Fears grow for future of iSoft after annual results are delayed

The healthcare software provider iSoft, which is already on the critical list, indefinitely postponed its annual results yesterday to make more time to discuss its banking facilities and its major contract to overhaul the National Health Services information technology infrastructure.

The shares, valued at close to 400p at the start of this year, tumbled 10.25p to 53p, valuing the Manchester-based company at less than £122m.

ISoft blamed a stinging profits warning announced in January on delays to the NHS's multibillion-pound National Programme for IT. Three months later, a second profits warning followed.

In early June, the software company revised its full-year profits forecasts for a third time and adopted a more cautious accounting policy, which some critics argued should have happened long before.

Tim Whiston, the chief executive, resigned less than a week later with a pay-off of £550,000. He is yet to be replaced.

Accenture, a key contractor of its software for the NPfIT, heaped more pressure on to iSoft's beleaguered management last week by suggesting that it may be prepared to use another supplier on the project.

The latest gloomy news prompted experts in the City to cast doubt on iSoft chances of survival.

David Toms, an analyst at Numis Securities, said: "We see a risk that iSoft is now caught in a death spiral. Customers, including NPfIT, are reluctant to sign any business until the financial standing is clarified.

"At the same time, the banks are unwilling to finalise the funding situation until there is clarification with customers."

He values the shares at just 35p and told clients to sell their holdings.

ISoft's annus horribilis has witnessed a stunning fall from grace by one of the country's brighter technology companies. Set up in 1994 by the accountancy group KPMG, iSoft floated on the London Stock Exchange in July 2000 before embarking on a series of acquisitions.

A merger with its main rival, Torex, three years later created a clear market leader and put it at the front of the pack when the NPfIT contracts were dished out.

The company was awarded three of the five contracts on offer and seemed well set, before the ambitious NHS project was beset by delays and spiralling costs.