UK health club chain Holmes Place has unveiled higher profits for 2001, but warned that growth may run out of steam this year.

The company said on Monday that profits before tax and one-off costs jumped by 39% compared with the year before to �19.7m.

Total membership also rose, climbing by 27% on the year to just under 250,000.

But Holmes Place chairman Graham Reddish warned that increasing competition in the company's core UK market may curb growth this year.

UK competition

"The health and fitness market is becoming more competitive in the UK, and although we believe there is substantial growth for us and other quality operators... the rate of growth may slow from previous expectations," he said.

And while the company expects a bright future in mainland Europe, some delays to planned club openings in Spain and Portugal last year may dent its overall performance in 2002.

The company runs a total of about 65 clubs, of which 18 are in Europe. Four new European clubs are due to open this year.

Holmes Place is one of a handful of UK health club operators to have cashed in on a boom in gym membership during the last decade.

Rising disposable income and increasing health consciousness boosted the value of the UK health and fitness industry to an estimated �1.6bn last year, up from just �682m in 1996.

2003 upturn

But growing competition from UK health club heavyweights such as Cannons and LA Fitness is starting to bite.

Last year, the company's UK sales rose by 43%, compared to a 60% increase in mainland Europe.

The company said it expects overall sales growth to pick up again by 2003, boosted in part by sustained demand in Europe.

Holmes Place shares were trading 8.5p lower at 158.5p on Monday morning.