Concept Sports Group Action
The Concept Sports prospectus was issued on 18 May 2004 and
contained a forecast for potential investors that revenue for the
six months ended 30 June 2004 would be $20.6 million and profit
would be $1.6 million respectively. Many investors purchased
shares in reliance on the statements made in the prospectus.
Concept Sports shares were sold on the initial public offer for
0.50c, but rose very quickly. On 20 July 2004 the shares were
trading at 0.73c.
The revenue and profit forecasts (made when there was only 6
weeks left in the period forecast) proved to be very
inaccurate.
On 18 August 2004, Concept Sports announced that for the six
months ended 30 June 2004, revenue would be only $14 million and
that it would make a loss. The share price immediately fell
dramatically. Subsequent announcements confirmed a pre-tax
loss of $2.2 million. Further bad news, contrary to other
forecasts in the prospectus continued to be published by Concept
Sports, further depressing the share price which remained below
0.12c from late 2004 to at least 2 October 2006.
On 2 October 2006 Concept Sports revealed that for the year
ending 30 June 2006 it had suffered an operating loss (after income
tax) of $11,271,573.
On 11 October 2006 its shares were trading at 2.2c.
The action
On 21 December 2004, Maurice Blackburn commenced an action on
behalf of shareholders who acquired an interest in shares in
Concept Sports between 25 May 2004 and 18 August 2004. IMF
(Australia) Ltd funded the litigation.
The action alleged that Concept Sports committed various
breaches of the Corporations Act, by the misleading and deceptive
content of the prospectus, the material omissions from the
prospectus, and breaches of the continuous disclosure regime of the
Australian Stock Exchange.
The action was for 136 named investors, including institutional
investors. It was against Concept Sports, its directors in
2004 and its auditor. Concept Sports' non-executive directors
sought indemnity from Concept Sports, and Concept Sports brought a
cross-claim against them alleging that they acted ineptly. Concept
Sports also brought cross-claims against international law firm
Baker McKenzie, Munro Legal and CGU Insurance.
On 7 July 2006 the proceeding was set down for a four-week trial
commencing on 20 November 2006. A mediation was held on 15 August
2006 and again on 25 August 2006.
Settlement
On 2 October 2006 a settlement for which 98% of the claimants
voted in favour was achieved. No claimant voted against the
settlement.
The terms of the settlement are confidential.
Settlement monies were distributed to claimants in December
2006.
Maurice Blackburn is proud of its recovery for the victims of
Concept Sports' misconduct, in particular because it was achieved
in less than 2 years and notwithstanding the disastrous financial
position of Concept Sports.