Brewer and pub operator Marston's will not follow in the footsteps of Enterprise Inns and Mitchells & Butlers, ruling out conversion to a real estate investment trust (REIT) in the short term because of its high cost of entry.
Chief executive Ralph Findlay told analysts today that Marston's, which owns 1,721 tennanted and leased pubs and 553 managed pubs, would monitor changes in the REIT structure closely.
Findlay said its joint managed and tenanted model, compared with M&B's purely managed and Enterprise's tenanted structures, would make any conversion to the tax efficient investment structure "not really compelling".
Marston's saw its revenue for the six months ending 29 March rise from £305.3m this time last year to £316.4m this year. Pre-tax profits fell by 15.9% to £35m after a share buy-back scheme.
Like-for-like sales in its managed Inns and Taverns estate, home to the Pitcher & Piano brand, rose only by 0.3% in the first half of the year, with food sales up by 7.8%. Drinks sales fell by 3.1% and income from gambling machines fell by 10.3%.
Its tenanted Pub company estate saw its turnover fall to £92.7m after it sold 279 pubs to investment group AAIM last year. Marston's said the smoking ban had led to a 9% fall in beer volumes in its tenanted pubs.
Findlay said that despite difficult trading conditions, Marston's performance has been resilient.
"Our integrated business model provides us with operational flexibility and a wider range of investment opportunities, and has enabled us to offset significant increases in the cost of food, labour and brewing raw materials," he said.
By Christopher Walton
E-mail your comments to Christopher Walton here.