No Pain, No Gain: MyHome's demolition is a sad and expensive outcome
Saturday 13 September 2008
Many companies are facing acute difficulties, and the transatlantic mortgage bail-out will not have any near-term impact. The trading environment continues to deteriorate as the still-ferocious credit crunch exerts pressure. With their limited resources, small-caps are particularly vulnerable in such brutal conditions.
With sales and funding under attack, sympathy is in short supply and the weak perish. Mistakes are not tolerated in such a hostile climate and guilty firms are treated harshly.
The No Pain, No Gain portfolio has suffered acute embarrassment, with constituents feeling the bitter impact of the crunch. In some cases, mistakes have compounded their difficulties.
Last week's distressing suspension of shares of Myhome International, the franchise group, is the latest disaster to hit the portfolio. The credit crisis could be an influence, but there is little doubt that the company made some fundamental errors.
The portfolio descended on the group in July 2005 at 15.5p a share. It sold at 50p. In the meantime, the price hit 106p with Myhome, then attracting enthusiastic City support, successfully placing shares at 85p and 72p. The portfolio foolishly returned at 27p. Share trading was halted at 5p. Administrators quickly arrived.
Investors who followed the portfolio first time round were in the money, but any who ventured in at 27p face annihilation. I apologise for their financial discomfort. Overall, the portfolio escaped with a £6,000 profit.
A takeover spree and management losing focus at a crucial time seem to be largely responsible for the crash. But the part played by Lloyds TSB requires some explanation.
Last year, to help the rush to expand, the franchise group borrowed £8m from Lloyds. In July, to the accompaniment of a mildly encouraging trading statement, it emerged, to the surprise of many, that some banking restrictions had been broken and Lloyds wanted the loan reduced. Then, two weeks ago, it was said that a potential investor was in talks to replace the loan and take an equity stake. Last week came the bombshell. Lloyds demanded immediate repayment; it must have known Myhome hadn't a cat's chance in hell of complying.
Why did the bank act so controversially? On the surface, it seems to have destroyed any hope of recapturing its £8m. And a network of 900 franchisees is under pressure.
Myhome, specialising in residential cleaning, was started by Unilever, the food and soap behemoth. It sold to a rival operation run by Russell O'Connell. The group moved from Plus to AIM at the start of last year. Unilever retained a stake until last year, when it sold at, I understand, about 90p a share. But a string of famed serial investors were not so lucky. Nigel Wray, Bruce Rowan (who increased his holding in July), Stephen Hemsley and Mark Slater declared significant shareholdings. As the clouds darkened this powerful band, who had obviously found the group attractive in its go-go days, provided the best hope of survival. But, perhaps, Lloyds' demand killed any chance of a shareholder-led rescue and frightened the potential investor.
The fall of what was once a darling of the City is not a complete surprise. In recent months, warning signals, such as Lloyds' discontent, emerged. Before then, it seemed that although trading had slowed there was little to worry about. In March, new chairman Jon Pither suggested this year's results could be "significantly ahead" of last year's.
It is a spectacular crash. And it has, not surprisingly, created bad feeling in the City. One shareholder, the t1ps Fund, says it intends to contact the Government and the Financial Services Authority, questioning the conduct of O'Connell, Myhome's chief executive and former chairman.
As it put through five take-overs last year, it had little trouble, with its shares riding high, raising City cash. Yet with hindsight, it seems that the last deal, the £16m acquisition of the Chips-Away franchise, was a deal too far. Also, assimilating ChipsAway took too much management time. At 5p, Myhome was capitalised at £3.2m – making nonsense of the price paid for an admittedly successful business undertaking minor car repairs.
An expensive and unhappy end to what once seemed a remarkable franchise success story.
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
Interest-only mortgages return to give more flexibility to borrowers
Bargain Hunter: Exclusive discount on a SmartGlider - a self-balancing electric scooter
My Tinder date asked for a refund when I declined a second meet up
Bank-beating exchange rates on your international payments
Be warned of the dirty tricks the bailiffs pull
- 1 What marriage would look like if we actually followed the Bible
- 3 The Chinese city where men have 'three girlfriends because there are so many women'
- 4 'Heartbreaking' Syria orphan photo wasn't taken in Syria and not of orphan
- 5 Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition
Britain to take more refugees as Cameron bows to pressure after more than 250,000 back our campaign
Senior British politicians tell David Cameron: When dead children are being washed up on beaches – it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don't change Europe's attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Make your voice heard: Sign The Independent's petition to welcome refugees
iJobs Money & Business
£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...
£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...
£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
Day In a Page
This five-bedroom home in Sutton Coldfield is arranged over three floors, with a detached garage to the rear and a driveway at the front of the property.
In an elevated position above the bay, this four-bedroom home offers sea and headland views. There is a decked balcony and sun terrace - plus coastal walks on the doorstep.
With four bedrooms, this spacious maisonette in a mid-terrace period-style house in Holland Road is well-maintained and offers high ceilings and period features.
The terraces of this two-bedroom penthouse apartment offer panoramic views that stretch over fifty miles from the cliffs of Beachy Head.
In the heart of the coastal village of Mumbles and moments from the pier, this five-bedroom Victorian terrace is set over three floors and retains many original features.
In a sandbanks location, moments from the beach, this three-bedroom apartment has a large open-plan living area and a south-west facing balcony.
This four-bedroom home has an annexe accessed from the side of the house, with potential for improvement and conversion subject to the necessary permissions.
In the heart of the hamlet of Wardley, this five-bedroom period home offers countryside views and a stylish interior, with original features and open fireplaces.
Offering countryside views and landscaped gardens, this three-bedroom Grade II-listed lodge has a spacious conservatory and a large cellar that could serve as a workshop.
Set in approximately 1.5 acres, this four-bedroom home comes with a second, detached property that's currently used as an annexe.
In the hamlet of Newchurch, this former parish church is now a four-bedroom home complete with clock tower and eyrie.
Offering scenic views from a large balcony and sun terrace, this four-bedroom home has a wraparound garden and a heated swimming pool.
Offering views across the Humber and East Yorkshire Wolds from a glass panelled balcony, this four-bedroom barn-style home befits a life of leisure.
This four-bedroom home offers versatile accommodation with annexe potential; features include a hot tub, sauna and Norwegian BBQ hut.
Well-located for schools, colleges and the town centre, this contemporary thatched cottage offers flexible living space with six bedrooms.
Built in 1907, this four-bedroom Edwardian period home has been refurbished by the current owners, retaining many original period features.
Surrounded by landscaped gardens, this five-bedroom home offers living space across three floors.
This lovely country home in Burnham Market is currently run as a popular holiday cottage, with five en suite bedrooms and colourful gardens.
This three-bedroom 17th-century former village bakery is just a few miles from the East Sussex coast.
Set on a landscaped plot, this light and airy four-bedroom home comes with a log burner in the lounge, a fitted kitchen and an open-plan ground-floor layout.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Built on a former chapel site, this impressive four-bedroom home boasts balconies, stunning views and contemporary modern living.
This three-bedroom house is situated in a quiet mews and set over three floors. Features include glazed staircases and high ceilings.
A period townhouse set over four floors, this five-bedroom home was built in the 18th Century and retains many original features.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.