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15 Jun 2017

Product innovation helps boost Virgin Active turnover
BY Deven Pamben

The gym chain will focus on investing in innovative classes

The gym chain will focus on investing in innovative classes

A roll-out of fitness classes and improved member experience helped revenue at Virgin Active rise by 6 per cent to £483million (US$615.5m, €548.6m) in the year to 31 December 2016, results from South African investment group Brait show.

Brait, which owns a controlling stake in the health club, also reported that earnings before interest, tax, depreciation and amortisation (EBITDA) grew 13 per cent to £104m (US$132.5m, €118.1m).

Total membership, including juniors, grew 0.3 per cent to 1.23m across its 241 clubs at the end of 2016.

Brait said Virgin Active's commitment to product innovation and member experience was evidenced in 2016 with the continued rollout of Grid classes, its Barre programme, the HEAT (a high energy athletic training class) offering, Hydro (a high intensity swim class) and Iron ZUU (group exercise combining weightlifting with movement), as well as improvements to its digital offering.

A breakdown shows that in Europe Virgin Active had 91 clubs at the end of 2016 (down one from the previous year): 46 in the UK, 33 in Italy, eight in Spain and four in Portugal. Revenue in Europe rose 3 per cent to £286m (US$364.5m, €324.8m), with membership remaining at 375,000.

Last year Virgin Active sold 36 UK clubs, 35 of which were bought by Nuffield Health in July 2016. It has also sold 14 clubs to David Lloyd Leisure, which completed on 31 May 2017.

The financial report said: "These two transactions represent the final significant step for the UK operations to focus on metropolitan and commuter hubs in key markets at the premium end, which is in accordance with Virgin Active's international strategy."

In southern Africa, revenue grew 7 per cent to £155m (US$197.5m, €176m) across its 137 clubs. Membership was down 1 per cent on the previous year to 728,000, impacted by a tougher consumer environment.

Asia Pacific showed strong growth for the company with turnover rising 28 per cent to £42m (US$53.5m, €47.7m) during the period. Virgin Active had 13 clubs at the end of the year in Australia (6), Singapore (2) and Thailand (5). Membership grew 21 per cent to 45,000 in the region.

In terms of this year, the club had 245 sites as of March.

The report said: "The South African business continues to be affected by economic and political uncertainty in common with other consumer facing business. In the near term, investment will be focussed on the existing clubs estate with a moderated roll out plan."

On Europe, it said: "The smaller, more streamlined UK estate is trading well under new leadership. With a focus on people and product, the business is positioned well to grow in the future. The company continues to monitor any Brexit impacts, with no major impact seen so far. The Italian business continues to trade well."

The Asia Pacific business "continues to trade strongly", with the medium-term outlook for Virgin Active remaining strong as the company continues to invest "in growth markets in Asia and Australia" and focuses on product innovation and the digital customer journey worldwide.



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