RECKON LIMITED — Investor Presentation 2021

Feb 15, 2021

Results Presentation

For the year ended 31 December 2020

To be read in conjunction with Appendix 4E and Accounts

Sam Allert RECKON CEO

Chris Hagglund RECKON CFO

FULLY FRANKED DIVIDEND

DEVELOPMENT INVESTMENT

REVENUE EBITDA NPAT +0.3% over PcP 85% subscription revenue +6.6% over PcP +19.8% over PcP million million million $75.6 $32.6 $9.7

million $5.8

Full Year 5 cents

million $19.5

Financial Results

Our Operating Businesses

Accelerating our unified cloud and mobile strategy by leveraging synergies across divisions, widening the addressable market and powering future growth opportunities.

NQZW Collection Q

Cloud User Growth - Business Group

	Cloud User Growth (excludes free STP mobile app)
	USERS
	110K
	100k
Over 101k cloud users (35%annualised user growth).	90k
Resulted in 3 consecutive halfyears of solid growth for thisdivision. (2020 : 7%)	80k
29% cloud revenue growthover FY19.	70k
	60k
56% of available revenue isnow cloud.	50k
	40k
	30k
	20k
	10k
	201220132014201520162017

Mobile and Employee Growth

Free STP Mobile App launched late May '19, already at 37k users; with 80k employees created in this app.

Paid mobile Payroll App launched May '20, with 2k users.

Reckon Mate launched Dec 2020 providing employee view of payroll information. Providing reach into salary earner market.

Mobile invoicing and timesheets to be released in 2021.

APS Cloud Development

a stand alone product.

and Timesheets.

Operational Highlights

Continued partnership with IPA – 1200+ IPA member firms active cloud advisors.

IPA relationship provides cross sell for APS cloud products.

IPA Partnership

Initiative with QLD government supporting Indigenous businesses.

White Labelled Reckon One, as well as training content, to support Indigenous businesses and business owners.

Deadly Digits

Open Banking UK certification successfully completed in 2020.

Provides ability to leverage Open Banking platform for bank feeds integrated to Reckon One.

Open Banking UK certified

84% Employee Engagement.

95% Employees agree with company direction.

96% Maintained productivity whilst working from home.

Employee Engagement

Employee Engagement Australia Benchmark

Engagement score in Australia 70%1 Confidence in leaders 73%2 70% kept productivity levels whilst WFH3

1 Source Culture AMP https://academy.cultureamp.com/hc/en-us/articles/360003236059-2019-Australia-Benchmark

2 Source Culture AMP https://academy.cultureamp.com/hc/en-us/articles/360003236059-2019-Australia-Benchmark

3 Source: Citrix Survey https://www.afr.com/work-and-careers/careers/it-s-more-productive-to-work-from-home-20200401-p54fwc RECKON INVESTOR PRESENTATION FY 2020 9

nQueue & ZebraWorks

We've added an amazing team and complimentary cloud products to our already well established Legal business.

• Unlocking Growth potential with a Cloud Practice Management Suite for Legal firms

• Enormous market that is still largely on desktop software

• A great team with complimentary products. The ZebraWorks team have a long and successful history of developing and distributing legal practice management software and other products to the USA legal industry

• Cross sell synergies between Legal Group and Accountant Group cloud development

• Initially 70% retained by Reckon, with strong incentive for management team to perform and increase their equity

• Reckon committed to fund growth of up to US $5M, via a combination of capital and loans

Sale of ReckonDocs Business

The sale of ReckonDocs, allows us to focus on our core strengths of Accounting and Payroll for small businesses, and Practice Management for Accounting and Legal firms.

• Sale of ReckonDocs assets to Class Limited for $13M

• ReckonDocs contributed $5M revenue and $3M EBITDA in the 2020 Reckon Group Results

• The completion date is 1st March 2021

• This sale creates an opportunity for a strong partnership with Class Limited, providing a integrated suite of software covering all accounting firm requirements

• The intended use of funds is to pay down debt, whilst providing additional cashflow to accelerate our "cloud first" development strategy

Financial Highlights

	FY20	FY19$ M	GROWTH%
	$ M
Revenue	75.6	75.4	+0.3%

Financial performance

EBITDA	32.6	30.6	+6.6%
NPAT	9.7	8.1	+19.8%

TOTAL	43.0	44.8
NORMAL	43.4	44.8
CARES LOAN FORGIVENESSOFFSETS TRANSACTION COSTS	(0.4)	-

Overheads

Business Group Financials

Subscription business with consistently strong online growth.

Revenue	FY20	FY19		Financial performance
	$ M	$ M	GROWTH	Revenue
CLOUD SUBSCRIPTION	19.8	15.3	29%
DESKTOP SUBSCRIPTION	13.8	14.3	-4%	•Cloud unit growth 35%.
SUBSCRIPTION	33.6	29.6	13%
PERPETUAL / SERVICE/ OTHER RECURRING	4.9	6.6	-25%	EBITDA
TOTAL	38.5	36.2	+7%	•Margin improvement to 51% from 48%.
EBITDA	19.7	17.4	+13%

• Cloud revenue growth continues at substantial rate.

• Subscription now 96% of available revenue.

• Margin improvement to 51% from 48%.

• Content market: strong start then impacted by COVID from March to May, then recovered from

• Subscription is 99% of available software revenue.

• Margin improvement to 55% from 52%.

Practice Management Accountant Group Financials

Revenue	FY20	FY19		Financial highlights
	$ M	$ M	GROWTH	Revenue
SUBSCRIPTION	21.8	22.4	-3%	•New business impacted by COVID.
UPFRONT AND SERVICE	0.3	0.4	-37%
CONTENT	4.5	4.6	-3%	June.
TOTAL	26.6	27.4	-3%
				EBITDA
EBITDA	14.5	14.2	+2%	•Margin improvement to 55% from 52%.

Stable subscription revenue and an impressive customer base.

• Strong start to 2020, but new sales impacted by COVID from March (especially in 2nd half)

• Doubtful debt provisioning increased to reflect current

• Investment in team to drive future growth from August.

Revenue	FY20	FY19		Financial highlights
	$ M	$ M	GROWTH	Revenue
SUBSCRIPTION	8.8	9.0	-2%
UPFRONT AND SERVICE	1.7	2.7	-40%	from March (especially in 2nd half)
TOTAL	10.5	11.7	-11%	•Subscription is 84% of revenue.
				EBITDA
EBITDA	1.1	2.2	-50%	conditions.

Practice Management Legal Group Financials

Cloud journey ramps up with ability to leverage impressive customer base.

Cashflow highlights

FY20$ M	FY19$ M
32.4	26.6
(19.5)	(16.3)
(5.7)	(3.4)
(5.8)	(7.0)

OPERATING CASHFLOW

DEVELOPMENT SPEND

DIVIDEND PAID

NET DEBT REDUCTION

Cash spend on development increased with focus on cloud products across the group.

Fully Franked dividend of 2 cents to be paid in March. (5 cents Full Year). Dividend yield of 6%.

Outlook

A focus on Growth

BUSINESS GROUP

ACCOUNTANTS GROUP

LEGAL GROUP

Small Business Accounting and Payroll

Practice Management and Compliance for Accountants

Practice Management and Workflow for Legal Firms

Cloud growth across small business accounting and payroll market, complimented with new mobile apps.

A cloud suite for Accountants complimenting APS clients and opening up a larger addressable market.

New legal market, team and product set - cross sell opportunities with Workflow / ledger accounting / Time Billing.

Q & A

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