The Financial Services Authority has criticised frozen food retailer Iceland for misleading investors about the health of the business.

Officials said the company, recently renamed The Big Food Group, broke its listing rules on two occasions between December 2000 and January 2001.

It said the company failed to notify the stock market "without delay" about changes in its performance and expectations.

The FSA added Iceland "failed to take all reasonable care" that a statement made on December 13, 2000 did not omit anything likely to affect its importance.

Carol Sergeant, the FSA's managing director of regulatory process and risk, said: "Iceland's failure on two occasions to keep the market accurately informed of price-sensitive information constitutes very serious breaches of the listing rules.

"The rules requiring full disclosure of all relevant market information without delay are a fundamental protection for investors."

Iceland's share price plunged in January 2001 when it stunned the market by revealing a drop in sales over the crucial Christmas period.

Alongside the announcement, Iceland said it remained confident about the future prospects of the business.

But the FSA said its investigation found that information within the company showed profits before one-off costs were 51.6 per cent below budget.

In a statement to the stock market, the Big Food Group said it had co-operated fully with the FSA's inquiry.

Chairman George Greener, added: "A new and strong management team is in place, having implemented improved controls and reporting procedures within the group, and is now focusing on the recovery of the business."