Shares in healthcare software provider iSoft yesterday plummeted more than 30 per cent after the group said annual profits would be lower than expected because of a change in accounting policy.
The firm, which disclosed it was in talks with banks to change aspects of its banking facilities, said pretax profit for the year ended April 30 was likely to be between £3 million and £7 million, compared with its forecast of £17 million to £22 million under previous accounting rules.
In the company's third profit warning this year it said: "The board has conducted a review and concluded that a change of accounting policy for revenue recognition is needed, to one that more appropriately reflects the changing nature of the business."
ISoft - whose largest office is based on Aston Science Park in Birmingham - has been plagued by concerns over delays in a project to upgrade IT systems for the NHS and market speculation about financial problems at the company, which the company had previously denied.
In May, Lord Warner, the Government minister heading the multi-billion pound plans to put 50 million patient records on to computers, said the project might be delayed by over two years.
"This remains the greatest area of uncertainty. While we would not expect iSoft to be kicked off the programme or fined, this is of course a possibility and will remain a concern," analysts at brokerage Bridgewell said.
Company broker Morgan Stanley said it suspended its recommendation on iSoft shares. "We don't feel that we have enough visibility to offer a recommendation," it wrote in a research note.
ISoft said it was aiming to reduce its operating cost base to between £180 million and £185 million from £210 million by the end of the current financial year and it is likely that around 150 people, or 15 per cent of its UK workforce, will be made redundant.
It may also sell some non-core assets, including freehold properties, it added in a statement. ISoft also said it was in talks with its banks about new terms for its borrowings and expected the discussions to reach conclusion early next month.
