Punch Taverns this morning announced it is to withhold its final dividend for 2008 – and that it plans to use the cash to pay-off debts and invest in it pubs. In a pre-close statement, the company said it, “considers it prudent not to propose a final dividend for the year ended 23 August 2008.” It added: “Firstly, although the group has secure, long term debt and no near-term requirement for funding, the board believes the main priority for the use of cash is to support the repayment of the group’s convertible bonds in spite of the fact that this does not become due until December 2010.” Punch – which comprises a leased estate of 7.560 pubs and includes a manged arm of 834 – added it wanted to retain cash to invest in its pubs. “Secondly, whilst cash flows remain strong we are mindful of the ongoing challenging market conditions that impact both our licensees and our managed business,” added Punch's statement. “It is important that we continue to invest in our pubs alongside our licensees to ensure that we continue to further improve the quality of our pub estate.” It revealed that sales in its leased pubs were down 3.4% for the year and that in Spirit – the group's managed pubs – sales were also down by 3.3%. This was compared with 3.4% in leased and 3.6% in managed pubs for the 44 weeks to June 21, as previously revealed. Punch said that rent concessions have increased to £6m, around 3% of the rent roll. The company reiterated that it had been given the right to convert into a real estate investment trust (REIT). But it added: “Whilst work progresses in assessing the reorganisation steps that would be required to allow conversion, in the current environment our main priorities are to maintain the strength of our balance sheet and to continue to invest in our business.”