Ultimate Leisure sees operating profits fall 68 per cent

Late night operator Ultimate Leisure says its site investment programme is boosting second half sales after the group reported operating profits down 68 per cent in the six months to December 31 2006.

The group, which operates nightclubs and bars including the Prohibition brand, said like-for-like sales for the first five weeks of the second half of the current financial year were up 2.3 per cent, with invested like-for-likes up 6.3 per cent.

Ultimate has reported turnover in the first half up four per cent to £18,179,000, with sales from new sites contributing to the increase.

However pre-exceptional operating profits fell 68 per cent to £641,000, while pre-tax losses amounted to £171,000, following a £772,000 profit in the same period previously. The group said it would not propose a dividend.

The £105,000 exceptional charge relates to ex-gratia payments made to directors who resigned between December 31 2005 and December 31 2006.

Ultimate's chairman Mark Jones said the results reflected the decline in sales throughout the group's un-invested core venues, combined with closures to refurbish sites and marketing costs to re-promote these venues.

Around £7.8m was invested during the period, with £2.3m going towards venue refurbishment.

"The trading environment continued to be tough as the impact of the licensing law changes and the historic lack of investment in our estate had an adverse impact on sales," he said.

"However, the reinvestment programme is now well underway and it was encouraging to see our December like-for-like sales return to growth."

Jones said the group had seen a "significant improvement" in food sales and expected this area to become increasingly important to the group.

Ultimate's shares remained unchanged at 186p.