Annual Report
2022
Reckon Limited Annual Report
For the Financial Year Ended 31 December 2022
ABN 14 003 348 730
Contents
Message to Shareholders from the Chairman and Group CEO
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Independent Auditor’s Report
Directors’ Declaration
Consolidated Statement of Profit or Loss
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Additional Information as at 17 February 2023
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3
Message from the Chairman
It is my pleasure to present to you Reckon Limited’s Annual Report for the year ended 31 December 2022 (FY2022)
– a year in which the Company consolidated its standing as a top tier ASX-listed technology company.
Reckon’s operations during the year were highlighted by the $100m all-cash sale of the Accountant Group division,
with prudent capital management of the sale proceeds and strong execution on the group’s cloud-based growth
strategy for its continuing operations.
The sale of the assets used by the Accountants Practice Management Group marked a validation of the Company’s
ability to build software assets and generate strong returns for shareholders over the long term. In proceeding with
the sale, the Board and management team determined that the $100m price offered by The Access Group
represented good value relative to Reckon’s market capitalisation, which was further reflected in the all-cash structure
of the deal.
Upon receipt of funds, the Reckon Board prioritised the payment of a $0.57 special dividend to shareholders and its
ongoing commitment to capital management, with a further 81% reduction in net debt to $2.8m as at 31 December
2022.
Pleasingly, those initiatives were accompanied by continued and targeted R&D investment towards the growth of
Reckon’s cloud-based product strategy for its two remaining operating divisions – the Business Group and the Legal
Practice Management Group.
Through its quality cloud-based solutions that provide accounting and payroll solutions for SMEs, the Reckon
Business Group has established a strong foothold in the Australasian market where it has over 117,000 cloud users
and 400,000 employees now being paid through Reckon software.
With targeted R&D investment, Reckon’s strategy heading into FY2023 is to leverage the Business Group’s market
position by accelerating organic growth through an expanded product offering. Strategically, the Business division
also provides steady cash flow generation to complement Reckon’s high-growth ambitions in the US legal services
market.
The Legal division provides Practice Management and Workflow solutions for legal services firms, and during FY2022
it strengthened its early traction in the lucrative US legal industry. With five of the world’s top legal firm’s deploying
Reckon’s platform in the US market, the Legal division presents an exciting growth profile for FY2023.
Along with business development opportunities, the company’s US team is focused on the next round of integrated
product solution rollouts that are expected to underpin revenue and margin growth over the next 12 months.
Following a transformational year for the business, Reckon is now positioned with streamlined operations across its
two core operating divisions, backed by the balance sheet strength to underpin R&D investments and capitalise on
growth opportunities.
As announced in December 2022, I have elected to transition from the Chairman position after four and a half years
in the role. In turn, I am pleased to hand over the reins to Clive Rabie, who assumed the Chairmanship effective from
1 January 2023. This marks an orderly transition in line with the Board’s governance practices, and Mr Rabie is the
ideal candidate in my view to lead the Company’s next growth phase for its continuing operations.
My involvement with Reckon now dates back over 30 years, and I would like to take this opportunity to again thank
the company’s management team, led by CEO Sam Allert, our committed staff, partners, customer base and
shareholders for their ongoing support – all of whom have contributed to growing Reckon into the established ASX
tech company that it is today.
Greg Wilkinson
Chairman (until 31 December 2022)
4
Message from the Group CEO
While FY2022 marked a particularly exciting year for the Company and its shareholders, the Reckon management
team remains focused on a targeted growth strategy to build market share and drive revenue and margin growth
from continuing operations.
Operationally, the successful $100m all-cash sale of the Accountants Practice Management Group leaves Reckon
uniquely placed with the balance sheet strength and R&D budget to further capitalise on the established market
footprint for the Business Group and the Legal Group.
During the period, Reckon achieved another period of steady growth through its Business Group, with a 7% increase
in cloud subscription revenues to $23m, and a 3.2% increase in EBITDA to $21m on revenues of $40.8m (+2.5% on
the previous corresponding period).
The results marked a consolidation of the strong growth achieved by the Business Group in recent years – a result
of the Company’s dedicated pursuit of cloud-based user growth which continues to underpin the positive revenue
outlook. During FY2022, Reckon expanded capacity for the Business Group across cloud and mobile payroll
solutions, with ongoing user growth supported by a successful integration with the Novatti platform which is already
facilitating faster payments with cheaper transaction costs.
The Company made equally strong progress in its Legal Group, where our management team and dedicated staff
implemented a number of operational rollouts to complement the group’s exciting growth outlook in the US market.
Investments across the Legal Group’s cloud-based software services offering included a major integration project to
merge client Outlook programs to the core platform and the launch of new cloud modules, BillingQ and DataQ.
During FY2022, the Legal Group reported subscription revenues of $9.2m, up 5.5% annually, and the platform is now
finding traction with a major market opportunity in the lucrative US legal market to transition client law firms to cloud-
based practice management software from traditional desktop platforms.
Already, Reckon’s product offering is serving five of the world’s largest US-based law firms, and management is
targeting further growth in a total addressable market opportunity estimated at more than US$2bn.
While Reckon reported steady annual revenue growth across its continuing operations, the Company also expects
to benefit from the R&D investments and operational improvements that were implemented during the period, aided
by the flagship $100m all-cash sale of the Accountants Practice Management Group.
With minimal debt, an established market position and plenty of upside opportunity across its product categories
and respective market jurisdictions, I am excited to lead the Reckon management team in the execution of our
strategy to build step-change growth with leading cloud-based, subscription revenue products.
I would like to join the Chairman in thanking Reckon’s global workforce for their hard work, our partners, customers
and shareholders for their ongoing support, and look forward to providing more updates on our operational
development strategy over the next 12 months.
Sam Allert
Group CEO
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Directors’ Report
The Directors of Reckon Limited submit these financial statements for
the financial year ended 31 December 2022
Clive Rabie, Chairman
Group Chief Executive Officer until 30 June 2018, Group Managing Director from 1 July 2018, Non-Executive Director
from 1 May 2022, Chairman from 1 January 2023
Clive was Chief Operating Officer of Reckon from 2001 until February 2006 and in that time played a pivotal role in
its turn-around. In February 2006 Clive was appointed to the position of Group Chief Executive Officer and was
appointed Group MD on 1 July 2018. He has extensive management and operational experience in the IT and retail
sectors as both an owner and director of companies. Clive is also a director of GetBusy PLC.
Greg Wilkinson, Non-Executive Director
Independent Non-Executive Deputy Chairman until 30 June 2018, Chairman from 1 July 2018, Non-Executive
Director from 1 January 2023
Greg Wilkinson has over 30 years’ experience in the computer software industry. Greg entered the industry in the
early 1980s in London where he managed Caxton Software, which became one of the UK’s leading software
publishers. Greg co-founded Reckon in 1987 and was the Chief Executive Officer until February 2006. He was
appointed to the position of Deputy Chairman in February 2006 and became a member of the board of the listed
entity on 19 July 1999. He was appointed to the Audit & Risk Committee in February 2010 and Remuneration
Committee in December 2011. He is also an investor and mentor to a number of cloud-based start-up companies.
Greg was appointed Chairman on 1 July 2018.
Philip Hayman, Non-Executive Director
Independent Non-Executive Director from 1 July 2018
Phil Hayman was appointed to the board on 1 July 2018. He was a co-founder of Reckon in 1987. He resigned from
Reckon in 2004 but has maintained his interest in Reckon through his ongoing shareholding. Phil has had varied
general entrepreneurial and commercial experience through his investments in companies in start-up and first round
capital raising phases. Phil is presently a director of an unlisted public company with manufacturing interests in China
and sales in Australia and New Zealand. He also consults to an agricultural company with extensive holdings in
southern NSW. He currently owns and manages an accommodation company.
Samuel Allert, Executive Director
Group Chief Executive Officer and Director from 1 July 2018
Sam Allert was appointed as a director on 1 July 2018. Sam was one of the first employees in the Australian Reckon
APS business in 1999. He has held numerous roles in that business from National Sales Manager, Managing Director
AU/NZ, eventually becoming CEO of Reckon APS in 2013. Taking on more responsibility Sam got involved with the
Business Division in a newly formed position of MD AU/NZ for the Reckon Group in 2015. In July 2018 Sam stepped
into the Group Chief Executive Officer position and was appointed to the board on 1 July 2018.
Myron Zlotnick LLM, GCertAppFin, MAICD
Company Secretary
Myron Zlotnick has over 20 years experience as a legal practitioner, general and corporate counsel, and as a director
of companies in the information, communications and technology sector.
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Directors’ Report (continued)
Review of Operations and Statement of Principal Activities
At the commencement of the year reported the Company was structured in three Groups, a Business Group, a Legal
Practice Management Group, and an Accountant Practice Management Group.
The focus has been to grow each Group independently, and where possible implement integrations, seek out
opportunities to cross sell, and to explore synergies across the Groups. From an internal operations point of view, within
Australia and New Zealand, the Accountant Practice Management Group and Business Group had centralised Sales,
Support, Marketing, and Client Success teams to manage the across-Group opportunities more efficiently.
The Business Group provides accounting and payroll software for small to larger sized businesses and personal wealth
management software branded as Reckon One and Reckon Accounts Hosted (cloud products), Reckon Accounts
Business and Reckon Accounts Personal respectively. The divisions operate predominantly in Australia and New Zealand.
The Legal Practice Management Group provides practice management and workflow solutions to legal firms and
corporations for document scanning and routing, print management and cost recovery solutions under the
nQZebraworks brand. With a focus on releasing a new cloud practice management suite. It is operational predominantly
in the USA and United Kingdom, with re-sellers in other parts of the world.
The Accountant Practice Management Group undertook the development, sales and support of practice management,
compliance and efficiency tools for professional accounting firms under the Reckon APS and Reckon Elite brands. It is
operational predominantly in Australia, New Zealand with a re-seller presence in the United Kingdom.
Effective 1 August 2022, the assets comprising the Accountant Practice Management group were sold to a buyer group
comprising entities in the Access Group, namely Access Software Australia Pty Limited, Access Workspace NZ Limited,
and Access UK Ltd. This was an all cash sale for $100 million.
Accordingly from 1 August 2022, the Company’s operational structure is only comprised of the Business Group and
the Legal Group.
This report still sets out the relevant information for all three Groups.
All Groups are supported by shared services teams which include IT, finance, marketing, and human resources.
All the Groups have a loyal client base that run products and solutions based on desktop technology with very rich
functions and features. Reckon has been on a transformation process developing or enhancing all products with a
“cloud first” focus. The process is to provide an upgrade path for existing clients to the cloud, as well as providing new
products that can attract and grow a new client base. The Business Group is furthest progressed on this strategy with
the Accountant Practice Management Group and the Legal Practice Management Group also well poised for growth
in the future.
Business Group
The Business Group distributes and supports a range of software products under the Reckon brand. These products
are generally used by small to larger businesses in Australia and New Zealand and, until recently, in the United
Kingdom. The Company is no longer pursuing Business Group activities in the United Kingdom.
The key product brands sold in this Group are: Reckon Accounts, Reckon Accounts Hosted, Reckon One, Better
Clinics, and Better HQ.
Reckon Accounts and Reckon Accounts hosted represent desktop and hosted cloud based solutions for small to
larger sized and enterprise businesses for accounting and bookkeeping, invoicing, payroll, GST/BAS reporting,
financial reporting, timesheets, and bank data feeds.
Reckon Accounts Hosted is hosted in an AWS environment.
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Directors’ Report (continued)
Specifically, Reckon BankData, is a bank feed solution which allows connections with banks and other financial
institutions to download bank transaction information directly into accounting software; and Reckon GovConnect, is
an SBR-enabled solution for lodging reports to government agencies such as the ATO.
While many of these functions reside within Reckon Accounts and Reckon Accounts Hosted, the Company also
sells standalone solutions for payroll, invoicing, point of sale, scheduling and point of sale solutions for allied health
professionals (branded as Better Clinics and BetterHQ), as well as personal finance software known as Reckon
Accounts Personal.
A key focus in the Business Group is to grow the Reckon One cloud-based business accounting software.
Reckon One cloud-based accounting software is based on a “designed by you” concept that allows users to tailor
the solution to their needs by choosing modules their business will use. The current modules available are: Core
(which includes payments and receipts, budgets and reporting); Invoices; Payroll; BankData (automatic bank
statement import into accounts and reconciliation); Projects (manage revenue, costs and forecasts by project); Time
(timesheets); and Employee Expenses (expense management module); and an open API for third party applications.
Users can select which modules they need and only pay for those they use, making Reckon One a very cost-effective
solution for small businesses.
The Payroll module in Reckon One includes the ability for small businesses to lodge their Single Touch Payroll
reporting requirements, which is part of an overall strategy to integrate small business accounting with regulatory
reporting under the Reckon GovConnect product brand.
Reckon One has also been made available as a “white label” version. This included relationships with The Institute of
Public Accountants and the Queensland government bringing Reckon One to Indigenous communities branded as
Deadly Digits. These initiatives in some instances have since been replaced with alternative strategies to better
pursue the potential growth presented by these markets.
The company also has a large focus on adding new mobile based applications that compliment and integrate with
the Reckon One cloud accounting modules. A free Single Touch Payroll reporting application was the first of these
new mobile apps released in 2019.
In 2021 the company added a new mobile Payroll App, which is an ideal upgrade path from the free STP as it
provides a complete feature rich payroll solution on the mobile. Reckon Mate, a new employee facing mobile app
released at the end of 2020 compliments Reckon One Payroll and the Company’s mobile strategy.
The Company is also working on new mobile apps including the recently launched Mobile Invoicing. Timesheets and
Expenses are expected to be released in the future.
The Company continues to explore strategic partnerships with suppliers who can meet the feature demands of small
business for their diverse needs.
Since 2017 the Company has partnered with Prospa in the “Fintech“ space to bring small business loans to its
customer base under the Reckon Loans brand.
In early 2022, the Company agreed terms with Novatti for the introduction of payment solutions for small business
customers.
The Company also partnered with Ozedi to implement eInvoicing solutions for small business customers.
Legal Practice Management Group
Since February 2021 the Company merged its Legal Practice Management Group with the business of Zebraworks
Inc (USA) into a 70/30 venture known as nQueue Zebraworks Inc. The team from Zebraworks Inc brings a history and
pedigree of success in the development of practice management solutions for Legal Practices. The merged business
presents a platform for new cloud technology development and new markets.
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The Legal Practice Management Group, supplies software solutions for document scanning and routing, print
management and cost recovery solutions that assist law firms clients. The present focus of the Legal Practice
Management Group is the release of a new cloud practice management suite.
These solutions enhance the automation and processing of any operational and administrative expenses, including
print, copy, scan, telephone, online searches, emails, court fees, car services, credit card charges, courier costs and
more. The scan solution also presents an opportunity to expand to non-legal client markets.
These solutions can be embedded directly into multi-function devices or reside on tablet computers or terminals to
provide clients with the knowledge required to run their businesses more profitably. Cloud Practice management
modules introduced to the suite of products in 2021 include Billing Q and Data Q.
Key focus of this Group is to reposition itself from a cost recovery provider to become a workflow expert in the areas
of Print Management, Uniform Advanced Scanning and Cost Recovery and building a cloud based Practice
Management suite. It is also pursuing a wider channel sales network including manufacturers of multi-purpose office
machines.
Accountant Practice Management Group
As noted above, the assets comprising this Group were divested effective 1 August 2022. The reporting below
reflects the operations and activities to that date.
The Accountant Practice Management Group develops, distributes and supports the APS suite of solutions for
professional service firms in Australia, New Zealand and, via a reseller arrangement, in the United Kingdom. For
professional accountants these solutions include Practice Management, Tax and Accounts production. It also
delivers a wide range of complementary integrated modules for business-critical functions in professional firms:
Practice Management (PM); Business Intelligence and Reporting (PIQ); Taxation (Tax); Client Accounting (XPA); Client
Relationship Management (CRM); Workpaper Management (WM); Sync Direct and others.
All the above modules were available in a hosted version called APS Private Cloud, if a client so requires. This
platform has been moved to a more efficient solution using a new supplier and is now called APS Accountants’
Workspace.
Consistent with the Group-wide philosophy, the Accountant Practice Management Group enhances products and
develops new products under the “cloud first” concept. These products can and will integrate with existing Accountant
Practice Management Group solutions and also provide an entirely new cloud-based suite that new clients can take on.
Cloud products include: Workflow and Contacts. Timesheets, Fees and Accounting are under development. From a
branding point of view these cloud products are marketed as APS+, Workflow+, Contacts+, etc.
The BankData product (powered by Reckon One Bank Data technology) is also targeted at accountants and
bookkeepers. The module enables accountants and bookkeepers to efficiently download and process bank
transactions and provide reporting and analysis to their clients. This is also undergoing an integration with Open
Banking.
Sync Direct is a cloud-based system that allows accountants to upload financial transaction data from virtually any
source and automatically enter it into their practice management system for accounts and tax return preparation
purposes. It is an extremely beneficial tool for professional accounting firms as it creates a “single ledger” experience
for them without being required to use the same software as their clients.
The Reckon Elite product suite includes tax return preparation tools, practice management tools and related solutions
mostly used by accountants and tax agents. Reckon Elite is predominantly used in small to medium sized accounting
firms compared to Reckon APS which is predominantly used by larger firms. Reckon Elite is also available in a hosted
cloud based version called Elite Workspaces.
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Directors’ Report (continued)
Results of Operations
Results Headlines (IFRS and non-IFRS)
Continuing operations
2022
2021
Restated
%Growth
Revenue
EBITDA
Net profit
$51.2 million
$49.5 million
+3.5%
$18.0 million
$17.3 million
+4.0%
$3.6 million
$5.6 million
-36.4%
Net profit attributable to members
$4.6 million
$6.2 million
-27.2%
Discontinued operations
2022*
7 months
2021
12 months
%Growth*
Revenue
EBITDA**
Net profit**
$13.5 million
$22.6 million
-40.3%
$74.9 million
$12.2 million
+514.0%
$53.2 million
$3.6 million
+1392.6%
Net profit attributable to members**
$53.2 million
$3.6 million
+1392.6%
*The Practice Management Accountant Group business was sold effective 1 August 2022, hence 2022 represents 7
months trading compared to 12 months in 2021.
**2022 results include the gain on sale of the Practice Management Accountant Group of $67.2 million ($50.5 million after
tax)
Revenue on a non-IFRS basis normalised for continuing businesses (at constant currency) is up 2% on the prior
corresponding period.
$47 million of the $51 million revenue is annual recurring revenue, up 5% over the prior corresponding period. Annual
recurring revenue represents 91% of total revenue. This is 2% up on the prior corresponding period.
EBITDA on a non-IFRS basis normalised for continuing businesses (at constant currency) is up 5% on the prior
corresponding period.
NPAT normalised for continuing operations down 1% on the prior corresponding period.
Debt has been reduced from $14.7 million to $2.8 million, largely funded by the proceeds of the Sale of the assets
comprising the business known as the Accountant Practice Management Group.
On 21 November 2022, the Company paid a 60% franked special dividend of 57 cents per share, from the proceeds
of the consideration for the sale of the Accountant Practice Management Group. On 23 September 2022, the
Company paid a dividend of 3 cents per share taking the total dividend to 60 cents per share in respect of the 2022
year (2021: 5 cents).
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Cash spend on development (on a non-IFRS normalised basis) continues to focus on cloud products across the
groups. Development spend in 2022 was $15.3 million in continuing operations compared with 2021 development
spend of $12.7 million.
Cashflow before development spend from continuing operations is $19.9 million.
Business Group
•
•
•
•
The Business Group continues to be a subscription business focused on online growth. Total revenue growth in
this Group is up 3% on 2021. This represents 4 consecutive years of growth.
Subscription revenue now represents 99% (2021: 97%) of available revenue in this Group.
Cloud subscription revenue (from Reckon One and Reckon Accounts Hosted) has continued to grow strongly,
up by 7% on 2021 and now represents 61% (2021: 59%) of this Group’s available revenue. The number of cloud
users has reached 117,000 users up 3% on 2021 (2021: 114,000).
The free Payroll app for Single Touch Payroll is being discontinued. The new paid Payroll app now provides an
ideal upgrade path for these users The total number of employees paid via Reckon payroll solutions in Australia
stands at 400,000.
• New cloud products for the Business Group released in 2022 include Reckon Invoicing app.
•
The Company set up an arrangement with Novatti to explore enhanced payment services for small businesses
to be integrated with Reckon products. The Company also entered into an agreement with Ozedi to provide
eInvoicing solutions to Reckon customers.
Legal Practice Management Group
•
•
•
This Group continues to pursue a process of driving subscription revenue rather than upfront revenue.
Subscription revenue grew 6% for the year (2021: 1%) on a constant currency basis.
Subscription revenue is 89% of the Group’s revenue (2021: 86%).
Billing Q and Data Q were released in 2022. Billing Q is a cloud based module that integrates with on premises
practice management systems for more efficient debtor/collections management. DataQ is a cloud business
intelligence reporting tool used with on premises practice management systems for better practice reporting
and insights.
•
The USA market continues to represent growth opportunities for cloud based products especially in the longer
term with a very large addressable market still using desktop solutions.
Accountant Practice Management Group
• The business remained entrenched as the product of choice amongst the major accounting firms.
• Revenue in the Accountant Practice Management Group was down on the previous year. This is because of the
sale of the business effective 1 August 2022. Hence only 7 trading months are accounted for. FY22 trading revenue
for 7 months was $13.5 million compared to FY21 for 12 months which was $22.6 million.
The sale of this business to the Access Group (Access Software Australia Pty Limited, Access Workspace NZ
Limited, and Access UK Ltd) for a consideration of $100 million dollars is reflective of the value created in the
business while it was part of the Reckon Group and why it represented an attractive commercial and strategic target
for the purchaser.
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Directors’ Report (continued)
COVID-19 Impact
Operationally, the Company continued to manage the impact of COVID 19 smoothly so far as working from home
was concerned as well as in terms of overall management of the business and its systems.
The infrastructure and business interruption processes were well designed to deal with these sorts of situations, and
continue to do so.
The Company has displayed its resilience, by posting solid and stable results in challenging times for its customer
base of small businesses and professional firms. As stated above there were performance impacts for the Legal
Group.
That said, the operations of the Company as a whole have not been adversely impacted by COVID 19. The financial
position of the Company has not been materially adversely affected by COVID 19.
At present, COVID 19 does not materially adversely impact the Company’s prospects for future financial years. No
impairment is considered necessary.
While it appears the world is learning to live with COVID 19, the impact of the COVID-19 pandemic is ongoing. It is
not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is fluid and
is dependent on measures imposed by the Australian Government and other countries, such as vaccination
requirements, renewed travel restrictions and any economic stimulus that may be provided.
Climate and Sustainability
The nature of the Company’s operations on the face of it have low impacts on climate and sustainability. However,
the board is mindful of the potential impact of climate change on economies at a macro level.
The board plans to understand and begin to assess existing and emerging risks that may be applicable to the
company’s business, including both physical and transitional climate risk. At present the board is comfortable there
are none.
Significant Changes in State of Affairs
Effective on 1 August 2022, the Company reached agreement with Access Software Australia Pty Limited, Access
Workspace NZ Limited, and Access UK Ltd to sell the assets comprising the Accountant Practice Management
Group to the Access Group.
The purchase consideration was $100 million dollars.
Funds received were used to pay a special dividend of $0.57 per share to shareholders, to reduce Reckon’s debt,
to $2.8 million.
The Accountant Practice Management Group contributed revenue of $13.5 million, and EBITDA of $7.7 million to the
2022 Reckon Group results for 7 months in 2022.
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Future Developments, Business Strategies and Prospects
for Future Financial Years
Following on from the sale of the Accountant Practice Management Group, the Company is well positioned to direct
focus on its remaining two businesses.
The Company’s overall strategy conceptually remains to pursue creating a suite of solutions that deliver business
efficiency tools for small to medium sized businesses – an ecosystem for business, together with practice efficiency
tools for professional legal firms. The goal is to ultimately make it easy for small businesses to operate and perform,
and for accountants, bookkeepers and legal firms to collaborate with their clients and ensure their compliance
obligations are met.
Key to understanding the Company’s strategy over the next 2 to 3 years is to appreciate the following, generally:
•
•
there are untapped opportunities in targeted and niche products that complement and diversify the traditional
efficiency software offered to businesses and professional firms.
investment will also be focused on maintaining, refining and improving existing assets and acquiring or developing
solutions to complement or differentiate our offerings, especially in the cloud.
•
the businesses have a stable and loyal customer base.
Specifically, for 2023 and beyond in the Business Group the intention is to pursue cloud growth across the small
business accounting and payroll market.
Development initiatives will be focused on fresh development of upgraded standalone versions of several of the
Company’s products, such as Payroll and Invoicing, and also to allow these new versions to integrate with the core
functionality of flagship products such as Reckon One, Reckon Accounts and Reckon Accounts Hosted.
Special focus will be devoted to upgrades and expansion of Payroll solutions as well as migrating free product users
to paid users of upgraded versions.
Price increases will also be considered to supplement organic growth.
Similar focus will be devoted to upgraded Invoicing solutions.
The Company continues to pursue opportunities to deploy various Fintech solutions through the customer base.
This will generally be done via partnerships with payment solutions providers, and the like.
For the Legal Practice Management Group the aim is also to pursue growth with NQ scanning and print management
solutions as well as with new cloud modules Billing Q and Data Q that compliment desktop competitor products that
create new sales opportunities.
The Company continues to assess appropriate corporate transactions.
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Remuneration Report (Audited)
1. Persons Covered by this Report
The Remuneration Report sets out, in accordance with section 300A of the Corporations Act: (i) the Company’s
governance relating to remuneration, (ii) the policy for determining the nature and amount or value of remuneration of
key management personnel; (iii) the various components or framework of that remuneration; (iv) the prescribed
details relating to the amount or value paid to key management personnel, as well as a description of any performance
conditions; (v) the relationship between the policy and the performance of the Company.
Key management personnel (KMP) are the non-executive directors, the executive directors and employees who have
authority and responsibility for planning, directing and controlling the activities of the consolidated entity. On that
basis, the following roles/individuals are addressed in this report:
Non-executive Directors
• Mr Clive Rabie
• Chief Operating Officer from 1 January 2001
•
Executive Director since 24 May 2005
• Group Chief Executive Officer from 22 February 2006
• Group Managing Director since 1 July 2018
• Chairman from 1 January 2023
• Mr Greg Wilkinson, director since 19 July 1999
• Deputy Chairman since 1 February 2006
• Chairman of the Board since 1 July 2018
• Risk and Audit Committee member since 1 February 2010
• Remuneration Committee chair since 1 January 2023
• Non-executive director from 1 January 2023
• Mr Philip Hayman, independent non-executive director since 1 July 2018
• Risk and Audit Committee Chairman since 1 July 2018
• Remuneration chair until 31 December 2022
Senior Executives Classified as KMP
• Mr Sam Allert
•
Executive Director since 1 July 2018
• Group Chief Executive Officer since 1 July 2018
• Mr Chris Hagglund
• Group Chief Financial Officer (CFO) since 1 October 2004
• Mr Myron Zlotnick
• General Counsel from 1 October 2002 until 2 July 2018
• Company Secretary since 19 November 2002
• Corporate Counsel from 22 February 2021
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2. Context of KMP Remuneration
The Remuneration Committee and the board exercise their powers mindful of the various governance demands that
impact on remuneration decisions and the interests of shareholders. At the 2022 Annual General Meeting there was
a vote of approval of 99.42% for remuneration practices. The board continues to endeavour to balance the
idiosyncrasies of the Company and its unique demands with generally accepted governance practices for
remuneration.
On the whole the contents of the report are substantially similar to prior years. At the time of writing this report and
as was the case in 2021, the board has been in the process of trying to set new incentive plans to meet the strategic
imperatives of the Company. It is hoped that at the Annual General Meeting of the Company in May 2023 shareholder
approval will be obtained for new incentive plans finally developed as a result of this process.
As announced during 2021 and 2022 there was corporate activity underway that impacted the overall business and
the board was reluctant to implement new incentive plans mindful that any performance targets set would potentially
be unsuitable for the business after the impact of corporate activity.
3. Overview of Reckon’s Remuneration Governance Framework
& Strategy
The Company is influenced in the governance of KMP remuneration by a wide range of sources, including:
• Remuneration Committee Members,
• External remuneration consultants (ERCs), (Professional Financial Solutions Pty Ltd)
• Stakeholder groups including shareholders and proxy advisors, and
• Company management to understand roles and issues facing the Company.
The following outlines Reckon’s remuneration governance framework.
3.1 Remuneration Committee
Authority for remuneration matters rests with the Remuneration Committee which reports to the board and makes
recommendations regarding remuneration to the board which has ultimate responsibility for signing off on
remuneration policies, practices and outcomes.
The Remuneration Committee in 2022 was comprised of two non-executive directors:
•
•
Mr Philip Hayman (independent non-executive director)
Mr Greg Wilkinson (independent, Chairman of the Board until 31 December 2022).
The Remuneration Committee operated substantially in accordance with the aims and aspirations of Principle 8 of
the ASX Corporate Governance Principles and Recommendations (“ASX Principles and Recommendations”),
including that the majority of the committee should be composed of independent non-executive directors.
The role and responsibilities of the committee are outlined in the Reckon Remuneration Committee Charter (the
Charter), available on the Company Website. The role of the Remuneration Committee is to ensure that appropriate
remuneration policies are in place which are designed to meet the needs of the Company and to enhance corporate
and individual performance. That is, the development, maintenance and application of the Remuneration Governance
Framework for the purposes of making recommendations to the Board regarding KMP remuneration matters, as well
as advising the Board on procedures that must be undertaken in relation to the governance of remuneration, and
communicating such matters to the market (such as the calculation of grants of incentives, review of performance
conditions and receipt of independent advice, etc.).
15
Remuneration Report (Audited) (continued)
Under the Charter, the Remuneration Committee is to be composed of at least three non-executive members with
the majority being independent directors. It should be noted that given the size of the Company and the board, the
Remuneration Committee presently is comprised of only two members. Consideration will be given when relevant
decisions need to be made to appointing a third independent member.
The charter of the Remuneration Committee is available on the company’s website at https://www.reckon.com/au/
investors/governance/.
3.2 Trading Policy
The Trading Policy of the Company is available on the Company website. It contains the customary references to
insider trading restrictions that are a legal requirement under the Corporations Act, as well as conditions associated
with good corporate governance. To this end the policy specifies trading blackout periods during which officers of
the Company may not trade in the securities of the Company. Officers must seek permission from the Chairman of
the Company before trading in any periods outside blackout periods. The Trading Policy also requires officers to
notify the Company Secretary of the transaction once it is completed and prohibits trading at all other times unless
an exception provided by the Chairman following an assessment of the circumstances (e.g. financial hardship).
Trading black outs operate in the period commencing one day before the end of a financial reporting period and end
one day after the reporting for the relevant financial period has been announced to the public.
Officers generally includes directors and Senior Executives of the Company.
The policy also restricts employees from short-term trading or from hedging etc. and gives the Board the power to
suspend all dealing in Company securities by employees at any time, should it be appropriate.
3.3 Executive Remuneration Policy
The following outlines the policy that applies to executive KMP (and does not apply to non-executive directors):
•
Remuneration should be composed of:
•
•
•
Base Package (inclusive of superannuation, allowances, benefits and any applicable fringe benefits tax
(FBT) as well as any salary sacrifice arrangements)
Short term incentive (STI) which provides a reward for performance against annual objectives
Long term incentive (LTI) which provides an equity-based reward for performance against indicators of
shareholder benefit or value creation, over a minimum three-year or longer period
•
In total the sum of the elements will constitute a total remuneration package (TRP)
•
Both internal relativities and external market factors should be considered
• TRPs ought to be structured with reference to market practices and the circumstances of the Company at the time
That the Base Package policy mid-points should be set with reference to P50 (the median or the middle) of the
relevant market practice subject to the circumstances of the Company at the time
That TRPs at Target (being the Base Package plus incentive awards intended to be paid for targeted levels of
performance) should be set between P50 and P75 (the upper quartile, the point at which 75% of the sample lies
below) of the relevant market practice so as to create a strong incentive to achieve targeted objectives in both
the short and long term
Remuneration will be managed within a range so as to allow for the recognition of individual differences such as
the calibre of the incumbent and the competency with which they fulfil a role (a range of +/- 20% is used, in line
with common market practices)
Exceptions will be managed separately such as when particular talent needs to be retained or there are
individuals with unique expertise that need to be acquired (“Red circle” exceptions) and
•
•
•
•
16
• Termination benefits will generally be limited to the default amount that may be provided for without shareholder
approval, as allowed for under the Corporations Act.
Taking account of the above, generally, remuneration structures are driven by the budget setting process and cost
to company as well as the particular circumstances of the relevant KMP, their skill set, experience, and value to the
Company.
Market capitalisation is one of the factors that influences external assessments of the appropriateness of remuneration;
it is understood that external groups tend to see it as the primary indication of the size and status of the Company,
and the field in which the Company is competing for talent. While Reckon does not subscribe to this view exclusively
and instead considers a broad range of factors that drive competition for talent in different parts of the Company, it
is acknowledged that it must be a consideration when communicating with stakeholders.
The Company will also take into account the impact of corporate transactions on incentives designed to retain talent
for the longer term.
3.4 Non-executive Director Remuneration Policy
The Non-executive Director Remuneration Policy applies to non-executive directors (NEDs) of the Company in their
capacity as directors and as members of committees, and may be summarised as follows:
•
Remuneration may be composed of:
•
•
•
Board fees inclusive of superannuation
Other benefits (if appropriate) and
Equity (if appropriate at the time, currently not applicable)
•
•
•
•
Committee fees do not form part of the NED remuneration policy because at present the workload of the Board
is shared equitably amongst its members
Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the
Company – currently $400,000 in accordance with shareholder approval in 2008
Termination benefits will not be paid to NEDs by the Company
A policy level of Board Fees (being the fees paid for membership of the Board, inclusive of superannuation) will
be set with reference to the P50 (median or middle) of the market of comparable ASX listed companies.
As at the commencement of FY23 the following fees apply:
Function
Main Board
Audit & Risk Committee
Nomination & Remuneration Committee
Other Committee
Role
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Fee Including Super
$165,750
$82,875
n/a
n/a
n/a
n/a
n/a
n/a
17
Remuneration Report (Audited) (continued)
During the FY22 reporting period the following fees were applicable:
Function
Main Board
Audit & Risk Committee
Nomination & Remuneration Committee
Other Committee
Role
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Fee Including Super
$138,992
$92,661
n/a
n/a
n/a
n/a
n/a
n/a
3.5 Short Term Incentive (STI) Policy
Currently the short term incentive policy of the Company is that an annual component of executive remuneration
should be at-risk tested over a single financial year, and allow the Company to modulate the cost of employment to
align with individual and Company performance while motivating value creation for shareholders. In addition:
•
STI should be settled in part or whole in the form of cash, and if appropriate at the time, a portion may be
specified as being settled in the form of equity
• The target cash component of the STI at target should have a weighting in the remuneration mix that is no
greater than the sum of LTI at target and any equity component of the STI at target, to ensure that executives are
focused on long term value creation via equity ownership
•
If part of the STI is to be settled in the form of equity:
• STI deferral is to apply to contribute to the long-term alignment of executives and shareholders, and to
facilitate retention of senior executive talent, and
•
Approximately one third to one half of any STI award will be settled provided the incumbent has remained
employed for 12 months following the end of the STI Measurement Period in order to receive the full award.
3.6 Long Term Incentive (LTI) Policy
The current long term incentive plan applies to offers made to KMP in 2020 with a performance period ending on 31
December 2022. No subsequent offers were made to KMP, although offers were made to employees who are not
KMP.
The current long term incentive plan so far as it applies to KMP is being reviewed by the board with a view to
replacing it with a new plan which is hoped to be put to shareholders for approval at the next Annual General Meeting
in May 2023.
The policy of current long term incentive plan is that an annual component of remuneration of executives should be
at-risk and based on equity in the Company to ensure that executives hold a stake in the Company, to align their
interests with those of shareholders, and that executives share risk with shareholders.
Further:
18
•
The LTI should be based on Performance Rights that vest based on assessment of performance against
objectives
•
The Measurement Period should be three years
• There should be two measures of long-term performance, one which best reflects internal measures of
performance and one which best reflects external measures of performance
•
•
•
The measure that has strongest alignment with shareholders is total shareholder return (TSR), however it is
recognised that absolute TSR is influenced by overall economic movements. Therefore, the TSR component of
LTI is based on relative TSR which removes broad market movements from assessments of the Company’s TSR
performance and avoids windfall gains from broad market movements. Vesting only when the performance of
the Company meets or exceeds the performance of the broader market
Senior Executives are faced with significant and long-term business development and project-based challenges.
Therefore the LTI should also be linked to the achievement of earnings growth objectives that will lead to value
creation for shareholders, and the earnings per share (EPS) growth measure is considered the best measure of
long term performance and value creation from an internal perspective, by the Board and by many stakeholders
When an executive owns a substantial portion of the Company’s issued capital, they are ineligible for employee
share scheme (ESS) tax treatment, and the consequences of participating in the plan are punitive. In order to
address this there is a separate plan (not presently in operation) which is effectively the same as the Rights LTI
plan but allows for the LTI instrument to be replaced with Share Appreciation Rights (SARs) which are settled in
cash, when this circumstance arises. Such payments are treated the same way as a cash STI in terms of tax.
This treatment also applies to any deferred component of STI that would otherwise be awarded in the form of
share-based rights. Whilst it is recognised that the settling of incentive rights in the form of cash is unusual, it is
trusted that shareholders understand the need to do so in these limited cases
•
The SAR plan operates in a similar way to an option, in that the participant only receives a benefit to the extent
of growth in value over the market value of a share at the time of calculation/granting. This requires that they be
valued differently, as their value is not the whole value of a Company share.
19
Remuneration Report (Audited) (continued)
3.7 Variable Executive Remuneration – The Short Term Incentive (STI)
Short Term Incentive (STI)
Aspect
Purpose
Measurement
Period
Award
Opportunities
Key Performance
Indicators (KPIs),
Weighting and
Performance
Goals
Plan, Offers and Comments
The STI Plan’s purpose is to give effect to an element of Senior Executive Remuneration. This
element of remuneration constitutes part of a market competitive total remuneration package and
aims to provide an incentive for Senior Executives to deliver and outperform annual business plans
that will lead to sustainable superior returns for shareholders. Target-based STI’s are also intended
to modulate the cost to the Company of employing Senior Executives, such that risk is shared with
the executives themselves and the cost to the Company is reduced in periods of poor performance.
The Company’s financial year i.e. from 1 January to the following 31 December.
FY22 Offers
The CEO was offered a target-based STI equivalent to roughly 31% of the Base Package for
target performance, with a stretch opportunity of up to 110% of the target.
The CFO was offered a target-based STI equivalent of up to 31% of the Base Package for target
performance with a stretch opportunity of up to 110% of the target.
Comments
The incentive levels offered in FY22 were consistent with the proportional opportunities
(proportional to Base Package) offered in previous years.
FY23 Offers
The FY23 offers are substantially similar to the FY22 offers.
FY22 Offers
KPIs may vary to some extent between participants and reflect the nature of their roles, while
creating shared objectives where appropriate. KPIs used for FY22 included:
• Revenue
• EBITDA
• EPS
Weightings are applied to the KPIs selected for each participant to reflect the relative importance
of each KPI. Information on this aspect and specific KPIs is given in detail elsewhere in this
report.
Comments
The Board selected KPI’s that were identified as having the strongest links with long term value
creation for shareholders at the Company level, and those objectives over which individuals had
most control that would also be expected to contribute to long term value creation and
sustainability for shareholders within a 12 month period, as well as KPIs to recognise individual
role related objectives and business plans for FY22.
FY23 Offers
The FY23 offers are substantially similar to the FY22 offers.
20
Award
Determination and
Payment
Calculations are performed following the end of the Measurement Period and the audit of
Company accounts.
Payments are in cash with PAYG tax deducted, paid following the completion of the Measurement
Period and completed audited full year accounts. A portion of the STI (between one third and
one half) is only paid a year later provided the KMP is still employed.
Performance was determined following audit sign-off of the FY22 accounts.
Change of Control
The Board has discretion to terminate the STI for the Measurement Period and make pro-rata
awards having regard to performance or make pro-rata awards based on performance and
allow the plan to continue for the. Measurement Period or make no interim awards and allow the
Plan to continue for the Measurement Period.
Plan Gate and
Board Discretion
Fraud, Gross
Misconduct etc
Clawback and
Malus
If the Company’s overall performance during the Measurement Period is substantially lower than
expectations and resulted in significant loss of value for shareholders, the Board may abandon
the STI Plan for the Measurement Period or adjust STI payouts downward. The Board also has
discretion to increase payouts, however, it has been determined that such discretion will only be
applied in future when it would be substantially inappropriate not to do so, due to an anomaly
during the Measurement Period, or because of exceptional circumstances, which would be
explained in detail as part of the Remuneration Report.
If the Board forms the view that a Participant has committed fraud, defalcation or gross
misconduct in relation to the Company then all entitlements in relation to the Measurement
Period will be forfeited by that participant.
A clawback policy is in place for cases of material misstatement or misconduct. The Remuneration
Committee has the power to withdraw offers that have not vested or to clawback short-term
incentives paid in the case of serious misconduct or material misstatement in the financial
statements respectively.
21
Remuneration Report (Audited) (continued)
3.8 Variable Executive Remuneration – Long Term Incentive (LTI) – Performance Rights Plan
Long Term Incentive (LTI)
Aspect
Purpose
Measurement
Period
Plan, Offers and Comments
The LTI Plan’s purpose is to give effect to an element of Senior Executive remuneration. This
element of remuneration constitutes part of a market competitive total remuneration package and
aims to provide an incentive for Senior Executives to deliver Company performance that will lead
to sustainable superior returns for shareholders. Other purposes of the LTI Plan is to act as a
retention mechanism so as to maintain a stable team of performance focused Senior Executives,
to create alignment with the interests and experiences of shareholders and to modulate the cost
to the Company of employing executives such that in periods of poor performance the cost is
lesser (applies to non-market measures under AASB 2). Currently the Company operates two
performance rights plans, one which is settled in the form of Company shares (equity-based
Rights), and one which is settled in the form of cash, but based on growth/change in the
Company’s share price (SARs), similar to an option (necessary to avoid potentially adverse tax
treatment of certain executive KMP due to personal shareholdings).
Normally three years.
FY22 Offers
FY22 offers were not made to KMP, pending the Remuneration Committee’s review of the LTI plan
as well as ongoing strategic reviews.
FY23 Offers
FY23 offers were not made to all KMP, pending the Remuneration Committee’s review of the LTI
plan. Any new plan that is proposed hopefully will be put to shareholders at the Annual General
Meeting in May 2023.
Form of Equity
LTI is in the form of Performance Rights, which are either rights to:
•
•
ordinary Company shares, under the regular LTI plan,
or to a cash value equivalent to growth in the market value of a share in respect of each
vested Performance Right, since the date of grant/calculation, under the share
appreciation rights plan (SARs),
both of which vest subject to the satisfaction of conditions related to long term performance and/
or service on an identical basis i.e. the form of equity has no bearing on the setting of vesting
conditions etc.
There is no entitlement to dividends during the Measurement Period.
LTI Value
The Board retains discretion to determine the value of LTI to be offered each year, subject to
shareholder approval in relation to Directors, when the Rights are to be settled in the form of a
new issue of Company shares. The Board may also seek shareholder approval for grants to
Directors in other circumstances, at its discretion.
22
Vesting Conditions
The Board has discretion to set vesting conditions for each offer. Performance Rights that do
not vest will lapse. The vesting conditions are TSR relative to the ASX 300, with a 50%
weighting, and EPS Growth relative to target, with a 50% weighting. Adjustment of the TSR
vesting scale will occur to remove any vesting at below-market (index) performance.
FY22 Offers
No offers were made for FY 2022 for KMP.
The vesting scales for prior offers are:
Performance Level
Annualised EPS Growth
Vesting
Below Threshold
< Budget
Threshold
=Budget
0%
75%
Between Threshold and Target
>Budget, <110% of Budget
Pro-rata
Target
110% of Budget
100%
Performance Level
Relative TSR of the
Company as % of the S&P
ASX 300 Accumulation
Index
Below Threshold
< Index
Threshold
=Index (90%)
Vesting
0%
75%
Between Threshold and Target
>100%, <110%
Pro-rata
Target
110% of Index
125%
23
Remuneration Report (Audited) (continued)
FY23 Offers
FY23 offers have not been made to KMP, pending the Remuneration Committee’s review of the
LTI plan as well as ongoing strategic reviews. Any new plan that is proposed hopefully will be put
to shareholders at the Annual General Meeting in May 2023.
Comments
Noting that the plan is likely to be changed for 2023 and beyond, the Board of Reckon recognises
that it is important that shareholders understand why the current LTI vesting conditions selected
are appropriate to the circumstances of the Company, and therefore seeks to be transparent in
this regard.
A form of total shareholder returns (TSR) was selected as it recognises the total returns (share
price movement and dividends assuming they are reinvested into company shares) that accrue
to shareholders over the Measurement Period. This measure creates the most direct alignment
between the experience of shareholders and the scaling of rewards realised by Senior Executives.
Relative TSR has been selected to ensure that participants do not receive windfall gains from
broad market movements unrelated to the performance of the Senior Executives (which is the
key feature that has led many companies to use relative TSR). Relative TSR achieves this by
modulating the required TSR outcome of the Company based on indicators of overall market
movements, and assessing performance in excess of broad market movements unrelated to the
activities of the Company.
While ranked TSR was considered, it was not possible to identify a comparator group of
companies that was statistically robust enough to be meaningful and the Board was concerned
that this would undermine the link between executive performance and reward outcomes. In
addition, the comparator group used until very recently is no longer appropriate as several
entities have failed or are no longer listed on the ASX. TSR relative to a robust indicator of market
movements/performance will therefore apply to future grants of LTI.
The relative TSR vesting scale requires that the Company deliver a TSR to shareholders that is
at least as good or better than the market over the Measurement Period before any vesting may
occur. Full vesting becomes available when the TSR of the Company reaches 100% of the TSR
of the index over the Measurement Period. The Target of 110% of the index is considered by the
Board to be challenging, but achievable, should the Board’s assumptions in making that
assessment prevail. While under such a TSR LTI approach, the market indicator is generic, the
vesting scale reflects the expectations of the Board, management, shareholders and other
stakeholders given the particular circumstances of the Company, relative to the broader market.
This new measure is, in the view of the Board and based on advice, likely to better align the
outcomes of the LTI plan with Company performance and shareholder interests than selecting a
tailored but largely irrelevant comparator group of companies to which a generic vesting scale is
then applied, which is the approach adopted by the vast majority of companies that use ranked
TSR.
Based on advice received by the Board from its independent remuneration advisor in 2016, it is
understood to be good practice to have both an external (TSR) and internal measure of long-
term Company performance in relation to the LTI. The internal measures that will most clearly
align with shareholder value creation at this stage will be the achievement of the earnings growth
targets specified by the Board in consideration of business plans and economic circumstances
each year. Therefore, earnings per share growth (EPSG) is used as the second condition.
Retesting
The Plan Rules do not contemplate retesting and therefore retesting is not a feature of the
Company’s current LTI offers.
24
Plan Gate and
Board Discretion
A gate applies to the TSR component of the LTI such that no vesting will occur if the Company’s
TSR is not positive. If the movement of the index is low over the Measurement Period, at less
than 5%, then the Board will exercise its discretion to limit vesting to the threshold level, or an
even lesser level.
The Board has the power to exercise discretion to decline to allow an award to vest, for example
in the circumstances of a “bad leaver”.
Amount Payable
for Performance
Rights
Exercise of Vested
Performance
Rights
Dealing
Restrictions on
Shares
Cessation of
Employment
During a
Measurement
Period
No amount is payable for Performance Rights.
The value of Rights is included in assessments of remuneration and policy.
Under the plan rules, vested Performance Rights will be available to be exercised, subject to
the payment of any Exercise Price, until the last exercise date. Exercised Rights will be satisfied
in the form of ordinary Company shares, except where the participant necessarily participates
in the cash Rights (SAR) plan to address the tax issues faced by them as significant
shareholders in the Company (see earlier discussion of this aspect).
No amount is payable by participants to exercise vested Performance Rights.
Shares that result from the exercise and vesting of Performance Rights will be subject to
dealing restrictions as per the Company’s trading policy applicable to officers of the Company.
In the event of cessation of employment due to dismissal for cause all unvested Performance
Rights are forfeited.
In the event of cessation of employment due to resignation or dismissal all unvested
Performance Rights are forfeited.
Change of Control
of the Company
The Board retains discretion under the rules of the plans to over-rule the automatic vesting of
incentives in the event of “capital events” such as takeovers or restructures.
Fraud, Gross
Misconduct etc
Clawback and
Malus
If the Board forms the view that a Participant has committed fraud, defalcation or gross
misconduct in relation to the Company then all entitlements in relation to the Measurement
Period will be forfeited by that participant.
A clawback policy is in place for cases of material misstatement or misconduct. The
Remuneration Committee has the power to withdraw offers that have not vested or to
clawback short-term incentives paid in the case of serious misconduct or material
misstatement in the financial statements respectively.
In previous years the Company also operated a Retention Rights scheme which allowed for vesting based on service
only. On 24 May 2011 the Remuneration Committee approved and recommended to the Board an extension to the
long-term incentive plan by adding a long-term retention incentive. The genesis of the idea to extend the plan and
offer additional performance shares was to provide a reward and an incentive for senior level employees who have a
long employment history and good performance record (i.e. beyond the KMP).
It was also intended that these performance shares could be used to provide an incentive for employees with
potential for a longer-term contribution to the success of the company to participate in the growth of equity value of
the company. Part of the company’s success as an organisation is premised on human domain expertise and the
consistency and longevity of service of KMP and other senior employees. The offer of these additional performance
shares is designed to encourage and reward employees to commit to longevity as well as to complement other
traditional forms of executive remuneration. By rewarding those employees who commit to the company over a very
long period and thereby providing stability as the business grows and matures, the board believes long term
shareholder benefits will result for shareholders.
25
Remuneration Report (Audited) (continued)
The long-term retention incentives are offered to selected employees with the principal vesting condition that
participants must remain employed for the term specified (typically 7-10 years). The shares offered remain at risk of
forfeiture until the relevant period of service has been satisfied. There is no entitlement to dividends during the
relevant period of service.
It is the Remuneration Committee’s belief that the addition of these performance shares has added to the balance
and overall mix of remuneration to the applicable employees in a positive way. If the exacting service requirements
are not satisfied, then any costs incurred under AASB 2 will be recouped and any forfeited shares will be available
for reallocation or to fund other employee equity entitlements.
This legacy arrangement has been phased out, with the final tranche vesting at the end of FY20 in respect of KMP.
3.9 Securities Holding Policy
The Board currently sees a securities holding policy as unnecessary since executives receive a significant component
of remuneration in the form of equity and that a number of key executives already hold significant numbers of shares,
voluntarily. Given that the outcome is effectively already being achieved, it was determined that such a policy was
currently unnecessary.
3.10 Clawback Policy
Reckon has adopted a clawback policy which is activated in cases of material misstatements in the Company’s
financial reports, or in cases of misconduct by executives.
26
4. Actual/Realised Remuneration Relevant to FY22
4.1 Senior Executive Remuneration
The statutory disclosure requirements do not provide clear information on value obtained by KMP during the current year as
the statutory information attempts to match the disclosed remuneration with when the services are provided.
The following table outlines the non-deferred component of STI achieved during the financial year, and the LTI, if any, and/or
any deferred STI that vested during the financial year in relation to the completion of the performance or vesting period at the
end of the specified financial year:
Name
Role(s)
Year
Salary
Superannuation
Contributions
Other
Benefits5
Base Package
STI1
LTI27
Make whole
payment6
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Total
Remuneration
Package (TRP)
Group
MD, then
non-
executive
director
Mr Clive
Rabie3
2022
$99,892
$10,194
$149,973
$260,059
100%
$0
0%
$0
0%
$0
0%
$260,059
Group MD
2021
$532,950
$26,773
$0
$559,722
100%
$0
0%
$0
0%
$0
0%
$559,722
Group
CEO
Group
CEO
Group
CFO
Group
CFO
Company
Secretary
and
Corporate
Counsel
Mr Sam
Allert
Mr Chris
Hagglund
Mr Myron
Zlotnick4
Company
Secretary
TOTALS
2022
ongoing
remuneration
2022 make
whole
payment
2022 total
$608,751
$27,500
$17,953
$654,204
38% $183,490
11% $149,448
9%
$987,142
$716,571
42%
$716,571
$1,703,713
2021
$598,461
$26,250
$18,911
$643,622
65% $175,636
18% $169,816
17%
$0
0%
$989,074
2022
ongoing
remuneration
2022 make
whole
payment
2022 total
$517,207
$26,700
$4,483
$548,390
52% $154,231
15% $99,632
9%
$802,253
$250,800
24%
$250,800
$1,053,053
2021
$510,742
$25,200
$8,332
$544,274
69% $145,687
18% $104,377
13%
$0
0%
$794,338
2022
ongoing
remuneration
2022 make
whole
payment
2022 total
$334,031
$27,500
$1,529
$363,060
63%
$0
0%
$0
0%
$363,060
$214,971
37%
$214,971
$578,031
2021
$278,370
$22,083
$16,761
$317,214
84%
0%
$59,000
16%
$0
0%
$376,214
2022
2021
$1,559,880
$91,894
$173,938
$1,825,713
$1,920,522
$100,306
$44,004
$2,064,832
$337,721
$321,323
$249,080
$333,193
$1,182,342
$0
$3,594,856
$2,719,348
1 Note that the STI value reported in this table is the STI that was paid during the reporting period, being the award earned during the previous period.
Incentive outcomes for the current and previous period are outlined elsewhere in this report.
2 Note that the LTI value reported in this table is the value at grant date of any equity that vested in the specified year.
3 Mr Rabie was Group MD until 31 March 2022, from 1 April 2022 he was a non-executive director.
4 Mr Zlotnick’s services as Company Secretary were provided on an independent contractor basis until February 2021 at an annual fee of $160,745
(2020: $160,745). On 22 February 2021 Mr Zlotnick was engaged as an employee.
5 Other benefits include movement in annual leave and long service leave. In the case of Mr Rabie this represents the split of his remuneration in
relation to the Legal Group.
6 On 14 November 2022, certain KMP were paid “make whole” payments to remedy the likelihood that the Company’s share price may diminish
following payment of a special dividend. Amounts paid were Mr Allert $716,571, Mr Hagglund $250,800 and Mr Zlotnick $214,971
7 The LTI shares where shareholders approved the waiving of performance targets for Mr Allert on 25 November 2022, were still subject to continuous
employment requirements in 2022, and will vest in 2023.
Both target and awarded values of STI and LTI remuneration are outlined in the relevant sections of the Remuneration
Report to assist shareholders to obtain a more complete understanding of remuneration as it relates to senior executives.
Note that in November 2022, the Group CEO was paid a bonus in respect of 1,000,000 performance shares offered to
him under a special incentive performance share (plan reported in 2019); and a bonus was also paid to KMPs who hold
certain tranches of performance shares. Refer to note 6 above.
27
Remuneration Report (Audited) (continued)
Under the CEO’s special incentive offer and the rules of the LTI applicable to KMPs, holders of performance shares were
not entitled to receive the special dividend that was paid to shareholders on 21 November 2022 after the completion of
the sale of the Accountant Practice Management Group.
However, the board was of the view that as there was a likelihood that the share price may diminish following payment
of the special dividend, and with a strong probability that the performance shares would vest, it was appropriate to pay
these bonuses to “keep them whole”.
The bonuses paid were approximately equal to the value of the special dividend the CEO and KMPs would have
received had they been the owners of shares (as opposed to holders of performance shares) at the time the special
dividend was paid.
5. Maximum Available Executive Remuneration for FY22
The disclosures required under the Corporations Act and prepared in accordance with applicable accounting standards
attempt to match remuneration reported with the services provided to earn that revenue in the relevant year. The table
below, on the other hand, indicates remuneration offered to KMP to be earned in the current and future periods. For
example, the LTI disclosed is not reflective of the offer made in the year being reported on due to the requirements of AASB
2. It should be noted that the table presents target incentive opportunities for achieving a challenging but achievable target
level of performance. In the case of STI, the maximum incentive may be up to 10% higher (i.e. 110% of the target). It should
be noted that the table presents target incentive opportunities for achieving a challenging but achievable target level of
performance. In the case of STI, the maximum incentive may be up to 10% higher (i.e. 110% of the target).
Position
Incumbent
Group MD,
then
non-executive
director
Group CFO
Group CEO
Company
Secretary and
Corporate
Counsel
Mr Clive
Rabie1
Mr Chris
Hagglund
Mr Sam
Allert
Mr Myron
Zlotnick
Base
Package
Including
Super
Other
Benefits2
Fixed
%
TRP
STI
LTI
Target
% of
Base
Package
Target
STI
Amount
STI
%
TRP
Target %
of Base
Package
Target
LTI
Amount
LTI
%
TRP
Total
Remuneration
Package at
Target
Performance
$110,086
$149,973
100%
0%
$0
0%
0%
$0
0%
$260,059
$543,907
$636,251
n/a
n/a
70%
31%
$166,650
21%
13%
$71,167
9%
$781,724
66%
31%
$198,000
21%
19%
$120,000
13%
$954,251
$361,531
n/a
86%
0%
$0
0%
16%
$59,000
14%
$420,531
1 Mr Rabie was Group MD until 31 March 2022, from 1 April 2022 he was a non-executive director.
2 Applicable to Mr Rabie only. In the case of Mr Rabie this represents the split of his remuneration in relation to the Legal Group.
The incentives presented in the table above is the target level of STI offered for FY22, and for LTI the anual cost of the
value at the time of the grant.
The intended value for STI will flow to participants when performance targets are achieved.
No LTI offers were made for KMP in FY22.
28
6. Remuneration Records for FY22 – Statutory Disclosures
The following table outlines the remuneration accrued for Senior Executives of the Company during FY22 and FY21
prepared according to statutory disclosure requirements and applicable accounting standards:
Name
Role(s)
Year
Base Package
Including Super and
Other Benefits
Non-deferred
STI awarded for
the Financial
Year
Deferred STI for
the FY
LTI for the FY1
Make whole
payment4
Actual Total
Remuneration
Package
(TRP)
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Mr Clive
Rabie2
Group
MD, then
non-
executive
director
2022
$260,059
100%
$0
0%
$0
0%
$0
0%
Group MD
2021
$559,722
100%
$0
0%
$0
0%
$0
0%
$0
$0
0%
$260,059
0%
$559,722
Group
CFO
Group
CEO
Group
CEO
Company
Secretary
and
Corporate
Counsel
Company
Secretary
Mr Chris
Hagglund
Mr Sam
Allert
Mr Myron
Zlotnick3
TOTALS
2022
ongoing
remuneration
2022 make
whole
payment
2022 total
$548,390
53%
$85,089
8%
$72,343
7%
$71,167
7%
$776,989
$250,800
24%
$250,800
$1,027,789
2021
$544,274
68%
$83,368
10%
$70,863
9%
$99,632
12%
$0
0%
$798,137
2022
ongoing
remuneration
2022 make
whole
payment
2022 total
$654,203
39%
$125,284
7%
$62,009
4%
$120,000
7%
$961,496
$716,571
43%
$716,571
$1,678,067
2021
$643,622
66%
$122,750
13%
$60,740
6%
$149,448
15%
$0
0%
$976,560
2022
ongoing
remuneration
2022 make
whole
payment
2022 total
2021
2022
2021
$363,061
57%
$0
0%
$0
0%
$59,000
9%
$422,061
$317,214
100%
$0
0%
$0
0%
$0
0%
$0
0%
$317,214
$1,825,713
$2,064,832
$210,373
$206,118
$134,352
$131,603
$250,167
$249,080
$1,182,342
$0
$3,602,947
$2,651,633
$214,971
34%
$214,971
$637,032
1 Note that the LTI value reported in this table is the amortised accounting charge of all grants that have not lapsed or vested as at the start of the reporting
period.
2 Mr Rabie was Group MD until 31 March 2022, from 1 April 2022 he was a non-executive director.
3 Mr Zlotnick’s services as Company Secretary were provided on an independent contractor basis until February 2021 at an annual fee of $160,745 (2020:
$160,745). On 4 February 2021 Mr Zlotnick was engaged as an employee.
4 On 14 November 2022, certain KMP were paid “make whole” payments to remedy the likelihood that the Company’s share price may diminish following
payment of a special dividend. Amounts paid were Mr Allert $716,571, Mr Hagglund $250,800 and Mr Zlotnick $214,971.
Note that in November 2022, the Group CEO was paid a bonus in respect of 1,000,000 performance shares offered to him under
a special incentive performance share (reported in 2019); and a bonus was also paid to KMPs who hold certain tranches of
performance shares.
Under the CEO’s special incentive offer and the rules of the LTI applicable to KMPs, holders of performance shares were not
entitled to receive the special dividend that was paid to shareholders on 21 November 2022 after the completion of the sale of the
Accountant Group.
However, the board was of the view that as there was a likelihood that the share price may diminish following payment of the
special dividend, and with a strong probability that the performance shares would vest, it was appropriate to pay these bonuses
to “keep them whole”.
The bonuses paid were approximately equal to the value of the special dividend the CEO and KMPs would have received had
they been the owners of shares (as opposed to holders of performance shares) at the time the special dividend was paid.
29
Remuneration Report (Audited) (continued)
Non-executive director fees are managed within the current annual fees limit (AFL or fee pool) of $400,000 which was
approved by shareholders at the 2008 AGM.
Remuneration received by non-executive directors in FY22 and FY21 is disclosed below:
Name
Role(s)
Year
Board
Fees
Committee
Fees
Superannuation
Other
Benefits
Equity
Grant
Termination
Benefits
Total
Mr Greg
Wilkinson
Mr Philip
Hayman
Independent,
non-executive
Chairman
Independent,
non-executive
Deputy
Chairman
Independent,
non-executive
director
Independent,
non-executive
director
TOTALS
2022
$126,072
$0
$12,919
$0
$0
$0
$138,991
2021
$124,848
$0
$12,179
$0
$0
$0
$137,027
2022
$84,048
2021
$83,232
2022
2021
$210,120
$208,080
$0
$0
$0
$0
$8,613
$8,119
$21,532
$20,298
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$92,661
$91,351
$231,652
$228,378
30
7. Performance Outcomes for FY22
7.1 Company Performance
All incentives paid for relevant periods for STI were measured strictly against the targets set.
In the context of some lagged impact of COVID 19 and an extremely competitive market, especially for the Business
Group, and the Accountant Group to some extent, the board is satisfied that the vesting of incentives correlates with
performance.
The board is mindful of the need to retain talent and believes that the KMPs are appropriately incentivized given that
several parts of the business are almost in a start up phase. More impressive returns are only anticipated in the
longer term if strategies are executed correctly.
As evidenced in this report, the Company as a whole has achieved:
• progress on cloud development to transition to a cloud first company;
•
•
•
•
solid revenue, solid profits, and cash generation;
stable growth;
reduction in debt;
increased strategic partnerships;
• ±8% gross yield by way of divided paid; and
• growth in annual recurring revenue.
Date
Revenue ($m)
31-Dec-22
31-Dec-21
31-Dec-20
31-Dec-19
31-Dec-18
$64.71
$72.12
$75.6
$75.4
$75.4
Profit After Tax
attributable to
owners of the parent
($m)
Share Price
Change in Share
Price
Dividends
$57.8
$9.82
$9.7
$8.1
$7.7
$0.60
$0.93
$0.78
$0.77
$0.67
-$0.33
$0.15
$0.01
$0.10
-$0.90
$0.60
$0.05
$0.05
$0.05
$0.03
1 The Accountant Group business was sold effective 1 August 2022 ($13.5 million of revenue was transferred to discontinued operations).
2 The ReckonDoc business was sold effective 1 March 2021 ($0.8 million of revenue was transferred to discontinued operations).
7.2 Links Between Performance and Reward
The remuneration of executive KMP is intended to be composed of three parts as outlined earlier, being:
•
•
Base Package, which is not intended to vary with performance but which tends to increase as the scale of the
business increases (i.e. following success)
STI which is intended to vary with indicators of annual Company and individual performance, including a deferred
component to encourage retention and
•
LTI which is also intended to deliver a variable reward based on long-term measures of Company performance.
31
Remuneration Report (Audited) (continued)
The STI achieved in relation to the FY22 period was paid after the end of the period (during FY23) in February 2023.
On average 104% of the target award opportunity or approximately 94% of the maximum award opportunity (being
110% of the target) available was paid. This level of award was considered appropriate under the STI scheme since
the objectives were set and offers made in relation to the achievement of each KPI at the beginning of the financial
year, and the majority of those objectives were met. During the FY22 period the objectives that were linked to the
payment of STI included:
Name
Position
Held at Year
End
Mr Clive
Rabie
Non-executive
director
Mr Chris
Hagglund
Group CFO
Mr Sam
Allert
Group CEO
KPI
Summary
Revenue
EBITDA
EPS
Revenue
EBITDA
EPS
Revenue
EBITDA
EPS
Mr Myron
Zlotnick
Company
Secretary and
Corporate
Counsel
Revenue
EBITDA
EPS
FY22 Company Level KPI Summary
Weighting
Target
Achievement
Award
Outcomes
Total
Award
40%
40%
20%
40%
40%
20%
40%
40%
20%
40%
40%
20%
n/a
n/a
$0
$64.7m
$24.2m
5.3cps
$64.7m
$24.2m
5.3cps
100%
106%
110%
100%
106%
110%
$85,089
$125,284
n/a
n/a
$0
This value is accounted for in the realised remuneration table presented earlier.
32
The STI paid during the FY22 period related to performance during the FY21 period and was paid in cash in February
2022. On average 102% of the target award opportunity or 93% of the maximum award opportunity (being 110% of
the target) available was paid. This level of award was considered appropriate under the STI scheme that was in
place during FY21, which is summarised in the table below. Therefore, there were strong links between internal
measures of Company performance and the payment of short-term incentives:
Name
Position
Held at
Year End
FY21 Company Level KPI Summary
Weighting
Target
Achievement
Award
Outcomes
Total
Award1
KPI
Summary
Revenue
Mr Clive Rabie
Group MD
EBITDA
EPS
Revenue
Mr Chris
Hagglund
Group CFO
EBITDA
EPS
Revenue
EBITDA
EPS
Revenue
EBITDA
EPS
Mr Sam Allert
Group CEO/
MD ANZ
Mr Myron
Zlotnick
Company
Secretary
and
Corporate
Counsel
40%
40%
20%
40%
40%
20%
40%
40%
20%
40%
40%
20%
n/a
n/a
n/a
$72.9m
$28.9m
5.9cps
$72.9m
$28.9m
5.9cps
99%
102%
110%
99%
102%
110%
$83,368
$122,750
n/a
n/a
n/a
This value is accounted for in the realised remuneration table presented earlier.
33
Remuneration Report (Audited) (continued)
Vesting of LTI incentives for the performance period 2020 to 2022 were paid in February 2023 based on achievement
of KPIs set at follows:
Incumbent
Role
Target LTI
Value (at
grant
January
2019) to
Vest for
FY221
Tranche
Weighting
%
Number
of Shares
Eligible
to Vest
for FY22
Performance
Against
Target
% of
Grant
Vested
Number of
Shares or
Appreciation
Rights
Vested
Mr Clive
Rabie
Mr Chris
Hagglund
Mr Sam
Allert
Mr Myron
Zlotnick
Group MD
n/a
Group CFO
$213,500
Group CEO
$400,000
Company
Secretary and
Corporate
Counsel
n/a
1 For Mr Allert the grant date was 1 September 2019
TSR
EPS
TSR
EPS
TSR
EPS
TSR
EPS
n/a
n/a
n/a
n/a
n/a
50/50
350,000
Achieved
112.5%
393,750
50/50
1,000,000
Achieved
100.0%
1,000,000
n/a
n/a
n/a
n/a
n/a
The Board is confident in stating that the links between Company performance and executive reward, both internally
and externally measured, and over both the short and long term, are well aligned and appropriate to the Company.
However, the Board will continue to make improvements and adjustments to these links as stakeholder expectations
and Company circumstances evolve. In particular consideration is being given to the structure and performance
targets for the LTI. Any proposed changes hopefully will be put to shareholders for approval at the Annual General
Meeting in May 2023.
7.3 Links Between Company Strategy and Remuneration
The Company intends to attract and retain the superior talent required to successfully implement the Company’s
strategies at a reasonable and appropriately variable cost by:
• positioning Base Packages (the fixed element) around P50 of relevant market data benchmarks when they are
undertaken
•
•
•
supplementing the Base Package with at-risk remuneration, being incentives that motivate executive focus on
short to mid-term objectives linked to the strategy via KPIs and annual performance assessments, and the
imposing of deferral periods for part of STI awards, and
long term value creation for shareholders by linking a material component of remuneration to those factors that
shareholders have expressed should be the long-term focus of executives and the Board.
Key strategies remain: investment in new technology; investment in new markets; and sustaining existing profitable
businesses. It is important to fix remuneration mindful of maintaining morale and retaining talent.
34
8. Employment Terms for Key Management Personnel
A summary of contract terms in relation to executive KMP is presented below:
Name
Position Held
at Close of
FY22
Employing
Company
Duration of
Contract
Period of Notice
Termination
Payments
From
Company
From KMP
Group MD and
then non-
executive
director
Reckon Limited
Open ended
1 month
1month
Group CFO
Reckon Limited
Open ended
3 months
3 months
Company
Secretary and
Corporate
Counsel
Reckon Limited
Open ended
1 month
1 month
Group CEO
Reckon Limited
Open ended
1 month
1 month
Mr Clive
Rabie1
Mr Chris
Hagglund
Mr Myron
Zlotnick2
Mr Sam
Allert
Up to 12
months*
Up to 12
months*
Up to 12
months*
Up to 12
months*
1 Mr Rabie was Group MD until 31 March 2022, from 1 April 2022 he was a non-executive director.
2 Mr Zlotnick’s services as Company Secretary were provided on an independent contractor basis until February 2021. On 22 February 2021 Mr
Zlotnick was engaged as an employee.
* Under the Corporations Act any termination benefit is limited to a maximum of 12 months average salary (measured over 3 years) unless shareholder
approval is obtained.
On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the
form of a letter of appointment. The letter summarises the Board policies and terms, including compensation relevant
to the office of the director. Non-executive directors are not eligible to receive termination payments under the terms
of the appointments.
A summary of the appointment terms in relation to non-executive KMP is presented below:
Name
Position Held at Close of
FY22
Employing
Company
Duration of
Contract
Period of Notice
From
Company
From
KMP
Termination
Payments
Mr Greg
Wilkinson
Mr Phillip
Hayman
Independent non-executive
Chairman
Independent Non-executive
Director
Reckon
Limited
Reckon
Limited
Open ended
None
None
None
Open ended
None
None
None
35
Remuneration Report (Audited) (continued)
9. Changes in KMP Held Equity
The following table outlines the changes in the amount of equity held by executives over the financial year
Number
Held at
Open 2022
Granted
FY22
Forfeited
Vested1
Purchased /
Disposed /
DRP
Number Held
at Close 2022
Name
Instrument
Number
Number
Number
Number
Number
Number
Mr Clive
Rabie
Mr Chris
Hagglund
Mr Myron
Zlotnick
Mr Sam
Allert
Shares
10,597,141
Rights/
Options
0
Shares
941,500
Rights/
Options2
350,000
Shares
0
Rights/
Options
300,000
Shares
487,779
Rights/
Options2
1,000,000
1 1 January 2023.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(390,606)
10,206,535
0
0
(288,140)
653,360
0
0
0
0
0
350,000
0
300,000
487,779
1,000,000
2 Purchased on-market in November 2022. These shares formed part of a total of 1,650,000 shares purchased on-market (at $0.60 per share) to
satisfy vesting of rights for KMPs and non-KMPs. An additional 81,249 shares were purchased on market in February 2023 (at 0.52 per share) to
complete the number of shares required for vesting. The fair value at grant date of 1 September 2019 for Mr Allert is $0.40 per share. The fair value
at grant date of 1 January 2020 for Mr Hagglund is $0.61 per share.
36
The following table outlines the changes in the amount of equity held by non-executive directors over the financial year:
Name
Instrument
Number
Held at
Open 2022
Granted
FY22
Forfeited
Vested
Purchased /
DRP
Number Held at
Close 2022
Number
Number
Number
Number
Number
Number
Mr Greg
Wilkinson
Mr Philip
Hayman
Shares
8,019,374
Rights/Options
n/a
Shares
1,397,460
Rights/Options
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
0
n/a
8,019,374
n/a
1,397,460
n/a
The following table outlines the value of equity granted during the year that may be realised in the future:
2022 Equity Grants
Tranche
Total Value at
Grant
Value
Expensed in
FY22
Max Value to
be Expensed in
Future Years
Min Value to be
Expensed in
Future Years
Name
Role
Mr Clive Rabie
Group MD
TSR
EPS
n/a
n/a
n/a
n/a
n/a
n/a
Service
Must be employed at end of performance period
Mr Chris
Hagglund
Group CFO
Mr Myron
Zlotnick
Company
Secretary
Mr Sam Allert
Group CEO
TOTALS
TSR
EPS
Service
TSR
EPS
Service
TSR
EPS
Service
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Must be employed at end of performance period
$0
$0
$0
$0
Must be employed at end of performance period
$0
$0
$0
$0
Must be employed at end of performance period
$0
$0
n/a
n/a
$0
$0
$0
$0
$0
$0
$0
37
Remuneration Report (Audited) (continued)
10. Other Remuneration Related Matters
The following outlines other remuneration related matters that may be of interest to stakeholders, in the interests of
transparency and disclosure:
• Other than as disclosed, there were no loans to Directors or other KMP at any time during the reporting period and
• There were no relevant material transactions involving KMP other than compensation and transactions
concerning shares, performance rights/options as discussed in this report.
The rules state that in all cases save as the rules provide otherwise, the Board has an over-riding discretion in relation
to any of its powers under the Rules.
This concludes the remuneration report which has been audited.
38
Indemnification of Directors and Officers and Auditors
During the financial year, the company paid a premium in respect of a contract insuring the directors of the company
(as named above), the Company Secretary and all executive officers of the company, and of any related body
corporate, against a liability incurred as a director, secretary or executive officer to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of
the premium.
In addition, Rule 27 of the company’s Constitution obliges the company to indemnify on a full indemnity basis and to
the full extent permitted by law, every director, officer or former officer for all losses or liabilities incurred by the person
as an officer. This obligation continues after the person has ceased to be a director or an officer of the company or a
related body corporate, but operates only to the extent that the loss or liability is not covered by insurance.
The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or
auditor of the company, or any related body corporate, against a liability incurred as an officer or auditor.
Directors’ Meeting
The following table sets out the number of directors’ meetings held during the financial year and the number of
meetings attended by each director.
Directors
Meeting
Reckon Limited – Attendance Tables
Board
Audit & Risk Committee
Remuneration Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Greg
Wilkinson
Clive Rabie
Phil Hayman
Sam Allert
12
12
12
12
12
12
12
12
2
n/a
2
n/a
2
n/a
2
n/a
2
n/a
2
n/a
2
n/a
2
n/a
39
Non-Audit Fees
Details of the non-audit services can be found in note 6 to the financial statements.
The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another
person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 6 to the financial statements do not compromise
the external auditor’s independence, based on advice received from the Audit & Risk Committee, for the
following reasons:
• All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor, and
• None of the services undermine the general principles relating to auditor independence as set out in Code of
Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical
Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or
decision-making capacity for the Company, acting as advocate for the company or jointly sharing economic
risks and rewards.
Subsequent Events
Reckon Limited advised on 9 March 2023 that it, together with minority shareholders, has made a commitment to
provide approximately US$4 million in funding to its Legal Practice Management Group (“Legal Group”), which
operates under the nQZebraworks brand in the US. Certain other existing investors (“co-investors”) in the Legal
Group, including the nQZebraworks CEO, have also agreed to provide growth capital on a pro-rata basis. Minority
shareholders that elect not to contribute, will dilute.
Reckon’s portion of the investment will be staged over 24 months and funded through earnings from Reckon’s
existing operations, with capital deployed towards scaling operations in the rapidly growing US legal market.
The strategic rationale for the capital injection is underpinned by the view of the Reckon management team that the
Company now has a major opportunity to leverage its footprint in the US legal market and generate a step-change
in revenues and group earnings.
Reckon’s increased investment will be deployed towards a targeted business development strategy in the USA,
where it already provides scan and print management workflow solutions practice management software to five of
the world’s largest legal firms and has increased capacity to scale up its client base.
Additional funds will also be allocated to product optimisation amid the ongoing transition from desktop-based
products to innovative cloud-based solutions. The Company is confident that the new funding will provide considerable
financial flexibility to capitalise on growth over the next 24 months.
Alongside the new funding commitment, Reckon will seek to implement a long-term incentive plan for the Legal
Group’s USA management and staff to pursue growth and exit opportunities. Details of this incentive plan will be
subject to shareholder approval, to be sought at the next Annual General Meeting.
The investment highlights Reckon’s ongoing commitment to unlocking growth opportunities for practice management
solutions in the large US legal services industry.
In addition, Reckon will also acquire existing securities in the Legal Group, issued to previous management.
These transactions will increase Reckon’s ownership in the division from 70% to 76% at a total cash cost of US$4
million.
40
Auditor’s Independence Declaration
The auditor’s independence declaration is included after this report on page 42.
Rounding Off of Amounts
The company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the
directors’ report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise
indicated.
On behalf of the directors,
Mr C Rabie
Chairman
Sydney 30 March 2023
41
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF RECKON LIMITED
As lead auditor of Reckon Limited for the year ended 31 December 2022, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Reckon Limited and the entities it controlled during the year.
Gareth Few
Director
BDO Audit Pty Ltd
Sydney
30 March 2023
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
42
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Reckon Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Reckon Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 31 December 2022, the
consolidated statement of profit or loss, consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial report, including a
summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
43
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Revenue recognition
Key audit matter
The Group has various revenue streams for which
revenue is recognised as or when the
performance obligation is satisfied by
transferring the promised good or service. For
bundled goods or services, significant
management judgment is required in
determining the fair value of the transaction
price allocated to each separate performance
obligation and the deferral of revenue at year
end.
At 31 December 2022 the Group has reported
sales revenue of $51.2m (2021: $49.5m) from its
continuing operations as disclosed in Note 4.
The related contract liabilities as disclosed in
the statement of financial position as at 31
December 2022 are $7.1m (2021: 5.9m) as
disclosed in Note 17.
How the matter was addressed in our audit
Our procedures, amongst others, included:
• Obtaining an understanding of the
•
•
Group’s revenue recognition policies and
assessing the policies applied for
compliance with the relevant accounting
standards
Identifying and testing the relevant
controls over the recognition and
measurement of revenue transactions
Selecting a sample of revenue
transactions from the various streams
throughout the year and tracing to
supporting documentation, cash receipts
and verifying whether revenue was
accounted for appropriately by
recalculating the fair value of each
element of the bundled transaction
• Recalculation of the deferred revenue
for the year ensuring the completeness
and accuracy by agreement, on a sample
basis, to underlying supporting
documentation and data sources
• Assessing the adequacy of the disclosures
in the financial statements.
44
2
Capitalised development costs
Key audit matter
The carrying value of capitalised development
costs as at 31 December 2022 is $27.8m (2021:
$39.8m) as disclosed in Note 12 of the financial
report.
The Group conducts a significant level of
development activities for which certain directly
attributable costs are capitalised. The
identification of these costs involves significant
management judgment in assessing whether the
costs are:
• Eligible for capitalisation under the
criteria prescribed by Australian
Accounting Standards
• Appropriate and directly attributable to
•
relevant products developed
Supportable to the extent to which these
capitalised development costs will
generate sufficient economic benefit to
support their carrying values.
How the matter was addressed in our audit
Our procedures, amongst other, included:
• Obtaining an understanding of the
processes and key controls in place over
the recording and identification of
development costs and products for
which these costs have been capitalised
• Evaluating the appropriateness and
eligibility of costs capitalised, on a
sample basis, by agreeing the costs to
external invoices, supporting payroll and
time records and cost allocation
calculations
• Assessing the recoverability of the
carrying value of the capitalised
development costs by major product,
with reference to current product
performance, historical and forecast
cash flows
• Assessing the adequacy of the disclosures
in the financial statements.
Disposal of Practice Management Accountant Group
Key audit matter
On 20 May 2022, the Group announced the
proposed sale of the Practice Management
Accountant Group for an all-cash sale valued at
$100m. The completion of the sale took place
on 1 August 2022 as disclosed in note 26(e) of
the financial report.
Due to the significance of this transaction to the
financial statements, we identified this
transaction as a key audit matter.
How the matter was addressed in our audit
Our procedures, amongst others, included:
• Obtaining and reviewing the sale
contract documentation, assessing
compliance with the terms and
conditions therein;
• On a sample basis, performing a
substantive audit of the discontinued
operation and asset held for sale note
including vouching the cash receipt to
the bank documentation;
• Assessing the calculation of profit on
disposal in accordance with AASB 5 Non-
3
45
current assets held for sale and
discontinued operations ensuring correct
cut off of transactions at disposal date;
and
• Assessing the adequacy of the disclosures
in the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2022, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
46
4
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31
December 2022.
In our opinion, the Remuneration Report of Reckon Limited, for the year ended 31 December 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Gareth Few
Sydney, 30 March 2023
5
47
Directors’ Declaration
The directors of the company declare that:
1.
the financial statements and notes as set out on pages 49 to 105, are in accordance with the Corporations Act
2001, and:
• comply with Accounting Standards; and
• give a true and fair view of the financial position as at 31 December 2022 and of the performance for the year
ended on that date of the consolidated group;
2.
3.
in the directors opinion, the attached financial statements are in compliance with international financial reporting
standards, as stated in note 1 to the financial statements,
in the Directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts
as and when they become due and payable, and
4.
the directors have been given the declarations required by Section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors pursuant to Section 295(5) of the
Corporations Act 2001.
On behalf of the directors,
Mr C Rabie
Chairman
Sydney, 30 March 2023
48
Consolidated Statement of Profit or Loss
for the year ended 31 December 2022
Continuing operations
Revenue
Product costs
Employee benefits expenses
Marketing expenses
Premises and establishment expenses
Telecommunications
Legal and professional expenses
Other expenses
Transaction costs
Transaction related share based payment expenses
Other income - Cares Act loan forgiveness
Note
Consolidated
2022
$’000
2021
$’000
Restated1
3, 4
51,228
3
(7,506)
49,517
(7,003)
(17,093)
(17,276)
(3,393)
(3,136)
(600)
(335)
(752)
(561)
(343)
(837)
(3,105)
(2,791)
-
(411)
26(c)
(483)
(1,099)
3
-
1,202
Depreciation and amortisation of other non-current assets
3 (13,133)
(11,370)
Finance costs
Profit before income tax
Income tax expense
Profit for the year attributable from continuing operations
Profit from discontinued operations
Profit for the year
Profit attributable to:
Owners of the parent
Non - controlling interest
Profit for the year
3
5
(72)
4,756
(1,166)
3,590
26(e)
53,224
56,814
57,778
(964)
56,814
(433)
5,459
190
5,649
3,566
9,215
9,822
(607)
9,215
Earnings per share for profit attributable to the parent
Cents
Cents
Basic Earnings per Share
Diluted Earnings per Share
Earnings per share from continuing operations for profit attributable to the parent
Basic earnings per share
Diluted earnings per share
Earnings per share from discontinued operations for profit attributable to the parent
Basic earnings per share
Diluted earnings per share
1 Restated to reflect the sale of the Practice Management Group, Accountants business, refer 26(e)
The above consolidated income statement should be read in conjunction with the accompanying notes.
51.0
49.9
22
22
4.0
3.9
47.0
46.0
8.7
8.4
5.5
5.4
3.2
3.0
49
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 31 December 2022
Note
Consolidated
2022
$’000
2021
$’000
Restated1
56,814
9,215
Profit for the year
Other comprehensive income/(loss), net of income tax
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translation of foreign operations - continuing operations
Exchange difference on translation of foreign operations - discontinued operations
Fair value movement on interest rate swap
Total other comprehensive income/(loss), net of income tax
21
21
21
695
(154)
58
599
219
(3)
199
415
Total comprehensive income for the year
57,413
9,630
Total comprehensive income attribute to:
Owners of the parent
Non - controlling interest
58,377
10,237
(964)
(607)
57,413
9,630
1 Restated to reflect the sale of the Practice Management Group, Accountants business, refer 26(e)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
50
Consolidated Statement
of Financial Position
as at 31 December 2022
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivables
Other assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Property, plant and equipment
Deferred tax assets
Intangible assets
Other assets
Right of use assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Contract liabilities
Other financial liabilities
Current tax liabilities
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Provisions
Contract liabilities
Lease liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Retained earnings
Total Equity attributable to owners of the parent
Non - controlling interest
Total Equity
Note
Consolidated
2022
$’000
2021
$’000
26
7
8
7
9
11
12
8
10
15
17
14
10
13
16
15
17
10
20
21
1,233
1,949
347
-
1,448
4,977
146
686
985
31,017
96
2,037
34,967
39,944
3,329
1,927
5,804
-
299
1,091
12,450
250
4,074
2,389
206
1,330
1,329
9,578
22,028
17,916
1,394
2,969
566
420
1,937
7,286
-
1,810
42
58,202
170
4,362
64,586
71,872
4,468
3,022
5,912
58
-
1,737
15,197
1,183
16,137
3,995
268
-
3,269
24,852
40,049
31,823
19,534
(48,087)
45,698
17,145
771
17,916
20,524
(48,626)
58,631
30,529
1,294
31,823
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
51
Consolidated Statement
of Changes in Equity
for the year ended 31 December 2022
Issued
capital
Share
buyback
reserve
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Swap
hedging
reserve
Retained
earnings
Acquisition
of non
controlling
interest
reserve
Non-
controlling
interest
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total
Balance at
1 January 2022
20,524 (42,018)
(1,689)
1,291
(58)
58,631
(6,152)
1,294
31,823
-
-
-
-
-
-
-
-
-
-
-
541
-
541
-
-
-
-
-
-
-
-
-
-
472
-
(1,003)
468
-
3
-
-
58
57,778
-
-
58
57,778
-
-
-
-
-
-
-
(70,243)
-
(468)
-
-
-
-
-
-
-
-
-
-
-
-
(964)
56,814
-
-
541
58
(964)
57,413
441
913
-
-
-
-
-
(70,243)
(1,003)
-
(990)
3
Profit for the year
Other comprehensive income:
-
-
-
-
-
-
-
-
(990)
-
Exchange differences
on translation of
foreign operations
Fair value movement
on interest rate swap
Total comprehensive
income
Share based
payments expense
(note 3)
Dividends paid
(note 27)
Vested shares
Treasury shares
transferred to
retained earnings
Treasury shares
acquired
Exchange
adjustment
Balance at
31 December
2022
19,534 (42,018)
(1,148)
1,231
-
45,698
(6,152)
771
17,916
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
52
Consolidated Statement
of Changes in Equity (continued)
for the year ended 31 December 2022
Issued
capital
Share
buyback
reserve
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Swap
hedging
reserve
Retained
earnings
Acquisition
of non
controlling
interest
reserve
Non-
controlling
interest
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total
20,524 (42,018)
(1,905)
679
(257)
54,508
(6,152)
-
25,379
Balance at
1 January 2021
Non - controlling
interest at date of
acquisition
(note 26 (c))
Profit for the year
Other comprehensive income:
Exchange differences
on translation of
foreign operations
Fair value movement
on interest rate swap
Total comprehensive
income
Share based
payments expense
(note 3)
Dividends paid
(note 27)
Vested shares
Treasury shares
transferred to
retained earnings
Exchange
adjustment
Balance at
31 December
2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
216
-
216
-
-
-
-
-
-
-
-
-
-
598
-
(43)
56
1
-
-
-
199
-
9,822
-
-
199
9,822
-
(5,665)
22
(56)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
849
849
(607)
9,215
-
-
216
199
(607)
9,630
1,059
1,657
-
-
-
(7)
(5,665)
(21)
-
(6)
20,524 (42,018)
(1,689)
1,291
(58)
58,631
(6,152)
1,294
31,823
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
53
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Payment for capitalised development costs
Interest (paid) / received
Income taxes paid
Note
Consolidated
Inflows/(Outflows)
2022
$’000
2021
$’000
70,767
80,195
(43,536)
(47,447)
(19,157)
(20,347)
372
(759)
(548)
(1,068)
Net cash inflow from operating activities
26(b)
7,687
10,785
Cash Flows From Investing Activities
Proceeds from sale of business
26(e) and 26(d)
78,381
12,892
Cash balance on acquisition of subsidiary
26(c)
Loan repayments received
Payment for property, plant and equipment
-
-
(213)
613
131
(739)
Net cash inflow from investing activities
78,168
12,897
Cash Flows From Financing Activities
Repayment of borrowings
Payments for lease liabilities capitalised under AASB 16
Payment for treasury shares
(12,063)
(15,651)
(1,631)
(2,121)
(1,993)
(21)
Dividends paid to owners of the parent
27
(70,243)
(5,665)
Net cash outflow from financing activities
(85,930)
(23,458)
Net Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash transferred on sale of the Practice Management Accountant Group
Effects of exchange rate changes on cash and cash equivalents
(75)
1,394
(93)
7
224
1,134
-
36
Cash and cash equivalents at the end of the financial year
26(a)
1,233
1,394
The above consolidated statement of cash flows should be read in conjunction with the accompanying note.
54
Notes to the Financial Statements
for the year ended 31 December 2022
1 Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial report are set out below. Unless otherwise
stated, the accounting policies adopted are consistent with those of the previous year. The financial report includes
the consolidated entity consisting of Reckon Limited and its subsidiaries. For the purposes of preparing the
consolidated financial statements, the company is a for-profit entity.
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards and
Interpretations and the Corporations Act 2001, and complies with the other requirements of the law.
Compliance with Australian Accounting Standards ensures that the consolidated financial statements and notes of
Reckon Limited comply with International Financial Reporting Standards (IFRSs). Consequently, this financial report
has been prepared in accordance with and complies with IFRSs as issued by the International Accounting Standards
Board.
The financial statements were authorised for issue by the directors on 30 March 2023.
The financial report has been prepared in accordance with the historical cost convention, except for the revaluation
of certain non-current assets and financial instruments. Historical cost is generally based on the fair values of the
consideration given in exchange for assets. The company is a company of the kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that
Corporations Instrument amounts in the financial report are rounded to the nearest thousand dollars, unless
otherwise indicated.
COVID-19 Impact
The Reckon Group has again displayed its resilience, by posting revenue growth in these extraordinary times. This
is despite revenue growth being hampered by COVID-19 in the Legal Group where there is a reliance on on-site sales
and installation activity.
No impairment is considered necessary.
The impact of the COVID-19 pandemic is ongoing and it is not practicable to estimate the potential impact, positive
or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by
the Australian Government and other countries, such maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
Significant Accounting Policies
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee;
and has the ability to use its power to affect its returns.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the date the company gains control until the date when the company ceases
to control the subsidiary.
55
Notes to the Financial Statements (continued)
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control are accounted
for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are
adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by
which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised
directly in equity and attributed to owners of the Company.
(b) Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of
assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are
recognised at their fair value, except that:
• Deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements and share-
based payment arrangements are recognised and measured in accordance with the relevant accounting
standards.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling
interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of
measurement basis is made on a transaction-by-transaction basis.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair
value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed
one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
Where a business combination involves the issuance of a put option granted to the vendor in respect of an equity
interest not owned by the parent, the present value of the put exercise price is recognised as a financial liability in the
consolidated accounts of the parent entity. The recognition of this liability effectively treats the option as if it has been
exercised, constituting a transaction between owners as owners which is recorded in equity. Any subsequent re-
measurement is considered to be part of the equity transaction and is recorded in equity via an “acquisition of non-
controlling interest reserve.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
56
(c) Depreciation and Amortisation
Depreciation is provided on plant and equipment. Depreciation is calculated on a straight-line basis. Leasehold
improvements are amortised over the period of the lease or the estimated useful life, whichever is the shorter, using
the straight-line method. The following estimated useful lives are used in the calculation of depreciation and
amortisation:
• Plant and equipment
•
Leasehold improvements
3 - 5 years
3 - 7 years
Right of use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset.
(d) Contributed Equity
Transaction Costs on the Issue of Equity Instruments
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the
proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred
directly in connection with the issue of those equity instruments and which would not have been incurred had those
instruments not been issued.
(e) Foreign Currency Translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (“the functional currency”). The consolidated financial
statements are presented in Australian dollars, which is Reckon Limited’s functional and presentation currency.
Transactions and balances
All foreign currency transactions during the financial year have been brought to account in the functional currency
using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date
are translated at the exchange rate existing at that date. Exchange differences are brought to account in the profit or
loss in the period in which they arise.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency of the consolidated entity as follows:
• Assets and liabilities are translated at the closing rate at the date of the statement of financial position;
•
Income and expenses are translated at average rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
• All resulting exchange differences are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve.
On consolidation, exchange differences arising from the translation of monetary items forming part of the net
investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such
investments, are taken directly to reserves. When a foreign operation is sold, a proportionate share of such exchange
differences are recognised in profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity at the closing rate.
57
Notes to the Financial Statements (continued)
(f) Intangible assets
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups
of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently
when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less
than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated
to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.
Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated income statement. An
impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination
of the profit or loss on disposal.
Intellectual Property
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised
at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are
acquired separately.
Customer contracts are amortised on a straight-line basis over their useful life to the Group of ten years.
Brand names are not amortised but are subject to annual impairment testing. The Group has committed to continually
use, invest in and promote acquired brands, therefore brands have been assessed to have an indefinite life.
Research and development costs
Research expenditure is recognised as an expense when incurred.
An internally-generated intangible asset arising from development is recognised if, and only if, all of the following have
been demonstrated:
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or
sell the intangible asset; and
•
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Development costs in respect of enhancements on existing suites of software applications are capitalised and
written off over a 3 to 4-year period. Development costs on technically and commercially feasible new products are
capitalised and written off on a straight-line basis over a period of 3 to 4 years commencing at the time of commercial
release of the new product.
Development costs include cost of materials, direct labour and appropriate overheads.
58
At each balance date, a review of the carrying value of the capitalised development costs being carried forward is
undertaken to ensure the carrying value is recoverable from future revenue generated by the sale of that software.
(g) Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based
on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities, and their carrying amounts in
the financial statements, and to unused tax losses.
The current tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit
or loss because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
The provisions are measured at the best estimate of the amount expected to become payable. The assessment is
based on the judgement of finance professionals within the Company and on specialist independent tax advice.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised in
relation to those temporary differences if they arose in a transaction, other than a business combination, that at the
time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. All deferred tax
liabilities are recognised.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
The company and its wholly-owned Australian resident entities have formed a tax-consolidated group and are
therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is Reckon Limited.
The Group uses the standalone approach by reference to the carrying amounts in the separate financial statements
of each entity in applying the accounting for tax consolidation.
The tax sharing agreement entered into between members of the tax-consolidated group provides for the
determination of the allocation of income tax liabilities between the entities should the head entity default on its tax
payment obligations or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement
is that each member’s liability for tax payable by the tax consolidated group is limited to the amount payable to the
head entity under the tax funding arrangement.
(h) Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to inventory on hand on a
weighted average cost basis.
(i) Share-based payments
Equity settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.
Details regarding the determination of the fair value of equity settled shared-based transactions are set out in note 19.
59
Notes to the Financial Statements (continued)
The fair value determined at grant date of the equity settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of the number of equity instruments that will eventually vest. At
each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of
the revision is recognised in the profit or loss.
(j) Employee Benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long
service leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated
future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
The Group recognises a liability and an expense for the long-term incentive plan for selected executives based on a
formula that takes into consideration the ranking of total shareholder return measured against a comparator group
of companies.
Contributions are made by the Group to defined contribution employee superannuation funds and are charged as
expenses when incurred.
(k) Financial Instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the
time frame established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the end of each reporting period.
See hedge accounting policy regarding the recognition of exchange differences where the foreign currency risk
component of a financial asset is designated as a hedging instrument for a hedge of foreign currency risk.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on trade receivables. The amount of expected
credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective
financial instrument.
60
The Group always recognises lifetime ECL (expected credit losses) for trade receivables. The expected credit losses
on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the
current as well as the forecast direction of conditions at the reporting date, including time value of money where
appropriate.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected
life of a financial instrument.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a
default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Group
considers both quantitative and qualitative information that is reasonable and supportable, including historical
experience and forward-looking information that is available without undue cost or effort.
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly since initial recognition:
•
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a
significant decrease in the debtor’s ability to meet its debt obligations;
•
an actual or expected significant deterioration in the operating results of the debtor;
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition
if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is
determined to have low credit risk if:
1.
the financial instrument has a low risk of default;
2.
the debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and
3.
adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce
the ability of the borrower to fulfil its contractual cash flow obligations.
(ii) Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes
as historical experience indicates that financial assets that meet either of the following criteria are generally not
recoverable:
•
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its
creditors, including the Group, in full.
iii) Write-off policy
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has
entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under
the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are
recognised in profit or loss.
(iv) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default
61
Notes to the Financial Statements (continued)
and loss given default is based on historical data adjusted by forward-looking information as described above. As for
the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that
are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at the original effective interest rate.
(v) Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing
for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable is recognised in profit or loss.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost or at fair value through profit or loss (FVTPL).
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of
each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the
instruments. These foreign exchange gains and losses are recognised in the ‘other gains and losses’ line item in
profit or loss (note 14) for financial liabilities that are not part of a designated hedging relationship. For those which
are designated as a hedging instrument for a hedge of foreign currency risk, foreign exchange gains and losses are
recognised in other comprehensive income and accumulated in a separate component of equity.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled
or have expired. The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risks, including foreign exchange forward contracts, options and interest rate swaps.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of
the recognition in profit or loss depends on the nature of the hedge relationship.
Further details of derivative financial instruments are disclosed in notes 1(u) and 14.
62
(l) Impairment of assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis
of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
(or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
(m) Revenue Recognition
Sale of goods and services
The Group applies the following 5-step model for revenue recognition related to contracts with customers:
a.
Identify the contract(s) with customer
b.
Identify the performance obligation in the contract
c. Determine the transaction price
d. Allocate the transaction price to the performance obligation in the contract
e. Recognise revenue when or as the entity satisfied in performance obligations.
The Group recognises sales revenue related to the transfer of promised goods or services when a performance
obligation is satisfied and when control of the goods or services passes to the customer, which is when the customer
receives the product upon delivery. The amount of revenue recognised reflects the consideration to which the Group
is or expects to be entitled in exchange for those goods or services. If the consideration promised includes a variable
amount, the Group estimates the amount of consideration to which it will be entitled and only to the extent that it is
highly probable that a significant reversal of revenue will not occur.
Contracts with customers can include various combinations of products and services, which are in certain
circumstances bundled and in other circumstances are capable of being distinct and accounted for as separate
performance obligations. Where a contract with multiple performance obligations that is not bundled, the revenue
associated with each obligation is calculated based on its stand-alone selling price.
63
Notes to the Financial Statements (continued)
Revenue is recognised over time if:
•
•
•
the customer simultaneously receives and consumes the benefits as the entity performs;
the customer controls the asset as the entity creates or enhances it; or
the seller’s performance does not create an asset for which the seller has an alternative use and there is a right
to payment for performance to date.
Where the above criteria is not met, revenue is recognised at a point in time.
The Group recognises revenue predominantly from the following sale of software and services:
Business Group desktop products
Business Group desktop products are sold with post-sale technical support services. These can be sold as a once-
off package, or on an annual subscription basis. For all Business Group desktop products contracts that contain the
sale of a licence, three distinct performance obligations are:
i.
Sale of a software/upgrade licence; and
ii. The provision of minor maintenance updates which may be made available over the period of the contracts; and
iii. Post-sale technical support for a specified period of time.
Revenue is recognised for a Business Group desktop licence at the point of sale. This is because customers purchase
a specific version of the software that exists at the time the licence is granted.
Revenue is recognised for the customer’s entitlement to access additional maintenance updates and the provision
of post-sale technical support over the time of the contract with the customer. This is due to the fact that Reckon may
provide minor maintenance updates to which the customer may be entitled over the term of the contract. In relation
to the post-sale technical support, the customer is deemed to simultaneously receive and consume the benefits
provided by Reckon’s performance of the post-sale technical support services as it is performed.
The price allocated to each performance obligation is based on the determined stand-alone selling prices of each
obligation. The price allocated to the sale of the software licence has been determined by using the adjusted market
assessment approach. The price allocated to the post-sale technical support has been determined on management’s
assessment by using an expected cost plus margin approach. The relative standalone selling price has been
apportioned to each performance obligation based on these methods.
The revenue stream forms part of “Subscription revenue” and “Other recurring revenue” as outlined in Note 4.
Reckon One (Business Group)
Reckon One is a cloud software as a service (sold on a monthly subscription basis) that is accessible to a customer
through their web browser and is sold with post-sale technical support services. Within these contracts, the contract
promises generally are:
i.
Sale of a licence;
ii. Ongoing maintenance of the cloud platform to ensure that it is accessible; and
iii. Post-sale technical support for a specified period of time.
As the customer is not able to benefit from the licence if the cloud is not accessible, two distinct performance
obligations generally are:
i.
Sale of a licence and ongoing maintenance for access to the cloud; and
ii. Post-sale technical support.
The transaction price is fixed in the contract entered into by the customer dependent on the specific modules
purchased.
64
Revenue for the licence and ongoing maintenance for the Reckon One product is recognised over the time of the
contract with the customer. Reckon is providing a continuous service of making the online portal available during the
contract period and the customer simultaneously receives and consumes the benefits provided by Reckon’s
performance as Reckon delivers the service.
Revenue for the post-sale technical support provided is also recognised over time. This is due to the fact that the
customer simultaneously receives and consumes the benefits provided by the Reckon’s performance of the post-
sale technical support services. The services are made available to the customer throughout the term of the contract.
Although there are two distinct performance obligations, both currently maintain the same contractual billing period
and are recognised over time. Accordingly, Reckon have deemed it unnecessary to allocate the transaction price
allocated to each performance obligation separately.
The revenue stream forms part of “Subscription revenue” as outlined in Note 4. Subscription revenue relates to
streams where customers use the services over the life of the contract.
Reckon Accounts Hosted (Business Group)
Reckon Accounts Hosted is a hosted software where software is accessible via a web browser or through a desktop
icon, and allows the customer to store data on the customer’s device or an external server. Reckon Accounts Hosted
can be sold as on an annual or monthly subscription basis. For all Reckon Accounts Hosted contracts that contain
the sale of a licence, the goods and services provided are:
i.
Sale of a software licence;
ii. Post-sale technical support for a specified period of time; and
iii. Hosting services for a specified period of time.
Each of the contract promises are considered as a distinct performance obligation because the customer can
benefit from the use of the software without the provision of the technical support and/or hosting services and they
are distinct within the context of the contract.
Revenue is recognised for a Reckon Accounts Hosted licence at the point of sale. This is because customers
purchase a specific version of the software that exists at the time the licence is granted.
Revenue for the hosting services and ongoing support is recognised over the time of the contract with the customer.
Reckon is providing a continuous service of hosting the customer’s data and providing post-sale technical support
over the contract period and the customer simultaneously receives and consumes the benefits provided by Reckon’s
performance as Reckon performs. The services are made available to the customer throughout the term of the
contract.
The price allocated to each performance obligation is determined based on the determined stand-alone selling
prices of each performance obligation. The price allocated to the sale of the software licence has been determined
by using the adjusted market assessment approach. The price allocated to the hosting services and post-sale
technical support has been determined on management’s assessment by using an expected cost plus a margin
approach. The relative standalone selling price has been apportioned to each performance obligation based on
these methods.
This revenue stream forms part of “Subscription Revenue” as outlined in Note 4. Subscription revenue relates to
streams where customers pay for the services over the life of the contract, rather than upfront at the commencement
of the contract.
65
Notes to the Financial Statements (continued)
Membership fees (Business Group)
Membership revenue relates to fees obtained as part of the Reckon’s Partner Program. Memberships are sold on an
annual basis. For all Membership contracts, the goods and services provided include:
i.
The provision of software licences;
ii. Access to a dedicated partner support team;
iii. A partner resource kit;
iv.
Invitations to exclusive events and training;
v. Marketing tool kits; and
vi. Annual partner awards.
Each of the contract promises above are considered to be a distinct performance obligations because the customer
can benefit from the use the software without the provision of the other contract promises listed above and they are
distinct within the context of the contract.
Revenue is recognised for a software licence at the point of sale. This is because customers purchase and obtain a
specific version of the software that exists at the time the licence is granted.
Revenue for the remaining benefits of joining the membership is recognised over time. Reckon provides a range of
different services which are delivered to the customer over the life of the contract. The nature of the services are such
that the customer simultaneously receives and consumes the benefits provided by Reckon’s performance as Reckon
performs.
The price allocated to each performance obligation is determined based on the determined stand-alone selling
prices of each performance obligation. The price allocated to the software licence has been determined based on
the adjusted market assessment approach. The price allocated to the remaining performance obligations has been
determined on management’s assessment by using an expected cost plus a margin approach. The relative
standalone selling price has been apportioned to each performance obligation based on these methods.
This revenue stream forms part of “Other Revenue” as outlined in Note 4.
Practice Management Accountant Group
APS is a desktop/cloud hybrid software as a service (sold on a subscription basis) that is accessible to a customer
for download through their web browser. This is sold with implementation services and the promise of specific
upgrades to the software modules. Without the required upgrades, the software would not be functional for the
customer. Technical support is also provided over the contract period.
The following generally are the contract promises:
i.
Sale of a licence;
ii.
Implementation services;
iii. Specific upgrades for the functionality of the software;
iv. Ongoing maintenance of the hosted platform to ensure that the software is accessible; and
v. Post-sale technical support for a specified period of time.
66
A customer is not able to benefit from the software without the implementation services and the specific upgrades,
as they are critical to the functioning of the software in its intended use. Knowledge of how to implement the software
and pass on the upgrades is proprietary to Reckon and therefore only Reckon can perform this. Therefore, the
customer is not able to use readily available resources to perform the implementation or pass on upgrades. Therefore,
one distinct performance obligation has been identified for the bundle of the sale of a licence, implementation
services, upgrades, and maintenance.
Post-sale technical support has been identified as a separate performance obligation. This is because the customer
can benefit from the use the software without the provision of the technical support and:
i.
The licence and technical support do not significantly modify or customise each other.
ii. The licence and technical support are not highly interdependent or highly interrelated as one does not significantly
affect the other.
Revenue for the performance obligation (being the bundled licence, implementation services, upgrades and
maintenance) is recognised over time. Reckon is providing a continuous service of making the software, upgrades
and the online portal available during the contract period and the customer simultaneously receives and consumes
the benefits provided by Reckon’s performance as Reckon performs.
Accordingly, revenue is recognised for Practice Management Accountant Group post-sale technical support over the
time of the contract with the customer.
As both performance obligations are recognised over the same period of time, Reckon has deemed it unnecessary
to allocate the transaction price attributed to each performance obligation separately.
This revenue stream forms part of “Subscription Revenue” as outlined in Note 4. Subscription revenue relates to
streams where customers pay for the services over the life of the contract, rather than upfront at the commencement
of the contract.
Elite (Practice Management Accountant Group)
Elite is a desktop/cloud hybrid software licence that is accessible to a customer for download through their web
browser.
Revenue is recognised for this software licence at the point of sale. This is because customers purchase and obtain
a specific version of the software that exists at the time the licence is granted.
Revenue is recognised as and when the performance obligation is transferred which is generally when the software
has been delivered to the client.
Corporate Services (Practice Management Accountant Group)
Corporate Services revenue relates to the provision of services including the registration of companies, provision of
template trust deeds and provision of company search information. These services are sold as once-off products on
an ad-hoc basis as required by a customer and deemed to have one distinct performance obligation for the services
provided.
Revenue is recognised for corporate services at the point of sale. This is because the services are provided to the
customer immediately once payment is made and there is not further obligation linked to this good.
This revenue stream forms part of “Other Revenue” as outlined in Note 4.
Practice Management Legal Group
The Practice Management Legal Group sells nQueue software and some hardware to the customer. nQueue’s
product is a cost recovery software which allows customers to track the costs associated with printing, photocopying,
and other disbursements and allocate these costs to their clients. nQueue also provides scanning and print solutions
67
Notes to the Financial Statements (continued)
to its clients. nQueue licences are sold with implementation and post-sale technical support services. nQueue
licences are sold either as a bundle including post-technical support services, but with implementation services sold
separately (subscription model) or the software, support and implementation services are all sold separately (upfront
model).
For Practice Management Legal Group upfront model, three distinct performance obligations have been identified:
i.
The provision of the software licence; and
ii. The provision of implementation services; and
iii. The provision of support services over the life of the contract.
Revenue is recognised for the licence at the point of sale. This is because customers purchase a specific version of
the software that exists at the time the licence is granted.
Revenue is recognised for the implementation services at point at which the services have been provided. These
services are sold on an ad-hoc basis as required by a customer and deemed to have one distinct performance
obligation for the services provided.
The support services have been deemed to be a separately distinct performance obligation. These services are
provided to customers who have existing contracts with nQueue. Customers can choose to purchase the support
services on a yearly basis. As such, the customer can benefit from support services on their own. It is noted that
support services are all separately identifiable within the context of the contract because support services do not
significantly modify the software.
The price allocated to the provision of the software licence and implementation services, and well as the price
allocated to the support services is based upon a price list and is separately identifiable.
Revenue for the software licence and implementation services is recognised as and when the performance obligation
is transferred which is generally when installation is completed.
Conversely, revenue for the provision of support services is recognised over the life of the contact as the benefits
from any support is simultaneously consumed by the customer as it is provided. The services are made available to
the customer throughout the term of the contract.
Revenue for the performance obligation related to the subscription model (being the bundled licence and support) is
recognised over time. Reckon is providing a continuous service of making the software and support available so long
as the customer continues to pay for the service. As the customer is not able to benefit from the software and
support if Reckon does not grant continuous access, the performance obligation is transferred over the term of the
contract. The customer simultaneously receives and consumes the benefits provided by Reckon’s performance as
Reckon performs.
This software licence and implementation services revenue above forms part of “other revenue” and revenue from
the sale of subscription products and the provision of support services forms part of “subscription revenue” as
described in Note 4.
Cost of obtaining a customer contract
AASB 15 requires that incremental costs associated with acquiring a customer contract, such as sales commissions,
are recognised as an asset and amortised over a period that corresponds with the period of benefit.
An assessment of commissions paid by the Group was performed in connection with the sale of all products. The
contracts for which commissions are paid vary in length however commissions are expensed over a maximum of 12
months.
There are no other costs incurred that are considered to be incremental.
68
The following table summarises the revenue recognition of major sale of software and services:
Revenue stream
Performance obligation
Timing of recognition
Business Group desktop
products
Sale of a software licence
At the point of sale.
Maintenance updates
Over the time of the contract with the
customer.
Post-sale technical support for a specified
period of time
Over the time of the contract with the
customer.
Reckon One
Sale of licence and ongoing maintenance for
access to the cloud
Over the time of the contract with the
customer.
Post-sale technical support for a specified
period of time
Over the time of the contract with the
customer.
Reckon Accounts Hosted
Sale of a software licence
At the point of sale.
Post-sale technical support for a specified
period of time
Over the time of the contract with the
customer.
Hosting services for a specified period of
time
Over the time of the contract with the
customer.
Membership fees – sale of
license
Sale of a software licence
At the point of sale.
Membership fees – support
Additional membership benefits
Over the time of the contract with the
customer.
Practice Management
Accountant Group
Sale of a bundled licence, implementation
services, upgrade and maintenance.
Over the time of the contract with the
customer.
Post-sale technical support
Over the time of the contract with the
customer.
Corporate Services Revenue
Provision of corporate services
At the point of sale.
Practice Management Legal
Group
The provision of the software licence and
implementation services
At the point of sale.
The provision of support services (upfront
model) and software and support services
(subscription model) over the life of the
contract
Over the time of the contract with the
customer.
Interest
Interest revenue relates to revenue recognised from the provision of loans to customers and is accounted for per the
requirements of AASB 9 Financial Instruments. Interest revenue is recognised as interest accrues using the effective
interest method, which is a method of calculating the amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
69
Notes to the Financial Statements (continued)
(n) Contract liabilities
Contract liabilities relate to payments received from customers for performance obligations which have not yet been
fulfilled. Contract liabilities arise when payment for performance obligations do not match the timing of when the
performance obligations are satisfied. Contract liabilities are recognised at the inception of the contract and unwound
as the performance obligation is satisfied over the life of the contract.
(o) Earnings per share
Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the figures in the determination of basic earnings per share by taking into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of dilutive potential ordinary shares.
(p) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and bank overdrafts.
(q) Borrowings
Borrowings are initially measured at fair value, net of transaction costs and are subsequently measured at amortised
cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective
interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
(r) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which
it is probable that an outflow of economic benefits will result and that the outflow can be reliably measured.
(s) Fair Value estimation
The fair value of financial instruments and share based payments that are not traded in an active market is determined
using appropriate valuation techniques. The Group uses a variety of methods and assumptions that are based on
existing market conditions. The fair value of financial instruments traded on active markets (quoted shares), are based
on balance date bid prices.
The Directors consider that the nominal value less estimated credit adjustments of trade receivables and payables
approximate their fair values.
(t) Government Grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government
grants whose primary condition is that the Group should continue to develop its range of software products, are
70
offset against development costs in the statement of financial position and transferred to profit or loss on a systematic
and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Group with no future related costs are recognised as other income in
profit or loss in the period in which they become receivable.
Government assistance which does not have conditions attached specifically relating to the operating activities of
the entity is recognised in accordance with the accounting policies above.
(u) Hedge Accounting
The Group enters into derivative financial instruments to manage its exposure to interest rate risk, including interest
rate swaps which is designated as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether
the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item
attributable to the hedged risk, which is when the hedging relationship meets all of the following hedge effectiveness
requirements:
•
•
•
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that
the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that
quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk
management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio
of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognised in other comprehensive income and accumulated under the heading of swap hedging reserve. The
gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other
gains and losses’ line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit
or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item.
However, when the hedged forecast transaction that is hedged results in the recognition of a non-financial asset or
a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated
in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or
nonfinancial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument
expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss
recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
Note 14 sets out details of the fair values of the derivative instruments used for hedging purposes.
71
Notes to the Financial Statements (continued)
(v) Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.
For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the
term of the lease unless another systematic basis is more representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the Group’s incremental borrowing rate. This rate has been determined by considering the
nature of the leased assets, the Group’s credit rating and the borrowing rate of funds in similar economic environments.
Lease payments included in the measurement of the lease liability compromise:
•
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use assets)
whenever:
• The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which
case the lease liabilities is remeasured by discounting the revised lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under
guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised leased
payments using the initial discount rate (unless the lease payments change is due to a change in a floating
interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case
the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made
at or before the commencement day and any initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects
to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial position.
The Group applies AASB 136 Impairment of Assets to determine whether a right-of-use asset is impaired and
accounts for any identified impairment loss as described in the ‘Property, plant and equipment’ policy.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and
the right-of-use asset. The related payments are recognised as an expense in the period in which the event or
condition that triggers those payments occurs and are included in the line ‘premises expenses or other expenses’ in
the statement of profit or loss.
(w) Discontinued operations
A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held
for sale and that represents a separate major line of business or geographical area of operations, is part of a single
72
co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued operations are presented separately on the face of the statement of
profit or loss and other comprehensive income.
(x) Significant accounting judgments, estimates and assumptions
Significant accounting judgments
In applying the Group’s accounting policies, management has made the following judgments which have the most
significant effect on the financial statements:
Capitalisation of development costs – the Group has adopted a policy of capitalising development costs only for
products for which an assessment is made that the product is technically feasible and will generate definite economic
benefits for the Group going forward. The capitalised costs are subsequently amortised over the expected useful life
of the product.
Revenue recognition – The Group has made judgements in relation to the bundling of contract promises into a single
distinct performance obligation by determining whether the contract promises are separately identifiable in the
context of the contract. The Group has also used judgement in allocating the transaction price to revenue streams
which have more than one performance obligation and where the stand-alone selling price is not directly observable.
The Group has applied the expected cost plus a margin approach in estimating these prices as described in Note
1(m) above.
ECL on impairment of financial assets – An allowance for doubtful debts is recognised based on the expected credit
loss (ECL) from the time the receivable is initially recognised. The ECL is based on a provision matrix that reflects the
Group’s historical credit loss experience, adjusted for management’s knowledge of specific customers’ circumstances,
as well as current collection trends and business conditions.
Basis of consolidation – In assessing whether it has control over the nQueue Zebraworks Inc. Group following the
acquisition in February 2021, the Group has made some key judgements, including contractual arrangements
between the Group and shareholders, which provides the Group with the ability to execute power over the relevant
activities of nQueue Zebraworks Inc. Following this assessment, the Group concluded that it has control.
Significant accounting estimates and assumptions
The carrying amount of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a significant risk of causing material adjustment to the
carrying amounts of certain assets and liabilities are:
Impairment of goodwill – the Group determines whether goodwill is impaired on an annual basis. This requires an
estimation of the recoverable amount of the cash-generating unit to which the goodwill is allocated. The assumptions
used in this estimation, and the effect if these assumptions change, are disclosed in Note 12.
Share based payments – the Group measures the cost of equity-settled transactions with employees by reference
to the fair value of the equity instruments at the date on which they are granted. The fair value has been determined
using a model that adopts Monte Carlo simulation approach and by external valuation reports, and the assumptions
related to this can be found in Note 19 and 26 (c).
Product life and amortisation – the Group amortises capitalised development costs based on a straight-line basis
over a period of 3-4 years commencing at the time of commercial release of the new product. This is the assessed
useful life.
Deferred consideration - the Group assesses the likelihood of the payment of deferred consideration on its business
combinations based on budgeted and forecast performance.
73
Notes to the Financial Statements (continued)
(y) New Accounting Standards
The Group has adopted all of the new and revised Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current reporting
period.
None of the new standards or revisions that are mandatory for the first time materially affected any of the amounts
recognised in the current period or any prior period and are not likely to significantly affect future periods.
The Group has not early adopted any new or revised Accounting Standards and Interpretations issued by AASB
which are not yet effective during the year.
(z) Working capital deficiency
The consolidated statement of financial position indicates an excess of current liabilities over current assets of $7,473
thousand (2021: $7,911 thousand). This arises partly due to the adoption of AASB 16, whereby the right of use assets
are treated as non-current assets, whereas a portion of the lease liabilities are treated as current liabilities. Net cash
inflows from operating activities for the year were $7,687 thousand (2021: $10,785 thousand). Unused bank facilities
at balance date was $19,477 thousand. Also, included in current liabilities are contract liabilities of $5,804 thousand
(2021: $5,912 thousand), settlement of which will involve substantially lower cash outflows.
Given the above, the Directors believe that preparation of the financial report on a going concern basis is appropriate.
2 Segment Information
Operating segments are identified on the basis of internal reports about components of the Group that are regularly
reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its
performance.
(a) Business segment information
The consolidated entity is organised into three operating divisions:
• Business Group
• Practice Management Group, Accountant (Discontinued in 2022)
• Practice Management Group, Legal
These divisions are the basis upon which the consolidated entity reports its financial information to the chief operating
decision maker, being the Board of directors.
The principal activities of these divisions are as follows:
•
Business Group - development, distribution and support of business accounting and personal financial software,
as well as related products and services. Products sold in this division include Reckon Accounts and Reckon One.
• Practice Management Group, Accountant - development, distribution and support of practice management,
tax, client accounting and related software under the APS brand and Reckon Elite brand (Discontinued in 2022).
• Practice Management Group, Legal - development, distribution and support of cost recovery, scan and cloud-
based integration platforms under the nQ Zebraworks brand predominantly to the legal market.
74
2 Segment Information (continued)
2022
Operating revenue
Segment results
EBITDA1
Depreciation and amortisation
Segment profit before tax
Central administration costs
Transaction related share based
payment expenses (refer note 26(c))
Finance (costs) / income
Profit before income tax
Income tax expense
Profit for the year
2021 Restated3
Operating revenue
Segment results
EBITDA1
Depreciation and amortisation
Segment profit before tax
Central administration costs
Transaction costs2
Transaction related shared based
payment expenses (refer note 26(c))
Other income - Cares Act loan
foregiveness (refer note 3)
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Business
Group
$’000
Practice
Management
Legal Group
$’000
Continuing
Operations
Discontinued
Operations
Consolidated
Group
40,799
10,429
51,228
13,469
64,697
21,036
(8,692)
12,344
222
(4,441)
(4,219)
21,258
(13,133)
8,125
(2,814)
(483)
(72)
4,756
(1,166)
3,590
74,860
(4,591)
70,269
-
-
531
70,800
(17,576)
53,224
96,118
(17,724)
78,394
(2,814)
(483)
459
75,556
(18,742)
56,814
39,881
9,636
49,517
22,556
72,073
20,379
(7,771)
12,608
514
(3,599)
(3,085)
20,893
(11,370)
9,523
(3,323)
(411)
(1,099)
1,202
(433)
5,459
190
5,649
12,185
(7,534)
4,651
-
-
-
-
(342)
4,309
(743)
3,566
33,078
(18,904)
14,174
(3,323)
(411)
(1,099)
1,202
(775)
9,768
(553)
9,215
1 EBITDA means earnings before interest tax, depreciation and amortisation.
2 Transaction costs relate to merger of the Legal Group and Zebraworks.
3 Restated to reflect the sale of the Practice Management Group, Accountants business, refer 26(e)
The revenue reported above represents revenue generated from external customers. Segment profit represents the
profit earned by each segment without allocation of central administration costs, new market expenditure, finance
costs and income tax expense, all of which are allocated to Corporate head office. This is the measure reported to
the chief operating decision maker for the purposes of resource allocation and assessing performance.
No single customer contributed 10% or more of Group revenue for either 2022 or 2021.
75
Notes to the Financial Statements (continued)
2 Segment Information (continued)
Assets
Liabilities
Additions to non-
current assets
Segment assets and liabilities
2022
$’000
2021
$’000
2022
$’000
2021
$’000
2022
$’000
2021
$’000
Business Group
19,418
19,576
8,564
10,603
10,787
9,148
Practice Management Group, Legal
15,919
14,027
6,702
5,154
4,985
4,676
Corporate Division
4,607
4,113
6,762
20,554
-
-
Continuing operations
39,944
37,716
22,028
36,311
15,772
13,824
Practice Management Group, Accountant
(Discontinued)
-
34,156
-
3,738
4,212
8,663
39,944
71,872
22,028
40,049
19,984
22,487
(b) Geographical information
Australia
United States of America
Other countries (i)
Continuing operations
Discontinued operations
Revenue from external
customers
Non-current assets
2022
$’000
2021
$’000
2022
$’000
2021
$’000
38,650
37,686
20,815
19,835
8,740
3,838
7,760
13,730
8,689
4,071
422
2,893
51,228
49,517
34,967
31,417
13,469
22,556
-
33,169
64,697
72,073
34,967
64,586
(i) No other country outside of Australia and the United States of America are considered to generate revenues which are material to the group.
76
3 Profit for the Year
Profit before income tax includes the following items of revenue and expense:
Revenue
Sales revenue
Subscription revenue
Other recurring revenue
Loans revenue
Other revenue
Sale of goods and rendering of services
Expenses
Product costs
Expected credit losses:
Other Entities
Depreciation of non-current assets:
Property, plant and equipment
Amortisation of non-current assets:
Leasehold improvements
Right of use assets
Intellectual property
Development costs
Total depreciation and amortisation
Foreign exchange losses / (gains)
Employee benefits expense:
Post employment benefits – defined contribution plans
Termination benefits
Equity settled share based payments
Finance costs/(income):
Loans/overdrafts
Leases
Other
Operating lease rental expenses:
Minimum lease payments
Other income - Cares Act loan forgiveness
Consolidated
2022
$’000
2021
$’000
Restated1
46,708
43,898
236
186
4,098
51,228
1,051
248
4,320
49,517
7,506
7,003
67
824
178
699
14
11,418
13,133
(14)
1,988
57
913
179
72
(179)
72
224
-
333
817
251
826
25
9,451
11,370
31
2,088
84
1,657
246
97
90
433
404
1,202
In the prior year, the Legal Group in the USA received a loan under the “CARES“ Act. This was received as part of
the USA stimulus package to assist small businesses during the COVID-19 crisis. The loan was able to be forgiven if
the use of the loan met certain criteria, which included retaining our USA employees. The criteria have been met and
so the loan has been forgiven.
1 Restated to reflect the sale of the Practice Management Group, Accountants business, refer 26(e)
77
Notes to the Financial Statements (continued)
4 Revenue
Primary
segments
2022
Product Description
Subscription
revenue
Licence, support and
hosting
Other recurring
revenue
Licence
Support
Licence
Over time
11,405
Point in time
26,045
Over time
Point in time
7
229
186
382
-
662
40,799
Loan income
Interest and commission
Over time
Other revenue Membership support
Over time
Membership fees - license
Point in time
1,883
Licence and implementation Point in time
Other
Point in time
Total revenue for continuing operations
Discontinued operations
Subscription
revenue
Bundled licence, support,
hosting and implementation
Over time
Other revenue
Licence and implementation Point in time
Revenue
recognition
Busines
Group
$’000
Practice
Management
Accountant
Group
$’000
Practice
Management
Legal Group
$’000
Consolidated
Group
$’000
-
-
-
-
-
-
-
-
-
-
9,258
20,663
-
-
-
-
-
-
1,171
-
26,045
7
229
186
382
1,883
1,171
662
10,429
51,228
-
-
13,027
442
-
-
13,027
442
40,799
13,469
10,429
64,697
2021 Restated
Subscription
revenue
Licence, support and
hosting
Other recurring
revenue
Licence
Support
Licence
Over time
10,334
Point in time
25,257
Over time
32
Point in time
1,019
Loan income
Interest and commission
Over time
Other revenue Membership support
Over time
248
399
Membership fees - license
Point in time
2,030
Licence and implementation Point in time
Other
Point in time
Total revenue for continuing operations
Discontinued operations
-
562
39,881
-
-
-
-
-
-
-
-
-
-
Subscription
revenue
Bundled licence, support,
hosting and implementation
Over time
Other revenue
Licence and implementation Point in time
Corporate services
Point in time
-
-
-
21,357
430
769
8,307
18,641
-
-
-
-
-
-
1,329
-
25,257
32
1,019
248
399
2,030
1,329
562
9,636
49,517
-
-
-
21,357
430
769
78
39,881
22,556
9,636
72,073
5 Income Tax
(a) Income tax expense recognised in profit and loss
Current tax
Deferred tax
Over provided in prior years
(b) The prima facie income tax expense on pre-tax accounting profit
reconciles to the income tax expense in the financial statements as follows:
Profit before income tax from continuing operations
Profit before income tax from discontinued operations
Profit before income tax
Income tax expense calculated at 30% of profit
Tax Effect of:
Effect of lower tax rates on overseas income
Utilisation of prior period capital tax losses not previously brought to account
Tax effect of non-deductible/non-taxable items:
Proceeds on sale of business
Research and development claims
Sundry items
Over provision in prior years
Income tax expense attributable to profit
Comprising:
Continuing operations
Discontinued operations
The tax rate used for the 2022 and 2021 reconciliations above is the corporate tax
rate of 30% payable by Australian corporate entities on taxable profits under
Australian tax law.
(c) Future income tax benefits not brought to account as an asset:
Tax losses:
Revenue
Capital
Consolidated
2022
$’000
2021
$’000
18,631
180
(69)
18,742
4,756
70,800
75,556
22,667
110
(152)
(3,282)
(646)
114
18,811
(69)
18,742
1,166
17,576
18,742
2,027
(960)
(514)
553
5,459
4,309
9,768
2,930
(17)
(1,135)
-
(780)
69
1,067
(514)
553
(190)
743
553
460
1,204
1,664
694
1,155
1,849
79
Notes to the Financial Statements (continued)
6 Remuneration of Auditors
(a) BDO and Deloitte Touche Tohmatsu
During the year, the auditors of the parent entity earned the following remuneration:
BDO
Auditing and reviewing of financial reports
Tax compliance and other consulting services
Deloitte Touche Tohmatsu
Auditing and reviewing of financial reports
Tax compliance and other consulting services
(b) Other Auditors
Auditing and reviewing of financial reports
Tax compliance and other consulting services
Consolidated
2022
$
2021
$
233,402
168,000
64,033
46,000
297,435
214,000
-
-
-
46,350
86,740
133,090
297,435
347,090
59,258
65,306
61,317
62,325
120,575
127,631
80
7 Trade and Other Receivables
Current:
Trade receivables (i)
Allowance for Expected Credit Loss (ECL)
Other receivables
Non-current:
Other receivables
(i) The ageing of past due receivables at year end is detailed as follows:
Past due 0 – 30 days
Past due 31 – 60 days
Past due 61+ days
Total
The movement in the ECL in respect of trade receivables is detailed below:
Balance at beginning of the year
Amounts written off during the year
Increase in ECL recognised in the profit and loss
Balance at end of year
Consolidated
2022
$’000
2021
$’000
1,881
2,739
(30)
(149)
1,851
2,590
98
379
1,949
2,969
146
-
1,005
1,124
73
138
85
445
1,216
1,654
149
(67)
(52)
30
463
(337)
23
149
81
Notes to the Financial Statements (continued)
7 Trade and Other Receivables (continued)
To determine the expected credit loss of trade receivables, a provision matrix is determined based on historic credit
loss rates for each group of customers, adjusted for any material expected changes to the customers’ future credit
risk. On that basis, the credit loss allowance as at 31 December 2022 was determined as follows:
2022
Receivables
Current
Past due 1 to 30 days
Past due 30 to 60 days
Past due over 60 days
Total receivables
Allowance based on historic credit losses
Adjustment for expected changes in credit risk1
Credit loss allowance
Net carrying amount
Business Group
$’000
Legal Practice
Management
Group
$’000
342
39
15
25
324
965
58
113
Group
$’000
666
1,004
73
138
421
1,460
1,881
3
13
16
14
-
14
17
13
30
405
1,446
1,851
1 Adjustment to reflect the expected change in the probability of default relating to customers that are over 60 days past due and those customers
specifically identified.
82
7 Trade and Other Receivables (continued)
2021
Receivables
Current
Past due 1 to 30 days
Past due 30 to 60 days
Past due over 60 days
Business
Group
$’000
Legal Practice
Management
Group
$’000
Accountant
Practice
Management
Group
$’000
254
27
28
34
294
1,017
30
229
Group
$’000
1,085
1,124
85
445
2,739
56
93
149
537
80
27
182
826
3
12
15
Total receivables
343
1,570
Allowance based on historic credit losses
Adjustment for expected changes in credit risk1
Credit loss allowance
1
6
7
52
75
127
Net carrying amount
336
1,443
811
2,590
1 Adjustment to reflect the expected change in the probability of default relating to customers that are over 60 days past due and those customers
specifically identified.
83
Notes to the Financial Statements (continued)
Consolidated
2022
$’000
2021
$’000
1,448
1,877
-
60
1,448
1,937
59
37
96
61
109
170
8 Other Assets
Current:
Prepayments
Other
Non current:
Prepayments
Other
84
9 Property, Plant and Equipment
Leasehold Improvements
At cost
Less: Accumulated amortisation
Total leasehold improvements
Plant and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
Consolidated
2022
$’000
1,082
(896)
186
5,056
(4,556)
500
686
2021
$’000
2,594
(1,882)
712
10,736
(9,638)
1,098
1,810
Consolidated
Carrying amount at 1 January 2022
Additions net of disposals
Effect of foreign currency exchange differences
Capitalised lease incentive reallocated
Sale of Practice Management Accountant Group (refer note 26(e))
Depreciation/amortisation expense
Balance at 31 December 2022
Consolidated
Carrying amount at 1 January 2021
Additions
Effect of foreign currency exchange differences
Capitalised lease incentive reallocated
Depreciation/amortisation expense
Balance at 31 December 2021
Leasehold
Improvements
$’000
Plant and
Equipment
$’000
Total
$’000
712
(103)
(2)
143
(271)
(293)
186
713
261
7
181
(450)
712
1,098
1,810
207
25
-
(203)
(627)
500
104
23
143
(474)
(920)
686
1,209
1,922
491
29
-
(631)
1,098
752
36
181
(1,081)
1,810
85
Notes to the Financial Statements (continued)
10 Right of Use Assets/Lease liabilities
Consolidated
2022
$’000
2021
$’000
6,363
11,324
(4,326)
(6,962)
2,037
4,362
1,091
1,329
2,420
1,091
1,136
193
-
1,737
3,269
5,006
1,737
1,544
1,474
251
2,420
5,006
4,362
5,960
98
(9)
(1,010)
263
11
-
(1,404)
(1,872)
2,037
4,362
Right of use assets
At cost
Less: Accumulated amortisation
Lease liabilities
Current
Non-current
Lease liabilities maturity profile
Year 1
Year 2
Year 3
Year 4
Consolidated Right of Use Assets
Carrying amount at 1 January
Additions
Effect of foreign currency exchange differences
Sale of Practice Management Accountant Group (refer note 26(e))
Depreciation/amortisation expense
Balance at 31 December
Leases relate to office premises with lease terms of between 1 to 7 years.
86
11 Deferred Tax Assets
The balance comprises temporary differences attributable to:
Expected credit loss
Employee benefits
Recoverable losses
Other provisions
Details of unrecognised deferred tax assets can be found in Note 5(c)
Reconciliation:
Opening balance at 1 January
(Charged) / credited to profit or loss
Balance at 31 December
12 Intangibles
Intellectual property – at cost (i)
Accumulated amortisation
Development costs – at cost
Accumulated amortisation
Goodwill – at cost
(i) The intellectual property carrying amount comprises of customer contracts.
Consolidated movements in intangibles
At 1 January 2022
Additions
Note
Goodwill
$’000
18,349
-
Sale of Practice Management Accountant Group
26 (e)
(14,641)
Impairment to goodwill
Effect of foreign currency exchange differences
Amortisation charge
At 31 December 2022
At 1 January 2021
Additions
Disposal
Effect of foreign currency exchange differences
Amortisation charge
At 31 December 2021
(684)
147
-
3,171
29,107
221
(11,124)
145
-
18,349
26(c)
26(d)
Consolidated
2022
$’000
2021
$’000
-
2
983
-
985
42
943
985
2
20
-
20
42
50
(8)
42
14,655
14,655
(14,655)
(14,641)
-
14
99,658
175,587
(71,812)
(135,748)
27,846
39,839
3,171
31,017
18,349
58,202
Intellectual
Property
$’000
14
Development
Costs
$’000
39,839
19,782
Total
$’000
58,202
19,782
-
-
-
-
(14)
-
39
-
-
-
(25)
14
(16,504)
(31,145)
-
437
(684)
584
(15,708)
(15,722)
27,846
31,017
36,586
21,251
(1,540)
(39)
65,732
21,472
(12,664)
106
(16,419)
(16,444)
39,839
58,202
87
Notes to the Financial Statements (continued)
12 Intangibles (continued)
Impairment test for goodwill
Goodwill is allocated to the Group’s cash generating units (CGUs) identified based on how
the businesses are managed and reported on and taking into account the use of shared
resources, as follows
Business Group
Practice Management Group, Accountant - Discontinued
Practice Management Group, Legal
Consolidated
2022
$’000
2021
$’000
46
-
3,125
3,171
730
14,641
2,978
18,349
The recoverable amount of a CGU is the higher of its fair value less costs of disposal or its value in use. The Group has used the
value in use assessment method in the current year.
In assessing impairment using value in use for the Business Group, the estimated future cash flows are discounted to their present
value using a post-tax discount rate of 10.9% (2021:10.8%) which reflects current market assessments of the time value of money
and the risks specific to the GCU for which the estimates of future cash flows have not been adjusted. Value in use calculations
utilise the most recently completed approved budgets for the forthcoming year. Subsequent cash flows are projected using
constant long term average growth rates of 2.5% per annum (2021:2.5%).
In assessing impairment using value in use for the Legal Group, the estimated future cash flows are discounted to their present
value using a post-tax discount rate of 13% (2021:11% for the existing business and 25% for the new practice management
business recently commenced), which reflects current market assessments of the time value of money and the risks specific to the
CGU for which the estimates of future cash flows have not been adjusted. Value in use calculations utilise the most recently
completed approved budgets for the forthcoming year and forecasts for a further 2 years. Subsequent cash flows are projected
using constant long term average growth rates of 3% per annum (2021:3%)
Within the Business Group Segment, an impairment charge of $684 thousand has been incurred against the goodwill recorded
on a CGU. Management reassessed the free cashflows and the expected achievement of the earn out targets has resulted in a
decrease in the value of the goodwill from $730 thousand (31 December 2021) to $46 thousand and a corresponding decrease in
the associated deferred consideration, and as a result there is no impact in the statement of profit or loss. Management assessed
the carrying value using a value in use discounted cash flow model with a discount rate of 10.8%. No impairment losses have been
recognised during the prior year.
Sensitivity analysis performed indicates that if a change in profit and associated development costs reflected in the models were
to decrease by up to 15% for the respective CGU’s there would be no impairment.
88
13 Borrowings
Current:
Bank overdraft (i)
Non-current
Bank borrowings (i)
Consolidated
2022
$’000
2021
$’000
-
-
4,074
16,137
(i) The consolidated entity has decreased its bank facilities to $25 million during the year (2021 : $40 million) following the sale
of the Practice Management Accountants Group business. The facility comprises variable rate bank overdraft facilities, loan
facilities, and bank guarantee and transactional facilities. The facilities expire in 31 March 2025. The facility is secured over the
Australian, New Zealand and United Kingdom net assets.
2022
The available, used and unused components of the facility at year end is as follows:
Available
Used
Unused
The remaining contractual maturity for the facility is as follows:
2-5 years
Weighted average interest rate
Bank
overdraft and
bank
guarantee
$’000
Loan
facility
$’000
22,000
4,074
17,926
3,000
1,449
1,551
4,074
1,449
2.21%
2.61%
89
Notes to the Financial Statements (continued)
14 Other financial assets/(liabilities)
Current:
Derivative that is designated and effective as a hedging instrument carried at fair value
-
(58)
Consolidated
2022
$’000
2021
$’000
15 Provisions
Current:
Employee benefits – annual leave
Employee benefits – long service leave
Consolidated
2022
$’000
2021
$’000
833
1,094
1,927
1,206
1,816
3,022
Non-current:
Employee benefits – long service leave
206
268
90
16 Deferred Tax Liabilities
The temporary differences are attributable to:
Expected credit loss
Employee benefits
Contract liabilities
Difference between book and tax value of non-current assets
Other provisions
Reconciliation:
Opening balance at 1 January
Charged / (credited) to profit or loss
Sale of Practice Management Accountant Group (refer note 26(e))
Consolidated
2022
$’000
(4)
(800)
(434)
3,676
(49)
2,389
3,995
1,123
(2,729)
2021
$’000
(4)
(1,182)
(436)
6,361
(744)
3,995
4,963
(968)
-
Balance at 31 December
2,389
3,995
Details of unrecognised deferred tax assets can be found in Note 5(c)
17 Contract liabilities
The unsatisfied performance obligations are as set out below:
Current
Subscription revenue
Other revenue
Non-current
Subscription revenue
Consolidated
2022
$’000
2021
$’000
5,659
5,753
145
159
5,804
5,912
1,330
-
91
Notes to the Financial Statements (continued)
Parent
2022
$’000
2021
$’000
1,741
37,130
38,871
7,243
8,573
15,816
3,974
67,419
71,393
9,757
26,352
36,109
19,534
20,524
(42,018)
(42,018)
-
1,145
(1,657)
(476)
46,527
23,055
(58)
1,250
(1,657)
(476)
57,719
35,284
37,091
6,229
-
–
18 Parent Entity Disclosures
Financial position
Assets
Current assets
Non-current assets
Liabilities
Current liabilities
Non-current liabilities
Equity
Share capital
Share buyback reserve
Swap hedging reserve
Share based payments reserve
Acquisition of non-controlling interest reserve
Foreign currency translation reserve
Retained earnings
Financial performance
Total comprehensive income
Capital commitments for the acquisition of property, plant and equipment
Not longer than 1 year
Other
Reckon Limited assets have been used as security for the bank facilities set out in note 13.
The parent entity has no contingent liabilities.
Working capital deficiency - refer note 1(z).
92
19 Employee Benefits
Long-term incentive plan
The long-term incentive plan presently comprises two possible methods of participation: the grant of equity under a
performance share plan; or cash payments under a share appreciation plan. The board has discretion to make offers
to applicable employees to participate in these plans. Performance shares offered (all in respect of the company’s
ordinary shares) and/or share appreciation rights do not vest before three years after their grant date and are
conditional on the participant remaining employed at vesting date, subject to board discretion. Vesting is also
conditional upon the company achieving defined performance criteria.
From 2011 onwards performance shares were also offered with longer term vesting periods. The single vesting
condition is that participants must remain employed for the term required. To achieve 100% vesting employees must
remain in employment for an effective 10 years from the date of the initial offer. Participation in this programme is no
longer offered.
The share appreciation rights plan represents an alternative remuneration element (to offering performance shares)
under which the board can invite relevant employees to apply for a right to receive a cash payment from the company
equal to the amount (if any) by which the market price of the company’s shares at the date of exercise of the right
exceeds the market price of the company’s shares at the date of grant of the right. The right may only be exercised
if the share price at the end of the performance period is greater than at the beginning of the performance period.
The performance criteria for the rights to vest are fixed by the board in the exercise of its discretion. At present these
are the same as the TSR target set for performance shares to vest and the same sliding scale applies.
There are two performance criteria that must be met. The first is achievement of budgeted earnings per share growth
(EPS) over the performance period. The second is a comparison of the company’s total shareholder return over the
performance period measured against the change in the S&P/ASX 300 over the performance period. The criteria
carry equal weighting. Vesting against both criteria occurs on a sliding scale. In the case of EPS 75% of entitlements
vest if the target EPS is achieved and 100% of entitlement will vest on achievement of 110% of target EPS, on a
sliding scale capped at 100% of entitlement. In the case of TSR, 75% of entitlements vest if the target TSR is
achieved, 100% of entitlements will vest on achievement of 110% of target TSR, and a prorata vesting occurs
between 100% and 110% of target TSR capped at 110%.
Share based payments are expensed over the vesting period for each tranche offered.
No options were issued during the year (2021: Nil).
475,000 senior executive rights (2021: 595,000), nil appreciation rights (2021: nil), and nil performance shares (2021:
nil), were issued during the year. The fair value of senior executive rights issued in 2022 was $0.72, using a model that
adopts the Monte Carlo simulation approach. The assumptions used in this model for the tranches issued in 2022
are: grant date share price of $0.93; expected volatility of 40.0%; dividend yield of 5.0%; and a risk-free rate of 1.0%.
The expense recognised in 2022 for the rights/performance shares was $430 thousand (2021: $558 thousand).
Remaining share based payments of $483 thousand (2021: $1,099 thousand) relates to nQueue Zebraworks Inc.
refer to note 26(c).
93
Notes to the Financial Statements (continued)
19 Employee Benefits (continued)
Set out below are summaries of performance shares and appreciation rights granted under the long-term incentive plan:
Performance Shares
Grant
Date
Vesting
Date
Shares
Granted
Shares lapsed
during the year
Shares vested
during the year
Shares available at
the end of the year
2022
2021
2022
2021
2022
2021
Jan’14
Dec’20
101,250
Jan’15
Dec’21
37,500
-
-
-
-
-
25,625
8,250
-
-
-
-
8,250
Nil shares have been acquired for future grants.
Senior Executive Rights
Grant
Date
Expiry
Date
Rights
Granted
Rights lapsed
during the year
Rights vested
during the year
Rights available at
the end of the year
2022
2021
2022
2021
2022
2021
Jan’19
Dec’21
860,000
34,271
Sep’19
Dec’22
1,000,000
Jan’20
Dec’22
737,500
-
-
Jan’21
Dec’23
595,000
37,778
Jan‘22
Dec’24
475,000
92,639
-
-
-
-
-
788,229
-
87,500
42,222
22,361
-
-
-
-
-
-
822,500
1,000,000*
1,000,000
650,000*
737,500
515,000
595,000
360,000
-
* Purchased on market ($0.60 per share) in November 2022 in respect of rights that vested for the reporting period.
Short-term incentive plan
Each annual budget fixes a pool of cash representing a total potential amount in which the relevant employees can
share if short term performance conditions are met.
The performance period for the short-term incentive plan is one-year. However, approximately one third of the
payment will only be made if the employee remains in employment for a further one year period after the performance
period.
The performance conditions are budgeted targets set for revenue, EBITDA and earnings per share. Actual
performance is the measured on a sliding scale from 90% to 110% against the budgeted performance of the group
to determine the extent to which incentives are paid. The incentive is paid on a sliding scale. Below 90% no incentive
is paid. Between 90% and 110% a pro rata increase is paid, capped at 110%. There is an overlap of earnings per
share as a performance condition for the long-term incentive and the short-term incentive.
94
20 Issued Capital
Fully Paid Ordinary Share Capital
2022
2021
No.
$’000
No.
$’000
Balance at beginning of financial year
113,294,832
20,524 113,294,832
20,524
Dividend re-investment plan
-
-
-
-
Balance at end of financial year
113,294,832
20,524 113,294,832
20,524
Less Treasury shares
Balance at beginning of financial year
-
Shares purchased in current period
1,650,000
Lapsed shares utilised
Shares vested
-
-
-
990
-
-
Balance at end of financial year
1,650,000
990
-
-
-
-
-
-
-
-
-
-
Balance at end of financial year net of treasury shares
111,644,832
19,534 113,294,832
20,524
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Changes to the then Corporations Law abolished the authorised capital and par value concepts in relation to share
capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and issued
shares do not have a par value.
During the year nil shares were bought back.
No options were exercised during the year.
The Group implemented a dividend re-investment plan in 2016.
95
Notes to the Financial Statements (continued)
21 Reserves
Nature and purpose of reserves
(a) Foreign currency translation reserve
Exchange differences arising on translation of the financial reports of foreign subsidiaries are taken to the foreign
currency translation reserve, as described in note 1(f).
(b) Swap hedging reserve
The swap hedging reserve represents the cumulative gains or losses arising on changes in the fair value of hedging
instruments entered into. These gains or losses will be reclassified to profit or loss only when the hedged transaction
affects profit or loss.
(c) Share buyback reserve
The value of shares bought back are allocated to this reserve.
(d) Share-based payments reserve
The share-based payments reserve is for the fair value of options granted and recognised to date but not yet
exercised, and treasury shares purchased and recognised to date which have not yet vested.
(e) Acquisition of non-controlling interest reserve
The acquisition of non-controlling interest reserve represents an equity account to record transactions between
equity holders.
22 Earnings per Share
Basic earnings per share – continuing operations
Diluted earnings per share – continuing operations
Consolidated
2022
cents
2021
cents
Restated
5.5
5.4
4.0
3.9
Weighted average number of ordinary shares used in the calculation of basic earnings
per share
113,294,832 113,294,832
Weighted average number of ordinary shares and potential ordinary shares (in relation to
employee performance shares) used in the calculation of diluted earnings per share
115,819,832 116,458,082
Earnings used in the calculation of earnings per share is $4,554 thousand (2021: $6,256 thousand), and for
discontinued operations $53,224 thousand (2021: $3,566 thousand).
23 Contingent Liabilities
There are no material contingent liabilities as at 31 December 2022 (2021: Nil).
96
24 Commitments for Expenditure
(a) Capital Expenditure Commitments
The consolidated entity has capital expenditure commitments of $nil as at 31 December 2022 (2021: $nil).
(b) Other Commitments
Within 1 year
Later than 1 year and not longer than 5 years
25 Subsidiaries
Consolidated
2022
$’000
2021
$’000
186
212
398
403
588
991
Name of Entity
Country of Incorporation
Ownership Interest
Parent Entity
Reckon Limited
Subsidiaries
Reckon Australia Pty Limited
Reckon Limited Performance Share Plan Trust
Reckon New Zealand Limited
Reckon Accountants Group Pty Limited
Reckon Holdings NZ Pty Limited
Reckon One Limited
Reckon Docs Pty Limited
nQ Zebraworks Pty Limited (Previously nQueue Pty Limited)1
Australia
Australia
Australia
New Zealand
Australia
New Zealand
United Kingdom
Australia
Australia
nQ Zebraworks Limited (Previously nQueue Billback Limited)1
United Kingdom
nQ Zebraworks Inc
nQ Zebraworks LLC1
United States of America
United States of America
Reckon Accounts Pte Limited2
Singapore
1 Wholly owned subsidiaries of nQ Zebraworks Inc.
2. Struck off in 2022
All shares held are ordinary shares.
2022
%
2021
%
100
100
100
100
100
100
100
70
70
70
70
-
100
100
100
100
100
100
100
70
70
70
70
100
97
Notes to the Financial Statements (continued)
26 Notes to the Statement of Cash Flows
(a) Reconciliation of Cash
For the purposes of the statement of cash flows, cash includes cash on hand and in banks
and investments in money market instruments, net of outstanding bank overdrafts. Cash at
the end of the financial year as shown in the statement of cash flows is reconciled to the
related items in the statement of financial position as follows:
Cash (i)
Bank overdraft
(i) Cash balance is predominantly in the form of short-term money market deposits, which
can be accessed at call.
(b) Reconciliation of Profit After Income Tax To Net Cash
Flows From Operating Activities
Profit after income tax
Depreciation and amortisation of non-current assets
Payment for capitalised development costs
Non-cash interest
Non-cash employee benefits expense – share based payment
(Gain) / loss on disposal of business
Increase in current tax liability/asset
Increase/(decrease) in deferred tax balances
Unrealised foreign currency translation amount
(Increase)/decrease in assets net of acquisitions:
Current receivables
Current inventories
Other current assets
Non-current receivables
Non-current other
Increase/(decrease) in liabilities net of acquisitions:
Current trade payables
Other current liabilities
Other non-current liabilities
Consolidated
2022
$’000
2021
$’000
1,233
1,394
-
-
1,233
1,394
56,814
9,215
17,724
18,904
(19,157)
(20,347)
(87)
913
(50,472)
719
180
38
(254)
(31)
297
(146)
74
(498)
305
1,268
227
1,657
148
445
(960)
46
870
173
(306)
45
16
74
588
(10)
Net cash inflow from operating activities
7,687
10,785
98
(c) Legal Group acquisition
The acquisition of Zebraworks was concluded during the prior year and was effective from 1 February 2021. A new Legal
Group USA holding company, nQueue Zebraworks Inc., was established and Zebraworks Inc. and the existing Legal Group
were merged into this new structure.
Zebraworks is a SaaS start-up building an integration platform to move legal practices to the cloud. Reckon Limited owns
70% of the new venture, with Zebraworks shareholders (mainly management) owning 30%. Management have the
opportunity to progressively increase their shareholding by 15% of total issued capital if certain KPI’s are met by 2027. The
KPI’s include revenue targets and product release targets. Non-cash consideration of $2,449 thousand was transferred
which is equal to 30% of the existing Practice Management Group, Legal measured at fair value. The non-cash consideration
includes $1,600 thousand of share based payments, related to founding shareholders. Fair value of the non-cash
consideration was measured by an independent valuer utilising the discounted cash flow method based on a high level
cashflow projection prepared by management and publicly available information. The valuation assessment was cross
checked with regard to the revenue multiple implied in the valuation compared to the revenue multiple of Reckon Limited.
An appropriate consideration on lack of discount for control and limited liquidity was also applied.
Trading results for the merged entity are as set out in note 2, and movements in the non-controlling interest are as set out
in the consolidated statement of changes in equity.
Net assets acquired:
Cash
Fixed assets
Other assets
Goodwill
Non-cash consideration transferred
Less consideration treated as remuneration
Net non-cash consideration
Consolidated
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
613
13
2
221
849
2,449
(1,600)
849
Had the acquisition been effected at 1 January 2021 there would have been no further material impact on the results for the year.
Share based payments recognised in nQueue Zebraworks Inc.
As part of the nQueue Zebraworks Inc acquisition, there are founding shareholders continuing employment and
shares provided to these founding shareholders were treated as remuneration.
Attaching to a portion of these shares are clawback provisions for certain members of management should they
leave within three years. These shares are restricted until such time as they vest. Vesting occurs in tranches over a
three year period.
A share based payment expense of $483 thousand has been included in the consolidated statement of profit and
loss in 2022 (2021: $1,099 thousand).
99
Notes to the Financial Statements (continued)
26 Notes to the Statement of Cash Flows (continued)
(d) Discontinued operations - Disposal of Reckon Docs business
The Reckon Docs business was sold to Class Limited effective 1 March 2021.
The funds have been used to reduce debt.
Consolidated
2022
$’000
2021
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,124
1,540
476
8
(107)
13,041
12,473
509
(90)
12,892
149
769
(475)
294
(126)
168
(50)
118
108
108
Net assets sold:
Goodwill
Development costs
Trade debtors
Inventory
Provisions
Carrying amount of net assets sold
Proceeds on sale comprise:
Cash settlement from Class Limited
Collection of trade receivables
Transaction costs
Loss on disposal before income tax
Trading results for the Reckon Docs business:
Revenue
Expenses
EBITDA
Amortisation
Profit before income tax
Income tax expense
Profit after income tax
Net cash from operating activities
Net cash and cash equivalents from discontinued operations
100
(e) Discontinued operations - Disposal of Practice Management Accountant Group
The Practice Management Accountant Group was sold to Access Group effective 1 August 2022. The principal activities
of this division are set out in note 2.
The completion accounts have since been agreed and all proceeds received. The proceeds were used to retire debt and
pay a special dividend to shareholders (refer note 27)
Consolidated
Net assets sold:
Cash
Trade and other receivables
Other assets
Property, plant and equipment
Intangible assets
Right of use assets
Trade and other payables
Provisions
Contract liabilities
Lease liabilities
Deferred tax liability
Carrying amount of net assets sold
Proceeds on sale comprise:
Cash settlement from Access Group
Completion accounts-working capital adjustment
Transaction costs and other adjustments
Income tax paid
Gain on sale before income tax
Income tax expense on gain
Gain on sale after income tax
Trading results for the Practice Management Accountant Group, business1:
Revenue
Expenses
EBITDA
Amortisation and depreciation
Interest income / (expense)
Profit before income tax
Income tax expense
Profit after income tax of discontinued operation
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net cash and cash equivalents from discontinued operations
1. Includes the Reckon Docs Business in 2021 for the period to 1 March 2021.
2022
$’000
93
1,274
192
474
31,145
1,010
(856)
(1,437)
(71)
(1,186)
(2,729)
27,909
100,000
(8)
(4,887)
(16,724)
78,381
67,196
(16,724)
50,472
13,469
(5,805)
7,664
(4,591)
531
3,604
(852)
2,752
3,052
78,356
(398)
81,010
2021
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,556
(10,371)
12,185
(7,534)
(342)
4,309
(743)
3,566
3,801
12,597
(739)
15,659
101
Notes to the Financial Statements (continued)
26 Notes to the Statement of Cash Flows (continued)
(f) Assets and liabilities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be,
classified in the Group’s consolidated statement of cash flows as cash flows from financing activities.
Note
Cash
Non-cash
Balance at
1 Jan 2022
$’000
Financing cash
flows (i)
$’000
Fair value
adjustment
$’000
Balance at 31
Dec 2022
$’000
Borrowings
16,137
(12,063)
Interest rate swap fair value
hedge or economically hedging
financing liabilities
Total liabilities from financing
activities
58
-
16,195
(12,063)
-
(58)
(58)
4,074
-
4,074
(i) The cash flows from bank loans, and other borrowings make up the net amount of proceeds from borrowings and
repayments of borrowings in the statement of cash flows.
Note
Cash
Non-cash
Balance at
1 Jan 2021
$’000
Financing cash
flows (i)
$’000
Fair value
adjustment
$’000
Balance at 31
Dec 2021
$’000
Borrowings
31,788
(15,651)
-
16,137
Interest rate swap fair value
hedge or economically hedging
financing liabilities
Total liabilities from financing
activities
257
-
(199)
58
32,045
(15,651)
(199)
16,195
(i) The cash flows from bank loans, and other borrowings make up the net amount of proceeds from borrowings and
repayments of borrowings in the statement of cash flows.
27 Dividends – Ordinary Shares
A fully franked final dividend for the year ended 31 December 2021 of 2 cents (2020: 2
cents) per share was paid on 25 March 2022.
A fully franked interim dividend for the year ended 31 December 2022 of 3 cents (2021: 3
cents) per share was paid on 23 September 2022.
A partially franked special dividend of 57 cents was paid on 21 November 2022
Franking credits available for subsequent financial years based on a tax rate of 30% (2021:
30%)
102
Consolidated
2022
$’000
2021
$’000
2,266
2,266
3,399
3,399
64,578
70,243
-
5,665
379
1,852
28 Financial Instruments
(a) Financial Risk Management Objectives
The Board of Directors has overall responsibility for the establishment and oversight of the company and group’s
financial management framework.
The Board of Directors oversees how Management monitors compliance with risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks. The main risk
arising from the company and group’s financial instruments are currency risk, credit risk, liquidity risk and cash flow
interest rate risk.
(b) Interest Rate Risk
The group is exposed to interest rate risk on the cash held in bank deposits and on bank borrowings. Cash deposits
of $1,233 thousand were held by the consolidated entity at the reporting date, attracting an average interest rate of
2.75% (2021: 0.11%). Interest bearing borrowings by the consolidated entity at the reporting date were $4,074
thousand (2021:$16,137 thousand). Interest rate risk is not considered material, and so is not hedged. Variable rate
borrowings during the year attracted an average interest rate of 2.21% (2021: 2.30%) on overdraft facilities and 2.61%
on loan facilities (2021: 2.43%). If interest rates had been 50 basis points higher or lower (being the relevant volatility
considered relevant by management) and all other variables were held constant, the group’s net profit would increase/
decrease by $20 thousand (2021: $81 thousand).
Hedging activities are evaluated to align with interest rate views and defined risk appetite, ensuring the most cost-
effective hedging strategies are applied.
The maturity profile for the consolidated entity’s cash ($1,233 thousand) that is exposed to interest rate risk is one
year, and interest-bearing borrowings ($4,074 thousand) that are exposed to interest rate risk, is two years. On the
assumption that interest bearing borrowings and variable interest rates remain at the current level, the annual interest
costs are expected to be $191 thousand.
Further details are set out in note 13.
c) Credit Risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to
the consolidated entity. The consolidated entity has adopted the policy of only dealing with creditworthy counterparties
and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial
loss from defaults.
The consolidated entity does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses,
represents the consolidated entity’s maximum exposure to credit risk without taking account of the value of any
collateral or other security obtained.
The average credit period on sale of goods is 45 days. Interest is generally not charged. The group has assessed the
expected credit loss on receivables and have used a provision matrix to measure the Group’s estimated impairment
losses (refer note 7).
103
Notes to the Financial Statements (continued)
28 Financial Instruments (continued)
(d) Foreign Currency Risk
The consolidated entity includes certain subsidiaries whose functional currencies are different to the consolidated entity
presentation currency. The main operating entities outside of Australia are based in New Zealand, United States of America
and the United Kingdom. These entities transact primarily in their functional currency and, aside from inter-group loan
balances, do not have significant foreign currency exposures due to outstanding foreign currency denominated items.
The consolidated entity’s future reported profits could therefore be impacted by changes in rates of exchange between the
Australian Dollar and the New Zealand Dollar, and the Australian Dollar and the US Dollar and the Australian Dollar and the
UK Sterling. The Group had assessed that any reasonable change in rates of exchange would not result in a material impact
to the consolidated entity.
(e) Liquidity
The Group manages liquidity risk by maintaining adequate cash reserves and banking facilities by continuously
monitoring forecast and actual cash flows.
The credit period for the majority of goods purchased is 30 days. No interest is charged. The Group has policies in place
to ensure payables are paid within the credit periods.
Further details are set out in notes 1 and 13.
(f) Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital
structure of the Group consists of cash, other financial assets, debt and equity attributable to equity holders of the parent.
The Board reviews the capital structure on a regular basis. Based upon this review, the Group balances its overall capital
structure through borrowings, the payment of dividends, issues of shares, share buy-backs and returns of capital. This
strategy remains unchanged since the prior year.
(g) Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial report approximates their respective
fair values, determined in accordance with the accounting policies disclosed in note 1 to the financial statements.
29 Subsequent Events
Reckon Limited advised on 9 March 2023 that it, together with minority shareholders, has made a commitment to
provide approximately US$4 million in funding to its Legal Practice Management Group (“Legal Group”), which
operates under the nQZebraworks brand in the US. Certain other existing investors (“co-investors”) in the Legal
Group, including the nQZebraworks CEO, have also agreed to provide growth capital on a pro-rata basis. Minority
shareholders that elect not to contribute, will dilute.
Reckon’s portion of the investment will be staged over 24 months and funded through earnings from Reckon’s
existing operations, with capital deployed towards scaling operations in the rapidly growing US legal market.
The strategic rationale for the capital injection is underpinned by the view of the Reckon management team that the
Company now has a major opportunity to leverage its footprint in the US legal market and generate a step-change
in revenues and group earnings.
Reckon’s increased investment will be deployed towards a targeted business development strategy in the USA,
where it already provides scan and print management workflow solutions practice management software to five of
the world’s largest legal firms and has increased capacity to scale up its client base.
104
Additional funds will also be allocated to product optimisation amid the ongoing transition from desktop-based
products to innovative cloud-based solutions. The Company is confident that the new funding will provide considerably
financial flexibility to capitalise on growth over the next 24 months.
Alongside the new funding commitment, Reckon will seek to implement a long-term incentive plan for the Legal
Group’s USA management and staff to pursue growth and exit opportunities. Details of this incentive plan will be
subject to shareholder approval, to be sought at the next Annual General Meeting.
The investment highlights Reckon’s ongoing commitment to unlocking growth opportunities for practice management
solutions in the large US legal services industry.
In addition, Reckon will also acquire existing securities in the Legal Group, issued to previous management.
These transactions will increase Reckon’s ownership in the division from 70% to 76% at a total cash cost of US$4
million.
30 Related Party Disclosures
(a) Key Management Personnel Remuneration
Short term benefits
Post-employment benefits
Share based payments
Make whole payment
Consolidated
2022
$
2021
$
2,288,664
2,510,327
113,426
250,167
1,182,342
120,604
249,080
-
3,834,599
2,880,011
The names of and positions held by the key management are set out on page 14 of the Remuneration Report. Further
details of the remuneration of key management are disclosed in the Directors’ Report.
(b) Other Transactions with Key Management Personnel
There were no transactions with Directors and other key management personnel apart from those disclosed in this note.
(c) Directors’ and Key Management Equity Holdings
Refer to the tables on pages 36 and 37 of the Remuneration Report.
31 Company Information
Reckon Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
•
Level 2, 100 Pacific Highway
North Sydney
Sydney NSW 2060
A description of the nature of the consolidated entity’s operations and its principal activities is included in the review
of operations and activities in the Directors’ Report, which is not part of this financial report.
The financial report was authorised for issue by the directors on 30 March 2023.
105
Additional Information as at
17 February 2023 (Unaudited)
Corporate Governance Statement
The Reckon Limited Corporate Governance Statement is available on our website in the section titled Corporate
Governance (https://www.reckon.com/au/investors/governance)
Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholder
NOVATTI GROUP LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
GREGORY JOHN WILKINSON
DJZ INVESTMENTS PTY LTD
NATIONAL NOMINEES LIMITED
MR CLIVE RABIE + MRS KERRY RABIE
RECKON AUSTRALIA PTY LTD
RAWFORM PTY LTD
VANWARD INVESTMENTS LIMITED
BNP PARIBAS NOMS PTY LTD
DMX CAPITAL PARTNERS LTD
VELKOV FUNDS MANAGEMENT PTY LTD
MR PHILIP ROSS HAYMAN
MS KYLIE LYNETTE NUSKE + MR MATTHEW JAMES COOK
MR CLIVE ALAN RABIE
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BIATAN PTY LTD
HURSTCLAN HOLDINGS PTY LTD
Number
Percentage
22,518,138
10,347,545
8,799,117
7,219,218
6,280,487
5,690,000
4,022,791
3,920,000
1,650,001
1,330,306
1,076,082
984,061
825,000
675,000
650,909
634,093
596,535
543,427
510,300
500,000
19.88
9.13
7.77
6.37
5.54
5.02
3.55
3.46
1.46
1.17
0.95
0.87
0.73
0.60
0.57
0.56
0.53
0.48
0.45
0.44
78,773,010
69.53
Number of Holders of Equity Securities
Ordinary Share Capital
113,294,832 fully paid ordinary shares are held by 3,260 individual shareholders as at 17 February 2023. All issued ordinary
shares carry one vote per share.
Less than marketable parcels
As at 17 February 2023 there were 759 holders holding less than a marketable parcel of RKN shares.
A marketable parcel of RKN shares was 991 shares, based on a price of $0.5050 on 17 February 2023
106
Additional Information as at
17 February 2023 (Unaudited) (continued)
Distribution of Holders of Equity Securities
As at 17 February 2023
Number of Ordinary Shares
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of
Shareholders
862
1,337
445
540
76
Shares
526,253
3,596,915
3,501,557
15,630,327
90,039,780
3,260
113,294,832
%
0.46
3.17
3.09
13.80
79.47
100.00
Substantial Shareholders
As disclosed to ASX during 2022 and up to 17 February 2023
Ordinary Shareholder
Novatti Group Limited (GCI Australia Pty Ltd)*
Microequities Asset Management Pty Ltd
Spheria Asset Management Pty Ltd
Pinnacle Investment Management Group Limited
Number
Percentage
22,518,138
19.88%
8,620,011
8,557,196
5,959,508
7.62%
7.55%
5.26%
* GCI Australia Pty Limited has no legal or beneficial ownership of the shares. The relevant interest has arisen as a consequence of non-disposal
covenants given by the beneficial owner, Novatti Group Limited, in connection with security arrangements put in place for the purposes of its
issue of corporate bonds as announced to ASX by Novatti Group Limited on 15 August 2022.
On-market buy back
There is no on-market buy-back in place as at 17 February 2023.
Unquoted Equity Securities
As at 17 February 2023 there are:
•
•
zero rights on issue held by zero holders;
zero options on issue held by zero holders.
107
Principal Registered Office
Level 2, 100 Pacific Highway
North Sydney NSW 2060
Tel: (02) 9134 3300
Principal Administration Office
Level 2, 100 Pacific Highway
North Sydney NSW 2060
Tel: (02) 9134 3300
Share Registry
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
Tel: (02) 8234 5000
Stock Exchange Listings
Reckon Limited’s ordinary shares are listed on the Australian Securities Exchange Limited under the symbol ‘RKN’.
Auditors
BDO Audit Pty Ltd
Level 11, 1 Margaret Street
Sydney NSW 2000
Company Secretary
Mr Myron Zlotnick
Annual General Meeting
The Annual General Meeting for Reckon Limited will be held on 25 May 2023 at 10:00am at Level 2, 100 Pacific
Highway, North Sydney, NSW.
PLEASE NOTE THAT IT IS INTENDED AT THE DATE OF THIS REPORT TO HOLD A HYBRID MEETING.
PAY CLOSE ATTENTION TO THE NOTICE OF MEETING TO CHECK ON THE STATUS OF THE ANNUAL GENERAL
MEETING.
If you are unable to attend OR NOT PERMITTED TO ATTEND, you are invited to complete the Proxy Form included
with your Notice of Meeting. The completed Proxy Form must be received no later than 48 hours before the Annual
General Meeting.
108
Important Information – Corporate Notices
Security holders have the option as to how they receive statutory corporate notices and reports. In the interest of cost
saving and the environment, we encourage you to opt in to receive all notices and reports electronically.
Please go to: www.computershare.com/au and follow the prompts to register your request to opt in to receive
TO RECEIVE ALL NOTICES AND REPORTS IN ELECTRONIC FORMAT.
To register to be notified by email when the Annual Report and other Announcements are available online:
• Visit the share registry at www.computershare.com/au
• Click on “Investor Centre”
•
Follow the prompts to update your “Communications Options”
• After you have updated your email address and selected the publications you wish to receive, a confirmation
email will be sent to you
Should you have any further enquiries, contact the Registry on 1300 855 080 or +61 3 9415 4000 (if outside Australia).
Alternatively, email your full name and address of the securityholder to shareholders@reckon.com to receive the
Annual Report, corporate and statutory notices electronically.
109