Mucklow (A & J) Regulatory News (MKLW)

7 Mar 2007 07:01

Mucklow(A.& J.)Group PLC07 March 2007 Mucklow (A & J) Group plc7 March 2007Embargoed: 7.00am Interim Results to 31 December 2006 Half yearly summary Proposed REIT Conversion on 1 July 2007 Increasing development programme Further 29 acres of prime development land acquired New Non-Executive Director appointed Interim dividend increased by 7.4% to 6.69p per share Valuation surplus of £11.7m, up 4.3% Net assets increased to £224m FINANCIAL HIGHLIGHTS Six months ended 31 December 31 December 2006 2005 ---------------------------------Profit before tax £16.42m £22.70m Adjusted - note 1 £7.42m £7.20m Interim dividend per Ordinary Share 6.69p 6.23p Earnings per share 21.67p 27.47p Adjusted - note 2 8.90p 8.93p Net asset value per share 374p 344p Adjusted - note 3 452p 417p Net assets £224.24m £206.62m Gearing (net of cash) 9% 1% The interim dividend of £4,013,464 will be paid on 29 June 2007 to holdersregistered on 1 June 2007. Notes 1 Excluding gains from the disposal and revaluation of investment property and the premium on redemption of debenture stock.2 Excluding gains from the disposal and revaluation of investment property (net of tax), deferred tax and the premium on redemption of debenture stock (net of tax).3 Excluding deferred tax and including the surplus on trading properties. See note 6 for details. For further information please contact: Rupert Mucklow, Chairman Tel 0121 504 2121 (direct)A & J Mucklow Group plc 07815 151254 (mobile) Fiona Tooley Tel 0121 455 8370Citigate Dewe Rogerson 07785 703523 CHAIRMAN'S STATEMENT On 14 February 2007, the Board announced its intention for the Group to convertto a Real Estate Investment Trust (REIT), with effect from 1 July 2007.Conversion to a REIT will require an amendment to the Company's articles ofassociation and for this purpose a circular will be sent to shareholders inApril 2007, outlining the reasons for conversion and setting out details of anEGM to be held on 23 May 2007. Results for the six months to 31 December 2006 Pre-tax profit for the half year was £16.4m, compared with £22.7m for thecorresponding period last year. A surplus, on the revaluation of investmentproperties, increased the profit by £11.7m (2005: £15.2m), while an exceptionalloss, on the early redemption of debenture stock, reduced the profit by £4.9m. Adjusted pre-tax profit+, which excludes gains on the revaluation of theinvestment portfolio, profit on the disposal of investment properties and thepremium paid on the redemption of debenture stock, was £7.4m (2005: £7.2m). Net asset value per share+, adjusted to exclude deferred taxation, but includingthe current value of our trading stock, increased during the first six monthsfrom 441p to 452p per share. The Directors have declared an interim dividend of 6.69p per Ordinary share(2005: 6.23p), an increase of 7.4% over last year. The dividend will be paid on29 June 2007 to shareholders on the register at the close of business on 1 June2007. Property Review I am pleased to report a solid start to the financial year, with anotherincrease in net asset value and good progress made towards implementing ourbusiness plan, in preparation for REITs. Over the last 12 months, our priority has been to establish a quality industrialand commercial land bank, to allow us more flexibility to grow our investmentportfolio, in a REIT structure. We will be able to promote sites for pre-letsand carry out some speculative developments, when it suits, which will offerhigher returns and better long term growth prospects for the future. In the first six months, we bought a further 29 acres of prime industrial land,in Birmingham and Coventry, for £13.7m. We have now acquired around 50 acres ofdevelopment land, with potential to build over 1m sq ft of new business spaceand create an additional £8.0m of rental income. Occupancy levels during the half year remained unchanged at around 93%.Prospects of rental growth, for Midlands industrial property, are starting toimprove, due to the lack of available modern space. Our latest development atMiddlemarch, Coventry was completed towards the end of the half year and isgenerating a lot of tenant interest. We intend to start three new developments in the second half year, at Worcester(28,000 sq ft offices), Dudley (40,000 sq ft industrial), Wednesbury (38,000 sqft industrial) and two major refurbishments at Stirchley (22,000 sq ftindustrial) and Coleshill (40,000 sq ft industrial). In September 2006, we received outline planning consent for a 500,000 sq ftmixed use scheme, on our Bull Ring Trading Estate, Birmingham. The estate iscurrently fully let and income producing, providing 67,000 sq ft of car showroomand industrial space on a site of 3.25 acres. Although there are no immediateplans to redevelop this site, the value of our investment has been significantlyenhanced. We have also acquired another investment property, close to the Bull RingTrading Estate, for £5.4m. The building comprises 120,000 sq ft of industrialspace, on a prominent 4 acre site and is fully let, producing an income of£400,000 per annum, offering similar, long term redevelopment prospects. In September 2006, we sold our Wates Way Industrial Estate, in Mitcham, Surrey,for £13.8m. The sale was concluded on a yield of 5.25% and showed a surplus overthe June 2006 valuation of £2.2m. DTZ Debenham Tie Leung reviewed the value of our investment properties as at 31December 2006. The investment portfolio, including industrial and commercialland, was valued at £279.9m*, which produced an increase in value for the sixmonths of £11.7m (4.3%). The value of Bull Ring Trading Estate rose by £3.9m. Trading Properties We sold 2.7 acres of residential land at Mellings Farm, Wigan in the first halfyear for £2.7m. The profit on the sale was £2.6m. DTZ Debenham Tie Leung also reviewed the value of the trading properties as at31 December 2006. The majority of trading properties comprise land with planningpermission for residential use. The value of the trading properties was £16.5m,which showed a surplus over book value of £15.3m. We are likely to dispose of a further £8.0m of trading properties in the secondhalf year, ahead of converting to a REIT and to partly fund our developmentprogramme. Debenture Buy-Back In December 2006, the Group bought in for cancellation a further £11.7m of its11.5% First Mortgage Debenture Stock at a cost of £16.7m. The debt was due tomature in 2014 and the interest payable was £1.4m per annum. The premium paidfor early redemption of debenture stock, was £4.9m, (£3.5m post-tax), reducingthe net asset value by 6p per share. There is now only £4.2m of 11.5% Debenture Stock remaining in issue. Non - Executive Director Appointment I am delighted to welcome Paul Ludlow FRICS, as a Non-Executive Director, witheffect from 1 March 2007. Paul was Managing Director of Severn Trent PropertiesLtd for 18 years, until the recent sale of the Company to Prologis. Outlook We have experienced exceptionally high levels of capital growth, over the lastfew years, due to the heavy weight of money compressing investment yields.However, this is unlikely to continue, as low property yields become lessattractive to Investors and it is imperative for us, to focus our activitytowards development, in order to achieve much higher returns. The interest costs, for funding land acquisitions and carrying out newdevelopments will undoubtedly have a short term impact on profit growth, but weare confident that our asset values are well supported by the quality of ourinvestment portfolio and our strategy will allow us to generate more income in aREIT structure and improve our performance in the medium to long term. Rupert J MucklowChairman6 March 2007 +See note 6 to the interim report.*See note 7 to the interim report. CONSOLIDATED INCOME STATEMENTfor the six months to 31 December 2006 Unaudited Unaudited Audited Six months to Six months to Year to 31 December 31 December 30 June 2006 2005 2006 Notes £000 £000 £000-------------------------------------------------------------------------------Revenue 2 9,979 9,797 17,296-------------------------------------------------------------------------------Gross rental income relatingto investment properties 7,057 7,131 14,351 Property outgoings (347) (451) (741)-------------------------------------------------------------------------------Net rental income relatingto investment properties 6,710 6,680 13,610-------------------------------------------------------------------------------Proceed on sale of trading properties 2,740 2,384 2,384 Carrying value of tradingproperties sold (95) (125) (125) Property outgoings relatingto trading properties (3) (4) (5)-------------------------------------------------------------------------------Net income from trading properties 2,642 2,255 2,254-------------------------------------------------------------------------------Administration expenses (1,183) (1,041) (2,401)-------------------------------------------------------------------------------Operating profit before netgain on investments 8,169 7,894 13,463 Profit on disposal ofinvestment properties 2,247 290 707 Net gains on revaluation ofinvestment and development properties 11,701 15,205 23,739-------------------------------------------------------------------------------Operating profit 3 22,117 23,389 37,909 Finance income 4 182 282 561-------------------------------------------------------------------------------Finance costs (929) (972) (2,036) Exceptional loss onredemption of debenture (4,949) - --------------------------------------------------------------------------------Total finance costs 4 (5,878) (972) (2,036)--------------------------------------------------------------------------------Profit before tax 3 16,421 22,699 36,434 Taxation 5 (3,422) (6,219) (9,290)--------------------------------------------------------------------------------Profit for the financial period 12,999 16,480 27,144--------------------------------------------------------------------------------Earnings per share- Basic and diluted 6 21.67p 27.47p 45.24p-------------------------------------------------------------------------------- All operations are continuing. CONSOLIDATED BALANCE SHEETat 31 December 2006 Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 Notes £000 £000 £000--------------------------------------------------------------------------------Non-current assetsInvestment and developmentproperties 7 278,442 241,332 257,406 Property, plant and equipment 1,713 2,704 1,602 Trade and other receivables 368 364 366-------------------------------------------------------------------------------- 280,523 244,400 259,374Current assetsTrading Properties 1,246 1,240 1,282 Held for sale assets - - - Trade and other receivables 2,848 1,973 2,685 Cash and cash equivalents 707 15,171 11,065-------------------------------------------------------------------------------- 4,801 18,384 15,032Total assets 285,324 262,784 274,406--------------------------------------------------------------------------------Current liabilitiesTrade and other payables (5,523) (6,270) (8,037) Borrowings (15,710) (1,512) (1,298) Tax liabilities (3,434) (3,549) (1,873)-------------------------------------------------------------------------------- (24,667) (11,331) (11,208)--------------------------------------------------------------------------------Non-current liabilitiesBorrowings (4,879) (16,578) (16,578) Deferred tax (31,540) (28,251) (30,948)-------------------------------------------------------------------------------- (36,419) (44,829) (47,526)--------------------------------------------------------------------------------Total liabilities (61,086) (56,160) (58,734)--------------------------------------------------------------------------------Net assets 224,238 206,624 215,672--------------------------------------------------------------------------------EquityCalled up ordinary share capital 14,998 14,998 14,998 Revaluation reserve 593 2,605 3,424 Redemption reserve 11,162 11,162 11,162 Retained earnings 197,485 177,859 186,088--------------------------------------------------------------------------------Total equity 224,238 206,624 215,672--------------------------------------------------------------------------------Net assets per Ordinary share - Basic and diluted 6 374p 344p 360p - Adjusted 6 452p 417p 441p-------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 31 December 2006 Unaudited Unaudited Audited Six months to Six months to Year to 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000------------------------------------------------------------------------------------Cash flows from operating activitiesOperating profit 22,117 23,389 37,909 Adjustments for non-cash items - Net revaluation gains on investment and (11,701) (15,205) (23,739) development properties - Profit on disposal of investment (2,247) (290) (707) properties - Depreciation and other non-cash items 45 (71) 71 Other movements arising from operations - Decrease in trading properties 36 59 10 - (Increase)/decrease in debtors (158) 194 (670) - (Decrease)/increase in creditors (1,975) 2 644-------------------------------------------------------------------------------------Net cash generated from operations 6,117 8,078 13,518Interest received 175 239 578Interest paid (5,778) (948) (1,863)Preference dividends paid (24) (24) (47)Corporation tax paid (1,891) (1,149) (3,008)-------------------------------------------------------------------------------------Net cash (outflow)/inflow fromoperating activities (1,401) 6,196 9,178 Cash flows from investing activitiesAcquisition and property development (21,188) (6,743) (13,006) Sales of investment properties 14,075 8,080 11,643 Expenditure on property, plant and equipment (69) (253) (689)-------------------------------------------------------------------------------------Net cash (outflow)/inflow frominvesting activities (7,182) 1,084 (2,052) Cash flows from financing activitiesNet increase in borrowings 3,301 1,512 - Equity dividends paid (4,487) (4,175) (7,913)-------------------------------------------------------------------------------------Net cash outflow fromfinancing activities (1,186) (2,663) (7,913) Net (decrease)/increase in cashand cash equivalents (9,769) 4,617 (787) Cash and cash equivalents at 1 July 9,767 10,554 10,554-------------------------------------------------------------------------------------Cash and cash equivalents atend of period (2) 15,171 9,767-------------------------------------------------------------------------------------Cash and cash equivalents consists of:Cash at bank (709) 563 (1,298)Short-term deposits 707 14,608 11,065------------------------------------------------------------------------------------- (2) 15,171 9,767------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the six months ended 31 December 2006 Unaudited Unaudited Audited Six months to Six months to Year to 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000--------------------------------------------------------------------------------Gains on revaluation of developmentand owner occupied properties 62 1,514 4,415 Deferred tax liability on itemstaken to equity (7) (329) (1,108)--------------------------------------------------------------------------------Net gain recognised directly inequity 55 1,185 3,307 Profit for the period 12,999 16,480 27,144--------------------------------------------------------------------------------Total recognised income and expensefor the period 13,054 17,665 30,451 NOTES TO THE INTERIM REPORT 1 Accounting policies Basis of preparation of interim financial information The interim report has been prepared in accordance with the recognition andmeasurement criteria of IFRS as adopted by the European Union and thedisclosure requirements of the Listing Rules. The Group's interim financial statements for the period ended 31 December 2006were authorised for issue by the Board of Directors on 6 March 2007. The interimfinancial information is unaudited but has been reviewed by Deloitte &Touche LLP and their report is attached. The information for the year ended 30 June 2006 does not constitute statutoryaccounts as defined in s240 of the Companies Act 1985. The statutory accounts for the year ended 30 June 2006 were unqualified by theGroup's auditors, and did not contain a statement under Section 237 (2) or (3)of the Companies Act 1985 and have been delivered to the Registrar of Companies. The financial statements are prepared under the historical cost convention,except for the revaluation of investment properties, development properties andowner occupied properties and deferred tax thereon. The Group financial statements consolidate the financial statements of theCompany and all its subsidiaries. Control is assumed where the parent companyhas the power to govern the financial and operational policies of thesubsidiary. Unrealised gains and losses on intra-group transactions and intra-group balancesare eliminated from the consolidated results. Revenue recognition The Group's revenue comprises rental income relating to investment properties,proceeds on the sale of trading properties and interest income. Interest incomeis recognised on an accruals basis as and when it falls due. Rental income Gross rental income represents rents receivable for the year. Rent increasesarising from rent reviews due during the year are taken into account only to theextent that such reviews have been agreed with tenants at the accounting date. Rental income from operating leases is recognized on a straight-line basis overthe term of the lease. Lease incentives are amortised on a straight-line basis over the lease term. Property operating expenses are expensed as incurred. Service charges and otherrecoverables are credited against the related expense. Revenue and profits on sale of investment and trading properties Revenue and profits on sale of investment properties and trading properties arerecognised on the completion of contracts. The amount of profit recognised isthe difference between sale proceeds and the carrying amount. Cost of properties An amount equivalent to the total development outgoings, including interest,attributable to properties held for development is added to the cost of suchproperties. A property is regarded as being in the course of development untilPractical Completion. Valuation of properties Investment properties are valued at the balance sheet date at open market value.Where investment properties are being redeveloped the property continues to betreated as an investment property. Surpluses and deficits attributable to theGroup arising from revaluation are recognised in the income statement. Valuationadjustments reflected in retained earnings are not distributable until realisedon sale. Properties under development, which were not previously classified as investmentproperties, are valued at open market value until practical completion, whenthey are transferred to investment properties. Valuation surpluses and deficitsattributable to properties under development are taken to revaluation reserveuntil completion, when they are transferred to retained earnings. Where thevaluation is below historic cost, the deficit is recognised in the incomestatement. Owner occupied properties are valued at the balance sheet date at open marketvalue. Valuation changes in owner occupied property are taken to revaluationreserve. Trading properties held for resale are stated at the lower of cost and netrealisable value. Management have made judgements over the valuation of properties that has asignificant effect on the amounts recognized in the financial statements.Management have used the valuation performed by its independent valuers as thefair value of its investment, development, owner-occupied and tradingproperties. The valuation is based upon assumptions including future rentalincome and an appropriate discount rate. The valuers also use market evidence oftransaction prices for similar properties. Property, plant and equipment Land and buildings held for use in the production or supply of goods orservices, or for administrative purposes, are stated in the balance sheet attheir revalued amounts, being the fair value at the date of revaluation, lessany subsequent accumulated depreciation and subsequent accumulated impairmentlosses. Revaluations are performed with sufficient regularity such that thecarrying amount does not differ materially from that which would be determinedusing fair values at the balance sheet date. Any revaluation increase arising on the revaluation of such land and buildingsis credited to the properties revaluation reserve, except to the extent that itreverses a revaluation decrease for the same asset previously recognised as anexpense, in which case the increase is credited to the income statement to theextent of the decrease previously charged. A decrease in carrying amount arisingon the revaluation of such land and buildings is charged as an expense to theextent that it exceeds the balance, if any, held in the properties revaluationreserve relating to a previous revaluation of that asset. Depreciation on revalued buildings is charged to income. On the subsequent saleor retirement of a revalued property, the attributable revaluation surplusremaining in the properties revaluation reserve is transferred directly toretained earnings. Plant and equipment is stated at cost less accumulated depreciation, less anyrecognised impairment. Depreciation Depreciation is provided on buildings, motor vehicles and fixtures and fittingson a straight-line basis over the estimated useful lives of between two andtwenty-five years. Investment properties are not depreciated. Government grants Capital grants received relating to the cost of building or refurbishinginvestment properties are deducted from the cost of the relevant property.Revenue grants are deducted from the related expenditure. Deferred taxation Deferred taxation is provided in full on temporary differences that result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Temporary differences arise from the inclusion ofitems of income and expenditure in taxation computations in periods differentfrom those in which they are included in the financial statements. Deferred taxis provided on temporary differences arising from the revaluation of fixedassets. Deferred tax assets are recognised to the extent that it is regarded asmore likely than not that they will be recovered. Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income and expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates that have beenenacted or substantially enacted by the balance sheet date. Tax is recognised in the income statement except for items that are reflecteddirectly in equity, where the tax is also recognised in equity. Pension costs The cost to the Group of contributions made to defined contribution plans areexpensed when they fall due. Acquisitions On the acquisition of a business, including an interest in an associatedundertaking, fair values are attributed to the Group's share of separable netassets. Where the fair value of the cost of acquisition exceeds the fair valueattributable to such assets, the difference is treated as purchased goodwill andcapitalised in the balance sheet in the year of acquisition. Goodwill is reviewed annually for impairment. Under the Group's previous policy,£134,728 of goodwill has been written off directly to reserves as a matter ofaccounting policy. This would be credited to the profit and loss account ondisposal of the business to which it related. Group undertaking Investments are included in the balance sheet at cost less any permanentdiminution in value. Financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Trade receivablesTrade receivables are measured at initial recognition at fair value, and aresubsequently measured at amortised cost using the effective interest ratemethod. Appropriate allowances for estimated irrecoverable amounts arerecognised in profit and loss when there is objective evidence that the asset isimpaired. The allowance recognised is measured as the difference between theasset's carrying amount and the present value of future cash flows discounted atthe effective rate computed at initial recognition. Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, and othershort-term highly liquid investments that are readily convertible to a knownamount of cash and are subject to an insignificant risk of changes in value. Financial liabilities and equityFinancial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the Group afterdeducting all of its liabilities. Bank borrowingsInterest-bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct issue costs. Finance charges, including premiums payableon settlements or redemption and direct issue costs, are accounted for on anaccrual basis in profit or loss using the effective interest rate method and areadded to the carrying amount of the instrument to the extent that they are notsettled in the period in which they arise. Trade payablesTrade payables are initially measured at fair value, and are subsequentlymeasured at amortised cost, using the effective interest rate method. Equity instrumentsEquity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. 2 Revenue Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000--------------------------------------------------------------------------------Total rental income from investment anddevelopment properties 7,057 7,131 14,351 Proceeds on sale of trading properties 2,740 2,384 2,384 Finance income (note 4) 182 282 561-------------------------------------------------------------------------------- 9,979 9,797 17,296-------------------------------------------------------------------------------- 3 Segmental analysis - primary segments Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000------------------------------------------------------------------------------------Investment and development properties - Net rental income 6,710 6,680 13,610 - Profit on disposal 2,247 290 707 - Gain on revaluation of investment 12,100 15,205 23,739 properties - Deficit on revaluation of development (399) - - properties------------------------------------------------------------------------------------- 20,658 22,175 38,056-------------------------------------------------------------------------------------Trading properties - Proceeds on sales 2,740 2,384 2,384 - Carrying value on sales (95) (125) (125) - Property outgoings (3) (4) (5)------------------------------------------------------------------------------------- 2,642 2,255 2,254-------------------------------------------------------------------------------------Administration expenses (1,183) (1,041) (2,401)-------------------------------------------------------------------------------------Operating profit 22,117 23,389 37,909Net financingcosts - Ordinary (747) (690) (1,475) - exceptional (4,949) - --------------------------------------------------------------------------------------Profit before tax 16,421 22,699 36,434-------------------------------------------------------------------------------------The property revaluation surplus has been recognized as follows: Income statement - Investment properties 12,100 15,205 23,739 - Development properties (399) - - Statement of recognized income and expense - Development and owner occupied properties 62 1,514 4,415-------------------------------------------------------------------------------------Total revaluation surplus for the period 11,763 16,719 28,154------------------------------------------------------------------------------------- All operations and income are derived from the United Kingdom. 4 Net financing costs Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000-------------------------------------------------------------------------------Finance cost on:Debenture stock 827 914 1,829Preference share dividend 24 24 47Other interest payable 78 34 160-------------------------------------------------------------------------------Total finance costs - ordinary 929 972 2,036Premium on redemption of debenture stock 4,949 - --------------------------------------------------------------------------------Total finance costs 5,878 972 2,036-------------------------------------------------------------------------------Finance income on:Short-term deposits 11 12 22Other interest receivable 171 270 539-------------------------------------------------------------------------------Total finance income 182 282 561-------------------------------------------------------------------------------Net finance costs 5,696 690 1,475------------------------------------------------------------------------------- In December 2006 the Group redeemed £11.70m of its 11.5% First MortgageDebenture Stock 2014 at a price of £141.81 per £100 of stock. This exceptionalpremium has reduced the tax charge for 2006 by £1.48m. The total cost of redemption was £16.65m, leading to a premium on redemption of£4.95m. 5 Taxation Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000-------------------------------------------------------------------------------Tax chargeCurrent tax - Corporation tax charged at 30% 598 1,844 2,998 - Tax in respect of property disposals 2,239 621 621------------------------------------------------------------------------------- 2,837 2,465 3,619-------------------------------------------------------------------------------Deferred tax - Deferred tax on property 609 3,554 5,221 revaluations - Other deferred tax (24) 200 173 - Prior year adjustment - - 277------------------------------------------------------------------------------- 585 3,754 5,671-------------------------------------------------------------------------------Total tax recognised in the incomestatement 3,422 6,219 9,290-------------------------------------------------------------------------------Tax recognised in equityDeferred tax 7 329 1,108------------------------------------------------------------------------------- 6 Profit, earnings per share and net asset value per share ProfitThe adjusted profit before tax has been amended from the profit before tax asfollows: Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000-------------------------------------------------------------------------------Profit before tax 16,421 22,699 36,434 Premium on redemption of debenture stock 4,949 - - Profit on disposal of investmentproperties (2,247) (290) (707) Net gains on revaluation on investmentand development properties (11,701) (15,205) (23,739)--------------------------------------------------------------------------------Adjusted profit before tax 7,422 7,204 11,988-------------------------------------------------------------------------------- Earnings per shareThe basic and diluted earnings per share of 21.67p (2005: 27.47p) has beencalculated on the basis of the weighted average of 59,991,990 Ordinary sharesand earnings of £13.00m (2005: £16.48m). The adjusted earnings per share hasbeen amended from the basic and diluted earnings per share by the following: Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000--------------------------------------------------------------------------------Earnings 12,999 16,480 27,144 Profit on disposal of investmentproperties (2,247) (290) (707) Tax charged on profit on disposal ofinvestment properties 2,239 621 621 Net gains on revaluation of investmentand development properties (11,701) (15,205) (23,739) Premium on redemption of debenture stock(net of tax) 3,464 - - Deferred tax 585 3,754 5,671--------------------------------------------------------------------------------Adjusted earnings 5,339 5,360 8,990--------------------------------------------------------------------------------Adjusted earnings per share 8.90p 8.93p 14.99p-------------------------------------------------------------------------------- The Group presents an adjusted earnings per share figure as the directorsconsider that this is a better indicator of the performance of the Group. There are no dilutive shares. Net asset value per shareThe net asset value per share has been calculated on the basis of the number ofequity shares in issue of 59,991,990 and equity shareholders' funds of £224.24m(31 December 2005: £206.62m). The adjusted net asset value per share has beenamended as follows: Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000--------------------------------------------------------------------------------Equity shareholders' funds 224,238 206,624 215,672 Valuation of land held as tradingproperties 16,507 16,584 18,947 Book value of land held as tradingproperties (1,246) (1,240) (1,282) Deferred tax 31,540 28,251 30,948-------------------------------------------------------------------------------- 271,039 250,219 264,285--------------------------------------------------------------------------------Adjusted net asset value per share 452p 417p 441p-------------------------------------------------------------------------------- 7 Properties Unaudited £000--------------------------------------------------------------------------------DTZ valuation as at 31 December 2006 279,891 Owner occupied property included in property, plant and equipment (1,283) Lease inducements (219) other 53-------------------------------------------------------------------------------- 278,442-------------------------------------------------------------------------------- The properties are stated at market value as at 31 December 2006 and are valuedby professionally qualified external valuers in accordance with the RICSAppraisal and Valuation Standards published by the Royal Institution ofChartered Surveyors. 8 Reconciliation of movements in equity Unaudited Unaudited Audited 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000--------------------------------------------------------------------------------Opening net assets 215,672 193,134 193,134 Total recognised income and expense 13,054 17,665 30,451 Dividends (4,488) (4,175) (7,913)--------------------------------------------------------------------------------Closing net assets 224,238 206,624 215,672-------------------------------------------------------------------------------- The dividend paid in the period represents 7.48p per ordinary share. INDEPENDENT REVIEW REPORT TO A & J MUCKLOW GROUP PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 31 December 2006 which comprises the income statement,balance sheet, statement of recognised income and expense, cash flow statementand related notes 1 to 8. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company for our review work, for this report, or for the conclusions we haveformed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. Deloitte & Touche LLPChartered AccountantsBirmingham6 March 2007 This information is provided by RNS The company news service from the London Stock Exchange