Ultimate Leisure, the Newcastle-based bar and club business led by Mark Jones, has reported a 82.1% drop in pre-tax profits for the year to 30 June to £1.5m. The company said it had been a year of “challenging market conditions”, which was worsened by the “historic lack of investment in the group’s assets”. Turnover declined by 10.8% to £32.5m, compared to £36.4m in 2005, while operating profits fell by £7.5m, to £2.4m over the period. However, the company said that its fundamental finances remain sound and that it believed the process of reinvesting in its estate and brands, which it has recently started, would put it in a significantly stronger position in the future. Jones said: “We have a core estate of highly attractive assets and brands and the much needed investment in these now well underway. “Trading in the current year has remained challenged. We will continue our significant by targeted capital expenditure in the business. Whilst the full benefits of this will take time to come through, we remain confident that this programme will deliver value to shareholders in the future.” During the period the company invested £2m in 14 of its sites, which saw improved customer facilities, the creation of outside areas where possible and a complete regeneration of customer surroundings. The company said that it was confident these changes would deliver short and long-term benefits. The group also launched a new training initiative called the “future leadership” programme as well as investing in a new marketing team and initiatives. During the year the company acquired two new nightclub sites in Derby and Glasgow. It also acquired three Prohibition bars from Living Ventures, the operator of Living Room. It has since added a fourth Prohibition site in Nottingham, through rebranding one of its existing bars. The group said the Prohibition brand continues to perform well and that it had made steady progress in finding suitable site for the roll out of the brand. Earlier this year Ultimate said it would invest £10m a year opening new sites, with up to 50 locations in the UK suitable for a Prohibition, according to Jones. So far the company has secured one new site and is currently in negotiations on four other sites, with openings for these scheduled towards the second half of its current financial year. Since the end of its last financial year the group has sold its Coyote Wild site in South Shields and purchased the freehold of The Attic bar in Newcastle. Total company sales for the first ten weeks of its current financial year were down 8%, while like-for-like sales over the same period were also down 8%. However, the group has reported a 1% increase in like-for-like sales in outlets it has invested in, which it said “demonstrated the benefits of the capital expenditure programme”. Jones said: “Whilst realising the full benefits of the new strategy will take time, the company remains confident that it will deliver value to shareholders in the future.”