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Date: Wednesday 11 Sep 2002

LONDON (ShareCast) - Property developer A&J Mucklow today announced profits up 3% in the 12 months to June but warned that it could be difficult to increase earnings this year. Its shares fell 6.7% in response.

Pre-tax profit was reported as £12.3m in the year to 30 June 2002, up from £11.9m the previous year, and increased its adjusted net asset value per share to 332p, up 7.8%.

Pre-tax profit excluding profit on the sale of investment properties improved marginally from £11.78m to £12.16m. Adjusted earnings per share increased by 13.4% to 15.38p on the share capital reduced by buy-backs.

Chairman Albert Mucklow said he "must view the outlook for the current year with a certain amount of caution".

The group's vacancy rate, he said, had risen from 5.1% at the beginning of the year to 7.4% at the year-end. "If this trend continues it may be more difficult to progress earnings," he said.

However, he said the group continued to make new lettings at firm rates and rent reviews are helping. "While at this stage it is difficult to predict the outcome for the current year, our financial position remains strong and I expect the group to give a good account of itself," he said.

The board is proposing a final dividend for the year of 5.61p per ordinary share, which together with the interim already paid, will make a total of 10.29p for the year, an increase of 7.5%.

During the year the company bought back and cancelled 1.994m of its ordinary shares at an average price of 204p for a total cost of £4.06m.

The board has again decided not to seek renewal of the authority to buy back shares this year, but may do so at a future date if shareholders are supportive of such a proposal, it said.

The gross annual rent-roll at the year-end was £19.75m, little changed from £19.89m in 2001. New lettings and additional income from rent reviews during the year contributed £870,000 and £420,000 respectively, while property vacancies and disposals reduced the annual rent by £1.24m and £190,000.

The group's indebtedness (borrowing net of cash) as at June 30 amounted to £70.56m, up from £68.89m. The gearing (net of cash) was 40% compared with 41% a year earlier.

Managing director Rupert J Mucklow said the group intended to concentrate its activities over the next 12 months on marketing vacant space and improve rental and capital growth.

He said: "We anticipate letting conditions to remain difficult and we are unlikely to embark on any new speculative developments until there are clear signs that tenant demand and business confidence are improving."

The shares fell 16p to 221.5p this morning, valuing A&J Mucklow at £143m.