Westbury's response to the slower housing market is to adopt a strategy of all-out growth, aiming to build more than 7,000 homes a year by 2010, against 4,361 sold in its year to February.

It is already the dominant developer in Milton Keynes and has big land holding around Ashford in Kent, two of areas earmarked by the Government for accelerated development.

It is also looking for opportunities to expand into the other two, the Thames gateway and the M11 corridor, Colin Cole, executive director, said yesterday.

As the housing market turned quiet in the second half of Westbury's 2004/05 year, the house-builder managed to increase its operating profit by £2.1 million to £77.5 million, while selling 2,274 homes for a total of £645 million, down from 2,369 homes and £470 million in the same months a year earlier.

That raised the full-year pretax profit to £120 million, 13 per cent up on 2003/04, while the operating margin rose to 17.1 per cent from 16 per cent.

A final dividend of 11.45p gives shareholders a 20 per cent increase for the year. Despite that, the shares slipped 7p to 420, equivalent to 5.8 times the year's earnings and yielding 4.0 per cent.

The balance sheet was 46 per cent geared at the yearend, down from 58 per cent in February, 2004.

Mary Miller, regional managing director for Westbury Homes, West Midlands, commented: "We have sufficient sites to deliver future growth, together with a strong land bank and substantial holding in the key areas identified by the Government for accelerated development."

Westbury's Space4 factory in Castle Bromwich significantly increased its output by 70 per cent to 2,200 (pre-fabricated) units to attain a break-even position compared to a loss of £2.0 million in the previous year.

An increase in volume from external customers is expected in 2005/06, including the social and affordable housing arena, which are a key priority.

Mr Cole said the Castle Bromwich factory was looking to turn out 2,500 to 3,000 prefabricated homes this year, which would move it into profit. It has the capacity to raise that to over 5,000 if it take on a third shift in addition to the 100 people already working on the site.

But the Telford mortgage subsidiary Incresco has been a disappointment. It lost £1.5 million during the year.

"In the light of its continuing poor results in the second half, we have embarked on a programme to refocus Incresco's operation that will avoid any disruption to our core Westbury Homes business," said Westbury's chief executive, Martin Donohue.

Mr Donohue is retiring in November after ten years as chief executive and 33 years with Westbury. His successor will be Nigel Fee, managing director of the homes division, who became deputy chief executive yesterday.