Senior savages his Ultimate successor

Former Ultimate Leisure chief executive Bob Senior has launched a scathing attack on the record of his successor Mark Jones in the 18 months he has been running the company.

Senior has claimed that Jones, who took over from him at Ultimate in August 2005, "does not understand the marketplace in which he is operating". He regards Jones's business model as "ill-thought out".

Senior said: "He (Jones) has been at the helm for some 18 months. He originally blamed previous management's lack of investment in the business as the reason for the company's sudden (profit) collapse.

"However, he has now completed his refurbishment of the whole estate, purchased several expensive new units and consequently increased bank debt by some £15m.

"Why, then, can he only forecast profits of £500,000 for the year ended June 2007 and £900,000 for June 2008?"

Senior pointed out that in the first year for Ultimate and his new company, Utopian Leisure, 12% to 13% of turn-over has been converted to the bottom line.

He said: "In our first year since forming Utopian - to the year ended 31 December 2006 - we generated profit before tax of not less than £800,000 on a turnover of £6.2m.

When we founded Ultimate, our first year end was June 1998 and we generated profit before tax of £660,000 on turnover of £5.7m.

"This is a poor conversion factor by our high standards, but the first 12 months' trading are always inefficient and loaded with start-up costs and relatively high overheads.

"In the second full year at Utopian, which will end in December 2007, all our key performance indicators will improve dramatically. In particular, profit before tax will increase to approximately 18% (of turnover).

"From units already open and trading, Utopian will produce Ebitda of not less than £3.5m and profit before tax of not less than £2.7m on a turnover of circa £15m.

"Profit before tax as a percentage of turnover will increase to a more acceptable level of 20% from our third year onwards.

"When we left Ultimate in 2005, we had generated profit before tax of more than £8m for each of the previous two years with profit before tax as a percentage of turnover being in excess of 20%."

One City analyst noted that Senior's last year at Ultimate saw a number of profit warnings and the sale by chairman Allan Rankin and his two brothers of the vast majority of their shares.

Senior was replaced by Jones in a shareholder revolt led by Dawnay, Day.