Racal write-down spikes Thales guns

THE acquisition of British defence and telecommunications group Racal two years ago has returned to haunt French rival Thales. It has been forced to write off £285m in goodwill on the £1.82bn purcahse.

The e460m write-off pushed Thales's total goodwill write-downs to e709m, and left the French company, formerly known as Thomson-CSF, nursing a net loss of e366m, despite sales ahead 20% at e10.2bn. Thales chief executive Denis Ranque said the Racal write-downs largely reflected a fall in the value of its telecoms businesses, which specialise in telecoms services, positioning and call centres.

But he said the acquisition of the rump of Racal in a swansong deal by its architect Sir Ernest Harrison had been a good deal for Thales. 'The Racal acquisition has made Thales a major defence contractor in the UK, which has the highest military spending in Europe,' Ranque said.

Thales builds Starstreak anti-aircraft missiles in Belfast and submarine sonars in southern England. New defence orders booked by Thales in Britain last year rose 128% to e1.8bn, and it is in phase two studies to provide Britain's next generation of aircraft carriers.

Overall new orders rose 19% to e11.1bn and operating profits rose 19% to e667m.