The Investment Column: Moben still sinking

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The Independent Online
Limelight, the Moben kitchens and Dolphin bathrooms business, has been one of the worst new issues of recent times. Floated at 175p a year ago the shares have been devastated by a series of profits warnings and the departure of the group's chief executive. The shares have slumped as low as 35p and investors - if they have not sold already - must be wondering if there are any grounds at all for optimism.

Not a huge amount, is the short answer. Yesterday's trading update said that the group expects to record a small trading loss in the current financial year. This was considered a profits warning in the City even though most analysts gave up covering this stock months ago. The company had been expected to make a modest profit. The shares, so used to bad news did not budge from 39.5p.

On the positive side the group's re-organisation, under which the Mobens Kitchens Direct (MKD) business is being integrated with the

Dolphin bathrooms division, is expected to reduce the cost base and create a more stable platform for next year. There has also been some improvement in the fitted kitchens market which failed to reap much benefit from the building society windfall bonanza. Sales and operating profits for the second half of the year at MKD are expected to improve while the Sharps fitted bedroom business is trading in line with the board's expectations

More significantly, the company says it may dispose of some divisions though it is not saying which. Given this last point, forecasts for the full year are not really meaningful. But for existing investors who paid 175p per share there is little option but to hang on and hope that disposals lift prospects. For others there may be some upside for investors who are feeling very brave. But given Limelight's dismal record in its brief life as a public company it should best be avoided.