COFFEE chain Caffe Nero has announced record annual pre-tax profits of £2.4million for the year ending May 31.

The figure compares with £1million profit last year. The firm has opened 43 new outlets in the past 12 months, including one in Deansgate, Bolton, which started trading at the end of January this year.

The chain is the third largest in the UK behind Starbucks and Costa Coffee, with 183 outlets in 66 towns and cities.

Turnover was up 28 per cent to £50.5 million, and Caffe Nero chairman Gerry Ford said the group "has accelerated expansion of the brand nationwide".

"The UK branded coffee sector continues to experience high levels of growth and Caffe Nero has clearly demonstrated its market-leading potential in this expanding segment of the market," he added.

"Trading in the current year has had an encouraging start and the group looks well positioned to deliver another year of excellent financial performance."

Mr Ford said Caffe Nero, which began in London in 1997, had an 11 per cent share of the UK branded market, a rise of 4.3 per cent since 2001.

The company began with five coffee bars in London in 1997. In 2002, it tried, but failed, to buy rival Coffee Republic.

In June, the group purchased eight outlets from rival Coffee Republic at locations including Bath, Weymouth, Brighton and Cardiff, and the company said that at its current pace of expansion it and hopes to have 200 by February, 2005.