Plastics recycling firm gets basting from LSE

The London Stock Exchange today publicly censured AIM-listed Environmental Recycling Technologies and said it would have fined it if the company's finances were not in such a parlous condition.

It found the plastics recycling firm guilty of breaching no fewer than six rules governing the junior stock market including not telling investors that losses would be greater than expected, not paying off a loan for which it raised money and not keeping its nominated adviser informed. The LSE also revealed that it had previously warned Environmental, then 3DM Worldwide, about facts it had kept quiet when it floated on the market in 2002.

It said that the £2.8 million share issue in 2007 and events in 2008 had shown "reckless conduct" by the company. The new shares were issued at 4.88p but the price has fallen to 1.5p today. Environmental claimed it had undergone "key board and operational changes" since the offences took place and had improved its governance.

The LSE said that in September 2007, the firm's internal forecasts estimated operating losses being pared from £2.62 million in 2006 to £1.67 million that year. In fact losses grew to £4.74 million which investors were not told until July 2008.