David Urquhart Travel, one of the biggest independent coach tour operators in the UK, has reported a drop in pre-tax profits and will not offer a dividend for the year that ended on April 30, according to latest figures from Companies House.

Profits fell to £504,991 from £621,430, despite higher sales during the period.

David Urquhart, the owner of the company, has said on previous occasions that the firm's profit figure can be affected by the fortunes of his private company investments. For example, an investment gain of £842,925 that helped put the company into the black in 2006 was not repeated in 2007.

Turnover rose to £31.9m from £31.7m in the pervious year.

In a statement contained in the annual report to Companies House, the directors of the company said trading conditions in the package holiday industry were expected "to remain competitive" for the foreseeable future.

They also said that the merger of two rivals represented opportunities and a challenge. The directors were referring to the merger of Wallace Arnold and Shearings that was put together in March 2005 by the investment group 3i. But they added: "We remain confident that we will maintain our current level of performance in the future."

The main risk to Urquhart's performance, the firm said, relates to changes to government transport policy that may push up operating costs.

Pay for the top director, believed to be David Urquhart, was nearly cut in half in 2007, falling from £553,199 in the previous period.

Founded in 1983, David Urquhart Travel carries holidaymakers to destinations across the continent and Ireland, as well as the UK.

The East Kilbride-based group employs more than 200 people in Scotland. As well as operating coach tours, David Urquhart owns Hart hotels in the Highlands and runs a sister company - David Urquhart Sky Travel - that sells package holidays by air.

In 2004, Hart hotels, acquired the Glenmorag hotel in Dunoon and it also owns the Garve hotel, Wester Ross, in the Highlands.