RECKON LIMITED — Investor Presentation 2011

Feb 7, 2011

Results Presentation

Year Ended December 2010

Presenters:Clive Rabie – Group CEOChris Hagglund – Group CFOGavin Dixon – Business Division CEOBrian Armstrong – Professional Division CEO

Group structure

The group comprises 3 main divisions:

• • Business Division – Business software suitable for SME's through to larger enterprises, personal financial software, content provider & practice software for smaller accounting firms
  • •Division CEO – Gavin Dixon
  • •Australia & NZ
• • Professional Division – Extensive suite of enterprise level practice software for accounting firms, as well as cost recovery solutions, print solutions, expense management and other related modules targeted specifically to the legal profession
  • •Division CEO – Brian Armstrong
  • •Australia , NZ & UK
• • nQueueBillback Division – Cost management software, print solutions & expense management solutions for the legal profession
  • •President & CEO – Rick Hellers
  • •USA & UK

Performance Highlights – December 2010

Oitperangreenevu	up	6%	$901tom
EBITDA	up	20%	$302tom
NPAT	pu	27%	$217tom

**Reckon Group –**December 2010

	thlf1sa	d2hlfna	Flluyear
Oitperangrevenue	$46.5m	$43.6m	$90.1m
%h(dli)tgrowuneryng	8%	7%	7%
li%tsp	51%	49%
EBITDA	$15.3m	$14.9m	$30.2m
%h(dli)tgrowuneryng	23%	11%	17%
%litsp	51%	49%
EBITDAimargn	33%	34%	33%

Margin trends

	2006	2007	2008	2009	2010
EBITDA	13.0m	16.5m	19.0m	25.1m	30.2m
Miargn	29%	29%	31%	29%	33%

**Divisional results (excl FX impacts) –**December 2010

	Ghtrow	2010	2009
BiDiiiitusnessvsonoperangrevenue	13%+	$56.0m	$49.8m
BiDiiiEBITDAsnesssonuv	32%+	$20.7m	$15.7m
EBITDAimargn		37%	31%
PfilDiiiitroessonasonoperangreenevvu	-2%	$26.8m	$27.3m
PfilDiiiEBITDAroessonavson	2%+	$10.8m	$10.6m
EBITDAimargn		40%	39%
QBillbkDiitnueueacvoperangrevenue	15%+	$7.3m	$6.3m
QBillbkDiiiEBITDAneeacsonuuv	41%+	$3.1m	$2.2m
EBITDAimargn		43%	35%

**Divisional results (reported) –**December 2010

	Ghtrow	2010	2009
BiDiiiitsnesssonoperangreeneuvvu	12%+	$56.0m	$49.9m
BiDiiiEBITDAusnessvson	33%+	$20.7m	$15.6m
PfilDiiiitroessonavsonoperangrevenue	-5%	$26.8m	$28.1m
PfilDiiiEBITDAroessonavson	-2%	$10.8m	$11.0m
QBillbkDiitnueueacvoperangrevenue	-1%	$7.3m	$7.3m
QBillbkDiiiEBITDAnueueacvson	41%+	$3.1m	$2.2m

Other Highlights – December 2010

• •Operating cash flow of $28.2m, up 49%
• •Cash balance $8.1m
• • Final dividend of 4.5 centsper share (4.0 cents in 2009)
• •Dividend franked to 90%
• •Dividend payout ratio 65%
• •EPS growth 25% to 12.4 cents per share

Cash Flow Highlights – December 2010

	2010	2009
Nhdbd/tttecaseayearen	$8.1m	-
Oihfltperangcasow	$28.2m	$18.9m	94%+
1DlCEdittteveopmenosxpenureAmisaionf dlopIPorttntts &oevemecos	$7.6m$6.4m	$6.5m$5.6m
Oihflfiliddltttttperangcasowaercapaseeveopmencoss	$20.6m	$12.4m	66%+
FidAAiiittxessecqusons	$1.4m	$1.8m
DiiddPidvensa	$9.9m	$8.6m

1 Additional expenditure designed to further improve the groups competitive position in its markets

Growing Recurring Revenue – December 2010

11

Business Division

• • Product range
  • •SME business products – mainly traditional QuickBooks range
  • •Medium to large business products – QuickBooks Enterprise
  • •Online business products
  • • Wealth management products –Quicken
  • •Elite practice management software for smaller accounting practices
  • • Company secretarial services –software, company registrations, super and trust deeds, searches
• •Market – Australia & NZ
• •150 employees

Business Division – December 2010

	Rkecon
Tlitoarevenuencrease	12%
DiQikBkhttrecucoosgrow	14%
Eih(illi)ttnerprserevenuegrownconne	28%
Rilhtteareenegrovuw	32%
Cihttorporaeservcesrevenuegrow	7%

Business Division - 2010 Highlights

• • Release of QuickBooks 2010 QBi Series
  • •Numerous enhancements well received by the market
  • •Smooth tax update in June
  • •Retail market share according to retailers now 40%
• •QuickBooks Enterprise continues to shine
• • Online products gaining traction
  • •Up take is increasing (Mac, iPad, iPhone, Android, Blackberry now supported devices)
  • •Smooth upgrade to 2010/11 version (including tax update)
  • •8,000 users
• • Partner membership growth of 10% represents increasing support from the accounting industry
• • Continued success with Elite products
  • •Smooth tax release, high customer satisfaction rating, good revenue growth
• • Corporate Services continues to grow market share
  • •Market in company formations grew 9% in units (Reckon 11%)
  • •New online products

Business Division Key Strategies

• • Expand Online service
  • •Improvements to connected services
  • •New service offerings – new Cashbook product launches in 2011
• •Further leverage scalability of QuickBooks Enterprise Edition
• • Expand Elite customer acquisition through broader addressable market
  • •Move into the mid market space
• • Continue to grow Reckon Docs market share
  • •Through new service offerings
  • •Expand to the APS client base in 2011 through integrated offering
• •Take advantage of expanded direct sales team
• • Leverage the APS relationship – sales of Online business products, Enterprise and Company secretarial products

• • Product range
  • •Fully integrated practice management and compliance suite for accounting practices
  • • Expense management/cost recovery and other practice software modules for the legal profession in Australia
• •Market – Australia & NZ & UK
• •135 employees

Professional Division Revenue Movements (excl FX) – December 2010

	Tltoarevenue	Mitanenance
PfilDiiiroessonavson	2%5%+-
Alitusraa	1%-	5%+
NZldeweaan	1%+	%-
UidKidtnengom	7%-	8%+

Professional Division Performance– December 2010

Software/hardware revenue

• •66 new firms added in 2010, despite difficult market
• •Adversely affected by difficult UK trading conditions
• • Change of strategy to a software focus in legal, impacted hardware revenue

Consulting revenue

• •Exclusivity of consulting services remains our strength
• •Adversely affected by difficult UK trading conditions
• •Reflects reduced consulting capacity in 2010
• •Adversely affected by difficult UK trading conditions

Maintenance revenue

• •Adverse economic conditions slowed increase in seat count
• • Also adversely affected by bankruptcy of Bearing Point, M&A activity by Big 4 firms and FX

Professional Division - 2010 Highlights

• •New products released to market, to complete the integrated suite
• •Strengthened position of supplier of choice to leading firms
• •Continued growth of client base
• •Successful completion of major consulting projects
• •Demand for new products from existing clients heightened in Q4
• • QuickBooks capability resonates with large firms
  • •Locked in alliance with major firms to distribute QuickBooks

Professional Division - Opportunities

• • New business growth picked up in Q4 in Australia (revenue impact in 2011) +51% over 2009 Q4 sign-ups.
• •Closing pipeline in 2010 stronger than 2009
• •Service demand for online and mobility solutions
• • New Products available in 2011 (minimal revenue impact to-date)
  • •Mobility – time & expense capture
  • •Workpaper management
  • •Value/contract billing
  • •Credit management
  • •CRM including event management
  • •Resource & capacity planning
  • •Company secretarial and corporate services
  • •Continued upgrades to core products

nQueue Billback Division

• •67% shareholding at 31 Dec 2010
• • Market – USA legal profession
  • •Strategically placed in the top 200 law firms
• • Product range
  • •Cost Recovery Software & Hardware
  • •Print Management
  • •Expense Management
  • •Embedded Solutions
  • •Workflow for Managed Print Services
  • •Desktop Solutions
  • •Hardware Solutions
  • •30 employees

**nQueue BillBack Division –**December 2010

	2010	2009
R(lFXi)tevenueexcmpac
MiRtanenanceevenue	$4.8m	$3.7m
NReeenewvu	$2.5m	$2.6m
Gfiitrosspromargn	93%	86%
Fflihhhdttttocusonsowaresouonraeranarware

nQueue Billback Division - 2010 Highlights

• • Successfully integrated the operations of nQueue & Billback USA
  • •Right sized the business
  • •Focus on business cost structure in 2010
  • •Positive client feedback on combined business
  • •Sales focus in 2nd half of 2010 culminating in strong Q4 sign-ups
  • •Good progress on the "best of breed" product suite
• • Added 34 new clients (including 3 Top 100 firms)
  • oNow serve 35% of the largest 250 law firms in the USA and 5 of the top 10 globally

nQueue Billback Division – UK operation

• •Accounting and Legal businesses in the UK de-merged in Jan 2011
• •Exchanged 25% of the UK operation for an additional 7% of the USA operation
• • Ownership post exchange:
  • •USA 74%
  • •UK 75%
• • Rationale:
  • •Harnesses the US Legal domain expertise for the UK business
  • • Cross sell opportunities in international legal practices which are expanding through global mergers
  • •Allows the Accounting team to focus purely on their market

nQueue Billback Division – Opportunities

• • Accelerated sales efforts:
  • •Expand geographies, now including Europe & Asia
  • •Target mid sized legal market through reseller relationships such as Canon
  • •Extend channel/reseller relationships
  • •Q4 sales were the strongest in the company's history (revenue impact in 2011)
  • •Expand outside of the legal profession - experienced sales resource appointed

Group trends over last 5 years

Group trends over last 5 years

NPBT

EPS

The strategic direction for the Reckon Group remains unchanged

• • Continued organic growth
  • Grow business product suite to ensure Micro markets to Enterprise markets are catered for
  • Expand product suite into the Accounting Profession Mid market
  • Develop product for the SaaS market in Business and Professional Divisions
  • Continue to deepen the product range to Accounting and Legal Markets
  • Merged premises for the Business & Professional Divisions in 2011, further enhancing cross sell opportunities and delivery efficiency

•Well placed for 2011

• oBusiness division
• Strong direct revenue growth is expected to continue
• Retail is now back at normal levels; Reckon's focus on market share growth continues
• oProfessional division
• Signs are evident of clients re-engaging and this is showing up in strong Q4 sign-ups
• Seat count number growth expected to resume
• onQueueBillback division
• Concerted sales effort in late 2010, is already showing signs of success with strong Q4 sign-ups in this business as well
• Gains expected from a re-focused UK business
• •Take advantage of ungeared balance sheet, including suitable acquisitions

Questions

Thank you