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.
Debt in Britain: Numbers seeking help on how to cope with mounting bills goes up by more than half in three years
General election 2015: David Cameron's promise brings uncertainty to investors
Bargain Hunter: BT improves its mobile reception with 'incredibly competitive' deals
Have a happy new financial year
Simon Read: 'It went below the radar but you could be eligible for a tax break on your savings'
- 1 Replica Back to the Future Hoverboard released
- 2 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 3 Brixton squat flats now costing up to £3k per month show how out of control rent is in London
- 4 A new (old) cure for MRSA? Revolting recipe from the Dark Ages may be key to defeat infection
- 5 Gamers confess the worst things they've done in The Sims
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...
£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...
Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...
Day In a Page
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
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.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
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.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
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
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000