The news sent the company's beleaguered share price tumbling by
7% on Thursday but the stock staged a recovery on Friday when the
company announced its financial results. Though the firm posted a
loss of £343.8 million for the year to the end of April, it also
said that it had secured a further £25 million loan facility with
its banks.
The company is one of the main suppliers of software to the NHS
IT project, which is currently running around two years behind
schedule. ISoft has seen its share price plunge by 90% this year
and two other supply partners in the NHS deal allege breach of
contract against iSoft.
The FSA is investigating possible accounting irregularities for
the results of 2004 and 2005 relating to whether or not iSoft
recognised earnings earlier than is permitted.
ISoft now says that it has secured £25 million in loan
facilities from its bank and that that will support the company for
15 months. It had announced in June that it would renegotiate its
term with its bankers and the new banking deal was struck on less
favourable terms.
The software company announced that it has re-confirmed its
contract with supplier CSC to continue providing software to the
NHS project, but that agreement only highlighted the fact that
there was no such re-affirming of its deal with Accenture, another
supplier.
"The agreement with CSC is a sensible, positive step," said
health industry analyst Tola Sargeant of IT and telecoms research
firm Ovum in a research note. "It should provide iSoft with greater
certainty about its cash flow since payments are largely tied to
incremental software releases rather than deployment."
"Tellingly, however, there is no news yet on a similar agreement
with Accenture. In 'Accenture-land' payments are still tied to
deployments – clearly bad news for iSoft since Accenture's progress
on deployments of its software in the region is at best slow," said
Sargeant.
The £12.4 billion NHS IT programme has been beset by problems
and delays and managers faced a grilling earlier this summer from
the House of Commons Public Accounts Committee on the programme's
poor progress. The PAC heard that managers who had worked on the
project thought that the procurement processes had been rushed.
Earlier this week The Guardian newspaper published a report
which said that consultants CSC and Accenture, who are charged with
implementing iSoft's software, said that there was "no believable
plan" for the release of the software.
