Bottom Line: Photo-Me frustration

WAITING for the good times at Photo-Me is a little like waiting for one of its photo booths to disgorge your passport-style mug shot - long and frustrating.

Stock market doubts have focused on the pounds 38m acquisition of KIS, a French manufacturer of photo booths. KIS is developing a new generation of booth, which allows customers to choose a pose with a type of video camera, rather than having to stare blankly at a mirror and wait for the flash.

Fears are that the KIS benefits will be slow in materialising, and in the meantime profits will stagnate.

Superficially, results for the year to 30 April served to re- inforce those concerns. Turnover slipped from pounds 175m to pounds 172m, pre- tax profits fell 14 per cent to pounds 13.9m, and earnings per share were 11 per cent lower at 10.3p.

The picture at the operating line is more encouraging. Strip out last year's pounds 4m of currency benefits and trading profits this time were 6 per cent up.

But it is right to exercise some caution with Photo-Me, and until the company can provide hard evidence that the new technology is workable the shares may continue to meander.

They have already fallen from 300p since the begining of the year, and shed another 20p yesterday to close at 235p. On a forward p/e of 14.7, the KIS gamble is pretty much in the price.