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Revaluation deficit sends Mucklow into red

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Date: Wednesday 27 Feb 2008

LONDON (ShareCast) - Property group A&J Mucklow gave back some of its recent gains on news it slipped into the red at the half way stage due to a revaluation deficit in 2007 versus a surplus the year before.

The group posted a pre-tax loss of £11.4m for the six months to 31 December 2007, having made a profit of £16.4m a year earlier.

It attributed the deficit to a £19.9m reduction in the market value of the firm’s investment properties as at 31 December 2007 compared with a surplus of £11.7m at the end of 2006.

The adjusted pre-tax profit, which excludes deficits on revaluation of the investment portfolio and profit on the disposal of investment properties, came in at £8.5m, up from £7.4m.

Mucklow blamed higher interest rates, a downturn in investor sentiment and the credit crunch for a 6% fall in the net asset value per share to 406p from 432p as at 30 June.

“The lack of liquidity in the property market may force some unit trusts and private investors to sell over the next six months, potentially causing a glut of investment properties on the market,” said the group.

“However, the prospect of lower interest rates and a number of lowly geared investors like ourselves waiting on the sidelines, should be sufficient to stop any further significant slide in values,” it added.

The interim dividend rose 20% to 8.03p per share.