RJH writes...

As iSoft plc flounders under the formidable financial and technical challenges of its NHS contract obligations the question arises who might profit from their blotted copybook.

After its merger with Torex, iSoft parted company with Chris Moore, one time Oldham Athletic owner and the CEO of Torex Retail. It also "released" former Torex finance director Mark Woodbridge for undisclosed reasons (another story craving the light of day). After a polite pause both appeared on the payroll of Ascribe plc (LSE, ASP), software specialist to the UK health sector. Small world, eh?

Ascribe plc's financial profile bears comparison with that of the 1999 version of iSoft. Then iSoft turned over £11m - as Ascribe is likely to by end June 2007 - and from a similar balance sheet position; both seek to complement organic growth by acquisition; and both generate prodigious cash from existing maintenance contracts.

Capitalised on the AIM at £35m, the firm is a small fish in the lively medical software market ocean where the relative whales General Electric Medical Systems, EDS, Misys and iSoft all swim. But Ascribe occupies pole-position in its niche competing most directly in the UK with the similarly sized JAC, a subsidiary of Mediware, Inc (Nasdaq, MEDW). Slightly larger potential rival Cortex plays in continental Europe and has no UK presence.

As with its closest peers Ascribe plans market gains and a broader clinical IT offering by acquisition. This spur, coupled with Ascribe's strong niche base, makes the firm worth consideration as a potential Mark II version of iSoft plc. Without, hopefully, the adoption of risky off balance sheet financing and opaque communiqués (Ascribe have kept public relations in-house thus far).

In its latest interims, and with one eye on iSoft's travails, Ascribe sent out a little message to anyone who cared to listen:

"There has been much publicity about the delays in the National Programme for IT (NPfIT) now called Connecting for Health (CfH)...We are now seeing many more customers engage with us about their future plans to deliver the functionality they require."
Stand duly alerted.

The accounts do not distress but the shares (at 34p) are priced for growth and closely held.

The writer owns iSoft plc and Ascribe plc equity

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