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Isoft said on Monday takeover talks for the struggling software group were at an “advanced” stage as it confirmed full-year sales would be at the top end of its forecasts.

The Oxfordshire-based group confirmed it was in talks with several parties about a possible takeover last October. However, discussions have slowed because of consultations with the government and its software installation partner CSC over possible consequences for the £12.4bn National Programme for ITgovernment project.

Australia’s IBA Healthcare, one of the parties interested in buying Isoft, said last week the UK group hoped to announce a conclusion to the talks in a couple of weeks. IBA is aiming to secure an all-share recommended offer and has appointed ABN Amro to assist with financing.

McKesson, the US drugs group, remains interested while the Isoft board has also held talks with General Atlantic, the US private equity group.

Isoft has struggled for the last year after it was hit by the slowdown to the NHS IT project, the largest single IT investment in the UK to date.

A forced change to a more conservative accounting regime wiped out £165m of profits while a subsequent internal investigation by new management revealed evidence of accounting irregularities in the years to April 2004 and 2005.

The Financial Services Authority is investigating potentially misleading statements to the stock exchange. The probe continues. Isoft has since fired Steve Graham, its former commercial director and co-founder, following the investigation.

Isoft confirmed revenues for the year to April 30 would be at the top end of its forecast of between £171m and £181m. It invested in strengthening operations and product management in the second half of the year but cost-cutting measures had “broadly succeeded” in offsetting the additional investment.

The group was highly criticised in a Commons public accounts committee report two weeks ago on the NHS programme, concluding that “at the present rate of progress it is unlikely that significant clinical benefits will be delivered by the end of the contract period”. 

In particular, it raised concern that Lorenzo, Isoft’s flagship software product - on which three-fifths of the programme depends - is still not available despite promises made by the company in 2005.

Isoft shares opened up 7.1 per cent, or 2¾p, at 41¼p.

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