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; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
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

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

    Helpdesk Analyst

    £23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

    Senior Helpdesk Analyst / Service Desk Co-ordinator

    £27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

    Day In a Page

    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
    Ed Sheeran hits back after being labelled too boring to headline festivals

    'You need me, I don’t need you'

    Ed Sheeran hits back after being labelled too boring to headline festivals
    How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

    How to Get Away with Murder

    Shonda Rhimes reinvents the legal drama
    A cup of tea is every worker's right

    Hard to swallow

    Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
    Which animals are nearly extinct?

    Which animals are nearly extinct?

    Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
    12 best children's shoes

    Perfect for leaf-kicking: 12 best children's shoes

    Find footwear perfect to keep kids' feet protected this autumn
    Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

    Arsenal’s ray of light ready to shine again

    Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
    Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

    Moyes’ show of sensitivity thrown back in his face... by Ferguson

    Manchester United legend tramples on successor who resisted criticising his inheritance
    Two super-sized ships have cruised into British waters, but how big can these behemoths get?

    Super-sized ships: How big can they get?

    Two of the largest vessels in the world cruised into UK waters last week
    British doctors on brink of 'cure' for paralysis with spinal cord treatment

    British doctors on brink of cure for paralysis

    Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
    Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

    Lonely Planet’s Best in Travel 2015

    UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London