Bullish PM Group chief executive Geoff Mountain today insisted that his firm was in good shape, despite seeing shares slump to an 18-month low on a profit warning.

Shares in the AIM-listed, Canal Road-based company bombed on the news that pending contracts with local authorities had been put on hold due to uncertainty surrounding the forthcoming General Election.

The price dropped from 216p to 152.5p on Wednesday's warning that results for the full-year, due to be announced this month, would be "significantly behind market expectations".

The warning related to the company's pioneering BinWeigh products which can be used on council dustbin wagons to weigh how much waste households are producing and enable them to be charged accordingly.

The systems have created a lot of interest among local councils both in the UK and overseas and helped build investor confidence in the Bradford firm.

But that was rocked when PM said the forthcoming General Election had led to the Clean Neighbourhoods and Environment Bill - which will include legislation on local authority waste management - to be put on hold. The firm's trading statement insisted sales had just been delayed as a result and inquiry levels about BinWeigh were at an all-time high.

Mr Mountain admitted he had been "surprised" by the severity of the market's reaction to the announcement which sparked fevered trading in the company's shares. Volumes increased from around 3,000 in a normal day to 140,000 on Wednesday.

He said: "Orders for this specialist product, which happens to be one of our key earners, have slowed down pending the General Election. The Clean Neighbourhoods and Environment Bill hasn't reached the final stages in the Commons as expected.

"Councils were expecting that Bill to go through and it would have given a clear indication of what the Government was planning to do in this field going forward."

Mr Mountain said he was still very confident the Bill would proceed assuming Labour wins the election. It is likely to mean councils will get incentives for encouraging recycling among householders.

Mr Mountain added: "The reaction of the market was a big surprise, but the share price has already gone back up again significantly.

"The order book and inquiry levels are at their highest ever. We never predicted that a General Election would have such a significant impact on councils but maybe we were a bit wrong on that in hindsight. Nevertheless, we feel quite comfortable about our prospects.

"We will be using this period as a window of opportunity and a chance to put in place the necessary infrastructure. It will prove a small breathing space to allow us to prepare for the bigger picture."

In its full-year results in March last year, PM saw turnover more than double to £7.2 million while pre-tax profits were up 32 per cent to £425,000. It announces its next results on March 23.