Punch Taverns, the largest operator of managed and leased pubs in Shropshire, today announced falling sales had forced it to axe a dividend to shareholders.
The pub giant, which has up to 150 premises across the county and into Mid Wales, insisted it was still in a “strong” financial position but needed to invest in its pub estate rather than give shareholders a payout.
In the company’s leased estate, which comprises 7,560 pubs nationwide, the like-for-like contribution from outlets fell 3.4 per cent over the financial year to August 23.
The 864 managed pubs reported a sales decline of 3.3 per cent.
The announcement saw Punch shares plummet but the prudent decision will see the cash invested in pubs and repayment of some debts.
Punch said: “In the current financing market environment, the board considers it prudent to retain cash and further strengthen the balance sheet ahead of returning cash to shareholders through distributions.”
It said it would look to use cash to support the repayment of its convertible bonds, even though they are not due until December 2010.
Punch said its earnings are in line with management expectations.
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