ISoft shares jumped in trading as analysts said the results were better than expected and focused on continuing takeover speculation surrounding the firm.

Shares were up 14% at 46.50 pence by mid-afternoon.

Troubled period

The £14.3m six-month loss compares with a £8m profit in the same period last year and comes on top of the £343.8m loss the firm reported for the 2005/6 financial year.

The Financial Services Authority is conducting an investigation into how iSoft accounted for revenues between 2003 and 2005 after an internal inquiry found possible irregularities.

These relate to allegations that income from future contracts were included on the firm's balance sheet prematurely.

The firm's auditors at the time, Robson Rhodes, are also being investigated.

As a result of the inquiries, the firm has changed its accounting policy - a move which resulted in last year's huge loss.

ISoft said it was still holding discussions with banks about its funding amid continuing concerns about its long-term financial position.

The firm has funding in place until the end of 2007 and is talking to potential investors about a possible cash injection or even a takeover.

ISoft is developing software for a national database of patients' records that GPs and hospitals across the UK can access.

The £6.2bn project has been plagued by delays and key contractor US firm Accenture recently withdrew, having previously blamed iSoft for some of the hold-ups.

'Improvement'

ISoft said its most recent results showed a "sharp improvement" in its financial position, as it had achieved break-even excluding one-off costs.

"We have made significant advances since the middle of 2006," said John Weston, the firm's chairman and chief executive.

"We have still to put long-term financing in place but iSoft is today in considerably better shape than it was a few months ago."

Mr Weston added that he did not believe, at this stage, that the investigations would have any impact on iSoft's financial position.