Company blames coalition cuts for a 拢80m hit to top line this year

The share price of social housing specialist Connaught has plunged by a third on the back of a profit warning this afternoon related to the coalition government鈥檚 cuts.

In a statement to the City, it said profit would be hit by 拢13m and turnover would be 拢80m lower as a result of 31 contracts on which spending will be deferred.

It added: 鈥淚f this were to continue we anticipate a reduction of revenue by 拢120m and EBITA by 拢16m for financial year 2011.鈥�

The share price fell 33% to 215p in Friday afternoon trading.

Despite the fall, the company has insisted that the medium-term outlook remains strong and pointed to savings of 拢25m in 2012 as a result of its cost reduction programme.

It said: 鈥淲e have a record bid pipeline of 拢5.3bn reflecting the trend towards larger, longer-term contracts as our customers seek to address their budgetary restrictions. Connaught is ideally placed to meet the emerging requirements of this market.鈥�

In March this year the company was the subject of bid speculation from private equity firm 3i, which some observers said had examined the possibility of merging it with its Enterprise outsourced maintenance business.

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