Enterprise Inns yesterday sold its entire estate in Scotland to property tycoon Robert Tchenguiz.
The 137 pubs fetched #115 million for Solihull-based Enterprise, which said it lacked critical mass in a region with "many different characteristics" to the market in England and Wales.
"We didn't sell the Scottish estate for anything other than strategic reasons," chief executive Ted Tuppen said. "It isn't because of the smoking ban."
The deal with Mr Tchenguiz’s vehicle Retail & Licensed Properties came as Enterprise announced a rise of 8.6 per cent in full-year profits to #315 million.
Enterprise ended the financial year to September 30 with 7,809 leased and tenanted pubs, generating average earnings per pub of #66,700 and with a combined book value of about #5.4 billion.
The company invested #54 million of capital expenditure in the estate during the year, much of which went towards preparing pubs for the forthcoming ban on smoking, which is due to be introduced in Wales in April and England in July.
With 89 per cent of pubs having already developed outside areas and 85 per cent now offering food, Enterprise said it was confident the majority of its licensees were well placed to benefit from the forthcoming ban.
It pointed out that the move would make "pubs more attractive to the significant majority who do not smoke".
In terms of licensing reform, Enterprise said that while additional trading hours have had only minimal effect on pub profitability, the change had helped reduce alcohol related disorder.
It said earnings before interest, tax, depreciation and amortisation per pub rose by 5.2 per cent to #64,200 last year.
Enterprise, which bought back more than 42 million shares at a net cost of #393 million, raised the divided by half to 27p.
The company said it was continuing to look at the possibility of restructuring to take advantage of the new Real Estate Investment Trusts (Reits) regime.
"The clouds are clearing a bit, but the devil will be in the detail," Mr Tuppen said.
"If we can see it with confidence as value enhancing then we really do need to investigate it. This isn't a place where you want to be first."
Enterprise admitted it had been a "year of rising costs" for its licensees but it said it was satisfied that it maintained its commitment to fair rents.
Commenting on the results Mr Tuppen said: "This has been another excellent year for the Enterprise Inns team, working together with our licensees to improve the quality and profitability of our pubs and once again delivering substantial growth in shareholder value."
Shares closed up 5p at 1172p.