Elliot Cooper (Enprise CEO)
NZX-listed Enprise has recorded an $11.8 million loss for 2023, mostly due to a $6.7 million goodwill write-off due to its dispute with MYOB.
Enprise reported unaudited revenue of $20.7 million for the year to 30 June, up 10.7 per cent from $18.7 million in 2022.
However, the net result was a loss of $11.8 million, down $9.7 million from a $2.1 million loss in 2022 due to several goodwill write-offs. The largest of which, $6.7 million, related to subsidiary Kilimanjaro Consulting's dispute with accounting software provider MYOB, which has entered the market directly.
Kilimanjaro had recurring revenue of $3.7 million (down 6 per cent) and contracted revenue of $4.2 million (up 25 per cent) out of a total revenue of $19.4 million, which was up 10 per cent.
The business was successful in winning an injunction on 4 August allowing its Australian business to withhold the margin on MYOB Exo annual license fees meaning MYOB cannot take action against the company for breach of its business partner agreement.
After that win, Enprise CEO Elliot Cooper told shareholders Kilimanjaro had no need to change its business model or take any steps to try and absorb or counter MYOB's reduction in the MYOB Exo margin.
However, Kilimanjaro considered it prudent to diversify and its management team was actively investigating options, Enprise told shareholders today.
"There are significant changes in the markets in which Kilimanjaro operate. The direct entry of MYOB has de-stabilised the partner channel, and further consolidation can be expected."
Enprise described the write off of goodwill in Kilimanjaro as being the worst-case scenario of an independent valuation due to the ongoing dispute causing disruption to management focus and the operation of the business.
"Whilst low business confidence and inflationary expectations are creating headwinds, there remains cause for optimism," the company said. "Kilimanjaro operates in a number of diverse markets that are resilient to recession.
"This, combined with our strong investment in people, marketing, technical excellence, internal platforms/system and the trend towards cloud-based software positions the business well for future growth should we be able to resolve the current dispute."
Enprise Group is invested in five businesses – the wholly owned Kilimanjaro Consulting Pty and Kilimanjaro Consulting NZ, subsidiary iSell, joint venture Datagate Innovation, and also has a significant holding in PBX system developer Vadacom.
Enprise also wrote off $1 million in its 75 per cent-owned iSell division at the end of the first half year due to the slower than previously forecast revenue growth, slower than anticipated delivery of key features and the change in discount rates.
A change in accounting policy to increase the amortisation of the company's IT Quoter software also impacted the bottom line.
Enprise said a breach of its BNZ banking covenants would continue and the board would seek a further waiver.
Enprise Group’s associate Datagate Innovation grew its annual recurring revenue for the year to over $3.3 million, an increase of 35 per cent.
"Datagate continues to be in high growth mode and is keeping its focus on growing revenue and market share," Enprise reported.
Datagate expected to reach break-even in the last quarter of this calendar year.
Enprise now holds just shy of a third of Datagate.
The company's Vadacom business recently released new cloud PBX phone system dubbed Next Voice. It continued to be profitable, Enprise said, "through careful cost control in a difficult market" and repaid 56 per cent of outstanding shareholder loans during the year.
