It is hard not to have a little sympathy with Mr Charles Gallagher's conservative views about running a business. The market-place is splattered with reminders of the risk-takers who jumped onto bandwagons only to find they were overstocked with landbanks, and houses, at a crucial nose dive in the market.

But his stewardship in a hostile market environment has not yet been tested. Over the past five years, his record has been laudable, though it could be argued that growth would have been considerably better, and Abbey would have been much larger, had it used its large cash balances - it had cash of £38.24 million (#48.6m) in its balance sheet in April 2000, representing a whopping 41 per cent of shareholders' funds.

Nevertheless, sales almost trebled from £45 million (#57.1m) in 1996 to £112 million (#142.2m) in 2000. Pre-tax profit has more than quadrupled from £6.2 million (#7.9m) to £29.9 million (#38m), but the growth is more modest if investment income and profits on the disposal of investment properties are excluded.

Earnings per share have almost quintupled from 11.17p (14.18 cents) to 55.18p (70.06 cents). And shareholders have benefited: dividends doubled from 5.5p (6.98 cents) to 11p (13.97 cents) and on top of that there was a special interim dividend of 40p (50.79 cents) per share. With the disposal of investment properties, and reduction in cash balances, its fortunes are now entirely dependent on the housing markets in the Republic and the UK, and the performance of M & J Engineers, its plant hire business in the UK.

With the purchase of some of its own shares, it has implanted an earnings per share booster which will make growth look better. Its latest results showed a rise in sales from £49.1 million (#62.34m) to £64.2 million (#81.5m) in the six months to October 31st last.

Pre-tax profits went ahead from £10 million (#12.7m) to £14.7 million (#18.7m) and earnings per share grew from 18.29p (23.22 cents) to 29.70p (37.71 cents). It built 227 houses in the UK and 130 in the Republic.

The auguries for the full year are good. While the company has warned that the prospects for the second half are "fair", with the UK "steady" and the Republic "buoyant", it should meet brokers' estimates of a 20 per cent growth in operating profit for the full year.

Surprisingly, the profit margins in the UK - percentage wise in the late twenties - are higher than in the Republic, where they are in the early twenties, and at the moment, the UK is where most of its business is.

But with Mr Gallagher's prediction of 1,000 houses in three to five years time, the balance could change with some 60 per cent in the Republic and 40 per cent in the UK. If the present margin regime were to be maintained, and if the Irish market remains competitive, then group margins could fall.

Abbey says it is committed to the managed growth of its housing business, where sales have escalated sharply in recent years. "However, the current high cost of equity capital suggests that further growth be funded at least in part through borrowings rather than equity."

That would be a sea change for the group which, up to now, has financed all its development from internal cash flow. Indeed it is hard to see this happening in the short-term. It had cash of £39 million (#49.52m) last October and it would need substantial capital investment to dry all that up. Indeed, it should still have a surplus of cash at the end of April when its financial year ends.

Despite the good earnings and dividend growth, the share price, at around #3.60, while above the 2000/1 low of #2.40, is still well below the #6.03 reached three years ago.

That reflects the shunning of small cap companies and the disinvestment policy of Irish institutions. It is a bit of a quirky situation. The group is valued by the stock market at around £97 million (#123m) while the cash at the half way stage represented some 38 per cent of that.

Abbey is conservative - Mr Gallagher once unsuccessfully tried to be elected under Margaret Thatcher, although he has no active interest now. His steady eddy approach should ensure the group survives any storms and should remain among the safest housebuilding companies.

That makes it unusual. It is unusual for another reason. Unlike the majority of Irish quoted companies, it has no share options for its executive directors. That is regressive and will ensure that it continues to be a family dominated company.