Derek Pain: 'Jam tomorrow' companies can leave a sour taste

No Pain, No Gain

Pursuit Dynamics must be one of the most unfathomable shares on the stock market. In the past five years the price has been below 200p and above 800p. At the time of writing it resides at around 310p, capitalising the heavy loss maker at £232.5m.

Such a price tag makes a nonsense of City valuations, particularly for a jam tomorrow company. Although PDX, as it is often called, offers fascinating glimpses of possible riches, it has spectacularly failed to deliver. And many observers wonder whether it will ever achieve the expected rewards that have so far proved to be tantalisingly out of reach. In the past four years losses have topped £30m. And last month's interim statement offered little, if any, comfort. The half-time deficit doubled to £7.2m, suggesting that this year's red ink will be splashed around even more prominently.

The group's cash burn is remarkably fierce. It is no stranger to replenishing its kitty by raiding the stock market through placings. Last such exercise pulled in £8m as it sold shares at 250p. It has cash of around £4.3m although net assets are a mere 7p a share.

PDX is keen to stress its good intentions. It says it aims to "maximise thinning resources and to protect the environment from the damaging side-effects of resource consumption".

The group is largely banking on technology that speeds up industrial processes, thus reducing costs. It gets paid by results and that has so far meant minuscule revenue. Still, it has signed a succession of deals with a variety of producers, covering such areas as biofuel, beer and food. Naturally, it has high hopes that as its technology is increasingly utilised its income will increase. And a recent deal involving waste to energy tests at Thames Water's Reading plant could be significant. But the array of relationships it has established has still to develop into rewarding commerciality.

The stock market tolerates an array of companies that have little more than stars in their eyes. They include mining and oil ventures, often clutching a piece of paper giving them the right to explore in some remote corner of the world. Some resource groups, after years of endeavour, have yet to produce anything tangible although they continue to soak up cash. Pharmaceutical groups conducting, it is hoped, promising laboratory research also have an insatiable appetite for money. PDX is, therefore, a member of a cash-absorbing stock market army that may or may not reward the faith of shareholders. Certainly PDX, listed on AIM at 50p a share 10 years ago, seems to have little difficulty raising the wherewithal. With its flotation and subsequent placings it has pulled in more than £40m at varying prices. Another cash-raising exercise appears likely fairly soon.

Although it obviously has a band of loyal supporters, some City names are sceptical about its ability to eventually produce substantial rewards. One of the most vociferous critics is Evil Knievil, the famed short seller aka Simon Cawkwell. In his comments on the t1ps.com website he has branded PDX bulls as "loonies".

Of course some companies that arrive on the stock market on little more than a wing and a prayer do, occasionally, achieve remarkable returns.. But others sink into oblivion. Still, when such a venture hits the jackpot shareholders can joyfully roll in luxury. Even so only investors who can afford to suffer losses should be tempted.

The no pain, no gain portfolio likes to stick to companies with at least a degree of asset backing and identifiable business operations. Such caution has, however, not always been rewarded. It is, perhaps, salutary that its one and only exploration excursion was Nighthawk Energy, a company that had an addiction for raising cash through share placings. The investment was a bitter disappointment. The portfolio purchased at 44p a share and the price surged to more than 100p. But then, it could be suggested, reality set in. When the portfolio, belatedly, departed the price was down to 14p. It is now around 5p.

After the Nighthawk experience there is no intention of getting involved in a company such as PDX. But I do wish it well. Perhaps it will be one of the jam tomorrow businesses that does eventually serve up sweet helpings of cheer.

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