Yesterday, home builder Tamawood Limited (ASX: TWD) announced its financial results for 2016 and the market responded positively. The share price closed at $3.58, up 4.1% for the day.

Revenue rose 6.7% to $101.8 million on the back of a 12.3% increase in construction revenue and earnings-per-share (EPS) were up 25.5% to 31.5 cents. The company maintained its dividends for the year at 25 cents, representing a 7.9% fully franked yield at current prices. Tamawood is debt free and finished the period with $2.6 million in cash.

The company discloses in the Chairman’s Report that profit would have been higher without one-off costs relating to the closure of offices in Melbourne and Adelaide during the year. However, the result was also boosted by a one-off $850,000 settlement relating to a legal dispute and the details of this are contained in the notes to the financial statements.

No information was provided in the annual report about the reasons for divesting the Melbourne and Adelaide operations which were previously part of the company’s expansion plans. In February’s half year report, the company said that it would look to franchise Melbourne and Adelaide over the following 12 months to 18 months.

Tamawood’s expansion into New South Wales is going well with revenue up 54.7% to $10.9 million for the year. It plans to open more offices in New South Wales over the next twelve months which should drive further revenue growth.

The franchise division’s external revenue fell 37.0% to $1.0 million for the year. The weak result was due to poor market conditions in regional Australia thanks in part to the mining downturn. In its half year report, the company said that it had chosen to run a number of coastal franchises that were coming to the end of their term directly through its Brisbane and Sydney offices.

In February 2016, Tamawood announced a 30% rise in year-to-date sales which should set the company up for a strong 2017.

The company also anticipates that it will launch its Resiweb software product in the next year and that this will have a positive impact on the franchise division. Internal use of the product has contributed to Tamawood’s tight cost control and the company now hopes to further monetise the software through external sales.

With an exceptional dividend yield, Tamawood could be worthy of adding to your watchlist.

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Motley Fool contributor Matt Brazier has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.