Abbey records 43% rise in pre-tax profits to £29.9m

House-building group, Abbey, has recorded a 42.8 per cent increase in pre-tax profits from €26.55 million (£20.9 million) to €37.93 million (£29.9 million) in the year ended April 30th 2000.

The share price rose 10 cents to €3.00 following publication of the results.

The profits were inflated by the inclusion of profits of €6.5 million from the disposal of listed investments and properties. If these are excluded, the growth at the operating level was a more modest 23 per cent, broadly in line with predictions.

However, this growth is unlikely to be repeated this year. Trading will be "more difficult in the next 12 months" said executive chairman, Mr Charles Gallagher.

There maybe a "modest correction" in its main UK market, he added. And in Ireland, Abbey expects to build the same number of houses.

The company, he said, has not seen the dramatic price increases talked about in the Republic. The average sales price of Abbey's three bedroom semi-detached amounted to £105,000 in the last financial year, compared with £98,000 in the previous year; he noted this only represented a £7,000 increase. Nevertheless he sees a continued strong Irish market. The company, he added, is committed to the Irish market and Abbey's Irish business is being developed in a structured way. It will be building in Swords, Lucan and Navan.

The latest figures show a rise in sales from €116.5 million to €142.1 million. Earnings per share grew from 48.62 cents to 70.06 cents. This growth is attributable to core growth, the profits from disposals and currency translation added about 7 per cent.

Abbey remains in a strong financial position with cash of some £38 million at the end of April. This will be reduced by £14.2 million with the payment of a special dividend and the funding of land commitments of £17 million.

While these payments will reduce the cash to around £7 million, the company is continuing to generate strong cash flow. Apart from the special dividend of 40p per share, Abbey has declared a final dividend of 7.0p, making a total of 11p, representing a 10 per cent increase on the previous year. Abbey completed 727 house sales in the UK last year, up from 598, while in the Republic, the numbers were reduced from 310 to 231. It has a land bank of 2,300 plots.

M&J Engineering, the UK plant hire business recorded operating profits of £976,000 on sales of £19.96 million.

There is to be a further rationalisation of this business which will result in a "substantial reduction of capital employed in the business, together with a planned improvement in profitability", the preliminary statement said.