Rising membership helps Bannatyne profits

Bannatyne Fitness has pledged to make it easier for members to cancel after OFT investigation. Picture: Getty
Bannatyne Fitness has pledged to make it easier for members to cancel after OFT investigation. Picture: Getty
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DUNCAN Bannatyne’s fitness empire, one of the UK’s largest health club operators, returned to profit growth last year as membership numbers edged higher.

Bannatyne Fitness, which operates 59 clubs and spas including ten in Scotland, saw pre-tax profits increase to £8.7 million in 2012 from £7.8m, according to newly filed accounts.

During the year the number of adult members at the clubs rose by 2 per cent to 3,213 with average “yield per customer” increasing marginally to £34.73.

Dragons’ Den star Bannatyne said although the board was satisfied with the results of the group for the year, it expects them to improve further.

For the second year running the company booked hefty impairment charges, thought to mainly reflect the slump in commercial property prices. After charges incurred in both years, profit fell to £4.3m compared to a loss in 2011 of £16.2m.

Turnover edged up to £89.5m from £89.1m. Net assets rose to £40.9m from £37.3m. Bank loans fell to £127.1m from £138.6m.

The company employed 2,512 staff during the year, a fall of 55 on the 2011 figure.

Although no charitable donations were made in 2012, the Bannatyne Charitable Trust donated £227,575 to good causes.

Earlier this month Bannatyne Fitness said it was one of three leading gym chains which have pledged to make it easier for people to cancel membership and make other improvements to members’ contracts after an investigation by the Office of Fair Trading (OFT).

The agency investigated gyms after claims that they locked members into contracts and made it too difficult to get out in the event of a change of circumstances.

Bannatyne Fitness, David Lloyd and Fitness First have all agreed to make changes to their contracts to make it easier for members in the case of illness or redundancy.

According to figures from Mintel, David Lloyd has 450,000 members across the UK, Fitness First has 336,000 and Bannatyne Fitness has 185,000. Mintel reported the average fee paid by each customer is £485 a year.

Under the agreement, the OFT said it had secured extended rights for members to cancel their contracts early if their circumstances changed in a way that made attending the gym difficult.

The companies have also agreed to stop describing membership as being of a fixed duration if the contract automatically continues on a rolling basis after the initial period expires.

Bannatyne, who worked as a welder, sailor, hospital porter and ice-cream van salesman before setting up his gyms empire, is estimated to have a fortune of more than £400m.