Low-cost gym operator The Gym Group PLC (LON:GYM) has told investors that it is on track to hit full-year market expectations as it swung to its first profit in the opening six months of the year.
The news comes after shares in the gym operator surged this week after a report that it had reached a deal with JJB founder Dave Whelan to acquire several Fitness First sites.
The company – which operates under ‘The Gym’ brand – added another 70,000 members to its books in the period, which it said was the main reason for the strong performance.
In the six months to the end of June, the group – which slipped to a £3.3mln loss in the first half of 2015 – posted a profit before tax of £3.4mln for the same period this year, on revenues of £36.1mln (H1 2015: £28.9mln).
The strong cash generation also allowed the group to reduce its net debt to £2.5mln.
“Excellent progress has been achieved so far in 2016 as demonstrated by the growth in membership,” said chief executive John Treharne.
“We are confident that our low-cost, disruptive positioning in the market place…and our strong financial position bode well for further rapid and measured profitable development and progress.”
In light of recent political and economic uncertainty around the world, the company reassured investors that are more “challenging” environment would actually make The Gym more attractive to customers.
The strong performance and the board’s “confidence in future cash flows” also allowed the group to declare a maiden dividend of 0.25p per share.
Six new gyms were opened in the first half of 2016 and the company says it’s on target to meet its target of opening between 15 and 20 new gyms each year.
In a separate announcement, The Gym Group confirmed that directors Philip Newborough and David Burs have resigned from the board with immediate effect.
Shares were down 7p, or 3%, to 222.5p.