2007

Pre-close update

The Board of iSOFT is currently considering its options for refinancing the Company’s bank borrowings and facilities. These options include discussions with several external parties that have expressed an interest in acquiring iSOFT or taking a significant stake in the Company. These discussions have taken longer to conclude than the Board originally expected because of the need for extensive consultation in respect of the Company’s role in the National Programme for IT (NPfIT) in England. However discussions are well advanced with several parties, both trade and private equity, and the Company will make a statement about the outcome as soon as is appropriate.

As a result of these discussions, the Company is formally in an “offer period” under the conditions of the UK Takeover Code and therefore is limited in what statements it is able to make at the current time. Nevertheless, the Company confirms that operational conditions and performance remain in line with indications given when it announced its results for the six months to 31 October 2006, in mid-December 2006.

The Company said at that time that it expected revenues for the full year ending 30 April 2007 to be in the range £171 to £181 million and currently it expects the outcome to be towards the upper end of that range. The Company expects to progress from this base in the financial year ending 30 April 2008.

Operating costs before exceptional items for the first half of the financial year were £85.9 million, which resulted in a break-even result for that period. In the second half, the Company has invested additional costs to strengthen operations and product management. Notwithstanding this, the radical programme of operational change within the business (referred to as the “Regeneration Plan”) has continued and has broadly succeeded in offsetting these additional costs. Overall, this performance is better than originally expected and we continue to initiate actions to reduce the cost base, as a proportion of revenue, still further.

Whilst the Company still needs to address its long term financing, the cash position continues to exceed expectations, in particular because of the receipt of the balance of a £21 million tax rebate in the second half, the pace of the Regeneration Plan and measures taken to improve working capital. As at 27 April 2007, total utilisation of the term and revolving credit facilities with the banks amounted to £93 million of which £49 million related to letters of credit and guarantees, leaving unused facilities of £48 million at that date. Given this cash performance to date, the Board currently believe that the Company has sufficient headroom to continue operations as normal until 14 November 2007 when its existing banking facilities are due for renewal.

At the present time the Company expects to announce its full results for the year ended 30 April 2007 in early July, subject to events that may occur as a result of the Board’s consideration of its options.

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