Whitbread, the leisure operator, held out the prospect of further substantial capital returns to shareholders yesterday after revaluing its hotel and pub-restaurant business at £3.6 billion.

The group, which has already returned £1.2 billion in the three years since Alan Parker became chief executive, said that it planned to take on another £400 million of debt by issuing bonds secured against those assets, currently in the books at £1.5 billion.

Chris Rogers, the finance director, said that most of the money would be returned to shareholders, although an unspecified amount would be paid into the group’s pension fund. Analysts are predicting a return worth up to 200p a share.

Mr Rogers said that a sale of its David Lloyd Leisure (DLL) arm — for which it is thought to have received three bids of more than £900 million — could result in a further cash return to investors, depending on capital investment requirements. It has promised to give an update on the auction by its annual meeting in June.

A sale of DLL would become the latest in a string of disposals under Mr Parker’s tenure, although at the time of his promotion to chief executive in 2004 he insisted that he had not been appointed to oversee a break-up of the former brewer.

“You should be judged on what you do, not what you say,” he said. “The opportunity to grow the company is one that still excites me, but three years later the world has changed. I do see the benefit of having a narrower base to the company.”

Despite speculation that its Costa coffee shop chain could be spun off, Mr Parker insisted that there would be no further disposals after DLL and that he remained committed to developing both its Costa and Premier Travel Inn (PTI) chains as well as the Beefeater and Brewers Fayre pub-restaurants that adjoin its PTI units.

He refused to comment on suggestions that Whitbread is a bidder in the €1 billion (£680 million) auction of the Jurys Inn chain, but added: “I’m interested in anything that would expand our budget hotel interests.” He said that, as PTI became an international business, he did not rule out pursuing a “multibrand strategy”.

Whitbread reported a better than expected 24.5 per cent increase in profits before tax and exceptionals from continuing operations to £213 million in the year to March 1. Earnings per share before one-off items rose from 56.7p to 66.3p and the final dividend of 22.15p makes a total of 30.25p, up 10.8 per cent.

Turnover from continuing operations was 10.3 per cent higher at £1.3 billion, while like-for-like sales rose by 4.3 per cent.

Comparable sales for PTI were 8.2 per cent better, while its owned Costa stores in the UK were up 6.6 per cent. DLL continued its turnaround with a 2.7 per cent increase, while pub-restaurants saw a 0.9 per cent rise after growth of 2.7 per cent in the second half.

Shares of Whitbread closed 13p down at £18.89.

Then and now

Alan Parker, chief executive, Whitbread

October 2004 “If they’d wanted somebody to come in and create shareholder value through a break-up, that was never going to be me”

April 2007 “I do see the benefit of having a narrower base to the company”

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