Tax Systems posts wider loss for first half

Revenues rose to £7.02m in comparison to £5.75m for all of 2016, with 92% of sales coming from recurring software licences and the remainder from its professional services division.

Margin generated from recurring revenue covered 197% of operating costs, alongside an improvement in gross margins to 91%.

Despite that, £1.0m of exceptional costs and a further £3.1m of amortisation and depreciation expenses saw the company fall into a loss before tax of -£1.53m versus -£0.48m in the year earlier period.

Year-on-year, new orders grew 34% after the corporate tax software company won 36 new contracts in the half.

A 96% retention rate also helped the firm to an adjusted EBITDA of £3.4m for the period, versus -£0.48m in the year earlier period.

The acquisition of Osmo Data Technology on 3 April for £3.2m in shares didn't stop Tax Systems from cutting its net debt by 3% from its level as of 31 December, down to £23.6m from £24.4m.

Cash and equivalents at 30 June were little changed at £4.2m, down from £4.62m one year ago.

Gavin Lyons, chief executive of Tax Systems, said: "With these results, we are able to provide demonstrable evidence that our activities are generating the desired outcomes and this coupled with the market opportunity, leaves us excited about the Group's continuous growth prospects."

As of 0925 BST, shares had dropped 2.25% to 78.20p.