Housebuilder Barratt Developments today said it would not pay a full-year dividend after revealing a 13% drop in pretax profit to £392.3m.

When one-off items such as impairment of goodwill and intangible assets were taken into account profits dropped 68% to £137.3m.

The company said that forward sales at 30 June were £697.6m, a 51% drop on the year before.

‘Whilst we have produced a satisfactory set of results in an extremely challenging market, there is little prospect for any material improvement in trading conditions until mortgage finance and customer confidence return,’ Barratt chief executive Mark Clare said. ‘In the meantime, we have successfully refinanced our business. Our focus today and looking forward is to maximise sales revenues, reduce costs and generate cash to reduce debt.’

Barratt said that net debt stood at £1.65bn at 30 June, compared to £1.3bn the previous year. During the last three months, the company has arranged a £400m refinancing and agreed revised covenants with its lenders to avoid breaches. The company took on £1.8bn of debt following its purchase of rival Wilson Bowden last year.

Barratt said that it hoped to complete the sale of its commercial division, Wilson Bowden Developments for £200m in the next six-12 months. When impairment is taken into account, the commercial division made a £61.7m loss last year.

Barratt shares opened 3.5% up at 162p.