SDI Group plc (SDIG.L) said Monday, in its trading update, that it does not expect to see a substantial improvement in market conditions in the next trading year. The group has also decided to write off outstanding balance owed by a retail client which defaulted on payments on a completed project. Shares dipped over 39% on the London Stock Exchange.
The UK-based group designs, builds and supports integrated materials handling solutions for international retail, wholesale, fulfilment and e-commerce distribution operations.
The group, which serves Asda George, Primark, Matalan and TNT, noted that signing of new business remained challenging as customers' decision-making processes are delayed. Even though the project pipeline is reasonably robust, the start of projects has been delayed longer than expected, the group said.
Hence, revenues and profits associated with the projects would be recognised in the next financial year, with "corresponding impact on the results for the current financial year." Further, before the year-end, the group also expects to incur some one-off costs due to reduction of overhead costs.
Although negotiations continue with the customer that recently entered administration and defaulted on payments on a completed project, the company decided to write off the outstanding balance owed by the customer.
The Group has also encountered some non-recurring issues and has made provisions accordingly. The combined cost of these matters is expected to be GBP 1.1 million, although it expects consequential cash outflow to be limited to GBP 0.6 million.
SDIG.L is currently trading down 2.25 pence of 39.13% at 3.50 pence, on the LSE.
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