Half-year Report

Tax Systems plc (formerly Eco City Vehicles Plc)

("Tax Systems" or the "Company")

Unaudited results for the six months ended 30 June 2016

Tax Systems announces its results for the six months ended 30 June 2016. The results for the period are not representative of the Company going forward as the Company successfully concluded the acquisition of Tax Computer Systems Limited ("TCSL") after the period end (the "Acquisition").

Background

From 1 January to 30 June 2016, the period under review, the Company was an Investing Company as classified under the AIM Rules.

As an Investing Company, the Company's strategy was to invest and/or acquire companies and/or assets in the telecommunications, media and technology sectors, where the board believed there are opportunities for growth which, if achieved, would be earnings enhancing for shareholders.

The Company's principal activity during the period under review was to identify, negotiate and conduct detailed technical, commercial, financial and legal due diligence on TCSL, a leading supplier of corporation tax software to the large corporate sector and the accounting profession in the UK and Ireland.

The majority of the costs incurred in connection with the Acquisition were incurred on a contingent basis and under accounting rules fall to be recognised outside the period under review. Of the costs incurred, £414,000 were not contingent on the completion of the Acquisition and have accordingly been recognised in these financial statements.

Post period end, on 25 July 2016, the Company's shareholders approved, inter alia, the acquisition of the entire issued share capital of TCSL and the change of the Company's name to Tax Systems plc.

Cash balances and funding

Cash balances at 30 June 2016 were £4.6m (2015: £0.1m), following a £5 million share subscription which raised a total of £5 million in December 2015.

Outlook

The acquisition of TCSL completed on 26 July 2016. While it has only been a short time since taking control, the board believes the prospects for the business are every bit as strong as considered at the time of the Acquisition.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Enquiries:

Tax Systems plc

Gavin Lyons, Executive Chairman +44 20 3845 3552

MXC Capital Markets LLP (Financial Adviser)

Charlotte Stranner/ Steven Zhang +44 20 7965 8149

finnCap Limited (Nomad and Broker)

Jonny Franklin-Adams/James Thompson +44 20 7220 0500  

Statement of Comprehensive Income

For the period ended 30 June 2016

All amounts relate to continuing activities.

Statement of financial position

As at 30 June 2016

Statement of changes in equity

As at 30 June 2016

Statement of cash flows

For the period ended 30 June 2016

1. General Information

Tax Systems PLC is a company incorporated in the United Kingdom and quoted on AIM, the market of that name operated by the London Stock Exchange. The address of the registered office is 5th Floor, One New Change, London, EC4M 9AF.

This unaudited interim report is presented in British Pounds Sterling, the currency of the primary economic environment in which the Company operates.

The unaudited interim financial information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial information for the year ended 31 December 2015 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The Independent Auditors' Report on those accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

2. Basis of preparation

The unaudited interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union.

The same accounting policies, presentation and method of computation are followed in this financial information as were applied in the Company's latest annual audited financial statements and using accounting policies that are expected to be applied for the financial year ending 31 December 2016. Practice is continuing to evolve on the application and interpretations of IFRS. Further standards may be issued by the International Accounting Standards (IASB) and standards currently in issue and endorsed by the EU may be subject to interpretations issued by IFRIC.

3. Non-recurring items

4. Loss per share

Following the passing of resolutions proposed at a general meeting of the Company held on 25 July 2016, a 1 for 50 share consolidation became effective. The 30 June 2016, 30 June 2015 and 31 December 2015 loss per share has been restated to illustrate the share consolidation after the reporting date. As a result of the losses incurred in each of the periods, potential ordinary shares are anti-dilutive and therefore excluded from the weighted average number of ordinary shares for the purposes of calculating diluted loss per share.

5. Share capital 

* Number of shares in issue following the 1 for 50 share consolidation - 30 June 2016 8,837,709 (31 December 2015 8,837,709).

6. Events after the reporting period 

On 1 July 2016 the Company announced the following:

· that it had agreed to acquire Tax Computer Systems Limited ("TCSL"), a leading supplier of corporation tax software to the large corporate sector and the accounting profession in the UK and Ireland for cash consideration of £73 million in addition to a cash for cash payment estimated to be £34.5 million;

· that it had conditionally raised £45 million, before associated costs, of approximately £4 million by way of a placing of 67,164,180 new ordinary shares at 67 pence per share;

· that it had arranged new debt facilities of £30 million comprising a £9 million term loan and £11 million revolving credit facility to be provided by HSBC Bank plc and £10 million unsecured loan notes issued to the Business Growth Fund plc;

· a proposed consolidation of every 50 existing ordinary shares into one new ordinary share; and

· proposed change of name to Tax Systems plc

The capital reorganisation, buy back of the deferred shares and change of name became effective on 25 July 2016 and the acquisition of TCSL, placing and debt facilities became effective on 26 July 2016.

Also on 1 July 2016 the Company announced:

· that the Company and MXC Guernsey Limited had entered into a warrant instrument whereby MXC Guernsey Limited will be issued with warrants to subscribe for 4,409,299 new ordinary shares exercisable from the third anniversary of the date of grant dependent on share price performance; and

· that the Company had established an employee share scheme, designed to assist in the recruitment, motivation and retention of staff and which, for executive directors and senior managers, carries performance conditions which align the interests of the management team with those of shareholders and that participants in the new employee share scheme will be entitled in aggregate to 6 per cent of future shareholder value generated, to be calculated by reference to the growth in the market capitalisation of the Company following readmission to AIM over a period of between 3 to 7 years as adjusted for the issue of new shares after readmission and taking into account dividends and capital returns.

Acquisition of TCSL

The acquisition of TCSL was in pursuance of the Company's stated strategy to seek an investment in the technology sector where the directors believe there are opportunities for growth. TCSL is a business that met the stated criteria and represents a strong and stable platform from which to build a UK tax automation and compliance software business of scale.

The acquisition of TCSL constituted a reverse takeover under Rule 14 of the AIM Rules for Companies.

The consideration for the acquisition of TCSL of £73 million was satisfied wholly in cash on completion, in addition to a cash for cash payment estimated to be £34.5 million.