Punch has been preparing for the UK-wide smoking ban

Pre-tax profits before one-offs rose 12% to £130m in six months to 3 March, as the firm continued to benefit from its 2006 purchase of Spirit Group.

But its shares fell as investors were unimpressed by a lack of plans to free up cash from its £7bn property estate.

Punch added it was well-prepared for the UK-wide smoking ban which could have a major effect on the pub sector.

The group has been working hard to provide outdoor smoking areas and to improve facilities for non-smokers.

Smoke ban fallout

Punch said it was too early to assess the impact of the recent ban on smoking in public places in Wales, which came into force in April. A ban in England begins in July.

However, Punch did say it was learning from its experiences in Scotland - where it blamed a smoking ban for a 1.5% dip in sales in the first half of last year after new rules came into force in March 2006.

Shares in the group slipped almost 4%, or 52 pence, to £12.52 in morning trade on the London market.