Healthcare software business iSoft, which merged with competitor Torex late last year, reported better than expected annual profits and gave an upbeat assessment of its prospects yesterday, sending its shares racing upwards.

The software firm made pre-tax profits of £36.8m in the year to the end of April, up from £23.5m a year earlier and several million better than the City expected.

In addition chief executive Tim Whiston gave an upbeat outlook statement. "We believe that the current year will be one of continuing progress prior to an acceleration of growth in 2006 and 2007," he said.

The company has secured itself an important role in the transformation of the IT systems used by English hospitals and healthcare trusts. During the last year the government has awarded five such contracts. iSoft picked up three of them - more than analysts had been expecting.

Originally iSoft reckoned the long-term contracts would bring in £300m in revenues, but yesterday the company revised its assessment of that amount to some £500m. The company also confirmed yesterday that it expects to make cost savings of £10m a year through the merger with Torex.