J Sainsbury has beaten City forecasts in its first results since Delta Two, the Qatari investment, walked away from a takeover bid, with pre-tax profit growing by 20 per cent during the first six months of the year.

The supermarket group reported pre-tax profit up from £194 million to £232 million for the six months to October 26. City consensus forecast profits at £231 million.

Like-for-like sales, which excludes gains from new stores opened in the first half of the year, rose by 4 per cent after Sainsbury's reported a 5.1 per cent rise in the first quarter of the year which slowed to 3 per cent in the 16 weeks to October 6.

Justin King, chief executive at Sainsbury's, declined to comment on trading during the current third quarter, instead pointing to TNS market research data, showing a 5 per cent annual rise in UK grocery sales in the 12 weeks to November 4.

Overall sales increased by 2.8 per cent to £9.9 billion. Sainsbury's will raise its interim dividend by 25 per cent to 3p a share.

Mr King said: "While there are tighter constraints on current consumer spending, we have a strong Christmas offer and the company is significantly stronger than it was when we launched our Making Sainsbury’s Great Again plan in 2004."

Sainsbury's also revealed a new joint venture agreement with Land Securities, the property company which this morning announced plans to demerge its company into three businesses.

The joint venture will own three freehold properties, with potential to expand retail space, worth £113 million. Land Securities, which will develop the sites, is already the landlord of two of the spaces.

Darren Shapland, chief financial officer at Sainsbury's, denied that the company's property development plans had been put in place to "placate" Robert Tchenguiz, the entrepreneur, who has built a 10 per cent stake in the supermarket group which holds a property portfolio worth £8.6 billion.

It is understood Mr Tchenguiz had been hoping that one of the two parties who have made takeover approaches to Sainsbury's this year - including a CVC-led consortium and, most recently, Delta Two - could unlock value from its property portfolio, possibly by splitting it out from the operating company.

Mr King said today that he was not disappointed that Delta Two's "non-bid" for Sainsbury's had not gone ahead.

The supermarket spent £7 million on "costs relating to the approach from Delta Two" in notes to the half-year accounts.

Morgan Stanley and UBS were the main investment banks advising Sainsbury on the 600p bid approach that began in July but was pulled last week.

Sainsbury employed an army of lawyers from Linklaters to advise on the bid while its pension fund took separate advice from Denton Wilde Sapte.

The Qatar Investment Authority-backed group cited the current credit crunch for its decision to walk away from the £10.6 billion deal which would have required an additional £500 million equity injection to keep the offer alive.

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