Connaught keeps falling in wake of Budget

The firm's shares have now lost more than two-thirds since its Friday warning on the impact of Government belt-tightening on its business – wiping more than 300m off the value of Connaught, which has a number of social housing maintenance contracts across Yorkshire.

Last night the shares closed at 107.2p, a fall of 27.8p.

The Exeter-based firm said it had identified 31 projects where spending would be delayed as a result of the clampdown – knocking 80m off revenues and 13m from underlying profits in the current financial year to August.

Based on last year's results, the blow represents more than a tenth of its revenues and around a third of profits.

If the squeeze were to continue into 2011, sales and profits would fall by a further 120m and 16m, Connaught has said.

Connaught has won for social housing work with a number of councils and housing associations, most recently a 125m five-year deal with Norwich City Council.

But Chancellor George Osborne's emergency Budget clampdown last week spelt out cuts of 25 per cent or more for unprotected departments, with social housing grants potentially in the firing line.

The firm's top management held a conference call with the City on Monday in an attempt to stem the damage, stressing a strong bid pipeline, a 25m cost-saving programme and an unchanged dividend policy.

Panmure Gordon analyst Dymphna D'Costa said: "They were keen to highlight that it was mainly only a section of social housing revenues which has been impacted, namely stand-alone contracts relating to capital spend such as kitchens and bathrooms, where the revenues had been deferred by local authorities and registered social landlords."

But she added: "In view of the issues which were covered in the conference call we do not feel much more reassured."