30 June 2021 Annual Report

Revenue $16,113M (Up 29.7%) Operating profit $629K (2020 1,581K) Profit the period $772K, (2020 1,359K) Cash at bank $2,806K (2020 $3,169K) Shareholders funds $13,793K (2020 $13,769k) Review of operations and outlook Enterprise Division The Enterprise Division was formed by the complete merger of the operations of Kilimanjaro Consulting in Australia and Enprise Solutions in New Zealand in January 2020. Strong improvements in productivity and economies of scale have followed and is reflected in the profitability of the Enterprise Division. We continue to leverage our position as MYOB's largest partner in the Enterprise space, with an overall goal to maintain our position as the "Partner of Choice for MYOB Enterprise Solutions in the Australian and New Zealand markets" To further leverage off our strengths and control our costs, the Enterprise Division is rapidly moving towards operating as "One Company - One Team - One Brand". The Enprise brand will be reserved for the listed entity Enprise Group Limited (ENS). This will facilitate clearer positioning of the Group as a high-tech software and services investment company. The "Enprise Solutions" brand has already been phased out in Australia and will be replaced by the Kilimanjaro brand in New Zealand over the coming months. The Enterprise Division specialises in the implementation, training, support, integration, and further development of MYOB ERP solutions for larger, more complex companies. Our portfolio has expanded from MYOB Exo to include MYOB Advanced and MYOB Advanced People and now includes a suite of integrated third-party products. The accelerating trend for organisations to use technology to improve their efficiency, and a rapidly growing base of SaaS users in different market verticals, gives us the opportunity to maximise the lifetime value of our large and loyal client base, and to attract new clients. Our offering is particularly attractive to organisations that aspire to a unified cloud-based business and people management solution. Our "Connected Services" approach enables existing clients to leverage off the power of "Best of Breed" SaaS solutions. This also creates an easy path to the cloud for our Exo clients, if and when they want it. Our ExoHosted solution facilitates this, moving on-premise servers to the cloud. The development of new integrations is always on our radar. Our newest self-developed tool, Synkit, facilitates integration between MYOB Exo and several 3rd Party SaaS services, including HubSpot, SalesForce, Smart Freight, Magento, and more. The MYOB / Acumatica (foundation of MYOB Advanced) connection is strong, with MYOB represented on the Acumatica Board. The robust and flexible General Ledger capabilities of MYOB Advanced, together with configurable workflows, make this the most powerful mid-market ERP system in its class. MYOB is now the only SaaS vendor in Australia and New Zealand with a fully integrated ERP / Payroll / Workforce Management solution. MYOB Changes MYOB, under KKR ownership, has undergone major changes in both company structure and product focus. The Enterprise Division is a strategic partner of MYOB and continues to work together with them to support existing products, new product development, and marketing. MYOB have changed their strategy in the Enterprise space from a purely channel partner model, to a combination of direct and channel. This is causing some disruption, as MYOB announced the acquisition of two of their Channel partners. The direct strategy is primarily aimed at defined segments, and some specialised verticals. An engagement desk has been put in place by MYOB to ensure fair competition and non-solicitation of our clients or employees. MYOB has reiterated the importance of partners in helping to achieve their mid-market growth ambitions and will continue to invest in building their capability. The partner channel remains a core pillar of their Go-to-Market strategy. Our Enterprise Division services the top end of the MYOB target market, which is currently a segment that MYOB does not service via their direct channel. Our investment in developing capabilities to service this market positions us very well to remain a valuable channel partner for MYOB. The current Strategic Plan of the Enterprise Division is designed to achieve a Compound Annual Growth rate of 15%. The Enterprise Division showed a revenue increase of 24% above the previous 15-month period. EBITDA was effectively on budget, despite the COVID-19 impacts. This meant the division made a significant contribution (Revenue $15.239m (2020 $12.251m)) In a SaaS world, success is measured by recurring revenue. A large proportion of the Enterprise Division revenue is recurring or contracted. Of the $15.239m revenue, $3.321m was recurring and $2.645m was contracted, total recurring and contracted revenue was $5.966m. Our #ClientFirst initiatives are aimed at customer satisfaction, which will preserve and expand on the contracted and recurring revenue. The Enterprise Division employs over 100 highly skilled people across Australia and New Zealand. We have the largest team in the MYOB channel and are continuing to grow and incrementally improve. We recognise that our people are our greatest asset, and we are committed to being in the top quartile of employers, based not only on remuneration but also on a strong culture and employee engagement. The skills built up in our teams over the last 21 years are critical to our success. Government subsidies received with thanks during the COVID-19 pandemic enabled us to retain these skills, which may otherwise have been lost. Our quick pivot to embrace remote working, acceleration of our on-line learning initiatives, and encouraging and assisting our existing clients to use technology to survive, will ensure not only our own survival but enable us to fulfil our obligation to support economic growth. Despite the prevailing uncertainty caused by COVID-19, the adoption of technology is seen by most companies as essential to survival and growth. This positions us well for the next year. Our recurring and contracted revenue provide a stabilising factor. Focus for the next year The year ahead will see us continue with our current strategic directions, with a focus on: 1. Adapting to MYOB's entry into the market with a direct channel. 2. Implementing the recommendations of our large-scale internal review of processes and systems. 3. Productivity improvements. 4. Cost control. 5. Better utilisation of resources across the Enterprise Division. 6. Continued recruiting of high-level skilled resources. iSell "Annual recurring revenue (ARR) has increased to $0.8 million. Enprise currently owns 71% of iSell. Focus over the last 18 months has moved from transitioning legacy customers, to acquiring new customers. Australia and New Zealand remain an active market however the last year saw ITQuoter establish a presence in the UK market, South Africa, Ireland, Netherlands, Denmark and more recently, the USA. A UK presence was established in March 2021, which has seen the number of UK and Europe sites grow to over 53 customers, with reseller partners established. With over 20,000 MSP's, this market offers a strong opportunity for ITQuoter to build on this beach-head and deliver continued growth. A decision was made to undertake a controlled and careful market entrance into the USA in May 2021. A low-key presence has been established including a local sales agent, an office and we are now beginning to acquire customers in this market. With over 100,000 potential customers it offers considerable opportunity for growth however will be undertaken with caution." Focus for the next year ITQuoter is looking to continue to focus on driving ARR by acquiring new customers in its key markets, in particular Australia, UK and the new USA market. Our plan includes doubling our customer base as we take advantage of the new product releases due at the end of this year. We will do this by focusing on ensuring our cloud product continues to develop, with the addition of new e-Commerce and Document Builder products later this calendar year. This will complete the core modules and enable us to focus heavily on ensuring the robustness of our software delivers an outstanding experience to our customers. The UK and USA markets are important for us to achieve the desired growth; lifting our monthly acquisition numbers. Capitalising on the beach-head we have secured in the UK via strengthening our sales and marketing is critical. Establishing a beach-head in the USA is also critical to help deliver the volumes required. A focus on creating strong reseller relationships in the USA is underway to augment our direct sales capability. Datagate Enprise Group's associate, Datagate Innovation Ltd (Datagate) grew its annual recurring revenue (ARR) to over $1.6 million, an increase of 47%. Datagate has more than doubled its ARR in the USA over the last year to 30 June 2021. Datagate is in high-growth mode and is keeping its focus on growing revenue and market share as aggressively as possible. Market demand for Datagate is strong, its core clients are suppliers of advanced unified communications systems and remote working solutions. Vadacom Vadacom Holdings Ltd (Vadacom) continued to grow ARR to $2.56 million (up 2.2%) year-on-year. Contracted revenue was $0.52 million at 31 March 2021. Vadacom has recently released its new cloud PBX phone system 'Next Voice'. As a result of an independent valuation of Vadacom, Enprise Group realised a $0.02 million increase in the carrying value of this investment in the period. Vadacom had a share buy-back during the period, this together with the change in valuation saw a reduction in carrying value to $0.69 million. End CA:00379952 For:ENS Type:ANNREP Time:2021-09-28 14:54:48