No Pain No Gain: Here's proof that we can't please a market when it's in a bad mood

It is easy to feel a little sorry for many a company executive in these days of nervous and volatile stock markets. Once or twice a year they journey to the City to present results and no doubt expect to enjoy the plaudits, if appropriate, of a job well done.

It is easy to feel a little sorry for many a company executive in these days of nervous and volatile stock markets. Once or twice a year they journey to the City to present results and no doubt expect to enjoy the plaudits, if appropriate, of a job well done.

Nowadays they may get the odd congratulatory nod, but that is about all. Hopes that robust figures will encourage something more tangible – such as a cheerful stock market response – are long gone. Indeed, as little MacLellan discovered, even the addition of a maiden dividend and an analyst's forecast that current year's profits will more than double is not enough to guarantee a favourable reaction.

I was not at any of last week's presentations. So I was unable to see just how the support services group's chairman, Bob Morton, and its chief executive, John Foley, reacted to the stock market's response, a 4p-a-share fall to 56p, lowest for more than two years.

Maybe, as the late holiday-camp king, Sir Billy Butlin, complained years ago when what he regarded as an outstanding profits performance was given short shrift, they realised it was impossible to please the stock market when it is in a bad mood.

It has, of course, been in an exceedingly bad mood since the turn of the millennium. True, it has lately enjoyed headline-deserving rallies but shares have still lost nearly half their value since we toasted the arrival of 2000. Perversely MacLellan, despite its fine figures, did not recapture even its pre-results level on any of the stock market's more exuberant days.

It is, I think, worth looking in some detail at the company's performance. Turnover rose 52 per cent to nearly £130m and pre-tax profit advanced 31 per cent to £2.6m. Earnings per share were also up, 29 per cent to 2.7p, and gearing was down to 9.3 per cent with interest charges covered no less than 16 times. The maiden dividend is 0.5p a share. The stockbroker Williams de Broe suggests profits this year will be £5.7m and says the shares, on a reasonable rating, are a buy. But nobody was listening.

I am particularly interested in MacLellan's display because I recruited the shares to the no pain, no gain portfolio nearly 18 months ago. I descended on them at 65.5p: they subsequently nudged 100p before sinking to 60p ahead of the results. Then came the slide to 56p. The behaviour of the stock market can, at times, be frustrating, as every investor has experienced. There was very little trading in MacLellan's shares last week and the modest decline, it could be argued, was of little significance. But I would have felt such a splendid display, even allowing for acquisition benefits, would have encouraged at least a modest gain.

The group, once an engineer, offers services, including cleaning and security. It has major contracts with leading UK groups and is thought to be near clinching more lucrative deals. Mr Foley masterminded the switch from engineering to support services; Mr Morton, a serial entrepreneur, is a significant shareholder.

In its transformation MacLellan has completed rewarding takeovers. The last major deal was last year when it acquired the Broadreach group, splashing out £19.3m for the privilege. The acquisition increased its involvement in the retail world. More deals, I suspect, are being lined up.

Galliford Try, another no pain, no gain constituent, has had a rather less successful time. The shares are just above my 20p buying price. If the group had been a "pure" housebuilder, its shares, no doubt, would be putting in a more positive performance (as far as that is possible these days). But Galliford mixed simple housebuilding with more complicated construction work and consequently shareholders have failed to fully enjoy the housing boom.

In the group's first half-year construction losses, including exceptional charges, came to £3.5m, compared with operating profits of £10.5m from housebuilding. The net result was pre-tax interim profits down from £6.6m to £3.6m.

Galliford is struggling to reshape its troublesome construction side and it may solve its problems by the end of the financial year. But construction has often been a drag, and with the housing market starting to give up momentum, group profits are likely to fall well short of last year's £18m, a figure less than impressive.

I intend to hang on to Galliford, and, of course, MacLellan. I feel that Galliford is over the worst, and although I do not see the shares regaining their earlier 40p level, they could, if the stock market does improve, make some modest headway. Although MacLellan is below my buying price there seems every reason to stay attached. I am pleased it joined the dividend list and I would expect its institutional shareholder base to grow as income funds climb aboard.

PROMOTED VIDEO
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Life and Style
tech
News
The Commonwealth flag flies outside Westminster Abbey in central London
news
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
theatre
Extras
indybest
News
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
Arts and Entertainment
tvWebsite will allow you to watch all 522 shows on-demand
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

    Training Programme Manager (Learning and Development)-London

    £28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

    Training/Learning and Development Coordinator -London

    £28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

    Business Anaylst

    £60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

    Project Manager - ETRM/CTRM

    £70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

    Day In a Page

    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
    Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

    Meet the people who play with Lego for a living

    They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
    The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

    20 best days out for the summer holidays

    From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
    Open-air theatres: If all the world is a stage, then everyone gets in on the act

    All the wood’s a stage

    Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
    Rand Paul is a Republican with an eye on the world

    Rupert Cornwell: A Republican with an eye on the world

    Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
    Self-preservation society: Pickles are moving from the side of your plate to become the star dish

    Self-preservation society

    Pickles are moving from the side of your plate to become the star dish
    Generation gap opens a career sinkhole

    Britons live ever longer, but still society persists in glorifying youth

    We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor