The country's biggest pubs operator Punch Taverns said on Wednesday it had finished its financial year trading in line with expectations, and its Scottish pubs had held steady despite the smoking ban there.

Pubs have dealt with the ban since March 26 by building shelters for smokers in their gardens and forecourts. But many fear the Scottish winter will prove too harsh for smokers who might shun the pub for a few cans of lager in front of the TV.

Punch Chief Executive Giles Thorley told Reuters the group had beaten recent numbers from rival Greene King and the Scottish Licensed Trade Association, which reported a 2.4 percent decline and a 10 percent decline in drink sales respectively.

On the managed side, they (sales) are flat and on the leased side they're down half a percent, so much better than any of those other numbers, Thorley told Reuters.

He said Punch hadn't highlighted the figures as it was still too early to dismiss the threat, especially ahead of the Scottish winter.

Across the group's pub estate, average sales at its 7,846 leased pubs rose 2.7 percent in the 52 weeks to August 19.

The Spirit estate of 1,410 pubs, which Punch bought in January, has increased like for like sales by 3.6 percent in the 32 weeks since acquisition, it added.

Most analysts said the numbers were reassuring, but Punch shares had fallen by 0.7 percent to 920 pence at 9:13 a.m., valuing the group at around 2.4 billion pounds.

Since buying Spirit's estate of 1,830 managed pubs, 382 have been sold, most of them to Regent Inns or private equity firm GI Partners, and 74 have been leased out. The drinks supply contracts have been switched to Scottish & Newcastle Plc

We continue to prepare for the impending smoking ban in England and Wales, which is anticipated in summer 2007, said Punch.

Analysts at UBS said: We still see risk to the impact from the smoking ban and would feel more comfortable if about 1,000 of the weakest tenanted pubs were sold ahead of the start of the smoking ban in England.

Thorley said: We think we're ahead of the game in England and Wales... but we're cautious about the Scottish winter, and I don't want people getting excited that the smoking ban isn't an issue.