RECKON LIMITED — Investor Presentation 2015

Feb 9, 2015

==> picture [172 x 125] intentionally omitted <==

Business Software for Accountants and Accounting Software for Businesses

Results presentation Year ended 31 December 2014.

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

Reckon group

• The Business Group

Develops and distributes accounting software solutions on either desktop, hosted or cloud platforms to small and medium sized businesses. It has over 300,000 active customers, and supports over 6,000 partners.

• The Accountant Group

The supplier of choice in practice management software to accounting practices, with 4 out of the top 5 firms and over 1,000 larger practices using the comprehensive APS suite, comprising of 73,000 seats across multiple modules. This division also services circa 7,000 practices using our Elite smaller practice management and tax solution or Reckon Docs company secretarial solution.

• The International Group

Is an industry leader in enabling business efficiencies for accountants, lawyers and business in general, offering a range of document management, portal, scan and cost recovery solutions to circa 2,000 clients globally.

==> picture [131 x 36] intentionally omitted <==

pg 1

SOFTWARE THAT CONNECTS

SMALL / MED BUSINESS

==> picture [93 x 270] intentionally omitted <==

RECKON ONE SAAS - ONE LEDGER

APS / SYNC DIRECT ONE PROCESS

VIRTUAL CABINET ONLINE COLLABORATION & DOCUMENTS

==> picture [92 x 271] intentionally omitted <==

ACCOUNTANT

==> picture [78 x 57] intentionally omitted <==

pg 2

==> picture [168 x 540] intentionally omitted <==

LOTS OF OPPORTUNITY

RECKON ONE

• Most Affordable in market (unique pricing model).

• New User Experience and new features (including payroll) launching soon.

• Positive test-group feedback.

• Launch imminent in UK.

RECKON ACCOUNTS HOSTED

• Continual Growth.

APS

• Sync Direct.

• Private Cloud.

• Continual roll-out of modules.

VIRTUAL CABINET

• International expansion to US.

• UK continual growth.

• Australia continual growth through client base.

RECKON DOCS

• Continual Growth.

pg 3

AUSTRALIAN BUSINESS OPPORTUNITY

CLOUD NOT CLOUD

No. of SME’s 2,000,000 1,000,000 500,000

==> picture [551 x 311] intentionally omitted <==

XERO MYOB INTUIT RECKON OPPORTUNITY

pg 4

INTERNATIONAL OPPORTUNITY IN THE CLOUD

New Zealand 0.45m Australia 2m United Kingdom North America

4.3m

==> picture [48 x 62] intentionally omitted <==

29m

pg 5

2014 achievements

Strike a balance between profit growth and investment into the business

• EBITDA +10% , whilst:

• Increasing investment in cloud infrastructure, sales capability and product development.

• Investing in the Reckon One launch in the UK and Virtual Cabinet into the USA.

• EPS +11%

• Operating cashflow +18%

Volume growth

• 4% unit growth in core Business Group products (online now represents 41% of those units).

• 9% Growth in Practice management seats in the Accountant Group.

• 10% unit growth in the Reckon Docs business.

• 25% growth in Virtual Cabinet seats in the International Group.

Grow the subscription component of the group revenue to enhance further long term sustainability

• 86% of Practice management revenue in the Accountants Group in now subscription (from 79% in 2013).

• 62% of core Business Group units are now subscription (from 53% in 2013).

• 78% of International group revenue is now subscription (from 76% in 2013).

Expand cloud capability and reach

• Next generation Hosted product launched Q3 2014.

• Reckon One launched in Q1 2014, with the next generation Reckon One product on the track for a Q2 release.

• Reckon One launched in NZ in Q4 2014.

• Reckon One UK launch expected in 2015.

• Good progress on moving practice management to the cloud.

• Stellar growth in Virtual Cabinet in the UK, Australia and NZ. USA expansion commenced.

• Sync Direct gaining momentum.

==> picture [131 x 36] intentionally omitted <==

Share buyback of Intuit shares - completed July 2014.

pg 6

Performance highlights

Year ended 31 December 2014

0% 2% 4% 6% 8% 10% 12% REVENUE UP 3% to $100.8m EBITDA UP 10% to $37.1m NPAT UP 5% to $17.6m EPS* UP 11% to 14.2 cents TOTAL DIVIDEND UP 3% to 9.0 cents

• Growth percentages exclude the impact of the profit on sale of the investment in Connect2Field in 2013.

==> picture [131 x 36] intentionally omitted <==

pg 7

Revenue growth Year ended 31 December 2014

Subscription product revenue Other recurring revenue Upfront and service revenue	2014 Growth	2013
	52.1m +11% 14.3m -6% 13.9m -19% 20.5m +9% 100.8m +3%	46.8m
		15.2m
		17.2m
Content revenue		18.9m
		98.1m

==> picture [131 x 36] intentionally omitted <==

pg 8

Reckon group Year ended 31 December 2014 (normalised)

==> picture [557 x 204] intentionally omitted <==

----- Start of picture text -----

1ST HALF 2ND HALF FULL YEAR
$ Millions $ Millions $ Millions
2014 Operating Revenue 51.1m 49.7m 100.8m
2013 Operating Revenue 49.5m 48.6m 98.1m
2014 EBITDA 19.3m 17.8m 37.1m
2013 EBITDA 17.4m 16.5m 33.9m
----- End of picture text -----

==> picture [131 x 36] intentionally omitted <==

pg 9

Business group results

Year ended 31 December 2014

REVENUE Subscription product revenue Other recurring revenue Upfront and service revenue EBITDA	2014 Growth	2013
	16.3m +12%	14.5m
	14.3m -6%	15.2m
	6.2m -19%	7.7m
	36.8m -1% 19.1m +20%
		37.4m
		16.1m

Revenue

• The business has been substantially de-risked.

• Core product units now comprise:

==> picture [100 x 100] intentionally omitted <==

+41% Subscription Online (32% in 2013) +21% Subscription desktop +32% Other recurring +6% Perpetual licences, etc

Overheads

• Saving of $5m in Intuit royalty, partly re-invested some of the royalty saving in online infrastructure, sales capability and product development.

==> picture [131 x 36] intentionally omitted <==

pg 10

Accountant group results

Year ended 31 December 2014

REVENUE Subscription product revenue	2014 Growth	2013
	22.3m +9% 3.4m -34% 20.5m +9% 46.2m +4% 16.5m +1%	20.4m
Upfront and service revenue		5.2m
Content revenue EBITDA		18.9m
		44.5m
		16.3m

Revenue

• 9% increase in number of practice management seats.

• Aggressively moved the business to a subscription model in 2014.

• Some level of upfront / service revenue will remain in future.

• Content business has experienced a strong second half.

• Volume growth of 10%.

Overheads

• Cost base maintained despite additional volume.

• Cost increase relates to COGS on content business (ASIC fees).

==> picture [131 x 36] intentionally omitted <==

pg 11

International group results

Year ended 31 December 2014

REVENUE Subscription product revenue	2014 Growth	2013
	14.0m +14% 3.8m -6% 17.8m +9% 6.1m +19%	12.2m
Upfront and service revenue		4.0m
EBITDA
		16.2m
		5.1m

Revenue

• Strong new customer acquisition in Virtual Cabinet.

• 25% increase in the number of seats.

• Mixed results in nQueue, with USA solid, but UK and Australia weaker.

Overheads

• Investment in UK online sales capacity continues.

• Investment in expansion into the USA with Virtual Cabinet.

==> picture [131 x 36] intentionally omitted <==

pg 12

EBITDA margin

Year ended 31 December 2014 (normalised)

Business Group Accountants Group International Group Group	2014 2013	2014 2013
	52.1%	43.1%
	35.6%	36.5%
	34.5%	31.6%
	36.8%	34.5%

==> picture [131 x 36] intentionally omitted <==

pg 13

Cash flow highlights

Year ended 31 December 2014

Net debt Operating cash fow Capitalised development cost expenditure (net of grant) Fixed asset acquisitions Dividends paid Share Buyback Further 20% of Virtual Cabinet	2014 2013 $41.4m $31.3m $26.5m ($15.3)m ($13.1)m ($0.8)m ($1.5)m ($10.7)m ($11.3)m ($27.5)m ($5.5)m ($2.4)m - +18%	2014 2013 $41.4m $31.3m $26.5m ($15.3)m ($13.1)m ($0.8)m ($1.5)m ($10.7)m ($11.3)m ($27.5)m ($5.5)m ($2.4)m - +18%
	$31.3m	$26.5m
	($15.3)m	($13.1)m
	($0.8)m	($1.5)m
	($10.7)m	($11.3)m
	($27.5)m	($5.5)m
	($2.4)m	-

==> picture [131 x 36] intentionally omitted <==

pg 14

Group Trends

==> picture [43 x 8] intentionally omitted <==

----- Start of picture text -----

Half Year
----- End of picture text -----

==> picture [40 x 9] intentionally omitted <==

----- Start of picture text -----

2nd Half
----- End of picture text -----

OPERATING REVENUE

EBITDA

==> picture [684 x 402] intentionally omitted <==

----- Start of picture text -----

$ 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
2013 49.5m 48.6m 2013 18.7m 16.6m
2014 51.1m 49.7m 2014 19.3m 17.8m
Includes profit on sale of investment of $1.4m
----- End of picture text -----

pg 15

==> picture [693 x 446] intentionally omitted <==

----- Start of picture text -----

Half Year
Group Trends
2nd Half
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
2013 13.2m 11.4m 2013 7.9 6.0
2014 12.5m 10.2m 2014 7.3 6.9
----- End of picture text -----

==> picture [131 x 36] intentionally omitted <==

• Includes profit on sale of investment of $1.4m

pg 16

Future opportunities

• Business Group

• Reckon Accounts: organic growth generated by the Hosted product. Reckon One: launch of the next version of the product in Q2.

• Reckon Pay: will be launched in collaboration with NAB in Q2.

• Accountant Group

• Organic growth from building the subscription base particularly from Virtual Cabinet, Private Cloud, Workpaper Management and Sync Direct products.

• Subscription pricing increases the addressable market.

• Expand content reach into the accountants base.

• International Group

• Team focused on meeting 2015 targets for Virtual Cabinet. USA launch of Virtual Cabinet in 2015.

• Reckon One launch in UK in 2015.

==> picture [131 x 36] intentionally omitted <==

pg 17

==> picture [120 x 87] intentionally omitted <==

Questions

thank you