Beleaguered iSoft reports £344 million loss

25-08-2006

Beleaguered software firm iSoft, which was contracted to upgrade the NHS' computer systems, has reported a £344 million loss just a day after revealing that it is to be investigated by the UK's financial services watchdog over possible "accounting irregularities".

The company said that its shareholders would be "feeling deeply disappointed" over its performance in recent months, during which the IT firm has twice delayed the publication of its annual results due to changes to accounting rules and identified errors in its financial records.

News of iSoft's losses will come as a further blow to investors, with the company reporting a loss before tax of £343.8 million in the year to April 30th.

The company said that the loss included an impairment charge of £351.4 million, mainly relating to the goodwill on its acquisition of the retail software company, Torex, in 2004.

Despite the reported loss, iSoft shares rose on the publication of its results, after the company announced that it had reached an agreement with its banks over the future financing of the firm.

Chairman and acting chief executive of iSoft, John Weston, said the company believed the new deal with its financiers provided the firm with a "short-term platform from which to address the long-term future".

"The second half of the financial year ended April 30th 2006 was a turbulent period for iSoft and long-term shareholders will be feeling deeply disappointed by the events of recent months," he concluded.

Mr Weston stressed that he shared the disappointment of shareholders, but added: "I am determined to see through a series of actions and change that I believe are necessary to put this company back on a solid footing and enable it to capitalise on its underlying product strengths and experience".

Former chief executive of iSoft Tim Whiston resigned in June, before the firm announced on August 8th that it had completed an initial investigation into potential irregularities in its accounts.

The provisional inquiry, conducted by iSoft's auditors, Deloitte, found that there was evidence of irregularities concerning the company's annual accounts for 2004 to 2005, with revenues apparently stated earlier than they should have been.

The Financial Services Authority (FSA) is now looking into the firm's finances. The regulator will reportedly examine whether iSoft misled investors over how much it earned as part of its probe.

The accounting scandal is the latest problem to beset the company, whose £6.2 billion contract to upgrade the NHS' IT network has been hit by a string of delays.


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