The Investment column: Kunick game for anything

LEISURE is a broad industry, and until recently Kunick has given the impression of wanting to be in every part of it. However, chief executive Russell Smith has now embraced the City mantra of focus and waxes lyrical about the merits of concentrating on amusement machines and managing health clubs.

The rhetoric has done Kunick's shares no end of good - in the past six months they have gained 45 per cent. The problem is that the company still has a raft of peripheral operations. Hence the market's lukewarm response to yesterday's news that the French care homes are up for sale, which accompanied interim results showing that pre-tax profits rose by 11 per cent to pounds 4.8m in the six months to March.

Investors are also waiting for an exit from the disastrous Smilin' Sams entertainment centres, which lost pounds 0.2m in the period, and the French non-food retail operation.

Mr Smith is reasonably optimistic about conducting a swift sale of the care homes, and analysts think they should fetch at least pounds 16m - which would almost wipe out Kunick's debts. However, getting out of the other two businesses will prove more tricky.

That said, the two main businesses are doing well. A joint venture with Sega to supply amusement games that run over a network - rather than come as free-standing machines - should boost sales. And the leisure management division, where turnover was up a fifth, continues to forge ahead and will provide scope for bolt-on acquisitions. On Greig Middleton's full- year profit forecast of pounds 11.6m, the shares, up 1p to 32p yesterday, are on a forward PE ratio of just 13. Given the scope for improvement, they are good value.