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Matthew Vella
The Department of Contracts will be monitoring media reports over the fate of Isoft, director Anthony Fava said about the troubled British software company bidding for a massive IT system tender at the Mater Dei hospital, which had its historical profits wiped out after it had to restate its accounts.
In the last year, Isoft’s share price plunged by 90 per cent, killing off GBP841 million of shareholder value. Last week, chief executive Tim Whiston resigned, after presiding over two profit warnings which put into doubt the future of a GBP6.2 billion IT upgrade for the British health service.
Isoft is among the final two bidders for the provision of an IT system at the Mater Dei hospital, which has to be up and running by the end of the year if Prime Minister Lawrence Gonzi hopes to cut the inauguration ribbon on 1 July 2007 – his fifty-fourth birthday anniversary.
Director for compliance Anthony Fava told MaltaToday the final selection process between tenderers Isoft and AME, a consortium including Inso, the suppliers of Mater Dei’s medical equipment, will still go on.
“At this stage, the candidature of Isoft is still valid. We will establish later on whether anything has changed vis-à-vis the original offer. There are no liquidation procedures, but what seems to be a takeover bid for the firm. In this case it will be the General Contracts Committee to effectively decide whether, in the case that Isoft is recommended to supply the software, the company is suitable to carry out its contractual obligations,” Fava said.
Another bidder, Intracom, has lodged an appeal with the director of contracts after it was excluded due to alleged technical non-compliance. The appeals board will hear the company’s protest on Wednesday.
Last week, a spokesperson for Isoft said the firm will meet delivery commitments for the Mater Dei IT software, adding that Malta was “an existing customer of Isoft and we are confident we can meet delivery commitments as per our submitted proposal.”
Leading private equity firms are now considering a bid for Isoft, whose chief executive Tim Whiston resigned after historical profits were wiped out following a disastrous accounting restatement.
The company has also suffered from uncertainty over the British government’s NHS computer upgrade, which is already 30 months behind schedule. One of its main customers, Accenture, has already blamed the firm for much of the GBP260 million loss it has so far recorded on the NHS contract.
The National Programme for IT was supposed to get hospitals and doctors online and digitise patients’ medical records.
According to The Observer, the much-vaunted Lorenzo software that Isoft was expected to install in the new system, has not even figured in the NHS upgrade. The newspaper reported that industry insiders say the firm has instead been installing old software.
A dramatic change in accounting policy at Isoft has now thrown into doubt the much-delayed upgrade of the NHS computer system, which will put records of 50 million patients onto computers.
A profit warning at the start of the year announced that the delay in the programme would diminish total revenue by GBP55 below previous expectations, to GBP30 million this year.
But the change in accounting policy, announced on 8 June 2006, meant Isoft’s profits would be readjusted to GBP3-GBP7 million, compared with a previous forecast of GBP17-22 million.
Critics said the change in policy should have occurred long ago, due to changes in accounting rules. Shares crashed by 38 per cent to 53-52p following the change in policy.
Isoft will be reducing its total operating costs and has announced that some 150 employees, approximately 15 per cent of its UK workforce, will be made redundant. It has also sold its Swiss operation to Nexus for GBP1 million.
mvella@mediatoday.com.mt
Links: www.maltatoday.com.mt/2006/06/18/t10.html
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