Capital Pub Company (CPC), the London-based operator, has scotched plans to pay its shareholders a dividend this year so as to pay down debt, which currently stands at £29m.
Announcing the group's annual results today, CPC chairman James Bruxner said it was in the best interests of shareholders to continue to "preserve internally generated cash for debt reduction and for financing future acquisitions rather than pay a dividend at this stage".
Last year CPC paid a final dividend of 2.1p a share as part of what it said at the time was intended to be a "progressive dividend policy".
The group said it would improve its net debt position thanks to "significant" levels of cash generated by the business being used to repay long-term bank borrowings.
Turnover for the group, which owns and operates 25 freehouses in the Greater London area, rose five per cent to £19.8m in the year to March 28, 2009.
Operating profits dipped nearly six per cent to £3.6m as administration expenses and costs of sales rose.
Pre-tax profits, down 44 per cent at £449,000, were hit by goodwill impairment charges. Adjusted pre-tax profits rose seven per cent to £2.1m, while adjusted earnings per share grew 37 per cent to 11p.
The group said cash generated through operations rose 47 per cent to £1.7m.
CPC said current trading remained "healthy" in a relatively resilient London market, and it remained "cautiously optimistic" for the rest of 2009.