FSA Disciplinary-Big Food Grp

RNS Number:1352V
Financial Services Authority
26 April 2002



               FSA Disciplinary Decision- The Big Food Group plc

                                 26 April 2002

Decision


 1. The FSA has decided that, on two occasions in the period December 2000 to
    January 2001, The Big Food Group plc (formerly known as Iceland Group Plc)
    (the "Company") contravened the requirements of paragraphs 9.2 and 9.3A of
    the Listing Rules. The Listing Rules in force throughout the relevant period
    were those published in May 2000. The contraventions were in respect of the
    timing and content of an announcement issued by the Company on 13 December
    2000 via the London Stock Exchange's Regulatory News Service ("RNS") and the
    failure of the Company to make an announcement on or before 2 January 2001
    in relation to a change in the Company's financial performance.


        Paragraph 9.2

        The Company failed, in two respects, to notify the Company Announcements
        Office without delay of changes in the performance of the Company's
        business and in the Company's expectation as to its performance, changes
        which, if made public, were likely to lead to substantial movement in
        the price of its listed securities: first, in relation to the Company's
        actual trading performance between September and December 2000,
        including the Christmas period; secondly, in relation to synergy benefit
        expectations arising from the acquisition of Booker Plc ("Booker") in
        June 2000 for the period to March 2001.

        Paragraph 9.3A

        The Company failed to take all reasonable care to ensure that the
        announcement which was issued via RNS on 13 December 2000 was not
        misleading and did not omit anything likely to affect the import of the
        announcement. This was in relation to both the Company's trading
        performance and the merger synergy benefit expectations.

        2.     The FSA considers that these failures constitute very serious
        breaches of the Listing Rules and accordingly that it is appropriate in
        the circumstances for its decision and the reasons for it to be made
        public.

Summary of facts

Background


        3.     The Company is a food retailer and wholesaler in the UK market.
        The Company has a financial year end of 31 March.

        4.     The acquisition of Booker by the Company (the "Acquisition") was
        completed on 23 June 2000. Listing Particulars for the Acquisition,
        issued on 26 May 2000, included expected synergy benefits of £20 million
        for the period ending 31 March 2001 and £50 million for the year ending
        31 March 2002.

        5.     Throughout the second half of 2000 market expectations as to the
        Company's profit before tax for the 15 month period to 31 March 2001
        were between £137 million and £140 million. The market was expecting
        positive like for like ("LFL") sales growth for the second half of 2000.
        Market expectations were broadly in line with the Company's original
        budget for the 15-month period to 31 March 2001, which included budgeted
        profit before tax of £143 million. The Company had budgeted for LFL
        sales growth for Iceland Foods ("Iceland") of around 3% over that
        period.

        6.     On 5 September 2000 the Company announced its interim results for
        the 26 weeks ending 1 July 2000. This announcement stated that
        "Iceland's like for like food sales in the 9 weeks to 2 September (2000)
        have grown by 4.5 per cent, while Booker's like for like sales excluding
        tobacco are up 2.0 per cent." In addition the Company stated in this
        announcement that "all our work to date underpins our confidence in the
        delivery of cost savings and trading synergies of not less than £20
        million in the current trading period to March 2001, and of at least £50
        million in the year to March 2002."

        The 13 December 2000 announcement

        7.     Throughout the period September 2000 to December 2000 the actual
        trading performance of the Company deteriorated significantly. By 13
        December 2000 information available within the Company indicated that
        LFL sales for Iceland had shown a decreasing trend over a 22 week period
        and had been negative for 11 weeks. The FSA has concluded that, in
        addition, by 13 December 2000 the most up to date information available
        within the Company indicated that actual profit after interest before
        synergies and exceptional items was 51.6% below budget.

        8.     By 13 December 2000 at the latest, therefore, an obligation had
        arisen under paragraph 9.2 of the Listing Rules to make an announcement
        informing the market as to a change in the performance of the Company's
        business. The Company's failure to make such an announcement was
        therefore in breach of paragraph 9.2 of the Listing Rules. This failure
        was not rectified until the Company released its announcements on 22 and
        31 January 2001.

        9.     By 13 December 2000 information available within the Company also
        indicated that synergy benefits for the period to March 2001 were likely
        to be at least 25% below the Company's original forecast as well as
        market expectations of £20 million.

        10.     On 13 December 2000 the Company announced that it would be
        hosting a visit for investment analysts the following day.
        Notwithstanding the facts set out in paragraphs 7 and 9, this
        announcement included the following statement:

        "Iceland's management remain positive on the Group's future prospects,
        and are confident that all the expected benefits of the merger with
        Booker are real and achievable."

        11.     In light of the facts set out in paragraphs 7 and 9, this
        statement was misleading and therefore in breach of paragraph 9.3A of
        the Listing Rules.

        12.     By 2 January 2001 information was available to the Company
        demonstrating that there had been a further deterioration in the
        performance of the Company's business, in particular indicating that
        Iceland's LFL sales over the Christmas period, regarded by the market as
        a key indicator of performance, were negative and significantly below
        budget.

        13.     d that, aAs at 2 January 2001, therefore, a further obligation
        to make an announcement under paragraph 9.2 of the Listing Rulesin
        relation to the Christmas trading figures had arisen. The Company took
        no immediate steps to consider whether such an announcement should be
        made and did not consult its financial advisers at that time. The
        Company's failure to make such an announcement without delay was again
        therefore in breach of paragraph 9.2 of the Listing Rules. This failure
        was not rectified until the Company released its announcement on 22
        January 2001.

        The 22 and 31 January 2001 announcements

        14.     On 22 January 2001 the Company issued a trading statement
        showing LFL sales for Iceland, Booker and the Company for the 26 weeks
        to 29 December 2000 and for the 4 weeks to 28 December 2000. This
        announcement included a statement that for the 4-week period to 28
        December 2000, LFL sales were down by 1.5% for the Company and by 5.5%
        for Iceland. For the 26 weeks to 29 December 2000, LFL sales were down
        by 0.5% for the Company and by 1.5% for Iceland. This announcement also
        referred to a further statement to be made by the end of January.
        Following this announcement the share price fell by approximately 16%
        from 258.5p on 21 January 2001 to 218p on 22 January 2001.

        15.     A further announcement was made by the Company on 31 January
        2001 in which it stated that the Company had completed its initial
        evaluation of the progress made following the Acquisition. This
        announcement included a statement that: "The Board's current expectation
        for the accounting period ending 31 March 2001 is that profit before
        tax, amortisation of goodwill and exceptional items, will be
        significantly below expectations and not likely to exceed £62 million."
        This compared with market expectations throughout the second half of
        2000 of £137 to £140 million and the Company's original budget of £143
        million. The announcement also included a revision of merger synergy
        benefits to the end of March 2001 from £20 million to £8 million.
        Following this announcement the share price fell by approximately 20.5%
        from 187.5p on 30 January 2001 to 149p on 31 January 2001, representing
        a 42.4% fall on the share price immediately prior to the 22 January 2001
        announcement.

        Conclusion

        16.     The Company has informed the FSA that, following significant
        senior management changes within the Company during January 2001,
        improved reporting procedures and internal controls have been
        introduced. The FSA has also noted the steps taken by present directors
        of the Company to ensure future compliance with the Listing Rules.

        17.     However, the FSA regards the continuing obligation requirements
        of Chapter 9 of the Listing Rules as a fundamental protection for
        shareholders. These requirements are designed to promote full disclosure
        to the market of all relevant information on a timely basis to ensure
        that all users of the market have simultaneous access to the same
        information. Observance of those continuing obligations is essential to
        the maintenance of an orderly market in securities and of confidence in
        the financial system. Accordingly, the FSA has decided that it is
        appropriate to publish this public statement stating its serious view of
        the Company's failures in this case.

        18.     A listed company, by its board, has a continuing obligation to
        consider carefully whether changes in its financial condition, in the
        performance of its business or in its expectation as to its performance
        may be such that, if made public, they would be likely to lead to
        substantial movement in the price of its listed securities and so
        require disclosure without delay under the Listing Rules. This is an
        overriding obligation and, when such changes are under consideration, a
        listed company should consult its professional advisers as soon as
        possible.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
Big Food Grp. (LSE:BFP)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024