The booming house-building industry in Ireland and Britain continues to boost Abbey's business which saw a more than doubling of pre-tax profits from £9.1 million to £19.3 million in the year ended April 30th, 1998. The results benefited from a conversion of sterling profits to pounds to the tune of £2.4 million. However, excluding this, there is still very strong underlying growth. Shareholders are to benefit from the results which have topped brokers' predictions by a wide margin. A final dividend of 6p net per share has been declared, bringing the total to 9p, a 32.4 per cent increase on the previous year. Earnings per share doubled from 15.76p to 33.88p.
Further strong growth is to continue, according to executive chairman, Mr Charles Gallagher. A similar number of houses, around 511, are expected to be built in Britain but the numbers in Ireland should increase from 284 to more than 300 this year in a "very strong market", he said. The numbers increased from 178 to 284 last year.
Abbey's house prices should rise in line with inflation or "a little more". The average house price in Ireland was £80,000 last year compared with £71,000 the previous year, representing a 12.7 per cent increase. Mr Gallagher attributed this to a housing mix and price inflation. Asked about margins, he said they are similar to those in Britain. The Bacon Report, he added, has had no impact on its operations as there are "hardly any investors" involved in the purchase of its houses which are directed towards first-time buyers. He sees no cracks on the horizon, noting the very optimistic projections for the economy. The number of house sales rose from 420 to 511 in Britain last year. "UK activities benefited from the strong market conditions enjoyed in the last quarter," he said. Abbey had a land bank with 1,826 plots (1000 in Ireland) with planning permission at the end of the year. Since then, it has purchased a further 730 plots and is seeking more. The group's results were also boosted by a strong performance from M&J Engineers, its British plant hire business which increased its operating profits from £284,000 to £1,761,000 on turnover of £14.8 million. The conversion from sterling accounted for part of the increase but the bulk came from the core business. Further growth is projected.
Rental income rose from £631,000 to £778,000, 85 per cent of which came from Irish investment properties. A revaluation threw up a £5 million surplus.
Abbey remains in a very strong financial position with net cash of over £17 million and net assets per share have risen from 147p to 197p. Acquisitions, said Mr Gallagher, are "unlikely". Instead, the cash, and cash flow, will be used to expand the core business.
