iSOFT GROUP PLC 2004 ANNUAL REPORT AND ACCOUNTS
FOR THE TWELVE MONTH PERIOD ENDED 30 APRIL 2004
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES CONTENTS
01 FINANCIAL HEADLINES
02 LETTER FROM THE CHAIRMAN
06 CHIEF EXECUTIVE’S REPORT
10 OPERATING AND FINANCE REVIEW
14 REPORT OF THE DIRECTORS
18 CORPORATE GOVERNANCE REPORT
24 CORPORATE SOCIAL RESPONSIBILITY STATEMENT
28 REMUNERATION REPORT
34 AUDIT COMMITTEE REPORT
36 INDEPENDENT AUDITORS’ REPORT
37 FINANCIAL STATEMENTS
70 FIVE YEAR SUMMARY
72 COMPANY INFORMATION
73 NOTABLE DATES 63.1%
>
Turnover growth of 63.1% 
to £149.3m
56.5%
>
Normalised profit before tax*
increased 56.5% to £36.8m
a profit margin of 24.7%
£35.9m
>
Net cash inflow from
operating activities
#
totalled
£35.9m, representing a
normalised profit before 
tax* cash conversion ratio 
of 97.6% 
17.3%
>
Underlying earnings per
share* for the year increased
17.3% to 17.70 pence
Year ended 30 April 2004 2003 2002 2001 2000
Turnover (£’m) 149.3 91.5 60.1 31.1 17.0
Normalised operating profit* (£’m) 39.5 25.6 16.4 7.6 3.5
Normalised profit before tax* (£’m) 36.8 23.5 15.4 7.2 3.1
Underlying earnings per share* 17.70p 15.09p 10.49p 4.77p 2.46p
Average monthly employees 1,338 580 430 252 162
IN THE YEAR ENDED 30 APRIL 2004
01
FINANCIAL HEADLINES
page one
* stated before amortisation of goodwill and exceptional items
#
stated before the cash impact of exceptional items LETTER FROM THE CHAIRMAN
page two
02
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 03
LETTER FROM THE CHAIRMAN
page three
Dear Shareholder,
Since its listing on the London Stock Exchange in July 2000, iSOFT has grown strongly to
become a healthcare software applications company of international significance. The year
ended 30 April 2004 continued the consistent record of strong growth in turnover 
and profitability.
Our progress as a publicly quoted company is testimony to our ability to deliver software
applications of unique value to our growing healthcare industry customer base. From its
inception, the iSOFT business has had the ambition to be the global leader in the provision 
of software applications for healthcare provider organisations.
The rate of progress made in the year ended 30 April 2004 has been pleasing with a number
of new business wins overseas to complement our outstanding success in winning contracts
under the National Programme for Information Technology (NPfIT) in England. Global leadership
as an application software supplier to the healthcare market is within our reach and we remain
committed to this goal for your benefit and that of our customers and employees.
Leadership in our market depends on reading future trends in healthcare better than our
competitors, developing innovative software application responses to these trends and
establishing distribution networks to get our products to market effectively. In the year ended
30 April 2004, we have continued to invest heavily in our LORENZO software application to
meet the current and emerging information systems requirements of hospital organisations and
primary care physicians.
Our use of technology in delivering comprehensive functionality and utility to support healthcare
processes positions LORENZO favourably against international requirements for healthcare
software. The demonstrable strength of our software applications led to the announcement in
April 2004 of our alliance with Microsoft to package LORENZO for ease of implementation by
third party organisations on an international basis. Increasingly, we expect to work with the
large IT service organisations to hasten the introduction of our applications into new
international markets.
The year ended 30 April 2004 was significant in corporate development terms because of our
merger with Torex PLC (Torex). The merger completed on 23 December 2003 and was finally
cleared by the Office of Fair Trading (OFT) on 24 March 2004. The rationale for the merger
was well understood and supported by the investor community, customers and staff of both
iSOFT and Torex. From the outset we made it clear that the combined entity will have a single
application portfolio, based primarily on the iSOFT suite of software. The strength of the former
Torex service organisation will be deployed increasingly to support the LORENZO offering either
through direct involvement with customers or via our work with IT service organisations
engaged in implementing iSOFT applications.
The rationale for the merger anticipated significant synergies and, despite a protracted period
of competition review by the OFT, we completed all planning work for the integration of the two
businesses by our year end. We are confident, based on that work, that we have increased the
capacity of our organisation to be an effective international healthcare software application
vendor. Additionally we expect to realise considerable cost structure improvements from the
opportunity to rationalise our operations, particularly in, but not confined to, the UK.
WE HAVE CONSIDERABLE INNOVATIVE TALENT WITHIN OUR
ORGANISATION AND A FERVENT DESIRE TO EXPRESS IT LETTER FROM THE CHAIRMAN
page four
04
Overall, we are very pleased with the merger progress and are re-inforced in our view that the
transaction represents a step-change in iSOFT’s progression towards being the global leader in
healthcare software applications.
A key factor in the successful development of the iSOFT business is the strength of your Board
in terms of its experience, enthusiasm and commitment to good governance. The changes
made since our last year end position us well for the next stage of corporate development of iSOFT.
Of course good strategic direction requires a strong execution capability. During the last year
we have strengthened our operational management team as a priority for the business. The
merger with Torex brought with it considerable operational management talent, particularly in
the software services area. We were pleased to welcome these new colleagues into the
enlarged iSOFT business. However, we have also recognised the need for investment staffing
in order to maintain the rate of growth that we have come to expect. Accordingly, we have
made a number of senior external recruitments aimed at consolidating our position in
established markets and opening new international territories for our software applications.
I would like to express my personal thanks to all our staff for their hard work and commitment
to the iSOFT business over the last year.
The success that we have achieved is only possible because we have considerable innovative
talent within our organisation and a fervent desire to express it through our application
products for the benefit of our healthcare customers.
The iSOFT business has performed well to date and the strength of the Group’s current market
position is such that I am confident that we are poised for further profitable growth over the
coming years.
Yours sincerely
Patrick Cryne
Executive Chairman 05
LETTER FROM THE CHAIRMAN
page five
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES CHIEF EXECUTIVE’S REPORT
page six
06
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 07
CHIEF EXECUTIVE’S REPORT
page seven
emphasise intermediate, community and
domiciliary care. Realising the benefits of
connecting up individual healthcare
providers and establishing an effective
supply chain of services across entire
healthcare communities therefore
represents the principal objective of these
reform initiatives.
Importantly, investment in modern
information technology solutions is
recognised as a key tool in the efficient
organisation and delivery of care.
With the administrative and clinical
practice of medicine largely common
around the world, new generation software
applications that support the capture,
collation, processing, distribution and
presentation of information for all those
involved in the delivery of healthcare in a
given community are in great demand in
each of the major healthcare economies.
At the heart of this new information
systems requirement is the introduction 
of comprehensive electronic health records 
for citizens.
The requirement for healthcare information
services to have extended reach across
communities has led to the procurement of
these solutions being conducted on a
scaled-up, regional, or even national,
basis. This represents a significant
international opportunity for a leading
modern applications expert, such as iSOFT.
DEVELOPING MODERN
INNOVATIVE APPLICATIONS
The success of the iSOFT business to
date, and the ability to capitalise on the
significant market opportunity now
available to us, depends principally on the
strength of our application offering.
A YEAR OF CONSIDERABLE PROGRESS
The year ended 30 April 2004 was a
period of considerable progress for the
iSOFT business. Group revenues grew
63.1% to £149.3m, with the normalised
operating profit* result of £39.5m
representing an increase of 54.4% from
the previous year.
Strong operating cash generation together
with the sale of the former Torex Retail
Division in February 2004 contributed to a
net cash generation before financing of
£71.6m. As a result we are pleased to
report a year end net cash position of
£3.8m. This balance sheet strength will
help the Group take advantage of new
business development opportunities as
they present themselves.
In addition to the positive financial
performance, this year has seen a clear
strengthening of our position in the
international healthcare applications
market. The recent successes in major
regional and national procurements 
have established iSOFT as one of the
leading international healthcare 
application suppliers.
THE INTERNATIONAL HEALTHCARE
APPLICATIONS MARKET
The need to cap the rate of growth in the
cost of providing healthcare services,
whilst at the same time delivering against
patient demands for improvement in the
quality and effectiveness of the healthcare
treatments they receive, is a challenge
facing every modern economy.
The answer lies in identifying ways to
improve efficiency and reduce the burden
on expensive, scarce resources. In order
to meet this objective, healthcare delivery
networks are forming that are designed to
reduce the load on acute services and
iSOFT applications remain positively
differentiated from competitor offerings 
as a result of constant innovation in
architecture, functionality, utility and the
effective use of technology.
LORENZO, our latest generation 
application, addresses fully the
administrative and clinical information
management requirements of the modern
healthcare economy.
Our ability to maintain this leadership is
due to the expert analysis and design
capability across the Group’s international
operations and, significantly, the strength
of our dedicated offshore software
application development centre in Chennai,
India. Established in January 2001, this
centre is responsible for software code
development and maintenance for all
strategic applications.
The centre represents a major competitive
advantage by bringing world class
technology solutions to market with
unprecedented speed. As a result, we will
continue our commitment to building our
offshore capability aggressively over the
course of the next few years.
A SUBSTANTIAL 
ESTABLISHED BUSINESS
The iSOFT business has established a
substantial presence in a number of
international healthcare systems markets.
At the date of this Annual Report, more
than 1,500 hospital organisations and
other healthcare institutions together with
over 5,000 primary care physicians
depend on iSOFT applications to deliver
care. This user base extends into 14
countries, with representation on 
five continents.
INVESTMENT IN MODERN INFORMATION TECHNOLOGY SOLUTIONS
IS RECOGNISED AS A KEY TOOL IN THE EFFICIENT ORGANISATION
AND DELIVERY OF CARE
* stated before amortisation of goodwill and exceptional items CHIEF EXECUTIVE’S REPORT
page eight
08
The NHS National Programme for
Information Technology (NPfIT) in England,
provided an opportunity to test the strength
of the iSOFT application proposition against
a shortlist of the other leading international
healthcare application vendors. This
procurement process represented arguably
the stiffest test ever applied to the array of
international suppliers who lay claim to
having advanced application solutions
relevant to the needs of modern 
healthcare economies.
The selection approach addressed not 
only the scope of the functional
requirements of healthcare applications,
but also their large scale implementation
and system performance capabilities.
Our significant success in securing the
application provider role in three of the 
five regional contracts awarded under the
NPfIT procurement is testimony to the
completeness and competitiveness of our
applications. It has created an extremely
strong international reference for iSOFT
and has stimulated a significant amount 
of interest from healthcare economies
around the world that are considering
similar IT reform initiatives and 
associated procurements.
NEW INTERNATIONAL 
MARKET OPPORTUNITIES
The success of iSOFT’s international
expansion to date evidences the quality of
the upfront analysis performed on any
prospective individual market opportunity,
the rigour applied in identifying the most
effective means of entry and our strong
track record of execution.
Given the widespread healthcare IT reform
agenda and the international attractiveness
of our application offering, the iSOFT
business is certainly not opportunity
constrained. As we plan and prepare for
further geographic expansion, the challenge
is for us to grow our analytical capability
and maintain our capacity to execute.
Over the years we have developed
considerable experience of operating both
with third party service organisations, as
distributors of our product, and with an
acquisition-led approach to entering a new
geographic market. The decision on
whether to partner, to acquire or to adopt a
combined strategy will be taken on a
region-by-region basis to ensure that the
preferred approach represents that best
suited to the characteristics of a 
particular market.
A key test applied by iSOFT when
evaluating a new geography is whether the
opportunity exists to establish a meaningful
market share in a short period of time and
in doing so gain early traction in generating
an appropriate financial return relative to
the cost of market entry.
We will continue to apply this test
rigorously when identifying relevant 
new markets.
OUTLOOK
Over the course of the next twelve months
we will, in the first instance, develop our
business interests in our established
geographic markets and in doing so drive
the further organic growth of our business.
We will complete are preparation for the
launch of LORENZO in a number of new
geographic markets and, as part of this
preparation, confirm the most appropriate
means of entry and development of 
those markets.
In summary, we expect over the course of
the next year to sustain good growth and
position the Group for further acceleration
of that growth in future years.
The opportunity now clearly exists for
iSOFT to realise its ambition of being the
global leader in the provision of 
healthcare applications. We look forward
with confidence.
Tim Whiston
Chief Executive Officer 09
CHIEF EXECUTIVE’S REPORT
page nine
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES OPERATING AND FINANCE REVIEW
page ten
10
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 11
OPERATING AND FINANCE REVIEW
page eleven
THIS WAS A VERY SUCCESSFUL YEAR FOR iSOFT WITH 
SIGNIFICANT ORGANIC GROWTH CONFIRMING THE STRENGTH 
OF OUR APPLICATION PROPOSITION
A reconciliation of normalised operating
profit, normalised profit before taxation 
and underlying earnings per share to the
statutory accounts is set out below.
MERGER WITH TOREX
The merger with Torex was completed 
on 23 December 2003. The total
consideration of £371.9m was satisfied by
the issue of iSOFT shares at the rate of
1.7692 iSOFT shares for each Torex share.
Costs amounted to £4.1m. Goodwill
recorded on the balance sheet is £397.2m
which is stated after fair value adjustments
which increased the net assets of Torex by
£54.0m.
Torex has been consolidated using
acquisition accounting for the period 
24 December 2003 to 30 April 2004 and
contributed £6.3m to normalised operating
profit* for the year. In the year prior to
acquisition, Torex made a normalised
operating profit* of £32.2m. This profit
result included a contribution from the
Torex Retail Division of £9.0m.
Torex Retail was disposed of on 
14 February 2004 for net proceeds of
£61.2m. These proceeds have been used
primarily to pay down bank borrowings.
The regulatory clearance of the merger
with Torex included a requirement to
dispose of the Torex Laboratory business.
OVERVIEW  
This was a very successful year for iSOFT,
with significant organic growth confirming
the strength of our application proposition.
In addition, the merger with Torex PLC
(Torex) has established iSOFT as the fourth
largest software and computer services
company on the London Stock Exchange.
TRADING RESULTS 
In the year ended 30 April 2004, Group
turnover increased 63.1% to £149.3m.
Adjusting for the part year effect of the
merger, underlying organic turnover growth
was 15.5%.
Normalised operating profit* increased by
54.4% to £39.5m (2003: £25.6m), and
normalised profit before tax* grew 56.5%
to £36.8m (2003: £23.5m).
Underlying earnings per share* increased 
17.3% to 17.70p.
The quality of the profit generated by the
Group is underlined by consistent strong
operating cash generation. The cash
inflow from operating activities
#
during the
year was £35.9m representing a cash
conversion ratio of 97.6% against
normalised profit before tax*.
The Group’s net funds position at the 
year-end was £3.8m compared with a 
net debt position of £2.9m in the 
previous year.
As a result, this small business unit is held
as an asset for resale with a carrying value
of £6.5m.
OPERATING PERFORMANCE
The iSOFT business proposition has been
carefully crafted over recent years with a
focus around the provision of modern,
forward referencing applications. The
launch of LORENZO as the next generation
of iSOFT application was announced last
year and has been favourably received 
by customer bases in each of our
geographic markets.
The application is acknowledged for
delivering greater processing power,
functionality and utility by those 
healthcare provider organisations 
seeking comprehensive modern 
application solutions.
In the UK, our operating performance has
been dominated by the advent of the NHS
National Programmme for Information
Technology (NPfIT) in England.
The 2003 Operating Review predicted that
iSOFT would be well placed in the NPfIT
procurement and this proved to be the
case with iSOFT selected as the principal
application supplier in three of the five
Local Service Provider contracts awarded
in late 2003 and early 2004.
It is pleasing to see such significant early
returns from recent application
development investment.
Year ended 30 April 2004 Operating Profit before Earnings per
profit taxation share
£m £m pence
As disclosed in the statutory accounts 20.3 17.6 6.66
Goodwill amortisation 11.3 11.3 7.04
Exceptional items 7.9 7.9 4.93
Tax on exceptional items - - (0.93)
Normalised/underlying amounts 39.5 36.8 17.70
* stated before amortisation of goodwill and exceptional items
#
stated before the cash impact of exceptional items OPERATING AND FINANCE REVIEW
page twelve
12
In the Australian market where we had
already secured a leading market share,
we experienced reduced demand but the
Group remains well placed to take
advantage of any upturn in healthcare 
IT spend over the coming years.
We continued to move forward our
presence in Asia Pacific and there are
plans to build our Asia Pacific business
interests further during 2005.
The merger with Torex has provided the
iSOFT Group with a strong presence in
Germany and the Netherlands. Both
entities have performed well in the four
months since acquisition and the introduction
of the iSOFT brand and the LORENZO
application will provide additional impetus
to our growth strategy in mainland Europe.
BUSINESS INTEGRATION 
The merger with Torex positioned iSOFT 
as a leading healthcare IT provider in an 
international context.
The integration of the two businesses has
proceeded according to plan, following
regulatory approval, and the delivery of
synergy savings in the enlarged Group’s
cost base is well underway. A formal
Business Improvement Programme is in
place and the Group will continue with
integration activities over the course of the
next financial year.
iSOFT’s track record of successfully
integrating businesses over the last four
years provides a proven framework for
addressing the challenges of merging
entities and building value.
GLOBAL FUNCTIONAL STRUCTURE
In order to deliver the business proposition
seamlessly across the Group, a new
organisation structure has been
implemented under which the Group is
organised along functional lines.
The structure consists of the main Board,
Product Strategy and Technology Group,
Product Development, Commercial,
Operations and Finance and 
Administration functions.
By organising the Group in this way, the
Board can ensure that each area of the
business operates in accordance with the
central strategy of delivering packaged
applications in response to modern
healthcare reform initiatives around 
the world.
PARTNERSHIPS
In Spring 2004, iSOFT announced its 
world-wide strategic alliance with
Microsoft. This agreement commits both
organisations to working jointly towards
iSOFT’s next-generation healthcare
application,LORENZO. A substantial part
of the agreement involves Microsoft
committing technical resources to assist
iSOFT in packaging its solutions for delivery
by third-party service organisations on a
regional and national scale.
APPLICATION DEVELOPMENT
During 2004, research and development
expenditure increased from £7.9m to
£12.7m representing 8.5% of turnover.
We continued to invest in our dedicated
software application development centre 
in Chennai, India, concluding the year with
430 staff employed in the centre.
This gives us a major competitive
advantage in accelerating our development
cycle times, allowing us to bring new
application product to market with
unprecedented speed.
Application design work continues to be
undertaken by staff located in our core
markets, notably the United Kingdom,
Germany, the Netherlands and Australia,
however, code manufacture and
maintenance for all strategic products will
continue to be performed in India.
Our commitment to maintaining application
leadership is underlined by the average
number of staff directly employed in
research and development activities during
the year of 491 (2003: 233), representing
approximately 36.7% of the Group’s
average total head count.
EXCEPTIONAL RESTRUCTURING COSTS
An exceptional restructuring charge of
£7.9m has been included in the profit and
loss account. As we implement our
integration plans the most significant
savings are expected to come from
elimination of duplicate overhead costs and
head count rationalisation. The head count
reduction opportunity comes primarily as a
result of the merger as the Group focuses
on a single application portfolio.
INTEREST 
Net interest payable in the year was £2.6m
(2003: £2.1m). The increase in comparison
with the previous year is due to the full year
impact of the iSOFT term loan and inclusion
of interest costs on Torex borrowings.
TAXATION
The reduction in the effective tax rate* for
the year to 22.6% (2003: 23.3%) is due
primarily to the impact of new regulations
which permit employee share option gains
to be deducted in the computation of the
Group’s corporation tax charge. 13
OPERATING AND FINANCE REVIEW
page thirteen
EARNINGS PER SHARE 
Underlying earnings per share*, increased
by 17.3% to 17.70p per share 
(2003: 15.09p).
Basic and diluted earnings per share were
affected by the new shares issued during
the year and by the exceptional
restructuring charge. Basic earnings per
share were 6.66p (2003: 11.17p) and
diluted earnings per share, calculated in
accordance with FRS 14, were 6.57p 
(2003: 11.08p).
BALANCE SHEET
The Group consolidated balance sheet
strengthened significantly over the year.
Following the merger with Torex, closing
net assets totalled £452.2m compared with
an opening net asset position of £73.5m.
The net funds position is £3.8m 
(2003: net debt of £2.9m), with cash
balances of £75.0m (2003: £45.5m) at the
balance sheet date.
The net increases in current assets and
current liabilities results from the trading
performance in the year and the impact 
of the merger.
FUNDING
The cash conversion of profits remains 
a key performance objective for the Group.
Cashflow generated from operating
activities
#
was £35.9m (2003: £23.5m)
which represents a cash conversion of
97.6% (2003: 100%) relative to the
normalised profit before tax* result.
At the balance sheet date, the Group had 
a total credit facility in place of £145.0m 
in addition to net funds of £3.8m. The
facilities are structured to suit the Group’s
short and medium term cash needs with 
a combined revolving credit facility and
overdraft of £85m and a five-year fixed
term loan of £60m.
Cash deposits are managed to maximise
interest receipts whilst maintaining
sufficient flexibility.
Exposure to foreign exchange fluctuations
is monitored on an ongoing basis with
balances maintained in foreign currencies
to match planned expenditure where
appropriate. At the balance sheet date
there was no material exposure to foreign
exchange risk.
ACCOUNTING POLICIES
The Group fully adopted the requirements
of FRS 17 “Retirement Benefits” in respect
of the defined benefit scheme operated by
Torex. At the balance sheet date, the 
FRS 17 deficit in respect of this pension
scheme was £8.7m. Net of the related
deferred tax asset, the pension liability
recognised in the Group accounts is
£6.1m. The net pension deficit acquired
with Torex was accounted for as part of the
fair value exercise. The scheme was
closed to new members in April 2000.
During the year, the Accounting Standards
Board issued Application Note G (“ANG”) 
to FRS 5 “Reporting the Substance of
Transactions” which sets out the principles
that should be followed in recognising
revenue. The adoption of ANG has not
resulted in a change in the Group’s revenue
recognition policies.
All other accounting policies remain
consistent with prior years and are set out
in detail on pages 44 to 46.
INTERNATIONAL FINANCIAL
REPORTING STANDARDS
In the year ending 30 April 2006, the
Group will be required to publish its
consolidated financial statements under
International Financial Reporting 
Standards (“IFRS”).
The Group’s profit and loss account,
balance sheet, cash flow statement and
related notes for the year ending 30 April
2005 will have to be restated for
comparative purposes.
There are a number of key differences
between IFRS and current UK GAAP.
The most significant difference to
potentially affect the Group is in relation 
to the treatment of product 
development expenditure.
As permitted by UK GAAP, the Group
currently expenses all development
expenditure as incurred, whereas IFRS
requires such expenditure, providing certain
criteria are met, to be capitalised and
amortised over its useful life.
The Group is currently in the process of
assessing the full impact of IFRS and will
complete its IFRS implementation
programme during the year ending 
30 April 2005 in order to ensure full
compliance with IFRS in the year ending 
30 April 2006.
DIVIDENDS
Consistent with a progressive dividend
policy, the directors have proposed a final
dividend of 1.7p per share (2003: 1.2p).
Combined with the interim dividend of 
0.7p (2003: 0.6p) per share, this gives a
total dividend payment for the year of 2.4p
per share (2003: 1.8p) reflecting the
directors’ confidence in the future. The
proposed final dividend, if approved at the
Annual General Meeting, will be paid on 
31 July 2004 to shareholders on the
register on 2 July 2004.
John Whelan
Group Finance Director
* stated before amortisation of goodwill and exceptional items
#
stated before the cash impact of exceptional items REPORT OF THE DIRECTORS
page fourteen
14
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 15
REPORT OF THE DIRECTORS
page fifteen
iSOFT IS A SOFTWARE APPLICATION PRODUCT BUSINESS 
LICENSING PROVEN APPLICATION SOFTWARE TO HEALTHCARE 
PROVIDER ORGANISATIONS
DIRECTORS
The directors of the Company as at the
balance sheet date are shown below:
Patrick Cryne (53), Executive Chairman,
was appointed to the Board of iSOFT
Group plc on 28 April 1999. He took on
the role of Executive Chairman on 
23 December 2003.
Tim Whiston (36), Chief Executive Officer,
joined the business as finance director in
August 1997 and was subsequently
appointed to the Board of iSOFT Group plc
on 14 April 2000. He has acted as
Company Secretary since that date.
He took on the role of Chief Executive
Officer on 2 February 2004.
Steve Graham (40), Group Commercial
Director, was appointed to the Board of
iSOFT Group plc on 28 April 1999.
Mark Woodbridge (33), Business
Development Director, joined the iSOFT
Group plc Board following the merger with
Torex on 23 December 2003. He was
formerly the Finance Director of Torex PLC.
John Whelan (37), Group Finance
Director, was appointed to the Board of
iSOFT Group plc on 13 February 2004.
Before joining iSOFT he spent several
years working for Lufthansa in Europe 
and North America. He is a chartered
accountant.
Digby Jones (48), Senior Independent
Non-executive Director and Chairman of
the Nominations Committee
#†
, was
appointed to the Board on 19 May 2000.
He is Director General of the Confederation
of British Industry (CBI), a non-executive
director of Alba plc, a director of Business
in the Community, a non-executive director
of the unlisted mhl support plc and
Chairman of the unlisted etrinsic plc.
The directors present their annual report
and the audited financial statements of the
Company and the Group for the year
ended 30 April 2004.
PRINCIPAL ACTIVITIES
The Group is a software application
products business, licensing proven
application software to healthcare provider
organisations from an established product
portfolio. It also provides application
product packaging, development,
installation, system configuration, training 
and customer support services in respect 
of its applications.
BUSINESS REVIEW AND
FUTURE DEVELOPMENTS
On 23 December 2003, the merger with
Torex PLC (Torex) was declared
unconditional. The directors consider that
the Group will continue to enjoy growth for
the foreseeable future. The Letter from 
the Chairman on page 02, the Chief
Executive’s Report on page 06, and the
Operating and Finance Review on page 10
provide further details of the performance
of the business during the year and of
expected future developments. The
Corporate Social Responsibility Statement
on page 24 provides an update on the
Group’s policies in respect of employees
and the environment.
RESULTS AND DIVIDENDS
The results of the Group are set out in the
consolidated profit and loss account on
page 39. The directors recommend the
payment of a final dividend of £3.8m to
the holders of the ordinary shares, which
together with the interim dividend of
£0.9m, gives a total equity dividend for the
year of £4.7m.
After deduction for dividends, the retained
profit for the financial year was £6.0m.
Eurfyl ap Gwilym (59), Non-executive
director and Chairman of the Audit
Committee*
#†
, was appointed to the Board
on 19 May 2000. He is a director of the
Principality Building Society and was
formerly a director of the Terence
Chapman Group plc.
Geoff White (51), Non-executive director
and Chairman of the Remuneration
Committee*
#†
, was appointed to the Board
on 19 May 2000. He is Chairman of SMP
Group and non-executive director of
Tekdata Interconnect Ltd and Tekdata
Distribution Ltd. He is also a non-executive
director of Radiancy Inc. He was formerly
Chief Executive of Pressac plc and a 
non-executive director of Derby City NHS
Trust. He is a fellow of the Institute of
Chartered Accountants.
Rene Kern (40), Non-executive 
director, was appointed to the Board on 
14 March 2003. He is a senior executive
with General Atlantic Partners who at the
balance sheet date owned 7.7% of the
shares of iSOFT Group plc. He is also a
director of TDS Informationstechnologie AG
which is domiciled in Germany.
David Thorpe (54), Non-executive director*
#†
,
joined the iSOFT Group plc Board on 
23 December 2003, having been
appointed as non-executive director of
Torex PLC on 28 May 2003. He has held
a number of senior positions for Electronic
Data Systems (EDS) including UK Chief
Executive and latterly President of EDS
Europe. He is a non-executive director 
of VT Group, Innovation Group and of
Staffware plc. He is also Chairman of
Tunstall Ltd. He is a member of the
Chartered Institute of Public Finance 
and Accounting.
* Member of the Audit Committee   
#  
Member of the Remuneration Committee   
†  
Member of the Nominations Committee REPORT OF THE DIRECTORS
page sixteen
16
* Member of the Audit Committee   
#  
Member of the Remuneration Committee   
†  
Member of the Nominations committee
Dr Colin Wall (54), Non-executive director*
#†
,
joined the iSOFT Group plc Board on 
23 December 2003, having been appointed
as non-executive director of Torex PLC in 
October 1998. He was employed with Blue
Circle Industries plc in a number of senior
management roles and subsequently
worked in a number of consultancy roles.
Roger Dickens resigned as a director on
23 December 2003. Chris Moore was
appointed on 23 December 2003 and
resigned on 2 February 2004.
The Board considers that Digby Jones,
Eurfyl ap Gwilym, Geoff White, David
Thorpe and Colin Wall were independent
throughout the year and that they remain
independent at the date of this report.
All directors are subject to election by the
shareholders at the first opportunity after
their appointment, and to re-election
thereafter at intervals of no more than
three years.
In accordance with this, the directors
retiring by rotation are Patrick Cryne, Tim
Whiston, Eurfyl ap Gwilym and Rene Kern,
who, being eligible, offer themselves for 
re-election at the Annual General Meeting.
The Executive Chairman has confirmed that
the non-executives (Eurfyl ap Gwilym and
Rene Kern) standing for re-election have
fully met the performance standards
required of non-executive directors by the
Company and that they continue to
demonstrate commitment to the role.
In addition, Mark Woodbridge, John
Whelan, David Thorpe and Colin Wall will
stand for election at the Annual General
Meeting, it being the first since their
individual appointment.
RESEARCH AND DEVELOPMENT
The Group has a continuing commitment 
to a significant level of application
development investment.
During the year, development investment
totalled £12.7m (2003: £7.9m),
representing 8.5% of turnover 
(2003: 8.6%). All research and
development expenditure is charged to 
the profit and loss account as incurred.
This expenditure ensures that iSOFT’s
software application portfolio benefits from
the latest technologies and continues to
address the current and emerging
customer business needs, thus protecting
the market position of the Company and
the potential for future revenue generation.
The Board’s commitment to development 
is demonstrated by an average of 491
employees having been dedicated to this
area in 2004 (2003: 233) out of a total
average employee base of 1,338 
(2003: 580). In addition, the formal
worldwide strategic alliance announced by
iSOFT and Microsoft further strengthens
the Group’s research and development
capability.
QUALITY
iSOFT maintains a policy of ensuring that
appropriate standards of operation are
maintained across the Group. Our
achievement of ISO 9001:2000
accreditation has been extended to our
software application development centre 
in Chennai which supports our commitment
to this quality standard.
DIRECTORS’ SHARE INTERESTS
The beneficial share interests in the ordinary share capital of the Company of those persons
who were directors at the balance sheet date were as follows:
Ordinary % issued Ordinary % issued
shares at capital shares at capital
1 May 2003 30 April 2004
Patrick Cryne 12,000,000 9.69% 12,000,000 5.32%
Steve Graham 8,000,000 6.46% 8,000,000 3.55%
Tim Whiston 402,488 0.33% 402,488 0.18%
Mark Woodbridge - - 121,968 0.05%
Digby Jones 25,000 0.02% 25,000 0.01%
Eurfyl ap Gwilym 45,454 0.04% 45,454 0.02%
David Thorpe - - 10,000 0.00%
Colin Wall - - 206,403 0.09%
Geoff White 110,454 0.09% 110,454 0.05%
Beneficial interests include the director’s personal holdings and those of their spouse and
minor children as well as holdings in family trusts of which the directors’ spouse or their
minor children are beneficiaries or potential beneficiaries. Included in the total shown above
for Patrick Cryne is 450,000 of such holdings.
John Whelan and Rene Kern had no beneficial share interest at the balance sheet date.
Rene Kern is an employee of General Atlantic Partners who owned 7.7% of the issued share
capital of iSOFT Group plc at the balance sheet date.
There have been no changes in the above interests between 30 April 2004 and 23 June 2004. 17
REPORT OF THE DIRECTORS
page seventeen
PAYMENTS TO CREDITORS
Whilst the Group does not follow any
specific external code or standard on
payment practice, the policy for all
suppliers is to fix terms of payment when
agreeing the terms of each business
transaction and to ensure that the supplier
is aware of those terms. The Group seeks
to abide by those terms whenever it is
satisfied that the supplier has met the
contractual obligations. At 30 April 2004,
the number of days of trade creditors for
the Group, calculated by reference to the
total amounts invoiced by suppliers, was
36 days (2003: 46 days).
SHARE CAPITAL
Full details of changes in share capital in
the year are shown in note 23 to the
financial statements on pages 65 to 66.
Other than the directors, the Company has
been notified of the following interests in
more than 3% of the issued share capital
of the Company at the date of this report:
Fidelity International Limited
and FMR Corporation 11.2%
ISIS Asset Management 10.1%
General Atlantic Partners L.P. 7.7%
Insight Investment Management 4.9%
Morley Fund Management 4.7%
Legal and General Investment
Management 4.5%
Aegon Asset Management 3.5%
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at
the offices of Ashurst, Boardwalk House,
5 Appold Street, London, EC2 2HA starting
at 10.00am on Thursday 22 July 2004.
The resolutions to be proposed at the
Annual General Meeting, together with
explanatory notes, appear in the separate
Notice of Annual General Meeting sent to
all shareholders. The proxy card for
registered shareholders is distributed with
the Annual Report and Accounts.
AUDITORS
A resolution to re-appoint RSM Robson
Rhodes LLP will be proposed at the
forthcoming Annual General Meeting.
APPROVAL
The Report of the Directors was approved
by the Board on 23 June 2004 and signed
on its behalf by:
Tim Whiston
Chief Executive Officer CORPORATE GOVERNANCE REPORT
page eighteen
18
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 19
CORPORATE GOVERNANCE REPORT
page ninteen
THE BOARD OF DIRECTORS
The Group is controlled by the Board of
directors which, at 30 April 2004
comprised the Executive Chairman, the
Chief Executive Officer, three further
executive directors and six experienced 
non-executive directors, five of whom were
independent for their period of
appointment during the year. Biographical
details of each director are set out on 
pages 15 to 16. Each non-executive
director is encouraged to contribute to
both the full Board and its committees 
as appropriate.
The directors are encouraged to bring an
independent judgement to bear on both
strategic and operational matters. Any
director may challenge company policy
and decisions are taken democratically
after discussion.
There is a formal schedule of matters
reserved for the Board. These include
strategy, approval of annual budgets,
significant investments and risk
management. The Board met seven times
during the year.
Regular dialogue is maintained to ensure
that the investing community receives a
balanced and consistent view of the
Group’s performance.
STATEMENT OF DIRECTORS’ ROLES
With the objective of ensuring successful
creation of shareholder value within a
framework of acceptable risk, the Board
sees its role to include:
• assisting value creation through 
entrepreneurial leadership and by the 
controlled and measured 
management of a wide range of 
business risks; 
• deciding the strategic direction and 
providing the resources required to 
fulfil the future needs of the business;
CORPORATE GOVERNANCE PHILOSOPHY 
AND APPROACH
The Board of directors (the Board) is
committed to the highest levels of
business integrity, high ethical values and
professionalism in all its activities. As an
essential part of this commitment, the
Board supports the highest standards in
corporate governance and seeks to apply
recommended best practice where this is
appropriate for the Group.
The Board acknowledges that the Group
operates in a rapidly developing business
environment. Changes to the risk profiles
in the business environment arise as a
result of both external challenges, in a
highly competitive and politically driven
market place, and through internal
challenges including the growth in the size
of the business and the development of
new products, management systems and
procedures. These challenges also
manifest themselves in greater detail as
risks to the success of the Group’s
financial, operational and compliance
activities. As a result, the Board is diligent
in evaluating and prioritising each risk and
in determining appropriate systems and
controls to detect and address them on an 
on-going basis. By doing so, the Board
believes that an effective mechanism for
continual improvement in threat mitigation
and opportunity management is 
being adopted.
• representing the interests of 
shareholders and satisfying all 
statutory duties due to them;
• ensuring appropriate behaviour with 
respect to the various codes of 
corporate governance and good 
business practices and by providing 
an audit trail of accountability;
• overseeing good corporate citizenship 
and ethical behaviour by the Group 
and its employees with regard to all 
its internal and external stakeholders;
• providing a challenging confidential 
forum, free from conflicts, in which 
the Chief Executive Officer can test 
strategic thinking with an informed 
group having broad continuity 
over time;
• requiring the Chief Executive Officer 
to report openly on the operational 
performance of all parts of the Group;
• monitoring the effectiveness of the 
Chief Executive Officer and his 
executive team against a series 
of performance objectives and 
benchmarks;
• setting a control framework within 
which the Chief Executive Officer can 
operate and authorising his decisions 
on major issues and investments; 
• constituting subcommittees of the 
Board to address the issues of 
remuneration, appointments and 
audit; and
• providing open disclosure in respect 
of the remuneration of executive 
directors and senior members of staff 
in order to incentivise other staff.
THE BOARD OF DIRECTORS SUPPORTS THE HIGHEST STANDARDS 
IN CORPORATE GOVERNANCE AND SEEKS TO APPLY RECOMMENDED 
BEST PRACTICE The directors confirm that they have
complied with the above requirements in
performing their roles.
The Board believes that its style of
involvement with management through the
Chief Executive Officer and the executive
directors is the most effective way to
provide confidence in the control
environment of the Group. Through
openness, the provision of well-defined
information and discussion, the Board
endeavours to understand and provide
leadership as to the willingness of the
Group to take appropriate risks in the
interests of the shareholders.
SHAREHOLDER COMMUNICATION
The Board is committed to good
communication with its shareholders and
maintaining an open and proactive dialogue
with its institutional investors.
The Board values the views of shareholders
and recognises their interests in the
Group’s strategy and performance.
A regular dialogue is maintained with
investment fund managers, other 
investors and equity analysts to ensure 
that the investing community receives 
a balanced and consistent view of the
Group’s performance.
The Chief Executive Officer and Group
Finance Director normally attend all
investor briefings and the Executive
Chairman attends as required and,
in particular, at the interim and full year
results announcements.
All shareholders are welcomed to the
Annual General Meeting where the
Executive Chairman provides an overview
of the Group’s business performance and
future prospects. Shareholders are
encouraged to raise questions and express
their views. The Executive Chairman aims
to ensure that all directors including
Committee Chairmen are available at the
meeting to answer relevant questions.
In addition, the Group has established an
investor relations facility on its website
where up to date financial and other
information can be found.
STATEMENT OF DIRECTORS'
RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS
Company law in the United Kingdom
requires the directors to prepare financial
statements for each financial year which
give a true and fair view of the state of
affairs of the Company and the Group 
and of the profit or loss of the Group for
that period.
In preparing those financial statements,
the directors are required to:
• select suitable accounting policies and 
then apply them consistently;
• make judgments and estimates that 
are reasonable and prudent;
• state whether applicable United 
Kingdom accounting standards have 
been followed, subject to any material 
departures disclosed and explained in 
the financial statements; and
• prepare the financial statements on 
the going concern basis unless it is 
inappropriate to presume that the 
Company will continue in business.
The directors are responsible for keeping
proper accounting records which disclose
with reasonable accuracy at any time the
financial position of the Company and
enable them to ensure that the financial
statements comply with the Companies 
Act 1985. They are also responsible for
safeguarding the assets of the Company
and hence for taking reasonable steps for
the prevention and detection of fraud and
other irregularities.
The directors confirm that they have
complied with the above requirements 
in preparing the financial statements.
The Annual Report is available on the
Group’s website www.isoftplc.com. The
maintenance and integrity of the Group's
website is the responsibility of the
directors. The work carried out by the
auditors does not involve consideration 
of these matters and, accordingly, the 
auditors accept no responsibility for any
changes that may have occurred to the
information contained in the financial
statements since they were initially
presented on the website.
Legislation in the United Kingdom
governing the preparation and
dissemination of the financial statements
and other information included in annual
reports may differ from legislation in 
other jurisdictions.
CORPORATE GOVERNANCE REPORT
page twenty
20 APPOINTMENTS TO THE BOARD
Each member of the Board brings different
experience and skills to the operation of the
Board and its various committees. The
Board composition is kept under review
and when a new appointment is to be
made, consideration is given to the
particular skills, knowledge and experience
that a potential new member could add to
the existing board composition.
Comprehensive, formal and tailored
induction is provided to new Board
members. The Group has long recognised
the vital role that non-executive directors
have in ensuring high governance
standards and maintains a significant, high
calibre, non-executive representation on
the Board.
All directors are required to submit
themselves for re-election at regular
intervals and at least every three years.
INFORMATION AND 
PROFESSIONAL DEVELOPMENT
The directors have implemented
appropriate reporting procedures to ensure
that they are supplied with timely, accurate
and comprehensive information to enable
the Board to discharge its duties in full.
Existing Board members have many years
of relevant experience, all are responsible
for ensuring continuing professional
development to maintain up to date and
effective skills and knowledge. The
directors have access to seek independent
advice, at the Group’s expense, if
necessary for the proper performance of
their duties. The directors also have
access to the Company Secretary for his
advice and services.
PERFORMANCE EVALUATION
The Board monitors performance against
the achievement of the Group’s strategic
objectives. Each executive director has
defined responsibilities for performance
and measurement of achievement 
includes a mix of financial and 
non-financial, together with predictive 
and historic indicators.
BOARD COMMITTEES
The Audit Committee, the Nominations
Committee and the Remuneration
Committee deal with specific aspects of 
the Group’s affairs in accordance with 
their written terms of reference. Each 
are comprised of only independent 
non-executive directors. The non-executive
directors also met once during the period
without the Executive Chairman or other
executive directors present.
THE NOMINATIONS COMMITTEE
The Nominations Committee has only
recently been established. Its terms of
reference include the authority to review
and make recommendations to the Board
about Board appointments. Digby Jones is
Chairman of the Nominations Committee
and all independent non-executive directors
are members of the Committee.
THE REMUNERATION COMMITTEE
The Remuneration Committee met four
times during the year and all members
were present at each meeting. The
Committee is chaired by Geoff White 
and all independent non-executive 
directors are members of the Committee.
The Remuneration Report is set out on
pages 28 to 33.
THE AUDIT COMMITTEE
The Audit Committee met three times
during the year and all members were
present at each meeting. All independent
non-executive directors with the exception
of Digby Jones are members of the
Committee with other directors and the
external auditors invited as appropriate.
The report of the Audit Committee is set
out on pages 34 to 35.
INTERNAL CONTROL
The Board retains full responsibility for the
Group’s system of internal controls, which
operate on a global basis, and for reviewing
its effectiveness. However, such a system
is designed to manage rather than
eliminate the risk of failure to achieve
business objectives and can, therefore,
provide only reasonable and not absolute
assurance against material misstatement 
or loss. In accordance with the Combined
Code, the directors have reviewed the
effectiveness of the Group’s system of
internal controls during the year, including
financial, operational, compliance and risk
management controls.
Key elements of the Group’s internal
controls are:
• a clearly defined management 
structure and delegation of authority 
to committees of the Board, heads 
of departments and individual 
business units;
• clearly documented internal 
procedures set out in the Group’s 
ISO 9001:2000 accredited quality 
management manual;
• regular internal quality audits of key 
processes and procedures under the 
Group’s ISO 9001:2000 accredited 
quality management process;
21
CORPORATE GOVERNANCE REPORT
page twenty one • an internal quality audit function which 
consists of four full time and fifty two 
part time members;
• high recruitment standards together 
with formal career development and 
training to ensure the integrity and 
competence of staff;
• regular and comprehensive 
information provided to management,
covering financial performance and 
key performance indicators, including 
non-financial measures;
• a detailed budgeting process and 
rolling three year strategic plans which 
are approved by the Board;
• procedures for the approval of capital 
expenditure and investment and 
acquisition projects;
• on-going review of contractual 
agreements with existing and new 
customers; and
• monthly monitoring and re-forecasting 
of results against budget, with 
investigation and action taken in 
response to variances.
Following the merger with Torex, the Group
plans to introduce an internal audit function
dedicated to testing internal financial
controls during the year ending 
30 April 2005. Further detail is provided 
in the Audit Committee report on 
pages 34 to 35.
COMPLIANCE WITH CODE PROVISIONS
The directors believe that the Group has
complied in all material requirements of the
Combined Code issued in June 1998 as
annexed to the Financial Service Authority’s
Listing Rules throughout the year.
The revised Combined Code (the ‘Revised
Code’) was issued in July 2003
incorporating recommendations from the
Higgs Report on Corporate Governance and
the Smith report in respect of Audit
Committees. The Revised Code will be
applicable to the Group’s financial year
ending 30 April 2005. Having reviewed the
principles and provisions of the Revised
Code, the Board believes that it currently
substantially complies with the new
provisions and expects to be fully compliant
by this time next year.
GOING CONCERN
The directors are satisfied that the Group
has adequate resources to continue in
operational existence for the foreseeable
future, a period of not less than twelve
months from the date of this report.
For this reason, they continue to adopt 
the going concern basis in preparing the
financial statements. The directors have
satisfied themselves that the Group is in a
sound financial position and that sufficient
cash resources will be available to meet
foreseeable investment opportunities or
other cash requirements.
This report was approved by the Board on
23 June 2004 and signed on its behalf by:
CORPORATE GOVERNANCE REPORT
page twenty two
22
Digby Jones
Senior Independent Director 23
CORPORATE GOVERNANCE REPORT
page twenty three
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES CORPORATE SOCIAL RESPONSIBILITY STATEMENT
page twenty four
24
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 25
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
page twenty five
The appraisal process is a key determinant
of remuneration and advancement, as well
providing an opportunity to monitor
ongoing employee progress.
The directors further recognise that
sustaining the Group’s competitive
advantage over the longer term is
dependent on employees realising their 
full potential. It is Group practice,
therefore, to ensure that personal
development, reward and promotion is
determined with direct reference to ability,
commitment and individual contributions 
to the collective achievements.
iSOFT recognises its responsibilities 
as a significant and growing employer in
India and has established close links to
local universities and proactively supports
local community initiatives such as
education sponsorship.
Employees are typically educated to
degree standard and, as a Microsoft
Certified Solution Provider Partner, iSOFT
actively promotes Microsoft accreditation
for staff engaged in the development and
support of the software application
portfolio. The directors are proud of the
Group’s record in respect of staff retention
and development.
EQUAL OPPORTUNITIES POLICY
The Group is a committed equal
opportunities employer and has
established working practices 
to promote an employment environment
that is free from discrimination and
harassment. The iSOFT policy ensures
that no employee, or applicant, is treated
less favourably on the grounds of gender,
marital status, race, colour, disability or
sexual orientation or is disadvantaged by
conditions or requirements that cannot
objectively be justified.
COMMITMENT TO CORPORATE 
SOCIAL RESPONSIBILITY
It is iSOFT’s view that operating in an
environmentally and socially sustainable
manner provides a stronger basis for
future development of the business
operations, financial performance,
protection of reputation and market
valuation. Whilst this is the first corporate
social responsibility statement we have
published, all of the policies have existed
for some time as an integral part of the
iSOFT business.
As a result of this deep commitment to 
Corporate Social Responsibility, iSOFT was
awarded membership to the FTSE4Good
Index in September 2003. Created by the
independent global index company, FTSE
Group, the index is designed to identify
companies that meet globally recognised
corporate social responsibility standards.
EMPLOYMENT POLICY
The objective of iSOFT’s employment
policy is to support our business goals
through the attraction, retention and
realisation of the full potential from a 
high-calibre workforce.
During the year, regular consultations and
briefings took place with employees to
enhance their understanding of the
Group’s performance and the financial 
and economic environment in which 
it operates.
Priority is given to ensuring that employees
are aware of significant matters relating to
the Group’s trading performance and
organisational changes.
The directors recognise the importance of
individual employee contributions in
delivering the Group’s successful
performance to date and have maintained
the commitment that each employee
receives a formal appraisal every six months.
Disabled individuals are afforded the same
opportunities as others, and the Group
actively supports the employment of
disabled persons both during the
recruitment process and in the retention of
employees who become disabled whilst in
the employment of the Group.
HEALTH AND SAFETY POLICY
The health and safety of our employees 
is also of paramount importance to iSOFT.
In fostering a working environment
encouraging productivity, participation and
togetherness, the Group has created a
workplace which embraces statutory
requirements and best practice guidelines
wherever possible.
EMPLOYEE EQUITY PARTICIPATION
A significant number of employees have
shareholding interests in the Company
either directly or under share option and
“Sharesave” schemes. The directors
actively encourage employee equity
participation, subject always to the Group’s
employee share dealing code rules, as
they firmly believe that this encourages the
profitable development of the Group.
Details of the current employee share
option schemes and the options granted
during the year are provided in note 23 to
the financial statements on page 66.
Our July 2003 Sharesave scheme has
been widely participated in, with 29% of
eligible employees in iSOFT’s world-wide
locations now participating in the Scheme.
Given the success of the original schemes,
the directors are proposing to introduce a
new offer under the existing Sharesave
scheme in the coming year. Participation 
in the Sharesave scheme is encouraged
across the Group.
THE GROUP’S PHILOSOPHY IS TO ESTABLISH A PAPERLESS WORKING
ENVIRONMENT WHEREVER APPROPRIATE THROUGH THE AUTOMATION OF
EMPLOYEE MANAGEMENT TOOLS BUSINESS IMPROVEMENT PROGRAMME
Following the completion of the merger
with Torex and the conclusion of the
National Programme for Information
Technology (NPfIT) in England procurement,
a top-to-bottom Business Improvement
Programme was instigated with the
objective of redesigning the Group wide
operational organisational structures, to
achieve optimisation of the significant
talent residing within the enlarged Group’s
workforce. This Programme will also
ensure that the resulting structures are
populated with the appropriate number 
of skilled resources. After completion of
merger integration activities, already at 
an advanced stage, the programme focus 
will turn to continual improvement
initiatives and other organisational
development activities.
EMPLOYEE CONSULTATION
In conjunction with this Programme, iSOFT
introduced an Employee Consultation
Forum (‘VOiCE’) in April of this year, with
elected representatives. VOiCE was
established to create a means of active
involvement, social dialogue, information
dissemination and communication with the
employees of the Group based within the
UK. The success of this forum will be
reviewed over the remainder of 2004 and,
if successful, rolled out across other
international operations.
SOCIAL, ENVIRONMENTAL AND ETHICAL 
(SEE) MATTERS 
The iSOFT business as a whole recognises
that achieving success in environmental
and social management is a joint
responsibility between employees and
management. Indeed active employee
participation in community events and
charities is strongly supported through the
giving of time and the internal promotion
and support for such activities.
The directors recognise that whilst 
iSOFT’s business activities as a provider 
of software applications, have minimal
direct environmental impact, there are
environmental impacts in running a
company and our commitment to adopting
best practice evidences our responsibility.
The Group maintains an environmental
policy to raise awareness, establish
standards, assess the impact of its
business activities on the environment,
set improvement objectives and monitor
performance against these objectives.
Examples of the Group’s commitment to
this policy are as follows:
• the continuing promotion of remote 
working to reduce the environmental 
burden of commuting and business 
travel; 
• introducing leading edge technology 
solutions to promote direct electronic 
information processing and exchange 
and teleconferencing; and
• enhancements to the Group’s intranet 
site such that employee 
communications can be distributed 
electronically.
The Group’s philosophy is to establish a
paperless working environment wherever
appropriate. This has been realised
through the automation of a number of
employee management tools such as
performance appraisals, annual leave
requests, sickness records and the job
profile library.
The responsibility for maintaining and
enforcing the SEE policy resides at Board
level. A copy of the current environmental
policy is available on the Group website.
DONATIONS
The Board of Directors feels that the 
choice of charitable activities is a matter 
of conscience for individual members of
staff, particularly given our wide
involvement with numerous healthcare
institutions. No charitable donations were
made during the year.
iSOFT made no financial contributions to
any political parties in the year.
This report was approved by the Board on
23 June 2004 and signed on its behalf by:
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
page twenty six
26
John Whelan
Group Finance Director 27
CORPORATE SOCIAL RESPONSIBILITY
page twenty seven
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES REMUNERATION REPORT
page twenty eight
28
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 29
REMUNERATION REPORT
page twenty nine
market comparatives and a significant
proportion of remuneration linked directly
to Group and individual performance.
The remuneration of executive directors
comprises basic salary, private health
insurance, life assurance, a contribution
towards personal pension arrangements,
a performance related bonus and, where
appropriate, the opportunity to participate
in the Group’s share option schemes.
Remuneration packages of the executive
directors are reviewed annually to ensure
that they remain supportive of the Group’s
business objectives, principally the creation
of shareholder value. To this end the
current remuneration is strongly weighted
towards prospective business performance,
in the form of cash and deferred 
share bonuses.
The remuneration of non-executive
directors is determined by the Board 
with regard to market comparatives.
Independent advice is sought to ensure
parity is maintained with similar
businesses. The basic annual fee for 
non-executive directors was increased
during the year in line with market
comparatives and commensurate with the
growth in the size of the Company. The
Board has the power to pay additional
remuneration for any services outside the
scope of the ordinary duties of a 
non-executive director.
BASIC SALARY 
Basic salaries are reviewed annually and
adjustments made where necessary to
reflect changes in responsibilities,
individual performance and market rates.
The nature and complexity of the business
has increased significantly during the year
and salaries have been increased to reflect
the growth of the Company and the
extended responsibilities of the directors.
THE REMUNERATION COMMITTEE
The Remuneration Committee (the
'Committee') is primarily responsible for
formulating and recommending to the
Board the framework for executive
remuneration, and determining, on behalf
of the Board and shareholders, the 
specific remuneration packages of the
executive directors.
The members of the Committee during 
the year were Geoff White as Committee
Chairman, Digby Jones and Eurfyl ap
Gwilym. On 11 May 2004, David Thorpe
and Colin Wall were appointed to the
Committee. All of the members of the
Committee are independent 
non-executive directors.
During the year the Committee received
guidance on executive remuneration from
the Executive Chairman and the Chief
Executive Officer, except on matters
relating to their own remuneration. The
Committee also consulted with New Bridge
Street Consultants LLP who have been
appointed by the Committee to provide
independent, external advice. No other
services were provided to the Company
during the year by New Bridge Street
Consultants LLP.
REMUNERATION POLICY
The Committee's policy is to recommend
that remuneration packages are effective
in attracting, retaining and motivating
executive directors and other senior
management of the calibre required to
achieve the Group’s objectives.
Additionally, the policy is to provide an
appropriate means of aligning executives'
interests with the interests of shareholders.
The Committee has developed a
remuneration policy which includes a
competitive base salary having regard to
levels of responsibility, experience and
Basic salary levels are benchmarked
against similar positions in comparable
FTSE 250 companies.
PERFORMANCE RELATED BONUS
The Group provides performance related
bonuses for executive directors. Bonuses
are payable at the discretion of the
Committee based on the Group’s
performance and the individual executive’s
contribution to that performance. The
financial performance targets are set with
reference to, amongst other things,
underlying earnings per share and
normalised profit before tax growth
targets. For the coming year, the year to
30 April 2005, the Committee decided that
payment of the profit bonus will be
dependent on the Group normalised profit
before tax for the year, amended for the
impact of any acquisitions. The Committee
considers the individual performance
criteria to be appropriately challenging.
To align the long-term interests of
executive directors and shareholders, the
Group operates a deferred bonus plan
whereby 50 per cent of any bonus earned
is payable in the form of shares in the
Company ("Bonus Shares"), equal in value
(at the time when the bonus is declared) to
the amount of bonus paid. Release of
Bonus Shares is deferred for a further
three years and is conditional upon the
director remaining in employment with the
Group throughout that period.
Exceptionally, Bonus Shares may be
released early if the executive director
ceases employment within the Group by
reason of death, disability, injury,
redundancy, retirement or otherwise if the
Remuneration Committee so determines.
Bonus Shares may also be released early
in the event of a takeover or corporate
reconstruction of the Group.
REMUNERATION PACKAGES OF THE EXECUTIVE DIRECTORS ARE
REVIEWED ANNUALLY TO ENSURE THAT THEY REMAIN SUPPORTIVE 
OF THE GROUP’S BUSINESS OBJECTIVES The Company’s policy is that in normal
circumstances executive directors should
have rolling service contracts with an
indefinite term providing for a maximum 
of one year’s notice from either party to
reflect market practice. The Committee is
mindful of the need to consider
compensation commitments, if any, that
are appropriate in the event of the early
termination of executive directors’
contracts bearing in mind the Group’s 
legal obligations and the individual’s ability
to mitigate their loss.
Roger Dickens resigned as a director of
iSOFT on 23 December 2003. He is
retained by the Group as a Business and
Strategy Executive under a service contract
effective 23 December 2003 and is paid
an aggregate annual remuneration of
£360,000. He is not entitled to any
performance related or other bonus.
The contract is for a fixed period until 
23 December 2006 and thereafter until 
terminated by either party giving to the
other nine weeks notice.
Details of deferred share bonus awards to
date are set out on page 32.
For the year to 30 April 2005, performance
related bonuses for executive directors are
again restricted to 200 per cent of basic
annual salary. The maximum bonus
payable to any individual executive director
would consist of a cash bonus and
deferred share bonus, each worth 
100 percent of basic salary, but this level
of bonus would be payable only in the
event of outstanding performance,
substantially in excess of the targets set.
SHARE OPTION SCHEMES
The Group operates an approved and an
unapproved share option scheme. The
schemes are designed to provide 
long-term incentives to recipients, thus
assisting in the creation and sustaining 
of shareholder value.
All options granted to executive directors
are subject to the achievement of certain
performance conditions. Details of the
share options granted to date are set out
on page 33.
Any options granted in the year to 
30 April 2005 will require an appropriately
challenging performance target, based on
normalised profit before tax growth in the
three years following the grant, to be
satisfied before they become exercisable.
This figure is reflected in these financial
statements which have been audited 
by RSM Robson Rhodes LLP.
PENSIONS
The Group makes an annual payment
equal to 20 per cent of basic salary to the
executive directors. Directors are
responsible for using these funds to make
their own pension arrangements. The
Company does not operate a defined
benefit scheme for directors.
The service contracts of Chris Moore and
Mark Woodbridge were effective from 
23 December 2003 and were negotiated
as part of the merger of Torex and include
special provisions in the event of early
termination within two years of the merger.
Termination of Chris Moore’s contract by
the Company giving notice, prior to 
23 December 2005, would require the
payment of the aggregate amount of
salary, bonus and benefits of Chris Moore
from the date of termination until 
23 December 2005 subject to the
payment not being less than one year’s
salary, bonus and benefits. In addition to
this amount, a further payment equal to
one year’s salary, bonus and benefits
would be payable provided that he abides
by certain post termination restrictive
covenants lasting 12 months after
termination. After 23 December 2005, the
notice period for Chris Moore is 12 months
with provision for immediate termination
provided a payment in lieu of notice of one
year’s salary, bonus and benefits is made.
REMUNERATION REPORT
page thirty
30
SERVICE CONTRACTS
Details of the service contracts of those serving as executive directors during the year are
as follows:
Contract Unexpired Notice Termination
date term period payments
P Cryne 25 Mar 2003 Rolling 12 months 1 year’s salary plus one 
year’s pension contribution
T Whiston 25 Mar 2003 Rolling 12 months 1 year’s salary plus one 
year’s pension contribution
S Graham 19 May 2000 Rolling 12 months 1 year’s salary plus one 
year’s pension contribution
J Whelan 12 Dec 2002 Rolling 12 months 1 year’s salary plus one 
year’s pension contribution
M Woodbridge See below for further details
C Moore See below for further details
R Dickens See below for further details No amounts are then payable in respect of
abiding by post restrictive covenants.
Chris Moore resigned as a director of the 
company on 2 February 2004 and the
Company has not made any termination
payments following his resignation.
In the event that the Company terminates
Mark Woodbridge’s contract prior to 
23 December 2004, the Company is
required to pay the aggregate amount of
salary and benefits of Mark Woodbridge
from the date of termination until 
23 December 2005. In addition to this
amount, a further amount will be payable
calculated as one year’s bonus entitlement
reduced pro-rata by the period elapsed
between the completion date of the
merger, 23 December 2003, and the date
of termination. After 23 December 2004,
the notice period for Mark Woodbridge is
12 months with provision for immediate
termination provided a payment in lieu of
notice of one year’s salary and benefits is
made. No amounts are then payable in
respect of bonus entitlements.
In the case of all directors, none of the 
amounts above are payable in the event 
of summary dismissal.
Non-executive directors do not have
service agreements and are appointed
under letters of appointment. There are no
provisions for early termination payments.
Re-appointment is not automatic and
current terms of appointment expire in
May 2006, except in the case of 
David Thorpe and Colin Wall, whose
appointments were effective in 
December 2003 and expire in December
2006. Letters of appointment are available
for inspection at the Company’s 
registered office.
EXTERNAL APPOINTMENTS
The consent of the Board is required for
any external appointments proposed by 
an individual director, such as a 
non-executive director position with
another company, to ensure that the
appointment does not give rise to a conflict
of interest. Where an appointment is
accepted, it must be undertaken in the
director’s own time. The director is,
therefore, in these circumstances
permitted to retain any remuneration
earned from the external appointment.
TOTAL SHAREHOLDER RETURN
The graphs below illustrate Total
Shareholder Return (TSR) performance of
the Company in comparison to appropriate
equity market indices over the period since
listing in July 2000. TSR is defined as
share price growth plus reinvested
dividends. The Committee has decided
that the FTSE 250, the FTSE Software 
& Computer Services and the FTSE
techMARK 100 indices are suitable
comparators as the Company has been 
a constituent of these indices for 
a significant period since flotation.
31
REMUNERATION REPORT
page thirty one
50
0
100
150
200
250
300
350
400
450
OCT00 APR01 OCT01 APR02 OCT02 APR03 OCT03 APR04
iSOFT TSR
FTSE SOFTWARE & COMPUTER 
SERVICES INDEX
iSOFT TSR
versus
FTSE Software &
Computer Services
Index TSR
50
0
100
150
200
250
300
350
400
450
OCT00 APR01 OCT01 APR02 OCT02 APR03 OCT03 APR04
iSOFT TSR
FTSE 250 INDEX
iSOFT TSR
versus
FTSE 250
Index TSR
50
0
100
150
200
250
300
350
400
450
OCT00 APR01 OCT01 APR02 OCT02 APR03 OCT03 APR04
iSOFT TSR
FTSE techMARK 100 INDEX
iSOFT TSR
versus
FTSE techMARK
100TSR REMUNERATION REPORT
page thirty two
32
DIRECTORS’ REMUNERATION (AUDITED)
Directors’ remuneration for the year ended 30 April 2004 was as follows:
Basic salary Benefits* Performance Total 2004 Total 2003 Prevailing basic
earned/fees related bonus salary/fees at
payable in cash 30 April 2004
£’000 £’000 £’000 £’000 £’000 £’000
Patrick Cryne 379 1 255 635 579 425
Tim Whiston 346 1 258 605 512 430
Steve Graham 328 1 252 581 502 360
Mark Woodbridge
1
100 - 38 138 - 300
John Whelan
2
56 - 34 90 - 270
Chris Moore
3
31 - - 31 - -
Roger Dickens
4
217 1 - 218 486 -
Digby Jones 41 - - 41 30 60
Eurfyl ap Gwilym 41 - - 41 30 60
Geoff White 41 - - 41 30 60
David Thorpe
5
15 - - 15 - 50
Colin Wall
6
15 - - 15 - 50
Rene Kern
7
- - - --- 
Total 1,610 4 837 2,451 2,169 2,065 
* Benefits comprise private health insurance and 
life assurance.
1 Mark Woodbridge was appointed on 
23 December 2003.
2 John Whelan was appointed on 13 February 2004.
The remuneration table only includes his earnings 
since his appointment to the Board.
3 Chris Moore was appointed on 23 December 2003 
and resigned on 2 February 2004.
4 Roger Dickens resigned on 23 December 2003.
5 David Thorpe was appointed on 23 December 2003.
6 Colin Wall was appointed on 23 December 2003.
7 Rene Kern is a director but receives no fee.
DEFERRED SHARE BONUS PLAN (AUDITED)
Shares awarded to the directors and former directors under the deferred share bonus plan 
are as follows:
Deferred share bonus summary as at 30 April 2004
Award At 1 May Shares At 30 April Vesting
date 2003 awarded 2004 date
number number number
Patrick Cryne 30 Apr 2003 95,351 95,351 01 May 2006
30 Apr 2004 62,378 62,378 01 May 2007
Tim Whiston 30 Apr 2003 95,351 95,351 01 May 2006
30 Apr 2004 63,112 63,112 01 May 2007
Steve Graham 30 Apr 2003 82,637 82,637 01 May 2006
30 Apr 2004 61,644 61,644 01 May 2007
Mark Woodbridge 30 Apr 2004 9,173 9,173 01 May 2007
John Whelan 30 Apr 2004 39,628 39,628 01 May 2007
Roger Dickens 30 Apr 2003 76,403 76,403 01 May 2006
The deferred share bonus awards
represent 50 per cent of the total annual
bonus awarded to directors in respect of
performance during the financial year
ended on the award date. The monetary
value of the bonus not taken up in cash is
translated into shares based on the
average market price of the Company’s
shares in the three trading days preceding
the award date. The only remaining
performance criterion attaching to the
above awards is that the directors remain
in employment with the Company for three
years from the date of the relevant award.
The average market price of the Company’s
shares on the three trading days prior to 
30 April 2003 was 265 pence and for the
three trading days prior to 30 April 2004
was 409 pence.
There have been no variations in the terms
and conditions of scheme interests during
the year. 33
REMUNERATION REPORT
page thirty three
DIRECTORS’ PENSION ENTITLEMENTS
(AUDITED)
The Company contributes 20 per cent of
basic salary towards the directors’
individual pension arrangements where
such an entitlement is included in the
individual director’s service contract.
Directors are responsible for using the
contribution to make their own pension
arrangements. Amounts contributed to
individual directors’ pension arrangements
in the year were as follows:
DIRECTORS’ SHARE OPTIONS (AUDITED)
In addition to the directors’ share interests noted in the Report of the Directors on page 16,
the following share options have been granted to directors:
Exercise At Granted At Date from
price 1 May during 30 April which Expiry
(pence) 2003* the year 2004 exercisable date
Tim Whiston
110
1
101,000 - 101,000
3
11 Jul 2003 10 Jul 2010
174
1
250,000 - 250,000
3
20 Dec 2003 19 Dec 2010
249
1
850,000 - 850,000
3
22 Jun 2004 21 Jun 2011
145
2
480,176 - 480,176 11 Oct 2005 10 Oct 2012
145
2
19,824 - 19,824 11 Oct 2005 10 Oct 2012
Mark Woodbridge
92.5
4
12,816 - 12,816 5 Mar 2002 4 Mar 2009
156.9
4
17,842 - 17,842 13 Aug 2002 12 Aug 2009
295.7
4
35,684 - 35,684 9 Feb 2003 8 Feb 2010
374.5
4
36,268 - 36,268 15 Mar 2004 14 Mar 2011
350.4
4
127,382 - 127,382 19 Sep 2004 18 Sep 2011
420.0
4
21,212 - 21,212 27 Feb 2005 26 Feb 2012
* Or at date of appointment if later.
1 Options are exercisable subject to the performance 
of the Company's Total Shareholder Return (TSR) 
relative to growth in the Retail Price Index (RPI) over 
the three year period from the date of grant of 
the option:
• 25% of options may be exercised if the 
Company's TSR over the period exceeds the 
growth in RPI by 20%
• 50% of options may be exercised if the 
Company's TSR over the period exceeds the 
growth in RPI by 35%
• 100% of options may be exercised if the 
Company's TSR over the period exceeds the 
growth in RPI by 50%
2 Options are exercisable subject to the growth in the 
Company's normalised profit before tax relative to 
the growth in RPI over the three year period from 
the date of grant of the option:
• 50% of options may be exercised if normalised 
profit before tax growth exceeds the growth in RPI 
by 10%
• 100% of options may be exercised if normalised 
profit before tax growth exceeds the growth in RPI 
by 20%
In both cases, where the performance target growth 
falls between the levels specified, the proportion of 
options that may be exercised will be calculated on 
a straight line basis. Where the growth is less than 
the minimum growth level specified above, all of the 
options lapse and cease to be exercisable.
3 The Company performance criteria for these options 
has been satisfied.
4 Rolled over from Torex share options. There are no 
outstanding performance criteria attaching to 
these options.
2004 2003
£’000 £’000
Patrick Cryne 76 65
Tim Whiston 69 52
Steve Graham 66 56
John Whelan 11 -
Chris Moore 6 - 
Roger Dickens 43 56
271 229
This report was approved by the Board on
23 June 2004 and signed on its behalf by:
Geoff White
Chairman of the Remuneration Committee
The market mid price of the Company’s shares at 1 May 2003 and 30 April 2004 was 
266 pence and 416 pence respectively. The range during the financial year was between
261 pence and 429 pence. AUDIT COMMITTEE REPORT
page thirty four
34
INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES 35
AUDIT COMMITTEE REPORT
page thirty five
The Audit Committee continues to review
the risk management processes and the
internal control framework in place
throughout the organisation. The key
elements of this framework are
summarised in the Corporate Governance
report included within this annual report.
EXTERNAL AUDITORS
The Audit Committee also reviews annually
the performance of the Group’s external
auditors to ensure that an objective,
professional and cost-effective relationship
is maintained. The Audit Committee is
also responsible for monitoring non-audit
fees paid to the external auditors to ensure
that no conflicts of interest arise.
The Audit Committee must authorise 
all non-audit work above £5,000
commissioned from the external auditors
in advance of such work being undertaken.
The Audit Committee has reviewed the
non-audit fees paid to the external 
auditors which, in aggregate, totalled
£27,000 and has deemed that in the 
year ended 30 April 2004 they do not
affect independence.
INTERNAL AUDIT FUNCTION 
The Audit Committee is responsible for
considering the need for an internal audit
function on an annual basis.
Historically, the Audit Committee has been
satisfied that a separate, independent
internal financial audit function has not
been required given the relative size and
complexity of the Group’s operations.
Following the merger with Torex and the
consequent increase in the size of the
business, the Audit Committee believes it
is now necessary to introduce an internal
audit function appropriate to a large,
rapidly growing public company.
ROLE OF THE AUDIT COMMITTEE 
The Audit Committee is responsible for
making recommendations on the
appointment of external auditors, the level
of the audit fee and for ensuring their
independence. The Audit Committee
reviews proposed results publications and
the effectiveness of internal controls.
AUDIT COMMITTEE MEMBERSHIP 
AND MEETINGS 
The Audit Committee is chaired by Eurfyl
ap Gwilym. Other members of the Audit
Committee are David Thorpe (from 
11 May 2004), Colin Wall (from 
11 May 2004) and Geoff White.
Digby Jones was a member of the Audit
Committee until 11 May 2004. All
members of the Audit Committee are
independent non-executive directors.
Other directors and the external auditors
are invited to Audit Committee meetings 
as appropriate.
The Audit Committee met three times
during the year with the Group Finance
Director and twice with the external
auditors. In addition, the Audit Committee
also met with the external auditors without
the executive directors being present on
two occasions. All of the Audit Committee
meetings were fully attended, save that
Digby Jones was absent from two of the
meetings. Details of the remuneration of
the members of the Audit Committee 
are set out on page 32 of the
Remuneration Report.
FINANCIAL STATEMENTS, INTERNAL
FINANCIAL CONTROLS AND RISK
MANAGEMENT SYSTEMS
The Audit Committee meets to review the
Group’s annual and interim financial
statements, internal management
arrangements, accounting policies and
internal financial controls.
The Group is currently preparing to
introduce an internal financial audit
function during the year ending 
30 April 2005 to further enhance the
existing internal control framework. The
work of the internal financial audit function
will supplement the work of the internal
quality audit team which was introduced
during the year ended 30 April 2004
following the Group receiving 
ISO 9001:2000 accreditation. The work 
of the internal quality audit team during
the year has concentrated on ensuring that
the Group complies with rigorous quality
processes covering both operational and
financial procedures. The Group’s quality
processes are also subject to annual
external audits which all received
satisfactory results during the year.
The report was approved by the Board on 
23 June 2004 and signed on its behalf by:
THE AUDIT COMMITTEE CONTINUES TO REVIEW THE RISK
MANAGEMENT PROCESSES AND INTERNAL CONTROL FRAMEWORK 
IN PLACE THROUGHOUT THE ORGANISATION
Eurfyl ap Gwilym
Chairman of the Audit Committee INDEPENDENT AUDITORS’ REPORT
page thirty six
36
We have audited the financial statements
on pages 39 to 69. We have also audited
the information in the Remuneration Report
that is described as having been audited.
This report is made solely to the
Company’s shareholders, as a body, in
accordance with Section 235 of the
Companies Act 1985. Our audit work has
been undertaken so that we might state to
the Company’s shareholders those matters
we are required to state to them in an
auditors’ report and for no other purpose.
To the fullest extent permitted by law, we
do not accept or assume responsibility to
anyone other than the Company and the
Company’s shareholders as a body, for our
audit work, for this report, or for the
opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF
DIRECTORS AND AUDITORS
The directors’ responsibilities for preparing
the Annual Report, the Remuneration
Report and the financial statements in
accordance with applicable law and United
Kingdom Accounting Standards are set out
in the Statement of Directors’
Responsibilities on page 20.
Our responsibility is to audit the financial
statements and the part of the
Remuneration Report to be audited in
accordance with relevant legal and
regulatory requirements, United Kingdom
Auditing Standards and the Listing Rules of
the Financial Services Authority. We report
to you our opinion as to whether the
financial statements give a true and fair
view and whether the financial statements
and the part of the Remuneration Report to
be audited have been properly prepared in
accordance with the Companies Act 1985.
We also report to you if, in our opinion, the
Report of the Directors is not consistent
with the financial statements, if the
Company has not kept proper accounting
records, if we have not received all the
information and explanations we require for
our audit, or if information specified by law
or the Listing Rules regarding directors’
remuneration and transactions with the
Company and other members of the Group
is not disclosed.
We review whether the Corporate
Governance Statement reflects the
Company’s compliance with the seven
provisions of the Combined Code specified
for our review by the Listing Rules and we
report if it does not. We are not required to
consider whether the Board’s statements
on internal control cover all risks and
controls or form an opinion on the
effectiveness of the Group’s corporate
governance procedures or its risk and
control procedures.
We read other information contained in the
Annual Report and consider whether it is
consistent with the audited financial
statements. The other information
comprises the Letter from the Chairman,
the Chief Executive’s Report, the Operating
and Finance Review, the Corporate
Governance Report, the Corporate Social
Responsibility Statement, the unaudited
part of the Remuneration Report, the Audit
Committee Report and the Five Year
Summary. We consider the implications for
our report if we become aware of any
apparent misstatements or material
inconsistencies with the financial
statements. Our responsibilities do not
extend to any other information.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with
United Kingdom Auditing Standards issued
by the Auditing Practices Board. An audit
includes examination, on a test basis, of
evidence relevant to the amounts and
disclosures in the financial statements and
the part of the Remuneration Report to be
audited. It also includes an assessment of
the significant estimates and judgements
made by the directors in the preparation of
the financial statements, and of whether
the accounting policies are appropriate to
the Group's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit 
so as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the financial statements 
and the part of the Remuneration Report 
to be audited are free from material
misstatement, whether caused by fraud 
or other irregularity or error. In forming 
our opinion we also evaluated the overall
adequacy of the presentation of information
in the financial statements and the part of
the Remuneration Report to be audited.
OPINION
In our opinion:
• the financial statements give a true 
and fair view of the state of affairs of 
the Company and the Group as at 
30 April 2004 and of the Group’s 
profit for the year then ended; and
• the financial statements and the part 
of the Remuneration Report to be 
audited have been properly prepared 
in accordance with the Companies 
Act 1985.
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS 
OF iSOFT GROUP PLC
RSM Robson Rhodes LLP
Chartered Accountants and 
Registered Auditors
Manchester, England
23 June 2004 INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES
37
FINANCIAL STATEMENTS
page thirty seven INNOVATIVE APPLICATIONS FOR HEALTHCARE COMMUNITIES
FINANCIAL STATEMENTS There is no difference between the results reported above and those on a historical cost basis.
* stated before amortisation of goodwill and exceptional items
Note Continuing Continuing 
operations: operations:
Ongoing Acquisitions Total Total
2004 2004 2004 2003
£'000 £'000 £'000 £'000
Turnover 2 105,704 43,556 149,260 91,495
Net operating costs 3 (77,080) (51,868) (128,948) (70,545)
Operating profit before goodwill 
amortisation and exceptional items 33,292 6,241 39,533 25,600
Goodwill amortisation (4,668) (6,642) (11,310) (4,650)
Exceptional items 3 - (7,911) (7,911) -
Operating profit/(loss) 3 28,624 (8,312) 20,312 20,950
Net interest payable and similar charges 4 (2,614) (2,070)
Other finance cost 22_iii (105) -
Profit on ordinary activities 
before taxation 17,593 18,880
Tax on profit on ordinary activities 7 (6,809) (5,484)
Profit on ordinary activities 
after taxation 10,784 13,396
Minority interests - equity (85) (146)
Profit for the financial year 10,699 13,250
Dividends on equity shares 9 (4,711) (2,192)
Retained profit for the year 5,988 11,058
Earnings per share:
Basic 10 6.66p 11.17p
Diluted 10 6.57p 11.08p
Underlying* 10 17.70p 15.09p
Consolidated profit and loss account
for the year ended 30 April 2004
39
FINANCIAL STATEMENTS
page thirty nine Consolidated statement of total recognised gains and losses 
for the year ended 30 April 2004
FINANCIAL STATEMENTS
page forty
40
Group Company Group Company
2004 2004 2003 2003
£’000 £’000 £’000 £’000
Profit for the financial year 10,699 7,248 13,250 4,624
Dividends (4,711) (4,711) (2,192) (2,192)
5,988 2,537 11,058 2,432
Other recognised gains and losses (216) - 670 -
Shares issued net of costs 372,895 372,895 12,881 12,881
Net increase in shareholders’ funds 378,667 375,432 24,609 15,313
Opening shareholders’ funds 73,270 55,119 48,661 39,806
Closing shareholders’ funds 451,937 430,551 73,270 55,119
Reconciliation of movements in shareholders’ funds
for the year ended 30 April 2004
2004 2003
£'000 £'000
Profit for the financial year 10,699 13,250
Foreign exchange (loss)/gain (243) 670
Actuarial loss recognised in the pension scheme (40) -
Movement on deferred tax relating to pension liability 67 -
Total recognised gains for the financial year 10,483 13,920 Note 2004 2003
£’000 £’000
Fixed assets
Intangible assets – goodwill 11 473,237 91,989
Tangible assets 12 11,870 1,776
485,107 93,765
Current assets
Assets held for resale 15 7,500 -
Stocks 3,837 -
Debtors 16 106,936 31,113
Cash at bank and in hand 75,034 45,451
193,307 76,564
Creditors: amounts falling due within one year 17 (142,397) (44,216)
Net current assets 50,910 32,348
Total assets less current liabilities 536,017 126,113
Creditors: amounts falling due after one year 18 (67,212) (52,586)
Provisions for liabilities and charges 21 (10,487) -
Net assets excluding pension liability 458,318 73,527
Pension liability 22 (6,119) -  
Net assets including pension liability 452,199 73,527
Capital and reserves
Called up share capital 23 22,542 12,382
Share premium account 24 36,672 30,119
Merger reserve 24 363,865 7,683
Profit and loss account 24 28,858 23,086
Equity shareholders’ funds 451,937 73,270
Minority interests - equity 262 257
Capital employed 452,199 73,527
Consolidated balance sheet 
as at 30 April 2004
41
FINANCIAL STATEMENTS
page forty one
The financial statements were approved by the Board of Directors on 23 June 2004 and signed on its behalf by:
Tim Whiston
Chief Executive Officer
John Whelan
Group Finance Director FINANCIAL STATEMENTS
page forty two
42
Note 2004 2003
£’000 £’000
Fixed assets
Investments 13 444,825 51,849
Current assets
Debtors 16 114,588 71,986
Creditors: amounts falling due within one year 17 (67,911) (16,545)
Net current assets 46,677 55,441
Total assets less current liabilities 491,502 107,290
Creditors: amounts falling due after one year 18 (60,951) (52,171)
Net assets 430,551 55,119
Capital and reserves
Called up share capital 23 22,542 12,382
Share premium account 24 36,672 30,119
Merger reserve 24 363,865 7,683
Profit and loss account 24 7,472 4,935
Equity shareholders’ funds 430,551 55,119
Company balance sheet 
as at 30 April 2004
The financial statements were approved by the Board of Directors on 23 June 2004, and signed on its behalf by:
Tim Whiston
Chief Executive Officer
John Whelan
Group Finance Director Note 2004 2003
£'000 £'000
Net cash inflow from operating activities before cash outflow from restructuring provision 35,938 23,538
Cash outflow from restructuring provision (319) -
Net cash inflow from operating activities 25 35,619 23,538
Returns on investments and servicing of finance
Interest received 785 356
Interest paid (3,199) (2,529)
Issue costs of new bank loans (608) (481)
Finance lease interest paid (57) (9)
Net cash outflow from returns on investments and servicing of finance (3,079) (2,663)
Taxation (5,325) (4,295)
Capital expenditure
Payments for tangible fixed assets (3,034) (357)
Receipts from sale of tangible fixed assets 896 26
Net cash outflow from capital expenditure (2,138) (331)
Acquisitions and disposals
Purchase of subsidiary undertakings 14 (4,633) (34,422)
Overdrafts acquired with subsidiary undertakings 14 (5,134) (8)
Deferred consideration paid on prior year acquisitions (2,126) -
Disposal of subsidiary undertakings 60,794 -
Net cash inflow/(outflow) from acquisitions and disposals 48,901 (34,430)
Equity dividends paid (2,365) (1,648)
Net cash inflow/(outflow) before financing 71,613 (19,829)
Financing
Issue of ordinary shares 6,067 12,656
Expenses paid in connection with ordinary share issue (1,890) (275)
New bank and other loans 70,000 51,500
Repayment of bank and other loans (115,965) (22,693)
Capital element of finance lease payments made (341) (121)
Net cash (outflow)/inflow from financing (42,129) 41,067
Increase in cash 26 29,484 21,238
Consolidated cash flow statement 
for the year ended 30 April 2004
43
FINANCIAL STATEMENTS
page forty three FINANCIAL STATEMENTS
page forty four
44
Notes to the financial statements
01
Accounting
policies
The financial statements have been prepared under the historical cost convention in accordance with the Companies
Act 1985 and applicable accounting standards. The accounting policies have been applied consistently throughout
both the current year and preceding year with the exception of the adoption of FRS 17 “Retirement Benefits”.
Following the merger with Torex PLC (“Torex”) on 23 December 2003, the Group has adopted FRS 17 in accounting for
the defined benefit schemes of Torex. As the Group has not had any defined benefit pension arrangements in prior
years, the change in accounting policy has not resulted in a prior year adjustment. Acquisition accounting has been
adopted for the merger with Torex and the deficit on acquisition of the Torex defined benefit schemes has been dealt
with by way of a fair value adjustment.
The principal accounting policies adopted by the directors are described below:
i_Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary
undertakings using acquisition accounting. The results of subsidiary undertakings acquired or disposed of during a
financial year are included from, or up to, the effective date of acquisition or disposal. Inter-company transactions and
balances are eliminated on consolidation. Where a subsidiary is held exclusively for resale, the financial results of that
company are not consolidated.
ii_Goodwill
Positive goodwill is the excess of the fair value of consideration paid for an acquired entity over the aggregate of the
fair values of that entity’s identifiable assets and liabilities. Positive goodwill relating to acquisitions is shown in the
balance sheet as an asset. On completion of each acquisition the directors estimate the useful economic life and it is
over this period that the goodwill is amortised on a straight-line basis. For transactions where the primary objective is
the acquisition of customer base, and where the customer relationships continue under multi-year contract
arrangements, the directors believe it appropriate to ascribe useful economic lives of up to 20 years. To date all
acquisitions have been assessed by directors to have useful economic lives of 20 years. In addition to systematic
amortisation, the book value is written down to recoverable amount when any impairment in value is identified. Where
goodwill is subsequently adjusted following the finalisation of contingent deferred consideration, the revised carrying
value of goodwill is amortised on a prospective basis over its remaining useful economic life.
iii_Research and development
Research and development costs are fully written off in the year in which they are incurred.
iv_Turnover
The Group’s revenues are derived from the sale of software product licences, the attendant installation, maintenance
and support service revenues, supplies of third party hardware and software. All revenue is reported exclusive of value
added tax and other sales tax.
Historically, in the absence of a United Kingdom accounting standard on revenue recognition, the Group followed
guidance set out under US GAAP, in particular SOP 97-2 and SAB 101. During the current financial year, the
Accounting Standards Board issued Application Note G to FRS 5 which closely mirrors the principles historically
followed by the Group. As a result, there has been no change to the recognition of revenue in the Group’s financial
statements. The Group’s approach to revenue recognition is that revenue is only recognised when:
1.persuasive evidence of an arrangement exists;
2.the price to the customer is fixed or determinable;
3.any services deliverable under the supply arrangement are clearly separable from the software supply; 
4.physical delivery has occurred or services have been rendered; 
5.contract milestones have been achieved; and
6.collectibility is reasonably assured and there are no material outstanding conditions or contingencies attaching 
to the receipt of monies due.
In the event that services deliverable under a supply arrangement are not clearly separable from the software supply,
total revenue in relation to the supply arrangement is recognised straight line over the period of the arrangement. Notes to the financial statements
01
Accounting
policies 
cont...
v_Recognition of profit
Turnover from the sale of software product licences is recognised at the time the software licence is granted in
accordance with agreed contractual triggers, typically the supply of the software product to the customer. Revenues
from the attendant installation, maintenance and support services are recognised proportionally over the period that the
services are provided with due regard for future anticipated costs. Payments received in advance of services are
recorded in the balance sheet as deferred income.
vi_Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of
transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
translated at the rates ruling at that date. Translation differences are taken to the profit and loss account.
Results of overseas subsidiaries are translated using the average exchange rate for the period. The balance sheets 
of overseas subsidiaries are translated using the closing year end rate. Exchange differences arising from the 
re-translation of the opening net assets of overseas subsidiaries are taken to reserves.
vii_Tangible fixed assets
Tangible fixed assets are stated at invoice cost less any applicable discounts. Depreciation is provided at rates
calculated to write down the cost of tangible assets over their estimated useful life on a straight-line basis. The annual
rates of depreciation, by category of fixed asset, are as follows:
• freehold property 2%
• office equipment, fixtures and fittings 12.5% to 20.0%
• computer equipment 33.3%
viii_Assets held for resale
Acquired assets held for resale are stated at the directors’ valuation of anticipated net realisable value.
ix_Stocks
Stocks comprise goods held for resale and are stated at the lower of cost and net realisable value. Cost includes all
costs in bringing each product to its present location and condition.
x_Share schemes
The Company has taken advantage of the exemption in UITF 17 “Employee Share Schemes” (Revised 2000) in respect
of the accounting for its employee savings related option schemes which states that the requirements of the Abstract
need not be applied to such schemes.
The cost in relation to the deferred bonus scheme is charged in the year of performance. The related credit entry 
is made within liabilities reflecting the fact that the deferred shares will be satisfied by a purchase of shares from 
the market.
xi_Fixed asset investments
Fixed asset investments are stated at cost less any write down for impairment.
xii_Leased assets
Assets held under finance leases are included in the balance sheet and depreciated in accordance with the Group’s
normal accounting policy for the class of asset concerned. The present value of future rentals is shown as a liability.
The interest element of rental obligations is charged to the profit and loss account over the period of the lease in
proportion to the balance of capital repayments outstanding.
Rentals payable under operating leases are charged to the profit and loss account on a straight-line basis over the
period of the lease.
45
FINANCIAL STATEMENTS
page forty five FINANCIAL STATEMENTS
page forty six
46
Notes to the financial statements
01
Accounting
policies 
cont...
02
Segmental
analysis
xiii_Taxation
Corporation tax is provided on taxable profits at the current rate.
Deferred tax is provided on timing differences that have arisen but not reversed by the balance sheet date, where the
timing differences result in an obligation to pay more tax, or a right to pay less tax, in the future. Timing differences
arise because of differences between the treatment of certain items for accounting and taxation purposes.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing differences are
expected to reverse, based on tax rates and law enacted or substantively enacted at the balance sheet date. Deferred
tax assets and liabilities are not discounted.
Where law or accounting standards require gains and losses to be recognised in the statement of total recognised
gains and losses, the related taxation is also taken directly to the statement of total recognised gains and losses.
xiv_Pensions
As noted above, following the acquisition of Torex, the Group acquired a defined benefit pension scheme and has
therefore implemented the requirements of FRS 17 during the year. The pension scheme assets are measured using
market values. Pension scheme liabilities are measured using the projected unit actuarial method and are discounted
at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. Any
increase in the present value of liabilities within the Group’s defined benefit pension schemes expected to arise from
employee service in the period is charged to operating profit. The expected return on the schemes’ assets and the
increase during the period in the present value of the schemes’ liabilities arising from the passage of time are included
in other finance income/cost. Actuarial gains and losses are recognised in the consolidated statement of total
recognised gains and losses. Pension scheme surpluses, to the extent that they are considered recoverable, or deficits
are recognised in full and presented on the face of the balance sheet net of related deferred tax.
The Group also operates a number of defined contribution pension schemes. The pension charge shown in the
financial statements for these schemes represents the total contributions payable by the Group for the year.
Multi-employer defined benefit schemes are accounted for as defined contribution schemes when the Group is unable
to identify its share of the underlying assets and liabilities of the schemes.
The principal activity of the Group is the development and supply of software application products and related services to
the healthcare sector. All turnover and profit is generated from this activity.
Turnover by geographical market 2004 2003
£’000 £’000
United Kingdom and other EU states 134,563 74,010
Asia Pacific 14,697 17,485
149,260 91,495 Notes to the financial statements
Net operating costs are analysed as follows:
Continuing operations
NoteOngoing Acquisitions Total Total
2004 2004 2004 2003
£’000 £’000 £’000 £’000
Change in stocks of finished goods - (280) (280) -
Other external charges (26,195) (9,628) (35,823) (30,780)
Staff costs 5 (29,884) (18,454) (48,338) (24,496)
Exceptional staff costs - (5,864) (5,864) -
Total staff costs (29,884) (24,318) (54,202) (24,496)
Depreciation of tangible fixed assets 12 (834) (1,160) (1,994) (592)
Goodwill amortisation 11 (4,668) (6,642) (11,310) (4,650)
Other operating charges (15,499) (7,793) (23,292) (10,027)
Exceptional other operating charges - (2,047) (2,047) -
Total other operating charges (15,499) (9,840) (25,339) (10,027)
Total operating costs (77,080) (51,868) (128,948) (70,545)
Exceptional costs in 2004 comprise the costs of rationalising and reorganising the Group following the acquisition of Torex.
The costs incurred comprise severance and redundancy costs of £5,864,000 and other costs, principally comprising
professional advisory fees and property related costs, of £2,047,000 (see note 21).
47
FINANCIAL STATEMENTS
page forty seven
03
Operating
profit/(loss)
02
Segmental
analysis 
cont...
Geographical operations
United Kingdom Asia Pacific Rest of World Total Total
and other EU states
2004 2003 2004 2003 2004 2003 2004 2003
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Total turnover 135,320 75,825 14,697 17,485 2,845 1,569 152,862 94,879
Internal turnover (757) (1,815) - - (2,845) (1,569) (3,602) (3,384)
External turnover 134,563 74,010 14,697 17,485 - - 149,260 91,495
Operating profit before
goodwill amortisation 
and exceptional items 36,858 19,128 2,166 5,875 509 597 39,533 25,600
Goodwill amortisation (11,145) (4,526) (130) (109) (35) (15) (11,310) (4,650)
Exceptional items (7,911) ----- (7,911) -
Operating profit 17,802 14,602 2,036 5,766 474 582 20,312 20,950
Net assets 442,948 67,566 7,795 4,723 1,456 1,238 452,199 73,527
Turnover, operating profit and net assets from acquisitions are materially derived from the United Kingdom and other 
EU states. FINANCIAL STATEMENTS
page forty eight
48
Notes to the financial statements
03
Operating
profit/(loss)
cont...
During the period, the following services were provided by the Group’s auditor:
2004 2003
£’000 £’000
Audit services – Group and statutory audits 331 100
Further assurance services 24 137
Tax services – compliance services 3 24
– advisory services - 10
358 271
Included in the analysis above are fees and expenses of £25,000 (2003: £20,000) in respect of the parent company.
In order to ensure that the independence of the Group’s auditors is not compromised, the level of non-audit work
performed by them is kept to a minimum. All individual pieces of non-audit work above £5,000 must receive prior
authorisation from the Audit Committee.
04 
Net interest
payable and
similar
charges
2004 2003
£’000 £’000
Interest receivable comprises:
Bank interest 785 328
Interest payable comprises:
Bank loans and overdrafts (3,199) (2,338)
Amortisation of loan arrangement fees (143) (51)
Finance leases (57) (9)
(3,399) (2,398)
Net interest payable and similar charges (2,614) (2,070)
2004 2003
£’000 £’000
Operating profit/(loss) is stated after charging/(crediting):
Research and development:
- Current period expenditure 12,690 7,896
Loss/(profit) on disposal of fixed assets 1 (3)
Depreciation and amortisation:
- Goodwill 11,310 4,650
- Tangible fixed assets, owned 1,589 526
- Tangible fixed assets, held under finance leases 405 66
Operating lease rentals:
- Premises 1,638 718
- Vehicles and equipment 1,423 678 Notes to the financial statements
Staff costs during the period were as follows:
2004 2003
£’000 £’000
Wages and salaries 41,840 21,477
Social security costs 4,706 1,835
Other pension costs 1,792 1,184
48,338 24,496
Exceptional redundancy costs (see note 02) 5,864 -
Total staff costs 54,202 24,496
The average monthly number of employees, including executive directors, employed by the Group during the period was:
2004 2003
Number Number
Development 491 233
Sales and marketing 91 60
Installation and project management 479 133
Customer services 137 88
Administration 140 66
1,338 580
49
FINANCIAL STATEMENTS
page forty nine
05
Employee
information
Total remuneration in respect of directors was as follows:
2004 2003
£’000 £’000
Salary and fees 1,610 1,324
Benefits 4 4
Bonus (payable in cash) 837 971
Aggregate emoluments 2,451 2,299
Pension contribution payments 271 229
2,722 2,528
A total of six directors received pension contributions to fund personal pension arrangements (2003: four). No share
options were exercised by directors during the year or the prior year.
Further details of directors’ remuneration are included in the audited section of the Remuneration Report on 
pages 28 to 33.
06
Directors’
remuneration FINANCIAL STATEMENTS
page fifty
50
Notes to the financial statements
07 
Tax on profit
on ordinary
activities
i_Analysis of tax charge in the period 2004 2003
£’000 £’000
United Kingdom corporation tax
Current tax on income for the year 7,248 3,685
Adjustments in respect of prior years (336) 44
6,912 3,729
Double tax relief (76) (94)
6,836 3,635
Overseas taxation
Overseas taxation 1,838 2,840
Adjustments in respect of prior years 264 (402)
2,102 2,438
Current taxation 8,938 6,073
Deferred taxation
Net reversal of timing differences (2,129) (589)
Tax on profit on ordinary activities 6,809 5,484
ii_Reconciliation of current tax charge 2004 2003
£’000 £’000
Profit on ordinary activities before taxation 17,593 18,880
Theoretical tax at UK corporation tax rate of 30% (2003: 30%) 5,278 5,664
Effects of:
Expenditure not tax deductible 2,083 1,018
Movement on deferred tax not provided 55 (584)
Utilisation of tax losses 255 -
Adjustments in respect of prior periods (72) (358)
Difference in tax rates in overseas companies (49) (128)
Withholding tax (76) (94)
Exchange rate differences 9 (34)
Group relief surrendered for nil consideration 146 -
Accelerated capital allowances 1,309 589
Actual current taxation charge (note 7_i) 8,938 6,073
The Group relief surrendered for nil consideration relates to a surrender to Torex Laboratory Systems Limited,
a subsidiary which has not been consolidated into the Group financial statements.
iii_Factors that may affect future tax charges
The iSOFT Group has operations in various overseas jurisdictions, some of which have higher corporation tax rates than the
UK. The profitability of these overseas operations will have an effect on the Group tax charge going forward. Notes to the financial statements
Of the profit for the financial year, a profit of £7,248,000 (2003: £4,624,000) is dealt with in the accounts of iSOFT
Group plc. The directors have taken advantage of the exemption available under section 230 of the Companies Act
1985 and have not presented a profit and loss account for the Company alone.
51
FINANCIAL STATEMENTS
page fifty one
08
Profits of
holding
company
2004 2003
£’000 £’000
Equity dividends
Ordinary shares of £0.10 each:
- Interim dividend of 0.70p per share (2003: 0.60p) 879 706
- Proposed final dividend of 1.70p per share (2003: 1.20p) 3,832 1,486
4,711 2,192
09
Dividends
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted
average number of shares in issue. For diluted earnings per share, the weighted average number of ordinary shares in
issue is adjusted for the potential ordinary share dilution from share options. Reconciliations of the earnings and 
weighted average number of shares are set out below:
2004 2003
Weighted Weighted
average average
number of Per share number of Per share
Earnings shares amount Earnings shares amount
£’000 ‘000 pence £’000 ‘000 pence
Basic earnings per share
Earnings attributable to shareholders 10,699 160,595 6.66 13,250 118,588 11.17
Dilutive effect of options - 2,252 (0.09) - 1,034 (0.09)
Diluted earnings per share 10,699 162,847 6.57 13,250 119,622 11.08
Underlying earnings per share (excluding goodwill 
amortisation and exceptional items)
Basic earnings per share 10,699 160,595 6.66 13,250 118,588 11.17
Goodwill amortisation 11,310 - 7.04 4,650 - 3.92
Exceptional items 7,911 - 4.93 ---
Tax on exceptional items (1,502) - (0.93) ---
Underlying earnings per share 28,418 160,595 17.70 17,900 118,588 15.09
Underlying earnings per share excludes the effect of goodwill amortisation and exceptional items. This is presented to
show more comparable and representative information on the underlying trading performance.
10
Earnings 
per share FINANCIAL STATEMENTS
page fifty two
52
Notes to the financial statements
11
Intangible 
fixed assets
Group Goodwill
£’000
Cost
At 1 May 2003 101,859
Additions (note 14) 399,294
Adjustment in respect of deferred consideration (6,769)
Exchange adjustments 33
At 30 April 2004 494,417
Amortisation
At 1 May 2003 9,870
Charged for the year 11,310
At 30 April 2004 21,180
Net book value 
At 30 April 2004 473,237
At 1 May 2003 91,989
Acquisition accounting has been adopted in respect of all business combinations. The additions to goodwill during the year
represent the the merger with Torex PLC on 23 December 2003 resulting in goodwill of £397,187,000, the acquisition of
i-Health/Galen on 9 January 2004 resulting in goodwill of £1,294,000, and an additional 7% stake in iSOFT R&D Private
Limited resulting in additional goodwill of £813,000.
The goodwill arising on the merger with Torex is being amortised on a straight line basis over 20 years. This is the period
over which the directors estimate that the value of the underlying business acquired will continue to exceed the value of
the underlying assets. Goodwill in respect of all other acquisitions is amortised over 20 years.
The adjustment in respect of deferred consideration comprises:
• £4,640,000 reduction to the final settlement of the deferred consideration payable on the original acquisition of 
iSOFT plc (see note 17).
• £2,273,000 reduction in the directors estimate of the deferred consideration payable on the acquisition of 
Revive Group Limited (see note 17).
• £144,000 increase in the total consideration payable in respect of Paramedical Pty Limited (see note 17).
The directors have elected to amortise the revised carrying value of goodwill in respect of iSOFT plc, Revive Group Limited
and Paramedical Pty Limited on a prospective basis over their remaining useful economic lives.
Company
The Company has no intangible fixed assets. Notes to the financial statements
53
FINANCIAL STATEMENTS
page fifty three
Group Freehold Fixtures
land & fittings &
buildings equipment Total
£’000 £’000 £’000
Cost
At 1 May 2003 - 3,607 3,607
On acquisition (note 14) 4,961 29,963 34,924
Additions - 3,071 3,071
Disposals (514) (1,532) (2,046)
Exchange adjustments (4) (272) (276)
At 30 April 2004 4,443 34,837 39,280
Depreciation
At 1 May 2003 - 1,831 1,831
On acquisition (note 14) 1,049 24,382 25,431
Disposals (137) (1,487) (1,624)
Exchange adjustments (3) (219) (222)
Charge for the year 72 1,922 1,994
At 30 April 2004 981 26,429 27,410
Net book value
At 30 April 2004 3,462 8,408 11,870
At 1 May 2003 - 1,776 1,776
At the balance sheet date the net book value of tangible fixed assets includes £1,149,000 (2003: £162,000) in respect of
assets held under finance leases. Depreciation charged in the period on those assets amounted to £405,000 (2003:
£66,000).
Company
The Company has no tangible fixed assets.
12
Tangible 
fixed assets
Company Shares in subsidiary
undertakings
£’000
Cost and net book value
At 1 May 2003 51,849
Additions 399,889
Adjustments to deferred consideration (6,913)
At 30 April 2004 444,825
Additions represent £371,878,000 in respect of the issue of shares on the merger with Torex PLC and an investment 
in a subsidiary undertaking, iSOFT Solutions Limited for £28,011,000.
The adjustments to deferred consideration relate to the acquisitions of iSOFT plc and Revive Group Limited (see note 17).
13
Fixed asset
investments FINANCIAL STATEMENTS
page fifty four
54
Notes to the financial statements
13
Fixed asset
investments
cont...
Principal trading Class of Proportion Nature Country of
Subsidiaries share held of shares of business incorporation
iSOFT plc Ordinary 100% Computer services England & Wales
iSOFT R&D Private Limited* Ordinary 82%Software development India
iSOFT Australia Pty Limited* Ordinary 100% Computer services Australia
iSOFT New Zealand Limited* Ordinary 100% Computer services New Zealand
iSOFT Holdings (Singapore) Limited* Ordinary 100% Computer services Singapore
iSOFT Applications Limited Ordinary 100% Computer Services England & Wales
iSOFT Solutions Limited Ordinary 100% Computer Services England & Wales
Revive Health Limited* Ordinary 100% Computer services England & Wales
Torex PLC Ordinary 100% Holding company England & Wales
Torex Health Limited* Ordinary 100% Computer services England & Wales
Torex Services Limited* Ordinary 100% Computer services England & Wales
Torex Medical Systems Limited* Ordinary 100% Computer services England & Wales
Torex-Hiscom BV* Ordinary 100% Computer services Netherlands
Torex GAP GmbH* Ordinary 100% Computer services Germany
Torex Health Switzerland Limited* Ordinary 100% Computer services Switzerland
Torex Business Solutions (Ireland) Limited* Ordinary 100% Computer services Ireland
Torex Business Solutions (Hong Kong) Limited* Ordinary 100% Computer services Hong Kong
Torex Business Solutions UK Limited* Ordinary 100% Computer services England & Wales
Torex Laboratory Systems Limited* Ordinary 100% Computer services England & Wales
Torex Radiology Systems Limited* Ordinary 100% Computer services England & Wales
HAS Solutions Pty Limited* Ordinary 100% Computer services Australia
Paramedical Pty Limited* Ordinary 100% Computer services Australia
* denotes shares not held directly by iSOFT Group plc.
All of the subsidiary undertakings, with the exception of Torex Laboratory Systems Limited, have been consolidated in the
Group financial statements. The financial statements of Torex Laboratory Systems Limited have not been consolidated
since acquisition on 23 December 2003 as it is being held exclusively for resale. The aggregate amount of the capital and
reserves of Torex Laboratory Systems Limited was £454,000 at 30 April 2004. The profit before tax for the period since
acquisition to 30 April 2004 was £155,000. In addition, the results of the companies forming the Retail Division of Torex
PLC (principally Torex Retail Limited, Arciris Holdings Limited, Figure Retail Systems Limited and POS Group Limited)
acquired on 23 December 2003 were not consolidated into the Group results between acquisition and the date of their
disposal on 14 February 2004 as the companies were also held exclusively for resale.
A full list of subsidiary undertakings will be annexed to the Company’s next annual return. Notes to the financial statements
55
FINANCIAL STATEMENTS
page fifty five
i_Merger with Torex PLC
On 23 December 2003, the merger of iSOFT Group plc and Torex PLC (“Torex”) was declared unconditional. Acquisition
accounting has been adopted. The book and provisional fair values of Torex on acquisition were as follows:
Provisional
Book value Revaluations fair value 
£’000 £’000 £’000
Tangible fixed assets 9,922 (473) 9,449
Assets held for resale 1,475 67,685 69,160
Stocks 4,750 (1,193) 3,557
Debtors 52,388 (2,412) 49,976
Deferred tax 3,104 3,675 6,779
Overdraft (5,134) - (5,134)
Corporation tax (5,626) (1,501) (7,127)
Deferred consideration (12,724) 4,057 (8,667)
Trade and other creditors (56,244) (8,489) (64,733)
Debt (69,675) - (69,675)
Provisions for liabilities and charges (1,551) (1,379) (2,930)
Pension liability - (5,964) (5,964)
Net liabilities acquired (79,315) 54,006 (25,309)
Goodwill 397,187
Consideration 371,878
Satisfied by:
Shares issued 367,825
Acquisition costs (of which £200,000 remains unpaid at 30 April 2004) 4,053
371,878
Revaluation adjustments comprise:
•
Write off of obsolete fixed assets of £473,000.
•
The adjustment in respect of assets held for resale represents the actual net proceeds of £61,185,000 of the Retail 
Division of Torex which was disposed of on 14 February 2004 to Lynxangel Limited, together with £6,500,000 
representing the estimated carrying value of Torex Laboratory Systems Limited. Both the Retail Division of Torex and 
Torex Laboratory Systems have not been consolidated into the acquisition balance sheet or the Group’s post 
acquisition balance sheet on the grounds that they were/are held exclusively for resale.
•
Write down of stocks by £1,193,000 to their estimated recoverable value.
•
Additional provision for bad and doubtful debts of £2,412,000.
•
Reassessment of the corporation tax liabilities of Torex to reflect an additional liability of £1,501,000 and inclusion of 
a deferred tax asset arising as a result of the fair value adjustments of £3,675,000.
•
Reassessment of the amounts payable in respect of deferred consideration by £4,057,000 based on most recent 
available data.
•
An adjustment to trade and other creditors of £8,489,000 comprising the reassessment of a number of onerous 
contracts to reflect an additional liability of £4,293,000 and the inclusion of £4,196,000 of liabilities in existence at 
the acquisition date but not recorded in the acquisition balance sheet.
•
Additional property provisions of £1,379,000 in respect of onerous lease commitments and dilapidations.
•
Inclusion of the £8,519,000 pension liability of Torex calculated on an FRS 17 basis and stated net of the related 
deferred tax asset of £2,555,000. See note 22 for details of the assumptions used in assessing this liability.
From 24 December 2003 to 30 April 2004, Torex (excluding the Retail Division and Torex Laboratory Systems) contributed
£43,268,000 to turnover, £6,329,000 to operating profit before goodwill amortisation and exceptional items and
£5,321,000 to profit before taxation, goodwill amortisation and exceptional items. Torex contributed £6,266,000 to the
Group’s net operating cashflows, paid £902,000 in respect of interest, £nil in respect of taxation and utilised £1,521,000
for capital expenditure.
14
Acquisitions FINANCIAL STATEMENTS
page fifty six
56
Notes to the financial statements
14
Acquisitions
cont...
The summary trading results of Torex for the preceding financial year ended 31 December 2002 and from 1 January 2003
to 23 December 2003 are as follows:
Period to Year ended
23 December 2003 31 December 2002
£’000 £’000
Turnover 193,481 161,791
Operating profit before goodwill amortisation and exceptional items 32,156 26,587
Goodwill amortisation (9,756) (8,020)
Exceptional items (7,960) -
Operating profit 14,440 18,567
Net interest payable (4,641) (3,879)
Profit before taxation 9,799 14,688
Taxation (5,721) (6,197)
Profit after taxation 4,078 8,491
Adjusted profit before taxation, goodwill amortisation and exceptional items 27,515 22,708
In the period to 23 December 2003, turnover includes £59,675,000 (year to 31 December 2002: £41,671,000) and
operating profit before exceptional items includes £9,042,000 (year to 31 December 2002: £4,869,000) in respect of the
Retail Division of Torex.
Exceptional items in the period to 23 December 2003 comprise merger related costs of £5,409,000, directors’ severance
costs of £1,056,000 and costs of £1,495,000 associated with the termination of an onerous supplier contract.
The summary statement of recognised gains and losses of Torex for the preceding financial year ended 
31 December 2002 and from 1 January 2003 to 23 December 2003 is as follows:
Period to Year ended
23 December 2003 31 December 2002
£’000 £’000
Profit for the period 4,078 8,491
Foreign exchange gain 925 320
Total recognised gains 5,003 8,811
There is no material difference in the results when calculated using the accounting policies of iSOFT Group plc set out 
in note 01. ii_Acquisition of i-Health and Galen
On 9 January 2004, the Group acquired the business and certain assets and liabilities of i-Health Limited and 
Galen Group Limited in New Zealand. Acquisition accounting has been adopted. The book and fair values of these
companies on acquisition were as follows:
Book and provisional
fair value
£’000
Tangible fixed assets 44
Creditors (63)
Net liabilities acquired (19)
Goodwill 1,294
Consideration 1,275
Satisfied by:
Cash consideration on acquisition 741
Deferred consideration 495
Acquisition costs paid 39
1,275
From the date of acquisition to 30 April 2004, i-Health and Galen contributed £288,000 to turnover and made an
operating loss before goodwill amortisation of £88,000. The post acquisition cashflows of i-Health and Galen were 
not material.
iii_Further investment in iSOFT R&D Private Limited
On 31 July 2003, the Group increased its stake in iSOFT R&D Private Limited (“iSOFT R&D”) from 75% to 82%.
In accordance with FRS 2, given that the carrying values of the net assets in iSOFT R&D were not materially different from
their fair values and the change in stake is not considered significant, the net assets of iSOFT R&D have not been revalued
on consolidation. Accordingly, the additional goodwill generated by the increase in stake is as follows:
£’000
Consideration – satisfied in shares 893
Additional net assets acquired (80)
Goodwill on increase in stake 813
Notes to the financial statements
57
FINANCIAL STATEMENTS
page fifty seven
14
Acquisitions
cont...
Group Company Group Company
2004 2004 2003 2003
£’000 £’000 £’000 £’000
Business held for resale 6,500 --- 
Property held for resale 1,000 ---
7,500 ---
15
Assets held
for resale FINANCIAL STATEMENTS
page fifty eight
58
Notes to the financial statements
16
Debtors
15
Assets held
for resale 
cont...
Group Company Group Company
2004 2004 2003 2003
£’000 £’000 £’000 £’000
Trade debtors 42,380 - 10,859 -
Amounts owed by Group undertakings - 113,980 - 71,863
Deferred taxation  9,513 - 566 -
Other debtors 4,938 463 175 25
Prepayments and accrued income 50,105 145 19,513 98
106,936 114,588 31,113 71,986
In the normal course of its business the Group enters into financing arrangements with third party funders in respect of
specific customer contracts. These transactions are entered into to provide PFI (Private Finance Initiative) compliant
finance for the capital cost of multi-year customer contracts. In these arrangements the present value of the customer
receivable is matched by the amount due to the funding provider. Given the directly related nature of the transactions the
Group does not recognise the equal and opposite related balances. This treatment is in accordance with FRS 5.
Prepayments and accrued income include a balance of £4,215,000 (2003: £901,000) due after one year.
Movement in deferred tax asset - Group
£’000
Balance at 1 May 2003 566
Amount credited to profit and loss account (note 7) 2,129
Acquisitions (note 14) 6,779
Exchange rate differences 39
Balance at 30 April 2004 9,513
Analysis of deferred tax asset - Group 2004 2003
£’000 £’000 
Accelerated capital allowances 662 76
Short-term timing differences 5,234 490
Losses carried forward 3,617 -
Deferred tax asset 9,513 566
There are other potential deferred tax assets totalling £2,143,000 (2003: £500,000) that have not been recognised on the
basis that the future economic benefit is as yet uncertain.
Company
The Company has no deferred tax balance.
The business held for resale represents the Group’s investment in Torex Laboratory Systems Limited, which was acquired
on the merger with Torex and is held exclusively with a view to resale. The investment is held at the Directors’ estimate of
carrying value. During the period from acquisition to 30 April 2004, there were no material trading transactions between
this business and the rest of the Group, and there were no dividends received or receivable from them. An amount of
£342,000 is held within other debtors representing amounts owed by Torex Laboratory Systems Limited principally in
respect of the payment of salaries by group companies on behalf of Torex Laboratory Systems Limited.
The property held for resale relates to a property acquired on the merger with Torex which is in the process of disposal.
The property is held at its estimated net realisable value. Group Company Group Company
2004 2004 2003 2003
£’000 £’000 £’000 £’000
Bank and other borrowings (note 19) 9,850 21,997 6,033 10,219
Trade creditors 11,118 353 3,486 501
Amounts owed to Group undertakings - 36,864 - 510
Corporation tax 14,151 - 3,334 -
Other taxation and social security 11,648 - 2,721 -
Accruals and other creditors 41,189 1,105 11,817 2,779
Deferred income 43,737 - 14,289 -
Deferred consideration 6,872 3,760 1,050 1,050
Proposed dividends 3,832 3,832 1,486 1,486
142,397 67,911 44,216 16,545
Deferred consideration, of which £6,872,000 (2003: £3,760,000) is payable within one year and £4,738,000 (2003:
£10,293,000) is payable after one year, comprises:
•
£3,360,000 (2003: £8,000,000) in respect of the acquisition agreement between KPMG and the Company for the 
purchase of iSOFT plc on 28 May 1999. The agreement provided for an amount of deferred consideration to become 
payable in cash by the Company in the event that the Company’s shares became listed on a recognised stock 
exchange on or before 30 April 2003. This amount was only to become payable when the original directors on 
acquisition realised the whole or substantially the whole of their equity shares into cash. In prior years, the estimate 
of deferred consideration payable of £8,000,000, which was included within deferred consideration falling due after 
one year, was calculated as a proportion of the market capitalisation of the Company after certain deductions had 
been made. At the balance sheet date, the Company had reached agreement with KPMG to settle the deferred 
consideration. The agreed final settlement of £3,360,000 was paid on 26 May 2004. The reduction in the directors’ 
original estimate of the deferred consideration payable, amounting to £4,640,000, has been adjusted through 
goodwill (see note 11).
•
£400,000 (2003: £3,050,000) relating to the acquisition of Revive Group Limited (“Revive”) on 27 November 2002.
The sale and purchase agreement provided that the deferred consideration was payable based on a percentage of 
the cash backed operating profit generated by Revive in each of the three years ended 30 November 2005 providing 
certain levels of cash backed profit and turnover were attained in each of those years. During the year, £377,000 of 
deferred consideration has been paid and the Company has now reached agreement with the vendors that a final 
payment of £400,000 will be made in full settlement of the deferred consideration. The reduction in the directors’ 
original estimate of the deferred consideration payable, amounting to £2,273,000, has been adjusted through 
goodwill (see note 11).
•
£6,000,000 (2003: £nil) in respect of the Torex acquisition of HAS Solutions Pty Limited (“HAS”) on 
6 September 2003. The deferred consideration is payable based on multiples of the profit after taxation generated by 
HAS in the calendar years from 31 December 2003 to 31 December 2006. The amount included in the financial 
statements represents the Company’s estimate of the amounts that will become payable under the terms of the sale 
and purchase agreement. Payments of the deferred consideration are due annually in respect of each calendar year 
end. The maximum potential deferred consideration payable under the terms of the sale and purchase agreement is 
estimated to be £10,700,000.
•
£918,000 (2003: £nil) in respect of the Torex acquisition of GAP Management AG on 29 May 2002. The deferred 
consideration has now been finalised and is payable on 31 March 2005.
•
£495,000 (2003: £nil) relating to the acquisition of i-Health Limited on 9 January 2004. The deferred consideration 
is payable based on proportion of revenue in each of the five years ending 31 December 2008. The amount included 
in the financial statements represents the Company’s estimate of the amounts that will become payable under the 
terms of the sale and purchase agreement. The maximum potential deferred consideration payable under the terms 
of the sale and purchase agreement is approximately £8,700,000.
•
£437,000 (2003: £293,000) in respect of the acquisition of Paramedical Pty Limited. Following the end of the 
performance period in respect of the deferred consideration, the estimate of the amount payable has been increased 
by £144,000. The consideration is payable fourteen days following the finalisation of the audited financial 
statements of Paramedical Pty Limited for the year ended 30 April 2004.
Notes to the financial statements
59
FINANCIAL STATEMENTS
page fifty nine
17
Creditors:
amounts
falling due
within one
year FINANCIAL STATEMENTS
page sixty
60
Notes to the financial statements
18
Creditors:
amounts
falling due
after one year
Group Company Group Company
2004 2004 2003 2003
£’000 £’000 £’000 £’000
Bank and other borrowings (note 19) 61,417 60,573 42,293 42,171
Deferred consideration (note 17) 4,738 - 10,293 10,000
Other creditors 1,057 378 --
67,212 60,951 52,586 52,171
19
Bank and
other
borrowings
Group Company Group Company
2004 2004 2003 2003
£’000 £’000 £’000 £’000
Due within one year:
Bank overdraft - 12,772 - 4,320
Bank loans 9,225 9,225 5,899 5,899
Finance leases 625 - 134 -
9,850 21,997 6,033 10,219
Due after one year:
Bank loans 60,820 60,573 42,171 42,171
Finance leases 597 - 122 -
61,417 60,573 42,293 42,171
71,267 82,570 48,326 52,390
All of the Group bank loans and overdraft are secured by a floating charge over the assets of the Group and are subject to
interest at between 0.65% and 1.125% over the bank’s base rate dependent on the level of the Group’s net debt position.
Bank loans are stated net of unamortised issue costs of £608,000 (2003: £143,000).
For details of the Group’s banking facilities see note 20.
20
Financial
instruments
The Group’s financial instruments comprise bank borrowings, some cash and various items, such as trade debtors,
trade creditors etc. that arise directly from its operations. Short-term debtors and creditors have been excluded from
all of the following disclosures except in relation to currency risk. The main risks arising from, and impacted by, the
financial assets and liabilities of the Group are interest rate risk, foreign currency risk and liquidity risk. The Board
reviews and agrees policies for managing these risks and they are summarised below. The Group does not trade in 
financial instruments. Notes to the financial statements
61
FINANCIAL STATEMENTS
page sixty one
20
Financial
instruments
cont...
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank borrowings. There is also a small 
amount of finance lease commitment. The Group has arranged facilities whereby United Kingdom held cash balances 
are used to net off the balance on the loans, with interest calculated on the net balance. The interest rate exposure 
of the financial liabilities of the Group was as follows:
2004 2003
Fixed Floating Non Fixed Floating Non
interest interest interest interest interest interest
rate rate bearing Total rate rate bearing Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Sterling
- Loans - 70,045 - 70,045 - 48,070 - 48,070
- Finance leases 1,222 - - 1,222 256 - - 256
- Deferred consideration - - 11,610 11,610 - - 11,343 11,343
- Provisions - - 10,487 10,487 ---  -
At 30 April 1,222 70,045 22,097 93,364 256 48,070 11,343 59,669
The weighted average interest rate on fixed rate borrowings was 8.0% (2003: 7.8%) and the weighted average period to
maturity was 1.0 years (2003: 1.5 years). The weighted average period to maturity on non-interest bearing financial
liabilities was 1.7 years (2003: 8.7 years). The only financial assets held by the Group are cash at bank. Amounts held 
at the year end were:
2004 2003
£’000 £’000
Sterling 37,094 33,315
Euros 27,866 1,694
Australian dollar 8,705 9,827
Singapore dollar 260 302
Swiss franc 694 -
Indian rupees 336 313
Hong Kong dollar 73 -
Norwegian kroner 6 -
75,034 45,451
All cash is at floating rates based on relevant national LIBID equivalents or government bond rates.
Currency risk
The Group is exposed to translation and transaction foreign exchange risk. The Group regularly reviews its exposure to
translation risk and where appropriate will match this risk with an appropriate level of borrowings in the same currency.
If necessary, transaction risk would be minimised by use of the forward hedge market. At the year end, there are no
currency hedging arrangements in place (2003: none).
There are net foreign currency monetary assets/(liabilities) held by subsidiaries with a functional currency of sterling of
£16,788,000 (2003: £3,307,000) denominated in euros, £252,000 (2003: £949,000) denominated in Australian dollars
and (£393,000) (2003: £nil) denominated in Hong Kong dollars. In addition, there are net foriegn currency monetary
assets/(liabilities) held by subsidiaries with a functional currency of the euro of £1,245,000 (2003: (£1,782,000))
denominated in sterling, (£173,000) (2003: £nil) denominated in Hong Kong dollars and £130,000 (2003: £nil)
denominated in the Swiss franc. FINANCIAL STATEMENTS
page sixty two
62
Notes to the financial statements
20
Financial
instruments
cont...
21
Provisions for
liabilities and
charges
Liquidity risk
It is the Group’s policy to maintain a mix of short, medium and long term borrowings with its bankers. Flexibility is
achieved by the use of a revolving credit facility and a fixed term loan facility.
Following the merger with Torex, the Group renegotiated its banking facilities in April 2004. The new facilities provide 
for a term loan of £60,000,000 and a multi-currency revolving credit facility of £85,000,000. The term loan is repayable 
in quarterly payments commencing August 2004 with the last payment scheduled for September 2008. The revolving
credit facility is also subject to review in September 2008. As at 30 April 2004, £75,000,000 of the revolving credit 
facility was unused by the Group.
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities, other than short term trade creditors and accruals,
at 30 April 2004 was:
2004 2003
Bank Finance Bank Finance
loans leases Other Total loans leases Other Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Due within one year, or 
on demand 9,225 625 15,143 24,993 5,899 134 1,050 7,083
Due after one year but not 
more than two years 12,124 597 2,004 14,725 5,899 94 1,293 7,286
Due after two years 
but not 
more than five years 38,878 - 4,084 42,962 36,272 28 1,000 37,300
Due in more than 
five years 9,818 - 866 10,684 - - 8,000 8,000
At 30 April 70,045 1,222 22,097 93,364 48,070 256 11,343 59,669
Other financial liabilities represent deferred consideration payable of £11,610,000 (2003: £11,343,000), the Group’s
restructuring provision of £7,280,000 (2003: £nil) and the Group’s property provisions of £3,207,000 (2003: £nil).
Fair value of financial instruments
There is no difference between the book value and fair value of the aforementioned financial instruments.
Group
Restructuring Property Total
£’000 £’000 £’000
At 1 May 2003 - - -
On acquisition (note 14) - 2,930 2,930
Created – exceptional charge 7,599 312 7,911
Utilised (319)(35)(354)
At 30 April 2004 7,280 3,207 10,487 Notes to the financial statements
63
FINANCIAL STATEMENTS
page sixty three
21
Provisions for
liabilities and
charges 
cont...
22
Pension
commitments
The restructuring provision represents the estimated cost of the restructuring of the Group following the merger with
Torex on 23 December 2003. Through its Business Improvement Programme (“BiP”), the Group is currently integrating
the former business of Torex with that of the iSOFT Group. The provision at the year end represents the estimated cost
of redundancies and severance packages identified to date that will be payable. The provision is expected to be used in
the next financial year.
At the year end, the provision held in respect of properties represents the estimated cost of exiting a number of vacant
properties held by the Group of £2,026,000 and the provision for leasehold dilapidations on a number of the Group’s
leasehold properties of £1,181,000. The anticipated cost of exiting the Group’s vacant properties has been estimated
taking account of residual lease commitments, contracted sub let income and other potential penalties associated with
termination of leases. The provision is expected to be utilised over the next eight years. The dilapidations provision has
been calculated taking advice from property surveyors where necessary.
As a result of the merger with Torex, the Group acquired the Torex Medical Systems defined benefit scheme (“the TMS
scheme”) and has adopted the requirements of FRS 17. As the Group previously had no defined benefit pension
arrangements, the change in accounting policy has not resulted in a prior year adjustment. The assets of the TMS 
scheme are held in a separate trustee administered fund. The most recent actuarial valuation of the scheme was at 
30 April 2004. The valuation of the TMS scheme used the projected unit method and was carried out by KPMG,
professionally qualified actuaries.
The principal assumptions used by the actuaries were:
30 April 23 December
2004 2003
% %
Rate of increase in pensionable salaries 4.4 4.3
Rate of increase in pensions in payment and deferment 2.9 2.8
Discount rate 5.6 5.5
Inflation assumption 2.9 2.8
The assets of the scheme and the weighted average expected return were:
Long term rate Long term rate
of return Value at of return expected 
expected at 30 April at 23 December Value at
30 April 2004 2004 2003 23 December 2003
% £’000 % £’000
Equities 7.5 8,834 7.5 8,848
Bonds 4.9 1,085 4.9 1,170
Insurance policy 5.0 1,193 5.0 1,173
Other 3.75 684 3.75 489
Total market value of assets 11,796 11,680
Present value of scheme liabilities (20,537) (20,199)
Deficit in the scheme (8,741) (8,519)
Related deferred tax asset 2,622 2,555
Net pension liability (6,119) (5,964) FINANCIAL STATEMENTS
page sixty four
64
Notes to the financial statements
22
Pension
commitments
cont...
i_Analysis of amount charged to operating profit in respect of defined benefit schemes:
Period to
30 April 2004
£’000
Current service cost 226
Past service cost -
Total operating charge 226
ii_Movement in surplus during the period:
£’000
Deficit in scheme at 23 December 2003 (8,519)
Movement:
Current service cost (226)
Contributions 149
Other finance cost (105)
Actuarial loss (40)
Deficit in scheme at 30 April 2004 (8,741)
iii_Analysis of the amount charged to other finance cost:
Period to 
30 April 2004
£’000
Expected return on pension scheme assets 261
Interest on pension scheme liabilities (366)
Net finance cost (105)
iv_Analysis of the amount recognised in the statement of total recognised gains and losses:
Period to
30 April 2004
£’000
Actual return less expected return on pension scheme assets (250)
Experience gains and losses arising on pension scheme liabilities 30
Changes in the assumptions underlying the present value of the scheme liabilities 180
Actuarial loss recognised in the statement of total recognised gains and losses (40) v_History of experience gains and losses:
Period to
30 April 2004
Difference between the actual and expected return on scheme assets:
Amount (£’000) (250)
Percentage of scheme assets (2%)
Experience gains and losses on scheme liabilities:
Amount (£’000) 30
Percentage of the present value of the scheme liabilities 0%
Total amount recognised in the statement of total recognised gains and losses:
Amount (£’000) (40)
Percentage of the present value of the scheme liabilities (0%)
vi_Overseas arrangements
As a result of the merger with Torex, the Group also acquired pension obligations in the Netherlands. Torex-Hiscom BV
participates in an industry-wide defined benefit pension plan, known as the PGGM. The PGGM provides pension benefits
related to final pay at retirement for approximately 1.8 million people, who are current or former employees in the
healthcare and social work sector in the Netherlands. The PGGM is a multi-employer plan under which Torex-Hiscom 
BV is unable to identify its share of the underlying assets and liabilities, and the Group has therefore adopted defined
contribution accounting as permitted by FRS 17. The premiums due from the employer for the period 1 January 2004 to
30 April 2004 were 451,000 euros (approximately £300,000). The employer’s contributions are expected to increase by
up to 15% in the foreseeable future to restore the funding level of the PGGM in respect of past service benefits to its
target level.
Notes to the financial statements
65
FINANCIAL STATEMENTS
page sixty five
22
Pension
commitments
cont...
23
Share capital
2004 2003
£ £
Authorised
350,000,000 (2003: 200,000,000) ordinary shares of £0.10 each 35,000,000 20,000,000
2004 2003
£ £
Allotted, called up and fully paid
225,421,755 (2003: 123,822,436) ordinary shares of £0.10 each 22,542,176 12,382,224
Shares issued during the period
On 23 December 2003, the Company increased its authorised share capital from 200,000,000 ordinary shares of £0.10
each to 350,000,000 shares of £0.10 each.
97,532,617 shares at a value of £367,824,750 were allotted on the merger with Torex (see note 14i). Issue expenses of
£1,890,000 arising on the allotment of the shares have been charged to the share premium account.
On 31 July 2003, the Company allotted 250,000 shares at a fair value of £893,000 in consideration for an additional 7%
stake in iSOFT R&D Private Limited (see note 14_iii).
3,816,702 shares have been issued during the year to satisfy the Company’s requirements under the Group’s share option
schemes. Consideration received was £6,067,000. FINANCIAL STATEMENTS
page sixty six
66
Notes to the financial statements
23
Share capital
cont...
Share options
The following options are outstanding under the Company’s unapproved and approved share option schemes. Exercise of
these options is subject to employees meeting individual performance criteria and also to the performance of the Group
measured over three years from the date of grant. Options include directors’ share options. All options were granted at
market value at the date of grant.
Date of grant Number Subscription price End of personal Period of option
per share (pence) performance period
11 Jul 2000 428,000 110.0 10 Jul 2001 11 Jul 2003 - 10 Jul 2010
20 Dec 2000 250,000 174.0 19 Dec 2001 20 Dec 2003 - 19 Dec 2010
13 Apr 2001 50,000 189.0 12 Apr 2002 13 Apr 2004 - 12 Apr 2011
22 Jun 2001 850,000 249.0 21 Jun 2002 22 Jun 2004 - 21 Jun 2011
11 Oct 2001 1,363,000 217.5 10 Oct 2002 11 Oct 2004 - 10 Oct 2011
30 Sept 2002 1,735,000 151.3 29 Sept 2003 30 Sept 2005 - 30 Sept 2012
11 Oct 2002 500,000 145.0 10 Oct 2003 11 Oct 2005 - 10 Oct 2012
27 Nov 2002 500,000 233.0 26 Nov 2003 27 Nov 2005 - 26 Nov 2012
25 Mar 2004 1,750,000 338.0 24 Mar 2005 25 Mar 2007 - 24 Mar 2014
These share schemes have been set up under a joint election to transfer the liability for employers NI to the employee.
As a result, in accordance with UITF25, no profit and loss charge arises.
Following the merger with Torex, the following Torex share options were rolled over into options over iSOFT Group shares.
Date of grant Number Subscription price End of personal Period of option
per share (pence) performance period
5 Mar 1999 120,467 92.47 23 Dec 2003 5 Mar 2002 - 4 Mar 2009
13 Aug 1999 75,326 156.91 23 Dec 2003 13 Aug 2002 - 12 Aug 2009
9 Feb 2000 354,901 295.67 23 Dec 2003 9 Feb 2003 - 8 Feb 2010
24 Aug 2000 207,458 355.36 23 Dec 2003 24 Aug 2003 - 23 Aug 2010
15 Mar 2001 1,164,917 374.46 23 Dec 2003 15 Mar 2004 - 14 Mar 2011
24 Sep 2001 224,389 317.66 23 Dec 2003 24 Sep 2004 - 23 Sep 2011
24 Sep 2001 265,379 350.44 23 Dec 2003 19 Sep 2004 - 18 Sep 2011
27 Feb 2002 212,278 418.27 23 Dec 2003 27 Feb 2005 - 26 Feb 2012
22 Feb 2003 48,653 202.35 23 Dec 2003 22 Feb 2006 - 21 Feb 2013
In addition to the options above, 375,115 options were outstanding in respect of the Company’s savings related share
option scheme. 291,009 of these options have an excercise price of 175.0 pence (first excercisable in 2006) and 84,106
have an excercise price of 239.0 pence (first excercisable in 2007). 2004 2003
£’000 £’000
Operating profit 20,312 20,950
Exceptional costs charged to operating profit 7,911 -
Operating profit before exceptional items 28,223 20,950
Goodwill amortisation 11,310 4,650
Depreciation of tangible fixed assets 1,994 592
Difference between pension charge and cash contributions 77 -
Increase in stocks (417) -
Increase in debtors (17,815) (7,483)
Increase in creditors 12,600 4,832
Decrease in property provision (35) -
Loss/(profit) on sale of fixed assets 1 (3)
Net cash inflow from operating activities before cash outflow 
from restructuring provision 35,938 23,538
Net cash outflow from restructuring provision (319) -
Net cash inflow from operating activities 35,619 23,538
Group Share premium Merger Profit and loss
account reserve account
£’000 £’000 £’000
At 1 May 2003 30,119 7,683 23,086
Retained profit for the period - - 5,988
Exchange differences - - (243)
Premium on shares issued net of issue costs 6,553 356,182 -
Actuarial loss recognised in the pension scheme - - (40)
Movement on deferred tax relating to pension liability - - 67
At 30 April 2004 36,672 363,865 28,858
The profit and loss account includes £6,119,000 (2003: £nil), stated after deferred taxation of £2,622,000 (2003: £nil) in
respect of pension scheme liabilities of the Torex Medical Systems defined benefit scheme (see note 22).
Company Share premium Merger Profit and loss
account reserve account
£’000 £’000 £’000
At 1 May 2003 30,119 7,683 4,935
Retained profit for the period - - 2,537
Premium on shares issued net of issue costs 6,553 356,182 -
At 30 April 2004 36,672 363,865 7,472
The Company has taken advantage of the relief afforded under section 133 of the Companies Act 1985 in respect of the
merger and consequent acquisition accounting of Torex PLC. Accordingly, the premium on issue of the shares for the
merger of Torex PLC has been credited to the merger reserve in both the Company and the Group.
Notes to the financial statements
67
FINANCIAL STATEMENTS
page sixty seven
24
Reserves
25
Reconciliation
of operating
profit to net
operating
cash flows FINANCIAL STATEMENTS
page sixty eight
68
Notes to the financial statements
26
Analysis of
change in net
(debt)/funds
27
Reconciliation
of net cash flow
to movement in
net (debt)/funds
At 1 May Cash flow Acquisition Non cash Exchange At 30 April
2003 (excl. cash movements movement 2004
and overdrafts)
£’000 £’000 £’000 £’000 £’000 £’000
Cash at bank and in hand 45,451 29,484 - - 99 75,034
Bank loans (48,070) 46,573 (68,405) (143) - (70,045)
Finance leases (256) 341 (1,270) (37) - (1,222)
Borrowings (48,326) 46,914 (69,675) (180) - (71,267)
Net (debt)/funds (2,875) 76,398 (69,675) (180) 99 3,767
The cash outflow from bank loans includes £608,000 of debt issue costs paid in the year.
2004 2003
£’000 £’000
Increase in cash 29,484 21,238
Cash outflow/(inflow) from decrease/(increase) in debt 46,914 (28,205)
Decrease/(increase) in net (debt)/funds from cash flows 76,398 (6,967)
Debt acquired with Torex PLC (69,675) -
New finance leases incepting in the period (37) (42)
Exchange movement 99 500
Amortisation of loan arrangement fees (143) (51)
Decrease/(increase) in net (debt)/funds in the period 6,642 (6,560)
Net (debt)/funds at 1 May 2003 and 1 May 2002 (2,875) 3,685
Net funds/(debt) at 30 April 2004 and 30 April 2003 3,767 (2,875) At 30 April 2004, the Group has lease agreements in respect of properties, vehicles, plant and equipment for which
payments extend over a number of years.
2004 2003
Property Vehicles, plant Property Vehicles, plant
and equipment and equipment
£’000 £’000 £’000 £’000 
Annual commitments under 
non-cancellable operating leases expiring:
Within one year 478 441 214 150
Within two to five years 1,469 2,246 326 260
After five years 1,313 6 123 32
3,260 2,693 663 442
Notes to the financial statements
69
FINANCIAL STATEMENTS
page sixty nine
28
Operating
lease
commitments
At the year end neither the Group nor the Company had entered into any capital commitments. 29
Capital
commitments FIVE YEAR SUMMARY
page seventy
70
Turnover
2004
£91.5m
£149.3m
2003
£60.1m 2002
£31.1m 2001
£17.0m 2000
Normalised operating profit*
2004
£25.6m
£39.5m
2003
£16.4m 2002
£7.6m 2001
£3.5m 2000
Normalised profit before tax
*
2004
£23.5m
£36.8m
2003
£15.4m 2002
£7.2m 2001
£3.1m 2000
Underlying earnings per share
*
2004
15.09p
17.70p
2003
10.49p 2002
4.77p 2001
2.46p 2000
Average monthly number of employees
2004
580
1,338
2003
430 2002
252 2001
162 2000
* stated before amortisation of goodwill and exceptional items 71
FIVE YEAR SUMMARY
page seventy one
* stated before amortisation of goodwill and exceptional items
#
before cash outflow from restructuring provision
Results 2004 2003 2002 2001 2000
£m £m £m £m £m
Turnover 149.3 91.5 60.1 31.1 17.0
Normalised operating profit* 39.5 25.6 16.4 7.6 3.5
Normalised profit before tax* 36.8 23.5 15.4 7.2 3.1
Key Statistics
Earnings per share 6.66p 11.17p 7.69p 3.07p 1.95p
Diluted earnings per share 6.57p 11.08p 7.61p 3.06p 1.95p
Underlying earnings per share* 17.70p 15.09p 10.49p 4.77p 2.46p
Net funds/(debt) 3.8 (2.9) 3.7 (13.5) (3.6)
Gearing - 3.9% - 48.5% 37.2%
Net cash flow from operating activities
#
35.9 23.5 16.9 8.3 (1.2)
Average monthly number of employees 1,338 580 430 252 162 COMPANY INFORMATION
page seventy two
72
BOARD OF DIRECTORS
Patrick Cryne
Executive Chairman
Tim Whiston
Chief Executive Officer
John Whelan
Group Finance Director
Steve Graham
Group Commercial Director
Mark Woodbridge
Business Development Director
NON-EXECUTIVE DIRECTORS
Digby Jones
Senior non-executive director
Eurfyl ap Gwilym
Geoff White
Rene Kern
Dr Colin Wall
David Thorpe
COMPANY SECRETARY
Tim Whiston 
FINANCIAL ADVISORS &
STOCKBROKERS
Hoare Govett Limited
250 Bishopsgate
London EC2M 4AA
AUDITORS
RSM Robson Rhodes LLP
Colwyn Chambers
19 York Street
Manchester M2 3BA
SOLICITORS
Ashurst
Broadwalk House 
5 Appold Street 
London EC2A 2HA
REGISTERED & HEAD OFFICE
iSOFT Group plc 
Bridgewater House
58–60 Whitworth Street
Manchester M1 6LT 
REMUNERATION ADVISORS
New Bridge Street Consultants LLP
20 Little Britain 
London EC1A 7DH
BANKERS
Lloyds TSB Bank plc
25 Gresham Street
London EC2V 7HN
Royal Bank of Scotland plc
135 Bishopsgate
London EC2M 3UR
Barclays Bank plc
5 The North Colonnade
Canary Wharf
London E14 4BB
HSBC Bank plc
8 Canada Square
London E14 5HQ
PUBLIC RELATIONS
Financial Dynamics
Holborn Gate
26 Southampton Buildings
London WC2A 1TB 
REGISTRARS
Lloyds TSB Registrars
The Causeway Worthing
West Sussex BN99 6DA 
REGISTERED NUMBER
3716736
WEBSITE
www.isoftplc.com 73
NOTABLE DATES
page seventy three
2004
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
2005
JANUARY
FEBRUARY
MARCH
APRIL
FINANCIAL YEAR END
PRELIMINARY RESULTS ANNOUNCED
ANNUAL GENERAL MEETING
FINAL DIVIDEND PAYMENT
FINANCIAL HALF YEAR
INTERIM RESULTS ANNOUNCED
INTERIM DIVIDEND PAYMENT
FINANCIAL YEAR END   BRIDGEWATER HOUSE  58-60 WHITWORTH STREET  MANCHESTER  ENGLAND  M1 6LT T +44 (0) 161 935 8800  F +44 (0) 161 233 8899
www.isoftplc.com
iSOFT GROUP PLC 2004 ANNUAL REPORT AND ACCOUNTS
FOR THE TWELVE MONTH PERIOD ENDED 30 APRIL 2004