Shares in Sportsworld Media, the company behind television shows such as Popstars and The Pepsi Chart Show, collapsed yesterday after it issued its second profits warning in 16 days and said it is in talks with its bankers. The shares fell 87 per cent to 3.5p, compared with 482.5p a year ago.
Chris Akers, the former chairman of Leeds Sporting, has resigned as a director. He is also chairman of Sports Resource Group, a sports management business which issued a profits warning last week.
Commenting on the latest Sportsworld setback, Mr Akers said: "I have no confidence in the management or the way the company has been run."
Sportsworld owns half the rights to Popstars. It also produces programmes on extreme sports and advises on sports sponsorship deals such as Npower's sponsorship of English test cricket.
The shares halved on 28 January when Sportsworld warned that trading profit for the full year was likely to be £9m to £10m against analysts' forecasts of £16m. It blamed a dramatic slowdown in the market for sports sponsorship, which the chief executive Geoff Brown said was the worst for 20 years.
The company issued a further statement yesterday saying that it had started a more detailed review of its operations and that the findings so far showed that profits for the full year "will be substantially below the range of figures previously indicated".
The company gave no information on the reason for the shortfall. It added that it had started discussions with its bankers, NatWest, over its funding requirements.
At the end of January the business had net cash of £42m but £37m of that is required to fund acquisitions to which the business is already committed.
Yesterday's statement added that the business would also be reviewing its investment in programming and the carrying value of goodwill "in the light of the current trading environment". This would point to an asset write-down.
The business will now delay the announcement of its interim results for the six months to 31 December until its operational review has been completed. The group is expected to show a £2m loss for the period. Analysts said the collapse in trading beggared belief. "I can't believe it's gone so badly wrong so quickly," Nick Batram at Granville Baird said. "As far as institutional investors go, it's dead and someone should put it out of its misery."
Sportsworld recruited a new finance director last month. Malcolm Gardner joined from Chorion, the leisure group.Reuse content