Annual Report
2023
Reckon Limited Annual Report
For the Financial Year Ended 31 December 2023
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
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8
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102
3
Message from the Chairman
It is my pleasure to present to you Reckon Limited’s Annual Report for the year ended 31 December 2023 (FY2023).
Reckon’s operations during the year saw a continued and targeted investment in our cloud-based products for our
two operating divisions – the Business Group and the Legal Group, with the aim of ultimately having all Reckon’s
revenue derived from our own proprietary cloud-based products. The Legal Group, trading as nQ Zebraworks,
continued the development of its new “Queues” cloud-based platform and the end of the year saw solid progress on
the new BillingQ and DataQ products.
FY2023 was the first complete year post the sale of the Accountant’s Group, and the Board is pleased with
management’s delivery of revenue growth and profit over the period. There is still room for improvement and your
Board is conscious of continuing to deliver returns to our shareholders.
To align the interests of management more directly with these objectives, the Board implemented new long term
incentive plans for all our Business Group senior management, replacing the former Performance Rights Plan, and
similar plans for our Legal Group management during the year. The new long term incentive plans include the Cash
Distribution Incentive Plan for our Group CEO and Group CFO, which was approved by shareholders at the 2023
Annual General Meeting. These new long term incentive plans focus ultimately on the delivery of shareholder value.
We were pleased to continue our long history of dividend payments, with a $0.025 annual dividend paid in September
2023. We expect to continue paying a dividend once per year in September.
FY 2023 was my first year as Chairman after Greg Wilkinson stepped down to a non-executive director role after four
and a half years in the Chair. Your Board is conscious that the time may come for a refresh of the Board and
increased diversity, but at this stage we believe that the direct experience your Directors bring to their roles with
Reckon is in the best interest of our shareholders.
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.
Mr C Rabie
Chairman
Sydney, 28 March 2024
4
Message from the Group CEO
I am proud to present our full year results for 2023, with the company displaying robust growth across the board and
a consistent commitment to key areas of development.
The Business Group continues to maintain excellent cashflow alongside strong performances from the Legal Group
– largely focused on the US and UK legal firm markets.
FY 2023 saw the Company delivering to our plan of maintaining revenue growth in the highly profitable and cash
generating Business Group to provide the flexibility to invest in our proprietary product, Reckon One and the release
of our new product Reckon Payroll, together with the high growth opportunities provided by our US and UK focused
Legal Group.
Key highlights from the 2023 full year results
•
•
•
•
•
•
•
$53m in revenue generated in 2023 with EBITDA of $20m and NPAT of $5m.
An Annual Dividend of 2.5c fully franked was paid to investors in September 2023.
Legal Group subscription revenue growth of 17%.
Ongoing investment in cloud-based products to underpin future business growth.
Over 105k cloud users on our SME products.
300k employees paid annually in Australia via Reckon products.
Six of the world’s top legal firms use our solutions.
REVENUE
ARR
EBITDA
$53
million
+4% over PcP
NPAT
$5
million
+36% over PcP
$49
million
+4% over PcP
$20
million
+10% over PcP
DEVELOPMENT INVESTMENT
DIVIDEND PAID
$14
million
2.5
cents
per share fully franked
5
Message from the Group CEO (continued)
The investment in the ongoing development and feature set of Reckon One is critical to our strategy of delivering the
leading Accounting and Payroll solution for SMEs whilst also moving away from our legacy desktop products and we
anticipate continuing that development into the future The year saw the release of our new Reckon Payroll, a Reckon
One codebase Single Touch Payroll 2.0 compliant product and mobile app, as evidence of our ability to deliver to our
strategy.
Increased focused on the transition to
the Reckon One codebase now underway
since the completion of Single Touch
Payroll 2.0 upgrades
Continued development investment into
Reckon One and Mobile solutions to
support this transition
Ongoing product enhancements creating
more valuable solutions for SME’s and
employees
Journey to Reckon One expands options
for the business and provides potential
value creation for Reckon
6
The revenue growth in the Legal Group highlights the strength of the Legal Group’s core systems (scan, print and
cost recovery software). The cloud platform products BillingQ and DataQ provide a value-add solution to Law firms
on top of their legacy practice management systems, and our investment in BillingQ and DataQ presents considerable
upside opportunity for Reckon given the size of the addressable market in the US and UK.
Core products upgraded to take advantage of
increased market interest and opportunity
Newer platform solutions can be cross sold into
Core client base
Continued ongoing investment into Cloud based
Platform solutions
Additional product integrations planned for Platform
solutions creating larger addressable market
Client base includes 6 of the top 10 firms in the world
and 8 of the top 25 firms in the US
Over $200k of ARR with 2200 users of Platform
sales made
ScanQ and MailQ – scanning
PrintQ – printing
BillingQ – billing workflows
DataQ – business intelligence
Core
CostQ – cost tracking
Platform
On a personal note, our recent employee engagement survey across the Australian employees produced outstanding
results with 100% of respondents indicating that they would recommend Reckon as a great place to work. I am
excited to lead the team at Reckon as we pursue our strategy and I cannot stress highly enough how important the
Reckon team are to our past and future success.
I wish to thank all Reckon’s workforce for their hard work and dedication during the year and I look forward to their
continuing support. I also wish to join the Chairman in thanking Reckon’s partners, customers and shareholders for
their ongoing support and I look forward to the journey ahead with them.
Sam Allert
Group CEO
7
Directors’ Report
The Directors of Reckon Limited submit these financial statements for
the financial year ended 31 December 2023.
Board of Directors
Clive Rabie, Chairman
BCom
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 AIM listed, GetBusy PLC.
Greg Wilkinson, Independent Non-Executive Director
Chair of Remuneration Committee and Member of Audit & Risk Management Committee
Greg Wilkinson has over 35 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.
Philip Hayman, Independent Non-Executive Director
Chair of Audit & Risk Management Committee and member of Remuneration Committee
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.
Samuel Allert, Chief Executive Officer and Executive Director
Group Chief Executive Officer and Director from 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 led the Australian and New Zealand business in a newly formed position of
Managing Director Australia/ New Zealand for the Reckon Group in 2015. In July 2018 Sam stepped into the Group
Chief Executive Officer position and was appointed as an Executive Director on 1 July 2018.
Company Secretaries
Myron Zlotnick -Company Secretary (resigned 30 March 2023)
LLM, GCertAppFin, MAICD
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.
Tom Rowe- Company Secretary (appointed 30 March 2023)
BA, LLB(Hons), GradDipAppFinInv, GradDipAppCorpGov
Tom Rowe has 25 years’ experience as a corporate lawyer with extensive corporate governance experience across
ASX listed companies in the financial services, manufacturing and software industries.
8
Directors’ Report (continued)
Review of Operations and Statement of Principal Activities
For the whole of FY2023, the Company operated two business divisions, the Business Group and the Legal Group.
The Accountant Practice Management Group was sold on 1 August 2022 and the Company had no involvement in that
business in FY2023.
The Business Group provides accounting and payroll software for small to medium sized businesses and personal
wealth management software branded as Reckon One, Reckon Accounts Hosted, Reckon Accounts Business and
Reckon Accounts Personal. The Business Group operates in Australia and New Zealand.
The Legal Group operates under the nQ Zebraworks brand. nQ Zebraworks is a document and billing workflow
company that leverages the power of its Zebraworks cloud-based integration platform to deliver digitalization, billing
and collections automation, cost recovery and analytics solutions for law firms and government and corporate legal
departments. nQ Zebraworks seeks to accelerate the legal industry’s move to the cloud by leveraging its legal technology
expertise together with its cloud platform to bring together core legal workflows in one place.
The nQ Zebrawork’s products are its server-based scan, print, document workflow, and cost recovery systems together
with its cloud based “Queues” technology billings workflow solution, BillingQ and business intelligence tool, DataQ.
nQ Zebraworks is based in the USA with additional operations in the United Kingdom and re-sellers in other parts of the
world.
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 medium businesses in Australia and New Zealand.
The key product brands sold in this Group are: Reckon One, Reckon Accounts, and Reckon Accounts Hosted.
Within the products are functions across accounting, payroll, timesheets, invoicing, payments and analytics.
Reckon Accounts and Reckon Accounts Hosted provide desktop and hosted solutions for medium to larger sized
businesses for accounting and bookkeeping, invoicing, payroll, GST/BAS reporting, financial reporting, timesheets,
and bank data feeds.
Reckon Accounts Hosted is a desktop application hosted in an Amazon Web Services cloud environment.
Reckon One is the Business Group’s new Software as a Service (SaaS) cloud-based accounting and payroll software
platform and includes mobile app functionality. Reckon One is a proprietary product as distinct to the Intuit code
based Reckon Accounts and Reckon Accounts Hosted products. Development of Reckon One was a focus for
FY2023, and will continue to be for the medium term, as the business improves the functionality of Reckon One to
meet and exceed the functions available in the Intuit code-based products.
During the year, Reckon One was upgraded to provided Single Touch Payroll 2.0 functions and is now the Company’s
flagship payroll product. Similar upgrades to timesheet and invoicing functions are currently underway to Reckon
One.
The Business Group continues to explore strategic partnerships with suppliers, particularly in financial services and
point of sale payments to deliver additional revenue streams.
The Business Group is certified under ISO 27001 for its information security management systems.
9
Directors’ Report (continued)
Legal Group
During the year, the Company committed an additional $US4 million in the Legal Group to:
a.
fund the continued development of its cloud-based products and the pursuit of its business development
strategy; and,
b. acquire the shares of some minority shareholders in nQ Zebraworks, taking Reckon’s shareholding to 76%.
The year saw the Legal Group continue it’s transition from a cost recovery provider to a workflow solutions expert
and expand its cloud offerings. At year end, the Legal Group had signed $200,000 of annual recurring revenue for its
new cloud products, BillingQ and DataQ.
The Legal Group’s client base includes 6 of the top 10 legal firms in the world and 8 of the top 25 firms in the United
States.
Results of Operations
Results Headlines (IFRS and non-IFRS)
Continuing operations
2023
2022
%Growth
Revenue
EBITDA*
Depreciation and amortisation of other
non-current assets
$53.4 million
$51.2 million
$19.7 million
$18.0 million
($14.4 million)
($13.1 million)
Finance Costs
($0.2 million)
($0.1 million)
Income tax expense
($0.2 million)
($1.2 million)
Net profit
$4.9 million
$3.6 million
Net profit attributable to members
$5.6 million
$4.6 million
Discontinued operations**
Revenue
EBITDA**
Net profit
Net profit attributable to members**
2023
-
-
-
-
-
2022**
7 months
$13.5 million
$74.9 million
$53.2 million
$53.2 million
-100%
* Earnings before interest, tax, depreciation and amortisation.
** The Accountant Practice Management Group business was sold effective 1 August 2022 and the above results include
the profit on sale of this business.
Group revenue from continuing operations was $53.4 million, up 4% on FY2022.
10
+4.2%
+9.7%
-
-
-
+36.0%
+22.3%
%Growth
-100%
-100%
-
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) during the year was $19.7 million, up 10%
on FY 2022. Group Net Profit After Tax (NPAT) was $4.9 million, a 36% uplift on FY2022, due to the increased
EBITDA and a lower effective tax rate as a result of the group’s R&D investments, offsetting higher amortisation costs.
Group operating cashflow after accounting for $14.4 million of development spend was consistent with the prior year
at $4.8 million (FY2022: $4.6 million).
Net Debt remained stable at $2.8 million compared to FY2022, following the payment of a 2.5 cent fully franked
dividend paid on 29 September 2023. For the foreseeable future, the Board anticipates paying one dividend annually
after the half year.
Business Group
•
The Business Group continues to be a subscription business focused on online growth. Total revenue growth in
this division was up 2% on 2022 to $41.7 million. This represents 5 consecutive years of growth.
• Momentum in the Business Group was highlighted by another strong year of cloud-based subscription revenue
growth, which rose by 5% to $24.1 million comprising 58% of the Business Group’s total revenue. The number
of cloud users reached 105,000 users at year end, a slight decline on FY2022 as we discontinued free products.
• Subscription revenue for FY2023 represented 92% (2022: 92%) of revenue for the Business Group at $38.2
million. The balance of revenue was derived mainly from membership and training fees.
Legal Practice Management Group
• Reckon’s core Business Group operations were complemented by a strong year of growth in the Legal Group,
which reported a 17% (12% in constant currency) increase in subscription revenues to $10.8m, it’s third year of
subscription revenue growth. Total revenue was $11.7 million, up 12% on FY 2022 (+7% on a constant currency
basis).
• Subscription revenue was 92% of the Legal Group’s revenue (FY2022: 89%).
• The Legal Group continued its investment in sales and development teams with the year delivering $0.9 million
EBITDA, a significant milestone for the Legal Group given its ($0.3) million EBITDA loss for FY 2022. Capitalised
development costs for the year remained stable at $4.9 million compared to $4.8 million for FY 2022.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the Company during the financial year.
11
Directors’ Report (continued)
Future Developments, Business Strategies and Prospects
for Future Financial Years
The Company intends to leverage the strong cash flow produced by its Business Group to continue investing in the
development of cloud-based products in both the Business Group and the Legal Group.
The Business Group will continue to focus on products that deliver business efficiency tools for small to medium
sized businesses while the Legal Group pursues revenue growth from its practice efficiency tools for legal firms.
The Business Group strategy over the next 5 years is:
•
•
•
Continued development of Reckon One, Reckon’s proprietary cloud based product to drive revenue growth;
Maintenance of the customers currently using the Company’s legacy Intuit code based products; and,
The transition of those customers to Reckon One over time.
The Legal Group will continue to pursue revenue growth from its core systems (scan, print and cost recovery
software). The longer-term focus is on the opportunity presented by the Legal Group’s cloud-based products
BillingQ and DataQ. These products provide a value-add solution to Law firms on top of their legacy practice
management systems, and the investment in BillingQ and DataQ presents considerable upside opportunity for
Reckon given the size of the addressable market in the US and UK. BillingQ also provides an opportunity for increased
wallet share on the payments conducted through its collections process.
The Legal Group also intends to pursue further third party product integrations for its cloud based products to create
a larger addressable market.
The Company will continue to assess corporate transactions
Material Business Risks, Climate and Social Risks
The Company and its divisions are subject to risks of both a general nature and ones that are specific to its business
activities.
The Company’s operations involve software development and sales activity with the vast majority of its products
distributed through on-line channels. The major inputs into product development and sales and the available market
for the Company’s products are unlikely to be materially impacted by climate change, other than at a macro economic
level.
The financial position of the Company has not been materially adversely affected by COVID 19 and COVID 19 does
not materially adversely impact the Company’s prospects for future financial years.
Material business risks, specific to the Company’s strategies include, but are not limited to, the following:
Product Development Execution
The development of Reckon One as the Business Group’s proprietary flagship product and nQ Zebrawork’s
development of its Queues technology are key to the Company’s medium term strategy. There may be delays or cost
increases as these projects continue through the medium term.
Increases to the timeline or cost of the projects would likely impact the cash flow of the Company.
Mitigation strategies include:
• Targeted customer and market research programs to inform product development priorities.
•
Focus available resources on highest priority initiatives.
12
Recurring Revenue
A significant proportion of the Business Group’s revenue and EBITDA is derived from the sale of the legacy products,
Reckon Accounts and Reckon Accounts Hosted. These products utilise older software that may not readily allow
for integration with third party services necessary to meet future market requirements, and in product developments
to satisfy regulatory obligations of accounting and payroll services.
The inability to integrate or develop these products in the medium term may cause an acceleration to the decline in
revenue from these products.
Mitigation strategies include:
•
•
Reallocation of resources to meet development requirements.
Migration to alternative products within Reckon One.
Information Security Management
The Company stores accounting, payroll and bank record data together with customer details with third party
providers. Hacking or exploitation of any vulnerabilities in its network, or those of the third party providers, leading to
the loss or disclosure of the data may negatively impact the revenue, profitability and reputation of the Company.
This risk, together with the Hosting Provider Disruption and Telecommunications and the Internet risks discussed
below, are managed within the Business Group by an ISMS committee and its processes and procedures are
subject to audit.
Competition
The Company, and particularly the Business Group, operates in a market dominated by much larger and well-
resourced international competitors. The products offered by competitors in the future may be, or be perceived to
be, superior to the Company’s products or offered on commercial terms that the Company is unable to meet, thus
limiting the commercial viability of the Company’s products.
Hosting Provider Disruption
The Business Group relies on Amazon Web Services for the hosting of its cloud-based products. The Legal Group’s
cloud-based Queues technology is hosted on Microsoft Azure. Should Amazon Web Services or Microsoft Azure
suffer outages, particularly the destruction of its data centres due to natural disaster, the relevant products and
services offered would likely be disrupted.
The Legal Group’s legacy products are installed on client’s own servers. As the cloud-based Queues technology is
developed and revenue increases on the BillingQ and DataQ products, hosting provider risk will increase for the
Legal Group.
Telecommunications and the Internet
The Company’s cloud-based SaaS products rely on the customer being able to access the products and services
over the internet. An internet failure and the resulting reduction in consumer confidence in being able to access the
products and services, regardless of whether the failure is the fault of the Company, is likely to have adverse financial
consequences for the Company.
13
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, director since 24 May 2005
• Group Managing Director from 1 July 2018 to 31 December 2022
• Chairman from 1 January 2023
• Mr Greg Wilkinson, director since 19 July 1999
• Chairman of the Board from 1 July 2018 to 31 December 2022
• 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, non-executive director since 1 July 2018
• Risk and Audit Committee Chairman since 1 July 2018
• Remuneration Committee Chairman until 31 December 2022
• Remuneration Committee member since 1 July 2018
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 (Resigned 30 March 2023)
• Company Secretary from 19 November 2002 to 30 March 2023
• Corporate Counsel from 22 February 2021 to 30 March 2023
14
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.
In 2023, the Board set a new KMP incentive plan to meet the strategic imperatives of the Company, the Cash
Distribution Incentive Plan (CDIP). The CDIP was approved by shareholders at the 2023 AGM.
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 2023 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 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.).
Under the Charter, the Remuneration Committee is to be composed of at least three non-executive members with
the majority being independent directors. Given the size of the Company and the board, the Remuneration Committee
presently is comprised of only two members and many remuneration matters are considered directly by the Board.
The charter of the Remuneration Committee is available on the company’s website at https://www.reckon.com/au/
investors.
15
Remuneration Report (Audited) (continued)
3.2 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 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 and market factors should be considered in determining TRP
• 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
• 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.
The Company will also take into account the impact of corporate transactions on incentives designed to retain talent
for the longer term.
3.3 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
16
•
•
•
Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the
Company – currently $500,000 in accordance with the Company’s constitution
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 FY24 the following fees apply:
Function
Main Board
Audit & Risk Committee
Nomination & Remuneration Committee
Other Committee
During the FY23 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
Role
Chair
Member
Chair
Member
Chair
Member
Chair
Member
Fee Including Super
$169,830
$84,915
n/a
n/a
n/a
n/a
n/a
n/a
Fee Including Super
$166,125
$83,063
n/a
n/a
n/a
n/a
n/a
n/a
3.4 Short Term Incentive (STI) Policy
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.
• The STI should be paid in cash.
• The targets for the STI should be weighted towards KPI’s that align with the creation of shareholder value and
short term strategic goals.
• There should be a deferral of payment of part of the STI.
17
Remuneration Report (Audited) (continued)
3.5 Long Term Incentive (LTI) Policy
The Performance Rights long term incentive plan applied to offers made to the CEO in 2019 and CFO in 2020 with a
performance period ending on 31 December 2022. Performance Rights were offered is the Company Secretary in
2021 with a performance period ending on 31 December 2023. No subsequent offers of Performance Rights were
made to KMP, although offers were made to employees who are not KMP. All KMP’s Performance Rights were
discharged during 2023 and no Performance Rights, or any equity-based long term incentives, are currently held by
KMP.
The CDIP was established during 2023 to provide a cash based long term incentive plan for KMP.
Performance Rights
The policy of the Performance Rights long term incentive plan was 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:
•
•
The Performance Rights 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
Cash Distribution Incentive Plan
The policy behind the Cash Distribution Incentive Plan (CDIP) is to incentivise the executive KMP to pursue value
accretive transactions, including the potential sale or disposal of assets or companies within the consolidated group,
which have benefits for and will result in distributions to shareholders over the long term.
The CDIP aligns the interest of the executive KMP with shareholders by incentivising them to deliver a significant
“cash” return to shareholders. The CDIP utilises a variation to “total shareholder return” as the performance measure
but ignores changes in share price. Instead, the CDIP focuses solely on the value received by shareholders in terms
of dividends and distributions paid on Reckon shares and the consideration received by shareholders for their shares
if Reckon itself is acquired, such as under a takeover.
The CDIP is paid in cash.
18
3.6 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.
FY23 Offers
The CEO was offered a target-based STI equivalent to roughly 30% 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 29% of the Base Package for target
performance with a stretch opportunity of up to 110% of the target.
Comments
The incentive levels offered in FY23 were consistent with the proportional opportunities
(proportional to Base Package) offered in previous years.
FY24 Offers
The FY24 offers are substantially similar to the FY23 offers.
FY23 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 FY23 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 FY23.
FY24 Offers
The FY24 offers are substantially similar to the FY23 offers but with an increased weighting
towards revenue growth.
19
Remuneration Report (Audited) (continued)
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 in February 2024 following approved of the preliminary final report
for FY2023.
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.
20
3.7 Variable Executive Remuneration – Long Term Incentive (LTI) – Performance Rights Plan
(Retired)
Long Term Incentive (LTI) - Performance Rights
Aspect
Purpose
Plan, Offers and Comments
The Performance Rights Plan’s purpose was to give effect to an element of Senior Executive
remuneration. This element of remuneration constituted part of a market competitive total
remuneration package and aimed to provide an incentive for Senior Executives to deliver
Company performance that will lead to sustainable superior returns for shareholders. Other
purposes of the Performance Rights Plan were 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). The Performance Rights Plan has no application to any KMP at the
date of this report.
Measurement
Period
Normally three years.
FY23 Offers
FY23 offers were not made to KMP, instead offers were made under the CDIP.
FY24 Offers
FY24 offers were not made. The Performance Rights Plan has been retired and is not offered to
any employee.
Form of Equity
Performance Rights, which are either rights to:
•
•
ordinary Company shares, under the regular LTI plan,
or to a cash value equivalent to a share in the Company for each vested Performance
Right share
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 on Performance Rights.
LTI Value
The Board retained the discretion to determine the value of Performance Rights to be offered
each year, subject to shareholder approval in relation to Directors, when the Performance Rights
are to be settled in the form of a new issue of Company shares.
21
Remuneration Report (Audited) (continued)
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.
FY23 Offers
No offers were made in FY 2023 for KMP, or any other employee.
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%
22
FY24 Offers of Performance Rights
FY24 offers have not been made to KMP, or any other employee.
Comments
Noting that the Performance Rights Plan was retired in 2023, the Board of Reckon recognises
that it is important that shareholders understand why the Performance Rights 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.
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
Performance Rights Plan.
23
Remuneration Report (Audited) (continued)
Plan Gate and
Board Discretion
A gate applies to the TSR component of the Performance Rights 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”.
No amount is payable for Performance Rights.
The value of Performance Rights is included in assessments of remuneration and policy.
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 all unvested Performance Rights
are forfeited, unless determined otherwise by the Board.
Amount Payable
for Performance
Rights
Dealing
Restrictions on
Shares
Cessation of
Employment
During a
Measurement
Period
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.
24
Long Term Incentive (LTI) - Cash Distribution Incentive Plan
Aspect
Plan, Offers and Comments
Purpose
The purpose of the CDIP is to comprise the long term incentive for executive KMP aligning their
interests with the long term strategy of the Company and the delivery of shareholder value.
Measurement
Period
Form of Benefit
CDIP Value
Payment
Conditions
24 May 2023- 31 December 2029
The CDIP will be settled entirely in cash.
The CDIP was offered in 2023, following shareholder approval at the 2023 AGM, and the plan
applies until 31 December 2029.
There will be no further offers under the CDIP, although the Board may approve additional
long-term incentives during the Measurement Period.
Due to the Payment Conditions under the CDIP and the long Measurement Period the CDIP
had minimal value at the date of offer. This value is disclosed in the table at Section 4 of the
Remuneration Report.
The payment of cash under the CDIP is contingent on the following Payment Conditions:
•
•
the executive KMP being an employee of Reckon at 31 December 2029; and,
the cumulative total of the following payments in respect to Company shares paid or
received by shareholders from 24 May 2023 to 31 December 2029 (Shareholder
Return) being at least $150,000,000:
• dividends;
• distributions; and
• if there is a change of control transaction occurring whereby 100% of the issued
capital of Reckon Limited is acquired by a third party (Control Transaction), the
consideration received by shareholders under the Control Transaction.
If the Shareholder Return includes shares or securities in another entity unrelated to Reckon,
whether in addition to or instead of cash, the Board may determine the value of the shares or
securities (if any) that will be factored into the calculation of the Shareholder Return, in its
discretion.
The Shareholder Return will not be reduced for any tax payable by shareholders and will be
adjusted upwards for the effect of franking credits.
25
Remuneration Report (Audited) (continued)
Cash Distribution
If the Payment Conditions are met, the amount of the cash payment (Cash Distribution) will be
calculated by the Board based on the following Distribution Schedule. Within each Shareholder
Return Band, the Cash Distribution will be paid pro rata in proportion to where the Shareholder
Return sits within the relevant Shareholder Return Band.
Distribution schedule:
Shareholder Return Bands Cash Distribution – CEO
Under $150,000,000
No cash distribution (Award is
Cash Distribution - CFO
No cash distribution (Award is
$150,000,000 and up to
$200,000,000
forfeited)
$770,000
forfeited)
$230,000
$200,000,000 and up to
$1,300,000
$400,000
$250,000,000
$250,000,000 and up to
$2,600,000
$800,000
$300,000,000
$300,000,000 or more
$5,700,000
$1,500,000
Any cash award will be paid as soon as possible following the end of the assessment period or
any early testing.
Retesting
Retesting is not a feature of the CDIP.
Variation to
Payment
Conditions and
Cash Distribution
Cessation of
Employment
during
Measurement
Period
The Board may, in its discretion, amend the Shareholder Return Bands and Cash Distribution
amounts as is reasonably necessary to maintain the alignment of the incentive created by the
CDIP with the value received by shareholders, including by:
• Reducing the Cash Distribution by any amount paid to a participant under a Reckon
long term incentive plan between 24 May 2023 and 31 December 2029.
• Making changes to the Shareholder Return Bands and/or the Cash Distribution amount
to take into account any capital raising activities of the Company.
• Reducing the thresholds under the Shareholder Return Bands in the event of early
testing, as discussed below.
•
Increasing the Cash Distribution amount if the highest Shareholder Return Band is
materially exceeded.
Unless the Board determines (in its absolute discretion) otherwise, if a participant’s employment
is terminated for cause or they resign (or give notice of their resignation) prior to the assessment
date, all of their award will lapse.
If a participant ceases employment in other circumstances prior to the assessment date, unless
the Board determines otherwise, the Board will test the award and determine the amount of the
Cash Distribution (if any) based on the Shareholder Return up to the date of cessation and pay
any award to the participant following testing. The Board may, in its discretion, also factor the
participant’s contribution towards potential value accretive transactions that have not yet
completed.
26
Change of Control
of the Company
If, prior to 31 December 2029, there is a takeover bid or other event or circumstances arise
which the Board considers should be treated in a similar way (Change of Control Event), the
Board has the discretion to early test the award and to calculate the Shareholder Return and
determine the Cash Distribution to be paid.
When determining the Cash Distribution to be paid where there is a Change of Control Event,
the Board may make such adjustments to the Cash Distribution or the Shareholder Return
Bands as it deems reasonable in the circumstances.
If a Control Transaction occurs but the Board has not exercised the discretion referred to above
before this time, the award will be tested up to the date of the Control Transaction based on
Shareholder Return up to that date and the participants will receive an award based on this
assessment.
Fraud, Misconduct
and Claw Back etc
The Board may determine that some or all of the entitlement under the CDIP lapses or that the
participant must pay back, as a debt, any of the Cash Distribution that is paid, if the participant:
•
•
•
•
•
•
acted fraudulently or dishonestly;
engaged in gross misconduct;
acted in a manner which brought the Company or the Group into disrepute;
breached their duties or obligations to the Company (including acting in breach of the
terms and conditions of their employment and/or the Company’s code of conduct, as
amended or replaced from time to time);
is convicted of an offence or have a judgement entered against them in connection with
the affairs of the Company;
contributed to, either by act or omission, to a material misstatement or omission in the
financial statements of the Company or any other circumstances or events which affect
the Company’s financial soundness or require re-statement of the Company’s financial
accounts, including, without limitation, as a result of misrepresentations, errors,
omissions, or negligence; (Disentitling Acts or Omissions) and
the result of the Disentitling Acts or Omissions is that the original outcomes which the CDIP was
intended to incentivise have not been realised, or would not have been realised if not for the
Disentitling Acts or Omissions.
If the Board is considering whether Disentitling Acts or Omissions have occured, the Board may
delay payment of any Cash Distribution, without any liability to compensate the participant for
the delay
3.8 Securities Holding Policy
The Board sees a securities holding policy as unnecessary since a number of executives already hold significant
numbers of shares voluntarily.
3.9 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.
4. Remuneration Records for FY23 – Statutory Disclosures
The following table outlines the remuneration accrued for Key Management Personel of the Company during FY23
and FY22 prepared according to statutory disclosure requirements and applicable accounting standards:
27
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28
Remuneration Report (Audited) (continued)
In November 2022, the Group CEO was paid a bonus in respect of 1,000,000 Performance Rights offered to him under a
special incentive Performance Rights (reported in 2019); and a bonus was also paid to KMPs who held certain tranches of
Performance Rights.
Under the CEO’s special incentive offer and the rules of the LTI applicable to KMPs, holders of Performance Rights 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 Rights would vest as a consequence of the sale of the
Accountants Group, 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 executive KMPs would have received
had they been the owners of shares (as opposed to holders of Performance Rights) at the time the special dividend was paid.
The maximum total value of an STI for FY2024 and future financial years is $207,900 for the Group CEO and $174,983
for the Group CFO. The maximum value of the LTI is described at section 3.7. The minimum amount for both the STI
and LTI is nil.
Remuneration received by non-executive directors in FY23 and FY22 is disclosed below. The Chairman’s non-
executive director fees are included in the table above. The non-executive directors do not have any bonus or equity incentive.
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
director
Independent,
non-executive
director,
Chairman
Independent,
non-executive
director
Independent,
non-executive
director
TOTALS
2023
$75,000
$0
$8,063
$0
$0
$0
$83,063
2022
$126,072
$0
$12,919
$0
$0
$0
$138,991
2023
$75,000
2022
$84,048
2023
2022
$150,000
$210,120
$0
$0
$0
$0
$8,063
$8,613
$16,125
$21,532
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$83,063
$92,661
$166,125
$231,652
29
Remuneration Report (Audited) (continued)
5. Performance Outcomes for FY23
5.1 Company Performance
All incentives paid for relevant periods for STI were measured strictly against the targets set.
The Board is satisfied that the vesting of incentives correlates with performance.
The Board is mindful of the need to retain talent and believes that the KMPs are appropriately incentivised given that
several parts of the business are almost in a start up phase. More impressive returns are only anticipated in the
longer term if strategies are executed correctly.
As evidenced in this report, the Company as a whole has achieved:
• progress on cloud development to transition to a cloud first company;
•
•
•
•
solid revenue, solid profits, and cash generation;
stable growth;
reduction in debt;
increased strategic partnerships;
• ±4.4% gross yield by way of divided paid; and
• growth in annual recurring revenue.
Date
Revenue ($m)
Profit After Tax
attributable to
owners of the parent
($m)
Share Price
Change in Share
Price
Dividends
31-Dec-23
31-Dec-22
31-Dec-21
31-Dec-20
31-Dec-19
$53.4
$64.71
$72.12
$75.6
$75.4
$5.6
$57.81
$9.82
$9.7
$8.1
$0.565
$0.60
$0.93
$0.78
$0.77
-$0.035
-$0.33
$0.15
$0.01
$0.10
$0.025
$0.60
$0.05
$0.05
$0.05
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).
5.2 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.
30
The STI achieved in relation to the FY23 period was paid after the end of the period (during FY24) in February 2024.
On average 102% of the target award opportunity or approximately 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 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 FY23 period the objectives that were linked to the
payment of STI included:
FY23 Company Level KPI Summary
Weighting
Target
Achievement
Award
Outcomes
Total
Award
$83,411
$122,814
$54.1m
$19.3m
4.0cps
$54.1m
$19.3m
4.0cps
99%
102%
110%
99%
102%
110%
Name
Position
Held at Year
End
Mr Chris
Hagglund
Group CFO
KPI
Summary
Revenue
EBITDA
EPS
Mr Sam
Allert
Group CEO
Revenue
EBITDA
EPS
Mr Myron
Zlotnick
Company
Secretary and
Corporate
Counsel
Revenue
EBITDA
EPS
40%
40%
20%
40%
40%
20%
40%
40%
20%
This value is accounted for in the remuneration table presented earlier.
n/a
n/a
$0
31
Remuneration Report (Audited) (continued)
The STI paid during the FY23 period related to performance during the FY22 period and was paid in cash in February
2023. On average 104% of the target award opportunity or 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 that was in
place during FY22, which is summarised in the table below:
Name
Position
Held at
Year End
FY22 Company Level KPI Summary
KPI
Summary
Weighting
Target
Achievement
Award
Outcomes
Total
Award1
Mr Clive Rabie
Non-
executive
director
Revenue
EBITDA
EPS
Mr Chris
Hagglund
Group CFO
Mr Sam Allert
Group CEO
Mr Myron
Zlotnick
Company
Secretary
and
Corporate
Counsel
Revenue
EBITDA
EPS
Revenue
EBITDA
EPS
Revenue
EBITDA
EPS
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 remuneration table presented earlier.
32
Vesting of LTI incentives for the performance period 2020 to 2022 were paid in February 2023 to the Group CEO and
the Group CFO, and for the performance period 2021 - 2023, in respect to the Company Secretary and Corporate
Counsel, was paid in March 2023 based on achievement of KPIs set at follows:
Incumbent
Role
Target LTI
Value
(at grant
date)
Tranche
Weighting
%
Number
of Shares
Eligible
to Vest
for FY23
Performance
Against
Target
% of
Grant
Vested
Number of
Shares or
Appreciation
Rights
Vested
Mr Chris
Hagglund
Mr Sam
Allert
Mr Myron
Zlotnick1
Group CFO
$213,500
Group CEO
$400,000
Company
Secretary and
Corporate
Counsel
$177,000
TSR
EPS
TSR
EPS
TSR
EPS
50/50
350,000
Achieved
112.5%
393,750
50/50
1,000,000
Achieved
100.0%
1,000,000
50/50
300,000
Achieved
100.0%
300,0002
1 Early vesting as a good leaver on resignation from employment.
2 Settled in cash for $178,000 rather than in Company Shares. Amount was negotiated and not determined solely by calculation of performance against
target.
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.
5.3 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.
33
Remuneration Report (Audited) (continued)
6. 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
FY23
Employing
Company
Duration of
Contract
Period of Notice
Base Salary
Excluding
Superannuation
Termination
Payments
Mr Chris
Hagglund
Group CFO
Reckon
Limited
Mr Myron
Zlotnick1
Company
Secretary and
Corporate
Counsel
Mr Sam
Allert
Group CEO
Reckon
Limited
Reckon
Limited
From
Company
From
KMP
Open ended
3 months
3 months
$498,584
Open ended
6 months
1 month
N/A
Open ended
3 months2
3 months2
$583,190
Up to 12
months*
Up to 12
months*
Up to 12
months*
1 Mr Zlotnick resigned on 30 March 2023. His contract was amended to provide 6 months notice by the Company in January 2023.
2 Contract amended in November 2023.
* 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.
Executive KMP remuneration is determined by the Board in accordance with the remuneration policy stated in this
Remuneration Report. Remuneration is currently paid entirely in cash. In past years the LTI component has been
paid in equity.
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
FY23
Employing
Company
Duration of
Contract
Period of Notice
From
Company
From
KMP
Termination
Payments
Mr Greg
Wilkinson
Mr Phillip
Hayman
Mr Clive
Rabie
Non-executive Director
Non-executive Director
Non-executive Chairman
Reckon
Limited
Reckon
Limited
Reckon
Limited
Open ended
None
None
None
Open ended
None
None
None
Open Ended
None
None
None
34
7. Changes in KMP Held Equity
The following table outlines the changes in the amount of equity held by executives over the financial year
Name
Instrument
Number
Held at
Open 2023
Granted
FY23
Forfeited
Vested
Purchased /
Disposed /
DRP
Number Held
at Close 2023
Number
Number
Number
Number
Number
Number
Mr Chris
Hagglund
Mr Myron
Zlotnick
Mr Sam
Allert
Shares
653,360
Rights/
Options2
Shares
Rights/
Options
350,000
0
300,000
Shares
487,779
Rights/
Options2
1,000,000
0
0
0
0
0
0
0
0
0
0
0
0
393,750
(393,750)
0
(300,000)1
1,000,000
(1,000,000)
0
0
0
0
0
0
1,047,110
0
0
0
1,487,779
0
1 On his resignation, Mr Zlotnick was treated as a good leaver and his Performance Rights, which were still within the measurement period, were
vested by the Board and Mr Zlotnick was paid $178,000 to discharge his entitlement to receive shares under the Performance Rights.
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.
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 2023
Granted
FY23
Forfeited
Vested
Purchased /
DRP
Number Held at
Close 2023
Number
Number
Number
Number
Number
Number
Mr Clive
Rabie
Mr Greg
Wilkinson
Mr Philip
Hayman
Shares
10,206,535
Rights/Options
n/a
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
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
0
n/a
0
n/a
10,206,535
n/a
8,019,374
n/a
1,397,460
n/a
There was no equity granted during the year that may be realised in the future.
35
Remuneration Report (Audited) (continued)
8. 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.
This concludes the remuneration report which has been audited.
36
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
Clive Rabie
Sam Allert
Greg
Wilkinson
Philip
Hayman
10
10
10
10
10
10
10
10
-
-
2
2
-
-
2
2
-
-
1
1
-
-
1
1
37
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 pre- 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
No events have occurred since 31 December 2023 and the date of this report that would require disclosure in the
financial statements if they had occurred during the financial year.
Capital Structure
The Company has 113,294,832 fully paid ordinary shares on issue and no shares were issued during the year. There
are no options on issue, unissued shares or shares to be issued on the exercise of options.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
Auditor’s Independence Declaration
The auditor’s independence declaration is included after this report on page 40.
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.
38
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations
Act 2001.
On behalf of the directors,
Mr C Rabie
Chairman
Sydney 28 March 2024
39
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
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 2023, 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
28 March 2024
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 2023, consolidated
statement of profit or loss, the 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 material accounting policy
information 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 2023 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.
for our opinion.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
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.
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.
40
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 2023, consolidated
statement of profit or loss, the 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 material accounting policy
information 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 2023 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.
41
Key audit matters
Capitalised development costs
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
How the matter was addressed in our audit
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 service. For bundled goods or services,
significant management judgement is required
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 2023 the Group has reported
sales revenue of $53.4m (2022: $51.2m) 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
2023 are $7.3m (2022: $7.1m) as disclosed in
Note 16.
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.
Key audit matter
How the matter was addressed in our audit
The carrying value of capitalised development
Our procedures, amongst others, included:
costs as at 31 December 2023 is $28.9m (2022:
$27.8m) as disclosed in Note 12 of the financial
report.
The Group conducts a significant level of
• Obtaining an understanding of the
processes and key controls in place over
the recording and identification of
development costs and products for
development activities for which certain directly
which these costs have been capitalised
attributable costs are capitalised. The
identification of these costs involves significant
management judgement in assessing whether the
costs are:
• Evaluating the appropriateness and
eligibility of costs capitalised, on a
sample basis, by agreeing the costs to
external invoices, supporting payroll and
• Eligible for capitalisation under the
time records and cost allocation
criteria prescribed by Australian
calculations
Accounting Standards
• Assessing the recoverability of the
• Appropriate and directly attributable to
carrying value of the capitalised
the relevant product developed
•
Supportable to the extent to which these
capitalised development costs will
generate sufficient economic benefit to
development costs by major product,
with reference to current product
performance, historical and forecast
cash flows
support their carrying values.
• 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 2023, 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.
42
2
3
Capitalised development costs
Key audit matter
How the matter was addressed in our audit
The carrying value of capitalised development
costs as at 31 December 2023 is $28.9m (2022:
$27.8m) 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 judgement in assessing whether the
costs are:
• Eligible for capitalisation under the
criteria prescribed by Australian
Accounting Standards
• Appropriate and directly attributable to
the relevant product developed
•
Supportable to the extent to which these
capitalised development costs will
generate sufficient economic benefit to
support their carrying values.
Our procedures, amongst others, 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.
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 2023, 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.
3
43
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
Director
Sydney, 28 March 2024
Responsibilities of the directors for the Financial Report
Responsibilities
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:
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 2023
In our opinion, the Remuneration Report of Reckon Limited, for the year ended 31 December 2023,
complies with section 300A of the Corporations Act 2001.
44
4
5
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
Director
Sydney, 28 March 2024
5
45
Directors’ Declaration
Consolidated Statement of Profit or Loss
for the year ended 31 December 2023
The directors of the company declare that:
1.
the financial statements and notes as set out on pages 47 to 101, 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 2023 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, 28 March 2024
Continuing operations
Revenue
Product costs
Employee benefits expenses
Marketing expenses
Legal and professional expenses
Other expenses
Transaction related share based payment expenses
Depreciation and amortisation of other non-current assets
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
Earnings per share from continuing operations for profit attributable to the parent
Cents
Cents
Profit attributable to:
Owners of the parent
Non - controlling interest
Profit for the year
Basic earnings per share
Diluted earnings per share
Basic earnings per share
Diluted earnings per share
Basic Earnings per share
Diluted Earnings per share
Earnings per share from discontinued operations for profit attributable to the parent
Earnings per share for profit attributable to the parent
The above consolidated income statement should be read in conjunction with the accompanying notes.
Note
Consolidated
2023
$’000
2022
$’000
3, 4
53,405
3
(7,730)
51,228
(7,506)
(17,780)
(17,093)
(3,327)
(3,393)
(743)
(752)
(4,127)
(4,040)
-
(483)
3 (14,391)
(13,133)
3
5
(199)
5,108
(226)
4,882
(72)
4,756
(1,166)
3,590
25(c)
-
53,224
4,882
56,814
21
21
5,568
(686)
4,882
57,778
(964)
56,814
4.9
4.9
-
-
4.9
4.9
4.0
3.9
47.0
46.0
51.0
49.9
46
1
Consolidated Statement of Profit or Loss
Consolidated Statement of Profit or Loss
for the year ended 31 December 2023
for the year ended 31 December 2023
Continuing operations
Revenue
Product costs
Employee benefits expenses
Marketing expenses
Legal and professional expenses
Other expenses
Transaction related share based payment expenses
Depreciation and amortisation of other non-current assets
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
Note
Consolidated
2023
$’000
2022
$’000
3, 4
53,405
3
(7,730)
51,228
(7,506)
(17,780)
(17,093)
(3,327)
(3,393)
(743)
(752)
(4,127)
(4,040)
-
(483)
3 (14,391)
(13,133)
3
5
(199)
5,108
(226)
4,882
(72)
4,756
(1,166)
3,590
25(c)
-
53,224
4,882
56,814
5,568
(686)
4,882
57,778
(964)
56,814
Earnings per share from continuing operations for profit attributable to the parent
Cents
Cents
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
Earnings per share for profit attributable to the parent
Basic Earnings per share
Diluted Earnings per share
The above consolidated income statement should be read in conjunction with the accompanying notes.
21
21
4.9
4.9
-
-
4.9
4.9
4.0
3.9
47.0
46.0
51.0
49.9
47
1
Consolidated Statement of Profit or Loss
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
and Other Comprehensive Income
for the year ended 31 December 2023
for the year ended 31 December 2023
Consolidated Statement
of Financial Position
as at 31 December 2023
Note
Consolidated
2023
$’000
2022
$’000
Profit for the year
4,882
56,814
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
20
20
20
(202)
-
-
(202)
695
(154)
58
599
Total comprehensive income for the year
4,680
57,413
Total comprehensive income attribute to:
Owners of the parent
Non - controlling interest
5,366
58,377
(686)
(964)
4,680
57,413
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
48
2
Total Equity attributable to owners of the parent
Non - controlling interest
Total Equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
58
771
19,624
17,916
3
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
Current tax liabilities
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Total Non-Current Liabilities
Provisions
Contract liabilities
Lease liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Retained earnings
Note
Consolidated
2023
$’000
2022
$’000
25
7
8
7
9
11
12
8
10
14
16
10
13
15
14
16
10
19
20
975
2,196
316
96
1,683
5,266
151
499
1,979
32,088
32
1,192
35,941
41,207
2,829
1,827
5,808
423
1,211
906
3,754
2,606
463
1,519
237
9,485
21,583
19,624
20,524
(49,106)
48,148
19,566
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
250
4,074
2,389
206
1,330
1,329
9,578
22,028
17,916
19,534
(48,087)
45,698
17,145
12,098
12,450
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 31 December 2023
Consolidated Statement
Consolidated Statement
of Financial Position
of Financial Position
as at 31 December 2023
as at 31 December 2023
Note
Consolidated
2023
$’000
2022
$’000
Note
Consolidated
2023
$’000
2022
$’000
Profit for the year
4,882
56,814
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
20
20
20
(202)
-
-
(202)
695
(154)
58
599
Total comprehensive income for the year
4,680
57,413
Total comprehensive income attribute to:
Owners of the parent
Non - controlling interest
5,366
58,377
(686)
(964)
4,680
57,413
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
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
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
25
7
8
7
9
11
12
8
10
14
16
10
13
15
14
16
10
19
20
Total Equity attributable to owners of the parent
Non - controlling interest
Total Equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
975
2,196
316
96
1,683
5,266
151
499
1,979
32,088
32
1,192
35,941
41,207
2,829
1,827
5,808
423
1,211
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
12,098
12,450
906
3,754
2,606
463
1,519
237
9,485
21,583
19,624
20,524
(49,106)
48,148
19,566
250
4,074
2,389
206
1,330
1,329
9,578
22,028
17,916
19,534
(48,087)
45,698
17,145
58
771
19,624
17,916
2
49
3
Consolidated Statement
Consolidated Statement
of Changes in Equity
of Changes in Equity
for the year ended 31 December 2023
for the year ended 31 December 2023
Consolidated Statement
of Changes in Equity (continued)
for the year ended 31 December 2023
Issued
capital
Share
buyback
reserve
Foreign
currency
translation
reserve
Share-
based
payments
reserve
Retained
earnings
Acquisition
of non
controlling
interest
reserve
Non-
controlling
interest
Share
Foreign
currency
Share-
based
Swap
controlling
Non-
Issued
buyback
translation
payments
hedging
Retained
interest
controlling
capital
reserve
reserve
reserve
reserve
earnings
reserve
interest
Acquisition
of non
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total
Balance at
1 January 2023
19,534 (42,018)
(1,148)
1,231
45,698
(6,152)
771
17,916
20,524 (42,018)
(1,689)
1,291
(58)
58,631
(6,152)
1,294
31,823
-
-
-
-
-
-
-
-
-
-
-
(202)
(202)
-
-
-
-
-
-
-
-
-
-
5,568
-
5,568
164
-
-
(2,832)
(980)
(286)
-
-
-
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(686)
4,882
Profit for the year
57,778
(964)
56,814
-
(202)
(686)
4,680
107
271
-
-
-
(2,832)
(233)
(43)
(881)
(881)
747
747
-
(1)
Other comprehensive income:
Balance at
1 January 2022
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 26)
Vested shares
Treasury shares
transferred to
retained earnings
Treasury shares
acquired
Exchange
adjustment
Balance at
2022
-
-
-
-
-
-
-
-
-
(990)
541
58
57,778
(964)
57,413
472
441
913
-
-
-
-
-
-
-
-
-
-
541
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
58
-
-
-
-
-
-
-
-
(70,243)
(1,003)
468
(468)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
541
58
(70,243)
(1,003)
-
3
(990)
20,524 (42,018)
(1,350)
414
48,148
(6,152)
58
19,624
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
31 December
19,534 (42,018)
(1,148)
1,231
-
45,698
(6,152)
771
17,916
(43)
-
-
-
Profit for the year
Other comprehensive income:
Exchange differences
on translation of
foreign operations
Total comprehensive
income
Share based
payments expense
(note 3)
Dividends paid
(note 26)
-
-
-
-
-
Vested shares
1,033
Treasury shares
acquired
Non-controlling
interest shares
acquired by
Reckon Limited
Shares issued to
non-controlling
shareholders
Exchange
adjustment
Balance at
31 December
2023
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
50
4
5
Consolidated Statement
of Changes in Equity
for the year ended 31 December 2023
Consolidated Statement
Consolidated Statement
of Changes in Equity (continued)
of Changes in Equity (continued)
for the year ended 31 December 2023
for the year ended 31 December 2023
Share
Foreign
currency
Share-
based
Acquisition
of non
controlling
Non-
Issued
buyback
translation
payments
Retained
interest
controlling
capital
reserve
reserve
reserve
earnings
reserve
interest
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
Total
Consolidated
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total
Balance at
1 January 2023
19,534 (42,018)
(1,148)
1,231
45,698
(6,152)
771
17,916
Balance at
1 January 2022
20,524 (42,018)
(1,689)
1,291
(58)
58,631
(6,152)
1,294
31,823
Profit for the year
5,568
(686)
4,882
Profit for the year
Other comprehensive income:
Other comprehensive income:
Vested shares
1,033
(980)
(286)
-
(202)
5,568
(686)
4,680
164
107
271
-
(2,832)
-
-
-
-
-
-
-
-
-
-
(202)
(202)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,832)
(233)
(43)
(881)
(881)
747
747
(1)
-
(1)
-
-
-
-
-
-
-
-
(43)
Exchange differences
on translation of
foreign operations
Total comprehensive
income
Share based
payments expense
(note 3)
Dividends paid
(note 26)
Treasury shares
acquired
Non-controlling
interest shares
acquired by
Reckon Limited
Shares issued to
non-controlling
shareholders
Exchange
adjustment
Balance at
2023
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
(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 26)
Vested shares
Treasury shares
transferred to
retained earnings
Treasury shares
acquired
Exchange
adjustment
Balance at
31 December
2022
31 December
20,524 (42,018)
(1,350)
414
48,148
(6,152)
58
19,624
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
4
51
5
19,534 (42,018)
(1,148)
1,231
-
45,698
(6,152)
771
17,916
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
for the year ended 31 December 2023
Notes to the Financial Statements
for the year ended 31 December 2023
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest (paid) / received
Income taxes paid
Note
Consolidated
Inflows/(Outflows)
2023
$’000
20221
$’000
Restated
58,619
70,767
(38,359)
(43,536)
(151)
(975)
372
(759)
Net cash inflow from operating activities
25(b)
19,134
26,844
Cash Flows From Investing Activities
Net proceeds from sale of business
25(c) and 25(d)
Acquisition of non-controlling interest
Payment for capitalised development costs
Payment for property, plant and equipment
Net cash inflow from investing activities
Cash Flows From Financing Activities
Repayment of borrowings
Payments for lease liabilities capitalised under AASB 16
Payment for treasury shares
120
(881)
78,381
-
(14,361)
(19,157)
(166)
(213)
(15,288)
59,011
(320)
(12,063)
(1,200)
(1,631)
(276)
(1,993)
Dividends paid to owners of the parent
26
(2,832)
(70,243)
Proceeds from issue of shares to non-controlling interests
Net cash outflow from financing activities
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
518
-
(4,110)
(85,930)
(264)
1,233
-
6
(75)
1,394
(93)
7
Cash and cash equivalents at the end of the financial year
25(a)
975
1,233
The above consolidated statement of cash flows should be read in conjunction with the accompanying note.
1. 2022 cashflows include discontinued activities (refer note 25(c))
1 Material 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 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.
Material 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.
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.
52
6
7
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
Notes to the Financial Statements
Notes to the Financial Statements
for the year ended 31 December 2023
for the year ended 31 December 2023
Note
Consolidated
Inflows/(Outflows)
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest (paid) / received
Income taxes paid
Net cash inflow from operating activities
25(b)
19,134
26,844
Cash Flows From Investing Activities
Net proceeds from sale of business
25(c) and 25(d)
Acquisition of non-controlling interest
Payment for capitalised development costs
Payment for property, plant and equipment
Net cash inflow from investing activities
Cash Flows From Financing Activities
Repayment of borrowings
Payments for lease liabilities capitalised under AASB 16
Payment for treasury shares
Proceeds from issue of shares to non-controlling interests
Net cash outflow from financing activities
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
Dividends paid to owners of the parent
26
(2,832)
(70,243)
2023
$’000
20221
$’000
Restated
58,619
70,767
(38,359)
(43,536)
(151)
(975)
372
(759)
120
(881)
78,381
-
(14,361)
(19,157)
(166)
(213)
(15,288)
59,011
(320)
(12,063)
(1,200)
(1,631)
(276)
(1,993)
518
-
(4,110)
(85,930)
(264)
1,233
-
6
(75)
1,394
(93)
7
Cash and cash equivalents at the end of the financial year
25(a)
975
1,233
The above consolidated statement of cash flows should be read in conjunction with the accompanying note.
1. 2022 cashflows include discontinued activities (refer note 25(c))
1 Material 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 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.
Material 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.
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.
6
53
7
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
(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.
(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.
54
8
(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
Transactions and balances
loss in the period in which they arise.
Group companies
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.
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
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.
(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
9
Notes to the Financial Statements (continued)
(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
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.
(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
8
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.
measurement basis is made on a transaction-by-transaction basis.
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.
(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
559
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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.
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.
in equity.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
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.
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to inventory on hand on a
(h) Inventories
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 18.
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.
56
10
11
Notes to the Financial Statements (continued)
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.
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.
•
•
•
•
•
10
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 18.
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.
5711
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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.
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:
Contributions are made by the Group to defined contribution employee superannuation funds and are charged as
expenses when incurred.
•
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;
(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.
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
•
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.
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
•
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its
(ii) Definition of default
recoverable:
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
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
58
12
13
Notes to the Financial Statements (continued)
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
Contributions are made by the Group to defined contribution employee superannuation funds and are charged as
of companies.
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.
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
financial instrument.
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
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.
life of a financial instrument.
(i) Significant increase in credit risk
12
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.
Financial assets
(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
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.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected
(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
5913
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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 3) 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).
(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
a.
Identify the contract(s) with customer
b.
Identify the performance obligation in the contract
c. Determine the transaction price
The Group applies the following 5-step model for revenue recognition related to contracts with customers:
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.
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:
60
14
15
Notes to the Financial Statements (continued)
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
Financial liabilities
Foreign exchange gains and losses
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.
All financial liabilities are measured subsequently at amortised cost or at fair value through profit or loss (FVTPL).
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 3) 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).
(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.
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:
14
6115
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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:
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
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.
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
62
16
17
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.
these methods.
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
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:
of the contract.
Membership fees (Business Group)
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.
Notes to the Financial Statements (continued)
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
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 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
Reckon One (Business Group)
promises generally are:
i.
Sale of a licence;
obligations generally are:
ii. Post-sale technical support.
purchased.
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
i.
Sale of a licence and ongoing maintenance for access to the cloud; and
The transaction price is fixed in the contract entered into by the customer dependent on the specific modules
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
of post-sale technical support over the time of the contract with the customer. This is due to the fact that Reckon may
ii. Post-sale technical support for a specified period of time; and
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;
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.
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.
16
6317
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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 (Discontinued operation)
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.
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
significantly modify the software.
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.
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19
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.
browser.
Elite (Practice Management Accountant Group) (Discontinued operation)
Elite is a desktop/cloud hybrid software licence that is accessible to a customer for download through their web
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.
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
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
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
Notes to the Financial Statements (continued)
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 (Discontinued operation)
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.
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.
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
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) (Discontinued operation)
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.
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
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
18
6519
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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.
customer.
customer.
customer.
customer.
customer.
customer.
period of time
access to the cloud
period of time
period of time
time
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
Post-sale technical support for a specified
Over the time of the contract with the
Reckon One
Sale of licence and ongoing maintenance for
Over the time of the contract with the
Post-sale technical support for a specified
Over the time of the contract with the
Reckon Accounts Hosted
Sale of a software licence
At the point of sale.
Post-sale technical support for a specified
Over the time of the contract with the
Hosting services for a specified period of
Over the time of the contract with the
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
(Discontinued operation)
Sale of a bundled licence, implementation
Over the time of the contract with the
services, upgrade and maintenance.
customer.
Post-sale technical support
Over the time of the contract with the
customer.
Practice Management Legal
The provision of the software licence and
Group
implementation services
At the point of sale.
The provision of support services (upfront
model) and software and support services
Over the time of the contract with the
(subscription model) over the life of the
customer.
contract
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.
66
20
21
Notes to the Financial Statements (continued)
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.
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.
from any support is simultaneously consumed by the customer as it is provided. The services are made available to
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.
An assessment of commissions paid by the Group was performed in connection with the sale of all products. The
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
(Discontinued operation)
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.
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.
20
6721
Notes to the Financial Statements (continued)
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
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, where the risk is considered to be material.
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
non-financial 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.
(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,
68
22
23
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.
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
(q) Borrowings
initial recognition.
(r) Provisions
(s) Fair Value estimation
on balance date bid prices.
approximate their fair values.
(t) Government Grants
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.
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
The Directors consider that the nominal value less estimated credit adjustments of trade receivables and payables
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
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, where the risk is considered to be material.
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
non-financial 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.
(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,
22
6923
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
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
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 judgements, estimates and assumptions
Significant accounting judgements
significant effect on the financial statements:
In applying the Group’s accounting policies, management has made the following judgements which have the most
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.
1(m) above.
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
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 18.
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.
70
24
25
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
(x) Significant accounting judgements, estimates and assumptions
term of the lease unless another systematic basis is more representative of the time pattern in which economic
Significant accounting judgements
In applying the Group’s accounting policies, management has made the following judgements 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 18.
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.
Notes to the Financial Statements (continued)
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
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.
24
7125
Notes to the Financial Statements (continued)
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
$6,832 thousand (2022: $7,473 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 net of payments for capitalised development costs were $4,773
thousand (2022: $7,687 thousand). Unused bank facilities at balance date was $20,019 thousand. Also, included in
current liabilities are contract liabilities of $5,808 thousand (2022: $5,804 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.
(aa) Restatement of comparatives
The comparative figures in the statement of cashflow have been restated to reflect the reclassification of capitalised
development costs as cashflows from investing activities in the current year. Payment for capitalised development
costs were previously disclosed as cashflows from operating activities. The reclassification of these payments has
been carried out to align classification of these cashflows with requirements of AASB 107 Statement of Cashflows.
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.
2 Segment Information (continued)
• 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.
• Practice Management Group, Accountant (Discontinued in 2022) - development, distribution and support of
practice management, tax, client accounting and related software under the APS brand and Reckon Elite brand.
2023
Operating revenue
Segment results
EBITDA1
Depreciation and amortisation
Segment profit before tax
Central administration costs
Finance (costs) / income
Profit before income tax
Income tax expense
Profit for the year
2022
Operating revenue
Segment results
EBITDA1
Depreciation and amortisation
Segment profit before tax
Central administration costs
Transaction related share based
payment expenses
Finance (costs) / income
Profit before income tax
Income tax expense
Profit for the year
Business
Management
Practice
Group
$’000
Legal Group
Continuing
Discontinued
Consolidated
$’000
Operations
Operations
Group
41,703
11,702
53,405
53,405
21,539
(9,982)
11,557
897
(4,409)
(3,512)
21,036
(8,692)
12,344
222
(4,441)
(4,219)
-
-
-
-
-
-
-
-
-
-
-
74,860
(4,591)
70,269
531
70,800
(17,576)
53,224
22,436
(14,391)
8,045
(2,738)
(199)
5,108
(226)
4,882
21,258
(13,133)
8,125
(2,814)
(483)
(72)
4,756
(1,166)
3,590
22,436
(14,391)
8,045
(2,738)
(199)
5,108
(226)
4,882
96,118
(17,724)
78,394
(2,814)
(483)
459
75,556
(18,742)
56,814
40,799
10,429
51,228
13,469
64,697
1 EBITDA means earnings before interest tax, depreciation and amortisation.
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 2023 or 2022.
72
26
27
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
$6,832 thousand (2022: $7,473 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 net of payments for capitalised development costs were $4,773
thousand (2022: $7,687 thousand). Unused bank facilities at balance date was $20,019 thousand. Also, included in
current liabilities are contract liabilities of $5,808 thousand (2022: $5,804 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.
(aa) Restatement of comparatives
The comparative figures in the statement of cashflow have been restated to reflect the reclassification of capitalised
development costs as cashflows from investing activities in the current year. Payment for capitalised development
costs were previously disclosed as cashflows from operating activities. The reclassification of these payments has
been carried out to align classification of these cashflows with requirements of AASB 107 Statement of Cashflows.
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
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.
2 Segment Information (continued)
• 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.
• Practice Management Group, Accountant (Discontinued in 2022) - development, distribution and support of
practice management, tax, client accounting and related software under the APS brand and Reckon Elite brand.
2023
Operating revenue
Segment results
EBITDA1
Depreciation and amortisation
Segment profit before tax
Central administration costs
Finance (costs) / income
Profit before income tax
Income tax expense
Profit for the year
2022
Operating revenue
Segment results
EBITDA1
Depreciation and amortisation
Segment profit before tax
Central administration costs
Transaction related share based
payment expenses
Finance (costs) / income
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
41,703
11,702
53,405
21,539
(9,982)
11,557
897
(4,409)
(3,512)
22,436
(14,391)
8,045
(2,738)
(199)
5,108
(226)
4,882
-
-
-
-
-
-
-
-
-
53,405
22,436
(14,391)
8,045
(2,738)
(199)
5,108
(226)
4,882
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
These divisions are the basis upon which the consolidated entity reports its financial information to the chief operating
1 EBITDA means earnings before interest tax, depreciation and amortisation.
26
7327
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 2023 or 2022.
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
2 Segment Information (continued)
3 Profit for the Year
Assets
Liabilities
Additions to non-
current assets
Segment assets and liabilities
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Business Group
20,037
19,418
8,244
8,564
9,953
10,787
Practice Management Group, Legal
16,342
15,919
6,555
6,702
5,092
4,985
Corporate Division
4,828
4,607
6,784
6,762
-
-
Continuing operations
41,207
39,944
21,583
22,028
15,045
15,772
Practice Management Group, Accountant
(Discontinued)
-
-
-
-
-
4,212
Sale of goods and rendering of services
41,207
39,944
21,583
22,028
15,045
19,984
Profit before income tax includes the following items of revenue and expense:
(b) Geographical information
Australia
United States of America
Other countries (i)
Continuing operations
Discontinued operations
Revenue from external
customers
Non-current assets
2023
$’000
2022
$’000
2023
$’000
2022
$’000
39,448
38,650
20,003
20,815
9,792
4,165
8,740
12,893
13,730
3,838
3,045
422
53,405
51,228
35,941
34,967
-
13,469
-
-
53,405
64,697
35,941
34,967
(i) No other country outside of Australia and the United States of America are considered to generate revenues which are material to the group.
Revenue
Sales revenue
Subscription revenue
Other recurring revenue
Loans revenue
Other revenue
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:
Termination benefits
Equity settled share based payments
Finance costs/(income):
Loans/overdrafts
Leases
Other
Operating lease rental expenses:
Minimum lease payments
Consolidated
2023
$’000
2022
$’000
49,051
46,708
187
173
3,994
53,405
236
186
4,098
51,228
7,730
7,506
13,269
14,391
35
11,418
13,133
(14)
67
824
178
699
14
57
913
179
72
(179)
72
224
51
288
174
660
-
131
271
151
48
-
199
141
Post employment benefits – defined contribution plans
1,932
1,988
74
28
29
Notes to the Financial Statements (continued)
Assets
Liabilities
Additions to non-
current assets
Segment assets and liabilities
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Business Group
20,037
19,418
8,244
8,564
9,953
10,787
Practice Management Group, Legal
16,342
15,919
6,555
6,702
5,092
4,985
Corporate Division
4,828
4,607
6,784
6,762
-
Continuing operations
41,207
39,944
21,583
22,028
15,045
15,772
Practice Management Group, Accountant
(Discontinued)
-
-
-
-
4,212
-
-
41,207
39,944
21,583
22,028
15,045
19,984
(b) Geographical information
Australia
United States of America
Other countries (i)
Continuing operations
Discontinued operations
Revenue from external
customers
Non-current assets
2023
$’000
2022
$’000
2023
$’000
2022
$’000
39,448
38,650
20,003
20,815
9,792
4,165
8,740
12,893
13,730
3,838
3,045
422
53,405
51,228
35,941
34,967
-
13,469
-
-
53,405
64,697
35,941
34,967
(i) No other country outside of Australia and the United States of America are considered to generate revenues which are material to the group.
2 Segment Information (continued)
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:
Consolidated
2023
$’000
2022
$’000
49,051
46,708
187
173
3,994
53,405
236
186
4,098
51,228
7,730
7,506
51
288
174
660
-
67
824
178
699
14
13,269
14,391
35
11,418
13,133
(14)
Post employment benefits – defined contribution plans
1,932
1,988
Termination benefits
Equity settled share based payments
Finance costs/(income):
Loans/overdrafts
Leases
Other
Operating lease rental expenses:
Minimum lease payments
131
271
151
48
-
199
141
57
913
179
72
(179)
72
224
28
7529
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
4 Revenue
5 Income Tax
Revenue
recognition
Busines
Group
$’000
Practice
Management
Accountant
Group
$’000
Practice
Management
Legal Group
$’000
Consolidated
Group
$’000
Primary
segments
2023
Product Description
Subscription
revenue
Licence, support and
hosting
Other recurring
revenue
Licence
Support
Licence
Over time
12,380
Point in time
25,857
Over time
Point in time
6
181
173
355
-
955
41,703
Over time
11,405
Point in time
26,045
Over time
Point in time
7
229
186
382
Loan income
Interest and commission
Over time
Other revenue Membership support
Over time
Membership fees - license
Point in time
1,796
Licence and implementation Point in time
Other
Point in time
Total revenue for continuing operations
2022
Subscription
revenue
Licence, support and
hosting
Other recurring
revenue
Licence
Support
Licence
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
-
662
40,799
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,814
23,194
-
-
-
-
-
-
888
-
25,857
6
181
173
355
1,796
888
955
11,702
53,405
9,258
20,663
-
-
-
-
-
-
1,171
-
26,045
7
229
186
382
1,883
1,171
662
10,429
51,228
Subscription
revenue
Bundled licence, support,
hosting and implementation
Over time
Other revenue
Licence and implementation Point in time
-
-
13,027
442
-
-
13,027
442
40,799
13,469
10,429
64,697
76
30
(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 2023 and 2022 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
2023
$’000
2022
$’000
1,773
(777)
(770)
226
5,108
-
5,108
1,532
74
-
72
(830)
148
996
(770)
226
226
-
226
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
459
1,202
1,661
460
1,204
1,664
31
Notes to the Financial Statements (continued)
segments
Product Description
recognition
Revenue
Busines
Accountant
Management
Consolidated
Group
$’000
Group
Legal Group
$’000
$’000
Group
$’000
Practice
Management
Practice
Subscription
Licence, support and
Over time
12,380
10,814
23,194
Total revenue for continuing operations
41,703
11,702
53,405
4 Revenue
Primary
2023
revenue
Other recurring
revenue
hosting
Licence
Support
Licence
Point in time
25,857
Over time
Point in time
Loan income
Interest and commission
Over time
Other revenue Membership support
Over time
Membership fees - license
Point in time
1,796
Licence and implementation Point in time
Other
Point in time
2022
revenue
Other recurring
revenue
hosting
Licence
Support
Licence
Point in time
26,045
Over time
Point in time
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
6
181
173
355
-
955
7
229
186
382
-
662
-
-
30
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
888
1,171
25,857
6
181
173
355
1,796
888
955
26,045
7
229
186
382
1,883
1,171
662
13,027
442
Total revenue for continuing operations
40,799
10,429
51,228
Discontinued operations
Subscription
Bundled licence, support,
revenue
hosting and implementation
Over time
Other revenue
Licence and implementation Point in time
13,027
442
40,799
13,469
10,429
64,697
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
Subscription
Licence, support and
Over time
11,405
9,258
20,663
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
Consolidated
2023
$’000
2022
$’000
1,773
(777)
(770)
226
5,108
-
5,108
1,532
74
-
72
(830)
148
996
(770)
226
226
-
226
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
The tax rate used for the 2023 and 2022 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
459
1,202
1,661
460
1,204
1,664
7731
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
6 Remuneration of Auditors
7 Trade and Other Receivables
(a) BDO
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
(b) Other Auditors
Auditing and reviewing of financial reports
Tax compliance and other consulting services
Consolidated
2023
$
2022
$
213,500
233,402
61,598
64,033
275,098
297,435
29,904
59,258
18,470
61,317
48,374
120,575
Current:
Trade receivables (i)
Allowance for Expected Credit Loss (ECL)
Receivables from non-controlling interests(ii)
Other receivables
Non-current:
Other receivables
Past due 0 – 30 days
Past due 31 – 60 days
Past due 61+ days
Total
(i) The ageing of past due receivables at year end is detailed as follows:
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
(ii) In March 2023 Reckon announced that it, together with minority shareholders, had committed to provide US$4m of growth
capital for the Legal Group. The capital to be provided by Reckon and Legal Group CEO Bill Bice is staggered based upon
requirements. This receivable represents the remaining contribution from Bill Bice.
Consolidated
2023
$’000
2022
$’000
1,821
1,881
(65)
(30)
1,756
1,851
229
211
-
98
2,196
1,949
151
146
1,264
1,216
910
210
144
30
(51)
86
65
1,005
73
138
149
(67)
(52)
30
78
32
33
Notes to the Financial Statements (continued)
During the year, the auditors of the parent entity earned the following remuneration:
(a) BDO
BDO
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
2023
$
2022
$
213,500
233,402
61,598
64,033
275,098
297,435
29,904
59,258
18,470
61,317
48,374
120,575
6 Remuneration of Auditors
7 Trade and Other Receivables
Current:
Trade receivables (i)
Allowance for Expected Credit Loss (ECL)
Receivables from non-controlling interests(ii)
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
2023
$’000
2022
$’000
1,821
1,881
(65)
(30)
1,756
1,851
229
211
-
98
2,196
1,949
151
146
910
210
144
1,005
73
138
1,264
1,216
30
(51)
86
65
149
(67)
(52)
30
32
7933
(ii) In March 2023 Reckon announced that it, together with minority shareholders, had committed to provide US$4m of growth
capital for the Legal Group. The capital to be provided by Reckon and Legal Group CEO Bill Bice is staggered based upon
requirements. This receivable represents the remaining contribution from Bill Bice.
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
7 Trade and Other Receivables (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 2023 was determined as follows:
2023
Receivables
Current
Past due 1 to 30 days
Past due 30 to 60 days
Past due over 60 days
Total receivables
Business Group
$’000
Legal Practice
Management
Group
$’000
290
93
36
32
267
817
174
112
Group
$’000
557
910
210
144
451
1,370
1,821
Allowance based on historic credit losses
Adjustment for expected changes in credit risk1
Allowance based on historic credit losses
Adjustment for expected changes in credit risk1
Credit loss allowance
Net carrying amount
(1)
(13)
(14)
437
(4)
(47)
(51)
(5)
(60)
(65)
1,319
1,756
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.
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
1,446
1,851
Business Group
Legal Practice
Management
Group
$’000
Group
$’000
666
1,004
73
138
(17)
(13)
(30)
324
965
58
113
(14)
-
(14)
421
1,460
1,881
$’000
342
39
15
25
(3)
(13)
(16)
405
2022
Receivables
Current
Past due 1 to 30 days
Past due 30 to 60 days
Past due over 60 days
Total receivables
Credit loss allowance
Net carrying amount
specifically identified.
80
34
35
Notes to the Financial Statements (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 2023 was determined as follows:
2023
Receivables
Current
Past due 1 to 30 days
Past due 30 to 60 days
Past due over 60 days
Total receivables
Credit loss allowance
Net carrying amount
specifically identified.
Allowance based on historic credit losses
Adjustment for expected changes in credit risk1
Business Group
Legal Practice
Management
Group
$’000
Group
$’000
$’000
290
93
36
32
(1)
(13)
(14)
437
267
817
174
112
(4)
(47)
(51)
557
910
210
144
(5)
(60)
(65)
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
1,319
1,756
7 Trade and Other Receivables (continued)
7 Trade and Other Receivables (continued)
2022
Receivables
Current
Past due 1 to 30 days
Past due 30 to 60 days
Past due over 60 days
Total receivables
451
1,370
1,821
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)
405
(14)
-
(14)
(17)
(13)
(30)
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.
34
8135
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
8 Other Assets
9 Property, Plant and Equipment
Current:
Prepayments
Other
Non current:
Prepayments
Other
Consolidated
2023
$’000
2022
$’000
1,666
1,448
17
-
1,683
1,448
29
3
32
59
37
96
Leasehold Improvements
At cost
Less: Accumulated amortisation
Total leasehold improvements
Plant and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
Consolidated
2023
$’000
1,056
(952)
104
4,762
(4,367)
395
499
500
165
5
-
(275)
395
207
25
-
(203)
(627)
500
2022
$’000
1,082
(896)
186
5,056
(4,556)
500
686
Total
$’000
686
166
5
91
(449)
499
104
23
143
(474)
(920)
686
1,098
1,810
Leasehold
Improvements
$’000
Plant and
Equipment
$’000
Consolidated
Carrying amount at 1 January 2023
Additions net of disposals
Effect of foreign currency exchange differences
Capitalised lease incentive reallocated
Depreciation/amortisation expense
Balance at 31 December 2023
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 25(c))
Depreciation/amortisation expense
Balance at 31 December 2022
186
1
-
91
(174)
104
712
(103)
(2)
143
(271)
(293)
186
82
36
37
Notes to the Financial Statements (continued)
8 Other Assets
9 Property, Plant and Equipment
Consolidated
2022
$’000
1,082
(896)
186
5,056
(4,556)
500
686
Total
$’000
686
166
5
91
(449)
499
Leasehold Improvements
At cost
Less: Accumulated amortisation
Total leasehold improvements
Plant and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
2023
$’000
1,056
(952)
104
4,762
(4,367)
395
499
Leasehold
Improvements
$’000
Plant and
Equipment
$’000
500
165
5
-
(275)
395
Consolidated
Carrying amount at 1 January 2023
Additions net of disposals
Effect of foreign currency exchange differences
Capitalised lease incentive reallocated
Depreciation/amortisation expense
Balance at 31 December 2023
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 25(c))
Depreciation/amortisation expense
Balance at 31 December 2022
186
1
-
91
(174)
104
712
(103)
(2)
143
(271)
(293)
186
1,098
1,810
207
25
-
(203)
(627)
500
104
23
143
(474)
(920)
686
8337
Consolidated
2023
$’000
2022
$’000
1,666
1,448
17
-
1,683
1,448
29
3
32
59
37
96
Current:
Prepayments
Other
Non current:
Prepayments
Other
36
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
10 Right of Use Assets/Lease liabilities
11 Deferred Tax Assets
Right of use assets
At cost
Less: Accumulated amortisation
Lease liabilities
Current
Non-current
Lease liabilities maturity profile
Year 1
Year 2
Year 3
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 25(c))
Depreciation/amortisation expense
Balance at 31 December
Consolidated
2023
$’000
2022
$’000
6,369
6,363
(5,177)
(4,326)
1,192
2,037
1,211
237
1,448
1,211
237
-
1,091
1,329
2,420
1,091
1,136
193
1,448
2,420
2,037
4,362
151
4
-
98
(9)
(1,010)
(1,000)
(1,404)
1,192
2,037
Leases relate to office premises with lease terms of between 1 to 7 years.
Effect of foreign currency exchange differences
84
38
The balance comprises temporary differences attributable to:
Details of unrecognised deferred tax assets can be found in Note 5(c)
Expected credit loss
Employee benefits
Recoverable losses
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
Intellectual
Development
Note
Goodwill
$’000
3,171
Property
$’000
At 1 January 2023
Additions
Sale of business
Amortisation charge
At 31 December 2023
At 1 January 2022
Additions
Impairment to goodwill
Amortisation charge
At 31 December 2022
Sale of Practice Management Accountant Group
25 (c)
(14,641)
Effect of foreign currency exchange differences
18,349
14
-
(45)
14
-
3,140
-
-
(684)
147
3,171
-
-
-
-
-
-
-
-
-
-
-
(14)
(15,708)
(15,722)
27,846
31,017
39
Consolidated
2023
$’000
2
2
1,975
1,979
985
994
1,979
2022
$’000
-
2
983
985
42
943
985
9,901
(9,901)
-
113,360
(84,412)
28,948
14,655
(14,655)
-
99,658
(71,812)
27,846
3,140
32,088
3,171
31,017
Costs
$’000
27,846
14,728
(446)
89
Total
$’000
31,017
14,728
(491)
103
(13,269)
(13,269)
28,948
32,088
39,839
19,782
58,202
19,782
(16,504)
(31,145)
-
437
(684)
584
Notes to the Financial Statements (continued)
10 Right of Use Assets/Lease liabilities
11 Deferred Tax Assets
The balance comprises temporary differences attributable to:
Expected credit loss
Employee benefits
Recoverable losses
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
2023
$’000
2
2
1,975
1,979
985
994
1,979
2022
$’000
-
2
983
985
42
943
985
9,901
(9,901)
-
113,360
(84,412)
28,948
14,655
(14,655)
-
99,658
(71,812)
27,846
3,140
32,088
3,171
31,017
Right of use assets
At cost
Less: Accumulated amortisation
Lease liabilities
Current
Non-current
Year 1
Year 2
Year 3
Lease liabilities maturity profile
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 25(c))
Depreciation/amortisation expense
Balance at 31 December
Consolidated
2023
$’000
2022
$’000
6,369
6,363
(5,177)
(4,326)
1,192
2,037
1,211
237
1,448
1,211
237
-
1,091
1,329
2,420
1,091
1,136
193
1,448
2,420
2,037
4,362
151
4
-
98
(9)
(1,010)
(1,000)
(1,404)
1,192
2,037
Leases relate to office premises with lease terms of between 1 to 7 years.
Effect of foreign currency exchange differences
Consolidated movements in intangibles
At 1 January 2023
Additions
Sale of business
Amortisation charge
At 31 December 2023
At 1 January 2022
Additions
Note
Goodwill
$’000
3,171
Intellectual
Property
$’000
-
Development
Costs
$’000
27,846
-
(45)
14
-
3,140
18,349
-
Total
$’000
31,017
14,728
(491)
103
14,728
(446)
89
-
-
-
-
-
14
-
-
-
-
(14)
-
(13,269)
(13,269)
28,948
32,088
39,839
19,782
58,202
19,782
(16,504)
(31,145)
-
437
(684)
584
(15,708)
(15,722)
27,846
31,017
Sale of Practice Management Accountant Group
25 (c)
(14,641)
Impairment to goodwill
Effect of foreign currency exchange differences
Amortisation charge
At 31 December 2022
(684)
147
-
3,171
38
8539
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
12 Intangibles (continued)
13 Borrowings
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, Legal
Consolidated
2023
$’000
2022
$’000
-
3,140
3,140
46
3,125
3,171
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 pre-tax discount rate of 13.52% (2022:13.10%) 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 (2022:2.5%).
In assessing impairment using value in use for the Legal Group, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate of 12.75% (2022:10.7%) for the existing business and 24% 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 3 years. Subsequent cash flows are projected
using constant long term average growth rates of 3% per annum (2022:3%)
Within the Business Group Segment, an impairment charge of $684 thousand has been incurred against the goodwill recorded
on a CGU in the prior year. 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 current 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.
(i) The consolidated entity has bank facilities of $25 million (2022 : $25 million). 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.
Current:
Bank overdraft (i)
Non-current
Bank borrowings (i)
2023
Available
Used
Unused
0-1 year
1-2 years
The available, used and unused components of the facility at year end is as follows:
The remaining contractual maturity for the facility is as follows:
Weighted average interest rate
Consolidated
2023
$’000
2022
$’000
-
-
3,754
4,074
Bank
overdraft and
bank
guarantee
$’000
Loan
facility
$’000
22,000
3,754
18,246
3,000
1,227
1,773
-
3,754
222
1,005
5.44%
6.08%
86
40
41
Notes to the Financial Statements (continued)
12 Intangibles (continued)
13 Borrowings
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, Legal
Current:
Bank overdraft (i)
Non-current
Bank borrowings (i)
Consolidated
2023
$’000
2022
$’000
-
3,140
3,140
46
3,125
3,171
Consolidated
2023
$’000
2022
$’000
-
-
3,754
4,074
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 pre-tax discount rate of 13.52% (2022:13.10%) 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 (2022:2.5%).
In assessing impairment using value in use for the Legal Group, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate of 12.75% (2022:10.7%) for the existing business and 24% 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 3 years. Subsequent cash flows are projected
using constant long term average growth rates of 3% per annum (2022:3%)
Within the Business Group Segment, an impairment charge of $684 thousand has been incurred against the goodwill recorded
on a CGU in the prior year. 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 current 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.
(i) The consolidated entity has bank facilities of $25 million (2022 : $25 million). 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.
2023
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:
0-1 year
1-2 years
Weighted average interest rate
Bank
overdraft and
bank
guarantee
$’000
Loan
facility
$’000
22,000
3,754
18,246
3,000
1,227
1,773
-
3,754
222
1,005
5.44%
6.08%
40
8741
The unsatisfied performance obligations are as set out below:
Current
Subscription revenue
Other revenue
Non-current
Subscription revenue
Consolidated
2023
$’000
2022
$’000
5,672
5,659
136
145
5,808
5,804
1,519
1,330
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
14 Provisions
16 Contract liabilities
Current:
Employee benefits – annual leave
Employee benefits – long service leave
Non-current:
Employee benefits – incentive plans
Employee benefits – long service leave
15 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 25(c))
Consolidated
2023
$’000
2022
$’000
686
1,141
1,827
222
241
463
833
1,094
1,927
-
206
206
Consolidated
2023
$’000
(4)
(510)
(431)
3,827
(276)
2,606
2,389
217
-
2022
$’000
(4)
(800)
(434)
3,676
(49)
2,389
3,995
1,123
(2,729)
Balance at 31 December
2,606
2,389
Details of unrecognised deferred tax assets can be found in Note 5(c)
88
42
43
Notes to the Financial Statements (continued)
14 Provisions
16 Contract liabilities
The unsatisfied performance obligations are as set out below:
Current
Subscription revenue
Other revenue
Non-current
Subscription revenue
Consolidated
2023
$’000
2022
$’000
5,672
5,659
136
145
5,808
5,804
1,519
1,330
Sale of Practice Management Accountant Group (refer note 25(c))
Balance at 31 December
2,606
2,389
Details of unrecognised deferred tax assets can be found in Note 5(c)
42
8943
Current:
Employee benefits – annual leave
Employee benefits – long service leave
Non-current:
Employee benefits – incentive plans
Employee benefits – long service leave
15 Deferred Tax Liabilities
The temporary differences are attributable to:
Expected credit loss
Employee benefits
Contract liabilities
Other provisions
Difference between book and tax value of non-current assets
Reconciliation:
Opening balance at 1 January
Charged / (credited) to profit or loss
Consolidated
2023
$’000
2022
$’000
Consolidated
686
1,141
1,827
222
241
463
2023
$’000
(4)
(510)
(431)
3,827
(276)
2,606
2,389
217
-
833
1,094
1,927
-
206
206
2022
$’000
(4)
(800)
(434)
3,676
(49)
2,389
3,995
1,123
(2,729)
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
17 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).
Parent
2023
$’000
2022
$’000
1,928
40,811
42,739
6,938
7,913
1,741
37,130
38,871
7,243
8,573
14,851
15,816
equal to the amount (if any by which the market price of the company’s shares at the date of exercise of the right
20,524
19,534
(42,018)
(42,018)
281
(1,657)
(476)
51,234
27,888
-
1,145
(1,657)
(476)
46,527
23,055
7,372
37,091
-
-
18 Employee Benefits
Long-term incentive plan
The long-term incentive plan previously comprised 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
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 (2022: Nil).
At the 2023 AGM shareholders approved a cash based long-term incentive plan for the CEO and CFO, replacing the
previous share based payment plans. Similarly, cash based incentive plans are also replacing share based payment
plans for senior executives, hence nil senior executive rights (2022: 475,000, nil appreciation rights (2022: nil, and nil
performance shares (2022: nil, were issued during the year. The expense recognised in 2023 for the rights/
performance shares was $116 thousand (2022: $430 thousand. Remaining share based payments of $155 thousand
(2022: $483 thousand relates to nQueue Zebraworks Inc.
90
44
45
Notes to the Financial Statements (continued)
17 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
Not longer than 1 year
Other
Capital commitments for the acquisition of property, plant and equipment
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).
Parent
2023
$’000
2022
$’000
14,851
15,816
20,524
19,534
(42,018)
(42,018)
1,928
40,811
42,739
6,938
7,913
281
(1,657)
(476)
51,234
27,888
1,741
37,130
38,871
7,243
8,573
-
1,145
(1,657)
(476)
46,527
23,055
7,372
37,091
-
-
18 Employee Benefits
Long-term incentive plan
The long-term incentive plan previously comprised 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 (2022: Nil).
At the 2023 AGM shareholders approved a cash based long-term incentive plan for the CEO and CFO, replacing the
previous share based payment plans. Similarly, cash based incentive plans are also replacing share based payment
plans for senior executives, hence nil senior executive rights (2022: 475,000, nil appreciation rights (2022: nil, and nil
performance shares (2022: nil, were issued during the year. The expense recognised in 2023 for the rights/
performance shares was $116 thousand (2022: $430 thousand. Remaining share based payments of $155 thousand
(2022: $483 thousand relates to nQueue Zebraworks Inc.
44
9145
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
18 Employee Benefits (continued)
19 Issued Capital
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
Fully Paid Ordinary Share Capital
2023
2022
No.
$’000
No.
$’000
Jan’15
Dec’21
37,500
-
-
-
8,250
-
-
Dividend re-investment plan
-
-
2023
2022
2023
2022
2023
2022
Balance at beginning of financial year
113,294,832
20,524 113,294,832
20,524
Balance at end of financial year
113,294,832
20,524 113,294,832
20,524
Nil shares have been acquired for future grants.
Senior Executive Rights
Less Treasury shares
Grant
Date
Expiry
Date
Rights
Granted
Rights lapsed
during the year
Rights vested
during the year
Rights available at
the end of the year
Balance at beginning of financial year
1,650,000
990
2023
2022
2023
2022
2023
2022
Shares purchased in current period
81,249
43
1,650,000
990
Jan’19
Dec’21
860,000
Sep’19
Dec’22
1,000,000
Jan’20
Dec’22
737,500
-
-
-
34,271
-
788,229
-
-
1,000,000
-
650,000
87,500
-
-
-
-
1,000,000*
650,000*
Jan’21
Dec’23
595,000
15,000
37,778
300,000**
42,222
200,000
515,000
Jan‘22
Dec’24
475,000
50,000
92,639
-
22,361
310,000
360,000
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
-
-
-
-
-
-
* Purchased on market ($0.60 per share) in November 2022 in respect of rights that vested for the reporting period.
** Settled in cash during 2023.
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.
Shares vested
(1,731,249)
(1,033)
Balance at end of financial year
-
-
1,650,000
990
Balance at end of financial year net of treasury shares
113,294,832
20,524 111,644,832
19,534
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.
92
46
47
Notes to the Financial Statements (continued)
18 Employee Benefits (continued)
19 Issued Capital
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
Fully Paid Ordinary Share Capital
2023
2022
No.
$’000
No.
$’000
Jan’15
Dec’21
37,500
-
-
-
8,250
-
-
Dividend re-investment plan
-
-
-
-
2023
2022
2023
2022
2023
2022
Balance at beginning of financial year
113,294,832
20,524 113,294,832
20,524
Balance at end of financial year
113,294,832
20,524 113,294,832
20,524
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
Balance at beginning of financial year
1,650,000
990
-
Less Treasury shares
2023
2022
2023
2022
2023
2022
Shares purchased in current period
81,249
43
1,650,000
Shares vested
(1,731,249)
(1,033)
-
Balance at end of financial year
-
-
1,650,000
-
990
-
990
Balance at end of financial year net of treasury shares
113,294,832
20,524 111,644,832
19,534
Jan‘22
Dec’24
475,000
50,000
92,639
-
22,361
310,000
360,000
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.
Jan’19
Dec’21
860,000
34,271
-
788,229
-
Sep’19
Dec’22
1,000,000
1,000,000
-
1,000,000*
Jan’20
Dec’22
737,500
650,000
87,500
650,000*
Jan’21
Dec’23
595,000
15,000
37,778
300,000**
42,222
200,000
515,000
-
-
-
-
-
-
-
-
* Purchased on market ($0.60 per share) in November 2022 in respect of rights that vested for the reporting period.
** Settled in cash during 2023.
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.
46
9347
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
20 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(e).
(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.
24 Subsidiaries
(e) Acquisition of non-controlling interest reserve
Name of Entity
Country of Incorporation
Ownership Interest
The acquisition of non-controlling interest reserve represents an equity account to record transactions between
equity holders.
21 Earnings per Share
Basic earnings per share – continuing operations
Diluted earnings per share – continuing operations
Consolidated
2023
cents
2022
cents
4.9
4.9
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
113,804,832 115,819,832
Earnings used in the calculation of earnings per share is $5,568 thousand (2022: $4,554 thousand), and for
discontinued operations in 2022 $53,224 thousand.
22 Contingent Liabilities
There are no material contingent liabilities as at 31 December 2023 (2022: Nil).
23 Commitments for Expenditure
(a) Capital Expenditure Commitments
The consolidated entity has capital expenditure commitments of $nil as at 31 December 2023 (2022: $nil).
Consolidated
2023
$’000
2022
$’000
205
34
239
186
212
398
2023
%
2022
%
100
100
100
100
100
100
100
76
76
76
76
-
100
100
100
100
100
100
100
70
70
70
70
-
Australia
Australia
Australia
New Zealand
Australia
New Zealand
United Kingdom
Australia
Australia
(b) Other Commitments
Within 1 year
Later than 1 year and not longer than 5 years
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
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.
94
48
49
Notes to the Financial Statements (continued)
Exchange differences arising on translation of the financial reports of foreign subsidiaries are taken to the foreign
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
20 Reserves
Nature and purpose of reserves
(a) Foreign currency translation reserve
currency translation reserve, as described in note 1(e).
(b) Swap hedging reserve
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 acquisition of non-controlling interest reserve represents an equity account to record transactions between
equity holders.
21 Earnings per Share
Consolidated
2023
cents
2022
cents
4.9
4.9
4.0
3.9
Basic earnings per share – continuing operations
Diluted earnings per share – continuing operations
Weighted average number of ordinary shares used in the calculation of basic earnings
113,294,832 113,294,832
per share
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
113,804,832 115,819,832
Earnings used in the calculation of earnings per share is $5,568 thousand (2022: $4,554 thousand), and for
discontinued operations in 2022 $53,224 thousand.
22 Contingent Liabilities
There are no material contingent liabilities as at 31 December 2023 (2022: Nil).
23 Commitments for Expenditure
(a) Capital Expenditure Commitments
The consolidated entity has capital expenditure commitments of $nil as at 31 December 2023 (2022: $nil).
(b) Other Commitments
Within 1 year
Later than 1 year and not longer than 5 years
Consolidated
2023
$’000
2022
$’000
205
34
239
186
212
398
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.
24 Subsidiaries
(e) Acquisition of non-controlling interest reserve
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.
2023
%
2022
%
100
100
100
100
100
100
100
76
76
76
76
-
100
100
100
100
100
100
100
70
70
70
70
-
48
9549
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
25 Notes to the Statement of Cash Flows
25 Notes to the Statement of Cash Flows (continued)
(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
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
Net cash inflow from operating activities
96
50
Consolidated
2023
$’000
2022
$’000
Restated
975
-
975
1,233
-
1,233
4,882
56,814
14,391
17,724
48
271
238
28
(777)
(319)
107
18
(235)
(5)
64
(591)
(88)
(87)
913
(50,472)
719
180
38
(254)
(31)
297
(146)
74
(498)
305
1,102
1,268
19,134
26,844
(c) 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 26)
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
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
Trading results for the Practice Management Accountant Group, business:
Consolidated
2023
$’000
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
6,998
74,410
(398)
81,010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51
Notes to the Financial Statements (continued)
(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
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
Net cash inflow from operating activities
50
Consolidated
2023
$’000
2022
$’000
Restated
975
-
975
1,233
-
1,233
4,882
56,814
14,391
17,724
48
271
238
28
(777)
(319)
107
18
(235)
(5)
64
(591)
(88)
(87)
913
719
180
38
(254)
(31)
297
(146)
74
(498)
305
1,102
1,268
19,134
26,844
25 Notes to the Statement of Cash Flows
25 Notes to the Statement of Cash Flows (continued)
(c) 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 26)
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
(50,472)
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, business:
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
2023
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
6,998
74,410
(398)
81,010
9751
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
25 Notes to the Statement of Cash Flows (continued)
26 Dividends – Ordinary Shares
(d) Disposal of Better Clinics business
The Better Clinics business was sold effective 31 March 2023.
Net assets sold:
Intangible assets
Provisions
Carrying amount of net assets sold
Proceeds on sale comprise:
Cash received
Deferred settlement (receivable 31 March 2024)
Transaction costs
Loss on sale of business
Consolidated
2023
$’000
2022
$’000
491
(8)
483
125
125
(5)
245
238
-
-
-
-
-
-
-
-
(e) 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 2023
$’000
Financing cash
flows (i)
$’000
Fair value
adjustment
$’000
Balance at 31
Dec 2023
$’000
Borrowings
4,074
(320)
-
3,754
(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 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.
Consolidated
2023
$’000
-
-
2022
$’000
2,266
64,578
2,832
3,399
2,832
70,243
377
379
A fully franked final dividend for the year ended 31 December 2021 of 2 cents per share
was paid on 25 March 2022.
A partially franked special dividend of 57 cents was paid on 21 November 2022
A fully franked dividend for the year ended 31 December 2023 of 2.5 cents (2022: 3 cents)
per share was paid on 29 September 2023.
Franking credits available for subsequent financial years based on a tax rate of 30% (2022:
30%)
27 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 $975 thousand were held by the consolidated entity at the reporting date, attracting an average interest rate of
3.58% (2022: 2.75%). Interest bearing borrowings by the consolidated entity at the reporting date were $3,754
thousand (2022: $4,074 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 6.08% (2022: 2.21%) on overdraft facilities and 5.44%
on loan facilities (2022: 2.61%). 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 $19 thousand (2022: $20 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 ($975 thousand) that is exposed to interest rate risk is one year,
and interest-bearing borrowings ($3,754 thousand) that are exposed to interest rate risk, is one year. On the
assumption that interest bearing borrowings and variable interest rates remain at the current level, the annual interest
costs are expected to be $204 thousand.
Further details are set out in note 13.
98
52
53
Notes to the Financial Statements (continued)
Consolidated
2023
$’000
2022
$’000
491
(8)
483
125
125
(5)
245
238
-
-
-
-
-
-
-
-
Net assets sold:
Intangible assets
Provisions
Carrying amount of net assets sold
Proceeds on sale comprise:
Cash received
Deferred settlement (receivable 31 March 2024)
Transaction costs
Loss on sale of business
(e) 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
Financing cash
Fair value
Balance at 31
1 Jan 2023
$’000
4,074
flows (i)
$’000
(320)
adjustment
Dec 2023
$’000
-
$’000
3,754
Borrowings
(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
Financing cash
Fair value
Balance at 31
adjustment
Dec 2022
1 Jan 2022
$’000
16,137
flows (i)
$’000
(12,063)
58
-
16,195
(12,063)
$’000
-
(58)
(58)
$’000
4,074
-
4,074
Borrowings
Interest rate swap fair value
hedge or economically hedging
financing liabilities
Total liabilities from financing
activities
(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.
25 Notes to the Statement of Cash Flows (continued)
26 Dividends – Ordinary Shares
(d) Disposal of Better Clinics business
The Better Clinics business was sold effective 31 March 2023.
A fully franked final dividend for the year ended 31 December 2021 of 2 cents per share
was paid on 25 March 2022.
A partially franked special dividend of 57 cents was paid on 21 November 2022
A fully franked dividend for the year ended 31 December 2023 of 2.5 cents (2022: 3 cents)
per share was paid on 29 September 2023.
Franking credits available for subsequent financial years based on a tax rate of 30% (2022:
30%)
27 Financial Instruments
(a) Financial Risk Management Objectives
Consolidated
2023
$’000
-
-
2022
$’000
2,266
64,578
2,832
3,399
2,832
70,243
377
379
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 $975 thousand were held by the consolidated entity at the reporting date, attracting an average interest rate of
3.58% (2022: 2.75%). Interest bearing borrowings by the consolidated entity at the reporting date were $3,754
thousand (2022: $4,074 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 6.08% (2022: 2.21%) on overdraft facilities and 5.44%
on loan facilities (2022: 2.61%). 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 $19 thousand (2022: $20 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 ($975 thousand) that is exposed to interest rate risk is one year,
and interest-bearing borrowings ($3,754 thousand) that are exposed to interest rate risk, is one year. On the
assumption that interest bearing borrowings and variable interest rates remain at the current level, the annual interest
costs are expected to be $204 thousand.
Further details are set out in note 13.
52
9953
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
27 Financial Instruments (continued)
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).
(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.
100
54
Notes to the Financial Statements (continued)
c) Credit Risk
loss from defaults.
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
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).
(d) Foreign Currency Risk
to the consolidated entity.
(e) Liquidity
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
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.
27 Financial Instruments (continued)
28 Subsequent Events
No events occurred post 31 December 2023 that impact the consolidated statement of financial position.
29 Related Party Disclosures
(a) Key Management Personnel Remuneration
Short term benefits
Post-employment benefits
Share based payments
Make whole payment
Consolidated
2023
$
2022
$
1,754,613
2,288,664
186,550
109,500
113,426
250,167
-
1,182,342
2,050,663
3,834,599
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 page 35 of the Remuneration Report.
(d) other related party transactions
There were no other related party transactions apart from as disclosed in note 7.
30 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 28 March 2024.
54
101
Additional Information
as at 3 March 2024 (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
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
Units
13,507,390
% Units
11.92
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
GREGORY JOHN WILKINSON
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MICROEQUITIES ASSET MANAGEMENT PTY LTD
DJZ INVESTMENTS PTY LTD
MR CLIVE ALAN RABIE
RAWFORM PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
ROUND ETERNAL INVESTMENTS PTY LTD
HYGROVEST LIMITED
MR SAMUEL JAMES ALLERT
VELKOV FUNDS MANAGEMENT PTY LTD
BIATAN PTY LTD
MS KYLIE LYNETTE NUSKE + MR MATTHEW JAMES COOK
DMX CAPITAL PARTNERS LTD
MR PHILIP ROSS HAYMAN
TOTAL
9,732,267
8,889,284
6,280,487
6,083,505
5,966,227
5,858,147
5,690,000
2,516,535
1,330,306
1,305,879
1,123,103
1,085,907
1,000,000
909,279
900,000
835,049
834,093
825,000
650,909
8.59
7.85
5.54
5.37
5.27
5.17
5.02
2.22
1.17
1.15
0.99
0.96
0.88
0.80
0.79
0.74
0.74
0.73
0.57
75,323,367
66.48
Number of Holders of Equity Securities
113,294,832 fully paid ordinary shares are held by 3,083 individual shareholders. Each share entitles the holder to one vote.
Less than marketable parcels
505 shareholders holding less than a marketable parcel of 901 ordinary fully paid shares.
102
Additional Information
as at 3 March 2024 (Unaudited) (continued)
Distribution of Holders of Equity Securities
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Total holders
824
1,241
413
513
92
Units
504,668
3,326,742
3,258,144
15,205,481
90,999,797
3,083
113,294,832
% Units
0.45
2.94
2.88
13.42
80.32
100.00
Substantial Holders
Substantial Holder
Spheria Asset Management Pty Ltd/ Pinnacle Investment Management Group
Limited
Microequities Asset Management Pty Ltd
1851 Capital Pty Ltd
Number of
Shares
Voting Power
8,817,089
7.23%
16,142,284
6,518,138
14.25%
5.75%
Securities Purchased On-Market
During the financial year, 81,249 fully paid ordinary shares in the Company were purchase on-market at an average
price of $0.52 per share to satisfy the entitlements of holders of Performance Rights.
On-Market Buy-Back
There is no current on-market buy-back.
Unquoted Equity Securities
Performance Rights
Performance Period 2021-2023
Performance Period 2022-2024
Number on
Issue
Number of
Holders
200,000
310,000
6
6
103
Additional Information
as at 3 March 2024 (Unaudited) (continued)
Registered 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’.
Company Secretary
Tom Rowe
Annual General Meeting
The Annual General Meeting for Reckon Limited will be held on 24 May 2024 at 10:00am at Level 2, 100 Pacific
Highway, North Sydney, NSW.
Pursuant to Article 13.3 of the Company’s Constitution, the closing date for receipt of director nominations is 11 April
2024.
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 then Login to Investor Centre to register your request to opt in to
receive TO RECEIVE ALL NOTICES AND REPORTS IN ELECTRONIC FORMAT.
104