Autonomy Corporation plc Announced Results for the Year Ended December 31, 2010
Corporation plc (LSE: AU. or AU.L) today reported financial results for the
twelve months and fourth quarter ended
of Autonomy’s industry-leading Meaning Based Computing technology by
blue-chip companies is delivering strong revenues, profits and cash flow.
Highlights - Record full year revenues of $870 million, up 18% from 2009 - All 2010 financial metrics in line with analyst consensus estimates (Bloomberg as at 1/11/2011) - Revenues $870 million (consensus $868 million) - PBT(adj.) $379 million (consensus $360 million) - Op margin (adj.) 43% (consensus 41%) - Strong growth in core IDOL business, including IDOL OEM growth of 32% and strong growth in IDOL Cloud revenues (Q4 up 12% year-on-year) with increasing contracts reflected in our "commit" number - Full year organic growth in core business of 17% (2009: 22%) - Rise in deferred revenue from last quarter, up to $178 million (Q3 2010: $168 million) - Operating margins (adj.) in Q4 at 45%; up significantly from 40% in Q3 2010 - Full year diluted EPS (adj. IFRS) at $1.20* up 24% from 2009 (IFRS: $0.89, up 12%) - Cash conversion for 2010 at 87%, up significantly from 80% in 2009 - 94 seven figure deals in 2010, up 42% from last year - Average selling price for 2010 rises to $790,000 - Strong investment in business with R&D up 16% from 2009 - Positive cash flow generated by operations of $363 million (2009: $287 million), up 27% - Gross cash of $1,061 million at year end and no net debt ----- * on the basis that if the share price were to be above GBP20.63 in February 2015 the convert would generate extra shares giving diluted EPS (adj.) at $1.11. See note 6.
Adjusted income statements are included on page 8, which reconcile IFRS
to the adjusted measures above.
Chief Executive’s Review
Commenting on the results, Dr
the following overview of the year:
“2010 was a year of transition for us. During the year Autonomy’s
technology and its ability to extract meaning from human friendly information
has spearheaded the Meaning Based Computing movement forward with new
applications of the technology and mission critical usages by our customers.
Human friendly information and the need to process it has continued to grow
rapidly with applications in customer interaction, legal, regulatory and, as
a result of new smart phone technology, mobile leading the way.
This year we have seen Autonomy become one of the leading players in
cloud computing as our customers, who can choose to take up our core
functionality by traditional licence, IDOL OEM or IDOL Cloud offering, have
transitioned to the private cloud model faster than expected. This trend can
be seen in the unexpected rise in our ‘commit’ metric (contracts entered into
by the customer with an expected minimum spend). The IDOL OEM and IDOL Cloud
routes are highly attractive to us as they turn one-off sales into multi-year
committed annuity streams, and these new fast growing routes have become the
dominant usage models for our technology. However there is a short-term
effect of depressing growth rates as those one-off sales which were
recognised immediately are replaced by longer-term but more valuable annuity
Autonomy continues to be chosen to handle the world’s most complex legal
cases and regulatory issues, for both corporates and regulators, including
the largest lawsuits in the world such as BP and as reported by industry
analysts has continued to gain market share in areas such as legal and
archiving. We are particularly pleased to see the very high growth rates in
IDOL OEM, which is now seeing IDOL used by most major software companies
across almost all sectors of the software industry.
The year saw strong investment in the future of the business with the
opening of new offices in
in the infrastructure for this cloud capability with Autonomy now handling
over 17 petabytes of critical customer information in the cloud. Whilst we
continue to provide our core IDOL technology in whichever model the customer
chooses, we are delighted with the transition to the cloud, and expect to
reap the benefits of the now cumulative subscription revenues in years to
Unlike others in the sector, Autonomy’s business thrived during the
downturn resulting in Autonomy reporting growth on growth unlike others who
are now seeing growth as a return to normal levels. In light of these tougher
comparative periods due to our strong growth in 2009, and the transition to
longer-term value revenue models, Autonomy continues to perform well.
In 2010 we saw transitions in the business and significant investments
for which we expect to reap the rewards in coming years. We also saw in Q3
2010 volatility in customer assessment of the macro environment, which now
seems to have reduced.
During the course of 2010 we saw the balance of our business shift
towards IDOL Cloud and IDOL OEM being the key drivers of our business. We
believe the growth rates seen across our business lines in Q4 2010 projected
forward provide a solid baseline on top of which our current record pipeline
and “commit” imply that current market expectations are conservative.”
Progress Towards Strategic Goals. During 2010 we made significant
progress on our strategic goals, including in the following areas:
- New standardisation agreements further cementing IDOL within the enterprise as the core platform for processing unstructured information, including Amgen, Bank of America, BNP Paribas, BP, Cigna, Philip Morris International and Play.com, and continued strong conversion of law firm customers from other suppliers. - 57% of sales during the year were from existing customers extending their investment in IDOL in new business areas. - Many more third party software products are now built on IDOL with 42 new and extended relationships with major software providers including: Nuance, Xerox and Cisco. Growth in this area accelerated to 32% during 2010. - Strong growth in the IDOL Cloud business, Q4 2010 up 12% year-on-year, increasing the level of recurring revenue and securing lifetime customer relationships. - Autonomy's market position remained strong with the Average Selling Price (ASP) for IDOL technology rises to $790,000 during FY 2010 and 94 deals in excess of $1 million signed. - $115 million invested in R&D resulting in a significant new product offering to the Healthcare sector. - Rated number one across multiple industry analyst reports and segments, as discussed below.
Sales and Customers. As expected, the adoption of our technology for
“Protect” usages continued strongly throughout the year driven by a whole
series of new regulations coming into effect which is driving our business.
We are still seeing very large deals in this area and expect this to continue
for the foreseeable future across most industry sectors. We have also seen
strong take-up of our technology for “Promote” usages, with customers such as
Allstate, AT&T, Belgacom, Blackrock, BNP Paribas, Canadian Broadcasting
Corporation, Euronews, Health Care Services Corporation, Safeway and Verizon
during the year. Our multi-channel offerings including optimisation and
real-time analytics have proven extremely attractive, leading to the
company’s largest ever deal in this area. At the close of the year, Autonomy
was pleased to count virtually the entire Fortune 1000 group of companies as
R&D. We continued to invest heavily in R&D during the year resulting in
the launch of a major new initiative targeted at Healthcare during 2010 and
another major launch imminent. The net impact of R&D capitalisation on the
operating margin was in the order of 2%, the same as in 2009.
Market Position and Penetration. Autonomy’s market leadership position
strengthened during 2010. We saw a continuation of the “chaining” effect as
customers deploy IDOL across functional areas that have traditionally been
isolated and served by different software vendors. Ultimately this leads to a
growing number of enterprise-wide standardisation customers. Competition
during the year also became slightly more benign with major players pulling
out of our market.
Amongst industry analysts we elevated our positions, being rated number
one across multiple industry analyst reports and segments, including IDC’s
Worldwide Search and Discovery Software 2010-2014 forecast, and the Forrester
Wave 2010 for Online Testing. Other accolades included:
- Rated by IDC as fastest-growing archiving software company and the leading provider of search and discovery software - Rated "Strong Positive" in Gartner's 2010 eDiscovery market report - Positioned as leader in Gartner's 2010 Magic Quadrant for Web Content Management - Achieved the highest score in the Forrester Wave 2010 for Online Testing, based on current offering, product strategy, corporate strategy and market presence
Operations. During the year we increased management breadth with the
appointment and promotion of senior management across all areas of the
business, including a new head of Latin American sales. We also massively
expanded our data centre capacity and opened new offices in emerging markets
During 2010 we welcomed two new highly-skilled individuals to the Board
as Non-Executive Directors.
Audit Committee, brings extensive financial and management expertise.
extension of Autonomy’s world-leading technology.
In 2010 Autonomy commenced providing supplemental metrics as part of its
financial results to assist in the understanding and analysis of Autonomy’s
2010 can be characterised as another year of significant progress for
Autonomy. Revenues for 2010 totalled
for 2009, as enterprises deployed Autonomy’s technology to extract maximum
value from rapidly expanding quantities of unstructured information. This
result was achieved due to a strong performance in all of our markets.
During 2010 Autonomy completed 94 deals over
2010 Americas revenues of
Rest of World revenues of
Autonomy’s strategy to deepen the penetration of IDOL across all areas of
the enterprise is proving successful, as the high level of repeat business
demonstrates, with 57% of 2010 revenues from existing customers (2009: 48%).
As customers return for additional technology, the scale of projects
increases, with greater levels of functionality and connectivity.
Delivery of Autonomy’s core technology is via a number of methods,
depending on the demands of the customers. Comparative data for prior years
is not available for the analysis of each line item as the information
required to present the information in this manner was only captured with
Sales during 2010 and Q4 2010 were as follows, with the trends as
IDOL Product. IDOL Product is normally delivered as licensed software
paid for up-front with an ongoing support and maintenance stream. This model
is becoming less significant with the rise of cloud computing. In 2010, IDOL
Product revenue totalled
IDOL Cloud. IDOL Cloud delivers Autonomy’s IDOL on a
Software-as-a-Service (SaaS) model, which is generally invoiced monthly in
arrears and does not generate deferred revenue. There are two key drivers of
cloud revenues for Autonomy: the first and most significant relates to
complex processing of information delivered as a service, the second relates
to the quantity of data under management. In 2010 IDOL Cloud revenue totalled
IDOL OEM. IDOL OEM is where Autonomy’s IDOL is embedded inside other
software companies’ products. IDOL is now embedded in most major software
companies’ products addressing most software vertical markets. This is a
particularly important revenue stream as it generates ongoing business across
the broadest product set possible, in addition to up-front development
licences. In 2010 IDOL OEM revenue totalled
In Q4 2010 IDOL OEM revenue totalled
representing 14% of revenues. 42 new agreements were signed during 2010 with
10 new agreements signed during Q4 2010, including deals with Nuance, HP and
Deferred Revenue Release. Deferred revenue release stems principally from
support and maintenance contracts recognized in arrears. In 2010 deferred
revenue release totalled
2010 deferred revenue release totalled
8%. As discussed during the company’s Q3 2010 results conference call, Q4
2010 saw the expected positive seasonal effect as the calendarisation of
Interwoven support and maintenance contracts unwound.
Services. Services revenues relate to third party and internal
implementation consultants and training. Services revenues remained flat in
2010 at approximately 5% of revenues (or
rare “pure software” model under which our goal is that most implementation
work is carried out by approved partners. This optimises Autonomy’s ability
to address its horizontal technology to multiple vertical markets and regions
in the most efficient way.
During Q4 we saw deals with new and existing customers including: Ahold,
Allstate, Amazon, Amgen, AT&T, Bank of America, Belgacom, Blackrock, BNP
Paribas, CIGNA, Dexia, Euronews, Goodyear, Health Care Services Corporation,
Qualcomm, Repsol, Safeway, Sunlife Insurance and Verizon. As expected we saw
no change to the demand backdrop among our key government clients, resulting
in new and extended agreements in
In analysing organic growth Autonomy considers organic IDOL growth to be
the most meaningful performance metric for understanding the momentum within
the business. This excludes the contribution from acquisitions, foreign
exchange impact, services revenue (not a goal of the business) and deferred
revenue release (primarily maintenance income).
Table 1: Core Business Organic Revenue Growth Calculation(1) Revenue ($ millions) 2010 2009 Q4'10 Q4'09 Core IDOL reported revenues(2) 574 491 169 153 IWOV stub revenues(3) - 4 - - Microlink/CA non-service revenue(4) - - - - FX 4 - 3 - 578 495 172 153 Growth 17% 12% 1 Autonomy's Core Business above excludes services and deferred revenue. 2 Core IDOL is made up of IDOL Product, IDOL Cloud and IDOL OEM categories, discussed above. 3 Interwoven stub revenues are for licence for the period January 1, 2009 through to March 16, 2009. 4 Microlink did not have its own product lines but only services. CA unit original product not sold by Autonomy.
Gross Profits and Gross Margins
Gross profits (adj.) for 2010 were
for 2009. Gross margins (adj.) for 2010 were 87%, compared to 88% for 2009,
with the effects in 2010 of the slightly lower margin IDOL Cloud business
being balanced by the higher margin IDOL OEM royalties. Gross profits (IFRS)
for 2010 were
(IFRS) for 2010 were 81%, compared to 81% for 2009. During the year Autonomy
has seen success in addressing the urgent needs of a small number of
customers with package solutions, constructed of services, hardware and
software, such as Arcpliance. The gross margin in these cases is lower than
the normal business.
Gross profits (adj.) for Q4 2010 were
89% for Q4 2009. Gross profits (IFRS) for Q4 2010 were
compared to 83% for Q4 2009.
Management took the opportunity during this year of transition to invest
in personnel, the indirect channel, discretionary marketing activities, new
product launches and new offices such as
an ideal position to benefit from any upturn in the global macro-economic
Total operating costs in 2010 rose 17% year-on-year to
costs increased by 18% in 2010. This is primarily because of new marketing
campaigns undertaken by Autonomy during the year, the acquisitions of
Microlink and CA’s Information Governance assets, as well as the additional
commission expense associated with a higher level of sales.
Profit from Operations and Operating Margins
Profit from operations (adj.) for 2010 was
2009, and returned to the company’s target range during Q4. Profit from
operations (IFRS) for 2010 was
2009. Operating margins (IFRS) were 36% in 2010 down from 37% in 2009.
During the year we did significant work on one specific acquisition
target and during the fourth quarter we expensed the costs relating to this
work. The transaction was delayed due to changes in the targeted asset; this
asset has not transacted with any other party.
Profit from operations (adj.) for Q4 2010 was
from 50% in Q4 2009, affected by discretionary spend discussed above but
within the company’s target range. Profit from operations (IFRS) for Q4 2010
were 40% in Q4 2010 compared to 43% in Q4 2009.
Interest payable for 2010 totalled
relation to the convertible loan notes issued in
loan notes pay a cash coupon of 3.25%. The income statement charge is
notional and is based on a market rate of interest for corporate loan notes
of similar term without a convertible element in accordance with IFRS. The
remainder of the interest payable relates to the company’s bank loan incurred
in connection with the Interwoven acquisition in 2009, which have decreased
during the year due to scheduled repayments.
The effective tax rate for 2010 was as forecast at 23%, down from 28% for
2009. The decrease from 2009 is the result of changes in the profit mix
between the UK and overseas, as well as the completion of tax studies
resulting in the recognition of additional tax losses. The effective tax rate
for 2011 will likely be in the range of 27-29% as the one-off benefit in 2010
in relation to the utilisation of tax losses will not be repeated.
Foreign Exchange Impact on Revenues
The effect on revenue of movements in foreign exchange rates in 2010 was
a decrease of
each quarter using the same exchange rates as those prevailing in the
previous year, revenues in 2010 would have been
The effect on revenue in Q4 2010 of movements in foreign exchange rates
was a decrease of
strengthened slightly versus Sterling to an average of
Net profit (adj.) in 2010 was
compared to net profit (adj.) of
Net profit (IFRS) in 2010 was
compared to net profit (IFRS) of
IAS 38 Charges and Capitalization
In 2010, Autonomy expensed
relating to new products including the development of Meaning Based
Healthcare technology, new core IDOL functionality and other ongoing
development projects. Under IAS 38 the company is required to capitalize
certain aspects of its research and development activities. R&D
capitalization in 2010 was
amortization charges of
The capitalization and offsetting charges resulted in a net credit
(before tax) in the year of
impact of 2% (2009: 2%).
EPS (adj.) for 2010 was
over the year, and in Q4 2010 was
assume that the convertible loan notes had already converted then EPS (adj.)
for 2010 would have been
12% growth over the year, and in Q4 2010 was
This result was achieved against the unusually strong performance a year
ago, and after the substantial discretionary investment in sales and
marketing, research and development and new product launches.
Balance Sheet and Cash Flows
Cash Balance. Autonomy closed 2010 with a gross cash balance of
Movements. Movements of note in cash flow during 2010 included: - Positive cash flow from operating activities of $302 million, up 21% from $250 million in 2009. - Capital expenditure of $60 million during 2010, up from $34 million in 2009. This represents the continued investment of the company in areas of expected growth for future years. - Expenditure on product development, resulting in a cash outflow of $39 million (2009: $25 million), as discussed above. - Acquisition of Microlink and CA's Information Governance assets for aggregate consideration of approximately $79 million. - Proceeds of approximately $762 million through the issuance of convertible loan notes in March 2010, offset by interest payments of $13 million during 2010 representing the first semi-annual payment of the coupon rate of 3.25%. - Scheduled bank loan repayments of $54 million (2009: $37 million).
Cash Conversion. On a twelve month basis, which accounts for the
seasonality of the business, cash conversion improved to 87% (2009: 80%).
Given the growth profile of the Company 87% approximates to the theoretical
maximum that should be achievable. Cash conversion was 84% in Q4 (Q4 2009:
58%), and within the company’s target range.
Receivables. In Q4 2010 DSOs were 94 days (Q4 2009: 88 days), just above
the top end of the company’s target 80-90 day range but in line with normal
historic fluctuations The bad debt write off was below 1% of sales and
accrued income remained below 5% of revenue.
Deferred Revenue. Deferred revenue increased to
of Q4 2010 (Q4 2009:
the trend towards pay-as-you-go cloud models. It is worth noting that our
IDOL Cloud and IDOL OEM revenue streams do not generate deferred revenue in
the same way as the traditional models.
Five Year Financial Summary Table 2: Five Year Financial Summary ($'000s) 2010 2009 2008 2007 2006 Revenue 870 740 503 343 251 Profit before tax 379 323 209 113 69 (adj.) Net cash generation 363 287 179 83 47 Operating margin 43% 44% 41% 32% 27% (adj.)* Diluted EPS (adj. $1.20 $0.97 $0.68 $0.38 $0.26 IFRS)** * See adjusted measures as calculated on page 8 ** Diluted EPS (adj.) at $1.11, see note 6
Scheduling of Conference Call and Further Information
Autonomy’s results conference call will be available live at
From time to time the Company answers investors’ questions on its website
which may include information supplemental to that set forth above. Questions
and answers can be found at: http://www.autonomy.com/investors/questions.
The company publishes on its website the expected calendar for full and
half year results, and interim trading updates, and associated conference
calls. Please visit www.autonomy.com/content/Investors/calendar/index.en.html
for the current expected calendar.
About Autonomy Corporation plc
Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in
infrastructure software for the enterprise, spearheads the Meaning Based
Computing movement. IDC recently recognized Autonomy as having the largest
market share and fastest growth in the worldwide search and discovery market.
Autonomy’s technology allows computers to harness the full richness of human
information, forming a conceptual and contextual understanding of any piece
of electronic data, including unstructured information, such as text, email,
web pages, voice, or video. Autonomy’s software powers the full spectrum of
mission-critical enterprise applications including pan-enterprise search,
customer interaction solutions, information governance, end-to-end
eDiscovery, records management, archiving, business process management, web
content management, web optimization, rich media management and video and
Autonomy’s customer base is comprised of more than 20,000 global
companies, law firms and federal agencies including: AOL, BAE Systems, BBC,
Bloomberg, Boeing, Citigroup, Coca Cola, Daimler AG, Deutsche Bank, DLA
Piper, Ericsson, FedEx, Ford, GlaxoSmithKline, Lloyds Banking Group, NASA,
Nestle, the New York Stock Exchange, Reuters, Shell, Tesco, T-Mobile, the
U.S. Department of Energy, the U.S. Department of Homeland Security and the
U.S. Securities and Exchange Commission. More than 400 companies IDOL OEM
Autonomy technology, including Symantec, Citrix, HP, Novell, Oracle, Sybase
and TIBCO. The Company has offices worldwide. Please visit www.autonomy.com
to find out more.
Autonomy and the Autonomy logo are registered trademarks or trademarks of Autonomy Corporation plc. All other trademarks are the property of their respective owners. Autonomy Corporation plc Condensed Consolidated Income Statement (in thousands, except per share amounts) Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 Continuing operations $'000 $'000 $'000 $'000 Revenues (see note 3) 870,366 739,688 244,505 223,111 Cost of revenues (excl. amortization) (111,513) (87,747) (33,518) (23,686) Amortization of purchased intangibles (57,280) (49,650) (13,793) (14,601) Total cost of revenues (168,793) (137,397) (47,311) (38,287) Gross profit 701,573 602,291 197,194 184,824 Operating expenses: Research and development (114,752) (98,785) (29,776) (26,141) Sales and marketing (204,109) (170,797) (56,828) (45,621) General and administrative (69,405) (60,627) (17,617) (17,046) Other costs Post-acquisition restructuring (3,468) (846) (1,353) - costs Gain on foreign exchange 6,576 942 7,097 852 Total operating expenses (385,158) (330,113) (98,477) (87,956) Profit from operations 316,415 272,178 98,717 96,868 Share of (loss) profit of associate (1,816) (273) (891) 457 Profit on disposal of investment 436 - 436 - Interest receivable 8,458 1,205 2,776 230 Interest payable (41,299) (7,044) (12,683) (1,798) Profit before income taxes 282,194 266,066 88,355 95,757 Income taxes (see note 4) (64,901) (74,515) (17,956) (26,363) Net profit 217,293 191,551 70,399 69,394 Basic earnings per share (see note 6) 0.90 0.81 0.29 0.29 Diluted earnings per share (see note 6) 0.89 0.80 0.29 0.29 Reconciliation of Adjusted Financial Measures Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 $'000 $'000 $'000 $'000 Gross profit 701,573 602,291 197,194 184,824 Amortization of purchased intangibles 57,280 49,650 13,793 14,601 Gross profit (adj.) 758,853 651,941 210,987 199,425 Profit before income taxes 282,194 266,066 88,355 95,757 Amortization of purchased intangibles 57,280 49,650 13,793 14,601 Share based compensation (see note 5) 5,979 7,173 2,044 1,994 Post-acquisition restructuring 3,468 846 1,353 - costs Gain on foreign exchange (6,576) (942) (7,097) (852) Profit on disposal of investment (436) - (436) - Interest charge on convertible loan notes 35,196 - 11,038 - Share of loss (profit) of associate 1,816 273 891 (457) Profit before tax (adj.) 378,921 323,066 109,941 111,043 Provision for income taxes (86,705) (90,268) (22,122) (30,571) Net profit (adj.) 292,216 232,798 87,819 80,472 Profit from operations 316,415 272,178 98,717 96,868 Amortization of purchased intangibles 57,280 49,650 13,793 14,601 Share based compensation (see note 5) 5,979 7,173 2,044 1,994 Post-acquisition restructuring costs 3,468 846 1,353 - Gain on foreign exchange (6,576) (942) (7,097) (852) Profit from operations (adj.) 376,566 328,905 108,810 112,611 Autonomy Corporation plc Condensed Consolidated Balance Sheet As at (unaudited) Dec 31, Dec 31, 2010 2009 $'000 $'000 ASSETS Non-current assets: Goodwill 1,361,900 1,287,042 Other intangible assets 400,372 399,277 Property and equipment, net 42,554 33,886 Equity and other investments 68,600 16,608 Deferred tax asset 16,263 24,015 Total non-current assets 1,889,689 1,760,828 Current assets: Trade receivables, net 267,646 230,219 Other receivables 62,471 45,231 Total trade and other receivables 330,117 275,450 Inventory 116 486 Cash and cash equivalents 1,060,600 242,791 Total current assets 1,390,833 518,727 TOTAL ASSETS 3,280,522 2,279,555 CURRENT LIABILITIES Trade payable (23,443) (14,926) Other payables (51,968) (54,517) Total trade and other payables (75,411) (69,443) Bank loan (78,745) (52,375) Tax liabilities (33,210) (43,338) Deferred revenue (170,256) (164,931) Provisions (1,661) (2,731) Total current liabilities (359,283) (332,818) Net current assets 1,031,550 185,909 NON-CURRENT LIABILITIES Bank loan (66,407) (145,152) Convertible loan notes (681,791) - Deferred tax liabilities (91,072) (85,087) Deferred revenue (7,421) (8,576) Other payables (3,702) (1,020) Provisions (3,597) (5,123) Total non-current liabilities (853,990) (244,958) Total liabilities (1,213,273) (577,776) NET ASSETS 2,067,249 1,701,779 Shareholders' equity: Ordinary shares (1) 1,344 1,333 Share premium account 1,247,907 1,130,767 Capital redemption reserve 135 135 Own shares (788) (845) Merger reserve 27,589 27,589 Stock compensation reserve 27,881 21,959 Revaluation reserve 47,415 4,499 Translation reserve (30,161) (12,032) Retained earnings 745,927 528,374 TOTAL EQUITY 2,067,249 1,701,779 ------------ (1) At December 31, 2010, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 242,562,584 issued and outstanding; as of December 31, 2009, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 240,574,304 issued and outstanding. Autonomy Corporation plc Condensed Consolidated Statements of Cash Flows Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 $'000 $'000 $'000 $'000 Cash flows from operating activities: Profit from operations 316,415 272,178 98,717 96,868 Adjustments for: Depreciation and amortization 99,610 81,083 24,757 25,490 Share based compensation 5,979 7,173 2,044 1,994 Foreign currency movements (6,576) (942) (7,097) (852) Post-acquisition restructuring 698 846 costs - 250 Other non-cash items - 128 - 1 Operating cash flows before movements in working cap 416,126 360,466 118,421 123,751 Changes in operating assets and liabilities: Receivables (60,983) (78,396) (54,007) (13,021) Inventories 369 235 89 (33) Payables 7,718 4,267 35,165 (38,503) Cash generated by operations 363,230 286,572 99,668 72,194 Income taxes paid (60,902) (36,551) (11,985) (10,368) Net cash provided by operating 302,328 250,021 87,683 61,826 activities Cash flows from investment activities: Interest received 7,789 1,127 2,776 152 Purchase of fixed assets (59,624) (34,429) (19,261) (11,031) Proceeds on disposal of 467 - 467 - investments Purchase of investments (10,676) (6,449) (8,176) (4,297) Expenditure on product (38,542) (24,722) (12,696) (5,574) development Acquisition of subsidiaries, net (79,460) (630,052) (658) (1,522) of cash acquired Net cash used in investing (180,046) (694,525) (37,548) (22,272) activities Cash flows from financing activities: Proceeds from issuance of shares, 18,735 24,668 2,382 7,472 net of issuance costs Proceeds from share placing, net - 308,512 of issuance costs - - Proceeds from convertible loan notes, net of issuance costs 761,781 - - - Interest on convertible loan (12,527) - - - notes Interest on bank loan (4,501) (5,340) (1,204) (1,380) Repayment of bank loan (53,906) (37,450) - - Drawdown of bank loan - 200,000 - - Payment of arrangement fee - (3,846) - - Net cash provided by financing 709,582 486,544 1,178 6,092 activities Net increase in cash and cash 831,864 42,040 51,313 45,646 equivalents Beginning cash and cash 242,791 199,218 1,027,739 200,732 equivalents Effect of foreign exchange on (14,055) 1,533 (18,452) (3,587) cash and cash equivalents Ending cash and cash equivalents 1,060,600 242,791 1,060,600 242,791 Autonomy Corporation plc Condensed Consolidated Statement of Comprehensive Income Twelve Months Three Months Ended Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 $'000 $'000 $'000 $'000 Net profit 217,293 191,551 70,399 69,394 Revaluation of equity investment 42,916 1,512 298 (967) Translation of overseas operations (18,129) 6,229 (15,332) (3,995) Other comprehensive income 24,787 7,741 (15,034) (4,962) Total comprehensive income 242,080 199,292 55,365 64,432 Autonomy Corporation plc Condensed Consolidated Statement of Changes in Equity Capital Ordinary Share redemption Own Merger shares premium reserve shares reserve Sub-total $'000 $'000 $'000 $'000 $'000 $'000 At January 1, 2009 1,214 798,279 135 (905) 27,589 826,312 Retained profit - - - - - - Other comprehensive income - - - - - - Stock compensation - - - - - - Share placing 103 308,409 - - - 308,512 Share options exercised 16 24,079 - - - 24,095 EBT options exercised - - - 60 - 60 Deferred tax on stock options..... - - - - - - At Dec 31, 2009 1,333 1,130,767 135 (845) 27,589 1,158,979 Stock Revaluation Sub-total comp'n Translation Retained Forwarded reserve reserve reserve earnings Total $'000 $'000 $'000 $'000 $'000 $'000 At January 1, 826,312 14,846 2,987 (18,261) 294,016 1,119,900 2009 Retained profit - - - - 191,551 191,551 Other comprehensive income - - 1,512 6,229 - 7,741 Stock compensation - 7,173 - - - 7,173 Share placing 308,512 - - - - 308,512 Share options exercised 24,095 - - - - 24,095 EBT options exercised 60 (60) - - - - Deferred tax on stock options - - - - 42,807 42,807 At Dec 31, 2009 1,158,979 21,959 4,499 (12,032) 528,374 1,701,779 Capital Ordinary Share redemption Own Merger shares premium reserve shares reserve Sub-total $'000 $'000 $'000 $'000 $'000 $'000 At January 1, 2010 1,333 1,130,767 135 (845) 27,589 1,158,979 Retained profit - - - - - - Other comprehensive income - - - - - - Stock compensation - - - - - - Share options exercised 11 19,325 - - - 19,336 EBT options exercised - - - 57 - 57 Equity element of convertible loan notes - 97,815 - - - 97,815 Deferred tax on stock options - - - - - - At Dec 31, 2010 1,344 1,247,907 135 (788) 27,589 1,276,187 Sub-total Stock Revaluation comp'n Translation Retained Forwarded reserve reserve reserve earnings Total $'000 $'000 $'000 $'000 $'000 $'000 At January 1, 2010 1,158,979 21,959 4,499 (12,032) 528,374 1,701,779 Retained profit - - - - 217,293 217,293 Other comprehensive income - - 42,916 (18,129) - 24,787 Stock compensation - 5,979 - - - 5,979 Share options exercised 19,336 - - - - 19,336 EBT options exercised 57 (57) - - - - Equity element of convertible loan notes 97,815 - - - - 97,815 Deferred tax on stock options - - - - 260 260 At Dec 31, 2010 1,276,187 27,881 47,415 (30,161) 745,927 2,067,249
AUTONOMY CORPORATION plc
NOTES TO THE CONDENSED SET OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE AND TWELVE MONTHS ENDED
1. General information
The accompanying quarterly and twelve month consolidated financial
statements of Autonomy Corporation plc are based on the company’s financial
statements which are prepared in accordance with International Financial
Reporting Standards as adopted for use in the EU (“IFRS”). The quarterly and
twelve month consolidated financial statements have been prepared using
accounting policies consistent in all material respects with those to be
applied in the Company’s Annual Report for the year ended
and those applied in the Company’s Annual Report for the year ended
announcement has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards (IFRSs),
this announcement does not itself contain sufficient information to comply
with IFRSs. The Company expects to publish full financial statements that
comply with IFRSs in
Quarterly and twelve month information is unaudited, but reflects all
normal adjustments which are, in the opinion of management, necessary to
provide a fair statement of results and the Company’s financial position for
and as at the periods presented. The results of operations for the three
months and twelve months ended
indicative of the operating results for future operating periods. The
financial information set out in the announcement does not constitute the
Company’s statutory accounts for the years ended
The financial information for the year ended
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts; their report
was unqualified, did not draw attention to any matters by way of emphasis
without qualifying their report and did not contain a statement under s498(2)
or (3) Companies Act 2006 or equivalent preceding legislation. The quarterly
and twelve month information should be read in connection with the Company’s
audited Consolidated Financial Statements and the notes thereto for the year
finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company’s annual general meeting. This
announcement was approved by the Board of Directors on
2. Accounting policies
Whilst the financial information included in this quarterly and twelve
month announcement has been computed in accordance with International
Financial Reporting Standards (IFRSs), this announcement does not itself
contain all of the disclosures required by IFRSs.
Basis of preparation
The same accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in the
group’s 2009 Annual Report, except for as described below.
Adoption of new and current standards
The accounting policies adopted in the preparation of the preliminary
announcement are consistent with those followed in the preparation of the
Group’s financial statements for the year ended
the adoption of new standards and interpretations. In the current financial
year, the Group has adopted International Financial Reporting Standard 3
(Revised 2008) “Business Combinations” and International Accounting Standard
27 (Revised 2008) “Consolidated and Separate Financial Statements” as
required, and will apply these principles throughout the year. Adoption of
these standards did not have any significant effect on the financial position
or performance of the Group.
The group has considerable financial resources together with a
significant number of customers across different geographic areas and
consequence, the directors believe that the group is well placed to manage
business risks successfully despite the current uncertain economic outlook.
After making enquiries and considering the cash flow forecasts of the
group the directors have a reasonable expectation that the group has adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the
twelve month and quarterly consolidated financial statements.
2. Accounting policies (continued)
Although IFRS disclosure provides investors and management with an
overall view of the Company’s financial performance, Autonomy believes that
it is important for investors to also understand the performance of the
Company’s fundamental business without giving effect to certain specific,
non-recurring and non-cash charges.
Consequently, the non-IFRS (adj.) results exclude share of profit/loss of
associates, profit on disposal of investment, interest on convertible loan
notes, post-acquisition restructuring costs and non-cash charges for the
amortization of purchased intangibles, share-based compensation, non-cash
translational foreign exchange gains and losses and associated tax effects.
Management uses the adjusted results to assess the financial performance of
the Company’s operational business activities.
See reconciliations on page 8.
3. Segmental information
The Company is organized internally along group function lines with each
line reporting to the group’s chief operating decision maker, the Chief
Executive Officer. The primary group function lines include: finance;
operations, including legal, HR, and operations, marketing, sales and
technology. Each of these functions supports the overall business activities,
however they do not engage in activities from which they earn revenues or
incur expenditure in their operations with each other. No discrete financial
information is produced for these function lines. The Company integrates
acquired businesses and products into the Autonomy model such that separate
financial data on these entities is not maintained post acquisition.
The group has operations in various geographic locations however no
discrete financial information is maintained on a regional basis. Decisions
around the allocation of resources are not determined on a regional basis and
the chief operating decision maker does not assess the group’s performance on
a geographic basis.
The group is a software business that utilises its single technology in a
set of standard products to address unique business problems associated with
unstructured data. The group offers over 500 different functions and
connectors to over 400 different data repositories as part of its product
suite. Each customer selects from a list of options, but underneath from a
single unit of the proprietary core technology platform. As a result, no
analysis of revenues by product type can be provided.
Each of the group’s virtual brands is founded on the group’s unique
Intelligent Data Operating Layer (IDOL), the group’s core infrastructure for
automating the handling of all forms of unstructured information. Separate
financial information is not prepared for each virtual brand to assess its
performance for the purpose of resource allocation decisions. The pervasive
nature of the group’s technology across each brand requires decisions to be
taken at the group level and financial information is prepared on that basis.
A significant proportion of the group’s cost base is fixed and represents
payroll and property costs which relate to the multiple function lines of the
group. As a result the business model drives enhanced performance though
growing sales and accordingly group wide revenue generation is the key
performance metric that is monitored by the chief operating decision maker.
The revenue financial data used to monitor performance is prepared and
compiled on a group wide basis. No separate revenue financial analysis is
maintained on revenues from any of the virtual brands.
The Company’s chief operating decision maker is the group’s Chief
Executive Officer, who evaluates the performance of the Company on a group
wide basis and any elements within it on the basis of information from junior
executives and group financial information and is ultimately responsible for
entity-wide resource allocation decisions.
As a consequence of the above factors the group has one operating segment
in accordance with IFRS 8 “Operating Segments”. IFRS 8 also requires
information on a geographic basis and that information is shown below.
3. Segmental information (continued)
The group’s operations are located primarily in the
other European countries as well as
The following tables provide an analysis of the group’s sales and net assets
by geographical market based upon the location of the group’s customers.
Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 Revenue by region: $'000 $'000 $'000 $'000 Americas 592,358 517,185 168,443 162,341 Rest of World 278,008 222,503 76,062 60,770 Total 870,366 739,688 244,505 223,111 Information about these geographical regions is presented below: Twelve Months Ended (unaudited) Dec 31, 2010 Dec 31, 2009 Americas ROW Total Americas ROW Total $'000 $'000 $'000 $'000 $'000 $'000 Result by region 196,203 117,104 313,307 212,775 59,307 272,082 Post-acq'n restruct. costs (3,468) (846) Gain on foreign exch 6,576 942 Operating profit 316,415 272,178 Share of loss of associate (1,816) (273) Profit on disposal of invest 436 - Interest receivable 8,458 1,205 Interest payable (41,299) (7,044) Profit before tax 282,194 266,066 Tax (64,901) (74,515) Profit for the period 217,293 191,551 Three Months Ended (unaudited) Dec 31, 2010 Dec 31, 2009 Americas ROW Total Americas ROW Total $'000 $'000 $'000 $'000 $'000 $'000 Result by region 32,743 60,230 92,973 76,549 19,467 96,016 Post-acq'n restruct. costs (1,353) - Gain on foreign exch. 7,097 852 Operating profit 98,717 96,868 Share of (loss) profit of associate (891) 457 Profit on disposal of invest 436 - Interest receivable 2,776 230 Interest payable (12,683) (1,798) Profit before tax 88,355 95,757 Tax (17,956) (26,363) Profit for the period 70,399 69,394 4. Income taxes Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 Tax charge (credit) by region: $'000 $'000 $'000 $'000 UK 52,513 46,413 21,050 22,562 Foreign 12,388 28,102 (3,094) 3,801 Total 64,901 74,515 17,956 26,363 5. Share based compensation
Share based compensation charges have been charged in the consolidated
income statement within the following functional areas:
Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 $'000 $'000 $'000 $'000 Research and development 1,605 1,926 549 535 Sales and marketing 2,932 3,517 1,002 978 General and administrative 1,442 1,730 493 481 Total share based compensation 5,979 7,173 2,044 1,994 charge 6. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: Twelve Months Ended Three Months Ended (unaudited) (unaudited) Dec 31, Dec 31, Dec 31, Dec 31, 2010 2009 2010 2009 $'000 $'000 $'000 $'000 Earnings for the purposes of basic and diluted earnings per share being net profit (IFRS) 217,293 191,551 70,399 69,394 Earnings for the purposes of diluted earnings per share (adjusted - see page 8) 292,216 232,798 87,819 80,472 Number of shares (in thousands) Weighted average number of ordinary shares for the purposes of basic earnings per share 241,732 237,531 242,431 240,017 Effect of dilutive potential ordinary shares: Share options 2,741 3,024 2,143 3,401 Weighted average number of ordinary shares for the purposes of diluted earnings per share (IFRS) 244,473 240,555 244,574 243,418 Convertible loan notes 19,926 - 24,082 - Weighted average number of ordinary shares for the purposes of diluted earnings per share (adjusted) 264,399 240,555 268,656 243,418 IFRS Earnings per share - basic $ 0.90 $ 0.81 $ 0.29 $ 0.29 Earnings per share - fully diluted $ 0.89 $ 0.80 $ 0.29 $ 0.29 Adjusted Earnings per share adj. - basic (IFRS) $ 1.21 $ 0.98 $ 0.36 $ 0.34 Earnings per share adj.- fully diluted (IFRS) $ 1.20 $ 0.97 $ 0.36 $ 0.33 Earnings per share adj. - fully diluted (adjusted for conversion of loan notes) $1.11 $ 0.97 $ 0.33 $ 0.33
Because, in our adjusted measure of profits, we exclude the interest
payable on the convertible loan notes the inclusion of the potential shares
for the convertible loan notes does not cause dilution. In order to give a
fair presentation of our adjusted diluted earnings per share we have elected
to reflect the impact of the convertible shares within our adjusted diluted
earnings per share measures.
7. Related Party Transactions
There have been no related party transactions, or changes in related
party transactions described in the latest annual report, that could have a
material effect on the financial position or performance of the group in the
Contacts: Financial Media Contacts: Analyst and Investor Contacts: Edward Bridges / Haya Herbert-Burns Derek Brown, Head of Investor Relations Financial Dynamics Autonomy Corporation plc +44(0)20-7831-3113 +44(0)20-7104-5700
SOURCE Autonomy Corporation plc