Connaught reveals 'urgent' need for additional funding

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

The Exeter-based group has been in turmoil since its warning last month that Government spending cuts could blow a £200 million hole in revenues over this year and next.

It said today that a review had identified an "urgent requirement" for additional funds to meet current and ongoing business, in part due to pressure from suppliers and sub-contractors.

And the company will breach banking covenants after warning that net debt will be significantly in excess of the previously advised level of £120 million by the end of August.

Connaught described talks with its lenders about securing additional funding as constructive.

Sir Roy Gardner, who became chairman in May, has moved to strengthen the management team with the appointment of four new directors, including the former finance chief at British Energy and WS Atkins.

He said: "These are challenging times for Connaught. We are fortunate that we have been able to attract a number of senior and experienced individuals to support the company at this time and we welcome the constructive discussions with our lenders."

Connaught recently announced the departure of founder Mark Tincknell on health grounds less than six months into his second spell as chief executive.

Mr Tincknell, who had been with Connaught for 28 years, will continue in a new role while finance chief Stephen Hill is to depart in October.

Today's statement comes after Sir Roy launched an independent review of accounting policies on mobilisation costs for contracts - currently recognised over the lifespan of contracts rather than upfront.

Connaught recently identified 31 projects where spending will be delayed as a result of the spending clampdown, wiping £80 million off revenues and £13 million from underlying profits in the current financial year.

If the squeeze continues into 2011, sales and profits will fall by a further £120 million and £16 million respectively.

Shares, which were 364p prior to the crisis, slumped another 68% to 32.5p, giving the company a market value of £49 million.