Since early 2008, demand for all timber products declined steadily in line with the global economic recession. The decline in demand resulted in a subsequent stock build-up across the sawmilling industry. Market conditions deteriorated further during the beginning of 2009 with the demand for lumber declining significantly by 25% to 35% followed by discounting of prices, further increases in stock levels and increased pressure on working capital. In this period, York's profit margins also declined as Komatiland Forests ("KLF") increased log prices (bi-annually between 35 & 40% per annum) directly affecting not only York's retained earnings, but also all other long term contract holders. York's interim and final year-end June 2009 results were therefore well below budget (reduction in sales of ca 25% and EBITDA with 100%) and for the first time York has breached some debt funding covenants based on the year-end June 2009 reporting period.