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CSC wounded as it books £943m NHS IT charge

CSC wounded as it books £943m NHS IT charge

Disastrous performance of project leads to big financial hit

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CSC, which is facing cancelled projects, investor lawsuits and an aggressive fraud investigation, has announced a near billion pound charge on its disastrous NHS IT project.

The company, facing problems on numerous fronts, saw its third quarter results knocked into the red, with a $1.39 billion (£874 million) group loss – following a £943 million charge on the NHS National Programme for IT (NPfIT).

CSC has suffered the writedown following the government's decision to terminate the project, which is the world's largest civilian IT scheme. The company has invested hundreds of millions of pounds into the work, but has only delivered patient systems to three major trusts in nine years.

The powerful Public Accounts Committee said last year that CSC's work on the project was so poor that the government needed to reconsider whether to give the company any more work.

Without the writedown, CSC said it would have made a profit on steady revenue in the most recent quarter. Revenue for the third quarter totalled $3.76 billion, down 5.8 percent year-on-year.

Today, the company announced the appointment of Mike Lawrie, of UK software giant Misys, as its new chief executive. Mike Laphen, who is retiring, announced his departure in a week that the company revealed an ongoing fraud investigation by US regulators. CSC gave no reason for the departure other than retirement.

CSC is facing an accounting scandal and deepening financial problems in the Nordics and Australia. Fraud allegations, levied by US regulator the Securities and Exchange Commission, claim CSC committed DKK 500 million (£59 million) worth of stock manipulation through incorrect financial reporting.

CSC has maintained former employees were to blame for the problems, and in its attempts to solve the issues it has replaced many staff and vowed to tighten controls.

Last week, it emerged that CSC had lost a large project in Demark mired by cost overruns and angry political arguments. The Danish national police dropped the project, known as Polsag, in which the cost had ballooned from the DKK153 million (£17 million) budgeted to DKK425 million (£48 million). CSC has not commented.

Several of its projects are understood to have been impacted heavily by strikes among the company's workforce, over a pay dispute. One of its largest projects in Denmark, with the country's Tax and Customs Administration, is also encountering problems. A senior executive of that administration has accused the company of wilfully obscuring the truth about the project's progress.

CSC is also being sued by a large pension fund, which is a major shareholder. The fund alleges that the company painted an inaccurate and unfairly positive picture of its prospects on the NHS programme.

Laphen today again expressed confidence in what work may remain for CSC in the NHS: "Notwithstanding the NHS charge, discussions continue toward defining a programme scope and a market potential that builds upon our accomplishments to date."

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