Taylor Wimpey, the embattled housebuilder, said it was still locked in talks with its bankers about revising the terms of its debt convenants as two massive writedowns blew a £1.54 billion hole in first-half profits.

The company said it hoped to conclude talks by the end of the year, dashing investors' hopes that a relaxation of its £1.7 billion net debt burden could be weeks away.

The new homes specialist, which has already given warning that it will breach its banking arrangements over the full year, insisted there were no fundamental obstacles in the way of a deal with its bankers.

At the same time it confirmed plans to scrap the interim dividend, arguing the payment was inappropriate given current trading conditions.

Shares in Taylor Wimpey fell 12.9 per cent to 45.25p in early trading, 86.6 per cent less than its stock was worth a year ago and valuing the company at just £477.6 million - 12 months ago it had a capitalisation of £3.5 billion.

Taylor Wimpey, led by its chief executive, Pete Redfern, has been battling to stabilise its funding position as it and its rivals in the housebuilding sector reel from the downturn in the property market and high refinancing costs imposed by lending banks.

The housebuilder has already taken the axe to staff, shutting 13 of its 39 operating businesses with the loss of about 900 jobs by the end of next month. Today, it took a £40 million restructuring charge, primarily against its UK arm.

But this came as Taylor Wimpey also took a £690 million writedown against the value of its landbanks in the UK, North America and Spain.

This, combined with an £816 million writedown of goodwill and intangibles at the acquisitive builder, including on the George Wimpey brand it now owns, meant it plunged into a £1.54 billion pre-tax loss for the first half.

Pre-tax profits before these exceptionals still collapsed to just £4.3 million for the six months to the end of June, compared with £119.8 million this time last year. Operating profits almost halved.

Mr Refern described first-half conditions as "very challenging" but insisted there was still long-term value in the business.

"To this end, the group is engaged in constructive dialogue and is not aware of any issues which would prevent thise amendments being finalised by the end of this year," he said.

"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."

Mr Redfern insisted that the North American arm was "fighting fit" despite the plunging housing market in the country.

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