Shares fall 12% after announcement of new £50m writedown and deteriorating prospects for housebuilding arm

Construction and housebuilding firm Galliford Try is planning to make a further £50m writedown in the value of its landholdings as it warned profits for the coming financial year may be lower than expected.

Galliford Try said in a statement to the City this morning that it is likely to write down the land because of “further significant deterioration” in the housing market since its announcement of a £9.1m land writedown in its full year results in September.

The firm's shares slumped more than 12% in early trading as it said the prospects for its housebuilding division have deteriorated further since the recent banking crisis, and warned it is now taking “a more cautious view of prospects for the remainder of this financial year, and the next year”.

Galliford Try also said that just 70% of anticipated sales for the financial year to next June have been reserved or completed, compared with 81% at this time last year. Cancellation rates have also increased to 28%. It said: “The already extremely difficult market took a further significant step downwards following the financial sector crisis from mid September.”

Greg Fitzgerald
Fitzgerald: "experiencing the most difficult trading conditions for a very long time"

Nevertheless, the firm said that overall its business, including construction and civil engineering, is performing well, with an order book of £1.8bn and 88% of anticipated revenues for the financial year secured. It added that 90% of its orders are in the public or regulated sectors.

Greg Fitzgerald, chief executive, said: “Although we are undoubtedly experiencing the most difficult trading conditions for a very long time, the board considers that the spread and depth of our business and operations across the construction and housebuilding sectors gives the group significant resilience.”

The firm also announced the departure of non-executive director Jonathan Dawson from the business, for personal reasons. He will be replaced by Andrew Jenner, now finance director of Serco Group.