Specialist travel has better margins than package holidays

Disposals boosted profits, such as the sale of its Spanish retail and business travel business for �24.9m, and the �9.7m sale of its 9% stake in Globalia.

Sales in the year ending 31 October were also up, to �2.35bn from �2.25bn.

The firm benefited from sales of specialist holidays, such as trekking, where price competition is less fierce.

The group, whose brands include Unijet, Falcon and Sovereign, said underlying pre-tax profits, before exceptional and goodwill items, were up 13%.

The group "is building a strong position characterised by differentiated content in the larger leisure travel arena," said chief executive Peter Long.

The group also hopes to improve group net operating margins to 5% by 2007, from the 4.2% this year.