Esporta's new chief executive, Maurice Kelly, has announced that the company is cutting 100 jobs and plans to out source non core activities such as food and beverage facilities as part of a move aimed at saving £4.2m over the next year.

The company hit the red last year as a result of poor trading and write-downs on the value of four of its clubs. While turnover was up 26 per cent, operating profits fell by 36 per cent and pre-tax profits fell from £10.7m to £4.5m.

The food and beverage operation currently employs 600 people and incurs losses of £0.5m a year.

Compass Group is tipped as the most likely to take over the running of Esporta's bar and restaurant operations.

Chairman John Grieves said; '2001 was a difficult year for the group, we failed to meet our own expectations. Following the profits warning in October, the Board took immediate remedial action … and a thorough overhaul of operations was commenced.'

Mr Kelly's appointment and subsequent review has already led to a growth in membership; national advertising campaigns have been scrapped to concentrate on marketing to customers in locals areas and responsibility has been given to managers for recruiting members at their own gyms and they can alter joining fees accordingly. Mr Kelly said that these measures had already led to 'superb' new joiners figures in January and February.

Esporta currently has 41 fitness centres in the UK and Europe with 182,000 members.