Reckon's FY18 profit up despite uncertainty of Accountants Group future

The company said it received a 'clear' understanding of the value of its accounting arm following the sale to MYOB falling through.
Written by Asha Barbaschow, Journalist on

Australian software firm Reckon Group has published its financial results for 2018, reporting AU$7.7 million in after-tax profit, up from the AU$7.4 million after-tax profit achieved in 2017.

For the 12 months to December 31, 2018, Reckon generated AU$75 million in revenue, down from the AU$80 million it reported a year prior.

Reckon organises its business under three groups: Business Group, Accountant Practice Management Group, and Legal Practice Management Group.

Business Group, which includes products such as the company's cloud accounting software, Reckon One, accounted for just under AU$17 million in revenue -- an eight percent increase year over year.

Total cloud subscribers numbered 54,000 by December 31.

The company's Accountant Practice Management Group was responsible for AU$15.3 million in revenue, in what Reckon labelled a disruptive period of uncertainty.

Early last year, accounting firm MYOB offered Reckon AU$180 million for its Accountant Practice Management Group.

However, MYOB pulled out of the deal in May, highlighting it wasn't prepared for how long the regulatory process of the acquisition was going to take, and said as a result it had pulled the pin on the purchase.

"The regulatory process has taken considerably longer than the parties anticipated and could continue for some time," MYOB wrote.

"The sale and purchase agreement had a six-month duration within which the conditions precedent to completion had to be satisfied (including the regulatory conditions) failing which either Reckon or MYOB could terminate the contract."

It followed the Australian Competition and Consumer Commission (ACCC) highlighting concerns over the proposed acquisition, fearing MYOB might gain a market monopoly if it were to proceed.

"2018 was no doubt a disruptive and transformative year for Reckon. From a sale that dropped after months in limbo, to a board restructure that now underpins our future growth strategy, and increasing compliance changes such as Single Touch Payroll, Reckon has displayed extraordinary resilience and maintained profitability throughout the year," Reckon Group CEO Sam Allert said,

Reckon's Legal Practice Management Group meanwhile provided AU$1.6 million in revenue for the year.

Total subscription revenue for the 12-month period was AU$59.5 million.

"Following the events in the first half of 2018, our core strategy was to remain laser focused on business stability and bring certainty back to our customers, shareholders and staff. Not only have we achieved that, but we've continued to expand our product ecosystem and enter new markets to unlock revenue streams," Allert continued.

"In 2019, Reckon will continue to drive its independent growth strategy. We are in a stronger position than ever to capitalise on future growth opportunities, as well as move the needle of innovation forward."


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