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iSOFT Diary

2nd January 2007

09032006_isoftstand.jpgiSoft, the healthcare software group, was founded in 1994 within KPMG Management Consulting, and spun out of KPMG in 1997.

It was hired by Accenture and Computer Sciences Corporation (CSC), the prime contractors on the NHS IT programme, to provide supply-chain software packages. It aims to supply Lorenzo electronic patient record software, the key patient software for three out of five regions of the NHS IT programme.

In 2005 iSoft won the Business of the Year award for north-west England. In January 2006 it admitted the rescheduling of a £6.2bn NHS IT contract would badly affect earnings. Further profits warnings followed and in June iSoft said it would change its accounting policies and restate profit and earnings from 2003, 2004 and 2005. This change in accounting policy wiped out £165m of historic profit.

We pick up the iSoft story in diary format;

iSoft faces an uncertain future (02 January 2007)

The chairman and acting chief executive of iSoft faces a bleak new year, trying to revive the ailing healthcare software company.

John Weston’s first task will no doubt be to reassure the company’s financial backers that iSoft remains a good prospect.  The banks were reassured by the fact that costs were cut in the first half of last year faster than management expected, but they remain reluctant to commit to funding beyond November 2007.

The company also needs to attract new customers which will prove difficult in the light of well publicised problems.  The prospects for iSoft's involvement in the National Health Service's information technology programme have improved by linking with Computer Sciences Corporation, but new customers remain cautious.

iSoft received £83m in upfront payments from Government (13 September 2006)

The Health Secretary, Patricia Hewitt, has revealed that iSoft received payments totalling nearly £82 million from the Government. Two payments of £58 million and £23.8 million were made to iSoft in 2005 and this year, on each occasion just before iSoft’s financial year closed.

In a written answer to Richard Bacon, the Tory MP and a member of the Public Accounts Committee, Ms Hewitt said the payments did not relate to work on the NHS programme for IT, but to iSoft software that has been in place across the NHS for many years. The Government has always insisted that only payments for services that have been delivered will be made to suppliers for the NHS programme.

However Mr Bacon said that payments to iSoft suggested that the NHS’s IT procurement arm had tried to prop up the software group, "presumably to avoid the disaster that would hit it if a vital software supplier were to collapse?.

Ms Hewitt countered that there was no indication that the payments made by the Department of Health were the subject of the suspected accounting irregularities for which iSoft is being investigated.
iSoft refinances after posting £343.8m loss   (25 August 2006)

iSoft has reported a full year pre-tax loss of £343.8m, mainly as a result of writing down the value of Torex, a company that iSoft bought in 2004.  The company has also stated that Accenture and Computer Sciences Corporation (CSC) have accused it of material breach of contract. iSoft denied the claims, but said that the most likely outcome was a commercial settlement.

However, shares in the company surged after it said it had agreed new financing arrangements with a consortium of banks. The shares rose about 41 per cent to 60p in early trade.

John Weston, chairman and acting chief executive said he recognized that "long-term shareholders will be feeling deeply disappointed by the events of recent months". The company has however now signed an agreement with CSC worth £153m for the delivery of products and services.

UK watchdog probes iSoft accounts (24 August 2006)

The Financial Services Authority (FSA) has launched a formal investigation into "accounting irregularities" at iSoft. The probe is understood to centre on whether the firm misled investors over how much it had earned.

In recent weeks, iSoft has confirmed it found evidence of irregularities affecting its 2004 and 2005 accounts; iSoft has said the problems mainly related to the firm's revenues being stated earlier than they should have been. Growing concern prompted MPs to demand that the Department of Trade and Industry investigate the company. 

Doubts over NHS computer system see iSoft shares fall (22 August 2006)

Shares in iSoft dropped close to an all-time low on August 21st, 2006 as concern increased over the company's main software product, Lorenzo, and its ability to develop the system on time. The Lorenzo software is being built in Chennai, India and must support 60% of Britain's GP practices and hospital trusts. Shares fell almost 6% before recovering slightly to close down 1.5p at 45.25p.

'No believable plan' for completion of iSoft Lorenzo (21 August 2006)

A confidential review of iSoft's release schedule, produced by iSoft’s prime contractors CSC and Accenture, says there are no immediate prospects for the completion and delivery of the Lorenzo electronic patient record software, the key patient software for three out of five regions NHS IT programme.

The EPR was first meant to be delivered to two-thirds of the NHS starting from 2004. Now, the earliest date that the first hospitals are due to get the Lorenzo system is 2008.

There are 39 outstanding issues relating to Lorenzo, 13 of which it identifies as red - requiring immediate work. Among these critical concerns were clinical safety and iSoft’s ability to plan and estimate how long its software development would take.

A spokesperson for CSC confirmed that in February 2006 a joint action plan was prepared and has been implemented. CSC has seconded a substantial number of staff to work with iSoft on the further development of Lorenzo.

Sheffield abandons iSoft iPM implementation (16 August 2006)

Sheffield Teaching Hospitals NHS Foundation Trust has abandoned plans to implement a new patient administration system from iSoft, the first stage of the local Care Records Service (CRS) software being offered to it under the NHS Connecting for Health programme. After delays stretching back to 2004, the independent foundation trust, will now instead seek an “alternative solution?.

iSoft faces formal probe (8 August 2006)

iSoft faces the prospect of a formal investigation after a preliminary examination of its past accounts found evidence of irregularities. Initial investigation launched two weeks ago by Deloitte, its new auditor, concluded that there were grounds for a further probe. Deloitte is looking at the financial years ended April 30 2004 and 2005.

iSoft said: “The board has deemed it appropriate to suspend Steve Graham, who was commercial director at the time, pending the final outcome of the more formal investigation. One other employee has been put on special leave of absence. The other employees that appear to be involved have since left the group.?

Shares closed down 3p at 56½p.

iSoft gets a bit cross with the Maltese (2 August 2006)

iSoft has gone on the attack to defend its reputation in Malta, where it is currently bidding for a significant integrated health service IT system at Mater Dei hospital on the Mediterranean island. John White, iSoft’s director of corporate communications, took issue with Malta Today’s reporting of issues at the company.

In a letter to the newspaper, White blamed “inaccurate overseas media sources?, in part, for what he called “inaccurate reporting? of iSoft’s difficulties. White told the Maltese that Isoft was a “strong? company.

iSoft shares fall on accounting fears (21 July 2006)

Shares in iSoft fell after the software group's new auditors, Deloitte and Touche, warned it of possible accounting irregularities in its revenues during previous financial years.

iSoft said it had commissioned an investigation into the possible irregularities, which affect the financial years prior to and including April 30 2005. The company added that there was no suggestion of a misappropriation of funds. Analysts said the announcement of an investigation was likely to further delay the publication of the group's full-year results.

iSoft shares fell 10.5 per cent to 55¼p.

iSoft delay halts result presentation (8 July 2006)

iSoft announced the second delay in a month in reporting its annual results. iSoft said it had failed to finalise terms on lending with its banks and on contracts with its customers and so was unable to update the market.

The company is in talks with its banks to try to agree new terms on lending after it abandoned an aggressive accounting policy that saw it book software licence fees as revenues in some cases years before the contracts were completed.

Shares in iSoft fell 10¼p to 53p.

Accenture examining alternatives to iSoft (4 July 2006)

The chief executive of Accenture, Bill Green, has said that the company is examining alternatives to its sub-contractor iSoft in relation to two contracts to modernise NHS IT systems in the North-east and Eastern and regions of the NHS. Asked about recent developments at iSoft, Mr Green confirmed that contingency plans had been developed if the company could no longer continue with iSoft.

Over the past six months, iSoft has lost approximately 80% of its market value after a series of profits warnings resulting from delivery delays.

iSoft CEO resigns (14 June 2006)

The chief executive of the UK health IT software company resigned, less than a week after the company restated its accounts. iSoft said that Tim Whiston was resigning with immediate effect.

Whiston said "My primary concern is for the future success of iSoft and the welfare of its customers, management and staff. I have become increasingly concerned that my continued role with the company may represent a source of negative speculation and comment, being an unhelpful distraction to those within it."

Chairman John Weston, acting as chief executive until a replacement is appointed, said the business was "creative and innovative", despite the current problems.

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Luke Sturgess-Durden

Tuesday 22nd August 2006 @ 17:14

The graph of the isoft share price makes interesting viewing...

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