Pubs and leisure group Whitbread yesterday posted a 24.5 per cent rise in profits after strong performances from its Costa and Premier Travel Inn divisions.

The company said pre-tax profits for the year to March 1 came in at £213 million - at the top end of expectations, and up from £171.1 million last year.

It said that it had also seen improved results at its restaurants division, while both Premier Travel Inn and Costa had shown strong growth. Plans for international expansion of the units were also progressing well.

The firm added that it was still "considering approaches" for gym business David Lloyd made earlier in the year, but said that in the meantime the turnaround at the division was underpinning value for the group. It added that no decision had been taken to sell the businesses, but that it was examining the proposals.

During the last year, Whitbread has worked to transform the business into a more "focused hospitality" company, selling off its non-core divisions, TGI Fridays, its interest in Pizza Hut and 239 of its pubs sites.

The disposals came as the group worked to drive performance across its restaurants business, including a remodelling programme, new menus and an improvement in service. Like-for-like sales at the division, which includes the Brewer's Fayre and Beefeater chains, rose 2.7 per cent, and the company said its focus on co-located restaurant and Premier Travel Inns sites had seen profits up by 50 per cent at these rest aurants, compared to stand-alone venues.

The group said it would continue to add Premier Travel Inns to its stand-alone restaurant sites, as well as opening ten new joint sites within the year.

Operating profits at Premier Travel Inn rose 20.3 per cent, driven by an accelerated expansion programme and a 4.8 per cent increase in revenue per available room to £37.68.

During the period the company made its target of opening 2,500 new rooms and opened 19 new sites, including the conversion of seven Holiday Inns.

Like-for-like sales at Costa increased by 6.6 per cent, driven by a rise in the number of transactions per store following the completion of a re-imaging programme at the chain.

Pricing remained stable, although it introduced a range of more premium products such as speciality coffee, while it opened 127 new stores in the UK and 72 overseas, taking the total to 199 sites.

The group said the chain also benefited from the Costa Book Awards, formerly the Whitbread Book Prize, in terms of brand building and recognition.

Like-for-like sale at David Lloyd were up by 2.7 per cent as membership remained stable at its 69 UK sites. It has also seen a "pleasing" performance from its ten European clubs, and said it expects to see further growth in this area.

The company said its strong performance had continued into the new year, and added that a review of its property portfolio revealed a market value of £3.6 billion.

Whitbread chief executive Alan Parker said: "It's been a great year for Whitbread and the momentum is continuing. We look forward to another year of strong performance."

The group also said it was increasing the level of lever-age in the business by about £400 million and after making payments into its pension fund would return some of the cash to shareholders. "It's unlikely they - share-holders - will get the lot, but they will get the majority of it," said finance director Christopher Rogers.

Whitbread has been looking at its capital structure for 18 months amid speculation that if it does not do more to extract value from its prop-erty holdings it could attract a takeover bid.

"The way we have looked at it is what is most efficient level of debt for us given our growth plans. It is not based on us wanting to defend ourselves, it is based on us wanting to maximise value for our shareholders," Mr Rogers said.