TIDMTIA
RNS Number : 4207I
Tialis Essential IT PLC
07 August 2023
Tialis Essential IT plc
("Tialis", the "Group" or the "Company")
7 August 2023
Unaudited Interim Results
Tialis Essential IT plc, the mid-market IT managed services
provider, today announces its unaudited results for the six months
ended 30 June 2023.
Financial Highlights
-- Revenue of GBP11.6 million (H1 2022: GBP6.7 million)
-- Gross profit of GBP3.6 million (H1 2022: GBP2.4 million)
-- Adjusted EBITDA* profit of GBP1.2 million (H1 2022: 0.9 million)
-- Year two of the GBP22.5m contract previously announced is progressing to plan.
Allvotec acquisition:
-- Completion of acquisition of profitable partner contracts
from Allvotec, a division of Daisy Group
-- The acquisition has brought three new channel partners to
Tialis, supporting the diversification of Tialis' partner base
-- Four Allvotec contracts have now been extended beyond the original end date.
Organic Growth
-- Six new lifecycle contracts have recently commenced or are starting imminently
-- National WiFi rollout won with a UK water company with
expected value of GBP1m over 24 months
-- Started new media company contract which will rise to an
annualised value in excess of GBP1 million from 1st July 2023 for
up to seven years
-- Awarded new million pound plus support contract for national power supplier
-- Started an all Lifecycle contract with major car rental company
-- Significant new channel partnership in the final stages of agreement for Lifecycle services
-- Very healthy pipeline of new prospects
Andy Parker, Executive Chairman, commented:
"The start to this year hasn't been without its challenges, with
some major contracts having a delayed start but that aside we have
delivered a strong first half with real momentum being felt in
sales activity and conversion into new customers. We will now see
the benefit of the delayed contracts in H2 which fills us with
confidence for the full year outturn to deliver against board
expectations. Furthermore, the board notes the continued decline in
the Company's share price and is considering whether or not to use
its authorities to buy back shares on the market if it deems it to
be the best use of capital and accretive to shareholders."
* Earnings from continuing operations before net finance costs,
tax, depreciation, amortisation, impairment charges, share based
payments and exceptional costs
Executive Chairman's Statement
On 1 February 2023, Tialis Essential IT Manage Limited, the
trading subsidiary of Tialis Essential IT PLC, acquired the
profitable partner contracts from Allvotec Limited, a division of
Daisy Group, for an initial consideration of GBP2.042 million. An
estimated GBP0.2 million of deferred consideration will be paid in
shares, subject to certain performance conditions being met by
February 2025, also at an effective price of 89.2 pence per
ordinary share.
The acquisition has brought three new channel partners to
Tialis, supporting the diversification of Tialis' partner base and
will build on the existing relationship that Tialis has with its
largest channel partner.
The first six months of the year have been a period of
integration with Allvotec and strong financial and operational
performance.
The business profile is like last year, with a stronger second
half anticipated.
Management expect revenue for FY23 full year to show significant
growth on FY22 full year.
In the first six months, the Company appointed two non-executive
directors, Nick Bedford and Matthew Riley, broadening the skillset
and independence of the board.
All our colleagues in Manage deserve a hearty thank you for the
outstanding work delivered and service excellence enjoyed by our
partners.
Summary and Outlook
The board continues to be pleased with the trading as we build
for a profitable, cash generative year. We continue to build our
base of customers and revenue. The Company has latter stage
engagement with new partners that would deliver a meaningful uplift
of revenues for 2023 and beyond.
We have a cash generative business and at an adjusted EBITDA
level, we have a profitable business. Our plan is to continue with
our organic initiatives that will continue to demonstrate growth.
We intend to expand our partner network and are also looking to
expansion into Europe. The Group will also consider growth through
further acquisition and would consider synergistic targets that
would expand and deepen our service offerings.
We can confidently look forward to a positive and rewarding
future for Tialis shareholders.
Andy Parker
Executive Chairman
Financial Review
Results for the six months to 30 June 2023
Revenue from continuing operations for the six months to 30 June
2023 from operations was GBP11.6 million (H1 2022: GBP6.7
million).
Gross profit from continuing operations for the six months to 30
June 2023 was GBP3.6 million (H1 2022: GBP2.4 million),
representing an overall decline in gross margin of 5 percent,
compared to the prior period. The change in gross profit in the six
months to 30 June 2023 was due to a change in product mix with less
Lifecycle project work.
At an Adjusted EBITDA* level for continuing operations the Group
generated a profit of GBP1.2 million (H1 2022:
GBP0.9 million).
Exceptional costs amounted to GBP0.4 million (H1 2022: GBP0.04
million) and related predominantly to acquisition redundancy costs
as a result of the synergies achieved. Going forward, we expect
exceptional costs to decrease.
Net financial costs were GBP0.3 million (H1 2022: GBP1.4
million), which include GBP0.2 million of interest on the loan
notes issued which is payable at the end of their term. In
addition, the costs include GBP6,000 of notional interest in
relation to the convertible loan notes.
The loss after tax for the period was GBP0.9 million (H1 2022:
loss of GBP0.7 million).
Loss per share was 0.18p (H1 2022: loss per share 0.14p).
Cashflow and Net Debt
The Group's cash generated from operating activities in the
period was GBP0.2 million (H1 2022 inflow of GBP0.7 million),
reflecting positive underlying performance and careful management
of working capital. The second half is expected to be stronger,
with further improvements in working capital and a continued
reduction in exceptions. The Group invested GBP0.04 million in
fixed assets. There were no new borrowings, but repayment of lease
liabilities consumed GBP0.1 million (H1 2022: GBP0.1 million). The
net result is that as at 30 June 2023 there were no bank borrowings
or overdraft debt and the cash balance was GBP0.5 million (H1 2022:
GBP0.8 million). Net debt as at 30 June 2023 was GBP4.7 million (H1
2022: GBP19.3 million) .
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Continuing Operations Six months Six months Year ended
ended 30 ended 30 31 December
June June 2022
2023 2022 GBP000
GBP000 GBP000
---- --------------------- ---------------------- --------------------------
Note
------------------------------------- ---- --------------------- ---------------------- --------------------------
Revenue 2 11,592 6,741 14,463
Cost of sales (8,013) (4,317) (9,408)
------------------------------------- ---- --------------------- ---------------------- --------------------------
Gross profit 3,579 2,424 5,055
Other operating income - - -
Administrative expenses excluding
impairment (3,976) (2,210) (4.011)
Operating profit/(loss) (397) 214 1,044
------------------------------------- ---- --------------------- ---------------------- --------------------------
Analysed as:
Adjusted EBITDA* 1,203 942 1,950
Non underlying items 3 (355) (36) (421)
Depreciation (145) (98) (208)
Amortisation (1,032) (585) (1,169)
Gain on the conversion of secured
loan note - - 892
Profit/(Loss) on the sale of
assets (1) (9) -
Fair value loss on deferred
consideration (67) - -
------------------------------------- ---- --------------------- ---------------------- --------------------------
Net financial costs (256) (1,440) (2,324)
------------------------------------- ---- --------------------- ---------------------- --------------------------
Loss before taxation (653) (1,226) (1,280)
Income tax (292) 513 843
------------------------------------- ---- --------------------- ---------------------- --------------------------
Loss for the period after
taxation (945) (713) (437)
------------------------------------- ---- --------------------- ---------------------- --------------------------
Discontinued operations:
Profit on discontinued operations 9 - -
Derecognition of foreign currency
reserve - - (150)
------------------------------------- ---- --------------------- ---------------------- --------------------------
Loss for the period and total
comprehensive income attributable
to equity holders of the parent (936) (713) (587)
------------------------------------- ---- --------------------- ---------------------- --------------------------
Basic and diluted loss per
share - continuing operations 4
Basic and diluted (pence per
share) (0.18) (0.14) (0.10)
Basic and diluted loss per
share - discontinued operations
Basic and Diluted (pence per
share) - - (0.04)
Total basic and diluted
profit/(loss)
(pence per share) (0.18) (0.14) (0.14)
* Earnings from continuing operations before net finance costs,
tax, depreciation, amortisation, impairment charges, share based
payments and exceptional costs
Consolidated Statement of Financial Position
Unaudited Unaudited Audited 31
30 June 30 June December
Note 2023 2022 2022
GBP000 GBP000 GBP000
-------------------------------- ---- ------------ ---------------- ---------------------
Non-current assets
Intangible assets 8,179 7,647 7,062
Property, plant and equipment 970 748 1,076
Deferred tax asset 2,816 2,778 3,108
Financial and other assets 100 - 100
-------------------------------- ---- ------------ ---------------- ---------------------
12,065 11,173 11,346
-------------------------------- ---- ------------ ---------------- ---------------------
Current assets
Trade and other receivables 5,468 3,530 3,661
Cash and cash equivalents 473 798 414
-------------------------------- ---- ------------ ---------------- ---------------------
5,941 4,328 4,075
-------------------------------- ---- ------------ ---------------- ---------------------
Total assets 18,006 15,501 15,421
-------------------------------- ---- ------------ ---------------- ---------------------
Current liabilities
Borrowings 5 - - -
Trade and other payables 4,740 4,300 4,544
Contract liabilities 924 - 51
Finance lease obligations 210 162 210
Provisions - 113 -
-------------------------------- ---- ------------ ---------------- ---------------------
5,874 4,575 4,805
-------------------------------- ---- ------------ ---------------- ---------------------
Non-current liabilities
Trade and other payables 174 900 -
Borrowings 5 3,711 18,422 3,490
Convertible loan notes 6 149 137 143
Finance lease obligations 660 629 765
Provisions 266 181 245
-------------------------------- ---- ------------ ---------------- ---------------------
4,960 20,269 4,643
-------------------------------- ---- ------------ ---------------- ---------------------
Total liabilities 10,834 24,844 9,448
-------------------------------- ---- ------------ ---------------- ---------------------
Net assets / (liabilities) 7,172 (9,343) 5,973
-------------------------------- ---- ------------ ---------------- ---------------------
Equity attributable to equity holders of the parent
Called up share capital 12,610 12,418 12,586
Share premium account 52,865 35,882 50,754
Other reserves 58 58 58
Retained earnings (58,361) (57,701) (57,425)
-------------------------------- ---- ------------ ---------------- ---------------------
Total equity 7,172 (9,343) 5,973
-------------------------------- ---- ------------ ---------------- ---------------------
Consolidated Statement of Changes in Equity
Share Share Equity Retained Foreign
capital premium Reserve earnings currency Total
(a) (b) (c) (d) translation
reserve
(e)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- -------------- ---------------- ---------------- ------------- ----------------- -------------
At 31 December
2021 (Audited) 12,418 35,882 58 (56,838) (150) (8,630)
Total
comprehensive
income for the
period
Loss for the
financial
year and total
comprehensive
income - - - (713) - (713)
Loss on FX
realised - - - (150) 150 -
----------------- -------------- ---------------- ---------------- ------------- ----------------- -------------
At 30 June
2022
(unaudited) 12,418 35,882 58 (57,701) - (9,343)
Total
comprehensive
income for the
period
Shares issued
for the
conversion of
secured
loan notes and
in lieu
of bonus to an
employee 168 14,872 - - 15,040
Loss for the
financial
year and total
comprehensive
income - - - 276 - 276
Transactions
with owners
recorded
directly in
equity
At 31 December
2022
(Audited) 12,586 50,754 58 (57,425) - 5,973
----------------- -------------- ---------------- ---------------- ------------- ----------------- -------------
At 1 January
2023 12,586 50,754 58 (57,425) - 5,973
Total
comprehensive
income for the
period
Shares issued
for the
acquisition
and in lieu
of bonus to an
employee 24 2,111 - - - 2,315
Loss for the
financial
year and total
comprehensive
income - - - (936) - (936)
At 30 June
2023
(unaudited) 12,610 52,865 58 (58,361) - 7,172
----------------- -------------- ---------------- ---------------- ------------- ----------------- -------------
(a) Share capital represents the nominal value of equity shares
(b) Share premium represents the excess over nominal value of
the fair value of consideration received for equity shares; net of
expenses of the share issue;
(c) The equity reserve consists of the equity component of
convertible loan notes that were issued as part of the fundraising
in August 2018 less the equity component of instruments converted
or settled.
The fair value of the equity component of convertible loan notes
issued is the residual value after deduction of the fair value of
the debt component of the instrument from the face value of the
loan note.
(d) Retained earnings represents retained profits and accumulated losses
(e) On consolidation, the balance sheets of the Group's foreign
subsidiaries are translated into sterling at the rates of exchange
ruling at the balance sheet date. Exchange gains or losses arising
from the consolidation of these foreign subsidiaries are recognised
in the foreign currency translation reserve. As the foreign
subsidiaries are being liquidated the balance on the reserve has
been recognised in Retained earnings.
Consolidated Cash Flow Statement
Unaudited Six Unaudited Audited
months Six months Year ended
ended 30 June ended 30 31 December
2023 June 2022
2022
GBP000 GBP000 GBP000
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Loss from continuing operations (653) (1226) (1,280)
Loss from discontinuing operations - - -
Loss before tax for the period (653) (1,226) (1,280)
Adjustments for:
Depreciation of property, plant
and equipment 145 98 208
Amortisation of intangible assets 1,032 585 1,169
Profit on discontinued operations 9 - -
Fair value loss on deferred consideration 67 - -
Net financial costs 256 1,440 2,324
Gain on conversion of secured loan
notes - - (892)
Profit/Loss on sale of fixed assets 1 9 -
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
857 906 1,529
(Increase) / decrease in trade and
other receivables (1,806) 750 521
Increase / (decrease) in trade and
other payables 1,161 (897) (461)
Increase/(decrease) in provisions 21 (65) (114)
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
233 694 1,475
Net corporation tax recovered/ (paid) - - -
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Net cash acquired from operating
activities 233 694 1,475
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Cash flow from investing activities:
Acquisition of property, plant and
equipment (40) (30) (208)
Proceeds from sale of fixed assets - - -
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Net cash used in investing activities (40) (30) (208)
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Cash flows from financing activities:
Repayment of lease liabilities (105) (77) (286)
Nimoveri loan note repaid - - (100)
Repayments of loans and borrowings, - (100) -
net of expenses
Share issue, net of expenses - - -
Interest received 9 - (10)
Interest paid (39) (38) (268)
Supplier finance repaid - - (558)
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Net cash absorbed by financing activities (135) (215) (1,202)
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Net increase/ (decrease) in cash
and cash equivalents 58 449 65
Cash and cash equivalents at beginning
of period 414 349 349
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Cash and cash equivalents at end
of period 472 798 414
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Being:
Cash and cash equivalents 472 798 414
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
472 798 414
--------------------------------------------- ------------------------------ ---------------------------- -------------------------
Notes to the half-yearly financial information
1. Basis of preparation
The condensed consolidated interim financial information for the
six-month period ended 30 June 2023 and 30 June 2022 is unaudited.
This statement has not been reviewed by the Company's auditor. This
condensed consolidated interim financial information was approved
by the Board of Directors and authorised for issue on 30 September
2023. A copy of this half- yearly financial report is available on
the Company's website at www.tialis.com.
The comparative figures for the financial year ended 31 December
2022 are extracted from but do not comprise the Group's
consolidated financial statements for that year.
The Company is a public limited liability company incorporated
and domiciled in Scotland. The address of its registered office is
24 Dublin Street, Edinburgh EH1 3PP. The Company is listed on the
AIM market of the London Stock Exchange.
Tialis and its subsidiaries have not applied IAS 34, 'Interim
Financial Reporting' as adopted by the European Union, which is not
mandatory for UK AIM listed companies, in the preparation of this
half-yearly financial report.
This condensed consolidated interim financial information for
the six-month period ended 30 June 2023 therefore does not comply
with all the requirements of IAS 34, 'Interim Financial Reporting'
as adopted by the European Union. The consolidated interim
financial information should be read in conjunction with the annual
financial statements of the Company as at and for the year ended 31
December 2022, which were prepared in accordance with IFRS as
adopted by the European Union.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 31
December 2022 were approved by the Board of Directors on 5 May 2023
and delivered to the Registrar of Companies. The report of the
auditor was unqualified, did not contain an emphasis of matter
paragraph and did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
Accounting policies
The accounting policies used in the preparation of the condensed
consolidated interim financial information for the six months ended
30 June 2023 are in accordance with the recognition and measurement
criteria of International Financial Reporting Standards ("IFRS") as
adopted by the European Union and are consistent with those that
will be adopted in the annual statutory financial statements for
the year ended 31 December 2023.
While the financial information included has been prepared in
accordance with the recognition and measurement criteria of IFRS,
as adopted by the European Union, these financial statements do not
contain sufficient information to comply with IFRSs. The accounting
policies adopted in the interim financial statements are consistent
with those adopted in the financial statements for the year ended
31 December 2022.
Exceptional items and other non-recurring items
Items which are material because of their size or nature, and
which are non-recurring are highlighted separately on the face of
the income statement. The separate reporting of exceptional items
helps provide a better picture of the Company's underlying
performance. Items which may be included within the exceptional
category include:
-- spend on major restructuring programmes;
-- significant goodwill or other asset impairments; and
-- other particularly significant or unusual items.
Exceptional items are excluded from the headline profit measures
used by the Group and are highlighted separately in the income
statement as management believe that they need to be considered
separately to gain an understanding the underlying profitability of
the trading businesses.
For further details, please refer to note 3.
Going concern
The condensed consolidated interim financial information has
been prepared on a going concern basis.
Taking into account the support of certain of the Company's
significant shareholders, of which the largest is represented on
the Board, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. For this reason, the Directors consider
that the adoption of the going concern basis is appropriate.
2. Segment reporting
There is only one segment remaining, the Tialis Essential IT
Manage Limited business.
3. Exceptional costs
In accordance with the Group's policy in respect of exceptional
costs, the following charges were incurred in relation to
continuing operations:
Unaudited Unaudited Audited
Six Six months Year ended
months ended 30 31 December
ended 30 June 2022
June 2022
2023
GBP000 GBP000 GBP000
-------------------------------- -------------------------------- ----------------------- -------------------------
Restructuring and
reorganisation
costs 355 36 421
-------------------------------- -------------------------------- ----------------------- -------------------------
4. Earnings per share from continuing operations
The calculation of basic and diluted loss per share is based on
results from continuing operations attributable to ordinary
shareholders divided by the weighted average number of ordinary
shares in issue during the year. The weighted average number of
shares for the purpose of calculating the basic and diluted
measures in the reporting periods is the same. This is because the
outstanding options would have the effect of reducing the loss per
ordinary share and therefore would be anti-dilutive under the terms
of IAS 33. Basic and diluted unaudited loss per share from
continuing operations are calculated as follows:
Unaudited Unaudited Audited
Six Six months Year ended
months ended 30 31 December
ended 30 June 2022
June 2022 GBP000
2023 GBP000
GBP000
------------------------------- --------------------------------- ----------------------- -------------------------
Loss attributable to
shareholders (936) (713) (437)
------------------------------- --------------------------------- ----------------------- -------------------------
Weighted average number of
shares 520,408,748 496,702,702 418,575,630
Diluted weighted average
number
of shares 520,408,748 496,702,792 418,575,630
------------------------------- --------------------------------- ----------------------- -------------------------
Basic loss per share (pence) (0.18) (0.14) (0.10)
Diluted loss per share
(pence) (0.18) (0.14) (0.10)
------------------------------- --------------------------------- ----------------------- -------------------------
5. Borrowings
In January 2019 the Company issued GBP5.3 million of secured
loan notes with a six-year term and a 12% coupon which is
compounded, rolled up and payable at the end of the term ("Loan
Notes"). In February and March 2019, a further GBP4.7 million in
total of Loan Notes were issued. The Loan Notes carry an
arrangement fee of 2.5 per cent., payable at the end of the term,
and an exit fee of 2.5 per cent., also payable at the end of the
term.
In December 2019 the Company issued an additional GBP1.5 million
of Loan Notes (with the same terms as those issued in the first
quarter of the year).
The Loan Notes are held at amortised cost using the effective
interest rate method. The effective interest rate for the Loan
Notes has been calculated to be 18%.
The Company issued a further loan note ("Loan Note 2025") net of
expenses for proceeds of GBP1m on 1 December 2022. The loan is
subject to interest at 20.4% per annum compound. The maturity date
is 23 December 2025. At the year-end management intended to settle
the loan notes before 31 December 2023 and accordingly, they are
classified as current liabilities.
On 2 November 2022 the members meeting at the Annual General
Meeting, and then at the General Meeting that followed, voted to
convert GBP25.5 million of loan notes (including fees and interest)
into share capital.
Unaudited Audited
Six months Unaudited Year ended
ended 30 Six months 31 December
June ended 2022
2023 30 June GBP000
GBP000 2022
GBP000
-------------- --------------------------------------------------- ---------------------- -------------------------
Non-Current
Loan Notes 3,711 18,422 3,490
-------------- --------------------------------------------------- ---------------------- -------------------------
Current
Loan Notes - - -
-------------- --------------------------------------------------- ---------------------- -------------------------
6. Convertible Loan Notes
On 21 August 2018, as part of a wider fundraising, the Company
issued GBP2.55 million of unsecured loan notes, which have a term
of 5 years and a zero per cent coupon ("CLNs"). The CLNs can be
converted into new ordinary shares in the capital of Tialis at a
price of 2.5 pence per share. Conversion is at the option of the
holder at any time during the 5 - year term. At the end of the
term, if the holder has not chosen to convert the CLNs, the CLNs
will be settled with a cash repayment. At issue, the CLNs had a
fair value of GBP2.54 million, split into an equity component
(GBP0.96 million) and a debt component (GBP1.58 million).
On 7 June 2021 GBP2,397,519 of the unsecured convertible loan
notes issued in August 2018 were converted into 95,900,760 Ordinary
shares of 2.5p each, at a conversion price of 2.5p per share.
GBP2.1 million has been posted against the Consolidated Loan Notes
debt component in June 2022 and the balance of GBP0.3 million set
off against the Equity reserve.
Unaudited Audited
Six Unaudited Six Year ended
months months ended 31 December
ended 30 30 June 2022
June 2022 GBP000
2023 GBP000
GBP000
------------------------- ------------------------------------- ------------------------- -------------------------
Balance at beginning
of period 143 131 131
Issue of new shares*
Interest -
unwound - 6 6 12
------------------------- ------------------------------------- ------------------------- -------------------------
Total 149 137 143
------------------------- ------------------------------------- ------------------------- -------------------------
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IR GZGGRNDDGFZM
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