Topnotch Health Clubs has announced it is to focus on consolidation and the disposal of underperfoming sites.

Turnover for the six months to 31 October 2002 was up 28 per cent to £7.8m with like for like sales increasing by 2 per cent, but the company continues to trade at a loss.

Losses included £0.5m trading loss and writing down asset value by £3.5m as well as a further £1m incurred by backing out of a proposed site development in Lewisham.

In December, the company sold its club in Derby to Horizons Health & Leisure for £1m and is to close and surrender the lease to its underperforming Royal Mint Court club in the City.

While the pace of club development has been slowed down, work on two £1.5m, 25,000sq ft clubs will begin in Sutton and Redditch this summer. They are both expected to open in October.

Poor trading towards the end of last year caused Topnotch to breach banking covenants, but new facilities have now been put in place for the coming 12 months.

Chief executive, Matthew Harris, said: 'Overall group performance has not met our expectations. We anticipate trading in the health and fitness industry is likely to remain competitive in the foreseeable future, however the board is confident the recently initiated strategic review will improve performance of the group and its progress towards profitability.'

The group is continuing to invest in all clubs to upgrade equipment and facilities and encourage membership growth.

Topnotch's portfolio currently stands at 20 clubs.