Derek Pain: Hero-to-zero RSH may have done too much, too soon

No Pain, No Gain

The catalogue of woe that has enveloped Rivington Street Holdings has, not surprisingly, had a devastating impact on the Plus-traded shares of the financial and software mini-conglomerate. In a near hero-to-zero performance the price has slumped from more than 50p to a mere 4p with one unhappy investor so anxious to get out that he sold 19,310 shares at just 2p each.

The no-pain, no-gain portfolio paid 27.5p a share for its holding. I congratulated myself as the shares nearly doubled but once again held on for too long as the stock declined, eventually unloading at 13p. At one time the group enjoyed a capitalisation of around £20m. Today its value is put at £1.8m.

What has gone so badly wrong? It is impossible for an outsider to appreciate the deepest ins and outs of a company. But it would seem that RSH grew too quickly through acquisitions and expensive start-ups and had to change its accounting policies to accommodate its ambition to move from Plus. In addition the still-to-be completed sale of its successful and highly rated corporate finance division seemed to question its clarity of purpose.

RSH is largely the creation of ex-City hack Tom Winnifrith. It started around the turn of the century with an internet share-tipping site and expanded into various other financial websites, as well as fund management, public relations, software activities and stockbroking. An interest was even acquired in a Newfoundland quarry. Mr Winnifrith, with around a 28 per cent stake, was, in effect, sidelined last year. He has now left the board although he has agreed a two-year contract that keeps him with the group. He complained bitterly about the demands of International Financial Reporting Standards, an accounting system RSH had to adopt for its intended move to AIM. He said at the time: "IFRS is cruel in that you must write down the carrying value of assets where you think a writedown may be prudent but cannot write up any values."

The net result was that a £2.7m impairment charge wiped out profits and left the group nursing a £260,000 loss last year. The company is also committed to deferred payments relating to acquisitions and felt obliged to raise £1m through a placing at 25p. It has since accepted a £750,000 loan from chairman Jim Mellon, an experienced businessman. Subsequent interim results to end-February revealed a £3.4m loss against a £954,000 profit. The group has already unloaded some of its operations and Mr Mellon says the changes put RSH "in better shape to return to a growth path in due course".

The departed Winnifrith, writing on T1ps.com, the website that started the group and is still part of it, told shareholders he shared their pain. "I apologise to those who have lost money backing RSH for mistakes I made; I cannot apologise for mistakes others made which it would be wrong for me to discuss."

From a former constituent to three current players: Booker, Animalcare and Hargreaves Services. The cash-and-carry chain continues to power ahead, producing year's pre-tax profits up 27 per cent at £90.8m with revenue 9.5 per cent higher at £3.9bn. The year's dividend is up from 1.67p to 2.28p a share. The group remains the star of the portfolio.

The two other constituents have let the side down. Hargreaves' shares, hitherto riding high, crashed when problems at its Maltby Colliery in Yorkshire were revealed. They will hit current year's profits by up to £16m although figures for the year just ended should escape.

And Animalcare, the veterinary group, issued a profit warning as identification microchip sales took a caning. Space prevents a detailed examination of these setbacks. Indeed coming after the Rivington escapade the portfolio has taken quite a bashing this year.

I will deal more fully with the portfolio's latest casualties next week. My intention is not to be panicked into any rash decisions. I am also keen to bolster the strength of my little share exercise with additions. After all the stock market, as the euro crisis drags on, has fallen from what I regarded as an unrealistically high level. It is often the time to buy when shares look a little depressed.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Life and Style
Small winemakers say the restriction makes it hard to sell overseas
food + drink
Arts and Entertainment
A comedy show alumni who has gone on to be a big star, Jon Stewart
tvRival television sketch shows vie for influential alumni
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
News
Clare Balding
peopleClare Balding on how women's football is shaking up sport
PROMOTED VIDEO
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
News
i100
Sport
Jonny May scores for England
rugby unionEngland 28 Samoa 9: Wing scores twice to help England record their first win in six
Life and Style
fashionThe Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
Sport
Tony Bellew (left) and Nathan Cleverly clash at the Echo Arena in Liverpool
boxingLate surge sees Liverpudlian move into world title contention
Voices
Neil Findlay
voicesThe vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Life and Style
food + drinkMeat-free recipes and food scandals help one growing sector
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible
    Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

    Look what's mushrooming now!

    Meat-free recipes and food scandals help one growing sector
    Neil Findlay is more a pink shrimp than a red firebrand

    More a pink shrimp than a red firebrand

    The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
    Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

    Oeuf quake

    Bill Granger's cracking egg recipes
    Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

    Terry Venables column

    Wayne Rooney is roaring again and the world knows that England are back
    Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

    Abject leadership is allowing football’s age-old sores to fester

    Those at the top are allowing the same issues to go unchallenged, says Michael Calvin