TAX.L Regulatory News (TAX)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

12 March 2019

INCREASED RECOMMENDED CASH ACQUISITION

of

Tax Systems plc ("Tax Systems" or the "Company")

by

Stripes Bidco Limited ("Bidco")

a wholly owned subsidiary of funds managed by Bowmark Capital LLP and its affiliates

to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006

Increased Acquisition Price and Additional Irrevocable Undertaking

Introduction

On 13 February 2019, the Independent Directors of Tax Systems and the Board of Bidco announced that they had reached agreement on the terms of a recommended cash acquisition of Tax Systems by Bidco at a price of 110 pence in cash for each Tax Systems Share, to be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The Scheme Document was posted to Tax Systems Shareholders on 21 February 2019.

The Increased Acquisition Price

The Board of Bidco and the Independent Directors of Tax Systems are pleased to announce today that they have reached agreement on the terms of an increased recommended all cash offer by Bidco to acquire the entire issued and to be issued share capital of Tax Systems (the "Increased Acquisition").

Under the terms of the Increased Acquisition, Tax Systems Shareholders will be entitled to receive:

for each Tax Systems Share held 115 pence in cash (the "Increased Acquisition Price")

The Increased Acquisition values the entire issued and to be issued share capital of Tax Systems at approximately £102.3 million on a fully diluted basis. The Increased Acquisition Price represents:

· a premium of approximately 14.4 per cent. to the Closing Price of 100.5 pence on 6 February 2019, being the Business Day prior to the commencement of the Offer Period;

· a premium of approximately 25.8 per cent. to the volume weighted average price of 91.4 pence for the 12 months to 6 February 2019, being the Business Day prior to the commencement of the Offer Period; and

· a premium of approximately 71.6 per cent. to the 67 pence at which Tax Systems Shares were issued to fund the reverse takeover of Tax Computer Systems Limited in July 2016.

Irrevocable Undertakings and support for the Increased Acquisition

In addition to its previously announced irrevocable undertakings (the "Original Irrevocable Undertakings"), which remain binding with regards the Increased Acquisition, Bidco has received an irrevocable undertaking from Weiss Asset Management LP to vote (or to procure the voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Increased Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of a total of 21,037,978 Tax Systems Shares, representing, in aggregate, approximately 24.27 per cent. of the share capital of Tax Systems in issue on 11 March 2019, being the last Business Day prior to the date of this announcement (the "Additional Irrevocable Undertaking").

The Additional Irrevocable Undertaking will cease to be binding if (a) Bidco announces, with the consent of the Takeover Panel, that it does not intend to make or proceed with the Increased Acquisition; or (b) the Increased Acquisition lapses or is withdrawn in accordance with its terms.

With the Original Irrevocable Undertakings (save for that received from Gavin Lyons referred to below) and the Additional Irrevocable Undertaking, Bidco has, therefore, received irrevocable undertakings from Tax Systems Shareholders to vote (or to procure the voting) in favour of the Scheme at the Court Meeting and the Resolution to be proposed at the General Meeting (or, in the event that the Increased Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of a total of 61,432,676 Tax Systems Shares, representing, in aggregate, approximately 70.88 per cent. of the share capital of Tax Systems in issue on 11 March 2019, being the last Business Day prior to the date of this announcement.

One of the Original Irrevocable Undertakings was received from MXC Capital. In connection with the Increased Acquisition, and conditional on the sanction of the Scheme by the Court, MXC Guernsey Limited ("MXCG"), a subsidiary of MXC Capital, has given an undertaking to the Company to exercise no more than 860,755 of its Warrants over Tax Systems Shares (the "Warrant Undertaking"). The remaining 2,501,886 Warrants held by MXCG (which, if exercised, would have resulted in 2,501,886 Scheme Shares being issued) will lapse upon the sanction of the Scheme by the Court. Bidco and MXCG have separately entered into an agreement dated 12 March 2019 pursuant to which Bidco has agreed to pay £200,000 to MXCG in consideration for and conditional upon MXCG entering into and performing the Warrant Undertaking (the "Warrant Fee Agreement"). The Warrant Fee Agreement is also conditional on the sanction of the Scheme by the Court.

As MXC Capital is a substantial shareholder of the Company, it is deemed to be a related party pursuant to the AIM Rules for Companies (the "AIM Rules") and entering into the Warrant Undertaking is a related party transaction for the purposes of Rule 13 of the AIM Rules (the "Related Party Transaction"). Paul Gibson, a Non-Executive Director, is not independent for the purposes of the Related Party Transaction given that he is also a partner of MXC Advisory Ltd, a subsidiary of MXC Capital. The other Tax Systems Directors are all deemed independent for this purpose and consider, having consulted with Tax Systems' nominated adviser finnCap, that the terms of the Related Party Transaction are fair and reasonable insofar as Tax Systems Shareholders are concerned.

Bidco received an Original Irrevocable Undertaking from Gavin Lyons (the only Tax Systems Director who is interested in Tax Systems Shares) to vote (or to procure the voting) in favour of the Special Resolution to be proposed at the General Meeting (or, in the event that the Increased Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 149,254 Tax Systems Shares, being his entire beneficial holding of Tax Systems Shares, representing approximately 0.17 per cent. of the share capital of Tax Systems in issue on 11 March 2019, being the last Business Day prior to the date of this announcement.

Recommendation

The Independent Directors, who have been so advised by Oakley Advisory and finnCap as to the financial terms of the Increased Acquisition, unanimously consider the terms of the Increased Acquisition to be fair and reasonable. In providing their advice to the Independent Directors, Oakley Advisory and finnCap have taken into account the commercial assessments of the Independent Directors. Oakley Advisory and finnCap are providing independent financial advice to the Independent Directors for the purposes of Rule 3 of the Code.

Accordingly, the Independent Directors consider the terms of the Increased Acquisition to be in the best interests of Tax Systems Shareholders as a whole and unanimously recommend that Tax Systems Shareholders vote in favour of the Scheme at the Court Meeting and approve the Resolutions to be proposed at the General Meeting.

Shareholder Meetings

The Board of Bidco and Independent Directors of Tax Systems remind Tax Systems Shareholders that the Court Meeting and the General Meeting in connection with the Increased Acquisition will both be held at the offices of K&L Gates LLP, One New Change, London EC4M 9AF on 15 March 2019. The Court Meeting will start at 10.00 a.m. and the General Meeting will start at 10.10 a.m.

As further detailed in the Scheme Document, to become effective, the Scheme will require, among other things, the approval of Scheme Shareholders at the Court Meeting and the passing of the Resolutions at the General Meeting. It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of the opinion of the Scheme Shareholders. Scheme Shareholders who have not already done so are therefore strongly urged to complete, sign and return the Forms of Proxy, or, alternatively, submit your proxy by electronic means, for both the Court Meeting and the General Meeting, as soon as possible. As outlined below, BLUE Forms of Proxy already submitted in respect of the Court Meeting and WHITE Forms of Proxy submitted in respect of the General Meeting in accordance with the instructions set out therein, and electronic proxy appointments, will continue to be valid in respect of the Increased Acquisition.

Financing the Increased Acquisition

The cash consideration payable by Bidco pursuant to the Increased Acquisition and the amount required to refinance the existing facilities of Tax Systems Group will be funded through equity financing of £70.3 million in aggregate drawn down from the Bowmark Funds, of which £30.3 million is being provided by the Co-Invest Funds, and debt facilities further described in the Scheme Document. In connection with their equity financing of Bidco, each of the Bowmark Funds has entered into an Equity Commitment Letter with Bidco.

GCA Altium, in its capacity as financial adviser to Bidco and Bowmark, is satisfied that sufficient resources are available to Bidco to enable it to satisfy, in full, the cash consideration payable to Tax Systems Shareholders under the terms of the Increased Acquisition.

General

The expected timetable of principal events for the implementation of the Scheme remains as set out on page 9 of the Scheme Document. If any of the dates and / or times in the expected timetable change, the revised dates and / or times will be notified by announcement through a Regulatory Information Service.

BLUE Forms of Proxy submitted in respect of the Court Meeting and WHITE Forms of Proxy submitted in respect of the General Meeting in accordance with the instructions set out therein, and electronic proxy appointments, will continue to be valid in respect of the Increased Acquisition. The completion and return of a Form of Proxy does not prevent a Tax Systems Shareholder from attending, speaking at or voting in person at the Court Meeting and the General Meeting, or any adjournments thereof, if such Tax Systems Shareholder wishes and is entitled to do so. Tax Systems Shareholders who have already completed and returned their Forms of Proxy and wish to change their voting instructions as a result of the Increased Acquisition should contact the Company's registrar, Computershare, for details as to how to do this. Computershare's contact details are set out at the end of this announcement and in the Scheme Document.

The Increased Acquisition does not change Bidco's intentions as regards the business of Tax Systems (including locations of its operations), the management and employees of Tax Systems and the proposals in respect of the Tax Systems Option and Warrant Arrangements, as set out in the Scheme Document. Further, the Increased Acquisition does not change the Sweet Equity Arrangements as described in the Scheme Document and the sums of money invested by the Rollover Managers in the Bidco Group remains as described in the Scheme Document.

Save as disclosed in this announcement, the Increased Acquisition will be subject to the terms and conditions set out in the Scheme Document.

In addition to the documents which are already available for inspection, as set out in the Announcement and the Scheme Document, (i) the written consents provided by each of GCA Altium, Oakley and finnCap to the publication of this announcement with the inclusion herein of the references to their names in the form and context in which they appear; (ii) the Additional Irrevocable Undertaking; (iii) the Warrant Undertaking; and (iv) the Warrant Fee Agreement will be made available on Tax Systems' website which can be accessed directly at the address www.taxsystems.com/announcement by no later than 12.00 p.m. on the Business Day following the date of this announcement.

Capitalised terms in this announcement, unless otherwise defined, have the meaning given to them in the Scheme Document.

Stephenson Harwood LLP is providing legal advice to Bowmark and Bidco. K&L Gates LLP is providing legal advice to Tax Systems.

Further information

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Increased Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Tax Systems in any jurisdiction in contravention of applicable law. Any vote in respect of the Scheme or other response in relation to the Increased Acquisition should be made only on the basis of the information contained in the Scheme Document.

GCA Altium, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Bidco and Bowmark and for no one else in connection with the Increased Acquisition or any matters referred to in this announcement and will not be responsible to anyone other than Bidco and Bowmark for providing the protections afforded to its clients nor for providing advice in relation to the Increased Acquisition, the contents of this announcement or any other matters referred to in this announcement.

Oakley Advisory, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser to Tax Systems and for no one else in connection with the Increased Acquisition or any matters referred to in this announcement and will not be responsible to anyone other than Tax Systems for providing the protections afforded to its clients nor for providing advice in relation to the Increased Acquisition, the contents of this announcement or any other matters referred to in this announcement.

finnCap, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser, nominated adviser and broker to Tax Systems and for no one else in connection with the Increased Acquisition or any matters referred to in this announcement and will not be responsible to anyone other than Tax Systems for providing the protections afforded to its clients nor for providing advice in relation to the Increased Acquisition, the contents of this announcement or any other matters referred to in this announcement.

The Increased Acquisition will be made solely by means of the Scheme Document or any document by which the Takeover Offer is made, which contains the full terms and conditions, including details of how to vote in respect of the Scheme. Any decision, vote or other response in respect of the Increased Acquisition should be made only on the basis of information contained in the Scheme Document as supplemented by the contents of this announcement.

This announcement does not constitute a prospectus or prospectus-equivalent document.

This announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Overseas jurisdictions

The release, publication or distribution of this announcement in certain jurisdictions other than the United Kingdom may be restricted by law and the ability of Tax Systems Shareholders who are not resident in the United Kingdom to participate in the Increased Acquisition may be restricted by the laws and/or regulations of those jurisdictions. In particular, the ability of persons who are not resident in the United Kingdom to vote their Scheme Shares with respect to the Scheme at the Court Meeting or with respect to the Resolutions at the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting and/or General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Therefore, any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom or Tax Systems Shareholders who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.

The Increased Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws of that jurisdiction and no person may vote in favour of the Acquisition by any use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and the formal documentation relating to the Increased Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction.

Notice to US investors

Tax Systems Shareholders in the United States should note that the Increased Acquisition relates to the securities of a company organised under the laws of England and Wales and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. This announcement, the Scheme Document and certain other documents relating to the Acquisition have been prepared in accordance with English law, the Code and UK disclosure requirements, format and style, all of which differ from those in the United States. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Increased Acquisition is subject to the disclosure requirements of and practices applicable in the United Kingdom to schemes of arrangement, which differ from the disclosure requirements of the United States tender offer and proxy solicitation rules.

None of the securities referred to in this announcement have been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United State or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offence in the United States.

Tax Systems' financial statements, and all financial information that is included in this announcement and in the Scheme Document, or any other documents relating to the Acquisition, have been prepared in accordance with International Financial Reporting Standards and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

Forward Looking Statements

This announcement contains certain statements about Bidco and Tax Systems that are, or may be deemed to be, "forward-looking statements" which are prospective in nature. All statements other than statements of historical fact, are or may be deemed to be, forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are therefore subject to known and unknown risks and uncertainties which could cause actual results, performance or events to differ materially from the future results, performance or events expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", "targets", "aims", "projects", "goal", "objective", "outlook", "risks", "seeks" or words or terms of similar substance or the negative thereof, as well as variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might", "probably" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this announcement. Any forward-looking statements made in this announcement on behalf of Bidco or Tax Systems are made as of the date of this announcement based on the opinions and estimates of directors of Bidco and Tax Systems, respectively. Each of Bidco and Tax Systems and their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them, expressly disclaims any intention or obligation to update or revise any forward-looking or other statements contained in this announcement, whether as a result of new information, future events or otherwise, except as required by applicable law. Neither Bidco, Tax Systems nor their respective members, directors, officers or employees, advisers or any person acting on their behalf, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur.

No forward-looking or other statements have been reviewed by the auditors of Bidco or Tax Systems. All subsequent oral or written forward-looking statements attributable to Bidco, Tax Systems or to any of their respective members, directors, officers, advisers or employees or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

No profit forecasts or estimates

Nothing in this announcement is intended or shall be deemed to be a forecast, projection or estimate of the future financial performance of Bidco or Tax Systems for any period and no statement in this announcement should be interpreted to mean that cash flow from operations, earnings, or earnings per share or income for the current or future financial years would necessarily match or exceed the historical published cash flow from operations, earnings, earnings per share or income of Tax Systems.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3:30 p.m. (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3:30 p.m. (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will normally be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and availability of hard copies

A copy of this announcement will be made available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Tax Systems' website at www.taxsystems.com/announcement by no later than 12 noon (London time) on the Business Day following this announcement. Neither the content of any website referred to in this announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this announcement.

Any person who is required to be sent a copy of this announcement under the Code, and who has not received a hard copy of it, may request a hard copy of this announcement (and any information incorporated by reference in this announcement) by submitting a request in writing to Computershare, Corporate Actions Projects, Bristol BS99 6AH or by calling Computershare on 0370 707 1238 or +44 370 707 1238 if calling from outside the United Kingdom. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 8:30 a.m. and 5:30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Save as otherwise referred to above, a hard copy of this announcement will not be sent unless requested. Any such person may also request that all future documents, announcements and information in relation to the Acquisition should be sent to them in hard copy form.  

Relevant securities in issue

In accordance with Rule 2.9 of the Code, Tax Systems confirms that, as at the date of this announcement, its current issued share capital comprises 86,673,530 ordinary shares of one pence each. Tax Systems does not hold any Tax Systems Shares in treasury. The International Securities Identification Number for Tax Systems Shares is GB00BDHLGB97.

Electronic communications

Please be aware that all addresses, electronic addresses (if any) and certain other information provided by the Tax Systems Shareholders, persons with information rights and other relevant persons for the receipt of communications from Tax Systems may be provided to offerors (including Bidco) during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

General

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

Responsibility statements

The Independent Directors each accept responsibility for the information contained in this announcement, other than the information for which responsibility is taken by the Bowmark Responsible Persons or the Tax Systems Directors (other than Paul Gibson), including the recommendations and opinions of the Independent Directors relating to the Increased Acquisition contained in this announcement. To the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Bowmark Responsible Persons each accept responsibility for the information contained in this announcement, including expressions of opinion, relating to Bowmark and the Wider Bidco Group. To the best of the knowledge and belief of the Bowmark Responsible Persons (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Tax Systems Directors (other than Paul Gibson), each accept responsibility for the information contained in this announcement concerning the Related Party Transaction, including the recommendations and opinions of those Tax Systems Directors relating to the Related Party Transaction contained in this announcement. To the best of the knowledge and belief of the Tax Systems Directors (other than Paul Gibson) (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Appendix ISources of information and bases of calculation

In this announcement, unless otherwise stated (such as in the Announcement or Scheme Document), or the context otherwise requires, the bases and sources used are set out below.

1. As at the last Business Day prior to the date of this announcement there were 86,673,530 Tax Systems Shares in issue.

2. The value of the issued and to be issued share capital of Tax Systems at the Increased Acquisition Price has been calculated by multiplying the Increased Acquisition Price of 115 pence per share by 88,948,713 issued and to be issued Tax Systems Shares, which consists of 86,673,530 Tax Systems Shares in issue as at the last Business Day prior to the date of this announcement, plus 1,414,428 Tax Systems Shares which may be issued as consideration if the EMI Options are exercised plus 860,755 Tax Systems Shares to be issued on the exercise of the Warrant.

3. The number of Scheme Shares entitled to be voted at the Court Meeting is 86,524,276 and has been calculated by subtracting the Excluded Shares from the 86,673,530 Tax Systems Shares in issue as at the last Business Day prior to the date of this announcement.