TRANSFORMED leisure firm Whitbread has toasted growth from its restaurants and fitness divisions as underlying profits climbed by almost eight per cent.

Strong sales from brands such as Pizza Hut and Brewers Fayre helped to compensate for weaker trading in its hotels division after September 11.

The group has sold off its brewing, pubs and bars interests over the past two years to focus on higher growth markets.

Pre-tax profits from its continuing businesses were £187m in the year to March 2, up 7.6 per cent on the previous 12 months.

The positive news came as the group announced a £3.5m development in North Yorkshire as part of £8.2m it is pumping into Yorkshire as a whole.

A Brewers Fayre pub restaurant and Travel Inn is being built in Harrogate, creating 100 jobs.

Overall sales climbed 6.6 per cent to £1.82bn last year with like-for-like growth in the group's David Lloyd Leisure business up by 15 per cent.

Chairman Sir John Banham said both Whitbread's restaurant and fitness arms had made "excellent progress" during the year.

He said that while profits in hotels fell due to the impact of the terrorist attacks on New York and Washington, its core Marriott business had fared well.

Sir John said: "The outlook for our markets is positive with growth expected in the UK economy and consumer confidence remaining high."

"The board is confident that the transformed Whitbread will build on the success already achieved and will continue to make good progress towards the achievement of our ambitious financial goals."

Whitbread cut 300 jobs from its 11,000 Marriott workforce in the wake of the September 11 atrocities and also shelved two hotel projects.

Operating profits across the Marriott and the formerly Sunderland-based Swallow brands fell by 8.9 per cent and wiped out a 6.7 per cent gain at Whitbread's Travel Inn business.