Enterprise Inns today provided some cheer to the embattled pub sector after assuring investors that earnings and dividends would be in line with market forecasts.

The tenanted pub company also said that it had put on ice plans to convert to tax-efficient real estate investment trust (reit) status because of “the current turmoil in financial markets”.

In a full-year trading update, the company said it had no intention of following the lead of Punch Taverns, which announced last month that it was scrapping the dividend to preserve its cash resources for debt repayment. Analysts expect it to hold the final payout, equivalent to a full-year increase of 6 per cent.

Enterprise said that its next financing requirement was a £1 billion syndicated debt facility, which expires in May 2011.

In the year to September 30, like-for-like earnings before interest, tax, depreciation and amortisation (ebitda) fell by 3 per cent. The decline accelerated to 5 per cent in the second half, although the company insisted this was still a robust performance, given the trading environment.

It attributed the decline in ebitda to falling beer sales and an increase in the financial support being given to distressed tenants. This amounted to £5.5 million in the second half, mainly in the form of short-term beer discounts, taking the full-year total to about £9 million.

Ted Tuppen, Enterprise’s chief executive, said that the company was encouraging tenants to use the financial support to spruce up their pubs to make them more appealing to customers. “We walk round the building with a licensee and suggest that, for example, live flowers rather than dead ones in the hanging baskets would be good.”

Mr Tuppen said that, despite the gloomy economic backdrop, ebitda per pub was up in about 80 per cent of its pubs, helped by food sales, while 40 per cent had managed to grow beer sales on a like-for-like basis. “That suggests the model isn’t broken,” he said.

He said that Enterprise was advertising on its website for new tenants in 757 pubs, equivalent to about 10 per cent of its total estate. “It’s up a bit because there are a few more licencees failing in the current market, but it’s not material.”

Mr Tuppen said that in the coming year the company would reduce the number of pub acquisitions and increase the number of disposals. Analysts suggested that, together with reduced capital expenditure on existing pubs, the move would help Enterprise cut its debt by about £100 million.

Despite the trading climate, a revaluation of its assets resulted in a “modest net revaluation uplift”. Mr Tuppen said: “With 83 per cent of our pubs growing profits, why would they go down in value?”

He said that, despite the decision to put reit conversion on ice, the idea had not been scrapped. “It seems to make a lot of sense to put it on hold until such time as the financial markets become more settled and the position becomes clearer,” he said.

“We still regard this as a way of generating value for shareholders so it is definitely not off the agenda.”

Shares of Enterprise, which have fallen by 70 per cent in the past year, added 21.25p — or almost 14 per cent — to 178.5p in afternoon trading. Punch, which has been even more savagely treated by the market, rose by 14.5p to 135, a rise of 12 per cent.

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