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Massive loss at housebuilder Taylor Wimpey

27/08/2008

Taylor Wimpey has announced a £1.54 billion loss for the first half of 2008, following a series of massive writedowns.

Amid what the company described as "challenging conditions", Taylor Wimpey has been forced take a £690 million writedown against the value of its landbanks in the UK, North America and Spain.

This has been augmented by £816 million of writedowns in goodwill and intangibles at the housebuilder, including on the George Wimpey brand it purchased it July 2007.

Restructuring has also taken a tool on the organisation.

Earlier this year the housebuilder confirmed it was to shed 13 of its 39 operating businesses, with the loss of about 900 jobs, by the end of next September. As a result, the company today took a £40 million restructuring charge, primarily against its UK arm.

However, even excluding these one-off reductions in asset values, Taylor Wimpey made a profit of just £4.3 million, a figure down from £119.8 million for the same period last year.

This represents a fall 39 per cent in UK profits over the period, coupled to a bleak situation in America and Spain, where profits fell by 63 per cent and 85 per cent.

Commenting on the results, Norman Askew, chairman, said: "The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain.

"The board remains convinced of the fundamental value of the business over the medium and long term and our primary focus is to amend certain of the existing borrowing agreements."

It has been reported today Taylor Wimpey is in negotiations with creditors in order to restructure debt – largely acquired during the acquisition of George Wimpey – to allow for the further development of the company.

"Our experience of the downturn in the US housing market has enabled us to recognise the early signs of market weakness in the UK and act swiftly to position our UK housing business for a difficult trading environment," added Pete Redfern, group chief executive.

"While conditions are likely to remain tough in both the UK and the US in the short term, we are maintaining momentum in the UK and we have seen pockets of stabilisation in the US," he concluded.

Chris O'Toole