The pubs and spirits group said clear progress had been made in increasing sales of its key brands.

The group said the economic crisis in Asia was unlikely to hit its business hard as 90% of its trading profit came from Europe and North America.

Investors are hoping the group will form a strategic alliance

Pre-tax profit before exceptional items was £615m, compared with last year's £607m.

After exceptionals, the underlying pre-tax profit rose from £406m to £455m.

Turnover slipped very slightly for the same period from £4.4bn to £4.3bn.

Meanwhile Allied Domecq said it had not ruled out an alliance with another industry player.

Chief Executive Tony Hales said: "It is a wrong conclusion to draw that we have cooled on the subject of consolidation or demerger.

"We have made our policy clear for a couple of years and it remains that way. It is still on the agenda."

Seagram was seen as the most likely candidate, but its recent decision to focus on the entertainment side of its business looks like putting it out of the running.

Bacardi and Pernod Ricard had also been linked with the UK drinks group.

Allied has been under pressure from investors to broker a deal following the merger of its two rivals, Guiness and Grand Metropolitan into Diageo last year.

Good cheer

During the year Allied Domecq's spirit operations were boosted by effective marketing which helped increase sales of major brands.

Like the rest of the industry poor weather and the slowdown in consumer spending in the summer hit the group's pub food sales in the second half of the year.

Trading in its off-licence operation remained level, but the group expects the recent merger of Victoria Wine and Thresher - in a 50/50 joint venture - to compete effectively against the major supermarket chains.

Finance director Tony Trigg will retire from the board at the next Annual General Meeting in January, and will be succeeded by Philip Bowman.

A company spokesman said: "Looking forward, we are confident of the momentum in the business and of its underlying quality,

"However difficult trading conditions may become, we expect to do well by industry standards and to continue to improve our operating performance."

Shareholders will pick up a total dividend of 25.33p, against last year's 24.44p.