Derek Pain: Green Compliance has made its investors feel very blue
Saturday 30 August 2014
Even the most successful entrepreneurs occasionally experience failure.
Bob Holt is a well-regarded businessman whose endeavours have richly rewarded the No Pain, No Gain portfolio. He floated the Mears support-services group on the stock market towards the end of the last century at 10p a pop. Since then the shares have been above 540p and, as I write, are 473p.
The group is one of the few to have twice earned portfolio plaudits. In its early days I descended on the shares at 23p and a few years later sold at around 80p. In March 2008, I returned to the stock, buying at 272p.
Mr Holt is largely responsible for developing Mears, remaining as chairman throughout its quoted life. The group enjoys strong positions in the social-housing and home-care markets and last week produced a satisfactory trading statement. But Mears is not the only Holt enterprise. He is involved in some unquoted companies and chairman of two market minnows, Inspired Energy and Green Compliance. Inspired may not have lived up to its name but has performed reasonably well since arriving in 2011. On the other hand, Green has had a longer and quite disastrous stock market life.
The portfolio recruited Green, then called Wyatt, around 10 years ago. Under Mr Holt's guidance, I thought it would be a sure-fire hit. How wrong can you be? I don't think the shares ever returned to my 27.5p buying price and with unrewarding deals the stock disintegrated. Green came into the picture in 2009. In a reverse takeover Wyatt acquired a business offering home-information packs.
Once again the company, rechristened Green CO2, failed to live up to best hopes. The portfolio then bailed out at around 1p, suffering a sickening loss. Since then Green has endured another reincarnation, moving into such areas as water treatment
With another name change – this time to Green Compliance – the group still struggled. As Wyatt, then Green CO2 and finally Green Compliance, the group frequently raised cash from shareholders but I don't believe it was ever in profit although it could be argued it was in the black last year.
Now the faltering business is being taken out of its misery, via a share-exchange offer, pricing the shares at around 1p and capitalising the group at £4.8m. The bidder is APC Technology, an installer of energy-efficiency devices and distributor of electronic components. With approaching 50 per cent acceptances it looks a done deal.
The portfolio suffered a humiliating loss when it sold out. I reckon many shareholders, present and past, must also rue the day they got involved. The portfolio's shares are now effectively worthless and allowing for cash calls an adjusted price five years ago is above 140p.
Not a rewarding venture, then. But Mears is an entirely different proposition. Mr Holt, an ardent charity worker and once chief executive of Tottenham Hotspur, had the pleasure of announcing half-year profits had risen from £5.4m to nearly £14m. True, some of the advance was of a technical nature and the full-year's profits are unlikely to realise such a percentage gain. Still, they should emerge ahead of last year's figure. And with the interim dividend lifted 14 per cent to 2.85p a share there is every indication that Mears's progressive dividend strategy is set to continue over the full year.
The portfolio is more than happy with Mears's contribution to its resources; the pity is Wyatt-cum-the Greens proved to be so unsatisfactory.
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