APS joins forces with Reckon

Notification to the ASX

22 December 2003

Reckon Limited (RKN)

RECKON ACQUIRES ADVANCED PROFESSIONAL SOLUTIONS

Reckon Limited is pleased to announce the acquisition of the Australian, New Zealand and UK operations of Advanced Professional Solutions (“APS”) for A$10m effective from 1 January 2004.

Established in 1991, APS designs, develops and licenses state-of-the-art practice management, tax and professional client accounting software products for professional accounting firms. APS supplies over 50% of Australia’s top 100 accounting practices, 60% of New Zealand’s top 30 firms and over 10% of the UK’s top 100 firms.

The Advance® suite of products now has over 20,000 users in accounting practices and professional services firms internationally. These include large, high profile firms such as KPMG, Deloitte & Touche, Pannell Kerr Forster, BDO, WHK Group , William Buck, Mazars UK and Pitcher Partners.


The acquisition will be funded using existing Reckon cash reserves and the issue of approximately 8.5m ordinary shares payable as follows:

• A$8 million on completion (expected by March 2004) subject to completion and adjustments; and
• A$2 million held in escrow for 18 months subject to attainment of performance goals.

Following completion, Reckon’s cash reserves are expected to be in excess of $10m with approximately 137.6m shares on issue.

Reckon’s CEO, Greg Wilkinson, said that “APS is a quality business with state of the art technology and a driven management team providing a strong strategic and cultural fit with Reckon’s existing operations. The APS team has made significant inroads into the top tier accounting firms in Australia and New Zealand.”

With a forecast EBITDA of $2.1m for the year ended 30 June 2004, the acquisition of APS is expected to be EPS positive immediately and expected to provide other significant benefits to Reckon including:

• A high quality practice management software product that will vertically integrate with Reckon’s world leading Quicken product.
• A strong management team led by Brian Armstrong, Managing Director.
• A high level of recurring revenues through maintenance arrangements.
• Enhanced operating scale and product range.
• An opportunity to achieve greater leverage from Reckon’s existing market strategy.
• A client base reflecting a high proportion of the top tier accounting firms in Australia and New Zealand with significant growth prospects in Australia and the UK.

Following the acquisition, APS will be operated as a separate division of Reckon with all of the key management personnel agreeing to remain with the business. “We are delighted to have secured the services of the APS team who have been instrumental in both the development of the technology and the establishment of the business around a commitment to customer service,” Mr Wilkinson said.