iSoft warns of 'significant' NPfIT delays
30 Jan 2006 Click to see the

British healthcare software developer iSOFT has warned that delays in delivering software to the UK National Health Service would slash its previous revenue and profit forecasts.

In a trading statement this morning the company said that total full-year revenue generated from the programme is expected to be around 30m, about 55m pounds below previous expectations, with operating profit seen reduced by about 45m.

According to the trading update the Manchester-based company says that as a result of delays it no longer expects to see any revenue in the second half of the year from delivery of software to the NHS National Programme for IT.

"As has been widely reported, the National Programme for IT in the NHS in England has been experiencing a significant degree of rescheduling. The process to revise delivery plans and timescales within the programme is on-going. As a result it is now clear that delivery of iSoft application solutions to NHS trusts will occur, in general, later than previously expected by the company," the firm said.

The iSoft statement added: "The impact of the rescheduling process is likely to be that the phasing of revenues will be less concentrated in the earlier years of the programme than previously anticipated."

The warning had an immediate effect on the company's share price which at one point had plummeted to a three year low.

iSoft's warning follows a analyst briefing given by health IT services company System C on 25 January, at which the company warned that revenues were down due to delays caused by a "shortage of third party product to implement". Although it did not mention iSoft, System C is active in the three northern clusters using iSoft software.

Industry sources indicate that the delays and rescheduling are related to delays in the availability of the strategic Lorenzo software solution iSoft is contracted to provide for three of the five regions of NPfIT - North West and West Midlands, Eastern and North Eastern.

The delayed system is the second phase of the integrated strategic solution to be provided to NHS trusts under NPfIT [known as P1R2] incorporating functionality such as results and order communications, clinical noting and departmentals such as maternity, theatres and A&E.

Although almost 50 trusts have been provided with a version of iSoft's iPM patient administration system under NPfIT, with a few exceptions these have been community and mental health trusts with a pressing need for a PAS.

But with significant delays in the availability of the strategic P1R2 clinical solution, there is currently little new to offer more complex acute trusts and a growing gap has opened up in the implementation schedule once current implementation work has been completed.

In a statement CfH said: "Some LSP system deployment activity is being re-scheduled. It is because suppliers and their subcontractors, including iSoft, have taken longer than anticipated to deliver effective software solutions that interface with national applications such as the Spine and Choose and Book."

The statement added that in the context of a ten year programme the impact of the rescheduling was "not significant", and said suppliers did not get paid until they deliver. "Completion risk lies with suppliers. We continue to look to our prime contractors who are responsible for managing their software suppliers performance."

In its own statement LSP for the North West and West Midlands, CSC Alliance, told EHI: "Since the start of the National Programme for IT the CSC Alliance has, we believe, deployed more Patient Administration Systems across the North West and West Midlands cluster than the other LSPs working across the Programme. All of the CSC Alliance implementations have used the iSoft solution."

http://www.e-health-insider.com/news/item.cfm?ID=1670

17 Feb 2006

LONDON (Reuters) - Healthcare software firm iSoft Group on Friday denied reports that development problems were at fault for delays in delivering software for a massive IT upgrade of Britain's public health service.

The rebuttal comes in response to comments in two broker notes and a report in the Financial Times on Thursday in which a senior manager in the National Health Service (NHS) appeared to blame iSoft for delays to an upgrade of IT systems.

ISoft shares fell 6.6 percent on Friday, having halved in value since January 30 when the firm warned delays to the upgrade meant annual operating profit would be about half what analysts had expected.

ISoft maintains the delays are a result of wider problems with the upgrade project that are beyond its control.

"The rescheduling has inevitably had a knock-on effect on the rate at which we are being asked to deliver products for the programme," a spokesman told Reuters.

"The rescheduling is not due to any fundamental issues with iSoft's applications."

The spokesman was responding in part to a report by West Midlands strategic health authority (SHA) chief information officer Colin Bexley which appeared to blame iSoft for the delay.

"The development of the strategic clinical NCRS (national care record service) product for the North West Midlands Cluster, iSoft's Lorenzo product, is running significantly behind plan," Bexley wrote in a January 25 report seen by Reuters.

"It is likely that the first Lorenzo clinical modules will not be available until late 2007," Bexley added.

Paul Shobrook, project head at the health authority, told Reuters on Friday there had been problems with the iSoft software interoperating with the NHS's Spine system -- an IT mainframe developed by British Telecom.

"Subcontractors, including iSoft, have taken longer than anticipated to deliver effective software solutions that interface with national applications such as the Spine and Choose and Book", he said.

Analysts said uncertainty over the project was weighing heavily on iSoft shares, with house broker Morgan Stanley downgrading the stock to "equal-weight" from "overweight" on Friday.

"Despite the underpinning of the valuation by maintenance revenue streams, we see more potential for negative newsflow and remain nervous of the shares," Numis Securities analyst David Toms wrote in a recent research note.

ISoft said on January 30 that revenues for the year to end-April would be around 55 million pounds below expectations because of delays to the NHS project, with operating profit coming in at around 45 million pounds compared with the previous consensus forecast of about 80 million.

Any views +/- appreciated. I predict that these will be worth over 300p in 12/15 mths time as the issues are with delays and not loss of contract which is believed to be 500mil over 10 years. I bought in on Friday @169 and then again @159. Todays director buys will strengthen the SP.

azhar - you need to subscribe to traders room - very vibrant discussion on IOT.

IOT Thread

thanks Gausie. IOT looking very blue this am. :-)

Nice one also been watching these after they dropped. Any more bad news and expect a further drop but that goes for any stock i suppose. Got in today with a few to see these well beyond 200p soon but watching very carefully. A gorgeous rise today.

Nice rise today more to follow. Watch this space.

http://moneyam.uk-wire.com/cgi-bin/articles/200604281600362224C.html

A profit warning at 4pm on a Friday afternoon prior to a Bank Holiday weekend.

I am sure small shareholders are chuffed - especially as the shares started collapsing an hour beforehand.

my immedaite response on very little research at all is to watch this one for a great recovery play

my advice, sight unseen, would be to cut your losses and/or AVOID

Get out fast of these it was a warning sign that the directors never bought any for 12 months prior to the profit warning.

Recent directors purchases!

http://moneyam.uk-wire.com/cgi-bin/articles/200602211223297126Y.html

http://moneyam.uk-wire.com/cgi-bin/articles/200602241024378960Y.html

Fly by Night

Red

The Sunday Times April 30, 2006

Isoft accounts under fire
Richard Fletcher
ISOFT, the troubled software firm, has become embroiled in a row with a City analyst about its accounting policies.

News of the row is the latest blow to Isoft, which issued a profit warning on Friday. Its share price has fallen 70% since the start of the year.

Isofts share price plunged more than 10% on Friday as 12m shares changed hands. The unusually heavy trading before the official announcement of a profit warning could spark an investigation by the Financial Services Authority. After the warning the second this year the shares closed at 117p.

In a note to clients last week Charles Brennan, an analyst at the investment bank ABN Amro, claimed discrepancies ... continue to undermine confidence in the accounts.

The row centres on the level of revenues from a crucial NHS contract. In his note, Brennan claimed that the company recognised 29m of revenue from the NHS National Programme in the year to April 2004, compared with the 5m that was apparently disclosed at the time.

Isoft insisted there was no discrepancy. The company said: We recognised that some confusion arose, which is why we increased the level of disclosure in our October 2004 interims and have maintained that level since.

At the outset, our expectation was that our National Programme revenues would comprise of new software product being 5m. It became clear that the contract would also involve the sale of traditional software, and for a longer time than originally expected, being 25m, which had been disclosed within 64m of product sales.

ABN Amro a former adviser to Isoft is not the first City analyst to have questioned Isofts accounting policies. Bridgewell, the companys broker, warned clients this month that the company might have to restate its revenues.

Isoft has been hit hard by delays to a 6.2 billion programme to modernise the NHS computer system. Only two years ago Isoft upgraded its own profit forecasts for the NHS deal boasting that it could make 500m rather than 300m from the contract.

The shares soared on the news and within weeks the firms founders, including Patrick Cryne and Stephen Graham, sold more than 40m of shares at about 425p each.

The recent bad news has propelled IOT towards the top of my recovery watch list and I'm beginning to take a keen interest in the Co. First impressions, fwtw, are that despite hiccups, the NHS software is quite highly regarded and in any case commitments may be such that there is little scope for a change in direction by the NHS; so, the've got to get it right and be paid for it.
Meanwhile, the market is worried there are yet more skeletons in the cupboard and depression is heightened by all the other scandals surrounding this Govt; in addition, the market generally may come under fire from the "Sell in May" brigade, which could hit exposed stocks like IOT hard.
I'm will be looking for an sp sub 100, but I think when I return from Cowes week, this might be in uptrend.
sd.

Stay in Cowes an extra week and you should have your "sub 100" on return.

No happy sailors aboard this fast sinking ship, I'm afraid, and it's only a matter of time before the cry of "every man for himself!!!" will be ringing out loud and clear.

"Company overboard" I'd say skipper!

Harry Peterson: Thanks for that: yet more gloom has come to light since my earlier post, I now see from my Sharescope that the sp dipped below 80p on 6th April and I'm coming across hints that there's not much in the way of assets to support even that price.
But I like to be optimistic about recovery stocks: the storm will pass, holes will be plugged and IOT will stay afloat. It's just a matter of getting right the timing for us to board.
sd.

Bound to be two very opposite POV's at a time like this./ If you're in these shares, it was time to bail after the first profit warning and if still being in will leave you feeling very sore at having to get out now (no other choice IMHO). If you are not/have not been in, then I'm with sd and would not be surprised by a rebound at some stage over the next 6 months when an up s/b would seem to be the ticket, there being no clear-cut fundamental value on which to buy actual shares until another year's accounts are reported without qualification or argument from the institutions.

WDIK
DYOR
sd

while being fortunate in not being a holder of these shares, I would ask any poor unfortunate what is the appeal of continuing to hold on? ...... None of us likes to take a smack, and it is psycholigically difficult to do so, but unless a serious rally is in the imemdiate offing (and why should it be?), then the blinding truth is to take the singed remains and invest it elsewhere.

Squid.

The rewards outweigh the risks at this point.
I feel a stron rally comming on. Lets face it the NHS will make the software work - they have to.

Hello

Hello Lad. That was a waste of time then. DES is flying today though.

transco: I agree that it's now looking more promising, and sooner than I thought.
They have had such bad press recently, surely there can't be any more skeletons left in the cupboard. And like you, I can't see any way that the're not going to be pressed to continue with the NHS contract and be paid for it.
But I do like a chart that shows a long basing area after it's fallen off a cliff (look at BLVN for example) and I'm not sure whether we're going to have that luxury here, so I.m going to continue sitting on the fence.
sd.

Think you're on the right track there squidd.
But - continue and be paid for what when? There will surely be penalties for their late delivery so far - and I don't know if this has been factored in. I just trade on TA - rumours based on fact were rife enough a year or more ago, but the fluff kept them going.

Chaps,

I have worked in the NHS with the ISOFT product and its not that bad.
Any new software has bugs and there will be resistance to change from within the NHS, however my gut feel was that on the ground many users were warming to the new systems.
Keep the faith.... it serves no pupose to put ISOFT out of business the new systems must be made to work.

the shares went down by a third yesterday, as I said before it was a warning sign that the directors bought nothing in the last 14 months

anybody got anything on kazakhmys.

Interesting read for IOT shareholders a possible bid imminent?

http://observer.guardian.co.uk/business/story/0,,1799933,00.html

Does anyone think this company will have a bid on the horizon shortly and if they do I think it will be a bargain!!

Keep well clear of ISOFT is my advice. Reward is outbalanced by RISK. You have been warned

Any share dealing is a risk....but surely the risk is worth it for the short term, it has recovered rather well since it bottomed out and with the bid speculation in the air.
It is interesting to note that there has been a lot of 'notification of major interest in shares' in the RNS for past three days. This must mean something....???

If you want to risk your money on this stock that is your choice, but I would far rather be short than long, for that is much the lower risk!

if the directors didn't even know what a state the company was in, can it be worth the risk? not on your nelly in my opinion

I think a bid on the company is pending...that is why it is going up.

A bid is the only thing to save tbis company .... however, any potential punters need to be aware that the world and his wife have probably already jumped on board in this hope and is the actuality really much better than 50/50.

AZHAR
YOU HAVE STARTED TWO THREADS ON "ISOFT" ..... ARE YOU ONE OF THE DIRECTORS OF "ISOFT" ????

Shares down to near 55p ....the market scribes feel will sink to 35p

so that 55p will look wonderful when the shares are 35p - or even worse

iSoft tumbles on accounts probe news


Shares in iSoft Group tumbled in early deals this morning following last night's revelation that the troubled software firm has commissioned an investigation into possible accounting irregularities.

After the market close yesterday, iSoft said the irregularities affect revenue recognition under its former accounting policy in the financial years prior to and including the year ended April 2005.

The group said it does not expect a material impact on the revenue figures for the group for the year ended April 2006 of 195m-200m that were announced, subject to audit, under its new accounting policy on June 8th 2006.

In reaction to the news, Morgan Stanley pointed out that while the possible accounting irregularities should not have a cash impact for the group, it will hit investor confidence.

The broker added that more significant will be the impact on the renegotiation of banking covenants currently underway with iSoft's creditors.

Morgan Stanley said it believes iSoft's banks are unlikely to agree new financing terms until the group is able to obtain auditor sign-off on its accounts.

The broker added that the renegotiation of iSoft's key NHS contract is also likely to be dependent on the group producing an audited set of accounts, and so may be delayed.

And Morgan Stanley pointed out that concern over its accounts could also affect new signings elsewhere in the business, with potential knock-on effects for profitability and cashflow.

Meanwhile Bridgewell Securities pointed out that the latest news for iSoft sees accounting uncertainty re-emerging as an issue that investors had previously regarded as closed.

The broker added that this issue takes its place beside the uncertainties concerning the NHS's National Programme for IT contract, the possibility of a rights issue to refinance iSoft's balance sheet, and the limited opportunities elsewhere should the group fail to continue to secure its place as a supplier on the NHS contract.

Bridgewell said it expects iSoft's share price to continue to exhibit the same volatility in the near term that has characterised its performance in recent weeks.

and on it goes

it all gets grimmer and grimmer. i see the Daily Mail is suggesting there just may be a possibility of criminal charges ...that may be a million miles away but it is staggering that the suggestion should even arise. the directors, of such high academic/professional standing appear to have been so very silly

My belief is that the company will lose its stock exchange quotation as it may well not be able to file its accounts.
the threat of that possibility of criminal charges will prevent it doing a fresh deal with the banks re its covernants etc. ...and without the bank undertakings etc the auditors may well not be able to sign off its accounts. without its accounts it will lose its stock exchange quotation so the advice is to sell immediately

looks like it's survived for the time being.

bonfield I am janet bennison formerly candolim. I normally post to you on goo and vog. I am pleased to see some stability from good news out today. I have been holding isoft for quite some time now. infact, I can remember back in April they were at 1.60 per share. my shares at present are averaging out at .61per share. Up until today I was sitting on a terrific loss, and thought I must hang on. It not too bad now they have drroped down to .57p. are you stiil in there? I think we need to watch arefully from now on, especially now fsa are involved with accounting irreglararities. best of luck.

someones done well today, but still a long way to go before I would look at it again, however could be a rewarding ride for those brave enough, NHS isn't there only client..

I've never owned this dog! (no offence meant) I went short a couple of years ago but was a bit early. missed the boat on the short side in fact. I was considering buying in today for a short term bounce but I don't like the look of the balance sheet so have held off for time being. Might even go short next week, depends on funds etc.

btw, have you ever considered using stop losses Janet. Could save you a bundle. Not an easy habit to get into, but well worth it.

I don't own any GOO which is a pity as they seem to be the next VOG. good luck with it, I'll do some research on it and see if I can make a case for jumping on the bandwagon.

I do not understand stop losses. If you would like to give me some examples then i would aprreciate that. I think isoft could be rife to be taken over by a private equity firm. I did read a little white ago, that some of these firms were looking at isoft, but they were waiting for their results to come out. Now that this has happened today, I think that this now could be quite possible, allowing for todays news. Need to monitor this on a daily basis. need to think what sort of a view the private equitys firm may be taking over the fsa enquiry.

most takeover stories are ramps to allow city insiders to sell out into an active market. I wouldn't get your hopes up. The company is worth -120m approx according to Evil Knievel, so no one is likely to buy it. Goodwill is generally worthless when push comes to shove.

A stop loss is merely a predetermined price level at which you will sell your investment to prevent further losses. e.g. Buy at 100p, stoploss 90p. Sell if breaks through 90p. simple. If a share rises, you can raise the stop to your buy point for a break even trade if shares retrace and onwards to lock in profits.

Oh if only life were that easy. Market makers know people have stoplosses so they tend to shake the tree and manipulate prices hoping to trigger stops. You sell out only to find the shares soar a few days, hours or minutes later.

Some people use guaranteed stoplosses with brokers but these aren't always a good idea because of the above manipulation by MMs.

Still, in principle they are a very good idea. I'd read some investment books to find out more, starting with The Naked Trader by Robbie Burns.

Good luck!

thankyou bonfield I will try and get hold of this book.

bonfield, have a look at front page of saturdays financial times - isoft eyes bidders. headlines. it said several potential private equity and trade buyers are understood to have approached isoft to buy all or part of its business. What do you make of the news.

news just come out - Isoft attracting possible bidders citing bt group and us computer services corp.

wow, some bid story..... Like I said, you can ignore that piffle. If someone makes a bid I'll eat my hat....

bonfield I have still got my shares, I thought about selling today at 60 pence, but I did not. I really should have sold on friday when they went to .69pence. It is hard to know when to sell any shares. You can guarantee one thing and that is when I sell some shares that they always go up afterwards. I hope you are doing well with your holdings. especially if you have goo. I have a feeling about them that they are going to go up fast on good news. I am still clawing back losses that I made in may. Have you heard of the web sit www.britishbulls.com and the candles that tell you if the shares are bullish or bearish. if you have do you think this is good method to go by? I t would be nice to know when to sell, and when to buy. Good luck.

Janet, Candles may well be useful, British Bulls isn't - it is a very short term look at the charts, one day it could be a buy, the next a sell, and you probably wouldn't have been able to make any money on the share due to the spread and dealing costs. I am not a chartist, but some on this site are, and I'm sure one of them would be able to recommend a good book on the subject if you're interested in going that route - a much better starting place than British bulls in my opinion.

frampton thankyou for your comments on the candles. good luck

Janet, it's not really a comment on candles - which may well be useful if you understand them - but a critisism of British Bulls, which I can't believe can be useful to anyone! Good luck with finding a way to time your trading better.

whats occurring?

news just come out , to do with escaping fines. I have just offloaded 50,000 at 49.5p. I have 70,000 left now. I should have got up a bit earlier this morning, I slept in unusual for me. Pity I did not catch them at .53p. Have you still got yours bonfield? I keep hanging on there hoping someone may try to takeover the company, unfortunatly this does not seem to be happening at the moment. Good luck to those still holding.

I never had any, but I'm glad I wasn't short!

American computer company, Computer Sciences Corporation(CSC) said Thursday it had been awarded a nine-year contract by Britain's National Health Service valued at up to $3.73 billion.

good luck to them!!

they may have been, but clearly IOT has not!

35.5p today...lowest ever...but it will go lower cos anything associated with NHS is doomed.

hyle they did drop down to .30p at one stage last week. They need a takeover bid to get out of trouble. There has been a lot of talk over the past few months that they have been in talks with different companies, but it apears that these talks have not come to anything. Without positive news I think the shares are probably worth what they are at the moment. It was only a few weeks ago when you could have sold at .58p. Thinking back this was around three weeks ago. I do hold some myself.

Hyle have you still got your isoft shares? They seem to be on the way up again, after their big fall. They have been up to .44 today then they have dropped back down to the .40p mark at close. I was watching bloomberg tv the other morning and isoft was mentioned, the reporter said that they shold make good progress over the next two years. The day I was watching bloomberg tv, the shares were .34p per share and since then they have been up to the highest level off .4425p. good luck with this one. They were 1.17 in april this year.

It is a myth that a person drowning rises to the surface three times. ISOFT shares are doomed and will be lost in the murky depths were they have to to be after the sordid actions of certain directors
The newspapers have not caught the full impact of the share sales of certain of the directors. One must go back about 4 to 5 years and see the of number shares held by the directors at that time. Then one needs to move forward month by month and note the share disposals by certain directors. In some cases it is interesting to see the Isoft news releases before the share disposal. What aggravated the situation was the denials that Isoft made ....... evidence has now surfaced of how the market was mislead. I anticipate that there may be more rot to follow. Sell your Isoft shares ...you will not regret that action.

The problem for anyone taking over iSoft will be the horrible lawyers' and accountants' bills for the due diligence process. Before buying a company like iSoft, BT (or whoever) would have to check the whole thing over thrice and get warranties -- from whom?

No one is going to buy the entity and so all the due diligence and warranties will not apply ....at the best part of the trading activity will be purchased.
It just beats me that the directors were flying about the world both buying companies and establishing new deals ...and all the time they had not wiped there own bottoms.
I knew one of the main directors quite well ...this was one who owned a major junk of the shares and he must have gained 30m or so
I was not in any way impressed by him. What talents/ability he had were well concealed. Ironically although i rated him low when i saw him at the business table i certainly saw no evidence of dishonesty or being a trickster. So how/why did this main director allow himself and the company to depart so far from the white line

IOT come in with truly horrid figues as expected with mutterings about ability to survive ..... sp jumps a good 10% on basisi that IOT also say "possible t/o talks are progressing satisfactorily" ...... does anyone have any idea what sort of t/o figure is being bandied about?

0p?

;-))

I have sold out this morning at .45 and a quarter I may buy back if they drop back down to .40p

i bought at 40.5 very recently, and have now placed a running stop at 45 ..... more than happy to take just a modest profit, but of course happier still if a large one materialises

you will definatly sell them today richard.

fine by me! ..... for me, it was always just a speccy punt anyway

Takeover very unlikely for IOT with so much debts at stake. SELL while u can now.

my stop got hit, so took a nice 10/12% profit from a few days holding .... would that i could always do so.

whether or not t/o is likley, i have no real idea, but certainly i can see no good reason for a predator to pay much of a premium if any on current sp ..... no doubt those with more knowledge of this company will take a different view, so i watch with interest

Has anyone any idea why these are 69.75p I understood that a TO price of 69p had been agreed. Cannot find any news to the contrary Have I missed something?