Kunick loses chief on second profits warning

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The Independent Online

Kunick, the leisure management company, yesterday parted company with its chief executive, Russell Smith, with immediate effect as it was forced to issue its second profit warning in as many weeks.

Kunick, the leisure management company, yesterday parted company with its chief executive, Russell Smith, with immediate effect as it was forced to issue its second profit warning in as many weeks.

Shares in the company lost 22 per cent of their value and analysts slashed forecasts by as much as 20 per cent. The group said it had seen "a further fall off" in the results of its Leisure Connection business, which operates swimming pools and sports halls for 40 local authorities up and down the country.

Kunick earlier warned that the outturn for the year would fall "significantly short" of the previous year's figures due to "a slower build up in revenues than expected in the vital summer months". Clive Clague, chairman, said the problems had come as the company sought to expand its leisure management business by merging its former Relaxion arm with the recently acquired Circa unit. "The strategy was correct but the execution was badly flawed."

Asked why there had been a change of chief executive, Mr Clague said: "Chief executives by and large have to carry the can." The terms of Mr Smith's severance are still being negotiated. He was on a two-year contract with a salary of £155,000 a year.

Alan Millar, an analyst at Old Mutual Securities, downgraded his full-year forecasts by £2m to £8m. He had earlier reduced his estimates from £11.8m to £10m following the first profit warning on 5 September.

Mr Smith was yesterday replaced by Colin Daniels, former head of Kunick's amusement machine division. Mr Daniels said he would conduct a full review of the business and would give a further update at the group's full-year results in December. Kunick shares closed down 4.75p at 16.75p.

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