Shares in Abbey, the house builder, rose by 28 cents to €3.48 following better than expected interim results that showed a 46.6 per cent increase in pre-tax profit to £14.7 million (€18.7 million) in the six months to October 30th, 2000.

In a continuing effort to return value to shareholders, cash-rich Abbey has declared an interim dividend of 26p per share, well up on the 4p in the comparable period last year. This follows the payment of a 40p special dividend last May.

There could be a contraction in profits in the second six months because of the bad weather but profits for the full year are expected to be higher. Although the group has substantial cash balances it warns that the "high cost of equity capital suggests that further growth be funded at least in part through borrowings rather than equity".

Chairman, Mr Charles Gallagher, said he does not expect an increase in borrowings in the short term. He said Abbey continues to retain substantial cash on its balance sheet significantly greater than its immediate day to day needs.

"These balances have been increased by the programme of investment disposals, reduction in capital employed in our plant hire division and high levels of retained earnings." The group "is committed to the managed growth of our housing business where turnover has escalated sharply in recent years".

It had net cash of £39 million at the end of October compared with £17 million a year earlier.

The latest results show a 30.9 per cent rise in sales from £49.07 million to £64.2 million. Profit margins improved from 20.4 per cent to 22.9 per cent. Abbey had the benefit of an increase in interest receipts from £490,000 to £840,000 but taxes increased from £2.96 million to £4.3 million. Earnings per share rose from 18.29p to 29.70p.

A breakdown of sales shows growth from £40.4 million to £55.2 million in building and property development, a rise from £8.2 million to £8.9 million in plant hire, and a drop in rental income.

The house-building division completed 357 sales; 227 were in the UK (226 in the previous period) and 130 (119) in this State. Sales of 450 houses are expected for this year compared with 225 last year. The UK market was steady and prospects for the second half are "fair", Mr Gallagher said.

The "Irish market remains buoyant and sales continue to be encouraging".

Abbey has completed the £7.5 million purchase of the second phase of 220 plots of its planned development in Swords, Co Dublin.