Abbey tiger roars in bricks and mortar jungle

Building bridges may be the current politically correct way to profit in the business of winning hearts-and-minds but, if it's hard cash you're after, building houses is a much better proposition. Publicly quoted housebuilder Abbey has emerged from a stick trading patch to become a tiger in the kingdom of bricks and mortar. Half year results this week show that Abbey more than doubled its pre-tax profits from £3.6 million to £7.6 million in the period to end October last on a turnover 38 per cent higher at £39.8 million. Apart from profits, Abbey's substantial cash flows has produced cash balances of £16.8 million, now representing 27 per cent of assets. Executive chairman Charles Gallagher said there were no plans to divert cash into acquisitions. "I would rather buy land and build houses."

Assuming the continuance of economic buoyancy, Abbey is on course to achieve record profits this year of around £14.5 million, which would represent annual growth of about 60 per cent. The slide rule statistics look robust. Profit margins have stretched to 12.7 per cent and earnings per share more than doubled to 13.08 per cent . Shareholders' hearts-and-bank balances are cemented with a bridge-building 36 per cent increase in interim payment to 3.0p per share. Assuming record annual earnings the shares are not without appeal.