The news sent the company's beleaguered share price tumbling by 7% on Thursday but the stock staged a recovery on Friday when the company announced its financial results. Though the firm posted a loss of £343.8 million for the year to the end of April, it also said that it had secured a further £25 million loan facility with its banks.
The company is one of the main suppliers of software to the NHS IT project, which is currently running around two years behind schedule. ISoft has seen its share price plunge by 90% this year and two other supply partners in the NHS deal allege breach of contract against iSoft.
The FSA is investigating possible accounting irregularities for the results of 2004 and 2005 relating to whether or not iSoft recognised earnings earlier than is permitted.
ISoft now says that it has secured £25 million in loan facilities from its bank and that that will support the company for 15 months. It had announced in June that it would renegotiate its term with its bankers and the new banking deal was struck on less favourable terms.
The software company announced that it has re-confirmed its contract with supplier CSC to continue providing software to the NHS project, but that agreement only highlighted the fact that there was no such re-affirming of its deal with Accenture, another supplier.
"The agreement with CSC is a sensible, positive step," said health industry analyst Tola Sargeant of IT and telecoms research firm Ovum in a research note. "It should provide iSoft with greater certainty about its cash flow since payments are largely tied to incremental software releases rather than deployment."
"Tellingly, however, there is no news yet on a similar agreement with Accenture. In 'Accenture-land' payments are still tied to deployments – clearly bad news for iSoft since Accenture's progress on deployments of its software in the region is at best slow," said Sargeant.
The £12.4 billion NHS IT programme has been beset by problems and delays and managers faced a grilling earlier this summer from the House of Commons Public Accounts Committee on the programme's poor progress. The PAC heard that managers who had worked on the project thought that the procurement processes had been rushed.
Earlier this week The Guardian newspaper published a report which said that consultants CSC and Accenture, who are charged with implementing iSoft's software, said that there was "no believable plan" for the release of the software.
