Derek Pain: Connaught sneezes and the social housing sector catches a cold
No Pain, No Gain
Saturday 10 July 2010
In these nervous days the merest whiff of trouble is likely to have a tumultuous impact. Take the problems engulfing Connaught, the support services group that is big in social housing. A shock profits warning sent waves of unease through the social housing sector and devastated Connaught's own share price. The impact, of course, would not have been so severe in more serene days, now of blessed memory. Indeed Bob Holt, chairman of Mears, another social housing group, must feel he is a victim of hysterical investors.
Still, there is no doubt that many have been unnerved by the Connaught drama. Mears shares, constituents of the no pain/no gain portfolio, have endured that sinking feeling since its arch rival caught its shareholders on the wrong foot with its dismal bulletin. Connaught's shares – once enjoying glamour status – took a pounding, falling 66 per cent in three days. Other groups involved in social housing felt the fall out. Mears, for example, tumbled from 280p to around 230p. Earlier this year the shares topped 310p.
Mears' slide would probably have been more severe if Mr Holt had not fought back. He issued two upbeat trading statements and told anyone who would listen that Connaught's difficulties did not indicate sector-wide problems. Connaught, hitherto regarded as leader of the social housing pack and for long enjoying a stronger share rating than Mears, said 31 contracts had been trimmed in recent months and worried about the impact of the coalition's emergency budget on its business. It added profits would be hit. But some observers wonder if Connaught has encountered yet-to-be-defined difficulties. In contrast Mears talked of strong trading and declared it had seen "no evidence" of any downturn. To rub salt in the Connaught wounds, Mr Holt claimed Mears was now the social housing leader.
Uncertainty about Government cuts will continue to influence shares for some time. Indeed many outsourcing groups could suffer acutely if Chancellor George Osborne's measures are anywhere near as fierce as currently indicated. But it is worth noting that housing associations, which represent a large part of the social housing market, are non profit-making organisations, relying mainly on rents for their income. They are not, therefore, beholden to the Government for cash and should emerge from any cost-cutting exercise relatively unscathed. Other portfolio constituents have produced results or trading statements. Private & Commercial Finance, the hire purchase group, more than doubled year's profits to £528,000 and claimed it was "ideally positioned with much reduce competition". The shares hardly stirred.
Clarity Commerce Solutions – supplying software to the leisure and retail business communities – achieved higher-than-expected profits of nearly £2m against £471,000. Its shares made progress. Both represent excellent value, but I would not bet on either progressing until stock market sentiment improves.
Hargreaves Services is a constituent feeling the pinch. A trading update was positive but mentioned that coal production had slipped due to problems at its Maltby mine in Yorkshire. Still year's profits – due in September – should not disappoint.
Nighthawk Energy, the US-focused group, has extended its oil and gas spread. With its partner, the US Running Foxes operation, it has acquired a further 4,773 acres containing 42 wells. The additional land is adjacent to existing operations. Price has not been disclosed.
Whitbread's trading update, covering the first 13 weeks of its current year, saw sales a heady 13.1 per cent ahead. It again enjoyed a strong run at its Costa Coffee off-shoot, with sales up 26.9 per cent and its Premier Inn budget hotels side also made a significant contribution with turnover 14.1 per cent higher. The group has so far survived the recession in fine style; it should continue to do so. The shares have topped 1,600p this year but, despite advancing following the trading statement, seem to have settled around 1,300/ 1,400p.
I was caught on the hop last week. Brewer Daniel Thwaites rolled out figures after I finished writing. They were pretty awful with pre-tax profits down to £1m from £9m. Still a 4.46p year's dividend is being paid and the assets argument, which I mentioned, remains in place.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Orgasm machine to deliver climax at the push of a button
- 4 Too upsetting? Academy members voted for Oscar-winning 12 Years A Slave 'without watching it'
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...
Day In a Page
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew