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Connaught Shares Tumble 58Pc On Austerity Fears

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http://www.telegraph.co.uk/finance/newsbysector/epic/cnt/7858374/Connaught-shares-tumble-58pc-on-austerity-fears.html

The support services group became one of the first private sector victims of the Emergency Budget after shocking the market with a profits warning late on Friday afternoon.

The shares – which fell 32.8pc to 215p on Friday – on Monday morning slid a further 37pc to 136p.

After conducting a "detailed analysis of its business in the lead up to and following the Emergency Budget" Connaught said in the statement it had identified 31 contracts relating to social housing where the client, such as local authorities, were deferring capital expenditure in order to make savings. It added: "This will impact revenue by around £80m and EBITA (earnings before interest, tax and amortisation) by £13m in the current financial year. If this were to continue we anticipate a reduction of revenue by £120m and EBITA by £16m for financial year 2011."

Connaught, which attracted concern in the City over some of its accounting after the publication of annual results last October, posted a 17pc increase in revenues to £355m for its half-year to February.

In the Budget, the Chancellor warned that departments would face average spending cuts of 25pc. The Homes and Communities Agency had already put all its social housing spending on hold after £6.2bn of cuts were announced in May.

Analysts from Liberum Capital, in a note released before the warning, cut its rating on Connaught. As well as warning that spending cuts could lead to social housing maintenance being deferred by local authorities, they said the VAT increase to 20pc would make outsourced services more expensive to landlords and that cuts in housing benefits may increase evictions and reduce council rent.

More private companies to suffer the same fate that are reliant on the public sector?

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http://www.telegraph.co.uk/finance/newsbysector/epic/cnt/7858374/Connaught-shares-tumble-58pc-on-austerity-fears.html

More private companies to suffer the same fate that are reliant on the public sector?

I guess so.

One large housing trust in our area is taking on a pest controller full-time instead of putting jobs out to

the likes of Rentokil. I suspect they'll try to do the same with many other services. It's cheaper that way.

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LONDON (SHARECAST) - Rightmove managing director Ed Williams has sold nearly 1% of the estate agency for just short of £8m.

Williams was the founder of the rightmove.co.uk website that formed the basis of the group. He has sold nearly 1.14m shares at 699.9325p each. That leaves Williams with 1.1% of Rightmove. The imminent increase in the rate of capital gains tax may have been in his mind when he decided to sell.

The disposal was made last Friday ahead of today’s announcement of house price inflation figures by Rightmove. The annual rate of house price inflation picked up from 4.3% to 5%, but Rightmove expects this to ease back as conditions get tougher later in the year.

Sellers and tenants face tougher times as deficit reduction measures, such as the rumoured CGT increase, disrupt the fragile housing recovery, it said.

Rightmove's commercial director Miles Shipside added that a continued dearth of mortgage availability and a recent surge in sellers will also knock confidence.

"These factors are likely to put an end to this year's recovery in house prices," Shipside said.

http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=3528862

Founder of Rightmove sells half his shares.

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Mears won loads of social housing maintenance contracts by low-balling last year. I presume they were intending to push the price up but will find that very difficult.

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LONDON (SHARECAST) - Rightmove managing director Ed Williams has sold nearly 1% of the estate agency for just short of £8m.

Williams was the founder of the rightmove.co.uk website that formed the basis of the group. He has sold nearly 1.14m shares at 699.9325p each. That leaves Williams with 1.1% of Rightmove. The imminent increase in the rate of capital gains tax may have been in his mind when he decided to sell.

The disposal was made last Friday ahead of today’s announcement of house price inflation figures by Rightmove. The annual rate of house price inflation picked up from 4.3% to 5%, but Rightmove expects this to ease back as conditions get tougher later in the year.

Sellers and tenants face tougher times as deficit reduction measures, such as the rumoured CGT increase, disrupt the fragile housing recovery, it said.

Rightmove's commercial director Miles Shipside added that a continued dearth of mortgage availability and a recent surge in sellers will also knock confidence.

"These factors are likely to put an end to this year's recovery in house prices," Shipside said.

http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=3528862

Founder of Rightmove sells half his shares.

Last week, or the week before, Moneyweek had RM as Turkey of the week and advised to sell.

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Mears won loads of social housing maintenance contracts by low-balling last year. I presume they were intending to push the price up but will find that very difficult.

Low balling

New Labour - lotS of deals to enable some to do very well and then become residents of Switzerland

link

Bramall went into social housing when other builders weren't interested with his Keepmoat company. He and his relatives had a 72 per cent stake in Keepmoat, which was sold to the management deal backed by Bank of Scotland in August 2007.
Edited by lowrentyieldmakessense(honest!)

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I'll confess to being gutted by Connaught's dump in share price. I bought £2000 shares at 270p and watched them gain 20% in a month and now this. Major ouch in my portfolio!! Down 50% from my buy in price now.

What I don't understand is why Connaught have been so heavily hit whilst other similar companies are denying any effect of the budget on their business.

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I'll confess to being gutted by Connaught's dump in share price. I bought £2000 shares at 270p and watched them gain 20% in a month and now this. Major ouch in my portfolio!! Down 50% from my buy in price now.

What I don't understand is why Connaught have been so heavily hit whilst other similar companies are denying any effect of the budget on their business.

Err because they've admitted it's going to affect revenues everyone else has just denied it.

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Err because they've admitted it's going to affect revenues everyone else has just denied it.

And/Or maybe they have better contacts and hence better insight into how big the cuts are going to be?

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I'll confess to being gutted by Connaught's dump in share price. I bought £2000 shares at 270p and watched them gain 20% in a month and now this. Major ouch in my portfolio!! Down 50% from my buy in price now.

What I don't understand is why Connaught have been so heavily hit whilst other similar companies are denying any effect of the budget on their business.

I heard Simon Cawkwell (£1M gained shorting Northern Rock, fame) is shorting it heavily, so the drop is probably over done in the short term.

Edited by Money Spinner

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I'll confess to being gutted by Connaught's dump in share price. I bought £2000 shares at 270p and watched them gain 20% in a month and now this. Major ouch in my portfolio!! Down 50% from my buy in price now.

What I don't understand is why Connaught have been so heavily hit whilst other similar companies are denying any effect of the budget on their business.

I had about the same number of shares at the same price. I had was tempted to sell at 330p, but I had a target of 350, and was trying to be disciplined and hold out for my target! :mellow:

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AIUI Connaught has had some management/governance issues that may have left it vulnerable. They may also be using the budget as scapegoat for wider troubles.

The obvious contrast is Mears, which fell a few percent in sympathy but not on anything like the scale of Connaught.

I'd expect the likelihood of budget savings to have been already factored into the prices of both companies.

The question now: is this a b***** good buying opportunity? Or in other words, is there such overcapacity in the sector as to merit the scale of the fall?

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Mears won loads of social housing maintenance contracts by low-balling last year. I presume they were intending to push the price up but will find that very difficult.

Mears are about to lose those contracts

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Mears are about to lose those contracts

They'll do better with that than keeping them if they can't push the price up as they start off loss-making.

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I'll confess to being gutted by Connaught's dump in share price. I bought £2000 shares at 270p and watched them gain 20% in a month and now this. Major ouch in my portfolio!! Down 50% from my buy in price now.

What I don't understand is why Connaught have been so heavily hit whilst other similar companies are denying any effect of the budget on their business.

I heard Simon Cawkwell (£1M gained shorting Northern Rock, fame) is shorting it heavily, so the drop is probably over done in the short term.

there you go nohpc, double up.

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I heard Simon Cawkwell (£1M gained shorting Northern Rock, fame) is shorting it heavily, so the drop is probably over done in the short term.

Which does that mean?

  1. It's headed for zero

  2. He's got it wrong

  3. Your news is old news, and he'll close the short very soon if he hasn't already

  4. Your information is wrong

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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