Newspaper article The Evening Standard (London, England)

Accounts Glitch Worry Is a New Blow for iSoft

Newspaper article The Evening Standard (London, England)

Accounts Glitch Worry Is a New Blow for iSoft

Article excerpt


NHS supplier iSoft sent shivers through its shareholders today as it emerged it is investigating possible accounting irregularities.

The software group, best-known for its controversial role in computerising medical patient records, was forced to put out a statement after the market closed yesterday, owning up to "possible accounting irregularities affecting revenue recognition(in the years up to and including 30 April 2005".

While iSoft, which has already postponed announcing profits for this year, said the affair would not have an impact on predicted revenues of between [pounds sterling]195 million and [pounds sterling]200 million this year, the market is clearly factoring in more bad news.

The shares slid 53/4p to 56p.

Numis analyst David Toms said: "Our guess is that contrary to iSoft's historic claims, there may actually be some customer recourse." In particular, he wonders if a large Irish contract, signed last year, could come under the auditor's scrutiny.

The other issue for shareholders is the effect the investigation will have on iSoft's negotiations with its lending banks over technical breaches of its banking covenants. There is also increasing talk that the NHS will terminate iSoft's contract - worth about [pounds sterling]300 million in revenue.

Unsurprisingly, Toms is advising clients to sell and has set a target price of just 35p.

In the wider market, leading shares took a hammering as volatile commodity prices knocked billions off leading mining shares. Gold fell more than 2% while copper prices extended yesterday 5% fall.

The FTSE 100 index lost 37.6 points to 5733.3, echoing drops on Wall Street and in Asia.

Antofagasta slipped 111/2p to 397p while BHP Billiton lost 17p to 1024p, the latter hit by the threat of further strike action at the Escondida copper mine in Chile in which it has a 57.5% stake.

Mining companies are facing strikes around the world as thousands of miners seek greater financial reward for creating their employers' record profits. …

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