WHSmith has reported group pre-tax profit has increased to £81m in its full-year results from £76m the previous year but sales have dipped slightly.

For the year ending August 31, like for like sales were down 5% and total group sales were down 1%. High street like for like sales were down 6% and total sales were down 5%, while travel like for like sales were down 2% and total sales were down 1%.

Group chief executive Kate Swann said: “We have delivered another strong performance, with Group profit up 8% to £82m, despite challenging trading conditions.  Operating performance was ahead of expectations in both our travel and high street divisions.”

She added: “WHSmith is a highly cash generative business and today we are announcing the return of up to £35m of cash to shareholders, together with a proposed final dividend increase of 16%. We continue to invest in the business where we believe we will create value for our shareholders.”

The retailer said it has a strong balance sheet and is highly cash generative. Net funds were £45m versus net debt of £9m in August last year. Group free cash flow was £89m, up from £63m in 2008.

WH Smith said its travel division continued to deliver strong operating profit, despite soft passenger numbers. It said it has increased average transaction value by focusing on mix changes and improved promotional activity.

In the high street division, the retailer said it delivered an operating profit of £49m, despite tough trading conditions. It said this was delivered through continuing to rebuild authority in core categories, tightly controlled costs, optimising margins and delivering the retailing basics.

It delivered £15m of cost savings in the high street business in areas such as renegotiating IT contracts and in-store efficiencies. A futher £14m of cost savings have been identified over the next three years, making total targeted savings of £24m between 2010 and 2012.

Swann said: “Whilst trading conditions are challenging, we have planned accordingly and the group is well-positioned to benefit when consumer spending recovers.”