Debt is being reduced apace at Barratt Developments but the house builder is not quite yet ready to resume dividend payments.
Some brokers had expected Barratt to return to the dividend standard after a four year gap, but shareholders will have to wait until after the end of the current financial year (June 2013) before they derive any income from their holdings.
"No dividend will be paid in respect of the 2011/12 financial year. However, the board recognises the importance of both capital growth and dividend income to our existing and potential shareholders, and is committed to re-introducing the payment of dividends," the group's preliminary results statement said.
If that disappointed the market then talk of proposing a final dividend in respect of the current financial year to June 30th with "a conservative dividend cover" also failed to have income investors dancing in the streets.
"The board intends to adopt a progressive dividend policy as profitability grows, with the aim over time of achieving a target dividend cover of around three times," the statement said.
With net debt tumbling to £167.7m at the end of June from £322.6m a year earlier and with the board mouthing the usual upbeat "director-speak" about future prospects, the market had clearly expected a little more generosity.
The median forecast for the full year dividend in respect of the year to June 30th 2012 from the clutch of analysts covering the stock was 0.55p.
The divi disappointment overshadowed an otherwise impressive set of numbers from the firm, although most of these had been released in Barratt's July trading statement.
Revenue climbed to £2.32bn from £2.04bn the year before, in line with market expectations.
The group had flagged full-year pre-tax profits of around £110m, and duly delivered £110.7m before exceptional items, a 159% increase on the previous year's outcome of £42.7m. This was slightly higher than the £108.84m the market had been expecting.
Statutory profit before tax was £100.0m, after the company took a £10.7m hit on the revaluation of a former joint venture interest. Last year, the company made a statutory loss before tax of £11.5m after exceptional charges of £54.2m.
Diluted earnings per share (EPS) were 6.9p versus a loss per share of 1.4p the year before. With exceptional items stripped out, EPS soared to 8.1p from 2.7p last year, below the 8.27p the market had pencilled in.
Completions, excluding joint ventures, increased by 14.1% in the year to 12,637 from the previous year's total of 11,078. Panmure Gordon wins the sweep-stake on this key performance indicator, as it had forecast exactly that number of completions.
Average selling prices increased to £180,500 from £178,300 the year before, with private average selling prices increasing by 1.5% to £201,800 (2011: £198,900).
The operating margin hardened to 9.5% in the second half of the fiscal year and was 8.2% for the year as a whole, versus 6.6% the year before. Panmure Gordon's mole at Barratt Developments was on the money with this prediction as well.
Net tangible asset per share at the end of the reporting period stood at 213p, up from 211p a year earlier, and well ahead of the 169.7p at which the shares
were trading before the results announcement; the shares fell back sharply on the results, dipping as low as 158.2p in the first two hours of trading.
"Some progress was made during the year in terms of the availability of finance for our customers, with higher LTV [loan-to-value] in the new build sector seeing a gradual improvement," said company Chairman, Bob Lawson.
"The launch in July 2011 of the government-backed FirstBuy shared equity scheme has helped to stimulate improved demand from first-time buyers. The launch, in March 2012, of the government-backed NewBuy mortgage indemnity scheme should ensure that this progress continues by effectively increasing to 95% the LTV available to buyers of new homes," Lawson suggested.
Meanwhile, Chief Executive Mark Clare revealed the group reckons it could move to having around 450 active sites in time; in fiscal 2012 the average number of sites was 387. With around 450 active sites, 15,000 completions a year, including those from joint ventures (JVs), becomes feasible. In fiscal 2012, the number of completions, including JVs, was 12,857.
"Since 1st July 2012, our sales performance has been in line with normal seasonal trends. In the last nine weeks, net private reservations per active site per week have averaged 0.50 (2011: 0.50) and our private forward order book (excluding JVs) currently stands at £609.6m (2011: £528.7m)," Clare divulged.
"Our strategy is capable of delivering significantly enhanced returns without any improvement in market conditions, and in the current financial year we expect to make further good progress, with over half of completions forecast to be delivered from our more recently acquired higher margin land," Clare said.
Although the share price took a hit, brokers Panmure Gordon and Jefferies kept the faith. The former kept its "buy" rating and 190p target, while the latter sticks with its "buy" rating and 204p target.