The housebuilder has had to write down the value of its assets, including the George Wimpey brand at a total non-cash cost of £816 million, as well as landbanks in the UK, North America and Spain totalling £690 million
The company said its priorities now are cash management and cost reduction. It confirmed it would close 13 of its UK 39 operating businesses by the end of September and look to make further overhead reductions in North America.
Norman Askew, chairman, said: "The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain."
He also indicated that the company was in talks with banks to relax its lending covenants. "... our primary focus is to amend certain of the existing borrowing agreements. To this end, the Group is engaged in constructive dialogue and is not aware of any issues which would prevent these amendments being finalised by the end of this year."
Pete Redfern, group chief executive, said: "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. Whilst 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. We believe that both markets continue to be attractive on a longer-term view."