Isoft said on Monday that discussions with parties interested in acquiring the group were continuing as the troubled healthcare software company reported a fall in interim revenues and a pre-tax loss.

The group has endured a series of profit warnings and a fall in its share price of 90 per cent in the past year following delays in its delivery of software for the £12.4bn upgrade of the National Health Service’s IT systems.

The company is also under investigation by the Financial Services Authority into possible misleading statements to the stock market.

In October, Isoft put itself up for sale after several approaches from private equity and trade buyers. It said a number of parties expressed interest in taking a large shareholding or creating a significant strategic alliance. It also predicted then that half-year revenue would fall by 10-15 per cent.

Isoft said on Monday that revenue for the six months to October 31 had fallen by 11.6 per cent, from £97.2m to £85.9m.

However, a 16 per cent reduction in costs since the start of the year meant that it achieved a break-even normalised operating result despite the revenue decline. Analysts at Numis said that rapid restructuring had reduced the cost base much faster than they had forecast.

The figures made refinancing easier, said Numis, which with interest rates heading upwards from January 1, “needs to be soon.”

At the end of August, Isoft signed a new agreement with its bands to provide facilities of £141m until November 2007. Isoft said the cost of borrowing would become increasingly expensive throughout next year, providing it with a significant incentive to secure long-term funding swiftly.

John Weston, chairman and acting chief executive, said: “Isoft is today in considerably better shape than it was a few months ago.”

The software company made a pre-tax loss of £14.3m, compared with a profit of £8m a year ago after net interest costs of £3.1m and exceptional costs of £11.6m relating to the closure of its former head office, redundancy costs and legal fees. Exceptional costs were likely to rise to £25m for the full year, Isoft said.

Net loss for the period was just £0.6m, compared with £8.5m a year earlier due to tax credit of £13.7m.

Numis highlighted problems with Isoft’s contract to supply health information systems to the Health Services Executive in Ireland over the period to 2015. Possible breaches of contract could raise questions over the €56m revenue from that deal, it said.

The FSA investigation is continuing, as is a separate investigation by the Accountancy Investigation and Discipline Board announced in October.

The accountants’ watchdog is questioning seven current and former directors over the accounting of revenues, off-balance sheet financing and a goodwill write-off. In June, the company admitted to ‘aggressive’ accounting policies and reversed £174m of revenues recorded between 2003 and 2005.

Isoft said on Monday that on the basis of information that has come to light so far, it did not believe that these matters would have any financial impact on the group.

Shares rose from 40¾ p to 46¼ p in early morning in London.

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