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Last Updated: Friday, 25 August 2006, 09:04 GMT 10:04 UK
Troubled iSoft hit by 344m loss
Computer mouse and keyboard
MPs have demanded an investigation into the firm
Troubled software firm iSoft has reported a 344m ($649m) annual loss and said accounting problems have caused "deep disappointment".

The firm, central to the 6bn upgrade of the NHS computer system, is being probed by regulators into accounting irregularities in 2004 and 2005.

The investigation is believed to centre on whether the troubled firm misled investors over how much it had earned.

But iSoft shares rose 48% as it sealed a deal with banks over its financing.

ISoft delayed its results earlier this year after reports of accounting errors and its auditor, Deloitte, said it was unable to state whether the accounts just published gave a true position of the firm's financial position.

New rules

The company reported a 343.8m pre-tax loss in the year to 30 April, mainly as a result of writing down the value of Torex, a company that iSoft bought in 2004.

Long-term shareholders will be feeling deeply disappointed by the events of recent months
John Weston, iSoft acting chief executive

ISoft's results - which saw sales rise 8% to 201.7m - were reported under a new accounting policy after the firm admitted earlier this year that it had found evidence of irregularities affecting its 2004 and 2005 accounts.

The problems - now being investigated by the Financial Services Authority (FSA) - mainly relate to the firm's revenues being stated earlier than they should have been.

A previous independent probe into iSoft's accounting problems also concluded there were grounds for a more formal investigation and resulted in the suspension of commercial director Steve Graham.

Troubled project

The firm has been blamed for delays to the 10 year multibillion upgrade of the NHS computer system.

It is supplying software to health trusts in the Midlands and north of England which will operate a new national electronic patients register.

The National Audit Office warned in June that the huge project faced "significant challenges" if it was to be delivered on time and budget.

ISoft has been accused of breach of contract by Accenture and CSC, the two firms overseeing the project, which it denies.

Hospital consultant
The software will allow hospital and GP systems to communicate

Acting chief executive John Weston said the last year had been a "turbulent" one and that a stream of negative publicity had damaged the firm's reputation and customers' willingness to sign contracts with it.

"Long-term shareholders will be feeling deeply disappointed by the events of recent months," he said.

"I share that disappointment but 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."

Political pressure

On Wednesday, growing concern about the health of iSoft prompted MPs to demand that the Department of Trade and Industry also investigate the company.

The FSA's inquiry is the latest in a long line of problems to hit the group. In June, its chief executive Tim Whiston resigned while another employee has been put on a leave of absence.

Announcing its results, iSoft said it was unable to predict at this stage what its revenues would be in the current year.

It also said it was likely to cut at least 150 jobs, equivalent to 15% of its UK workforce, as it tries to reduce costs.

UK watchdog probes iSoft accounts
24 Aug 06 |  Business
ISoft uncovers accounting errors
08 Aug 06 |  Business
Software firm to probe accounts
20 Jul 06 |  Business
ISoft delays results publication
07 Jul 06 |  Business
Boss resigns at struggling iSoft
14 Jun 06 |  Business
iSoft hit by NHS contract delays
29 Mar 06 |  Business

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