TIDMTAX
RNS Number : 4478B
Tax Systems PLC
04 April 2017
Tax Systems Plc
("Tax Systems" or the "Company")
Acquisition of OSMO Data Technology Limited
Board Changes
Tax Systems, a leading supplier of corporation tax software and
services is pleased to announce that it has acquired the entire
issued share capital of OSMO Data Technology Limited ("OSMO") in
return for the issue of 4,701,492 new ordinary shares of 1 penny
each in the capital of the Company ("Ordinary Shares") (the
"Acquisition"), which, at the mid closing price as at 3 April 2017,
represents a value of GBP3.2 million. In addition the Company
announces certain board changes.
Highlights
Acquisition
-- OSMO is a provider of automated data extraction software that
connects to 295 versions of accounting software packages
-- Strategic software acquisition enabling organisations to
leverage data and automate parts of the end to end tax process
which in turn will help them comply with HMRC's Making Tax Digital
programme
-- Acquisition extends Tax Systems' solutions portfolio to
further penetrate the Company's existing customer base of over
1,050 clients
-- Using OSMO's technology, finance and tax teams can avoid the
requirement for manual data entry from accounting systems leading
to increased efficiency and cost savings
-- OSMO's technology is sold on a software as a service basis
(SaaS); for the year ended 31 December 2016 OSMO generated revenue
of GBP1.2 million, of which over 75% is recurring, and Adjusted
EBITDA* of GBP0.1 million
Board Changes
-- Gavin Lyons, formerly Executive Chairman, appointed Chief
Executive Officer to focus on the Company's development
-- Clive Carver, formerly Non-Executive Director, appointed Non-Executive Chairman
-- Kevin Goggin appointed Chief Financial Officer, with Grahame
Benson, Finance Director and COO, stepping down with immediate
effect
-- Paul Gibson appointed Non-Executive Director
* Adjusted for capitalisation of research and development costs
in line with Tax Systems' policy
Gavin Lyons, CEO of Tax Systems, commented:
"The acquisition of OSMO and the strengthening of the Board are
key steps in the development of the Company.
With regards to the Acquisition, tax departments are under
increasing pressure to manage tax risk, leverage tax data and
automate as much of the end to end tax reporting and compliance
process as possible. OSMO's software is an excellent solution to
help ease the manual workload associated with gathering data from
accounting systems; this is a critical task which consumes a
substantial amount of time and cost. Tax departments will be able
to use the OSMO solution to automate data collection, free up
expert tax resources and help them prepare for HMRC's 'Making Tax
Digital' programme.
In addition, I am excited to accept the role of CEO having been
Executive Chairman since the re-admission to AIM in July 2016. I am
also very pleased to welcome both Kevin and Paul to the board, both
of whom have strong backgrounds in the technology sector, and wish
Grahame all the best for his future endeavours.
Further details of the Acquisition and board changes are set out
below.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Tax Systems plc
Gavin Lyons, Chief Executive Officer +44 20 3845 3552
MXC Capital Markets LLP (Financial Adviser)
Marc Young/Charlotte Stranner +44 20 7965 8149
finnCap Limited (Nomad and Broker)
Jonny Franklin-Adams/James Thompson +44 20 7220 0500
Further Details on OSMO
OSMO is a UK based business providing software solutions which
enable customers to extract accounting data from various
off-the-shelf platforms and present the data in a consistent and
user friendly format. Using OSMO's technology, finance and tax
teams can avoid the requirement for manual inputs and re-keying by
automating the collection of data in their accounting systems. This
automation of data collection is becoming increasingly important
with the advancing digitisation of tax administration, with HMRC
currently investing substantially in additional digital
administrative methods, under the title 'Making Tax Digital'. The
headline goal is to eliminate the annual tax return as it currently
exists by 2020, replacing it with a quarterly reporting regime in
which companies would report summary totals to HMRC. This could
significantly add to the workload of finance and tax teams.
Automated data extraction could ease this burden, resulting in
increased efficiency and cost savings, making OSMO's products ideal
add-ons to the existing software and services that Tax Systems
already provides in order to increase spend and penetration per
customer. Manual re-keying of data absorbs significant time and
cost within Tax Systems' customers as well as increasing the risk
of human error and therefore the Board believes that an automated
data extraction tool could offer a good return on investment for
its customers.
In the year to 31 December 2016, OSMO generated revenue of
GBP1.2 million, of which over 75% is recurring, Adjusted EBITDA* of
GBP0.1 million, and a loss after tax of GBP0.05 million for the
year ended 31 December 2016. Net assets as at 31 December 2016 were
GBP0.2 million. Key customers include Lloyds Bank plc and Close
Invoice Finance Limited.
* Adjusted for capitalisation of research and development costs
in line with Tax Systems' policy
Terms of the Acquisition
The consideration for the entire issued share capital of OSMO is
4,701,492 Ordinary Shares (the "Consideration Shares") which, at
the mid closing price as at 3 April 2017, represents a value of
GBP3.2 million. 85 per cent. of the Consideration Shares are
subject to a 12 month lock-in deed whereby the holders have
undertaken not to sell, charge or grant any interests over any
Consideration Shares held by them and a further 12 month orderly
market agreement whereby the holders have undertaken to make any
disposal through the Company's brokers. The Consideration Shares
represent 6.2 per cent. of the enlarged issued share capital of the
Company.
Issue of Equity/ Total Voting Rights
In satisfaction of the consideration for the Acquisition, the
Consideration Shares have been allotted to the vendors of OSMO.
Application has been made for the Consideration Shares to be
admitted to trading on AIM ("Admission"). Admission is expected to
occur on 7 April 2017. Following Admission, the total number of
Ordinary Shares in issue will be 80,703,381. There are no Ordinary
Shares held in treasury and so the total number of voting rights in
the Company is 80,703,381.
The above figure of 80,703,381 may be used by shareholders as
the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to
their interest in, the Company under the FCA's Disclosure and
Transparency Rules.
Board Changes
The Company announces that Gavin Lyons has been appointed as
Chief Executive Officer with immediate effect. Gavin was previously
Executive Chairman of Tax Systems and a partner of MXC Capital
Limited ("MXC"), which currently holds 20% of the issued share
capital of the Company. Gavin has stepped away from his role as an
operating partner at MXC to concentrate his efforts on Tax Systems
and Adept4 plc where he remains Executive Chairman. Clive Carver,
previously Non-Executive Director, has been appointed Non-Executive
Chairman.
The Company also announces that Grahame Benson, Finance Director
and COO, has stepped down from the board with immediate effect to
pursue other interests. Kevin Goggin has been appointed Chief
Financial Officer ("CFO"). Kevin is a chartered accountant by
profession with significant international experience in finance and
operations, having previously held both CFO and Managing Director
positions. Kevin has worked in both listed and private companies,
most recently in software and technology and, prior to this, in
media storage and logistics. Kevin has completed a number of
corporate transactions, including two business sales to private
equity. Before joining Tax Systems, Kevin worked with Monitise plc
and was CFO at Bonded Services Group.
In addition, Paul Gibson has been appointed to the Board as
Non-Executive Director. Paul is a partner at MXC and has had a
highly successful career in the TMT sector, most recently as Chief
Operating Officer of Advanced Computer Software Plc ("ACS") prior
to its acquisition by Vista Equity Partners for GBP725 million. In
his five years at ACS Paul oversaw a period of exceptional value
creation and transformation, with responsibility for driving both
organic and acquisitive growth. Prior to ACS, Paul held a number of
senior roles in both financial and operational capacities, latterly
as Finance Director of Redac Limited, the Alchemy backed turnaround
that was subsequently sold to ACS for GBP100 million. The
foundations of Paul's career were built at Unigate, GrandMet (now
Diageo) and Oracle. Paul will be the sole representative of MXC on
the Board.
Schedule Two Paragraph (g) Disclosures
The following information is disclosed pursuant to Rule 17 and
Schedule Two Paragraph (g) of the AIM Rules for Companies:
Kevin Paul Goggin, aged 54, does not currently hold any ordinary
shares in the Company.
Below is a list of Kevin's current directorships and
partnerships and those held in the past five years:
Current Directorships/Partnerships:
Goggin Ltd
Past directorships:
Jigsaw Pieces Limited
Bonded Services Group Limited
Global Logistics Worldwide Limited
Bonded Services Acquisition Ltd
Bonded Services Limited
International Distribution Services Ltd
Novo Overseas Limited
F.T.S. (Great Britain) Limited
Jigsaw Freight Limited
F.T.S. (Road Transport) Limited
Novo Group Limited
Fleet Freight Limited
Filmbond Video Services Limited
FTS Bonded Limited
F.T.S. (Freight Forwarders) Limited
Bonded Services International Limited
Film Media Services Limited
Novo Holdings Limited
Paul David Gibson, aged 52, holds or has held the following
directorships or partnerships in the past five years:
Current Directorships/Partnerships:
Enable Business Solutions Limited
Waverton Property LLP
Past directorships:
Advanced Business and Healthcare Solutions Pvt Limited
Advanced Business Software and Solutions Pte Limited
Cedar Group Inc
Transoft Inc
V1 Document Management Inc
Cobaltside Limited
Opsis Limited
Exchequer Software Limited
Teamflow Limited
Care Business Solutions Limited
Consensus Information Technology Limited
Integra Computer Systems Limited
AIM Professional Systems Limited
Formation Software Limited
LFM Partnership Solutions Limited
Advanced Accounts Limited
Pinnacle Computer Systems Limited
Systems Team Limited
AIM Holdings Limited
Computer Software Limited
Springstone Software Services Limited
Transoft Limited
JBS Computer Services Limited
Teamflo Limited
Minerva Computer Systems Limited
Management Support Systems Limited
Caresys Software Limited
Staffplan Enterprise Limited
Open Logistix Systems Limited
Webgenerics Limited
Covemead Limited
Adastra Software Limited
Integrated Support Systems Limited
Cerrus Limited
Open Accounts Limited
Advanced Business Software and Solutions Limited
Advanced Communication Software and Solutions Limited
Konnekt IT Solutions Limited
Exchequer365 Mobile Solutions Limited
Goldcrest Solutions Limited
Compass Computer Consultants Limited
ConsultGRP Limited
ConsultCRM Limited
Lawwwdiary Limited
Plain Healthcare Limited
Laserform International Limited
Videss Limited
Advanced Ticketing Limited
AIM Group Holdings Limited
Advanced 365 Limited
Fabric Technologies Limited
Advanced Business Solutions CRM Limited
ADV Management Services Limited
Business Systems Group Holdings Limited
Staffplan Limited
Advanced Health and Care Limited
Strand Technology Limited
Healthy Software Limited
Belmin Group Limited
V1 Limited
A.S.R. Computers Limited
REDAC Limited
Prolog Systems Limited
Transoft Group Limited
Penfold Heath Media Limited
Meridian Law Limited
Advanced Field Service Solutions Limited
Advanced Enterprise Software Limited
Computer Software Holdings Limited
Computer Software Group Limited
CSG Shareholder Debtco Limited
CSG Midco Limited
CSG Equityco Limited
Advanced Chorus Application Software Limited
Advanced Sharpowl Software Limited
5 Star Computer Systems Limited
Charity Software Limited
G B Systems Limited
Advanced Legal Solutions Limited
Opsis Practice Management Solutions Limited
Applied Computer Expertise Limited
CSG Bidco Limited
Alphalaw Limited
Advanced Computer Software Group Limited
Paul Gibson holds no Ordinary Shares, however, under Tax
Systems' Long Term Incentive Plan, Paul is entitled to 2% of the
growth in value of the market capitalisation of the Company above
the market capitalisation of the Company at the time of its placing
and re-admission to trading on AIM in July 2016 ("Re-admission"),
as adjusted for future equity issuances and taking into account
dividends and returns of capital. This is subject to meeting a
share price hurdle rate, which is set as a premium of 40% to the
placing price of 67 pence at the time of the Company's
Re-admission.
Save as disclosed above there are no additional disclosures to
be made in accordance with Rule 17 or Schedule Two paragraph (g) of
the AIM rules regarding Kevin Goggin and Paul Gibson.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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