All eyes on iSoft as Deloitte probes full-year numbers

Battered IT company iSoft and its auditors Deloitte will be on the spot next
week as the company, which has been plagued by accounting problems, reports its
final results.

iSoft, a provider of software for the NHS’s national IT programme, was forced
to overhaul its much-maligned accounting policies last month and reduce revenues
from £215m to £200m and pre-tax profits from around £22m to £7m.

Analysts believe the changes were made because iSoft was using a £70m
off-balance sheet credit facility and recognising revenues from NHS work far too

Deloitte itself will have to give a view on the numbers. Analysts believe the
main point the Big Four firm will have to consider is the state of iSoft’s
banking covenants.

After restating its accounts, iSoft said the changes would have a major
impact on its banking covenants and force an amendment to its borrowing rules.
Since then, the company has been in talks with its lenders.

Deloitte’s view ‘will depend on whether iSoft has made any progress in
negotiations over its covenants. I have no news on how those talks are
progressing, but we could have an update with the results’, one analyst said.

An iSoft spokesman confirmed that the company would be providing an update on
the banking covenant situation, but would not comment on whether the accounts
would be qualified. Deloitte also declined to comment.

If the company has successfully renegotiated its covenants, analysts say
Deloitte may be able to give the accounts a clean bill of health.

The final results will be released on Tuesday, 11 July. The results will be
the first hosted by new chief executive John Weston, who replaced Tim Whiston,
who stepped down last week.

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