The Investment Column: Wilson Connolly

HOUSEBUILDER Wilson Connolly has no truck with the idea it is just lying back and enjoying the much-hyped surge in house prices this year. It claims there are other reasons - such as its strategy - behind the 42 per cent jump in first half profits.

The figures are really an indication of the orders received in the six months up to February, when it was all doom and gloom in the housing market. The earnings growth has come from Wilcon's decision to get out of bargain basement housing - it used to have the lowest average selling prices in the industry - and take itself up market.

That's seen it exit the North-east and build a greater number of detached, four- and five-bedroom homes. The group's businesses serving the Anglian, Eastern and Southern regions now accounts for half of completions but 80 per cent of profits.

The change in housing mix has seen average selling prices in Wilcon's estate rise 15 per cent to pounds 85,000. Margins climbed from 10.5 to 11.8 per cent.

Analysts expect pre-tax profits of pounds 62m and earnings of 22.1p per share in the full year as Wilcon benefits from land sales and its traditionally stronger second half. The company is set to beat its 1989 profits record this year and the shares, up 4.5p yesterday at 185p, have further to go.