The sponsor of the Oxford - Cambridge  Varsity Boat race saw its shares “catch a crab” and almost  halve in value last month as it issued a profit warning and wrote off £100 million of goodwill on its 2008 acquisition of US based Cambridge Systems.

The firm prompted the issue when it released a trading statement which showed on top of the £100 million write off it was expecting impairment charges of £12m to take into account.

It was not totally unexpected given the firm had staged a conference call with analysts in August last year to warn on sales and was forced to defend itself over its accounting practices.

It said for the year ahead it expected its operating profits to be at the lower end of the analysts’ spectrum would not be issuing a 2010 dividend and would be looking to cut costs.

It also saw founder and Chief Executive David Andrews announced he was to step down but would retain a link with the firm as an adviser to its Chairman.

Chief Financial Officer Ken Lever has taken on the Chief Executive role while a new CEO is found but the news was not a hit with the analysts.

There have been accusations “aggressive accounting” in layman’s terms overpromising on projected financial performance, something which is denied by the company.

Speaking to the Daily Telegraph Mr Lever said. “The constant reference to aggressive accounting is very unfair. It’s extremely misleading. It’s important we don’t make a crisis out of a drama.”

He said the Cambridge acquisition had “proved to be disappointing” but that “it isn’t an issue about accounting - it’s about an acquisition that has brought difficulties.”

Analyst David Brockton at Execution Noblesaid: “Xchanging has understandably reviewed some of the carrying value of the Cambridge acquisition and will impair around £100m of goodwill and £12m of intangibles. This compares with £166.4m of crystallised goodwill from Cambridge on the balance sheet in 2009 and £16.7m of contractual customer relationships. Clearly a significant intangible remains on the balance sheet, after this assessment, and there appears to be no change to accounting policy.

“In the circumstances the board has decided not to pay a dividend for 2010, which raises questions around cash generation and our assumptions for payout in successive years.

“[The] update addresses some of our concerns, but does not resolve them fully and raises many further issues. Further deterioration in US activity, the dividend cut and departure of its founder create additional uncertainty as to the precise value and opportunity of Xchanging. This is compounded by the group’s approach to capitalising a relatively high level of intangible activity.”

There has been little talk from the London market. Given the core contract Xchanging enjoys with the market both in terms of its back office processing roles which its assumed from both the Lloyd’s and the London company markets there are some which have been concerned as to what the impact of the issues could be.

“Part of the remit for Xchanging was to work with the London market in process reform and that includes the joint funding of some of the initiative which we have already carried out and plan to do in the future,” said one underwriter.

At present the market is working on the latest versions of the Electronic Claims File Initiative and the Accounting and Settlement process with the London Market Group announcing in January that this year would be one where the core aim was to finish what it has started in terms of the two initiatives which will see the role out of enhanced functionality in the months to come.

Xchanging was unsuccessful in the tender process to work with Lloyd’s on its exchange system which is now operating within the market to facilitate the electronic transfer of endorsements following a pilot scheme with IBM having been chosen as the preferred partner at the start of last year.

However there are those in the market which believe that the company’s troubles are not likely to spread across to impact on the market itself.

“The fact is the fundamental product is sound the share price may have taken a hit but the company is still there and there is no reason for the market to panic,” said one Claims manager. “This is an industry which is based on crisis and the response to it but we have not got to the crisis stage yet.”