The Company is currently experiencing more challenging trading conditions which are having a significant effect on the trading performance of the Company for FY18. These factors are likely to have less of an impact on the Company's trading performance in FY19.
The challenges currently faced are set out below.
· Continued increases in input costs are being driven by parent reel price inflation. In particular, there has recently been a further material rise in parent reel prices.
· The anticipated inflation recovery through product price increases has delivered less than planned to date. In addition, the delay in price increases will have a reduced positive impact on the current financial year.
· The Company has also incurred higher than anticipated costs in relation to the operational changes associated with preparing the business for growth. The Company believes these changes will deliver improved performance over the longer term.
· The Board has recently been advised that a Health and Safety incident, which occurred prior to the Company's AIM IPO, may now result in a more significant fine being imposed by the Health and Safety Executive (HSE) than was previously anticipated. Whilst this is not expected to impact on trading, based on advice received by the Company's legal advisers, any resulting fine may have a material impact on the Company's cash position.
Whilst the revenue expectations for FY18 remain broadly in line with market expectations, the Board has reviewed its expectations of the Group's performance. Based on current market conditions, the Board now anticipates that earnings will be significantly below existing market forecasts for the current financial year, and as a consequence net debt will be correspondingly higher at year end.
In view of the above, the Board will review the dividend in respect of the current financial year.
Following the appointment of Gareth Jenkins as CEO on 11 September 2017, the Board commenced a wide-ranging review of the Company's operations with a view to improving its margins and its overall financial performance.
Temporary Suspension of Trading on AIM
Whilst the Board considers the anticipated impact of the above on the Company's net debt position, pending clarification of its financial circumstances, the Company has applied for suspension of trading in the Company's ordinary shares on AIM with effect from 7:30 a.m. today.