The increase came as turnover dipped slightly to €46.1 million but operating margins climbed from 26 per cent to 28 per cent.

Michael Taggart, the company's chief executive and joint founder, said that housebuilding activity had remained strong last year in its main Irish and British markets.

"The sector, although showing signs of slowing, still augurs well for 2005," according to Mr Taggart.

Housebuilding delivered about 60 per cent of the firm's turnover last year but Mr Taggart said that much of its future pipeline was commercial.

He was expecting "substantially larger profits" this year.

The firm was recently outbid in a £200 million-plus (€300 million) race for one of London's landmark buildings, the Trocadero in Leicester Square. It is believed to have been the first runner-up to Golfrate, which is planning to gut the building after paying £225 million for it.

Last year was a period of change for Taggart Holdings, with the company consolidating its expansion in the Republic by purchasing an office base at Molesworth Street in Dublin.

Further "satellite" offices were opened in Belfast and Manchester, while representative offices were established in the Slovakian capital, Bratislava, and in Florida. Mr Taggart said the firm's strategy was to maintain momentum in its core markets while building on its commercial and international portfolios.

He pointed to particular opportunities in the US and central and eastern Europe. Taggart Holdings has already set up a 40-apartment scheme with retail and office outlets in Bratislava and also has interests in Latvia.

It is also working on projects in Florida and New York.

The firm hopes to draw 30 per cent of its earnings from operations abroad within three to five years, according to Mr Taggart.

At the end of last year, Taggart Holdings had total work in progress of €60.3 million, with €17.3 million of this coming from sites under construction. The remainder represented land at varying stages of the planning process. Shareholders' funds grew from €16.5 million to €24.4 million over the period.

Taggart Holdings was founded in 1989 by Mr Taggart and his brother, John. It hit the radar screens of the financial world in the Republic early last year after being linked with a merger approach to listed housebuilder McInerney.