Derek Pain: Connaught sneezes and the social housing sector catches a cold

No Pain, No Gain

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.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
    Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

    Laughter, but no tears, as Letterman takes his bow after 33 years

    Veteran talkshow host steps down to plaudits from four presidents
    Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

    Hozier's 'blasphemous' song takes Novello award

    Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
    Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

    Join the tequila gold rush

    The spirit has gone from a cheap shot to a multi-billion pound product
    12 best statement wallpapers

    12 best statement wallpapers

    Make an impact and transform a room with a conversation-starting pattern
    Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

    Paul Scholes column

    Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?
    Season's finale brings the end of an era for top coaches and players across the continent

    The end of an era across the continent

    It's time to say farewell to Klopp, Clement, Casillas and Xavi this weekend as they move on to pastures new, reports Pete Jenson
    Bin Laden documents released: Papers reveal his obsession with attacking the US and how his failure to keep up with modern jihad led to Isis

    'Focus on killing American people'

    Released Bin Laden documents reveal obsession with attacking United States
    Life hacks: The innovations of volunteers and medical workers are helping Medécins Sans Frontières save people around the world

    Medécins Sans Frontières's life hacks

    The innovations of volunteers and medical workers around the world are helping the charity save people
    Ireland's same-sex marriage vote: As date looms, the Irish ask - how would God vote?

    Same-sex marriage

    As date looms, the Irish ask - how would God vote?
    The underworld is going freelance: Why The Godfather's Mafia model is no longer viable

    The Mafia is going freelance

    Why the underworld model depicted in The Godfather is no longer viable