Humberts has written off £18.4m because the ‘goodwill value’ of companies bought over the last year had fallen with the declining market.
In its end of year results the surveyor, which specialises in the Southern residential sector and is 20% owned by Vincent Tchenguiz, said following the write down it had made a total loss after tax of £17.5m for the year ending September 2007.
Current market conditions
‘Against the background of the current performance of the business in today's market, the Group has reviewed each of the acquired companies' business plans,’ said Humberts chairman John McLean. ‘As a result of current market conditions and the requirements of the accounting standards, a goodwill impairment write-down of £18.4 million has been made.'
Goodwill is a value based on a company’s intangible attributes such as reputation and good customer relations.
Over the past year the company has gone on a spending spree buying estate agencies Thomson Currie, Halls Participation, Richard Harding and Fox & Manwaring.
The company said it will now stop its strategy of buying companies and will focus on integrating its new acquisitions.
Humberts also said talks are underway with a third party regarding a possible offer for the business and that it has received a number of further approaches and entered into preliminary discussions with those parties as well.
Recipe for challenging times
The company said uncertainty over interest rates, the problems with US subprime lending, concerns over the introduction of Home Information Packs (HIPs) and the Northern Rock debacle had slowed business in the second half of 2007.
Shares in the company tumbled in January from 26p to 8p a share following a profit warning and the departure of its chairman and chief executive, Tim James and Max Ziff.
Today its shares started trading at 8.5p a share.