HP revises down profits at Lynch software group by $8.8bn

Claim that profits at Autonomy were overstated by 81% before sale

Hewlett Packard (HP) has claimed that Autonomy, the software group founded by Tipperary entrepreneur Mike Lynch, overstated profits at one of its main British units by 81 per cent in the year before it was sold to the global technology and services giant for $11.7 billion.

The US multinational has since written down the value of Autonomy by $8.8 billion and accused the company of accounting irregularities. Last week, it revealed new details about its claims by refiling financial accounts for this division.

Mr Lynch, who earned an estimated $800 million from the sale, has repeatedly denied the allegations. HP this week, according to Reuters, refiled 2010 accounts for Autonomy Systems Ltd, one of its main British units, and the revised accounts claim this company's annual revenue was £81 million, or 54 per cent less than previously stated.

Net profit, according to the new filing, was reduced from £86 million to £19.6 million. The net profit for Autonomy as a whole by comparison was about £132 million in 2010.

“The extensive investigations undertaken by Hewlett-Packard . . . into the past accounting practices of the group, have revealed extensive errors (including misstatements) in the previously issued financial statements,” the new accounts filed by HP said.

A spokesman for Mr Lynch, who hails from Carrick-on-Suir in Tipperary, said: “We continue to reject these allegations by HP.”

Mr Lynch has previously said that a factor in HP's allegations was differences between accounting rules in Britain and the United States.

Last year, Mr Lynch set up a new $1 billion venture capital firm called Invoke Capital. Its first investment estimated to be between $10 million and $20 million was in Darktrace, a cyber security firm.

Last month Darktrace hired UK surveillance expert Andrew France as chief executive. Mr France was previously deputy director for cyber defence operations at GCHQ, the British agency for signals intelligence, where he helped formulate the UK's national cyber defence strategy.

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