News

Impairment charge slashes Abbey profits

10 July 2008 09:45:00

Abbey has scrapped the final dividend after a €20.6m impairment charge sent full year profit plunging nearly two-thirds and the shares to a new low.

Pre-tax profit for the year to 30 April tumbled to just €16.8m from €45.3m the year before on revenue down to €180.3m from €192.2m. It said the charge was against land and work in progress arising from depressed trading conditions.

"Whilst we believe these impairments are prudent based on current market conditions, if the market significantly deteriorates further write-downs may be needed in future," it warned.

The firm, which completed 716 sales during the period, 467 in the UK and 249 in Ireland, said market conditions have continued to deteriorate during the last two months and current sales rates are at "very low levels".

"In the circumstances it is likely the housing division will deliver materially fewer houses this year."

Conditions have worsened noticeably in recent weeks, added Abbey, blaming the difficulty on the "dramatic contraction of the mortgage market".

"Future prospects will be governed (amongst other factors) by the ability of the group to avail of opportunities to buy land on advantageous terms," it said.

"In these circumstances sensibly maximising the cash resources at the disposal of the group is essential and, therefore, the board will not recommend a dividend for consideration at the Annual General Meeting in October."

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