Hang in there...
Virgin Active announces the sale of 35 UK clubs to Nuffield Health. The transaction is expected to complete over the summer, when the clubs, their members and their staff will transfer to Nuffield Health.
Following Brait’s acquisition of a majority stake in the company, Virgin Active’s strategy has been built around a focus on operating and developing prime sites in metropolitan hubs in its key geographies. In recent months, this has seen investment in the UK, Southern Africa, Italy, Australia, Thailand and Singapore.
Today’s transaction represents an acceleration of this strategy, creating a far more focused UK estate of 61 clubs based around London and other major towns and cities. The UK business will now be organised around three core proposition pillars: high-end Collection clubs, big family clubs and racquets clubs. The proceeds of the sale will be directed to up-weighting the company’s club upgrade and new club rollout programmes, including in the UK.
Virgin Active is already engaged in a significant investment programme in the UK which will now be increased following this transaction. Amongst other investments it will be upgrading a further 10 London clubs into its luxury ‘Collection’ group of clubs, adding to the 11 in the UK and 17 worldwide. These include two new clubs opened in London (Merchant Square and Walbrook) in 2015. It will also be opening a new Collection club in Mansion House later this year, investing over £6.5m and creating 80 new jobs.
Collection clubs are designed to offer a standout health and fitness experience, where exceptional design, luxurious spas and personalised member service - including signature touches such as shirt pressing, shoe shining and kit laundering - create the perfect environment to workout or relax in. Members of the Collection clubs receive unique benefits including access to all clubs worldwide and early access to new innovations. Recent additions to its product line up include an exciting tech-enabled cycle proposition, “The Pack”. This is one of a number of cutting edge innovations, including ballet-inspired Barre and a high energy training zone The Grid, delivering boutique style programming within Virgin Active clubs. A strong innovation pipeline, both globally and in the UK, means there is much more to come.
The transaction follows another strong year for Virgin Active, and builds on its sixteen years of uninterrupted profit growth. The company has also today, through its owner Brait, announced its 2015 results. Revenue for the Group was £630.5m, representing a 3% increase on prior year. On a current club portfolio basis, revenue growth was 5%. Underlying EBITDA grew by 15% to £133.5m, reflecting growth across all territories.
Total clubs increased by 9 to 276, and total membership grew by 3% to 1.5m. Significant investment in junior programming saw junior membership increase by 19%.
The company is confident of another year of growth in 2016 as it continues to uprate its existing clubs and accelerates its global club opening programme, with plans to open up to 19 clubs across all its markets.
The price of the transaction is not being disclosed.
Paul Woolf, Chief Executive Officer of Virgin Active, commented:
"This transaction is an acceleration of our global strategy to focus on high end clubs in metropolitan areas. We will have a far more focused UK business with particular strength in London, the South East and bigger towns and cities. It will also help accelerate investment into our UK estate, particularly as we continue to grow our UK Collection portfolio of clubs.
"Both the members of the clubs being sold, and the associated club teams, will be transferred to Nuffield Health, and this was a very important consideration for us. We’d like to thank our people for their contribution to the success of these clubs, and our members for their support.
"We are announcing this transaction off the back of another strong year for Virgin Active. In 2015 we increased both revenue and underlying EBITDA for the 16th consecutive year.
"The fact that we are an international business with an international brand enables us to invest selectively in our markets around the world. As part of our global growth, we recently announced plans to invest £150m in up to 40 new clubs in Asia Pacific, on top of the six clubs opened over the last couple of years. We are also maintaining our growth trajectory in both Southern Africa, where we opened 10 clubs in 2015, and in Europe, where we opened three new Collection clubs and acquired three prime sites in Central Milan.
"With consumers all over the world becoming increasingly aware of the benefits of an active lifestyle and our exciting plans to develop existing and new clubs, I am confident 2016 will be another year of growth."
Ben Foster, Teneo Strategy +44 (0)20 3603 5221
Notes to Editors
The 35 clubs transferring to Nuffield Health are: Bolton, Bridgend, Bristol, Chigwell, Chislehurst, Crawley, Croydon, Cwmbran, Derby, Devonshire, Ealing, Edinburgh Fountain, Edinburgh Omni, Enfield, Farnborough, Friern Barnet, Glasgow, Hemel Hempstead, Hendon, Islington Essex Road, Kingston Richmond Rd, Leeds The Light, Manchester Didsbury, Medway, Merton Abbey, Milngavie, Oxfordshire, Preston, Romford, Rugby, Stockley Park, Sunbury, Wandsworth Southside, Weston-Super-Mare and Wokingham.