Derek Pain: 'Jam tomorrow' companies can leave a sour taste
No Pain, No Gain
Saturday 23 July 2011
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: See how much you could save by switching credit cards. Compare now
The magicians using online collaboration to push boundaries
Jennifer Lawrence attacks mass media again over body image
- 1 America's 'virgin births'? One in 200 mothers 'became pregnant without having sex'
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 4 Christmas comes early: Justin Bieber 'retiring from music'
- 5 Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
Exclusive: Young people ‘want UK to stay in Europe’: Four in 10 adults aged 18 to 24 are ‘firmly in favour’ of membership, poll shows
You can STILL be jailed for being a republican, government confirms, and it remains illegal to even 'imagine' overthrowing the Queen
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
Fighting back: the woman giving a voice (and 49,999 others) to the victims of sexism - by giving an airing to their horror stories
PM denies two child limit for benefits is part of Tory welfare policy
UK evangelist says Tom Daley ‘is gay because his father died’
- < Previous
- Next >
iJobs Money & Business
£60000 - £75000 per annum + Bonus and Benefits: Harrington Starr: A leading au...
£25000 - £32000 per annum: Harrington Starr: Junior Business Analyst - Banking...
£25000 - £35000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Implementation...
Day In a Page
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
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 Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.