ACCENTURE, the American information technology group that is rolling out new computer systems to GPs and NHS hospitals, refused to rule out dumping iSoft as a contractor yesterday as the British healthcare IT company said that it had secured backing from its banks for another 15 months.

The US group refused to expand on its relationship with iSoft, beyond noting comments that it made in March, when it blamed iSoft for its expected losses on the NHS work and said that it was “actively exploring all options with respect to the contracts”.

John Weston, iSoft’s recently appointed chairman, conceded that Accenture was “still looking at other alternatives”, but said that he was “reasonably optimistic” of a suitable outcome for iSoft. “We’re waiting to see what happens,” he said.

ISoft is working on two contracts with Accenture, in the North East of England and the East Midlands. It is working with CSC, a rival to Accenture, on the North West and West Midlands regional deployment.

CSC said yesterday that it was “fully committed” to iSoft as it extended an existing agreement with the company to supply its software to seven NHS trusts in London and the South East of England.

Shares in iSoft, which is now under formal investigation by the City’s chief regulator, recovered 13½p to 56p as the company said that it had come to an agreement with its banks that would avoid it breaching its banking covenants.

ISoft, based in Manchester, has hit trouble in recent months after a series of profit warnings prompted a change in its accounting policies that would put it in breach of those covenants.

Analysts said that it was reassuring that the company had secured the backing of its banks, but highlighted uncertainty about its role in the NHS’s £6.2 billion IT modernisation programme.

ISoft admitted yesterday that both Accenture and CSC had accused it of breach of contract. However, it said that correspondence with both companies had so far not resulted in any notice to end any contracts.

Earlier this month, BT, which is running a fourth contract in the NHS’s National Programme for IT, replaced IDX Systems as its software supplier, with Cerner, a rival, fuelling speculation that iSoft could be dropped from projects.

ISoft’s problems began in January when it announced that the NHS programme was behind schedule, pushing revenue that it had expected to book in that financial year into future financial years. A second profit warning was made in April.

In June the company said that it would change the way it booked revenues, having previously booked revenues over the life of contracts rather than when revenues were received.

The decision to change its accounting policies uncovered the possibility of accounting irregularities, prompting an internal inquiry that led to the suspension of Steve Graham, the commercial director, and the starting of a Financial Services Authority investigation.

ISoft yesterday reported its full-year results for the year to April 30, having twice delayed publication. It fell to a net loss of £382 million, from a profit of £5.9 million the previous year, after wiping £350 million from its balance sheet with a goodwill writedown.

Operating profits rose from £8.5 million to £13.3 million, despite some expectation that the company would fail to show a profit.

ISoft said its core Lorenzo product will start to be delivered by the end of next year, up to two years behind schedule.

COSTLY REMEDY

• The company has secured £141 million of banking facilities maturing in November 2007
• Refinancing charges are expected to be £1.2 million and the cost of interest will increase
• Extra interest will be charged on outstanding facilities at the end of this year, starting at 5 per cent a year for the first three months of 2007, rising to 7.5 per cent for the next three months, and then 10 per cent a year
• The lenders could be granted warrants over 3.7 per cent of the company’s share capital

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