Connaught shares lost almost half their value on Friday as the troubled outsourcing company reported it will take a significant loss this year. Even Sir Roy Gardner, who was brought in to turn the company around in May, has said he faces major “challenges” in reversing Connaught’s fortunes. However, he stands by the company and professes, “This is a business worth fighting for.”
Connaught, which repairs and maintains social housing, saw its share value slip 46 per cent to a new low of 15.5 p, having lost most of their value already over the last few weeks. Last month Connaught saw their share value lose 69 per cent in one day, after Sir Roy announced the company’s debt levels.
The company has seen much more optimistic days. Just this past June the company was trading at 330 p. There is a good reason behind the dismal losses in value; the local government has deferred spending on 31 social housing contracts. This, in turn, led Connaught to issue a profit warning as early as six weeks ago.
The announcement on Friday regarding significant losses for the company this year, is just the latest in a embattled last few months for the shareholders. A few weeks ago, Connaught did an internal review of the trading performance to realize the implications on its fall year financial performance. It reported Friday that the review indicates that it will “record a material loss at an earnings before interest, taxation and amortisation level”. At an “adjusted” level, these items will “do no better than breaking even,” the company said.
Sir Roy said: “My focus, and that of the new executive team, will be to continue the plans for the refinancing of the company for the benefit of all our stakeholders who have shown loyalty to Connaught over the years. The business remains committed to delivering excellent quality and service for our clients.”