Derek Pain: Rising star Rivington makes surprise moves upmarket
No Pain, No Gain
Saturday 02 July 2011
Rivington Street Holdings, a star of the no pain, no gain portfolio, plans to elevate its shares from the fringe Plus market to the Stock Exchange's junior platform, the Alternative Investment Market, usually referred to as AIM. The switch should occur early next year. Around the same time one of its Plus satellites, Worship Street Investments, is expected to undertake the same journey.
The moves upmarket come as a surprise. In the past Rivington has appeared supremely satisfied with Plus. But times change. And the conglomerate, with a £20m capitalisation, feels shareholders deserve a more active share market. Indeed the move appears to be shareholder inspired. Some have urged the switch and it seems the Rivington team, led by serial investor Jim Mellon, has come round to the AIM view.
Chief executive Tom Winnifrith says Rivington's current dealing spread is too wide and rating too low. "The increased interest we will get on AIM would address both issues. Ultimately the value of a business is driven not by what market its securities are traded on but by cash generated and assets built. But Plus is not proving a valid mechanism for allowing value to be reflected." On the Worship front he declares: "The spread is a joke and liquidity minimal."
In a criticism of the boards of some, perhaps more prominent, companies, he points out: "In any firm you cannot ignore your shareholders. The express wish of the majority of shareholders (by numbers if not by voting rights) who have contacted me (in both companies) is to move." Mr Winnifrith adds: "Shareholders own a company and shareholders want Rivington on AIM. Since Jim (Mellon) and I agree with that assessment then we are happy to do as instructed." He says the group, with interests ranging over corporate finance, software and stock broking, is now in a position to accommodate the extra costs of an AIM presence.
The portfolio arrived at Rivington in November at 27.5p a share. The price is now close to 50p. Worship shares, however, have fallen from 2.5p to around 1.45p, pricing the company at £1.2m. Rivington's forthcoming departure will mean that NCI Vehicle Rescue, a rarely traded share, is the portfolio's only representation on the fringe market. Its yearly figures are due.
Two existing AIM members have also hit the City news wires. Hargreaves Services, with fuel to transport interests, reported that year's profits, due in September, would be in line with expectations (around £40m is the stock market hope) and debt had fallen more than expected to £66m. Its long- running endeavour to increase its coal output through a development in Wales could reach a conclusion on Monday when the local authority involved considers Hargreaves proposals. The shares, recruited at 417p four years ago, are around 1,040p. Stockbroker Brewin Dolphin has a 1,174p target.
Clarity Commerce Solutions, providing software for the leisure and retail sectors, is not such a happy constituent. It has won two theme park contracts, one a £640,000 follow-up deal in the US, and is commanding a growing presence in the theme park world but the important retail division continues to suffer as deals take longer to clinch. Still, it has not signalled any deluge of cancellations. The group's year's results are due soon. The shares bump along at 19p against the portfolio's 29.5p buying price and around 50p in 2009.
Finally, a Footsie stock, Whitbread. The Premier budget hotels to Costa Coffee group wrong footed the City when it unveiled an upbeat trading statement last week. Just before the announcement, the shares were looking decidedly forlorn as doubts about the group's growth swirled around with increasing intensity. As I write, the shares are not far below 1,600p, having moved ahead in difficult stock market conditions.
With the price deteriorating and some top City brains alleging the group was feeling acute pressure from the recessionary pinch, I must confess that I wondered whether it would be wise to take what was left of the portfolio's profit. But once again patience paid off and assuming the stock market is not overwhelmed by the Greek- inspired euro tragedy, I believe the shares should move higher. Earlier, before the bearish whispers gathered any strength, they nudged 1,900p. The portfolio paid 1,105p in July, 2008.
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