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Departing Executives At Ailing Housing Contractor Connaught Sold £16.6M In Shares

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Three boardroom executives at crisis-hit social housing maintenance group Connaught, who are departing in the wake of a profits warning that wiped £300m off the value of the company, have cashed shares and options worth a combined £16.6m in the last two years, according to a Guardian analysis.

While some have recently bought Connaught shares in an attempt to shore up investor confidence, these investments pale in comparison to substantial share-selling since April 2008. The director share sales identified by the Guardian took place in a period when Connaught's reported earnings were soaring ahead, even though cash was not coming into the business at a comparable rate.

Today the group's new chairman, Sir Roy Gardner, ordered a review of the group's past accounting policies, which analysts suggest could involve a re-statement of past earnings.

Mark Tincknell quit as chief executive of Connaught today after a shock profits warning that knocked two-thirds off the value of shares. He cited health problems as the reason for stepping down.

Tincknell, 49, had spent 28 years building the Exeter-based business into one of Britain's biggest maintenance groups, with much of its work involving upgrades to some of the country's most run-down housing estates. After four years as executive chairman, in January he resumed day-to-day control when chief executive Mark Davies announced he would be leaving Connaught in August this year "to seek new challenges elsewhere".

Also departing, after four years as finance director, is Stephen Hill, who will be the last of the three executives to leave the boardroom when he goes in the autumn. Much of the shakeout has been orchestrated by former Manchester United chairman Gardner, who joined the company only two months ago.

In recent months Tincknell has spent £1.6m on buying Connaught shares, but has made moves previously to cash in 80% of his interest in the business, generating a £10.7m windfall.

Three months before stepping down Davies cashed in all his share options when Connaught's share price stood at 425p and close to an all time peak of 444p, helping generate a personal fortune of £5.5m. At the same time Hill sold £2m of shares.

As well as overseeing the departures of Tincknell and Hill, Gardner has ordered an independent review of Connaught's aggressive accounting policies in relation to start-up costs on long-term contracts. Separate to the recent profits warning, analysts have been growing increasingly concerned about the widening gulf between Connaught's declared earnings growth and the actual cash coming into company coffers. William Shirley of Liberum Capital said the adoption of a more conservative accounting might involve writing off balance-sheet assets in excess of £40m. Others noted it could also involve restatements of past earnings.

Reading this it sounds like Enron style accounting.

Although I'm sure it's all above board and no one will ever be charged with anything illegal.

Selling shares is all about the timing.

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Reading this it sounds like Enron style accounting.

Although I'm sure it's all above board and no one will ever be charged with anything illegal.

Selling shares is all about the timing.

invoicing is easy.

collecting payment from delinquents and fictitious entities is more difficult.

collecting money from wholly own subs that get their money from a merry go round of similar shells falls down eventually.

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