Baugur, the acquisitive Icelandic investment group that owns retailers Hamleys, Iceland and Jane Norman, has reported profits after tax of £94 million for the first six months of the year - nearly twice the amount it made during the whole of last year.

The group, which has been expanding dramatically in the UK despite enduring a lengthy domestic investigation into alleged accounting malpractice and fraud among its senior executives, has increased its total assets to £893 million as at the end of June.

This figure includes equity of £407 million.

Baugur said its "strong" financial performance was "due to both realised and unrealised gains on the company's investments in the UK, Denmark and Iceland".

The group, which also owns Booker and MK One, claimed today that the combined turnover of the companies it is invested in was £7.7 billion during the past financial year - with combined pre-tax earnings of £327 million before exceptionals.

The most recent available comparative profits figures for Baugur show that for 2004 the investment group made after tax profits of £51.4 million, dramatically down on the £83.5 million it made the previous year.

Then, equity stood at £244.8 million.

Today's published numbers appear to show that Baugur is still expanding successfully despite the investigation in Iceland that has lasted several years and which most recently saw chief executive Jon Asgeir Johannesson face 40 charges, including of fraud and embezzlement.

Mr Johanneson firmly denies the charges and has received the full backing of Baugur.

The uncertainty created by persistent claims of alleged malpractice, which Baugur insiders have argued are politically motivated, forced the group most recently to drop out of the bidding battle for Somerfield, the British supermarket group expected to fetch more than £1 billion.

Although fuller details of the fraud charges against Mr Johanneson emerged after the period covered by today's profits statement, the investigation has dogged Baugur and first hit the headlines in Britain during the course of 2003.

Baugur is one of three partners in a £500 million property fund that will buy British food stores and retail parks. Baugur will take about 10 per cent of the fund. HBOS, the bank, and Sir Tom Hunter, the Scottish entrepreneur, will own over 40 per cent each.

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