BAR and nightclub operator Ultimate Leisure is pinning its hopes for recovery on the £4m refurbishment of its estate.
The North-East company said it expected its fortunes to have turned around by the end of the year after yesterday reporting a 67 per cent fall in half-year profits.
Ultimate, which is based in Newcastle, said pre-tax profits had fallen to £1.6m in the six months to December 31, compared to £4.9m in 2004, while turnover was down 11 per cent at £17.5m.
Chairman Mark Jones said the disappointing results reflected a historic lack of investment in the core business.
"We are now investing £4m to refurbish 14 of our venues - that is more than we have invested in this type of work over the past five years," he said.
"This is a one-off catch-up payment. We wouldn't spend the money if we didn't feel the shareholders would get a return. I think there will be signs of a recovery in the next financial year after we have refurbished the estate."
Ultimate operates 34 late-night bars and clubs, mainly in the North-East. Mr Jones said the company had been adversely affected by the introduction of late-licensing laws.
"Now that any bar or pub can open late, it has increased the competition and the market has got a lot tougher for us," he said.
"To tackle that, we need to start to create brands that are more exciting and more relevant for young people."
Ultimate is expanding its Blubambu brand. There are already six nightclubs nationwide, including one in Newcastle.
The group has invested £500,000 to convert its Beach Nightclub, in Sunderland, into a Blubambu venue.
Mr Jones said: "We want to become a national player. We have strong balance sheets and financial firepower and so would like to acquire something outside the North-East."
Ultimate is also investing £300,000 on staff training and marketing.
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