Concept Sports Group class 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.


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.