Derek Pain: Grape expectations for English Wines Group
No Pain, No Gain
Saturday 02 May 2009
Patience, bundles of it, is often a necessity in the investment game. There is always a danger that a long-term involvement can stretch to such a distant horizon that there is a strong temptation to cut and run.
But such a defeatist attitude has little to commend it, providing, that is, that the company involved retains the ability to deliver – if rather later than originally expected.
English Wines Group, the No Pain, No Gain portfolio's only Plus representative, is an example. Its latest set of profits are, quite frankly, disappointing. But the company, the only British wine producer with a public share presence, is continuing to make headway. And with appreciation of English-produced grape wines (as opposed to fruit wines) growing there is every chance that EWG's shares will eventually mature into a rewarding investment.
The portfolio descended on them more than two years ago at 20p a time. They fermented happily to 26p but were then caught in the small-cap retreat and now reside, rather forlornly, at 14.5p. Pre-tax profits have emerged at £106,000 against £158,000. Two fairly unresponsive summers have taken their toll. So, I suspect, have various recessionary influences. Consequently the group suffered a 6 per cent turnover decline. To some extent the fall was off-set by higher prices. As chairman Paul Brett observed, the trading pattern was "unfortunate at a time of increasing demand" for EWG's highly regarded Chapel Down wines.
Still, positive signs abound. More and more land is being switched to viniculture and various aspects of production have been improved. An up-market restaurant at EWG's vineyard in Tenterden, Kent, seems to be doing well and an impressive range of leading restaurants and stores stock Chapel Down wines. A first-ever shipment recently went to Hong Kong.
I think it is also significant that directors account for some 70 per cent of the capital. Indeed, they have added to their stakes in the past year. Nigel Wray, the serial investor, is a major shareholder.
It is clear that EWG is taking rather longer to blossom than I anticipated. But I intend to be patient. Internet tipster Tom Winnifrith reckons revenue could double in a few years and is looking for operating profits of some £1.2m in 2011.
The group's figures offer another example of the twisted impact of the new-fangled accountancy rules. Because of share options the profits I have mentioned are well over the top. After accommodating these non-cash items the declared profit is reduced to £35,000 and the previous year's figure to £86,000. Yet another example of the bizarre accounting requirements now in force.
EWG is the third Plus share recruited to the portfolio. Printing.com, which graduated to AIM, is showing a small gain but Myhome International is best forgotten. In a bid to enlist more constituents I have looked at a number of Plus shares and I would not be surprised if EWG's isolation is eventually ended.
From a speculative miniature to the portfolio's biggest constituent – the hospitality giant Whitbread. The year's "true" profits came in at £199m, up from £135m. There must be concern over the continuing softening of trading at the Premier Inn chain, largely the result of more upmarket hotels cutting their charges. But the other two legs of the group, the restaurants division and the Costa Coffee chain, are trading "positively" and could largely offset any Premier setback. City profit forecasts for the current year are around £181m.
Another constituent, Mears, the social housing and domiciliary care group, has produced an encouraging update. Chairman Bob Holt says trading remains strong. In the past two months contracts worth £100m have been signed and forward orders stand at £1.6bn. Some 92 per cent of this year's expected revenue is now in the bag. With its customer base largely composed of local authorities and other public bodies, Holt believes the group is "substantially immune to bad debts".
Both Whitbread and Mears are, unhappily, below my buying prices. I cannot, however, see any point in selling at this stage. Indeed, as the stock market recovers I would expect them to narrow the gap. They are well-run companies with the ability and resources to counter the recession and have much to commend them to the buy-and-hold investor.
Bargain Hunter: Comparethemarket.com launches two-for-one cinema tickets offer
Help to Buy Isa Q&A: Are they real help for first-time buyers or simply a vote-winner for the 2020 election?
You'll need £220,000 for a minimum wage in your retirement
Pension freedom: Steve Webb answers your questions on the big shake-up
Bank-beating exchange rates on your international payments
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 2 Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
- 3 Zayn Malik already working on solo material, just days after quitting One Direction
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...
Day In a Page
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
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station