RECKON LIMITED — Investor Presentation 2013

Feb 4, 2013

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Results presentation Year ended 31 December 2012

To be read in conjunction with the Appendix 4E and the Accounts

reckon’s UNIQUE Positioning

1. Technology

Supplier of Desktop, Hosted & Cloud offerings

2. A “Designed for you” development methodology

3. Relationships

Strong relationships which is firmly integrated into the firms culture

4. Domain expertise provides best practice technology

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pg 1

PERFORMANCE HIGHLIGHTS

Year ended 31 December 2012

0% 2% 4% 6% 8% 10% 12% REVENUE UP 7% to $96.8m EBITDA UP 9% to $34.0m NPAT UP 6% to $17.8m EPS UP 11% to 13.4 cents TOTAL DIVIDEND UP 6% to 8.5 cents

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pg 2

GROUP TRENDS by division

Year ended 31 December 2012

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Operating Revenue ($ MILLIONS)
0 10 20 30 40 50
2012 - 40.4m
Accounts
2011 - 40.5m
2012 - 25.1m
APS
2011 - 23.2m
2012 - 17.9m
Docs
2011 - 15.3m
2012 -10.8m
NQBB
2011 -11.2m
Virtual Cabinet 2012 - 2.4m
Total 2012 96.6m
Total 2011 90.2m
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pg 3

GROUP TRENDS by division

Year ended 31 December 2012

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EBITDA ($ MILLIONS)
-6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22
Accounts 2012 - 21.3m
(Including Docs) 2011 - 20.6m
2012 - 12.4m
APS
2011 - 10.7m
2012 4.6m
NQBB
2011 5.1m
Virtual Cabinet 2012 - 0.5m
2012 (4.8m)
Corporate Costs
2011 (5.1m)
Total 2012 34.0m
Total 2011 31.3m
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pg 4

reckon group

Major Revenue Movements

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$ Millions Growth
2011 Operating Revenue 90.2
Australian Direct - SME Accounting Products 2.0 +8%
Docs 2.7 +17%
APS 1.9 +8%
Virtual Cabinet 2.4 -
Australian Retail - SME Accounting Products (1.9) -36%
Other (0.7)
2012 Operating Revenue 96.6 +7%
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pg 5

reckon group

Operating Revenue % growth % split	1ST HALF	2ND HALF	FULL YEAR
	48.1m	48.5m	96.6m
	3%	11%	7%
	50%	50%
EBITDA	17.1m	16.9m	34.0m
% growth % split	9%	9%	9%
	50%	50%

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pg 6

reckon group

Major Revenue Movements

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1ST HALF 2ND HALF
$ Millions $ Millions
2011 Operating Revenue 46.7 43.5
Australian Direct SME - Accounting Products 0.8 +7% 1.2 +10%
Docs 1.4 +19% 1.3 +16%
APS 0.7 +6% 1.2 +10%
Virtual Cabinet - - 2.4 -
Australian Retail - SME Accounting Products (1.2) -38% (0.7) -34%
Other (0.3) (0.4)
2012 Operating Revenue 48.1 +3% 48.5 +11%
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pg 7

reckon group

Divisional results

Growth 1ST HALF on prior $ Millions half year

Growth 2ND HALF on prior $ Millions half year

BUSINESS DIVISION

Operating revenue EBITDA SIONAL DIVISION Operating revenue EBITDA LLBACK DIVISION Operating revenue EBITDA	30.4 +3% 11.0 -1% 12.3 +6% 5.8 +13% 5.4 -4% 2.3 -10%

PROFESSIONAL DIVISION

nQUEUEBILLBACK DIVISION

27.9 +6% 10.3 +9% 12.8 +10% 6.6 +18% 5.5 -2% 2.3 -7%

VIRTUAL CABINET DIVISION

Operating revenue EBITDA - -

2.4 - 0.5

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pg 8

reckon group

EBITDA margin %

Accounts (including Docs) APS nQueueBillback Virtual Cabinet Group	2012 2011	2012 2011
	36.7%	36.9%
	49.3%	46.0%
	42.3%	45.2%
	21.0%	-
	35.2%	34.7%

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pg 9

revenue breakdown

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Accounts
Recurring Revenue
78% 9% 13%
Full Product Revenue
74% recurring revenue prior year
Service Revenue
Docs (all new product sales)
100%
0% recurring revenue prior year
APS
72% 11% 17%
70% recurring revenue prior year
nQueue Billback
75% 19% 6%
74% recurring revenue prior year
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pg 10

reckon group

Cash Flow Highlights - year ended 31 December 2012

(Debt) / Cash	2012 2011 $ MILLIONS $ MILLIONS	2012 2011 $ MILLIONS $ MILLIONS
	($9.1)	$4.7
Operating cash fow (excluding tax) Tax payments Development cost expenditure Acquisitions / Investments bought and sold Fixed asset acquisitions Share buyback Dividends paid	$30.5	$31.4
	($6.5)	($4.6)
	($9.6)	($7.4)
	($7.2)	($7.3)
	($1.4)	($1.8)
	($7.6)	($1.4)
	($10.8)	($10.6)

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pg 11

reckon group

Cash spend on development

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2012 2011
$ MILLIONS $ MILLIONS
Capitalised $9.3 $7.4
Expensed $1.2 $2.3
Existing products $10.5 $9.7
-
New products - VC 0.3
Total $10.8 $9.7
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• Development spend remains consistent

• New Saas product (Reckon One) will be ready for launch in a few months. Development almost complete.

• Total amount amortised for capitalised development costs was $7.3m in 2012 ($6.1m in 2011)

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pg 12

GROUP TRENDS

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OPERATING REVENUE EBITDA
$ MILLIONS $ MILLIONS
0 10 20 30 40 50 60 70 80 90 100 0 5 10 15 20 25 30 35
2006 22.9m 22.1m 2006 6.7m 6.3m
2007 28.0m 27.4m 2007 8.2m 8.3m
2008 31.2m 28.8m 2008 9.4m 9.6m
2009 43.3m 42.0m 2009 11.8m 13.3m
2010 46.5m 43.6m 2010 15.3m 14.9m
2011 46.7m 43.5m 2011 15.6m 15.7m
2012 48.1m 48.5m 2012 17.1m 16.9m
Half Year Half Year
2nd Half 2nd Half
pg 13
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GROUP TRENDS

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NPBT EPS
$ MILLIONS CENTS
0 2 4 6 8 10 12 14 16 18 20 22 24 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
2006 5.8m 5.2m 2006 3.3 2.9
2007 6.7m 6.6m 2007 3.8 3.7
2008 7.5m 7.6m 2008 4.2 4.3
2009 9.4m 9.6m 2009 4.6 5.3
2010 11.4m 11.0m 2010 6.3 6.1
2011 11.0m 11.2m 2011 6.1 6.0
2012 12.5m 11.4m 2012 7.1 6.3
Half Year Half Year
2nd Half 2nd Half
pg 14
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reckon australia and new zealand

Accounts

• Direct Revenue grew by 8%

Unit growth 18%

Price/mix reduction of (10%)

• Hosted products grew 67%

• Enterprise grew 16%

Units up 32%

• Retail continues to be a declining market down 36%

• Mix and retail impact expected to reduce over time

Docs

• Revenue growth of 17%

• Direct sales effort into accounting base continues to contribute to market share growth

• Introducing more products

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pg 15

reckon australia and new zealand

Accounts continued...

• Renegotiated the Intuit distribution agreement to include

• No royalty payments after Feb 2014

• Perpetual licence agreement

• Trade off is our Product Names need to change

• Have already changed our “Quicken Suite” to Reckon Accounts (September)

• No effect on product performance since the change

• Established and grown our Direct Sales Team with reducing reliance on Retail

• Impact on Online, Enterprise and Docs revenue has been very positive

• Expect to release cloud solution in Second Quarter

• Branded Reckon One

• Based on the “Designed for You” concept

• Designed to give SME’s the best Economical Outcome

• Will be Scalable and Transportable

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pg 16

reckon australia and new zealand

APS

• Revenue growth 8%

• Strong results in both Australia and NZ

• Retained its position as a supplier of choice to top firms built on strong relationships

• Continued acquisition of new clients (market share growth)

• Stepped up rollout of the integrated APS Product Suite from currently 4 products per client to a target of 7 products over the next few years (expected major movers are Company Secretarial, Workpaper Management and Virtual Cabinet)

• Have started roll out of APS Private Cloud

Expands addressable market

• UK has been sold to previous CEO. Ongoing revenue in form of royalties

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pg 17

reckon international

Virtual Cabinet

• Acquired Virtual Cabinet in the UK which develops and distributes Document Management and Client Portal technology

• 1st 6 months performance as expected

• Continued growth momentum in UK market

• Investment in resources to rollout to Aust/NZ and potentially in the US market

• Rollout of products in Aust/NZ has commenced. Already 7 sites in the region

successfully installed

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pg 18

reckon international

nQueue Billback

• Strong growth achieved in UK

• Added new clients in USA but average price per new client reduced in 2012

• NQBB development rollout was delayed in 2012 and we expected to rollout a refreshed

• product in 2013 which will give us incremental sales opportunities

• Minority interest in UK and USA groups acquired

• Legal business in Australia now under NQBB management control

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pg 19

strategic focus

• Reckon Accounts

• Lock in the benefit from the profit uplift in 2014 from no more royalties payable to Intuit

• Complete the rebranding and renaming project

• Continue to grow sales by building out our direct sales force

• Release Reckon One into a new and fast growing market segment

• Investigate offshore opportunities

• Continue momentum in APS

Major revenue opportunities from APS Private Cloud & Document Management

• Drive Virtual Cabinet to meet 2015 targets

• They appear to be well on that track

• Compliment their growth by adding sales from NZ & Australia

• Consider reseller opportunities

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pg 20

strategic focus continued...

• Move NQBB into a stronger growth position

• Product refresh should give them new client and cross sell opportunities

• Investigate opportunities for Document Management into the

• broader US market

• Reckon’s financial strength and proven track record gives our customer and partners confidence that we can continue to lead the market in delivering innovative and high quality products and solutions now and into the future

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pg 21

Questions

thank you