Dividend setback for investors as Enterprise warns of challenging conditions.

The company stopped paying dividends in May 2009 to help reduce its debts of nearly 4bn. It left the door open to a resumption of dividends next year if market conditions improved, as it reported full-year results in line with market forecasts.

Ted Tuppen, the company's chief executive, said: "Given the current degree of market uncertainty, the board does not consider that the resumption of dividends now would be appropriate."

He said subject to market conditions, the board expected further stabilisation in the pub estates' performance. The company also expects to cut debts through cash generation and the sale of pubs.

"On this basis, the board is confident that the business is in a sound position to deliver positive returns to shareholders over the medium term, including the resumption of dividend payments."

"The dividend has not been restored which is disappointing," said KBC Peel Hunt analyst Paul Hickman who kept a 'hold' recommendation.

"Management comments that we need to see an actual improvement in the trading base, and there are of course many economic headwinds."

Mr Tuppen described the performance as "creditable" in difficult circumstances but added that the company was approaching the current year with caution.

"The economic environment is set to remain challenging and we do not underestimate the impact of the government's austerity measures and fiscal tightening which will affect both our licensees and their customers," he added. Enterprise sold 579 pubs during the period, raising 166m, and generated proceeds of 114m through a sale and leaseback programme.

This helped it to reduce net debt by 374m to 3.3bn.

Mr Tuppen said the group was looking to sell between 500 and 600 pubs in the current year and hoped to cut net debt to around 3bn by the year-end. Enterprise Inns, which has 6,820 pubs, reported an underlying pretax profit of 175m for the year to September 30, down from 208m the year before, but in line with the average forecast.

The company has 2,276 pubs in its northern region, which includes Yorkshire.