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

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

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Ashdown Group: Trainee Consultant - Surrey/ South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before