Dods Group PLC (LON:DODS) saw its shares plunge on Monday after the business intelligence group warned on profits after blaming Brexit uncertainties for “challenging trading conditions” in the UK over the past three months.
In a trading statement, the AIM-listed group said, whilst trading in October and November was broadly in line with its expectations, December “closed significantly behind in response to unprecedented political uncertainty.”
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The company added; “With fourth quarter revenues forecast to be lower than anticipated, against a backdrop of increased costs of delivery due to long lead time contracts, the Group has revised its expectations for the current financial year.”
Dod’s, which publishes ‘The Parliament’ magazine, said it now expects to report a significantly lower than forecasted adjusted underlying earnings (EBITDA) and a loss before tax - excluding non-cash impairments - for the year ending 31st March 2019.
The group added: “With lower than expected new product revenues and contribution from the 30% Associate investment of £1.7mln in the previous year, the Board is undertaking a review of the software, infrastructure, product offering, investments and intangibles to assess any further impairment impact for the year.”
The company said it continues to hold material cash reserves and has no debt, with cash in the bank, as at 31st December 2018, totalling £7.3mln, including restricted cash of £1.27mln.
Political decision making could continue to impact
On the outlook, Dod’s continued: “The Board is cognisant that the current hiatus in political decision making could continue to adversely affect our business beyond the current financial year end.
“With this in mind we remain focused on deploying the Company's robust balance sheet to generate growth through potential merger and/or acquisitions in related market sectors whilst continuing to preserve and invest in the Group's heritage brand and assets.”
It concluded: “Whilst the market is challenging, the Board remains confident that, in conjunction with potential investments, the Group is capable of sustainable profit streams in the longer term.”
In early morning trading, Dods shares had dropped 40.7% to 5.50p.