Tax Systems trades well after mid-year acquisition

Corporation tax software and services supplier Tax Systems announced its audited results for the year to 31 December 2016 on Wednesday - the year in which it acquired Tax Computer Systems on 26 July 2016 for an enterprise value of £73m.

The AIM-traded firm confirmed £75m of new capital was raised during the year to fund the acquisition, transaction costs, working capital and future growth.

It said that consisted of an oversubscribed placing of new ordinary shares raising £45m, new bank facilities of £20m, and £10m unsecured loan notes issued to the Business Growth Fund.

Revenue for the year of £5.8m, representing the trading of Tax Computer Systems for the five months from date of acquisition to 31 December, rising from nil in 2015.

EBITDA for the year was £2.7m, swinging from an EBITDA loss of £0.2m year-on-year, while cash stood at £4.2m and net debt was £24.4m as at 31 December.

Tax Systems implemented a new board and senior management team during the year, which it said had a “strong track record of delivery”.

Significant investments were made into leadership, software engineering and development teams and methodology to maintain and enhance the software portfolio, the board added.

It also confirmed the post year-end strategic acquisition of OSMO Data Technology, a provider of automated data extraction software that connected to 295 versions of accounting packages, on 3 April for £3.2m in shares.

“I'm pleased to present Tax Systems' first set of results as a leading supplier of corporation tax software and services, which represent a period of significant change for the company,” said CEO Gavin Lyons.

“In July 2016 we completed the acquisition of Tax Computer Systems, a business which represents a strong and stable platform from which to build a tax software and services business of scale.”

Since then, Lyons said the firm had invested significantly into new senior management and software development and go to market teams.

“We remain confident in the ability of the business to deliver shareholder value over the coming years.

“I look forward to 2017 and beyond with excitement.”