Capital Pub Company suspends dividends for shareholders

London pub group Capital Pub Company (CPC) is the latest operator to declare it is suspending dividend payments to shareholders in order to shore up its balance sheet.

Announcing its results for the six months to September 27, 2008, the 24-strong pub group said it had "carefully considered whether to recommend an interim dividend and has come to the conclusion that in the current economic environment it should not do so.

"The board believes it is in the best interests of shareholders to preserve internally generated cash for debt reduction and for financing future acquisitions."

The move will save the company around £220,000.

When it announced its annual results in June of this year, CPC said it was increasing the total dividend paid to investors by five per cent and that it would be pursuing a "progressive dividend policy" in future.

CPC said its current level of debt was approaching £30m, representing gearing of 90 per cent.

In its latest results statement CPC said it was "delighted" with the overall performance of the group.

Turnover rose 11 per cent to £10.1m, while operating profits rose 9.6 per cent to £2m.

Underlying pre-tax profits, excluding movements in an interest rate swap, grew 24 per cent to £1.12m, while overall pre-tax profits fell 16 per cent to £816,000.

Underlying earnings per share rose by a fifth to 4p, although basic eps fell nearly a third to 2.5p.

The group said that "margins on both liquor and food sales remain at March 2008 levels underlining the company's ability to increase sales without the need to offer discounts or promotional offers".

In line with the rest of the market CPC said the outlook for the coming year remained challenging.

"Trading in London continues to remain relatively robust, however it is anticipated that 2009 will prove to be a tougher trading environment," the group concluded.