Fujitsu’s decision to restrict bidding for UK government contracts after the Post Office Horizon scandal has wiped out the value of goodwill on the balance sheet of the Japanese technology group’s UK business.
Fujitsu Services Holdings, which provides IT services to customers across Europe, recorded a £78.6mn “impairment of the carrying value of historical goodwill” in its UK business in the year to March 2024, according to accounts published by Companies House. This compares with goodwill of £78.8mn for its UK business a year earlier.
The £78.6mn impairment represented more than half of the European business’s previous £149.7mn goodwill, a measure of the price paid for a company beyond the value of its net assets. In total, the net book value of the group’s goodwill dropped from £135.6mn in 2023 to £40.3mn in 2024.
In what has been described as one of the UK’s biggest ever miscarriages of justice, more than 900 Post Office branch managers were convicted between 1999 and 2015 in cases involving unreliable data from its Horizon accounting software supplied by Fujitsu.
Following a public outcry in the wake of an ITV dramatisation of the events, Fujitsu told the government last January that it would pause bidding for state contracts until an inquiry into the scandal had concluded, except where there were “existing customer relationships or an agreed need for Fujitsu skills and capability”.
Although the company has continued to win a small number of contracts, Fujitsu Services Holdings said in its financial accounts that management had “revised business plans to account for the impact of their decision to pause bidding activity on new government contracts until the conclusion of the Post Office IT Inquiry”.
Management had since “taken a prudent view of forecast future cash flows due to uncertainties over short-term business performance”, it added.
UK public sector contracts awarded to Fujitsu since its commitment to pause bidding totalled £1.4mn in value, the lowest figure for comparable periods in more than a decade, the Financial Times reported in November.
Partly due to the impact of the goodwill writedown, the group posted a widening of its loss before taxation to £219.4mn during the 12 months to March 2024, compared with £40.6mn in the previous year. Revenue nudged down over the same period.
Fujitsu is bracing for further costs. The group said in its accounts that in response to the findings of the inquiry, which heard closing statements in December, it “expects to take appropriate and proportionate measures to engage with the UK Government with respect to a contribution towards the UK Government’s compensation schemes” for victims.
It added the final cost of these government compensation schemes — two of four main schemes for affected former sub-postmasters, with the other two delivered by the Post Office — was “not yet known, but is likely to be significant”.
Fujitsu Services Holdings said the carrying values of goodwill in Ireland and Denmark — at £9.9mn and £5.2mn, respectively — were also impaired in the most recent year.
Fujitsu said in a statement that its UK business remained “committed to the UK market and to delivering for our customers”, adding it was “well positioned to adapt to adverse market effects”.
It said that revenues rose 2.6 per cent during the year to March 2024, driven by business with private sector customers.
