Connaught said today it will make a material loss for its current financial year, including exceptional charges, as a result of the review into its accounting practices.
After adjusting for these exceptional charges - it will do no more than break even.
In addition, it also anticipates making a provision for future losses on current contracts in its results for the financial year ending 31 August 2010.
As part of its reviews, Connaught also anticipates that it will make significant write downs to the value of carrying value of assets, such as goodwill following previous acquisitions, as at 31 August 2009, the previous year end.
This essentially means that it could have overstated the value of these assets in the past.
These write downs are before taking account of the impact of the ongoing assessment into the accounting policy for mobilisation costs, which could lead to further exceptional charges.
The company’s review is continuing and further details will be announced in the preliminary results for the current financial year.
Commenting on the announcement, chairman Sir Roy Gardner said: “Further to my appointment as Chairman in May and my establishing a series of independent reports on the business, it is clear we face challenges in turning this Group around, but I remain both confident that this can be achieved and committed to seeing the process through.”
“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.”
“This is a business worth fighting for and my new team and I ask for your continued support for our efforts to rebuild Connaught.”