RKN - Reckon Limited

So_Cynical said:

This in specie distribution seems silly - why do i want to hold a London listed stock?

https://www.reckon.com/au/investors/market-announcements/

Its a pain in the ass, and now they want us to fund the spin out via a rights issue..seriously?

Click to expand...

Yeah it's an odd deal. The document management business is growing (indeed it represents most of the group's growth) and profitable (before corporate cost allocations) but that kind of leave the headstock with little prospect. Add in the fact that it's a bit subscale and to be listed on the AIM...

RKN reckons most of the revenue from the spinoff are generated overseas - but so are dozens of ASX listed companies who ply their trade abroad. A listing on the ASX would have been much more accessible for the shareholders.

Looks like the downhill slide may have stopped and the fundamentals improving somewhat. My favourite P&F pattern and all pointed to a breakout yesterday. Bought at open today, better than a Cup bet I reckon.

The stock price hit a 52 week high today of AUD 0.890 on above-average volume. The 30-day average volume is 44,875 shares. The stock price range is from AUD 0.065 in September 2001 to AUD 2.740 in April 2011. The next resistance level is AUD 0.962 and then AUD 1.189.

Disclaimer:
This information is for general information only and should not be used solely to base trading or investment decisions. Please do your own research.

Here https://decentralisedwealth.com/QualityTradeIdeas.html you can find links to the company’s web-site, fundamental and technical analysis. Databases for other Australian and US stocks of interest are also available.

Reckon Limited notes the movement this morning in the Reckon share price and the volume of shares traded. .... up 20% to 94c

Reckon also notes the release this morning of the announcement of Novatti Group Limited (NOV) declaring its intention - subject to a capital raising - to acquire an equity interest in Reckon of at least 15% of the Reckon shares on issue, at a price of $1.00 per share.

Reckon Limited had no prior notice of this proposed acquisition until the release of the Novatti announcement.


from NOV : Under the share purchase agreements, Novatti will acquire the Strategic Stake at a price of $1.00 per Reckon share from institutional investors for a total amount of approximately $17 million (representing approximately 17 million Reckon shares).

and going for a run today; from 87c to $1.28 on news

Reckon signs agreement to sell Accountants Practice Management Group for $100 million

Highlights

▪ All-cash sale for $100 million of Accountants Practice Management Group to The Access Group, subject to regulatory approvals in Australia
▪ Board and management believe the Transaction represents good value for shareholders relative to the market capitalisation of the Company
▪ Purchase price represents a 4.6x multiple of FY21 revenue and 8.4x multiple of FY21 EBITDA for the Accountants Practice Management Group
▪ Following completion, Reckon plans to return the majority of proceeds, net of taxes, to shareholders via a special dividend.
▪ Post transaction Reckon would comprise the Business Group and the Legal Practice Management Group, which together generated ~$50 million of revenue and EBITDA of ~$17 million in FY2021, representing ~70% and ~60% of Reckon’s pre-Transaction revenue and EBITDA respectively
▪ Management is excited to focus on the remaining businesses and believe Reckon is well positioned to take advantage of the strong global market opportunities that exist for both divisions, with its expanding cloud product set

am still currently down 1.1% on it

maybe i should watch it tomorrow and see if i can make a small profit on it ( since i missed $1.35 today )

Sale of Accountants Practice Management Group Completed
Reckon Limited (“Reckon” or the “Company”) (ASX: RKN) is pleased to advise that it has completed the sale
of the Accountants Practice Management Group to Access Software Australia Pty Ltd, Access Workspace NZ
Limited and Access UK Ltd (“Access Group”) in an all-cash transaction valued at $100 million (the
“Transaction”) (refer ASX announcements: 20 May 2022, 14 June 2022, and 20 June 2022).
Reckon will continue working with the Access Group under a temporary transitional services agreement to
ensure an efficient and successful handover for all assets, staff, clients, and employees.
The Company intends to deliver the majority of proceeds from the Transaction to shareholders via a partially
franked special dividend. Additional details of the proposed special dividend will be released as Reckon
finalises the completion accounts, determines taxes payable, and completes other aspects associated with the
Transaction. Additional funds from the Transaction will be used to repay a portion of debt, which will
considerably strengthen the Company’s balance sheet.
Reckon now has two operating divisions: The Business Group, which provides accounting and payroll software
for small to large sized business and personal wealth solutions, and the Legal Practice Management Group
that focuses on practice management and workflow solutions to law firms predominantly in the USA and United
Kingdom, with re-sellers in other parts of the world.
Both divisions will benefit from Reckon’s ongoing investment in product development and the introduction of
new, unique cloud-based offerings to underpin growth in customer numbers, and ensure continued high
retention rates are maintained.
Reckon’s half year results will be released on Tuesday 9 August 2022, where the company will provide a
trading update as well as share key strategic goals for the continuing business.
Reckon Group CEO, Mr Sam Allert said:
“Reckon is now well placed and very well funded to focus on and continue investing in its two core operating
divisions. The Business and Legal Groups represented circa 70% of Reckon’s revenue and approximately
60% of the Company’s EBITDA prior to the transaction and have considerable scope to grow.”
“Now that the transaction has completed, Reckon will prepare the completion accounts and finalise taxes
payable, allowing the Board to provide details of the proposed special dividend.”
“We look forward to releasing our half year results next week, and talking about our exciting and focused
future.”
AUTHORISED FOR RELEASE BY THE BOARD OF DIRECTORS OF RECKON LIMITED


=============================================================================================

DYOR

i hold RKN

am still down 1.5% on this

Reckon delivers strong HY results underpinned by growth in
continuing operations
Financial highlights (total group):
• Normalised NPAT of $6m, up 5% on the prior corresponding period (PcP)
1
• Normalised EBITDA of $18m, a 6% increase on PcP
• Normalised revenues of $39m, up 2% on PcP
• Annual recurring revenues (ARR) of $36m, marking a 5% increase on the PcP
• Fully franked interim dividend of $0.03 per share
Financial highlights (continuing operations):
• Normalised NPAT of $4m, up 8% on the prior corresponding period (PcP)
• Normalised EBITDA of $11m, a 6% rise on PcP
• Normalised revenues of $27m, up 2% on PcP
• Annual recurring revenues (ARR) of $24m, a 6% increase on the PcP
1 NON- IFRS: Growth has been normalised and is on a constant currency basis as set out in the Additional
Information table. This applies to all results in this announcement.
Sale of Practice Management Accountant Group:
• Sale of the Practice Management Accountant Group to The Access Group for a cash
consideration of $100m, an 8.4x multiple of FY21 EBITDA for the operating division
• Additional partially franked special dividend of between $0.54 and $0.58 is expected to be
declared from sale of the Accountants Group division, subject to finalisation of completion
accounts, tax payments and other aspects of completion
Operational highlights:
• Reckon now fully focused on advancing growth across its Business and Legal Groups through
ongoing investment and launch of new cloud products and other cross selling opportunities
• R&D spend of $11m, underpinning continued growth in cloud-based products
• Agreement with ASX-listed payments company Novatti (ASX: NOV) for launch of an integrated
payments solution
Reckon Limited (“Reckon” or the “Company”) (ASX: RKN) is pleased to report strong financial and operational
performance for the six-month period ended 30 June 2022 (H1 CY2022).
Group Net Profit After TAX (NPAT) from continuing operations was $4m on a constant-currency basis, a 8%
uplift on the previous corresponding period (PcP). Earnings Before Interest, Taxes, Depreciation and
Amortisation (EBITDA) from continuing operations was $11m, a 6% uplift on the PCP.
First-half highlights included the $100m cash sale of Accountants Group division (refer ASX announcement: 1
August 2022), with strong revenue and earnings growth across the Company’s remaining operating divisions.
Proceeds of the sale are expected to fund the payment of a partially franked special dividend of between $0.54
and $0.58 to shareholders as well as reduce a portion of the Company’s debt.
Momentum in the first half from continuing operations was underpinned by growth in subscription revenue in
the Company’s remaining two divisions; Small Business (accounting and payroll solutions for SMEs) and Legal
(practice management and workflow for law firms).
Group revenue from continuing operations was $27m, up 2% on the PcP, with recurring subscription revenue
accounting for 90% of total revenue.
The Business Group recorded H1 subscription revenue of $19.9m, up 6% on PCP. The integrated payments
solution with Novatti, which holds a 19.9% stake in the Company, is also expected to create additional revenue
opportunities for the Business Group.
The Legal division recorded H1 subscription revenues of $4.4m (up 5% on the PcP) and further established
its footprint in the US market, where its customer base includes five of the world’s largest law firms.
Management commentary:
Reckon Group CEO, Mr Sam Allert said: “The half-year report is reflective of strong execution across the
Company’s product suite. Operational highlights for first half 2022 were led by the $100m all-cash sale of the
Accountants Group division, along with consistently strong results from the Group’s continuous operations.
With an established market footprint for our Small Business payroll solutions and Practice Management
platform for legal services, Reckon has built a platform for sustainable growth underpinned by a strong balance
street and subscription-based revenue model.”
Segment performance (continuing operations):
Business Group
• H1 revenues of $21.9m (up 3% on PcP),
• Comprising 91% subscription revenue, with over 400,000 employees now paid via Reckon software
• EBITDA increased to $12.3m, an 6% increase over PcP
• Cloud revenue up by 9% on PCP, representing 52% of the divisions HY revenue
• Continued growth across our cloud and mobile payroll solutions, with integration of Novatti payments
solution expected to support H2 CY2022 sales growth
Practice Management – Legal Group
• H1 subscription revenues of $4.4m, up 5% from PcP
• Continued investment in cloud-based software services and sales capability
• Opportunity to introduce cloud practice management suite for law firms still largely using desktop software
• Reckon retains 70% of division with incentives for US management to increase equity through revenue
milestones
• US$5m committed to fund growth via combination of cash and loans

DYOR

i hold RKN