Sale of ReckonDocs Business

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    Reckon Limited is pleased to announce that it has reached agreement with NowInfinity Pty Ltd (a wholly owned
    subsidiary of Class Ltd) and Class Ltd (the Class Buyer Group), to sell the assets comprising the ReckonDocs
    Business to the Class Buyer Group.
    The purchase consideration is $13 million dollars.
    The transaction is unconditional.
    It is anticipated that the transaction will complete on 1 March 2021.
    The intended use of the fundsreceived will be to reduce Reckon’s debt, and to provide additional development
    funds for Reckon’s “cloud first” development strategy for small business accounting and payroll, and practice
    management for accountants and lawyers
    The Division contributed revenue of $5 million and EBITDA of $3 million to the 2020 Reckon Group results.
    The ReckonDocs Business is currently part of Reckon’s Accountant Practice Management Group and is a
    provider of company formations, trust deeds and other related documents and services.
    The sale of this business will enable a stronger focus in Reckon’s core cloud software initiatives with the added
    benefit of a tighter integration of our Accountants Group products with Class products over time.
    Reckon Group CEO, Sam Allert said:
    “The sale of ReckonDocs, allows us to focus on our core strengths of acounting and payroll for small businesses,
    and practice management for accountants and lawyers. We also gain a strong integration partner with Class
    and will be able to offer a fully integrated suite of software for accounting firms throughout Australia with
    Reckon APS and Class products.”

    courtesy of Bell Direct
    =============================================================================================

    DYOR

    i hold RKN

    for the looks of the half-yearly report , the sold asset was the only section making money

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    Financial results for the year to 31 December 2020
    ▪ Group NPAT of $9.7m – up 19.8% from $8.1m in Prior Corresponding Period (PCP)
    ▪ Group EBITDA of $32.6m – up 6.6% from $30.6m in PCP
    ▪ Group revenue of $75.6m – up 0.3% from PCP
    ▪ Third consecutive half of revenue growth for the Business Group
    ▪ Strong recurring revenues – 85% now subscription based
    ▪ Strong operating cashflow of $32.4m (before development spend)
    ▪ Investment in product development of $19.5m – majority of outlay for cloud-based solutions
    ▪ Reduced debt by $5.8m – lowering current debt position by 15% to $31.8m
    ▪ $0.02 fully franked final dividend maintains year-on-year return to shareholders of $0.05 per share,
    providing 6% dividend yield
    Reckon Limited (“Reckon” or the “company”) (ASX:RKN) today announced its financial results for the year
    ended 31 December 2020 (CY2020), with its continued investment in cloud-based product development and
    capital allocation strategy delivering strong bottom line growth.
    The company reported NPAT of $9.7m for the year, increasing from $8.1m in 2019, and representing a ~20%
    uplift on the prior corresponding period (PCP). In addition, EBITDA continued to grow 6.6% from $30.6m to
    $32.6m. This was driven by ongoing cloud-based product uptake, particularly in the Business Group, as well as
    stringent cost management measures implemented throughout the period.
    Revenue for the year increased marginally to $75.6m with subscription based revenues across the group
    accounting for approximately 85%, representing a 5% increase on the PCP. This highlights the company’s
    strong recurring revenue base, led by cloud-user growth in the Business Group and together with prudent
    capital allocation, supported strong operating cashflow.
    Investment in the development of cloud-based products increased for the third consecutive year with total
    development spend up by $3.2m to $19.5m in CY2020. This investment continues to underpin Reckon’s
    product development roadmap, with the continued launch of a number of new product releases across the
    business, supporting customer acquisition and retention.
    Continued growth in the bottom line and a disciplined capital management program also allowed Reckon to
    reduce its debt position by a further $5.8m, with total debt at the end of the period of $31.8m. In addition,
    Reckon has declared a $0.02 fully franked final dividend, taking total dividend distributions for the period to
    $0.05 per share, maintaining the same level of shareholder return as the PCP.

    Management commentary
    CEO Mr Sam Allert said: “The strong execution of our plan during 2020, which includes a continued focus on
    investing in cloud-based product development to satisfy client demand, means Reckon is increasingly well
    placed for growth.
    “Despite the uncertainty created by the pandemic, Reckon performed well across key financial metrics and in
    particular continued its positive cloud-based user growth trajectory within the core Business Group. We are
    also seeing our investment in product development and ongoing product launches presenting cross sell
    opportunities within our operating businesses. Amid the challenges of 2020, our team has been remarkable in
    supporting the delivery of these strategic objectives with unwavering focus.
    “We have a clear growth plan for 2021, which includes more mobile apps for our small business client base,
    and cloud modules for our APS and Elite Accountant client base, whilst leveraging the power of Reckon One
    to enhance the back office and payroll function for Accounting firms and small businesses alike. This strategy
    compliments our US cloud Practice Management roadmap and provides strong synergies and cross sell
    opportunities across our global business. 2021 promises to be another exciting year of progression and growth
    for the Reckon Group, our clients, our shareholders, and our team.”
    ReckonDocs sale to Class Ltd
    Reckon is also pleased to announce that today we executed an agreement with Class Ltd to sell the assets of
    our ReckonDocs business.
    The purchase consideration is $13 million dollars.
    Please refer to the full announcement regarding this transaction released today.
    Segment performance
    Business Group
    • The Business Group continued to deliver year-on-year revenue growth of 7% from $36m to $39mhighlighting three consecutive halves of growth
    • EBITDA growth for the segment was $20m and a 13% increase was achieved as a result
    • Cloud revenue continued to grow strongly, up by 29%, and now represents 56% of this division’s
    available revenue
    • Cloud users now total 101,000, with growth of 26,000 in 2020
    • Our new free Single Touch Payroll app was launched in May 2019, and now has 37,000 users, with
    over 80,000 pay runs processed via the app
    • A paid payroll app was launched as a potential upgrade path for the free Single Touch Payroll app users
    in May 2020, and has accumulated 2000 users since launch.
    • The cloud/mobile strategy continues into 2021 with further mobile apps planned for launch this year
    including invoicing, expenses, and timesheets.
    • Our partnership with the Institute of Public Accountants (IPA) to drive subscriptions through our white
    label agreement continues to grow - we now have over 1,200 IPA member firms as cloud advisors with
    growing Books + client base
    • We launched a second white label initiative with the QLD Government supporting indigenous businesses.
    The product is Deadly Digits, offering Accounting and Payroll software with training and support, designed
    specifically for Indigenous businesses.
    • We completed our UK Open Banking certification to support our product expansion opportunities in the
    UK.
    Practice Management – Accountants Group
    • The business remains entrenched as the product of choice amongst the major accounting firms.
    • Revenue in the Accountants Group was down on the previous year as new revenue growth is yet to
    offset client attrition that is occurring at expected levels.
    • Revenue was also impacted by COVID-19, which also led to a reduced level of on-site sales and
    installation activity.
    • Cost management strategy supported a moderate improvement in EBITDA of 2%.
    • Development of our new cloud suite is progressing well, with additional Cloud Practice Management
    modules released during 2020.
    • 2021 will see additional cloud modules released which is expected to expand the addressable market.
    Practice Management – Legal Group
    • The Legal Group is predominantly based in the USA and UK and consequently was impacted by COVID19 in 2020. The business maintains a strong sales pipeline, however the ability to convert this to new
    revenue was hampered by delayed client decisions due to COVID-19.
    • Subscription revenue from existing customers was stable.
    • EBITDA was down on the prior year due to lower new revenue generated in 2020 and as a result of
    increased doubtful debt provisioning.
    • Future potential growth in this division was significantly strengthened following the announcement
    in August of the intended merger with Zebraworks. This deal has now concluded and the team is
    focussed on delivering cloud practice management technology to the legal market.

    courtesy of Bell Direct
    =============================================================================================

    DYOR

    i hold RKN

    *** • EBITDA was down on the prior year due to lower new revenue generated in 2020 and as a result of
    increased doubtful debt provisioning. ***

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  3. 83.9k
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    Sale of Accountants Practice Management Group Completed
    Reckon Limited (“Reckon” or the “Company”) (ASX: RKN) is pleased to advise that it has completed the sale
    of the Accountants Practice Management Group to Access Software Australia Pty Ltd, Access Workspace NZ
    Limited and Access UK Ltd (“Access Group”) in an all-cash transaction valued at $100 million (the
    “Transaction”) (refer ASX announcements: 20 May 2022, 14 June 2022, and 20 June 2022).
    Reckon will continue working with the Access Group under a temporary transitional services agreement to
    ensure an efficient and successful handover for all assets, staff, clients, and employees.
    The Company intends to deliver the majority of proceeds from the Transaction to shareholders via a partially
    franked special dividend. Additional details of the proposed special dividend will be released as Reckon
    finalises the completion accounts, determines taxes payable, and completes other aspects associated with the
    Transaction. Additional funds from the Transaction will be used to repay a portion of debt, which will
    considerably strengthen the Company’s balance sheet.
    Reckon now has two operating divisions: The Business Group, which provides accounting and payroll software
    for small to large sized business and personal wealth solutions, and the Legal Practice Management Group
    that focuses on practice management and workflow solutions to law firms predominantly in the USA and United
    Kingdom, with re-sellers in other parts of the world.
    Both divisions will benefit from Reckon’s ongoing investment in product development and the introduction of
    new, unique cloud-based offerings to underpin growth in customer numbers, and ensure continued high
    retention rates are maintained.
    Reckon’s half year results will be released on Tuesday 9 August 2022, where the company will provide a
    trading update as well as share key strategic goals for the continuing business.
    Reckon Group CEO, Mr Sam Allert said:
    “Reckon is now well placed and very well funded to focus on and continue investing in its two core operating
    divisions. The Business and Legal Groups represented circa 70% of Reckon’s revenue and approximately
    60% of the Company’s EBITDA prior to the transaction and have considerable scope to grow.”
    “Now that the transaction has completed, Reckon will prepare the completion accounts and finalise taxes
    payable, allowing the Board to provide details of the proposed special dividend.”
    “We look forward to releasing our half year results next week, and talking about our exciting and focused
    future.”
    AUTHORISED FOR RELEASE BY THE BOARD OF DIRECTORS OF RECKON LIMITED

    courtesy of Bell Direct
    =============================================================================================

    DYOR

    i hold RKN

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