iSoft posts healthy profits, outlook rosy

Sonya Dowsett

LONDON: British software firm iSoft Group Plc painted an optimistic outlook for the future, as it reported a 60 percent surge in first half profits fuelled by increased government spending on healthcare information technology.

The Manchester-based group supplies software like electronic patient record systems for hospitals, doctors' surgeries and laboratories. It is one of the few London-listed technology companies not to have issued a profit warning this year.

Chief Executive Patrick Cryne -- who will step down in July to be replaced by Finance Director Tim Whiston -- said he was confident about full-year results, and said the business outlook was strong. "If you look at forward visibility with our business it's extremely strong because the contracts that we strike are multi-year deals," he told Reuters.

ISoft said sales increased by over a half in the six months to end-October to 35.3 million pounds ($54.6 million), giving profits before tax and goodwill of 8.2 million pounds. Shares rose two percent to 241 pence, valuing the firm at around 280 million pounds. They had already risen by around 60 percent since a trading update in September saying year performance was seen in line with the group's expectations.

In contrast to other technology firms, whose customers are cutting spending to grapple with a global economic slowdown, healthcare investment looks set to grow. In April, the British government unveiled the biggest new injection of money into the nation's ailing health service since it was founded half a century ago. Some of that cash will be used to update computer systems in hospitals and clinics. Around 80 percent of iSoft's sales are in the UK.

Cryne, who led the management buyout of the firm in 1998 when it was part of accountancy group KPMG, said he was stepping down as CEO to focus on the company's geographical expansion and product research. He will take up the position of Director, Corporate Development.

Analyst Lorne Daniel of broker Seymour Pierce, who rates the stock a "buy", said the CEO's departure did not set alarm bells ringing. "It's an able board, so I'm not concerned about succession," he said.

© Reuters