Derek Pain: Bear raiders have Nighthawk in their sights

No Pain, No Gain

It looks like being a celebratory year for English wine. Indications are this still-fledgling industry is enjoying a vintage harvest, an event that should cheer shareholders of English Wines Group (EWG), a constituent of the no pain, no gain portfolio.

EWG, operating under the Chapel Down banner, is the largest of the growing band of home-grown commercial wine producers. The shares, the only Plus-traded portfolio constituent, were recruited in February 2007 at 20p. They subsequently climbed to 26p but, like almost every share in sight, fell victim to recessionary influences. The current price is around 17p.

Unexpected setbacks are hideously prevalent in such a weather-dominated industry as viniculture, particularly in this country. Still, it is not just English producers who are in a confident mood. It seems that most of the northern hemisphere is toasting a bumper return although the quality of the wine has yet to be ascertained.

In the last two years, EWG has suffered disappointing harvests. As a result, its turnover in the first half of this year fell 8 per cent and a modest profit was replaced by a £29,100 loss. Still, the taste for English wine is getting stronger; indeed EWG's chairman, Paul Brett, says demand outstrips the group's ability to supply.

Another constituent with an interesting future is Nighthawk Energy. Shares of the US-focused oil and gas explorer and producer have been volatile this year with bear raiders on the prowl. There are now signs that short-sellers are retreating with the shares looking a little firmer.

With three share placings – raising a total of £34.4m – in less than a year it is, perhaps, not surprising that Nighthawk has a contingent of weak shareholders. The cash was needed for oil and gas developments and the balance sheet is now much stronger with around £20m in the bank.

The latest results could represent a new beginning, but shareholders are no strangers to false dawns. Still, with costs cut and production increasing, the yearly loss was reduced by 42 per cent to around £1.25m. With output likely to advance significantly from a range of energy prospects, there is a strong chance that the current year will show a break-even position, perhaps even a profit.

Observers believe the shares are dramatically underpriced. Stockbroker Hanson Westhouse has a 225p valuation and Growth Equities & Company Research is looking at 227p. I will be content if the shares hit their earlier peak of 116p. The portfolio paid 44p.

Three other constituents have reported in the past week or so. Printing.com said trading in July and August was in line with expectations but September, although recording an increase, was down on the previous year. Interim figures will appear next month and, for the year, a little over a £2m profit is on the cards. If, as seems likely, the dividend is held, the shares yield a not inconsiderable 9 per cent.

Private & Commercial Finance, the hire-purchase group, has indulged in its second share placing within a month. In September, it raised £1.35m; now it has pulled in a further £95,000. Both exercises were conducted at 6p.

Why two bites at the cherry? Some shareholders complained they had been left out in the cold in the first placing and were unhappy at the resultant dilution. So PCF decided to accommodate them with a mini-placing. Certain directors, away at the time of the first exercise, also took part in the second round.

I applaud the group's response to its aggrieved shareholders. Too often long-standing supporters are ignored as placings are directed at privileged City institutions and individuals. I realise rights issues are more expensive, but a placing and open offer, which is in effect what PCF has undertaken, is surely a satisfactory solution. The mini-placing also gave some directors the chance to buy new shares. I had earlier criticised them for their poor response to the first placing.

In a trading statement, PCF said results were in line with expectations with reduced competition helping its performance.

Finally: Green CO2, the energy certification business, has reported a £1.2m loss. The figure relates mainly to the old Wyatt Group, some of which may be sold.

yourmoney@independent.co.uk