The French defence electronics maker Thales has reported worse than expected profits after it wrote down the value of its UK subsidiary Racal.

Thales bought Racal during the height of the technology boom, but the British firm has been hit by the downturn in the telecoms sector.

Thales said the fall in value of Racal was mostly behind the 530m euro charge (�331m; $469m) it was taking.

The charge contributed to a Thales posting a net loss of 366m euro (�225m; $319.9m) for 2001, compared to a profit of 201m euros a year earlier.

The company's military related orders grew thanks to greater spending on electronic equipment in defence budgets, but profitability at its IT and services businesses fell.