System C issues profit warning as NPfIT slows

System C Healthcare has issued a profit warning citing a siginificant slowdown in deployments under the NHS IT programme as a result of a three month "hiatus" during the handover from Accenture to CSC.

A spokesperson for System C told EHI: "The hand-over from Accenture to CSC caused a significant hiatus in activity for us during that period. With the hand-over now complete, the amount of work is increasing steadily, but we know now that the ramp-up will not be as fast as we expected."

They added: "This means that in the time left to us in our current financial year, we won’t be able to make up the shortfall in our numbers – hence the need for profits warning to the City."

System C is one of the main companies implementing computer systems as a sub-contractor to the local service providers (LSPs) delivering the £12bn NHS National programme for IT (NPfIT). In its trading statement the company said "System C continues to operate in challenging conditions in our core English market".

The firm indicated that the slow down stemmed from the protracted contract wrangles last year between NHS Connecting for Health and one of its prime contractors, Accenture, eventually resulting in Accenture’s replacement by Computer Sciences Corporation.

The trading statement says, "Accenture’s announcement in September 2006 of their withdrawal from the national programme, and the final transfer of LSP responsibilities from Accenture to CSC in the North-east and East clusters on 8 January 2007, led to a hiatus in deployments during this period."

With the LSP position resolved for the two clusters concerned System C says that deployment progress "is beginning to improve, but it is now clear that the ramp-up will be more gradual than the rapid acceleration we had previously expected".

As a result the company now believes that its results, while profitable, "will be significantly below current market expectations for the year ending 31 May 2007".