Xansa profits warning and job cuts

SHARES in highly-rated computers group Xansa were savaged after it issued a profits warning and said it was expanding its current restructuring programme by axing a further 100 jobs.

The former FI Group said a further deterioration in market conditions would push full-year operating profits to the lower end of expectations, which were about £54m. The market greeted the news with disdain by marking the shares down 27%, or 70p, to a more than five-year low at 192 1/2p.

Xansa said the costs of a redundancy scheme unveiled in January are £500,000 lower than expected at £8m, but will result in adding £2m to costs in the year to 30 April.

'Unfortunately, the market for discretionary spend by our clients has tightened further since then,' said executive chairman Hilary Cropper. 'So we are likely to have to make a further 100 redundancies and have chosen to issue this market update, indicating that we expect profits to be at the low end of market expectations.'

The new round of redundancies is expected to cost an additional £2.3m, resulting in a total exceptional charge for the year of £10.3m. The fall in the shares wiped £223m from the value of the group, which at last night's close at 262 1/2p was worth £860m.