iSoft admits to huge losses
iSoft, the company at the heart of the NHS IT upgrade, said on Friday that it had recorded a pre-tax loss of £343.8m in the last year, in its long-awaited full-year financial results.
iSoft, which is being investigated by the Financial Services Authority (FSA), had been scheduled to release these results on 11 July. It was forced to delay them by over a month after admitting that potential accounting irregularities had been discovered.
Losses of £343.8m are a huge downswing from the previous year, when iSoft recorded profits of £2.2m. However, even the company admits that its results may not be entirely accurate. "The independent auditors have been unable to give an opinion as to whether the financial statements give a true and fair view in respect of the accounts for the year ended 30 April 2006 and the comparative figures for the year ended 30 April 2005."
Despite this, iSoft's share price — which has been dropping all year — rose by some 30 percent to 55p at Friday lunchtime. This recovery was fuelled by the news that iSoft had secured new financial agreements with its banks.
iSoft has been subcontracted by Accenture and Computer Sciences Corporation (CSC) to supply clinical records software to the multi-billion pound NHS IT upgrade. iSoft is reportedly up to two years behind schedule in supplying this software. The company admitted on Friday that it has been accused of "material breach of contract" by Accenture and CSC.
Earlier this month, a leaked report revealed that there was "no believable plan" for iSoft's Lorenzo software.
On Friday morning, Accenture declined to comment on iSoft's financial results or reveal more details of the allegations of "material breach of contract".
In its second-quarter results, issued back in March 2006, Accenture said it faced losses of $450m through its involvement in the NHS IT project, due in part to the failings of some subcontractors.
"There will be significant delays by one of Accenture's major subcontractors in delivering software that is critical to the systems' deployment, creating additional cost implications including more interim solutions", Accenture admitted.
NHS Connecting for Health (CfH) issued a statement on Friday morning in which it noted iSoft's financial results had been published.
"We note that iSoft has confirmed that it has the financial support and resources to continue with the development of the products and services it is delivering under the NPfIT. And it confirms that it will make the Lorenzo product available through 2008, which is in line with NHS CfH's expectation," the statement said.