The health club and hotel group led by former Dragons’ Den star Duncan Bannatyne narrowed its losses as lockdown restrictions eased, new accounts show.
Darlington-based Bannatyne Group has grown from its first site on Teesside 26 year ago to a portfolio of 71 gyms, 47 spas and four hotels across the UK.
But the pandemic forced the entire network of health clubs and spas to close for a number of months, pushing the company into the red with operating losses of £13.9m.
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Under strict Covid-19 rules, gyms were forced to remain closed, despite Mr Bannatyne’s calls to MPs to allow some facilities to reopen. He argued that exercise improves mental health and that the need to tackle obesity was being obstructed by health club closures in winter months.
That request was denied, however, leading the group’s finances to be impacted over two financial years, with the latest accounts affected by a full lockdown lasting from January until May.
Now accounts have been published covering the year ended December 31, 2021, showing the company is starting to recover from the effects of the pandemic, with turnover rising from £59.9m to £75.5m. Pre-tax losses were reduced from £23m to £12.9m, and the previous year’s operating loss was significantly reduced to £2.05m.
The average number of staff employed by the group dropped during the year, from 2,990 to 2,684.
The accounts also show that in 2020 and 2021 the group received £7.67m in furlough payment support.
Ed James, director at Bannatyne Group, outlined the lockdowns in a report accompanying the accounts and said the firm tapped into Government support.
He said: “We have secured access to all relevant Government support schemes including access to Coronavirus Large Business Interruption Loan Scheme and delayed VAT payments.
“We furloughed over 90% of our employees across the group (including all health club and hotel employees) to protect the group’s financial position during our enforced periods of closure.
“Since our reopening in April 2021, the group has been rebuilding the membership base each month, and the directors are pleased with membership growth to date, planning to achieve pre-Covid-19 levels by summer 2022.”
At the year end, the group had cash balances of £5.5m, up from £4.4m, and bank loans totaling £65.4m, and as a result of the national lockdown the group drew down a second CLBILS loan for £12m. At the same time, the group refinanced its core term loan of £40m, reducing the loan to £33m by a £7m repayment.
A spokesperson said: “The results are as expected, with increased turnover and substantially reduced losses. The company remains in a strong position to recover from the effects of the pandemic and return to a profitable position.”
