The two best-performing quoted companies in the industry last week had something in common.

Both contractor Mowlem, whose shares rose 4.5% to 155.75p in the construction and building materials index, and support services group Waterman, which rose by almost 11% to 127.5p, had put out trading update statements.

The rise for Waterman was no surprise. It informed the City that in its full-year results announcement next Friday, it “expects to report profits before tax significantly ahead of market expectations”. The reasons cited were profit realisation on some projects being earlier than expected, improved performance of the business at a regional and international level, and a reduction in overhead costs in London.

No investor is going to argue with that, so the hike in share price was unsurprising.

Mowlem on the other hand hit the City with the news that its profit for the full-year to the end of December 2005 was going to be £70m less than analysts had anticipated, because it was changing the way it valued contracts and stated them on the balance sheet.

The fact that it was not going to have good news was not a surprise in itself – Mowlem warned the City it had problems in July, then estimated to the tune of £20m – but two months later to come up with a figure £50m higher was certainly a surprise.

Mowlem clearly did a good job of persuading the City on Tuesday that it was a short-term problem and that long-term the prospects were good, but the significance of the numbers should not be underestimated.

The rise in share price, which stood out all the more because the rest of the sector had an unremarkable week with falls in many companies, can perhaps be better explained by the possibility of a break up of the business, which has not been ruled out by Mowlem’s board.

Losers included many of the housebuilders, although there were no drastic falls in share price. Travis Perkins fell by 2.5% to 1429p, still suffering from fears over its DIY chain Wickes after sales had been hit in recent months.

The All-Share remained unchanged at 2714 and construction shares overall fell 0.8% to 3745.