Marston's, the brewer and pub operator that sponsors English cricket, dampened the sector's renewed enthusiasm for real estate investment trusts (Reits) yesterday by saying that it could see no benefit from conversion.

The announcement, which accompanied half-year results, came after the decision by Enterprise Inns to convert to tax-efficient Reit status in the autumn and a declaration by Mitchells & Butlers that it will seek to do so as soon as credit markets improve.

David Thompson, the chairman of Marston's, said: “We do not currently plan to change the existing structure of the group as we do not believe the potential benefits outweigh the implementation costs or increased risk. But we will, nevertheless, continue to keep the situation under review.”

Ralph Findlay, the chief executive, said that he found it difficult to envisage Marston's departing from its strategy of owning most of its pubs. “Our tax rate is not particularly high anyway,” he said, “so it wouldn't be that much of a tax saving.”

Marston's reported a 15.9 per cent decline in pre-tax profits before exceptionals to £35million in the half-year to March 29, reflecting higher interest costs from the £150 million share buyback and tough trading conditions.

Turnover rose by 3.6 per cent to £316.4 million, helped by acquisitions, while underlying earnings per share were unchanged at 10p, helped by the reduction in the number of shares resulting from the buybacks.

Mr Findlay described the performance as “resilient” in the light of trading conditions.

Marston's Inns and Taverns, its 550- strong managed division, reported a 0.3 per cent increase in like-for-like sales on the back of a 7.8 per cent rise in food sales, while its 1,720-strong tenanted unit suffered a 0.6 per cent fall in profit per pub.

Food costs rose by 4 per cent in the first half, although the company predicted that would accelerate to 8 per cent in the second half. Derek Andrew, the head of the managed division, said that 70 per cent of the rise was because of red meat costs. Mr Andrew said that the company was working hard to mitigate the impact through menu changes and price adjustments, adding: “We'll get through it, but it's going to be difficult as this is a value-driven sector. Margins will be under pressure.”

The brewing business, which owns such ales as Pedigree and Banks's, suffered a fall in profits from £7.4 million to £7 million after big increases in the costs of malted barley and energy.

The company said that trading was in line with expectations. It remained cautious about the outlook but expected relative performance to improve over the summer after the anniversary of the introduction of the smoking ban.

Ale House

Last year Piccadilly Licensed Properties, a subsidiary of AAIM, the property group backed by Sir Alex Ferguson, the Manchester United Football Club manager, bought 279 of Marston's pubs for £82.5million

Marston's share of the premium cask ale market is 20 per cent, its share of the take-home ale market is 7.6 per cent and its share of the bottled ale market is 18.4 per cent

Marston's, which was listed on the London stock exchange in 1947, sponsors the England Cricket Board and is the “Official Beer of Twenty20”

The company has about 2,300 pubs and bars in England and Wales, of which 1,721 are tenanted or leased and 553 are managed

Marston's employs more than 12,000 people

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