The Gym Group share price rises as it flexes its muscle and moves into the black

 
Rebecca Smith
Peel Hunt said the number of low-cost gyms in the UK could triple over the next ten years
Peel Hunt said the number of low-cost gyms in the UK could triple over the next 10 years (Source: Getty)

Pay-as-you-go gym operator The Gym Group has posted its first full-year profit with revenues rising 22 per cent as it shows no signs of slowing expansion.

Read more: How budget chain The Gym Group built up its muscle

The figures

The company, which owns 89 low cost gyms across the UK, reported revenue of £73.5m for 2016, up 22.6 per cent from 2015's £60m.

Group adjusted earnings before interest, taxes, depreciation and amortisation rose to £22.7m, up 33.4 per cent from £17m in 2015.

Adjusted profit before tax rose £10.7m to £8.7m after an adjusted loss before tax of £2m in 2015.

The firm has proposed a final dividend of 0.75p per share, giving a full-year dividend of 1.0p per share.

Shares rose 4.16 per cent to 187.38p in early trading.

Why it's interesting up

Competition in the low-cost gym sector has been heating up, with The Gym Group and other operators such as Pure Gym putting the pressure those in the middle of the market. Mintel has said the sector will grow 20 per cent by 2020 and Peel Hunt estimates the number of low-cost gyms in the UK could triple over the next 10 years.

The Gym Group focused on bulking up last year, opening 15 new gyms and increasing its total empire to 89. And the number of year-end members was 448,000 - a rise of 19.1 per cent compared to 2015.

For this year, the no-frills chain said gym openings will be towards the top of its guidance of 15-20 sites.

Read more: The Gym Group races to finish 2016 with strong earnings

What the company said

John Treharne, chief executive of The Gym Group, said:

2016 has been a good year with strong financial and operational progress. Our existing estate continues to deliver excellent returns and our low cost, 24/7, no contract model is disrupting the market and attracting new members. We will continue to expand rapidly in 2017 through a well developed site pipeline.

We have had an encouraging start to 2017 with January and February, key months for any gym business, showing record membership levels with an increase in members to 495,000.

Related articles