Whitbread in £350m shareholder return as profits surge

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The hotel-to-restaurant group Whitbread unveiled plans to return another £350m to shareholders yesterday, as it posted a better-than-expected 21 per cent rise in first-half profits.

The latest handout, which follows a string of pub and restaurant disposals over the past two years, takes the total amount of cash returned to shareholders to £1.16bn in just 18 months.

Over the last half alone, the group completed the sale of 222 pub-restaurants for £497m, and exited its 50-per-cent joint venture with Pizza Hut, netting it proceeds of £99m.

The group now plans to focus on its Premier Travel Inn hotels, Costa Coffee shops, David Lloyd Leisure centres, and its remaining estate of pub-restaurants - all of which are attached to one of its hotels.

The group confirmed yesterday it is in talks to sell its TGI Fridays restaurant chain, which will complete its disposals process.

Its chief executive, Alan Parker, said the group's focus would now be on organic growth, but did not rule out smaller acquisitions which fit within its four key divisions.

"I'm interested in bolt-on acquisitions at the right price," he said. "But our main focus is on organic expansion."

Mr Parker said the group had already begun investing in "remodelling and reshaping" its remaining pub-restaurant business, and had seen a 40 per cent increase in covers at the outlets which have already been converted. He added that the company was committed to the David Lloyd Leisure chain, and was happy with its turnaround over the past year. Like-for-like sales increased 2.2 per cent compared to the same period last year.

Group pre-tax profits rose 20.8 per cent to £109.8m for the half, compared to analysts' forecasts of between £100m and £107m. The impressive performance was driven by 15 and 21 per cent rises in sales respectively at its Premier Inn and Costa businesses.

As well as returning £350m to shareholders, the group said it would pay £50m into its pension fund, which currently has a deficit of £288m.

Mr Parker said he was confident of further progress in the second half through a combination of "operational improvement, focused investment and tight cost control".

Shares in the company rose as much as 5.3 per cent on the back of yesterday's upbeat results, before falling back slightly to close up 54p at 1,405p, giving the company a market value of £3.08bn.