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Connaught Plc--- Merged

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From http://www.constructionenquirer.com/2010/07/26/connaught-runs-out-of-cash-to-pay-subcontractrs/

Troubled social housing specialist Connaught is desperately trying to borrow more cash from the banks as it struggles to pay subcontractors and suppliers.

The firm warned the Stock Exchange this morning that it will breach its banking covenants as debts soar above the £120m previously predicted.

The dire trading update stated that Connaught: “Has identified an urgent requirement for additional funds to meet the current and ongoing needs of the business, in part caused by additional pressure from suppliers and subcontractors.

“The Group has also concluded that net debt will be significantly in excess of the previously advised level of £120m at its year end of 31 August 2010 and that it will breach its banking covenants.

“It has therefore entered into negotiations with its lenders to secure additional funding and these discussions have been constructive.”

Connaught has also assembled an emergency team of new directors to steer it through the current crisis which saw shares dive last month following a profit warning as Government spending cuts on social housing hit home.

Stephen Billingham, the former Finance Director of British Energy Group and W S Atkins has joined the group to work on financial and funding matters.

Roger Wood, the former Managing Director of British Gas Services and Managing Director of the AA business, is chairing a steering committee responsible for Connaught’s operational efficiency programme, focussing on the delivery of significant cost savings.

Michael Young, who was Corporate Affairs Director at Centrica plc and Director of Corporate Policy and Communications at Compass Group plc, will be advising the Board on communication and reviewing management processes.

Chris Sellers, the Group’s Business Development Director, who previously held operational roles at Capita, Agilisys and Shell, has assumed the full operational role of acting Chief Executive of the Social Housing business.

Non-executive chairman Sir Roy Gardner 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.

“We continue to place great importance on the solid relationship we have built with our supply chain and customers and the continuing support we receive from our employees.”

Share price down by 65% this morning.

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Scary stuff - down by around 94% since last November.

High of 444p - now at 29p - massive drop at end of June.

A pure public service contractor - just goes to show what unintended consequencies can occur if you don't have a coherent strategy and just slash and burn.

Connaught are a major employer down here in the westcountry - could be devastating. I think there will be major efforts to save them. Hopefully they will get some more contracts when the ConDems sort them selves out (if they sort themselves out).

http://www.connaught.plc.uk/investors/shareprice/

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They were buying businesses with monopoly money from the Banks at prices for company's that only had to tell them they had lots of contracts in the pipeline and more millions were put on the price, unbelievable accountancy practices the whole thing is about to explode with insolvency when the truth is out.. Anyone in the trade knew the SP apart from you guessed it the Banks.

Edited by papag

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Guest Noodle

Scary stuff - down by around 94% since last November.

High of 444p - now at 29p - massive drop at end of June.

A pure public service contractor - just goes to show what unintended consequencies can occur if you don't have a coherent strategy and just slash and burn.

Connaught are a major employer down here in the westcountry - could be devastating. I think there will be major efforts to save them. Hopefully they will get some more contracts when the ConDems sort them selves out (if they sort themselves out).

http://www.connaught.plc.uk/investors/shareprice/

Another good example of the corporate welfare state. I don't know very much about government tenders and bidding for work or if the government uses term contractors for public works. Anyone know anything about this?

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Since the huge falls of a few weeks ago, you can be sure the big outsourcing groups will've been sniffing at Connaught. Capita or Shirko could probably buy it outright, and a wider range of companies could pick up parts of it if the business were split up. At todays price it also looks like quite a bargain "special situation" for a cash-rich investor without any sector affinity.

Seems to be having a ripple effect again: Mears down more than 3%.

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Scary stuff - down by around 94% since last November.

High of 444p - now at 29p - massive drop at end of June.

A pure public service contractor - just goes to show what unintended consequencies can occur if you don't have a coherent strategy and just slash and burn.

Connaught are a major employer down here in the westcountry - could be devastating. I think there will be major efforts to save them. Hopefully they will get some more contracts when the ConDems sort them selves out (if they sort themselves out).

http://www.connaught...ors/shareprice/

yeah, it a tough world when the money runs out.

I expect the £300K salaries, fleets of range rovers, pensions et al, then running on an overdraft, all help the profitability.

The problem is the fashion for US style companies, that is, build one, build up its share price by increasing turnover and "earnings", then flogging off.

efficiency? saving for a rainy day?....no need, the banks and government contracts made it all unneccessary.....till now.

If the councils in the west country NEED these guys, they can subcontract to the unemployed bods who will have the inside knowledge and contacts to make this happen.

the fat cats at the failed firm will fade away.. this is what recessions do...clean up the waste...if you let them.

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Connaught is spread across much of the UK, this a big employer - around 10,000 I think. Too big to fail? Will it be bailed out? This is one to watch I think - it will be a very bad sign for the economy if they do go out of business! 10,000 redindancies and the knock on effect will be horrendous.

The firm is based in Exeter - if it goes that will be very bad for the city as well. Just goes to show what happens if you go around shouting 'cuts, cuts, cuts', without thinking through the consequencies.

Plus all the MPs etc on holidays from today. Oh happy days - :(

Edited by flapjack

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Connaught is spread across much of the UK, this a big employer - around 10,000 I think. Too big to fail? Will it be bailed out? This is one to watch I think - it will be a very bad sign for the economy if they do go out of business! 10,000 redindancies and the knock on effect will be horrendous.

The firm is based in Exeter - if it goes that will be very bad for the city as well. Just goes to show what happens if you go around shouting 'cuts, cuts, cuts', without thinking through the consequencies.

Plus all the MPs etc on holidays from today. Oh happy days - :(

wrong. Firms go bust because 1: they are poorly run, and 2: there is no market.

in 1, the workers will buy into the old contracts, and 2: the whole thing was just a drain on the economy anyway.

Redundancies yes, loss of hope for all who shall pass here??...no.

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The dire trading update stated that Connaught: "Has identified an urgent requirement noticed they ain't got no money and desperately need to borrow a load more for additional funds to meet the current and ongoing needs of the business, in part caused by additional pressure from suppliers and subcontractors.

Edited for frankness.

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Connaught is spread across much of the UK, this a big employer - around 10,000 I think. Too big to fail? Will it be bailed out? This is one to watch I think - it will be a very bad sign for the economy if they do go out of business! 10,000 redindancies and the knock on effect will be horrendous.

The firm is based in Exeter - if it goes that will be very bad for the city as well. Just goes to show what happens if you go around shouting 'cuts, cuts, cuts', without thinking through the consequencies.

Plus all the MPs etc on holidays from today. Oh happy days - :(

This is pure economic illiteracy.

The necessary work they're doing isn't going to go away - someone will do it.

If they're engaged in unproductive activities (like pocketing taxpayers money for old rope, or creative accounting - both of which seem strong possibilities), then it's right those should be stopped. And if it brings the current management (or even the whole company) down, you can be sure someone else will pick up the pieces.

As should've happened with Northern Rock ...

[edit to add] Today's news is they're in discussion with their lenders. They may get the money they need, but if they do you can be sure it'll have strings attached (LART the management that got it into trouble). If they don't, someone else will take control.

Edited by porca misèria

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And if it brings the current management (or even the whole company) down, you can be sure someone else will pick up the pieces.

Correct.

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Why should we be surprised ?

It's obvious HMG spending cuts were going to lead to a large number of reliant companies going pop.

If unemployment is to reach 3.5 million within 2 years then this sort of story is going to be repeated over and over again.

Get used to it.

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From http://www.constructionenquirer.com/2010/07/26/connaught-runs-out-of-cash-to-pay-subcontractrs/

Troubled social housing specialist Connaught

[snip]

“We continue to place great importance on the solid relationship we have built with our supply chain and customers and the continuing support we receive from our employees.”

A Connaught spokesman told the Enquirer: “We do have good relationships with our subcontractors and have been in discussions with them.

“The important thing to emphasise is that we have every intention of paying them.”

You missed the last few lines of the story. This sort of tells you who'll really be squashed if this company fails: the little businesses that Connaught employ to actually do the work.

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Real balls of steel "investors" out there on the share bulletin boards.

strongbuy - 26 Jul'10 - 16:17 - 955 of 961

I have topped up on my 250,000 at ave of 21.5p Get in there my son !! I now have 400k at ave of 23p !!!

Fingers crossed they don't suspend em in morning pending clarification of financial situation!!!!!

Membership required.

http://www.advfn.com/cmn/fbb/thread.php3?id=13617151&from=951

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And they are all in it together(well nearly all)

Quote

Peter Jones was removed as managing director of Connaught's northern division,Jones, who grew up on a council estate in Leeds and now lives in Bradford, made a total of £254,953 by selling shares he owns with his wife, Debra, on May 21 and June 23.

The second sale was made two days before the profit warning, which sent Connaught shares diving 217.2p to 103p. Jones sold his shares at 322.6p.

The shares closed today at 31p( nice timing ?)

Can see a £50 fine coming up

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wrong. Firms go bust because 1: they are poorly run, and 2: there is no market.

in 1, the workers will buy into the old contracts, and 2: the whole thing was just a drain on the economy anyway.

Redundancies yes, loss of hope for all who shall pass here??...no.

Bloo, never have I seen a post that is soooooo wrong, "Firms go bust because 1: they are poorly run, and 2: there is no market"

Firms go bust because they're not bailed out. I thought everyone new that?

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Bloo, never have I seen a post that is soooooo wrong, "Firms go bust because 1: they are poorly run, and 2: there is no market"

Firms go bust because they're not bailed out. I thought everyone new that?

we do now!:lol:

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Real balls of steel "investors" out there on the share bulletin boards.

strongbuy - 26 Jul'10 - 16:17 - 955 of 961

I have topped up on my 250,000 at ave of 21.5p Get in there my son !! I now have 400k at ave of 23p !!!

These are the trades of the day CLICKY

I don't see any purchase for 150,000 shares ?!

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From todays Mail

The Financial Services Authority has launched a second probe into council house maintenance firm Connaught.

The City watchdog is investigating whether Connaught fully disclosed its dire financial condition to investors ahead of last month's shock profits warning.

The FSA's move emerged as Connaught warned yesterday it desperately needs new funds, and is set to breach its loan agreements with banks, raising significant fears for the company's future.

Sir Roy Gardner, the City grandee drafted in as chairman in May, said in a grim statement that net debt at the end of the financial year would be 'significantly ahead' of the £120million estimate it announced less than three weeks ago.

It is understood that Connaught now expects debt to hit £200million by the end of August - an astonishing amount for a company with a market value of just £44.3million.

It comes just days after the FSA is thought to have started investigating a share sale at Connaught, which suspended one if its directors.

Peter Jones was removed as managing director of its northern division, as Connaught called in lawyers and began an internal inquiry.

Jones allegedly failed to disclose a share sale two days before a major profits warning was announced.

Oriel Securities analyst Paul Checketts summed up the feelings of many in the City, saying: 'Connaught is almost like a black box - you just can't see what's going on. I can't understand it and so I can't see where it ends.'

Connaught, which employs 10,000 people, is thought to be looking to cut a significant number of jobs as it seeks to slash its cost base by 25 per cent by 2012. However, it is understood the firm won't start the process-until at least September because it does not have enough cash to fund redundancy packages.

The crisis sparked a huge sell-off, forcing the stock down 70.64p, or 69 per cent, to 31.46p. This means the firm has lost more than 90pc of its value since June 25 when it warned that public sector spending cuts would wipe £80million off revenues this financial year, and said chief executive-Mark Tincknell and finance director Stephen Hill were leaving.

The share price fall leaves Sir Roy sitting on a £490,036 paper loss after his appointment as chairman prompted him to buy stock in the company. US activist investor Richard Breeden has lost more than £15million on the company in less than a month after he raised his stake from 6pc to 13 per cent in the aftermath of June's profits warning.

In a barrage of announcements, Connaught said it was negotiating to borrow more from its lenders, as suppliers and sub-contractors, who are increasingly worried that they won't get paid, pressure the firm to pay them as early as possible.

It also said it had begun a review of its trading performance, as speculation mounts that there will be a further profits warning.

This is in addition to the accounting review Sir Roy asked Deloitte to conduct earlier this month, amid growing criticism about the way Connaught treats the costs associated with starting new contracts.

Most of its rivals take the bulk of these costs on the chin during the first few months of a contract, putting them through on the profit and loss account.

Connaught, on the other hand, 'capitalises' a much higher portion of its 'mobilisation' costs, which sees it spreading the impact of the start-up expenses over the course of a project. This does not breach any rules, but analysts say it reduces the transparency of Connaught's accounts.

Sir Roy also said he had hired former British Energy finance chief Stephen Billingham to work on the financial review, and Roger Wood, who was British Gas Services' managing director, to help cut costs.

The FSA declined to comment. Connaught declined to comment on whether it was considering redundancies.

Read more: http://www.dailymail.co.uk/money/article-1297878/Crisis-hit-Connaught-second-FSA-investigation.html?ito=feeds-newsxml#ixzz0urdY7rdK

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And here we have the public sector in microcosm.

they cant pay the workers.

they cant borrow enough to pay redundency to reduce the workers.

choice:..Bail them to reduce the workers, or to carry on as before.

either way, they are a drain on the rest of society.

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  • 149 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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