30 June 2022 Annual Report

ANNREP

Fri, Oct 07 2022 08:30 am

Revenue $18.744M (Up 16.3%)
Operating loss $1,782K (2021 Profit $629K)
Loss for the period $2,193K (2021 Profit $772K)
Cash at bank $1,216K (2021 $2,806K)
Shareholders Funds $11,354K (2021 $13,793K)

Review of operations and outlook

Kilimanjaro Consulting

Kilimanjaro Consulting exceeded the revenue growth expectations, achieving 16% for the financial year. Growth in contracted and recurring revenue was 20.5%. Significant challenges with MYOB's entry directly into our market and more businesses competing for scare resources have put pressure on our margins. Management is implementing plans to restore margins including a strategic review of operations and suppliers.

Recurring Revenue $3.897M (2021 $3.321M)
Contracted Revenue $3.325M (2021 $2.645M)

The Covid-induced rapid change in demand for skilled resources required an immediate response, in order to retain and further grow the exceptional skills developed over the past 20 years. As a professional services consultancy, our people are our greatest asset, and therefore also our greatest cost. We aspire to being an “Employer of Choice”, which includes positioning our remuneration in the top quartile. The time lag between increasing remuneration and passing these increased costs on to clients under contract in a tough trading environment, has significantly hurt the bottom line. The pricing model has now been revised and the coming months will see a continued recovery of margins in the consulting practice. Kilimanjaro has been able to maintain productivity levels with a hybrid model of working from home and working from the office. The team has now grown to over 120 people, under our “One Company – One Team – One Brand” banner.

A restructuring of the support teams, and a focus on our #ClientFirst initiative has seen customer satisfaction ratings improve significantly, to be best practice. This enables us to align our pricing with our positioning in the market: A premium provider, with high perceived value. There is a continuing trend to move to cloud-based software. Our experience integrating Exo on-premise software with cloud solutions gives our Exo clients a pathway to transition to the cloud, as and when they choose. Our Exo Hosted option supports those who wish to remain on Exo, but move to the cloud. For those looking for a cloud-native environment, the Acumatica / MYOB Advanced product is certainly best of breed.

Future Direction

Kilimanjaro's large and stable core of loyal existing clients look to us, as their trusted advisor, for efficiency improvements through technology. Our access to cutting-edge technology through our partnership with MYOB and other connected service providers, allows us to fulfil this role successfully. Operating as One Company – One Team- One Brand across Australia and New Zealand is realising synergies and improving our own efficiency. This has required a large investment over the past year, and 12 internal projects have been completed to provide a platform for improved profitability and continued growth. The future strategic direction will be largely dictated by the final resolution we reach with our dispute with MYOB, as referenced in the announcement to the NZX on 1st August 2022 and Note 26. Pending a satisfactory resolution of the MYOB dispute, we intend to remain the best Exo partner in the Channel, and at the same time rapidly build the MYOB Advanced side of the business. Diversification is being considered as a strategy.

iSell

Annual recurring revenue (ARR) has increased to $1.04 million (up 36%). Total revenue $1.09 million (up 26%). Enprise currently owns 75% of iSell. During the year iSell achieved its first case study in the USA this year and has just received formal Avalara (USA Sales Tax) certification, these are significant milestones for ramping up entry into the USA market.

The current focus is on simplifying the on boarding process to empower new customers to perform more self service. On line help has been released during the year with in excess of 200 supporting videos. Integrations with up and coming PSA tools, Halo and Ingram Cloud Blue have been developed and further functionality will be added during the next financial year.

The integration with Datagate has been completed which will enable further synergies between the companies.

Datagate

Enprise Group’s associate, Datagate Innovation Ltd (Datagate) grew its annual recurring revenue (ARR) to over $2.4 million, an increase of 49%. Growth in the USA was 65%. Datagate continues to be in high growth mode and is keeping its focus on growing revenue and market share. Enprise participated in the convertible note round in December 2021, Enprise took up $0.5 million of the total issue of $1.55 million.

Vadacom

Vadacom Holdings Ltd (Vadacom)’s ARR and contracted revenue was $2.56 million for the year ended 31 March 2022. The recently released new cloud PBX phone system ‘Next Voice’ functionality continues to expand to support new and existing customers directly and through resellers. As a result of an draft independent valuation of Vadacom, Enprise Group realised a $0.06 million decrease in the carrying value of this investment in the period.