Under the plan, Reckon's document management business will become a separate company, listed on the London Stock Exchange's AIM market.
After the demerger, Reckon will retain the business and practice management divisions, and their Reckon Accounts, Reckon One, Reckon Loans, Reckon APS, nQueue and Reckon Docs products. This accounts for around 85% of current group turnover.
The new company — provisionally called Document Management Newco — will concentrate on document management and the existing Virtual Cabinet and SmartVault products.
The company said the "new" Reckon would benefit from improved cash flow by not having to support the document management division, allowing it to pursue further growth in its business, while Document Management Newco would be freed to pursue an independent strategy.
“The decision to demerge our business is the best course of action to unlock value from our increasingly diverse and complex range of operations. This represents a natural progression for Reckon as our business continues to undergo robust growth,” said Reckon chief executive Clive Rabie.
“At its core, it will allow us to refocus and tailor independent expansion strategies for each business to better pursue their strategic priorities at their own pace and discretion.”
The split "will allow us to boost our document management business’s access to overseas capital markets, where a bulk of the potential clientele base stems from, to ultimately accelerate development opportunities,” he added.
Approximately 85% of Reckon's document management revenue currently comes from overseas.
The proposal means Reckon shareholders (other than those in certain overseas jurisdictions) will receive pro rata Document Management Newco shares for Reckon shares held.
Shareholders may also be given an opportunity to participate in a capital raising prior to the listing on AIM. "The Reckon board has indicated their full confidence and commitment to this proposal by declaring their intention to participate in the capital raising," the company said.
The plan is to complete the demerger and IPO before the third quarter of the current financial year, i.e. by the end of calendar 2017. However, it is conditional and subject to regulatory approval. Reckon said the ASX had indicated that shareholder approval was not required.