The latest accounts for Bannatyne Fitness, which operates ten clubs across Scotland, flagged that during last year the company discovered that “misappropriation” of its assets had been taking place for a number of years.
The company said the activity resulted in the overstatement of assets and the need to book exceptional items with sums totalling more than £5 million. Accounts for 2013 have been restated and an exceptional item of £1.125m booked in its latest financial year in connection with the issue.
It said it has since undergone a “thorough review of internal controls” and made necessary changes to protect the company from expose to such risks in the future. Turnover at Bannatyne Fitness edged down to £88.2m in 2014 from £88.79m but increased costs including the exceptional item related to the former staff member saw pre-tax profits fall to £2.98m from £9.89m.
During the year the firm’s 59 clubs saw an overall increase in adult members of 1,329, a rise of 0.8 per cent on the previous year. The company has around 170,000 members.
Bannatyne said he was “satisfied with the results of the group for the year” but expects results to improve in the future.
Staff numbers dipped to 2,284 from 2,342.
During the year the company dramatically reduced cash borrowings by £85.5m after a refinancing of long-term bank loans by a sale and leaseback of land and buildings.
The agreement with M&G Investments covers 39 Bannatyne’s Health Clubs and cleared its loans with the failed Anglo Irish Bank. The deal involved the sale of land and buildings in exchange for 125-year ground lease agreements.
At the time of the finance deal Bannatyne said: “M&G can see the long-term value of our business and has agreed to be our landlord over a very long lease term. Our premium business is successful, sustainable and profitable and we believe it is an ideal tenant to provide M&G’s investors with reliable returns.”
Bannatyne began his business career with an ice cream van before moving on to nursing homes and health clubs.
He sold his nursing home business for £46m in 1996 before moving into health clubs. He also owns bars, hotels and property.
This week it was widely reported that Bannatyne had signed up to take part in the next series of I’m A Celebrity.