PUB operator Punch Taverns said last night it would invest up to £4m in improving its estate of inns across the North-East in 2007.

The UK's largest pub company has invested £2.7m in the region's pubs in the first six months of this year, and will invest a further £1m in the second half.

Punch has an estate of 524 pubs in its Northern region, which covers the Scottish borders down to Scarborough.

Many of its pubs in the region were acquired when it bought Hartlepool-based group Pubmaster in 2003, in a deal worth about £1.2bn, in which it acquired the group's stable of 3,200 leased and tenanted pubs across the UK.

Andrew Thompson, the operations director for Punch Taverns, said last night that the group would be investing about £4m in the region in 2007 - the year England's smoking ban comes into effect.

Mr Thompson said Punch's large estate of Scottish pubs had been relatively unaffected by the smoking ban, introduced two months ago.

"It's very early to say what the impact has been," he said.

"But so far, sales are steady. We expect the same when the ban is introduced in England."

He added that preparations were well underway for the ban in England and Wales, expected next summer, with each pub drawing up plans.

Punch also said it was looking forward to World Cup glory for the England team this year, and believes the tournament in Germany will be good for business - especially if England triumphs.

The company posted a 13 per cent rise in pre-tax profits for the first half of the year.

Punch banked £116m in the 28 weeks to March 4, compared with £103m last year after sales leapt 53 per cent to £619m.

The company was boosted by the acquisition of 1,830 pubs from Spirit.

The company said it benefited from the fact that 95 per cent of its pubs had beer gardens or other outside spaces where people may be able to smoke.

It also said its pubs in England and Wales were already moving to reduce smoking, with more than 50 introducing a ban in the past six months.

Punch has an estate of 7,748 pubs, which it leases out to be managed independently, and recently bought more than 1,800 sites from Spirit for £2.7bn. Punch said it planned to transfer the majority of the Spirit estate to lease.