2024
Annual
Report
3
Reckon Limited Annual Report
For the Financial Year Ended 31 December 2024
ABN 14 003 348 730
Contents
Message to Shareholders from the Chairman and Group CEO
4
Directors’ Report
8
Remuneration Report
14
Auditor’s Independence Declaration
38
Independent Auditor’s Report
39
Directors’ Declaration
44
Consolidated Statement of Profit or Loss
45
Consolidated Statement of Profit or Loss and Other Comprehensive Income
46
Consolidated Statement of Financial Position
47
Consolidated Statement of Changes in Equity
48
Consolidated Statement of Cash Flows
50
Notes to the Financial Statements
51
Consolidated Entity Disclosure Statement
97
Additional Information
98
4
It is my pleasure to present to you Reckon Limited’s Annual Report for the year ended 31 December 2024 (FY2024).
FY2024 saw a steady performance by the Company with mild growth in revenue and EBITDA over FY2023. We were
pleased to continue our long history of dividend payment, with a $0.025 annual dividend paid in September 2024.
Our strategic aim to ultimately have all of Reckon’s revenue derived from our own proprietary cloud-based products
is front of mind for the Board and senior management of the Company and we, as a Board, continue to drive the
business towards that goal. To that end, we continued to invest in the development of Reckon One and will continue
to do so for the foreseeable future. The Legal Group’s cloud-based Billing Workflows product saw the first sprouts
of growth during the year, and we look forward to seeing the fruits of our investment into 2025 and beyond.
Management is focused on minimizing the revenue impact of the transition away from the legacy intuit code-based
products and the Board is conscious of how that journey may impact the returns to our shareholders in the short
term. The acquisition of the Cashflow Manager business with its 20,000 SME customers on proprietary software is
an example of the measures taken to maintain shareholder value during the transition. With our strong cash
generation, the Board remains open to accretive acquisitions that align with our overall strategy.
We remained a small and focused Board membership during the year. We believe that the direct experience your
Directors bring to their roles with Reckon, combined with the experienced management team, 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.
Message from the Chairman
Mr C Rabie
Chairman
Sydney, 21 March 2025
5
Message from the Group CEO
I am proud to present our full year results for FY2024, with the company maintaining our performance from 2023 with
a positive and hard-fought result across Revenue, EBITDA and NPAT.
We remained committed to our strategy of driving revenue growth within the highly profitable, cash-generating
Business Group while simultaneously investing in our proprietary software, Reckon One, together with the high
growth opportunities provided by our US and UK focused Legal Group, trading as nQ Zebraworks.
Key highlights from the 2024 full year results
•
$54m in revenue generated in 2024 with EBITDA of $20m and NPAT of $4m.
•
An annual dividend of 2.5c fully franked was paid to investors in September 2024.
•
Ongoing investment in cloud-based products to underpin future business growth.
•
Legal Group subscription annual recurring revenue growth of 13%.
•
7% cloud revenue growth with over 111K users on the Business Group’s cloud-based SME products.
•
Strategic acquisition of Cashflow Manager business adding circa 20,000 new SME clients for 2025.
•
US$4.5M funding round fully subscribed at a pre-money valuation of US$20M for the Legal Group.
6
In the Business Group we continued to prioritise organic growth in cloud revenue and user acquisition while
transitioning our existing customer base to the Reckon One platform. Maintaining strong cash generation enabled us
to continue our strong investment into Reckon One and its accounting and payroll solutions. The transition of our
customer base to Reckon One remains a key strategic focus for the Business Group.
Message from the Group CEO (continued)
Increased focus on the transition to the Reckon One codebase
7% cloud revenue growth and 5% cloud user growth
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*
700 Desktop Payroll Premier customers successfully
upgraded to Reckon One
7
Sam Allert
Group CEO
Consistent with our exceptional employee engagement results in 2023, Reckon continues to be considered a great
place to work by our employees and our management team are focused on maintaining those industry leading levels
of employee satisfaction. Looking ahead, 2025 is poised to be a pivotal year for us. The Legal Group is funded to
accelerate growth in its Billing Workflows offerings, while the Business Group is positioned to consolidate its years
of development with continued enhancements to Reckon One and a sharp focus on transitioning its legacy customer
base to Reckon One.
I wish to thank all Reckon’s team or team members 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 customers, partners and
shareholders for their ongoing support and I continue to look forward to the journey ahead with them.
Our cloud-based Billing Workflow products within the Legal Group started to obtain the market’s attention during the
year and the US$4.5M funding for the business established in December 2024 positioned us to accelerate our sales
and marketing activities to drive revenue growth in 2025 and beyond
ScanQ – streamlined scanning
MailQ – digital mailroom
RecordsQ – backscanning
PrintQ – print management
CostQ – cost tracking
Document
Workflows
Billing
Workflows
BillingQ – invoices-to-cash
PayQ – online payments
DataQ – billing & collections
business intelligence
Document Workflows streamlines digital
transformation with scanning, digital mailroom,
records, print management, and cost tracking
Billing Workflows enhances firms’ existing financial
management systems with invoices-to-cash,
online payments, and billing & collections business
intelligence
Ongoing investment in cloud-based Billing Workflows,
including integrations with additional financial management
systems Elite 3E and Aderant
13% total ARR growth with 89% Billing Workflow ARR growth
• Document Workflows
• Billing Workflows
• Total
$11.8M
$0.6M
$12.4M
(growth 11%)
(growth 89%)
(growth 13%)
8
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 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 currently consults to an unlisted public company with manufacturing interests in China and sales
in Australia, New Zealand and the USA.
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 Secretary
Tom Rowe- Company Secretary
BA, LLB(Hons), GradDipAppFinInv, GradDipAppCorpGov
Tom Rowe is a corporate lawyer with extensive corporate governance experience across ASX listed companies in
the financial services, manufacturing and software industries.
Directors’ Report
The Directors of Reckon Limited submit these financial statements for
the financial year ended 31 December 2024.
9
Review of Operations and Statement of Principal Activities
The Company operated two business divisions, the Business Group and the Legal Group during FY2024.
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,
Reckon Accounts Personal and Cashflow Manager, acquired in January 2025. The Business Group operates primarily
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 Billing Workflows technology providing the billings workflow solution, BillingQ and business
intelligence tool, DataQ together with online payments through PayQ.
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 Cashflow Manager provide desktop solutions, and Reckon Accounts Hosted provides hosted
solutions, across 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 together with Cashflow Manager are proprietary
products as distinct to the Intuit code based Reckon Accounts and Reckon Accounts Hosted products. Development
of Reckon One was a focus for FY2024, 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.
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 and the Legal
Group is certified under SOC 2.
Directors’ Report (continued)
10
Legal Group
During the year, the Company committed an additional $US3.75 million to the Legal Group as a part of a $US4.5
million capital raise to accelerate growth in the Legal Group’s Billing Workflows offerings through the strengthening
of its sales and support capabilities.
The year saw the Legal Group experience moderate revenue expansion in Document Workflows, its core offering
which includes scan, print, and cost recovery solutions. Meanwhile, the cloud-based Billing Workflows solution that
includes BillingQ, PayQ and DataQ demonstrated notable traction, achieving a twofold increase in platform
subscription revenue compared to FY 2023, albeit off a low base.
The Legal Group’s client base includes 12 of the 20 largest firms worldwide and 40% of the AmLaw 200 largest firms.
Results of Operations
Results Headlines
Continuing operations
2024
2023
%Growth
Revenue
$54.1 million
$53.4 million
+1.3%
EBITDA*
$20.2 million
$19.7 million
+2.5%
Net profit**
$3.6 million
$4.9 million
-25.7%
Net profit attributable to members
$4.4 million
$5.6 million
-20.6%
* Earnings before interest, tax, depreciation and amortisation.
** 2023 net profit included a benefit of $0.7 million related to 2022 research and development grants.
Group revenue from continuing operations was $54.1m, up 1% on the previous corresponding period (PcP). The
group remains committed to its core strategy of generating consistent growth in revenue and profit supported by an
ongoing priority on R&D spending.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) during the year was $20.2m, up 2.5% on
the PcP.
Group Net Profit After Tax (NPAT) was $3.6m, down compared to the PcP, due higher amortisation resulting from
higher development spend in prior periods and the impact of an R&D refund in FY2023, related to the prior year.
Group operating cashflow after accounting for $14.4m of development spend was $3.4m.
Net Debt of $2.9m remained stable compared to FY2023 (FY2023 $2.8m), with the debt funded Cashflow Manager
acquisition settling post balance date. The Board maintains its intention to pay one dividend annually after the half
year.
Business Group
Momentum in the Business Group was highlighted by another strong year of cloud-based subscription revenue
growth, which rose by 7% to $26.1m.
The number of users on Reckon’s cloud-based SME products increased by 5% to 111K. Subscription revenues from
desktop and cloud-based products contributed 93% of total revenues for the division, which rose to $39 million for
the year. Development spend remained consistent with the prior period at 23% of revenue.
Directors’ Report (continued)
11
Legal Practice Management Group
The Legal Group reported a 6% increase in subscription revenues to $11.4m, with a doubling of revenue on the
cloud-based Billing Workflows platform. Legal Group Annual Recurring Revenue was $12.4m, a 13% increase on the
prior period, with Billing Workflows $0.6m of this total.
Subscription revenue was 93% of the Legal Group’s revenue (FY2023: 92%).
The Legal Group continued its investment in sales and development teams with the year delivering $1.1 million
EBITDA, an 18% improvement on FY 2023. Development costs capitalised for the year remained consistent at $4.8
million compared to $4.9 million for FY 2023.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the Company during the financial year.
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 and sales 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 Cashflow
Manager; 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 Billing
Workflows. These products provide a value-add solution to Law firms on top of their legacy practice management
systems, and the investment in Billing Workflows 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. PayQ provides an integrated or standalone opportunity on
customers payments processing.
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
12
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 macroeconomic
level.
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 is 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.
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. The Legal Group’s processes and procedures are also 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.
Directors’ Report (continued)
13
The acquisition of competitors of the Legal Group by providers of financial management and business operations
software solutions may reduce the opportunity for the Legal Group to integrate its Billing Workflows products into
those third-party solutions.
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 Billing Workflows 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 revenue on the cloud-based Billing
Workflows technology increases, 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.
14
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
•
Chairman from 1 January 2023
•
Mr Greg Wilkinson, director since 19 July 1999
•
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 member since 1 July 2018
Senior Executives Classifi ed as KMP
•
Mr Sam Allert
•
Executive Director since 1 July 2018
•
Group Chief Executive Offi cer since 1 July 2018
•
Mr Chris Hagglund
•
Group Chief Financial Offi cer (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
15
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 infl uenced 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 2024 was comprised of two non-executive directors:
•
Mr Philip Hayman (independent non-executive director)
•
Mr Greg Wilkinson (independent, non-executive director).
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.
16
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, benefi ts and any applicable fringe benefi ts tax
(FBT) as well as any salary sacrifi ce 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 benefi t
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
•
Remuneration will be managed within a range so as to allow for the recognition of individual diff erences such as
the calibre of the incumbent and the competency with which they fulfi l a role
•
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 and
•
Termination benefi ts 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 benefi ts (if appropriate) and
•
Equity (if appropriate at the time, currently not applicable)
•
Committee fees do not form part of the NED remuneration because at present the workload of the Board is
shared equitably amongst its members
•
Remuneration will be managed within the aggregate fee limit (AFL) or fee pool approved by shareholders of the
Company – currently $500,000 in accordance with the Company’s constitution
•
Termination benefi ts will not be paid to NEDs by the Company
17
As at the commencement of FY2025 the following fees apply:
Function
Role
Fee Including Super
Main Board
Chair
$174,860
Member
$87,431
Audit & Risk Committee
Chair
n/a
Member
n/a
Nomination & Remuneration Committee
Chair
n/a
Member
n/a
Other Committee
Chair
n/a
Member
n/a
During the FY2024 reporting period the following fees were applicable:
Function
Role
Fee Including Super
Main Board
Chair
$170,213
Member
$85,106
Audit & Risk Committee
Chair
n/a
Member
n/a
Nomination & Remuneration Committee
Chair
n/a
Member
n/a
Other Committee
Chair
n/a
Member
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 fi nancial 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.
3.5 Long Term Incentive (LTI) Policy
Performance Rights were off ered to the former Company Secretary in 2021 with a performance period ending on 31
December 2023. No subsequent off ers of Performance Rights were made to KMP, although off ers 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 executive KMP.
18
Remuneration Report (Audited) (continued)
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 refl ects internal measures of
performance and one which best refl ects 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 infl uenced 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 signifi cant 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 benefi ts 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 signifi cant
“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.
19
3.6 Variable Executive Remuneration – The Short Term Incentive (STI)
Short Term Incentive (STI)
Aspect
Plan, Off ers and Comments
Purpose
The STI Plan’s purpose is to give eff ect 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.
Measurement
Period
The Company’s fi nancial year i.e. from 1 January to the following 31 December.
Award
Opportunities
FY2024 Off ers
The Group CEO was off ered a target-based STI of approximately 30% of the Base Package for
target performance, with a stretch opportunity of up to 110% of the target.
The Group CFO was off ered a target-based STI of approximately 30% of the Base Package for
target performance with a stretch opportunity of up to 110% of the target.
Comments
The incentive levels off ered in FY2024 were consistent with the proportional opportunities
(proportional to Base Package) off ered in previous years.
FY2025 Off ers
The award opportunity for the FY2025 off ers are substantially similar to the FY2024 off ers, save
that the stretch opportunity is 120% of the target.
20
Remuneration Report (Audited) (continued)
Key Performance
Indicators (KPIs),
Weighting and
Performance
Goals
FY2024 Off ers
KPIs may vary to some extent between participants and refl ect the nature of their roles, while
creating shared objectives where appropriate. KPIs used for FY2024 included:
•
Revenue
•
EBITDA
•
EPS
•
Reckon One and Reckon Mobile units
Weightings are applied to the KPIs selected for each participant to refl ect the relative importance
of each KPI. Information on this aspect and specifi c KPIs is given in detail elsewhere in this
report.
Comments
The Board selected KPI’s that were identifi ed 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 FY2024.
FY2025 Off ers
The KPIs for the FY2025 off ers are targeted against the FY2025 budget for:
• Reckon One and Reckon Mobile annual revenue
• Cash/net debt at 31 December 2025
The KPIs are weighted equally with the award opportunity threshold at 90% of target for Reckon
One and Reckon Mobile annual revenue and 100% of target for cash/net debt.
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. For FY2023, a portion of the STI (between one
third and one half) was deferred for a year provided the KMP is still employed. For FY2024 and
FY2025 there is no deferral of payment with the full award entitlement paid following its
determination.
Performance was determined in February 2025 following approved of the preliminary fi nal report
for FY2024.
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
If the Company’s overall performance during the Measurement Period is substantially lower than
expectations and resulted in signifi cant 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.
21
Fraud, Gross
Misconduct etc
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.
Clawback and
Malus
A clawback policy is in place for cases of material misstatement or misconduct. The Remuneration
Committee has the power to withdraw off ers that have not vested or to clawback short-term
incentives paid in the case of serious misconduct or material misstatement in the fi nancial
statements respectively.
3.7 Variable Executive Remuneration – Long Term Incentive (LTI) – Performance Rights Plan
(Retired)
Long Term Incentive (LTI) - Performance Rights
Aspect
Plan, Off ers and Comments
Purpose
The Performance Rights Plan’s purpose was to give eff ect 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.
FY2024 Off ers
FY2024 off ers were not made to KMP. The Performance Rights Plan has been retired and is not
off ered to any employee.
FY2025 Off ers
FY2025 off ers were not made.
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 off ered
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.
22
Remuneration Report (Audited) (continued)
Vesting Conditions
The Board has discretion to set vesting conditions for each off er. 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.
FY2024 Off ers
No off ers were made in FY2024 for KMP or any other employee.
The vesting scales for prior off ers are:
Performance Level
Annualised EPS Growth
Vesting
Below Threshold
< Budget
0%
Threshold
=Budget
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
Vesting
Below Threshold
< Index
0%
Threshold
=Index (90%)
75%
Between Threshold and Target
>100%, <110%
Pro-rata
Target
110% of Index
125%
FY2025 Off ers of Performance Rights
FY2025 off ers have not been made to KMP, or any other employee.
Retesting
The Plan Rules do not contemplate retesting and therefore retesting is not a feature of the
Performance Rights Plan.
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”.
Amount Payable
for Performance
Rights
No amount is payable for Performance Rights.
The value of Performance Rights is included in assessments of remuneration and policy.
23
Dealing
Restrictions on
Shares
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 offi cers of the Company.
Cessation of
Employment
During a
Measurement
Period
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.
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
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.
Clawback and
Malus
A clawback policy is in place for cases of material misstatement or misconduct. The
Remuneration Committee has the power to withdraw off ers that have not vested or to
clawback short-term incentives paid in the case of serious misconduct or material
misstatement in the fi nancial statements respectively.
Long Term Incentive (LTI) - Cash Distribution Incentive Plan
Aspect
Plan, Off ers 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
24 May 2023 - 31 December 2029
Form of Benefi t
The CDIP will be settled entirely in cash.
CDIP Value
The CDIP was off ered in 2023, following shareholder approval at the 2023 AGM, and the plan
applies until 31 December 2029.
There will be no further off ers 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 off er. This value is disclosed in the table at Section 4 of the
Remuneration Report.
24
Remuneration Report (Audited) (continued)
Payment
Conditions
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 eff ect of franking credits.
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
Cash Distribution - CFO
Under $150,000,000
No cash distribution (Award is
forfeited)
No cash distribution (Award is
forfeited)
$150,000,000 and up to
$200,000,000
$770,000
$230,000
$200,000,000 and up to
$250,000,000
$1,300,000
$400,000
$250,000,000 and up to
$300,000,000
$2,600,000
$800,000
$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.
25
Variation to
Payment
Conditions and
Cash Distribution
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.
Cessation of
Employment
during
Measurement
Period
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.
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.
26
Remuneration Report (Audited) (continued)
4. Remuneration Records for FY2024 – Statutory Disclosures
The following table outlines the remuneration accrued for Key Management Personel of the Company during FY2024
and FY2023 prepared according to statutory disclosure requirements and applicable accounting standards:
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 off ence or have a judgement entered against them in connection with
the aff airs of the Company;
•
contributed to, either by act or omission, to a material misstatement or omission in the
fi nancial statements of the Company or any other circumstances or events which aff ect
the Company’s fi nancial soundness or require re-statement of the Company’s fi nancial
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 signifi cant
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
fi nancial reports, or in cases of misconduct by executives.
27
Name
Role(s)
Year
Salary
Superannuation
Contributions
Other Benefi ts5
Base Package
Including Super and
Other Benefi ts5
Non-deferred
STI Awarded for
the Financial
Year
Deferred STI for
the FY
LTI for the FY1
LTI - reversal of
prior accruals3
LTI - settlement
of LTI in cash3
Termination
payment6
Actual Total
Remuneration
Package (TRP)
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Amount
% of
TRP
Mr Clive
Rabie
Chairman
20247
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Chairman
2023
$150,000
90%
$16,125
10%
0
0%
$166,125
100%
$0
0%
$0
0%
$0
0%
$0
0%
$0
0%
-
-
$166,125
Mr Chris
Hagglund
Group CFO
2024
$529,404
78%
$27,900
4%
(47,231)
-7%
$510,073
75%
$149,663
22%
$0
0%
$19,500
3%
$0
0%
$0
0%
-
-
$679,236
Group CFO
2023
$514,755
77%
$26,600
4%
(40,074)
-6%
$501,281
75%
$83,411
12%
$72,364
11%
$11,400
2%
$0
0%
$0
0%
-
-
$668,456
Mr Sam
Allert
Group CEO
2024
$623,150
70%
$28,750
3%
17,647
2%
$669,547
75%
$152,920
17%
$0
0%
$65,400
7%
$0
0%
$0
0%
-
-
$887,867
Group CEO
2023
$605,718
71%
$27,500
3%
(8,555)
-1%
$624,663
74%
$122,814
14%
$62,026
7%
$38,100
4%
$0
0%
$0
0%
-
-
$847,603
Mr Myron
Zlotnick2
-
2024
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Company
Secretary
and
Corporate
Counsel
2023
$41,750
21%
$13,489
7%
$404
0%
$55,643
27%
$0
0%
$0
0%
$14,750
7%
($132,750)
-66%
$178,000
88%
$86,711
43%
$202,3544
TOTALS
2024
$1,152,554
$56,650
-$29,584
$1,179,620
$302,583
$0
$84,900
$0
$0
$0
$1,567,103
2023
$1,312,223
$83,714
-$48,225
$1,347,712
$206,225
$134,390
$64,250
-$132,750
$178,000
$86,711
$1,884,538
1 The LTI value for Mr Zlotnick in 2023 is the amortised accounting charge of all grants that had not lapsed or vested at the beginning of the period. The amounts other amounts in 2023 and in 2024 are the accrual for the CDIP issued to Mr
Allert and Mr Hagglund. Refer to Note 4 below for payment made during 2023 on the vesting of Mr Zlotnick’s LTI.
2 Mr Zlotnick resigned eff ective 30 March 2023.
3 On termination of his employment, Mr Zlotnick’s 300,000 Performance Rights were vested by the Board and he received a payment of $178,000 cash in lieu of receiving shares in the Company. His Performance Rights were subsequently
cancelled.
4 The total amount paid to Mr Zlotnick in 2023 was $338,656.
5 Other benefi ts include movement in annual leave and long service leave.
6 Payment for notice period.
7 The remuneration for the Chairman in FY2024 is included in the non-executive remuneration table.
28
Remuneration Report (Audited) (continued)
The maximum total value of an STI for FY2025 and future fi nancial years is $232,470 for the Group CEO and $195,662
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 FY2024 and FY2023 is disclosed below. The non-executive
directors do not have any bonus or equity incentive.
Name
Role(s)
Year
Board
Fees
Committee
Fees
Superannuation
Other
Benefi ts
Equity
Grant
Termination
Benefi ts
Total
Mr Clive
Rabie
Non-executive
Chairman
2024
$166,005
-
$4,208
-
-
-
$170,213
2023*
-
-
-
-
-
-
-
Mr Greg
Wilkinson
Independent,
non-executive
director
2024
$76,500
-
$8,606
-
-
-
$85,106
Independent,
non-executive
director
2023
$75,000
-
$8,063
-
-
-
$83,063
Mr Philip
Hayman
Independent,
non-executive
director
2024
$76,500
-
$8,606
-
-
-
$85,106
Independent,
non-executive
director
2023
$75,000
-
$8,063
-
-
-
$83,063
TOTALS
2024
$319,005
-
$21,420
-
-
-
$340,425
2023
$150,000
-
$16,125
-
-
-
$166,125
* The remuneration for the Chairman for FY2023 is included in executive remuneration table.
29
5. Performance Outcomes for FY2024
5.1 Company Performance
All incentives paid for relevant periods for STI were measured strictly against the targets set.
The Board is satisfi ed that the vesting of incentives correlates with performance.
The Board is mindful of the need to retain talent and believes that the KMPs are appropriately incentivised given that
several parts of the business are almost in a start up phase. More impressive returns are only anticipated in the
longer term if strategies are executed correctly.
As evidenced in this report, the Company as a whole has achieved:
•
progress on cloud development to transition to a cloud fi rst company;
•
solid revenue, solid profi ts, and cash generation;
•
stable growth;
•
±4.2 % yield by way of divided paid; and
•
growth in annual recurring revenue.
Date
Revenue ($m)
Profi t After Tax
attributable to
owners of the parent
($m)
Share Price
Change in Share
Price
Dividends
31-Dec-24
$54.1
$4.4
$0.598
$0.033
$0.025
31-Dec-23
$53.4
$5.6
$0.565
-$0.035
$0.025
31-Dec-22
$64.71
$57.81
$0.60
-$0.33
$0.60
31-Dec-21
$72.12
$9.82
$0.93
$0.15
$0.05
31-Dec-20
$75.6
$9.7
$0.78
$0.01
$0.05
1 The Accountant Group business was sold eff ective 1 August 2022 ($13.5 million of revenue was transferred to discontinued operations).
2 The ReckonDoc business was sold eff ective 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
Remuneration Report (Audited) (continued)
The STI achieved in relation to the FY2024 period was paid in February 2025. 47% of the award opportunity was
paid. During the FY2024 period the objectives that were linked to the payment of STI were:
Name
Position
Held at
Year End
FY2024 Company Level KPI Summary
Award
Outcomes
KPI Summary
Weighting
Target
Achievement
Total
Award
Mr Chris
Hagglund
Group CFO
Revenue
EBITDA
EPS
Reckon One and Reckon
Mobile units
40%
30%
10%
20%
$56.3m
$21.6m
4.4cps
-*
96%
93%
89%
105%
$74,440
Mr Sam
Allert
Group CEO
Revenue
EBITDA
EPS
Reckon one and Reckon
Mobile units
40%
30%
10%
20%
$56.3m
$21.6m
4.4cps
-*
96%
93%
89%
105%
$88,440
*Target is commercially sensitive information.
This value is accounted for in the remuneration table presented earlier.
The STI paid during the FY2024 period related to performance during the FY2023 period and was paid in cash in
February 2024. On average 102% of the target award opportunity or 93% of the maximum award opportunity (being
110% of the target) available was paid. This level of award was considered appropriate under the STI scheme that
was in place during FY2023, which is summarised in the table below:
Name
Position
Held at
Year End
FY2023 Company Level KPI Summary
Award
Outcomes
KPI
Summary
Weighting
Target
Achievement
Total
Award
Mr Chris
Hagglund
Group CFO
Revenue
EBITDA
EPS
40%
40%
20%
$54.1m
$19.3m
4.0cps
99%
102%
110%
$83,411
Mr Sam Allert
Group CEO
Revenue
EBITDA
EPS
40%
40%
20%
$54.1m
$19.3m
4.0cps
99%
102%
110%
$122,814
Mr Myron
Zlotnick
Company
Secretary
and
Corporate
Counsel
Revenue
EBITDA
EPS
40%
40%
20%
-
-
-
This value is accounted for in the remuneration table presented earlier.
31
No LTIs vested in 2024 or to the date of this report to either the Group CEO or the Group CFO.
Vesting of LTIs 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
FY2023
Performance
Against
Target
% of
Grant
Vested
Number of
Shares or
Appreciation
Rights
Vested
Mr Chris
Hagglund
Group CFO
$213,500
TSR
50/50
350,000
Achieved
112.5%
393,750
EPS
Mr Sam
Allert
Group CEO
$400,000
TSR
50/50
1,000,000
Achieved
100.0%
1,000,000
EPS
Mr Myron
Zlotnick1
Company
Secretary and
Corporate
Counsel
$177,000
TSR
50/50
300,000
Achieved
100.0%
300,0002
EPS
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 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 fi xed 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,
•
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 profi table
businesses. It is important to fi x remuneration mindful of maintaining morale and retaining talent.
32
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
FY2023
Employing
Company
Duration of
Contract
Period of Notice
Base Salary
Excluding
Superannuation
Termination
Payments
From
Company
From
KMP
Mr Chris
Hagglund
Group CFO
Reckon
Limited
Open ended
3 months
3 months
$529,404
Up to 12
months*
Mr Sam
Allert
Group CEO
Reckon
Limited
Open ended
3 months
3 months
$623,150
Up to 12
months*
* Under the Corporations Act any termination benefi t 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 offi ce 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
FY2023
Employing
Company
Duration of
Contract
Period of Notice
Termination
Payments
From
Company
From
KMP
Mr Greg
Wilkinson
Non-executive Director
Reckon
Limited
Open ended
None
None
None
Mr Phillip
Hayman
Non-executive Director
Reckon
Limited
Open ended
None
None
None
Mr Clive
Rabie
Non-executive Chairman
Reckon
Limited
Open Ended
None
None
None
33
7. Changes in KMP Held Equity
The following table outlines the changes in the amount of equity held by executives over the fi nancial year
Name
Instrument
Number
Held at
Open 2024
Granted
FY2024
Forfeited
Vested
Purchased /
Disposed /
DRP
Number Held
at Close 2024
Number
Number
Number
Number
Number
Number
Mr Chris
Hagglund
Shares
1,047,110
-
-
-
-
1,047,110
Rights/
Options
-
-
-
-
-
-
Mr Sam
Allert
Shares
1,487,779
-
-
-
550,000
937,779
Rights/
Options
-
-
-
-
-
-
* Mr Zlotnick reigned in 2023.
The following table outlines the changes in the amount of equity held by non-executive directors over the fi nancial year:
Name
Instrument
Number
Held at
Open 2024
Granted
FY2024
Forfeited
Vested
Purchased /
DRP
Sold
Number Held at
Close 2024
Number
Number
Number
Number
Number
Number
Number
Mr Clive
Rabie
Shares
10,206,535
-
-
-
-
2,000,000
8,206,535
Rights/Options
-
-
-
-
-
-
-
Mr Greg
Wilkinson
Shares
8,019,374
-
-
-
-
-
8,019,374
Rights/Options
-
-
-
-
-
-
-
Mr Philip
Hayman
Shares
1,397,460
-
-
-
-
-
1,397,460
Rights/Options
-
-
-
-
-
-
-
34
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.
35
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 auditor of
the company, or any related body corporate, against a liability incurred as an 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.
Reckon Limited – Attendance Tables
Directors
Meeting
Board
Audit & Risk Committee
Remuneration1 Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Clive Rabie
12
12
-
-
-
-
Sam Allert
12
12
-
-
-
-
Greg
Wilkinson
12
11
1
1
-
-
Philip
Hayman
12
12
1
1
-
-
1 All remuneration matters were considered by the Board during the year.
36
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
On 6 January 2025, the Company completed the acquisition of Adelaide based accounting and payroll software
businesses, Cashflow Manager and OKKE from Money Management Group Pty Ltd and its UK subsidiary Money
Management Group (UK) Limited. The total purchase price was $8.75 million with $7.5million paid in 2025 and $1.25
million deferred until early 2026. The effective date of the acquisition was 1 January 2025.
No other events have occurred since 31 December 2024 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.
37
Auditor’s Independence Declaration
The auditor’s independence declaration is included after this report on page 38.
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.
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 21 March 2025
38
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
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.
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF RECKON LIMITED
As lead auditor of Reckon Limited for the year ended 31 December 2024, 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
21 March 2025
39
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
Sydney NSW 2000
Australia
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of A.C.N. 050
110 275 Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and A.C.N. 050 110 275 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.
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 2024, 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, the consolidated entity
disclosure statement 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 2024 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.
40
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Revenue Recognition
Key audit matter
How the matter was addressed in our audit
As outlined in the revenue recognition accounting
policy in Note 1, the Group generates revenue from
various streams.
In accordance with the Australian Accounting Standard
AASB 15: Revenue from Contracts with Customers
(‘AASB 15’), the Group employs a five-step model to
recognise revenue, recognising revenue as or when
performance obligations fulfilled by transferring the
promised good or serviced.
For bundled goods or services, significant management
judgement is required to determine the fair value of
the transaction price allocated to each separate
performance obligation and the deferral of revenue at
year end.
Given these factors and the overall importance of
revenue as a key performance indicator for the group,
we considered revenue to be a key audit matter.
To determine whether revenue was appropriately
accounted for and disclosed within the financial
statements, we undertook, amongst others, the
following audit procedures:
•
Critically evaluated the revenue recognition
policies for all material sources of revenue during
the period to ensure they are in accordance with
AASB 15.
•
Verified a sample of revenue transactions from
various streams throughout the year against
supporting documentation, including cash receipts.
This involved recalculating the fair value of each
element of the bundled transactions to ensure
revenue was appropriately accounted for.
•
Recalculated the deferred revenue for the year,
ensuring completeness and accuracy by verifying,
on a sample basis, against underlying supporting
documentation and data sources.
•
Performed procedures on manual journal entries
over revenue and assessed the nature of manual
journal entries recorded to revenue outside of
expectations.
•
Assessed the adequacy of the Group’s disclosures
in respect of revenue and revenue recognition
against the requirements of Australian Accounting
Standards.
41
Capitalised Development Cost
Key audit matter
How the matter was addressed in our audit
As disclosed in note 12, the group capitalised $14.8m
in development costs during the period, related to
software development.
The group undertakes significant development
activities, capitalising certain directly attributable
costs. The Group applies significant judgement to
ensure the costs have been capitalised in accordance
with the requirements of AASB 138: Intangible assets
(‘AASB 138’)
Given the significant judgement involved and the
amount of costs capitalised, we considered
capitalisation of development costs as a key audit
matter.
To determine whether development costs were
appropriately accounted for and disclosed within the
financial statements, we undertook, amongst others,
the following audit procedures:
•
Obtained 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.
•
Reviewed the development expenditure
capitalised during the year to ensure
recognition is appropriate under AASB 138.
•
Tested a sample of additions during the year
to source documentation ensuring recognition
is appropriate under AASB 138.
•
Obtained the amortisation schedule and
recalculated the amortisation for the
financial year in line with the groups
accounting policy.
•
Obtained and assessed management’s
assessment of any indicators of impairment.
•
Assessed the adequacy of the Group’s
disclosure of capitalisation of development
costs within the financial report against the
requirements of Australian Accounting
Standards.
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 2024, 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.
42
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a) the financial report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001 and
b) the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i)
the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error; and
ii)
the consolidated entity disclosure statement that is true and correct and is free of 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.
43
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 34 of the directors’ report for the
year ended 31 December 2024.
In our opinion, the Remuneration Report of Reckon Limited, for the year ended 31 December 2024,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Gareth Few
Director
Sydney, 21 March 2025
44
The directors of the company declare that:
1.
the financial statements and notes as set out on pages 45 to 97, 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 2024 and of the performance for the year
ended on that date of the consolidated group;
2.
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,
3.
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, 21 March 2025
Directors’ Declaration
45
Consolidated Statement of Profit or Loss
for the year ended 31 December 2024
Note
Consolidated
2024
$’000
2023
$’000
Revenue
3, 4
54,109
53,405
Product costs
3
(8,147)
(7,730)
Employee benefi ts expenses
(18,407)
(17,780)
Marketing expenses
(3,107)
(3,327)
Legal and professional expenses
(745)
(743)
Other expenses
(3,514)
(4,127)
Depreciation and amortisation of other non-current assets
3
(15,652)
(14,391)
Finance costs
3
(85)
(199)
Profi t before income tax
4,452
5,108
Income tax expense
5
(826)
(226)
Profi t for the year
3,626
4,882
Profi t attributable to:
Owners of the parent
4,420
5,568
Non - controlling interest
(794)
(686)
Profi t for the year
3,626
4,882
Earnings per share
Cents
Cents
Basic earnings per share
21
3.9
4.9
Diluted earnings per share
21
3.9
4.9
The above consolidated income statement should be read in conjunction with the accompanying notes.
46
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 31 December 2024
Note
Consolidated
2024
$’000
2023
$’000
Profi t for the year
3,626
4,882
Other comprehensive income/(loss), net of income tax
Items that may be reclassifi ed subsequently to profi t or loss:
Exchange diff erence on translation of foreign operations
20
1,104
(202)
Total other comprehensive income/(loss), net of income tax
1,104
(202)
Total comprehensive income for the year
4,730
4,680
Total comprehensive income attribute to:
Owners of the parent
5,524
5,366
Non - controlling interest
(794)
(686)
4,730
4,680
The above consolidated statement of profi t or loss and other comprehensive income should be read in conjunction with the accompanying notes.
47
Consolidated Statement
of Financial Position
as at 31 December 2024
Note
Consolidated
2024
$’000
2023
$’000
ASSETS
Current Assets
Cash and cash equivalents
25
986
975
Trade and other receivables
7
2,669
2,196
Inventories
280
316
Current tax receivables
14
96
Other assets
8
1,789
1,683
Total Current Assets
5,738
5,266
Non-Current Assets
Trade and other receivables
7
174
151
Property, plant and equipment
9
516
499
Deferred tax assets
11
3,581
1,979
Intangible assets
12
33,346
32,088
Other assets
8
33
32
Right of use assets
10
3,010
1,192
Total Non-Current Assets
40,660
35,941
Total Assets
46,398
41,207
LIABILITIES
Current Liabilities
Trade and other payables
3,031
2,829
Provisions
14
1,914
1,827
Contract liabilities
16
5,499
5,808
Current tax liabilities
719
423
Lease liabilities
10
599
1,211
Total Current Liabilities
11,762
12,098
Non-Current Liabilities
Trade and other payables
914
906
Borrowings
13
3,909
3,754
Deferred tax liabilities
15
2,912
2,606
Provisions
14
672
463
Contract liabilities
16
1,155
1,519
Lease liabilities
10
2,454
237
Total Non-Current Liabilities
12,016
9,485
Total Liabilities
23,778
21,583
Net Assets
22,620
19,624
EQUITY
Issued capital
19
20,524
20,524
Reserves
20
(48,124)
(49,106)
Retained earnings
49,849
48,148
Total Equity attributable to owners of the parent
22,249
19,566
Non - controlling interest
371
58
Total Equity
22,620
19,624
The above consolidated statement of fi nancial position should be read in conjunction with the accompanying notes.
48
Consolidated Statement
of Changes in Equity
for the year ended 31 December 2024
Consolidated
Issued
capital
$’000
Share
buyback
reserve
$’000
Foreign
currency
translation
reserve
$’000
Share-
based
payments
reserve
$’000
Retained
earnings
$’000
Acquisition
of non
controlling
interest
reserve
$’000
Non-
controlling
interest
$’000
Total
$’000
Balance at
1 January 2024
20,524
(42,018)
(1,350)
414
48,148
(6,152)
58
19,624
Profi t for the year
-
-
-
-
4,420
-
(794)
3,626
Other comprehensive income:
Exchange diff erences
on translation of
foreign operations
-
-
1,104
-
-
-
-
1,104
Total comprehensive
income
-
-
1,104
-
4,420
-
(794)
4,730
Share based
payments expense
(note 3)
-
-
-
102
-
-
-
102
Dividends paid
(note 26)
-
-
-
-
(2,832)
-
-
(2,832)
Treasury shares
acquired
129
-
-
(242)
113
-
-
-
Vested shares
(129)
-
-
-
-
-
-
(129)
Non-controlling
interest shares
aquired by Reckon
Limited
-
-
-
-
-
-
(70)
(70)
Shares issued to
non-controlling
shareholders
-
-
-
-
-
-
1,177
1,177
Exchange adjustment
-
-
-
18
-
-
-
18
Balance at
31 December
2024
20,524
(42,018)
(246)
292
49,849
(6,152)
371
22,620
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
49
Consolidated Statement
of Changes in Equity (continued)
for the year ended 31 December 2024
Consolidated
Issued
capital
$’000
Share
buyback
reserve
$’000
Foreign
currency
translation
reserve
$’000
Share-
based
payments
reserve
$’000
Retained
earnings
$’000
Acquisition
of non
controlling
interest
reserve
$’000
Non-
controlling
interest
$’000
Total
$’000
Balance at
1 January 2023
19,534
(42,018)
(1,148)
1,231
45,698
(6,152)
771
17,916
Profi t for the year
-
-
-
-
5,568
-
(686)
4,882
Other comprehensive income:
Exchange diff erences
on translation of
foreign operations
-
-
(202)
-
-
-
-
(202)
Total comprehensive
income
-
-
(202)
-
5,568
-
(686)
4,680
Share based
payments expense
(note 3)
-
-
-
164
-
-
107
271
Dividends paid
(note 26)
-
-
-
-
(2,832)
-
-
(2,832)
Vested shares
1,033
-
-
(980)
(286)
-
-
(233)
Treasury shares
acquired
(43)
-
-
-
-
-
-
(43)
Non-controlling
interest shares
aquired by Reckon
Limited
-
-
-
-
-
-
(881)
(881)
Shares issued to
non-controlling
shareholders
-
-
-
-
-
-
747
747
Exchange adjustment
-
-
-
(1)
-
-
-
(1)
Balance at
31 December
2023
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.
50
Consolidated Statement of Cash Flows
for the year ended 31 December 2024
Note
Consolidated
Infl ows/(Outfl ows)
2024
$’000
2023
$’000
Cash Flows From Operating Activities
Receipts from customers
59,161
58,619
Payments to suppliers and employees
(39,789)
(38,359)
Interest (paid) / received
(61)
(151)
Income taxes paid
(1,426)
(975)
Net cash infl ow from operating activities
25(b)
17,885
19,134
Cash Flows From Investing Activities
Net proceeds from sale of business
25(c)
51
120
Acquisition of non-controlling interest
(70)
(881)
Payment for capitalised development costs
(14,446)
(14,361)
Payment for property, plant and equipment
(359)
(166)
Net cash infl ow from investing activities
(14,824)
(15,288)
Cash Flows From Financing Activities
Proceeds / (Repayment) of borrowings
155
(320)
Payments for lease liabilities capitalised under AASB 16
(1,259)
(1,200)
Payment for treasury shares
(129)
(276)
Dividends paid to owners of the parent
26
(2,832)
(2,832)
Proceeds from issue of shares to non-controlling interests
989
518
Net cash outfl ow from fi nancing activities
(3,076)
(4,110)
Net decrease in cash and cash equivalents
(15)
(264)
Cash and cash equivalents at the beginning of the fi nancial year
975
1,233
Eff ects of exchange rate changes on cash and cash equivalents
26
6
Cash and cash equivalents at the end of the fi nancial year
25(a)
986
975
The above consolidated statement of cash fl ows should be read in conjunction with the accompanying note.
51
Notes to the Financial Statements
for the year ended 31 December 2024
1 Material Accounting Policy Information
The principal accounting policies adopted in the preparation of the fi nancial report are set out below. Unless otherwise
stated, the accounting policies adopted are consistent with those of the previous year. The fi nancial report includes
the consolidated entity consisting of Reckon Limited and its subsidiaries. For the purposes of preparing the
consolidated fi nancial statements, the company is a for-profi t entity.
Basis of preparation
This general purpose fi nancial 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 fi nancial statements and notes of
Reckon Limited comply with International Financial Reporting Standards (IFRSs). Consequently, this fi nancial report
has been prepared in accordance with and complies with IFRSs as issued by the International Accounting Standards
Board.
The fi nancial report has been prepared in accordance with the historical cost convention, except for the revaluation
of certain non-current assets and fi nancial 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 fi nancial report are rounded to the nearest thousand dollars, unless
otherwise indicated.
Material Accounting Policies
(a) Basis of consolidation
The consolidated fi nancial statements incorporate the fi nancial 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 aff ect 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. Specifi cally, the results of subsidiaries acquired or disposed of during the
year are included in profi t 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 fi nancial 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 refl ect the changes in their relative interests in the subsidiaries. Any diff erence 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
(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
profi t or loss as incurred. At the acquisition date, the identifi able 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 benefi t 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 identifi able assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifi able 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
profi t 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 identifi able 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 fi nancial liability in the
consolidated accounts of the parent entity. The recognition of this liability eff ectively 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 refl ect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have aff ected 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
3 - 5 years
•
Leasehold improvements
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.
Notes to the Financial Statements (continued)
53
(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 fi nancial 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 fi nancial
statements are presented in Australian dollars, which is Reckon Limited’s functional and presentation currency.
Transactions and balances
All foreign currency transactions during the fi nancial year have been brought to account in the functional currency
using the exchange rate in eff ect at the date of the transaction. Foreign currency monetary items at reporting date
are translated at the exchange rate existing at that date. Exchange diff erences are brought to account in the profi t or
loss in the period in which they arise.
Group companies
The results and fi nancial position of all the Group entities (none of which has the currency of a hyperinfl ationary
economy) that have a functional currency diff erent 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 fi nancial position;
•
Income and expenses are translated at average rates (unless this is not a reasonable approximation of the
cumulative eff ect 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 diff erences are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve.
On consolidation, exchange diff erences 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
diff erences are recognised in profi t 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 benefi t from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently
54
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 fi rst 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 profi t 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 profi t 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 indefi nite 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 benefi ts;
•
the availability of adequate technical, fi nancial 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 diff erences between the tax bases of assets and liabilities, and their carrying amounts in
the fi nancial statements, and to unused tax losses.
Notes to the Financial Statements (continued)
55
The current tax payable is based on taxable profi t for the year. Taxable profi t diff ers from net profi t as reported in profi t
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 fi nance professionals within the Company and on specialist independent tax advice.
Deferred tax assets and liabilities are recognised for temporary diff erences 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 diff erences to measure the deferred tax asset or liability. An exception is made for certain temporary
diff erences arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised in
relation to those temporary diff erences if they arose in a transaction, other than a business combination, that at the
time of the transaction did not aff ect either accounting profi t or taxable profi t or loss.
Deferred tax assets are recognised for deductible temporary diff erences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary diff erences 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 fi nancial 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 eff ect 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) 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 profi t or loss.
(i) Employee Benefi ts
A liability is recognised for benefi ts 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 benefi ts, are measured at their nominal values using the
remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefi ts are measured as the present value of the estimated
future cash outfl ows 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.
56
Contributions are made by the Group to defi ned contribution employee superannuation funds and are charged as
expenses when incurred.
(j) Financial Instruments
Financial assets and fi nancial liabilities are recognised in the Group’s statement of fi nancial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets and fi nancial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of fi nancial assets and fi nancial liabilities (other than fi nancial assets and fi nancial liabilities
at fair value through profi t or loss) are added to or deducted from the fair value of the fi nancial assets or fi nancial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of fi nancial
assets or fi nancial liabilities at fair value through profi t or loss are recognised immediately in profi t or loss.
Financial assets
All regular way purchases or sales of fi nancial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the
time frame established by regulation or convention in the marketplace.
All recognised fi nancial assets are measured subsequently in their entirety at either amortised cost or fair value,
depending on the classifi cation of the fi nancial assets.
Foreign exchange gains and losses
The carrying amount of fi nancial 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 diff erences where the foreign currency risk
component of a fi nancial asset is designated as a hedging instrument for a hedge of foreign currency risk.
Impairment of fi nancial 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 refl ect changes in credit risk since initial recognition of the respective
fi nancial instrument.
The Group always recognises lifetime ECL (expected credit losses) for trade receivables. The expected credit losses
on these fi nancial assets are estimated using a provision matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specifi c 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 fi nancial instrument.
(i) Signifi cant increase in credit risk
In assessing whether the credit risk on a fi nancial instrument has increased signifi cantly since initial recognition, the
Group compares the risk of a default occurring on the fi nancial instrument at the reporting date with the risk of a
default occurring on the fi nancial 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 eff ort.
Notes to the Financial Statements (continued)
57
In particular, the following information is taken into account when assessing whether credit risk has increased
signifi cantly since initial recognition:
•
existing or forecast adverse changes in business, fi nancial or economic conditions that are expected to cause a
signifi cant decrease in the debtor’s ability to meet its debt obligations;
•
an actual or expected signifi cant deterioration in the operating results of the debtor;
The Group assumes that the credit risk on a fi nancial instrument has not increased signifi cantly since initial recognition
if the fi nancial instrument is determined to have low credit risk at the reporting date. A fi nancial instrument is
determined to have low credit risk if:
1.
the fi nancial instrument has a low risk of default;
2.
the debtor has a strong capacity to meet its contractual cash fl ow 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 fulfi l its contractual cash fl ow obligations.
(ii) Defi nition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes
as historical experience indicates that fi nancial 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 fi nancial asset when there is information indicating that the debtor is in severe fi nancial
diffi culty 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 profi t 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 fi nancial assets, this is represented by the assets’ gross carrying amount at the reporting date.
For fi nancial assets, the expected credit loss is estimated as the diff erence between all contractual cash fl ows that
are due to the Group in accordance with the contract and all the cash fl ows that the Group expects to receive,
discounted at the original eff ective interest rate.
(v) Derecognition of fi nancial assets
The Group derecognises a fi nancial asset only when the contractual rights to the cash fl ows from the asset expire,
or when it transfers the fi nancial 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
fi nancial asset, the Group continues to recognise the fi nancial asset and also recognises a collateralised borrowing
for the proceeds received.
58
On derecognition of a fi nancial asset measured at amortised cost, the diff erence between the asset’s carrying
amount and the sum of the consideration received and receivable is recognised in profi t or loss.
Financial liabilities and equity
Classifi cation as debt or equity
Debt and equity instruments are classifi ed as either fi nancial liabilities or as equity in accordance with the substance
of the contractual arrangements and the defi nitions of a fi nancial liability and an equity instrument.
Financial liabilities
All fi nancial liabilities are measured subsequently at amortised cost or at fair value through profi t or loss (FVTPL).
Foreign exchange gains and losses
For fi nancial 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
profi t or loss (note 3) for fi nancial 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 fi nancial liabilities
The Group derecognises fi nancial liabilities when, and only when, the Group’s obligations are discharged, cancelled
or have expired. The diff erence between the carrying amount of the fi nancial liability derecognised and the
consideration paid and payable is recognised in profi t or loss.
Derivative fi nancial instruments
The Group enters into a variety of derivative fi nancial 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 profi t or loss
immediately unless the derivative is designated and eff ective as a hedging instrument, in which event the timing of
the recognition in profi t or loss depends on the nature of the hedge relationship.
Further details of derivative fi nancial instruments are disclosed in notes 1(t).
(k) 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 suff ered 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 identifi ed, 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 identifi ed.
Intangible assets with indefi nite 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 fl ows are discounted to their present value using a pre-tax discount rate that refl ects current
Notes to the Financial Statements (continued)
59
market assessments of the time value of money and the risks specifi c to the asset for which the estimates of future
cash fl ows 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 profi t 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 profi t 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.
(l) 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 satisfi ed in performance obligations.
The Group recognises sales revenue related to the transfer of promised goods or services when a performance
obligation is satisfi ed 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 refl ects 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 signifi cant 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 benefi ts as the entity performs;
•
the customer controls the asset as the entity creates or enhances it; or
•
the seller’s performance does not create an asset for which the seller has an alternative use and there is a right
to payment for performance to date.
Where the above criteria is not met, revenue is recognised at a point in time.
The Group recognises revenue predominantly from the following sale of software and services:
Business Group desktop products
Business Group desktop products are sold with post-sale technical support services. These can be sold as a once-
off package, or on an annual subscription basis. For all Business Group desktop products contracts that contain the
60
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 specifi ed period of time.
Revenue is recognised for a Business Group desktop licence at the point of sale. This is because customers purchase
a specifi c 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 benefi ts
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 specifi ed period of time.
As the customer is not able to benefi t from the licence if the cloud is not accessible, two distinct performance
obligations generally are:
i.
Sale of a licence and ongoing maintenance for access to the cloud; and
ii.
Post-sale technical support.
The transaction price is fi xed in the contract entered into by the customer dependent on the specifi c 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 benefi ts 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 benefi ts provided by the Reckon’s performance of the post-
sale technical support services. The services are made available to the customer throughout the term of the contract.
Although there are two distinct performance obligations, both currently maintain the same contractual billing period
and are recognised over time. Accordingly, Reckon have deemed it unnecessary to allocate the transaction price
allocated to each performance obligation separately.
Notes to the Financial Statements (continued)
61
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 specifi ed period of time; and
iii.
Hosting services for a specifi ed period of time.
Each of the contract promises are considered as a distinct performance obligation because the customer can
benefi t 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 specifi c 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 benefi ts 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.
Each of the contract promises above are considered to be a distinct performance obligations because the customer
can benefi t 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.
62
Revenue is recognised for a software licence at the point of sale. This is because customers purchase and obtain a
specifi c version of the software that exists at the time the licence is granted.
Revenue for the remaining benefi ts of joining the membership is recognised over time. Reckon provides a range of
diff erent 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 benefi ts 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 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 identifi ed:
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 specifi c 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 benefi t from support services on their own. It is noted that
support services are all separately identifi able within the context of the contract because support services do not
signifi cantly 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 identifi able.
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 benefi ts
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
Notes to the Financial Statements (continued)
63
as the customer continues to pay for the service. As the customer is not able to benefi t 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 benefi ts 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 benefi t.
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.
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 specifi ed
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 specifi ed
period of time
Over the time of the contract with the
customer.
Reckon Accounts Hosted
Sale of a software licence
At the point of sale.
Post-sale technical support for a specifi ed
period of time
Over the time of the contract with the
customer.
Hosting services for a specifi ed 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 benefi ts
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.
64
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 eff ective
interest method, which is a method of calculating the amortised cost of a fi nancial asset and allocating the interest
income over the relevant period using the eff ective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the fi nancial asset to the net carrying amount of the fi nancial asset.
(m) Contract liabilities
Contract liabilities relate to payments received from customers for performance obligations which have not yet been
fulfi lled. Contract liabilities arise when payment for performance obligations do not match the timing of when the
performance obligations are satisfi ed. Contract liabilities are recognised at the inception of the contract and unwound
as the performance obligation is satisfi ed over the life of the contract.
(n) Earnings per share
Basic earnings per share is determined by dividing net profi t after income tax attributable to members of the Company
by the weighted average number of ordinary shares outstanding during the fi nancial year, adjusted for bonus
elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the fi gures in the determination of basic earnings per share by taking into account
the after income tax eff ect of interest and other fi nancing costs associated with dilutive potential ordinary shares and
the weighted average number of dilutive potential ordinary shares.
(o) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with fi nancial institutions and bank overdrafts.
(p) Borrowings
Borrowings are initially measured at fair value, net of transaction costs and are subsequently measured at amortised
cost using the eff ective interest method, with interest expense recognised on an eff ective yield basis. The eff ective
interest method is a method of calculating the amortised cost of a fi nancial liability and of allocating interest expense
over the relevant period. The eff ective interest rate is the rate that exactly discounts estimated future cash payments
through the expected life of the fi nancial liability, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
(q) 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 outfl ow of economic benefi ts will result and that the outfl ow can be reliably measured.
(r) Fair Value estimation
The fair value of fi nancial 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 fi nancial 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.
Notes to the Financial Statements (continued)
65
(s) 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 profi t 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. Specifi cally, government
grants whose primary condition is that the Group should continue to develop its range of software products, are
off set against development costs in the statement of fi nancial position and transferred to profi t 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 fi nancial support to the Group with no future related costs are recognised as other income in
profi t or loss in the period in which they become receivable.
Government assistance which does not have conditions attached specifi cally relating to the operating activities of
the entity is recognised in accordance with the accounting policies above.
(t) Hedge Accounting
The Group enters into derivative fi nancial instruments to manage its exposure to interest rate risk, including interest
rate swaps which is designated as cash fl ow 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 eff ective in off setting changes in fair values or cash fl ows of the hedged item
attributable to the hedged risk, which is when the hedging relationship meets all of the following hedge eff ectiveness
requirements:
•
there is an economic relationship between the hedged item and the hedging instrument;
•
the eff ect 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 eff ectiveness 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 eff ective portion of changes in the fair value of derivatives that are designated and qualify as cash fl ow hedges
is recognised in other comprehensive income and accumulated under the heading of swap hedging reserve. The
gain or loss relating to the ineff ective portion is recognised immediately in profi t 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 reclassifi ed to profi t
or loss in the periods when the hedged item aff ects profi t 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-fi nancial asset or
a non-fi nancial 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-fi nancial asset or
nonfi nancial liability.
66
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 qualifi es 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 profi t or loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in profi t or loss.
(u) Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defi ned 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
benefi ts 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 fi xed payments), less any lease incentives receivable.
The lease liability is subsequently measured by increasing the carrying amount to refl ect interest on the lease liability
(using the eff ective interest method) and by reducing the carrying amount to refl ect 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 fl oating
interest rate, in which case a revised discount rate is used).
•
A lease contract is modifi ed and the lease modifi cation 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 refl ects 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 fi nancial position.
The Group applies AASB 136 Impairment of Assets to determine whether a right-of-use asset is impaired and
accounts for any identifi ed impairment loss as described in the ‘Property, plant and equipment’ policy.
Notes to the Financial Statements (continued)
67
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 profi t or loss.
(v) Signifi cant accounting judgments, estimates and assumptions
Signifi cant accounting judgments
In applying the Group’s accounting policies, management has made the following judgments which have the most
signifi cant eff ect on the fi nancial 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 defi nite economic
benefi ts 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 identifi able 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(l) above.
ECL on impairment of fi nancial 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 refl ects the
Group’s historical credit loss experience, adjusted for management’s knowledge of specifi c 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.
Signifi cant 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 signifi cant 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 eff ect 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.
68
(w) 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 eff ective for the current reporting
period.
None of the new standards or revisions that are mandatory for the fi rst time materially aff ected any of the amounts
recognised in the current period or any prior period and are not likely to signifi cantly aff ect future periods.
The Group has not early adopted any new or revised Accounting Standards and Interpretations issued by AASB
which are not yet eff ective during the year.
(x) Working capital defi ciency
The consolidated statement of fi nancial position indicates an excess of current liabilities over current assets of $6,024
thousand (2023: $6,832 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 infl ows from operating activities for the year net of payments for capitalised development costs were $3,439
thousand (2023: $4,773 thousand). Unused bank facilities at balance date was $20,086 thousand. Also, included in
current liabilities are contract liabilities of $5,499 thousand (2023: $5,808 thousand), settlement of which will involve
substantially lower cash outfl ows.
Given the above, the Directors believe that preparation of the fi nancial report on a going concern basis is appropriate.
2 Segment Information
Operating segments are identifi ed 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 two operating divisions:
•
Business Group
•
Practice Management Group, Legal
These divisions are the basis upon which the consolidated entity reports its fi nancial 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 fi nancial software,
as well as related products and services. Products sold in this division include Reckon Accounts and Reckon One.
•
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.
Notes to the Financial Statements (continued)
69
2 Segment Information (continued)
Business
Group
$’000
Practice
Management
Legal Group
$’000
Consolidated
Group
$’000
2024
Operating revenue
41,824
12,285
54,109
Segment results
EBITDA1
21,310
1,061
22,371
Depreciation and amortisation
(10,108)
(5,544)
(15,652)
Segment profi t before tax
11,202
(4,483)
6,719
Central administration costs
(2,182)
Finance (costs) / income
(85)
Profi t before income tax
4,452
Income tax expense
(826)
Profi t for the year
3,626
2023
Operating revenue
41,703
11,702
53,405
Segment results
EBITDA1
21,539
897
22,436
Depreciation and amortisation
(9,982)
(4,409)
(14,391)
Segment profi t before tax
11,557
(3,512)
8,045
Central administration costs
(2,738)
Finance (costs) / income
(199)
Profi t before income tax
5,108
Income tax expense
(226)
Profi t for the year
4,882
1 EBITDA means earnings before interest tax, depreciation and amortisation.
The revenue reported above represents revenue generated from external customers. Segment profi t represents the
profi t earned by each segment without allocation of central administration costs, new market expenditure, fi nance
costs and income tax expense, all of which are allocated to Corporate head offi ce. 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 2024 or 2023
70
2 Segment Information (continued)
Assets
Liabilities
Additions to non-
current assets
Segment assets and liabilities
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Business Group
23,055
20,037
10,178
8,244
9,885
9,953
Practice Management Group, Legal
17,510
16,342
6,060
6,555
8,082
5,092
Corporate Division
5,833
4,828
7,540
6,784
-
-
46,398
41,207
23,778
21,583
17,967
15,045
(b) Geographical information
Revenue from external
customers
Non-current assets
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Australia
39,600
39,448
22,364
20,003
United States of America
10,354
9,792
15,020
12,893
Other countries (i)
4,155
4,165
3,276
3,045
54,109
53,405
40,660
35,941
(i) No other country outside of Australia and the United States of America are considered to generate revenues which are material to the group.
Notes to the Financial Statements (continued)
71
3 Profi t for the Year
Consolidated
2024
$’000
2023
$’000
Profi t before income tax includes the following items of revenue and expense:
Revenue
Sales revenue
Subscription revenue
50,370
49,051
Other recurring revenue
180
187
Loans revenue
72
173
Other revenue
3,487
3,994
Sale of goods and rendering of services
54,109
53,405
Expenses
Product costs
8,147
7,730
Expected credit losses:
Other Entities
95
51
Depreciation of non-current assets:
Property, plant and equipment
282
288
Amortisation of non-current assets:
Leasehold improvements
176
174
Right of use assets
662
660
Development costs
14,532
13,269
Total depreciation and amortisation
15,652
14,391
Foreign exchange losses / (gains)
(46)
35
Employee benefi ts expense:
Post employment benefi ts – defi ned contribution plans
2,022
1,932
Termination benefi ts
131
131
Equity settled share based payments
102
271
Finance costs/(income):
Loans/overdrafts
147
151
Leases
24
48
Other
(86)
-
85
199
Operating lease rental expenses:
Minimum lease payments
145
141
72
4 Revenue
Primary segments
Product Description
Revenue
recognition
Busines
Group
$’000
Practice
Management
Legal Group
$’000
Consolidated
Group
$’000
2024
Subscription revenue
Licence, support and
hosting
Over time
13,312
11,413
24,725
Licence
Point in time
25,645
-
25,645
Other recurring revenue
Support
Over time
6
-
6
Licence
Point in time
174
-
174
Loan income
Commission
Over time
72
-
72
Other revenue
Membership support
Over time
336
-
336
Membership fees - license
Point in time
1,689
-
1,689
Licence and implementation Point in time
-
872
872
Other
Point in time
590
-
590
Total revenue for continuing operations
41,824
12,285
54,109
2023
Subscription revenue
Licence, support and
hosting
Over time
12,380
10,814
23,194
Licence
Point in time
25,857
-
25,857
Other recurring revenue
Support
Over time
6
-
6
Licence
Point in time
181
-
181
Loan income
Commission
Over time
173
-
173
Other revenue
Membership support
Over time
355
-
355
Membership fees - license
Point in time
1,796
-
1,796
Licence and implementation Point in time
-
888
888
Other
Point in time
955
-
955
Total revenue
41,703
11,702
53,405
Notes to the Financial Statements (continued)
73
5 Income Tax
Consolidated
2024
$’000
2023
$’000
(a) Income tax expense recognised in profi t and loss
Current tax
2,160
1,773
Deferred tax
(1,296)
(777)
Over provided in prior years
(38)
(770)
826
226
(b) The prima facie income tax expense on pre-tax accounting profi t
reconciles to the income tax expense in the fi nancial statements as follows:
Profi t before income tax
4,452
5,108
Income tax expense calculated at 30% of profi t
1,336
1,532
Tax Eff ect of:
Eff ect of lower tax rates on overseas income
108
74
Tax eff ect of non-deductible/non-taxable items:
Proceeds on sale of business
-
72
Research and development claims
(579)
(830)
Sundry items
(1)
148
864
996
Over provision in prior years
(38)
(770)
Income tax expense attributable to profi t
826
226
The tax rate used for the 2024 and 2023 reconciliations above is the corporate tax
rate of 30% payable by Australian corporate entities on taxable profi ts under
Australian tax law. The tax rate for USA entities is 27% for 2023 and 2024.
(c) Future income tax benefi ts not brought to account as an asset:
Tax losses:
Revenue
506
459
Capital
-
1,202
506
1,661
74
6 Remuneration of Auditors
Consolidated
2024
$
2023
$
(a) BDO Audit Pty Ltd
During the year, the auditors of the parent entity earned the following remuneration:
Auditing and reviewing of fi nancial reports
218,000
213,500
Tax compliance
70,000
61,598
288,000
275,098
(b) Other Auditors
Auditing and reviewing of fi nancial reports
23,219
29,904
Tax compliance and other consulting services
3,576
18,470
26,795
48,374
Notes to the Financial Statements (continued)
75
7 Trade and Other Receivables
Consolidated
2024
$’000
2023
$’000
Current:
Trade receivables (i)
2,138
1,821
Allowance for Expected Credit Loss (ECL)
(27)
(65)
2,111
1,756
Receivables from non-controlling interests(ii)
417
229
Other receivables
141
211
2,669
2,196
Non-current:
Other receivables
174
151
(i) The ageing of past due receivables at year end is detailed as follows:
Past due 0 – 30 days
998
910
Past due 31 – 60 days
375
210
Past due 61+ days
166
144
Total
1,539
1,264
The movement in the ECL in respect of trade receivables is detailed below:
Balance at beginning of the year
65
30
Amounts written off during the year
(95)
(51)
Increase in ECL recognised in the profi t and loss
57
86
Balance at end of year
27
65
(ii) In March 2023 and in December 2024 Reckon announced that it, together with minority shareholders, had commited to
provide 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.
76
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 2024 was determined as follows:
2024
Receivables
Business Group
$’000
Legal Practice
Management
Group
$’000
Group
$’000
Current
421
178
599
Past due 1 to 30 days
136
862
998
Past due 30 to 60 days
17
358
375
Past due over 60 days
17
149
166
Total receivables
591
1,547
2,138
Allowance based on historic credit losses
(1)
(5)
(6)
Adjustment for expected changes in credit risk1
(10)
(11)
(21)
Credit loss allowance
(11)
(16)
(27)
Net carrying amount
580
1,531
2,111
1 Adjustment to refl ect the expected change in the probability of default relating to customers that are over 60 days past due and those customers
specifi cally identifi ed.
Notes to the Financial Statements (continued)
77
7 Trade and Other Receivables (continued)
2023
Receivables
Business Group
$’000
Legal Practice
Management
Group
$’000
Group
$’000
Current
290
267
557
Past due 1 to 30 days
93
817
910
Past due 30 to 60 days
36
174
210
Past due over 60 days
32
112
144
Total receivables
451
1,370
1,821
Allowance based on historic credit losses
(1)
(4)
(5)
Adjustment for expected changes in credit risk1
(13)
(47)
(60)
Credit loss allowance
(14)
(51)
(65)
Net carrying amount
437
1,319
1,756
1 Adjustment to refl ect the expected change in the probability of default relating to customers that are over 60 days past due and those customers
specifi cally identifi ed.
78
8 Other Assets
Consolidated
2024
$’000
2023
$’000
Current:
Prepayments
1,778
1,666
Other
11
17
1,789
1,683
Non current:
Prepayments
19
29
Other
14
3
33
32
Notes to the Financial Statements (continued)
79
9 Property, Plant and Equipment
Consolidated
2024
$’000
2023
$’000
Leasehold Improvements
At cost
526
1,056
Less: Accumulated amortisation
(506)
(952)
Total leasehold improvements
20
104
Plant and equipment
At cost
2,535
4,762
Less: Accumulated depreciation
(2,039)
(4,367)
Total plant and equipment
496
395
516
499
Leasehold
Improvements
$’000
Plant and
Equipment
$’000
Total
$’000
Consolidated
Carrying amount at 1 January 2024
104
395
499
Additions net of disposals
-
359
359
Eff ect of foreign currency exchange diff erences
1
12
13
Capitalised lease incentive reallocated
91
-
91
Depreciation/amortisation expense
(176)
(270)
(446)
Balance at 31 December 2024
20
496
516
Consolidated
Carrying amount at 1 January 2023
186
500
686
Additions net of disposals
1
165
166
Eff ect of foreign currency exchange diff erences
-
5
5
Capitalised lease incentive reallocated
91
-
91
Depreciation/amortisation expense
(174)
(275)
(449)
Balance at 31 December 2023
104
395
499
80
10 Right of Use Assets/Lease liabilities
Consolidated
2024
$’000
2023
$’000
Right of use assets
At cost
9,211
6,369
Less: Accumulated amortisation
(6,201)
(5,177)
3,010
1,192
Lease liabilities
Current
599
1,211
Non-current
2,454
237
3,053
1,448
Lease liabilities maturity profi le
Year 1
599
1,211
Year 2
481
237
Year 3
546
-
Year 4
616
-
Year 5
691
-
Year 6
120
-
3,053
1,448
Consolidated Right of Use Assets
Carrying amount at 1 January
1,192
2,037
Additions
2,811
151
Eff ect of foreign currency exchange diff erences
9
4
Depreciation/amortisation expense
(1,002)
(1,000)
Balance at 31 December
3,010
1,192
Leases relate to offi ce premises with lease terms of between 1 to 5 years.
Notes to the Financial Statements (continued)
81
11 Deferred Tax Assets
Consolidated
2024
$’000
2023
$’000
The balance comprises temporary diff erences attributable to:
Expected credit loss
1
2
Employee benefi ts
1
2
Recoverable losses
3,579
1,975
3,581
1,979
Details of unrecognised deferred tax assets can be found in Note 5(c)
Reconciliation:
Opening balance at 1 January
1,979
985
(Charged) / credited to profi t or loss
1,602
994
Balance at 31 December
3,581
1,979
12 Intangibles
Intellectual property – at cost
9,901
9,901
Accumulated amortisation
(9,901)
(9,901)
-
-
Development costs – at cost
130,066
113,360
Accumulated amortisation
(100,150)
(84,412)
29,916
28,948
Goodwill – at cost
3,430
3,140
33,346
32,088
Consolidated movements in intangibles
Note
Goodwill
$’000
Development
Costs
$’000
Total
$’000
At 1 January 2024
3,140
28,948
32,088
Additions
-
14,797
14,797
Eff ect of foreign currency exchange diff erences
290
703
993
Amortisation charge
-
(14,532)
(14,532)
At 31 December 2024
3,430
29,916
33,346
At 1 January 2023
3,171
27,846
31,017
Additions
-
14,728
14,728
Sale of business
(45)
(446)
(491)
Eff ect of foreign currency exchange diff erences
14
89
103
Amortisation charge
-
(13,269)
(13,269)
At 31 December 2023
3,140
28,948
32,088
82
12 Intangibles (continued)
Consolidated
2024
$’000
2023
$’000
Impairment test for goodwill
Goodwill is allocated to the Group’s cash generating units (CGUs) identifi ed based on how
the businesses are managed and reported on and taking into account the use of shared
resources, as follows
Practice Management Group, Legal
3,430
3,140
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 fl ows are discounted to their present
value using a pre-tax discount rate of 13.52% (2023:13.52%) which refl ects current market assessments of the time value of money
and the risks specifi c to the GCU for which the estimates of future cash fl ows have not been adjusted. Value in use calculations
utilise the most recently completed approved budgets for the forthcoming year. Subsequent cash fl ows are projected using
constant long term average growth rates of 2.5% per annum (2023:2.5%).
In assessing impairment using value in use for the Legal Group, the estimated future cash fl ows are discounted to their present
value using a pre-tax discount rate of 12.6% (2023:12.75%), which refl ects current market assessments of the time value of money
and the risks specifi c to the CGU for which the estimates of future cash fl ows 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 fl ows are projected using constant long term average growth rates of 3% per annum (2023:3%)
Sensitivity analysis performed indicates that if a change in profi t and associated development costs refl ected in the models were
to decrease by up to 15% for the respective CGU’s there would be no impairment.
Notes to the Financial Statements (continued)
83
13 Borrowings
Consolidated
2024
$’000
2023
$’000
Current:
Bank overdraft (i)
-
-
Non-current
Bank borrowings (i)
3,909
3,754
(i) The consolidated entity has bank facilities of $25 million (2023 : $25 million). The facility comprises variable rate bank
overdraft facilities, loan facilities, and bank guarantee and transactional facilities. The facilities expire in September 2027. The
facility is secured over the Australian, New Zealand and United Kingdom net assets.
2024
Loan
facility
$’000
Bank
overdraft and
bank
guarantee
$’000
The available, used and unused components of the facility at year end is as follows:
Available
22,000
3,000
Used
3,909
1,005
Unused
18,091
1,995
The remaining contractual maturity for the facility is as follows:
0-1 year
-
-
2-5 years
3,909
1,005
Weighted average interest rate
5.65%
6.35%
84
14 Provisions
Consolidated
2024
$’000
2023
$’000
Current:
Employee benefi ts – annual leave
682
686
Employee benefi ts – long service leave
1,232
1,141
1,914
1,827
Non-current:
Employee benefi ts – incentive plans
407
222
Employee benefi ts – long service leave
265
241
672
463
15 Deferred Tax Liabilities
Consolidated
2024
$’000
2023
$’000
The temporary diff erences are attributable to:
Expected credit loss
(3)
(4)
Employee benefi ts
(644)
(510)
Contract liabilities
(389)
(431)
Diff erence between book and tax value of non-current assets
4,192
3,827
Other provisions
(244)
(276)
2,912
2,606
Reconciliation:
Opening balance at 1 January
2,606
2,389
Charged / (credited) to profi t or loss
306
217
Balance at 31 December
2,912
2,606
Details of unrecognised deferred tax assets can be found in Note 5(c)
Notes to the Financial Statements (continued)
85
16 Contract liabilities
Consolidated
2024
$’000
2023
$’000
The unsatisfi ed performance obligations are as set out below:
Current
Subscription revenue
5,374
5,672
Other revenue
125
136
5,499
5,808
Non-current
Subscription revenue
1,155
1,519
86
17 Parent Entity Disclosures
Parent
2024
$’000
2023
$’000
Financial position
Assets
Current assets
1,712
1,928
Non-current assets
48,484
40,811
50,196
42,739
Liabilities
Current liabilities
6,696
6,938
Non-current liabilities
11,117
7,913
17,813
14,851
Equity
Share capital
20,524
20,524
Share buyback reserve
(42,018)
(42,018)
Swap hedging reserve
Share based payments reserve
78
281
Acquisition of non-controlling interest reserve
(1,657)
(1,657)
Foreign currency translation reserve
(476)
(476)
Retained earnings
55,932
51,234
32,383
27,888
Financial performance
Total comprehensive income
6,402
7,372
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 defi ciency - refer note 1(x).
Notes to the Financial Statements (continued)
87
18 Employee Benefi ts
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
off ers to applicable employees to participate in these plans. Performance shares off ered (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 defi ned performance criteria.
From 2011 onwards performance shares were also off ered 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 eff ective 10 years from the date of the initial off er. Participation in this programme is no
longer off ered.
The share appreciation rights plan represents an alternative remuneration element (to off ering 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 fi xed 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 fi rst 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 off ered.
No options were issued during the year (2023: Nil).
At the 2022 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 (2023: nil), nil appreciation rights (2023: nil), and nil
performance shares (2023: nil), were issued during the year. The expense recognised in 2024 for the rights/
performance shares was $39 thousand (2023: $116 thousand). Remaining share based payments of $63 thousand
(2023: $155 thousand) relates to nQueue Zebraworks Inc.
88
18 Employee Benefi ts (continued)
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
2024
2023
2024
2023
2024
2023
Sep’19
Dec’22
1,000,000
-
-
-
1,000,000
-
-
Jan’20
Dec’22
737,500
-
-
-
650,000
-
-
Jan’21
Dec’23
595,000
-
15,000
200,000
300,000
-
200,000
Jan‘22
Dec’24
475,000
206,666
50,000
-
-
103,334
310,000
Short-term incentive plan
Each annual budget fi xes 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.
Notes to the Financial Statements (continued)
89
19 Issued Capital
2024
2023
No.
$’000
No.
$’000
Fully Paid Ordinary Share Capital
Balance at beginning of fi nancial year
113,294,832
20,524
113,294,832
20,524
Dividend re-investment plan
-
-
-
-
Balance at end of fi nancial year
113,294,832
20,524
113,294,832
20,524
Less Treasury shares
Balance at beginning of fi nancial year
-
-
1,650,000
990
Shares purchased in current period
-
-
81,249
43
Shares vested
-
-
(1,731,249)
(1,033)
Balance at end of fi nancial year
-
-
-
-
Balance at end of fi nancial year net of treasury shares
113,294,832
20,524
113,294,832
20,524
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Changes to the then Corporations Law abolished the authorised capital and par value concepts in relation to share
capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and issued
shares do not have a par value.
During the year nil shares were bought back.
No options were exercised during the year.
The Group implemented a dividend re-investment plan in 2016.
90
20 Reserves
Nature and purpose of reserves
(a) Foreign currency translation reserve
Exchange diff erences arising on translation of the fi nancial reports of foreign subsidiaries are taken to the foreign
currency translation reserve, as described in note 1(e).
(b) Share buyback reserve
The value of shares bought back are allocated to this reserve.
(c) 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.
(d) Acquisition of non-controlling interest reserve
The acquisition of non-controlling interest reserve represents an equity account to record transactions between
equity holders.
21 Earnings per Share
Consolidated
2024
cents
2023
cents
Basic earnings per share – continuing operations
3.9
4.9
Diluted earnings per share – continuing operations
3.9
4.9
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
113,398,166
113,804,832
Earnings used in the calculation of earnings per share is $4,420 thousand (2023: $5,568 thousand).
22 Contingent Liabilities
There are no material contingent liabilities as at 31 December 2024 (2023: Nil).
Notes to the Financial Statements (continued)
91
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
2024
$’000
2023
$’000
(b) Other Commitments
Within 1 year
189
205
Later than 1 year and not longer than 5 years
854
34
1,043
239
24 Subsidiaries
Name of Entity
Country of Incorporation
Ownership Interest
2024
%
2023
%
Parent Entity
Reckon Limited
Australia
Subsidiaries
Reckon Australia Pty Limited
Australia
100
100
Reckon Limited Performance Share Plan Trust
Australia
100
100
Reckon New Zealand Limited
New Zealand
100
100
Reckon Accountants Group Pty Limited
Australia
100
100
Reckon Holdings NZ Pty Limited
New Zealand
100
100
Reckon One Limited
United Kingdom
100
100
Reckon Docs Pty Limited
Australia
100
100
nQueue Zebraworks Pty Limited (Previously nQueue Pty Limited)1
Australia
78
76
nQueue Zebraworks Limited (Previously nQueue Billback Limited)1
United Kingdom
78
76
nQueue Zebraworks Inc
United States of America
78
76
nQueue Zebraworks LLC1
United States of America
78
76
1 Wholly owned subsidiaries of nQ Zebraworks Inc.
All shares held are ordinary shares, except for NQueue Zebraworks Inc, where preference shares are also held.
92
25 Notes to the Statement of Cash Flows
Consolidated
2024
$’000
2023
$’000
(a) Reconciliation of Cash
For the purposes of the statement of cash fl ows, 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 fi nancial year as shown in the statement of cash fl ows is reconciled to the
related items in the statement of fi nancial position as follows:
Cash (i)
986
975
Bank overdraft
-
-
986
975
(i) Cash balance is predominantly in the form of short-term money market deposits, which
can be accessed at call.
(b) Reconciliation of Profi t After Income Tax To Net Cash
Flows From Operating Activities
Profi t after income tax
3,626
4,882
Depreciation and amortisation of non-current assets
15,652
14,391
Non-cash interest
24
48
Non-cash employee benefi ts expense – share based payment
102
271
(Gain) / loss on disposal of business
-
238
Increase in current tax liability/asset
378
28
(Increase)/decrease in deferred tax balances
(978)
(777)
Unrealised foreign currency translation amount
(219)
(319)
(Increase)/decrease in assets:
Current receivables
(336)
107
Current inventories
24
18
Other current assets
(106)
(235)
Non-current receivables
(23)
(5)
Non-current other
(1)
64
Increase/(decrease) in liabilities:
Current trade payables
111
(591)
Other current liabilities
(222)
(88)
Other non-current liabilities
(147)
1,102
Net cash infl ow from operating activities
17,885
19,134
Notes to the Financial Statements (continued)
93
25 Notes to the Statement of Cash Flows (continued)
(c) Disposal of Better Clinics business
The Better Clinics business was sold eff ective 31 March 2023.
Consolidated
2024
$’000
2023
$’000
Net assets sold:
Intangible assets
-
491
Provisions
-
(8)
Carrying amount of net assets sold
-
483
Proceeds on sale comprise:
Cash received
-
125
Deferred settlement (i)
-
125
Transaction costs
-
(5)
-
245
Loss on sale of business
-
238
(i) $51 thousand has been received during 2024
(d) Assets and liabilities
The table below details changes in the Group’s liabilities arising from fi nancing activities, including both cash and non-cash
changes. Liabilities arising from fi nancing activities are those for which cash fl ows were, or future cash fl ows will be,
classifi ed in the Group’s consolidated statement of cash fl ows as cash fl ows from fi nancing activities.
Note
Cash
Non-cash
Balance at
1 Jan 2024
$’000
Financing cash
fl ows (i)
$’000
Fair value
adjustment
$’000
Balance at 31
Dec 2024
$’000
Borrowings
3,754
155
-
3,909
(i) The cash fl ows from bank loans, and other borrowings make up the net amount of proceeds from borrowings and
repayments of borrowings in the statement of cash fl ows.
Note
Cash
Non-cash
Balance at
1 Jan 2023
$’000
Financing cash
fl ows (i)
$’000
Fair value
adjustment
$’000
Balance at 31
Dec 2023
$’000
Borrowings
4,074
(320)
-
3,754
(i) The cash fl ows from bank loans, and other borrowings make up the net amount of proceeds from borrowings and
repayments of borrowings in the statement of cash fl ows.
94
26 Dividends – Ordinary Shares
Consolidated
2024
$’000
2023
$’000
A fully franked dividend for the year ended 31 December 2024 of 2.5 cents (2023: 2.5
cents) per share was paid on 2 September 2024.
2,832
2,832
Franking credits available for subsequent fi nancial years based on a tax rate of 30% (2023:
30%)
497
377
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
fi nancial 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 fi nancial instruments are currency risk, credit risk, liquidity risk and cash fl ow
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 $986 thousand (2023: $975 thousand) were held by the consolidated entity at the reporting date, attracting an
average interest rate of 3.85% (2023: 3.58%). Interest bearing borrowings by the consolidated entity at the reporting
date were $3,909 thousand (2023: $3,754 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 6.35% (2023: 6.08%) on
overdraft facilities and 5.65% on loan facilities (2023: 5.44%). 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 profi t would increase/decrease by $15 thousand (2023: $19 thousand).
Hedging activities are evaluated to align with interest rate views and defi ned risk appetite, ensuring the most cost-
eff ective hedging strategies are applied.
The maturity profi le for the consolidated entity’s cash ($986 thousand) that is exposed to interest rate risk is one year,
and interest-bearing borrowings ($3,909 thousand) that are exposed to interest rate risk, is 2 to 5 years. On the
assumption that interest bearing borrowings and variable interest rates remain at the current level, the annual interest
costs are expected to be $220 thousand.
Further details are set out in note 13.
c) Credit Risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in fi nancial loss to
the consolidated entity. The consolidated entity has adopted the policy of only dealing with creditworthy counterparties
and obtaining suffi cient collateral or other security where appropriate, as a means of mitigating the risk of fi nancial
loss from defaults.
The consolidated entity does not have any signifi cant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics.
Notes to the Financial Statements (continued)
95
27 Financial Instruments (continued)
The carrying amount of fi nancial assets recorded in the fi nancial 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 diff erent 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 signifi cant foreign currency exposures due to outstanding foreign currency denominated items.
The consolidated entity’s future reported profi ts 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 fl ows.
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 fi nancial 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 fi nancial assets and fi nancial liabilities recorded in the fi nancial report approximates their respective
fair values, determined in accordance with the accounting policies disclosed in note 1 to the fi nancial statements.
96
28 Subsequent events
Reckon Limited has completed the acquisition of the Cashfl ow Manager and OKKE businesses from Money Management
Group Pty Ltd and its UK subsidiary Money Management Group (UK) Limited with an eff ective date of 1 January 2025.
The businesses are Adelaide based accounting and payroll software businesses. Cashfl ow Manager’s fl agship product is
its namesake desktop software solution. The purchase also includes OKKE, a startup Saas accounting product, whose
users Reckon intends to migrate to its superior Reckon One product as soon as possible. Reckon acquired complete
ownership of both products.
The total purchase price is $8.75M with $7.5M to be paid in 2025 and $1.25M deferred until early 2026. The acquisition will
be funded through the company’s existing bank facilities. The acquisition is EPS accretive and is expected to contribute
$6M of revenue, $3M of EBITDA and $1M of NPAT in FY2025. The initial accounting for the acquisition is incomplete at the
date of issue of these fi nancial statements. Completion accounts are expected to be completed and approved in quarter 1
of 2025.
No other events have occured since 31 December 2024 and to the date of this report that would require disclosure in the
fi nancial statements if they had occured in the fi nancial year.
29 Related Party Disclosures
(a) Key Management Personnel Remuneration
Consolidated
2024
$
2023
$
Short term benefi ts
1,744,558
1,754,613
Post-employment benefi ts
78,070
186,550
Share based payments
84,900
109,500
1,907,528
2,050,663
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 Remuneration 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 33 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
offi ce and principal place of business is:
•
Level 2, 100 Pacifi c 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 fi nancial report.
The fi nancial report was authorised for issue by the directors on 21 March 2025.
Notes to the Financial Statements (continued)
97
Name of Entity
Country of Incorporation
Ownership
Interest
and
Tax Residency
%
Parent Entity
Reckon Limited
Australia
Subsidiaries
Reckon Australia Pty Limited(2)
Australia
100
Reckon Limited Performance Share Plan Trust(1)
Australia
100
Reckon New Zealand Limited
New Zealand
100
Reckon Accountants Group Pty Limited
Australia
100
Reckon Holdings NZ Pty Limited
New Zealand
100
Reckon One Limited
United Kingdom
100
Reckon Docs Pty Limited
Australia
100
nQueue Zebraworks Pty Limited (Previously nQueue Pty Limited)
Australia
78
nQueue Zebraworks Limited (Previously nQueue Billback Limited)
United Kingdom
78
nQueue Zebraworks Inc
United States of America
78
nQueue Zebraworks LLC
United States of America
78
1 All entities are body corporates apart from Reckon Limited Performance Share Plan Trust
2 Trustee company for the Reckon Limited Performance Share Plan Trust.
Consolidated Entity Disclosure
Statement
as at 31 December 2024
98
Additional Information
as at 3 March 2025 (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)
Twenty Largest Holders of Quoted Equity Securities
Name
Units
% Units
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
16,977,205
14.98
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
15,359,008
13.56
BNP PARIBAS NOMINEES PTY LTD
9,073,597
8.01
GREGORY JOHN WILKINSON
6,280,487
5.54
MICROEQUITIES ASSET MANAGEMENT PTY LTD
6,000,935
5.30
DJZ INVESTMENTS PTY LTD
5,690,000
5.02
CITICORP NOMINEES PTY LIMITED
3,970,810
3.50
UNDERWOOD CAPITAL LIMITED
1,805,191
1.59
MR CLIVE ALAN RABIE
1,516,535
1.34
RAWFORM PTY LTD
1,330,306
1.17
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,301,899
1.15
ROUND ETERNAL INVESTMENTS PTY LTD
1,085,907
0.96
VANWARD INVESTMENTS LIMITED
980,196
0.87
MR SAMUEL JAMES ALLERT
909,279
0.80
VELKOV FUNDS MANAGEMENT PTY LTD
900,000
0.79
BIATAN PTY LTD
835,049
0.74
MS KYLIE LYNETTE NUSKE + MR MATTHEW JAMES COOK
834,093
0.74
DMX CAPITAL PARTNERS LTD
825,000
0.73
MR PHILIP ROSS HAYMAN
650,909
0.57
HAGGLUND FAMILY SUPER PTY LTD
636,693
0.56
TOTAL
76,963,099
67.93
Number of Holders of Equity Securities
113,294,832 fully paid ordinary shares are held by 2,911 individual shareholders. Each share entitles the holder to one vote.
Less than marketable parcels
679 shareholders holding less than a marketable parcel of 981 ordinary fully paid shares.
99
Distribution of Holders of Equity Securities
Range
Total holders
Units
% Units
1 - 1,000
779
476,955
0.42
1,001 - 5,000
1,187
3,156,594
2.79
5,001 - 10,000
391
3,068,564
2.71
10,001 - 100,000
462
13,857,866
12.23
100,001 Over
92
92,734,853
81.85
Total
2,911
113,294,832
100.00
Substantial Holders
Substantial Holder
Number of
Shares
Voting Power
Microequities Asset Management Pty Ltd
16,142,284
14.25%
MA Financial Group Limited
13,250,826
11.70%
Securities Purchased On-Market
During the financial year, 225,000 fully paid ordinary shares in the Company were purchase on-market at an average
price of $0.57 per share to satisfy the entitlements of holders of Performance Rights.
Unquoted Equity Securities
Performance Rights
Number on
Issue
Number of
Holders
Performance Period 2022-2024
310,000
6
Additional Information
as at 3 March 2025 (Unaudited) (continued)
100
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 14 May 2025 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 28
March 2025.
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.
Additional Information
as at 3 March 2025 (Unaudited) (continued)
101
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