Enterprise Inns says its business model is "robust

Enterprise Inns' leased and tenanted business model remains "robust" despite the current tough trading environment, the group said today.

In an interim management statement the UK's second-largest pubco said the quality of its estate, the "resilience and innovation of the majority" of its lessees and its own continuing support "where necessary" meant that there had been "no material deterioration in the key indicators of our licensees' financial health and sustainability".

However declining beer volumes had hit the business, the group said, and inevitably put some pressure on group EBITDA.

"In the first half of the year, the additional costs of our Business Recovery Scheme, which offers licensees support through rent concessions and special discounts, amounted to more than £3.5m, a level which has increased in the second half," the pubco added.

Ted Tuppen, Enterprise's chief executive said: "These are testing times for the pub industry but I am constantly reassured by the quality of our pub estate and our licensees and the security of our balance sheet.

"Our cash flows remain strong, providing adequate funds for investment and the reduction of borrowings as required.

"The majority of our licensees are coping well with the current consumer downturn. Where appropriate, we have the resources to help licensees who are experiencing short term trading difficulties, thereby demonstrating an essential strength of the leased and tenanted pub model.

We remain confident that Enterprise will continue to deliver real long term growth in value for shareholders".

The pubco said since its announcement in May regarding its eligibility to become a real estate investment trust (REIT) it believed it could satisfy the necessary requirements and would be seeking approval from stakeholders in the near future.

The group would then look into the merits of becoming a REIT, it added.