Xansa writes off £497m on one deal

COMPUTER services group Xansa has provided a painful example of the outrageous valuations during the dotcom boom when it took a £497m write-down on a single acquisition.

The charge represents 68% of the £725m Xansa paid for software group Druid in an all-paper deal completed at the peak of the boom in March 2000. But executive chairman Hilary Cropper said the collapse in the value of technology assets had forced the write-down.

Operating profits rose 9% to £49.1m in the year to 30 April. This was in line with market expectations, which have been downgraded from £60m after three profit warnings in the past eight months.

The write-off left a £507.8m pre-tax loss, compared with a £3.5m profit previously although the dividend was held at 3.24p a share. Xansa shares, 382p in January, fell 5p to 100p.

News of the charge comes a week after Xansa revealed that banking group HBOS had axed their lucrative joint venture four years early. Cropper said trading had deteriorated significantly in the second half and was unlikely to improve before the start of 2003. 'We expect a pretty tough market for some time,' she said.