Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Registered number SC368538
Year ended 31 December 2022
Contents
Directors and Advisers
2
Company Profile and Summary
3
Chairman’s Statement
4
Financial Review
7
Strategic Report
9
Directors’ Report
13
Remuneration Committee Report
17
Corporate Governance Statement
19
Statement of Directors’ Responsibilities
25
Report of the Audit Committee
26
Independent Auditor’s Report
28
Consolidated Statement of Comprehensive Income
34
Statements of Financial Position
35
Statements of Changes in Equity
36
Statements of Cash Flows
38
Notes to the Consolidated Financial Statements
40
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
2
Directors and
Advisers
Directors
Andy Parker (Executive Chairman)
Ian Smith (Executive Director)
Nicolas Bedford (Non-Executive Director)
Matthew Riley (Non-Executive Director)
Company Secretary
Delgany Corporate Services Limited
Registered Office
24 Dublin Street
Edinburgh EH1 3PP
Company Number SC368538
Nominated Adviser and Broker
finnCap Limited
1 Bartholomew Close
London EC1A 7BL
Solicitors
DAC Beachcroft LLP
25 Walbrook
London EC4N 8AF
Auditor
Barnes Roffe LLP
Charles Lake House
Claire Causeway
Crossways Business Park
Dartford
DA2 6QA
Share Registrar
Computershare Investor
Services plc
44 North St. Andrew Street
Edinburgh EH2 1HJ
Principal Banker
RBS NatWest plc 250
Bishopsgate London
EC2M 4AA
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
3
Company Profile
The principal activities of Tialis Essential IT PLC (formerly IDE Group Holdings plc) are the provision of end-to-end solutions to
enterprise scale end-customers, public and private, concentrating on end-user device management and on-site support solutions.
The country of incorporation is Scotland; the Company’s registered number is SC368538 and the Company is limited by shares.
The main country of operation is the United Kingdom.
On 2 November 2022 the Company passed a Special Resolution to change its name from IDE Group Holdings plc to Tialis Essential
IT PLC.
Further information on the Company can be found at www.tialis.com.
Business summary
•
Tialis Essential IT PLC (‘Tialis’) is a UK based managed services provider delivering outsourced services as a strategic
technology partner primarily on behalf of system integrators. After a series of acquisitions and divestments, the group is
now wholly focused on Tialis Essential IT Manage Limited (‘Manage’) (formerly IDE Group Manage Limited).
•
Note 34 sets out the group reorganisation that took place during the year ended 31 December 2022 where several non-
trading subsidiaries were placed into solvent liquidation to simplify the group structure and reduce costs.
•
Within its portfolio of services, Tialis specialises in activities including the storage, build, configuration, and shipping of all
end-user devices as well as the provision of on-site support engineers, tech bars, server maintenance and fully managed
project deployments.
•
Its support services have been developed to support clients with all IT requirements, to either complement an existing in-
house IT team or act as a fully dedicated IT team on its customers’ behalf.
•
Revenues from continuing operations remained consistent in 2022 at £14.5 million (2021: £14.5 million) in 2022, gross
margins decreased by 8% to 35% (2021: 43%) due to a shift in revenue streams. Adjusted EBITDA** decreased to £2.0
million from £3.1 million in 2021. Loss on ordinary activities before taxation amount to £1.3 million (2021: £3.0 million).
•
We have made an excellent start to 2023 within our Manage business, demonstrating significant growth in revenues and
profitability. These results are based on developing long-term relationships with third-party system integrators and supply
contracts typically with 3–5-year terms. Therefore, as we experience further growth, we are generating a strong annuity
income stream, with a strong pipeline of prospects.
We have built a strong base to support a period of sustained growth and we are exploring organic and acquisitive methods to
accelerate this development.
** Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charges, non-underlying items, loss on
disposal of fixed assets and share-based payment charges.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
4
Chairman’s Statement
2022 was an important year in the ongoing rationalisation of our trading business and at a group level, with the conversion of the MXC
debt into equity.
In November 2022 the members at the General Meeting voted to reorganise the Company’s share structure so as enable the Company
to issue new ordinary shares. Immediately following the capital reorganisation, the loan notes (“Loan Notes”) held by MXC were
converted into equity, reducing the debt level of the group to a sensible level. Note 27 sets-out in detail the Company’s capital
reorganisation.
Manage
During 2022, Tialis Essential IT Manage Limited’s turnover remained consistent at £14.5 million (2021: £14.5 million).
Adjusted EBITDA for Manage, before unallocated group overheads, decreased from £3.8 million to £2.6 million, this reflects the change
in business mix and a decrease in one-off projects experienced in 2022.
For the 2023 financial year, we have a higher level of visibility over revenues. It is anticipated that the successful transition of some of
our traditional service contracts into our lifecycle facility will see margins step back up year on year.
Employee numbers within the Manage business increased by 15% within the year due to the company taking on more onsite managed
service contracts. The number of heads in our central function decreased by 12 in the year.
Highlights in the year include:
•
The sale of IDE Connect in October 2021 enabled the company to return to profit (before finance costs) in 2022 and allowed
us to concentrate on end user device and on-site support services rather than chase the market in many different directions.
•
Although revenue for 2022 was flat on 2021, the company is fundamentally stronger as the income is derived from recurring
revenue. 2021 revenue was bolstered by a number of very large, one-off projects.
•
The acquisition of the profitable partner contracts from Allvotec Limited, a division of Daisy Group, adds circa 50% to our
revenues in 2023.
•
In May 22, the company signed a seven figure multi-year contract with a major nuclear organisation which has doubled the
annualised revenue on that account.
•
Extended relationship with Indian Global outsourcer to mid-2023.
•
Continued to expand our preferred supplier agreement with major partner and over doubled the revenue from 2021 to 2022.
•
Via our partnership with CloudCoCo two large charities started large lifecycle contracts across all users within their
organisations.
•
Took over the Tech Bar support operation for major German multinational in multi-year deal.
•
Started two important support relationships with large City insurance companies, which will both be experiencing significant
expansion in 2023.
•
Started year one of a three-year project with UK utility in 2022.
•
Awarded Approved Supplier status with major UK IT service provider.
•
In December 2022, signed in excess of a million pound a year contract for a minimum of 3 years with major UK print company
which is due to start in June 2023.
Results
Revenue remained steady for the full year at £14.5 million (2021 continuing operations: £14.5 million), and we have seen gross profit
margin fall by 8%, from 43% to 35%. Resulting gross profit has decreased year-on-year to £5.1 million (2021 continuing operations:
£6.3 million). Adjusted EBITDA decreased to £2.0 million (2021: Adjusted EBITDA of £3.1 million). The net loss after tax for the
year from continuing operations is £0.6 million (2021: £2.0 million), after £1.2 million amortisation expense and a £0.9 million gain
on conversion of the secured loan notes (2021 continuing operations: £3.0 million amortisation and impairment charge).
People
The management team has made continued progress in simplifying the structure of the business and aligning services better to
support our clients. The board would like to recognise and thank its employees who have worked hard to deliver excellent client
service and retain existing key clients. The headcount in Tialis Essential IT Manage Limited has increased by 15% reflecting
increased activity and trading.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
5
Strategy
Our plan is to continue with our organic initiatives that will continue to demonstrate positive growth. We intend to expand our
partner network and are also looking to expansion into Europe. After four long years of restructuring the Group is now considering
growth through acquisition and would consider synergistic targets that would expand and deepen our service offerings.
Financing and dividend
The Company had been exploring several options for the secured loan notes, as the final stage of its restructuring, to reduce the
Company’s indebtedness to allow the Company to grow organically and through acquisition.
Prior to the secured loan note conversion on 2 November 2022, the balances owed to the loan note holders were as summarised
below:
Holder
Value
of
loan
notes
Pre
Conversion
Value
of
loan
notes
Post
Conversion at 31 December 2022
MXC
£15,588,902
£-
Richard Griffiths
£1,854,546
£1,891,435
Funds
managed
by
Kestrel
Partners LLP
£1,354,963
£1,382,896
Other loan note holders
£204,138
£215,660
Total secured loan note value
£19,002,549
£3,489,991
The Company did not have adequate cash resources to repay the loan notes and therefore, after exploring several options, the
Board believed that the capital reorganisation and loan note conversion was the best option available to the Company. The loan
note conversion resulted in MXC materially increasing their percentage shareholding in the Company, MXC have confirmed to
the Company that it has no current intention in taking the Company private.
Note 27 sets out the full details of the capital reorganisation which took place on 2 November 2022 having been approved by the
Members in General Meeting.
The capital reorganisation consisted of the following steps:
1.
the amendment of the Articles to set out the rights and restrictions attached to the Deferred Shares issued;
2.
the sub-division of each existing Ordinary Share into 2 new shares – a Redenominated Ordinary Share of 0.01p and a
Deferred Share of £2.49p; and
3.
every 100 Redenominated Ordinary Shares of 0.01p each were consolidated into one New Ordinary Share of 1p each.
The Board is not proposing to declare a dividend at this time,
Current trading and outlook
Trading in the current financial year remains in line with Board expectations, with current financial performance broadly in line
with the same period last year (excluding Allvotec). As our business grows, we are looking to expand our partner channel and
possible expansion of our business model into Europe.
Our outlook for the year is 85% of revenue covered by existing contracts and end user customers, and together with a buoyant
pipeline gives us great confidence in another positive year of growth for the Group.
The key objective for 2023 is to increase the focus and utilisation of our lifecycle facility which provides much greater efficiencies
for our end-user customers and higher levels of customer satisfaction. Initiatives are underway with our most significant partner
to see an increase in this area. In February 2023, the Group added three new large partners to the portfolio, providing the group
with further opportunities.
Andy Parker
Executive Chairman
5th May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
6
The Group reported total revenues from continuing operations for the year to 31 December 2022 of £14.5 million, the same as in
2021 (2021: £14.5 million) and gross profit of £5.1 million (2021: £6.3 million). This shows a reduction in margins year-on-year of 8
percentage points compared to the prior year due to a shift in revenue streams.
The Group uses Adjusted EBITDA which is a non-GAAP measure of performance as it believes this more accurately reflects the
underlying performance of the business. This is one of the key operational performance measures monitored by the Board. Adjusted
EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charges, non-underlying items, loss on
disposal of fixed assets and share-based payments.
The Adjusted EBITDA for the year to 31 December 2022 was a profit of £2.0 million (2021: profit of £3.1 million).
A detailed review of the business is set out in the Chairman’s Statement and this Financial Review. Included in these reviews are
comments on the key performance indicators that are used by the Board on a monthly basis to monitor and assess the performance of
the business. These indicators include the level of revenue, gross profit and Adjusted EBITDA together with net debt.
Manage
The revenue for the continuing operations all relates to the Manage Business. Revenues remained consistent at £14.5 million (2021:
£14.5 million). For the year we have seen lower gross profit margins to 35% (2021: 43%), as a result of the services mix and
operational efficiencies.
Adjusted EBITDA attributable to Manage has moved to £2.6 million (2021: profit of £3.8 million).
Non-underlying items
Non-underlying items relating to restructuring and reorganisation amount to £0.4 million in the year (2021: £0.4 million).
Finance costs
After incurring net finance charges of £2.3 million relating to interest and arrangement fees for loan notes, leases and bank debt
(2021: £2.5 million), the loss before tax is £1.3 million (2021: loss of £3.0 million).
Taxation
The utilisation of tax losses and the benefit of the increase in the rate of corporation tax on the deferred tax asset has resulted in a
tax credit for the year of £0.8 million (2021: £1.2 million).
Loss on continuing operations
Whilst the underlying trading performance of Manage shows significant positive EBITDA, group costs, finance costs and impairment
charges on the software licences result in a loss after tax for the year on continuing operations of £0.6 million (2021: loss on
continuing operations £1.8 million), which equates to a basic loss per share of 0.14 pence (2021: loss per share of pence 0.39).
Loss on discontinued operations
The loss on discontinued operations of £nil million (2021: loss of £0.2 million) arises on the disposal of the Connect Business on 19
October 2021, and from the operations in the period up to the date of disposal.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
7
Financial Review
Statement of Financial Position
Non-current assets
The Group has property, plant and equipment of £1.1 million (2021: £0.8 million) all of which are subject to depreciation as per the
policies set out in the accompanying financial statements. During the year there were additions of £0.5 million (2021: £0.03 million
additions).
In 2020 we invested in software licences at the year-end amounting to £1.8 million. These licences were purchased with a view to a
planned expansion of the group, resale to our clients in our Connect Business and for operational use in the Connect Business and
are payable in three tranches at the end of 2021, 2022 and 2023. The licences were capitalised as intangible assets at the present
value of the payments, which are included within trade payables at 31 December 2021. Due to planned expansion which didn’t
materialise and the sale of the Connect Business in 2021, the Group is unable to obtain the full benefit of the licences in its remaining
business. Accordingly, these software licenses were impaired and written down to £nil in 2021. They can no longer be utilised by
the continuing operations and as such are deemed unlikely to be sold to the customers of the Connect Business, given its disposal
in the prior year, or sold to third parties.
Further, intangible assets of customer contracts and related relationships are £7.1 million (2021: £8.2 million) and are subject to
amortisation as per the policies set out in the accompanying financial statements.
Trade and other receivables
Trade and other receivables have decreased to £3.8 million from £4.3 million.
Following the disposal of the Connect Business in 2021, working capital management has improved as the underlying nature of the
Managed Business has a reduced number of customers; all of them are larger corporates with good credit ratings and regular
payment cycles.
Trade and other payables
Trade and other payables amounted to £4.5 million (2021: £6.0 million), including trade payables of £2.7 million (2021: £3.8 million)
taxation and social security of £0.8 million (2021: £0.8 million) and accruals of £1.0 million (2021: £1.4 million).
Contract liabilities arise from customers being invoiced in advance of services delivered, in accordance with individual contractual
terms, at the balance sheet date this amounted to £0.05 million (2021: £0.05 million). Contract liabilities remain materially unchanged
year on year.
Following the disposal of the Connect Business, the number of suppliers has been reduced and allows for better supplier
management leading to improved working capital.
Cashflow and net debt
Net cash generated from operating activities during the year was £1.5 million (2021 £0.6 million generated). Our Manage business
continues to be cash generative and has developed excellent relationships with key strategic partners. The Group invested £0.2
million (2021: £0.03 million) in fixed assets. There were no new loans in 2022 (2021: £1.0 million net), but repayment of lease
liabilities consumed £0.3 million (2021: £0.4 million) of cash. The result is that as at 31 December 2022 there were no bank
borrowings or overdraft debt and the cash balance was £0.4 million (2021: £0.3 million).
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Financial Review (continued)
8
Borrowings
On 11 May 2021 £2,397,519 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.
The Nimoveri Loan Notes issued on 1st June 2020 (£100,000) were redeemable on 31 December 2021. On 13 December 2021 both
parties agreed the Nimoveri Loan Notes would be repaid in four equal monthly instalments commencing 31 January 2022.
The Company issued a loan note net of expenses for proceeds of £1.0 million in November 2022, which if not repaid by 31 March
2022 increases to £1.1875m and incurs interest of 20.4 % per annum, repayable on 23 December 2025. The loan note was not
repaid by 31 March 2022.
On 2 November 2022 the members meeting at the Annual General Meeting, and then at the General Meeting that followed, voted
to convert £15.5 million of loan notes (including fees and interest) into share capital. Details of the capital reorganisation and
consolidation are set out in Note 27.
As at 31 December 2022, the convertible loan notes liability in the balance sheet was £143,480 (2021: £130,437), and the secured
loan notes liability was £3,489,991 (£2021: £17,027,016).
Dividend
The Directors do not propose a dividend in respect of the current financial year (2021: £nil).
Donations to charities
The Directors paid £33 to The Prince’s Trust as part of the Company capital reorganisation as set out in Note 27 (2021: £nil).
Update and outlook for 2023
Set out within the Chairman’s Statement are details of the current trading performance and outlook. Trading in the first four months
of 2023 has been strong, including very positive further contract wins from our key partner.
Going concern
The Directors have produced detailed trading and cashflow forecasts. In reaching their conclusion on the going concern basis of
accounting, the Directors note and rely on the improved trading performance, the positive cash generation that the business is now
experiencing and the current signed order book. A reverse stress test of the model has been run to determine at what level of shortfall
in revenues the Group would run out of cash. Given the committed orders already obtained and the visibility of future revenues, the
directors do not consider it likely that revenues could drop to such an extent that the Group would run out of cash. They have also
considered the impact of any delayed customer payments and have developed plans to mitigate any such delays to ensure that the
Group can continue to settle its liabilities as they fall due and operate as a going concern. The Directors therefore have an expectation
that the Group and Company have adequate resources available to them to continue in operational existence for a period of at least
12 months from the date of approval of these financial statements. Accordingly, the Group and Company continue to adopt the going
concern basis in preparing these consolidated financial statements.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
9
Strategic Report
Review of the Business
A detailed review of the business is set out in the Chairman’s Statement and the Financial Review. The year under review was a
positive one for the business with continuing revenues remaining consistent year-on-year and Adjusted EBITDA* remaining positive,
although the Group reported a post-tax loss due to finance costs, impairments and restructuring. Future developments and current
trading and prospects are set out in the Chairman’s Statement and the Financial Review. These reports together with the Corporate
Governance Statement are incorporated into this Strategic Report by reference and should be read as part of this report. The Group’s
strategy is focused on maximising value for stakeholders by increasing revenues and profits by upselling to our current customer
base as well as by bringing new customers on board.
At 31 December 2022, the Board comprised two Directors (2021: two) all of which were male. At 31 December 2022 the Group had
196 employees including Directors (2021: 165) of which 164 were male (2021:134) and 36 were female (2021:31).
* Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charges, non-underlying items,
loss on disposal of fixed assets and share-based payments.
Principal Risks and Uncertainties
Identifying, evaluating, and managing the principal risks and uncertainties facing the Group is an integral part of the way the Group
does business. There are policies and procedures in place throughout the operations, embedded within our management structure and
as part of our normal operating processes.
The Board reviews the principal risks on a bi-annual basis. The risks have been amended following the sale of the Connect Business
with the resultant Group being greatly simplified. The impact, measures in place and tactics to mitigate risks are assessed on a regular
basis. The risk categories, set out below, have been identified by the Board as those currently considered to potentially have the most
material impact on the Group’s future performance. In addition to these risks, note 24 contains details of financial risks.
Customer concentration
The Group has a significant revenue concentration with a single Partner (84%). This is mitigated as there are a number of end
customers, all with different agreements and contract end dates. The Group has traded with the Partner for over 20 years and has
long standing relationships. The Group is also focused on reducing this concentration and is working on several opportunities to
achieve this.
Market and Economic Conditions
Market and economic conditions are recognised as one of the principal risks in the current trading environment. Risk is mitigated by
the monitoring of trading conditions and changes in government legislation, the development of action plans to address specific
legislative changes and the constant search for ways to achieve new efficiencies in the business without impacting service levels.
The Board does not believe the current macro-economic outlook has changed the Group’s prospects given the large proportion of
the end-customers being in the public sector. The Group has also undertaken stress testing of the detailed trading forecasts and
cashflows taking into account inflation and interest rate increases. The Board does not consider that these will change the outlook
at present. In relation to interest rates increases, the Group’s debt is at a fixed rate.
Reliance on Key Personnel and Management
The success of the Group is dependent on the services of key management and operating personnel. The Directors believe that the
Group’s future success will be largely dependent on its ability to retain and attract highly skilled and qualified personnel and to train
and manage its employee base. During the year, the restructuring programme continued which resulted in more members of staff
being made redundant and other members of staff moving into new roles. For those who remain there are several employee benefits
and active communication is encouraged within the business to mitigate the risk of losing skilled and qualified individuals. Furthermore,
there is an apprenticeship scheme which the Group believes will assist in training and retaining younger individuals going forward.
Competition
The Group operates in a highly competitive marketplace and while the Directors believe the Group enjoys certain strengths and
advantages in competing for business, some competitors are much larger with considerable scale. The Group monitors competitors’
activity and constantly reviews its own services and prices to ensure a competitive position in the market is maintained.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
10
Technology
The market for our services is in a state of constant innovation and change. We devote significant resource to the development of
new service lines, ensuring new technologies can be incorporated and integrated with the Group’s core services. The nature of the
Group’s services means that they are exposed to a range of technological risks, such as viruses, hacking and an ever-changing
spectrum of security risk. We maintain constant pro-active vigilance against such risks and the Group maintains membership of
some of the highest levels of security accreditation as part of the service it offers its customers.
s.172(1) Companies Act 2006: Statement of Directors’ Duties to Stakeholders
Promoting the success of the Company
The Directors are aware of their duty under section 172(1) of the Companies Act 2006 to act in the way which they consider, in good
faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to
have regard (amongst other matters) to:
•
The likely consequences of any decision in the long term;
•
The interests of the Company’s employees;
•
The need to foster the Company’s business relationships with suppliers, customers and others;
•
The impact of the Company’s operations on the community and the environment;
•
The desirability of the Company maintaining a reputation for high standards of business conduct; and
•
The need to act fairly between members of the Company.
The Board recognises that the long-term success of the Company requires positive interaction with its stakeholders. Positive
engagement with stakeholders will enable our stakeholders to better understand the activities, needs and challenges of the business
and enable the Board to better understand and address relevant stakeholder views which will assist the Board in its decision making
and to discharge its duties under Section 172 of the Companies Act 2006.
Our Commitment
The Company is committed to operating with an inclusive, transparent, and respectful culture and places particular emphasis on
operating to the highest ethical and environmental standards.
The Directors take personal ownership of the policies and maintenance of the necessary exacting standards of business conduct
throughout the organisation and for delivering these corporate and social responsibilities.
Stakeholder Engagement
Recruitment and employee management are undertaken in line with the Company Employment Policy which has committed to a
working environment with equal opportunities for all, without discrimination and regardless of sex, sexual orientation, age, race,
ethnicity, nationality, religion, or disability.
We are committed to being an equal opportunities employer and oppose all forms of unlawful discrimination. We believe that staff
members should be treated on their merits and that employment-related decisions should be based on objective job-related criteria
such as aptitude and skills. For these reasons, all staff members, and particularly managers with responsibility for employment-
related decisions, must comply with the practices described below.
• recruitment;
• pay and benefits;
• promotion and training;
• disciplinary, performance improvement and redundancy procedures.
As part of the induction of all employees and on a recurring annual basis, all employees have to complete a mandatory set of training
courses, one of which is on equality, diversity and inclusion in both the workplace and local communities.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
11
Stakeholder Engagement (continued)
We conduct a gender pay analysis annually and the report is published on the Company’s website.
Tialis seeks to attract and retain staff by acting as a responsible employer. The health, safety and well-being of employees is
important to the Company. On the sale of Connect, we engaged with the acquirer and supported all the employees through the
transition. All employees had access and were encouraged to use the Employee Assistance Program with a 24-hour helpline.
Furthermore, the Company has committed to continuous development schemes and will support employees to attain the best for
themselves and the Company through personal assessment, training and mentoring.
Externally, Tialis has established long-term partnerships that complement its in-house expertise and has built a network of
specialised partners within the industry and beyond.
The Directors have committed to promoting a company culture that treats everyone fairly and with respect and this commitment
extends to all principal stakeholders including shareholders, employees, consultants, suppliers, customers, and the communities
where it is active.
All Directors are encouraged to act in a way they consider, in good faith, to be most likely to promote the success of the Company
for the benefit of its shareholders. In doing so, they each have regard to a range of matters when making decisions for the long-term
success of the Company.
Health and Safety
Tialis Group cares profoundly about the health and safety of our employees, customers and the communities who could be affected
by our activities and aims to protect them from any foreseeable hazard or danger arising from our activities. To this end in 2022 the
Company completed a series of safety related studies and reviews, including electrical and gas, quantified risk assessments and
layer of protection analysis using external experts to review the product risk and the application on our Dartford site. In all instances
the findings of the safety risk assessments have demonstrated that the risk arising from the Tialis Group’s activities is well within
acceptable tolerable risk levels. In 2023 the Company will revisit these assessments to identify any changes that have been
introduced which may represent new or variants of risk.
We have a Health and safety policy and as mentioned above all employees have to complete a mandatory set of training courses,
which include several health and safety courses, including manual handling, mental health awareness, stress awareness, bullying
and harassment, display screen set-up and a general health and safety course.
During 2022 the Board was particularly mindful of the impact of the ongoing COVID-19 pandemic when making decisions. This has
impacted all areas of decision making and is not limited to ensuring that its impact on employees, contractors, suppliers and the
communities in which Tialis Group operates is factored into any decision, but also to ensure that its reputational, financial and other
impact is also considered.
The Directors recognise that the key to successful health and safety management requires an effective policy, organisation, and
arrangements which reflect the commitment of senior management. The executive management team implement the Company’s
health and safety policy and ensure that the Company Health and Safety (HSE) management system and safety standards are all
maintained, monitored, and improved where necessary. During the COVID-19 pandemic and currently, the level of cleaning was
improved and a high level of cleanliness is maintained.
The Company’s activities at its Dartford site were delivered HSE incident free in 2022.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
12
s.172 Companies Act 2006: Statement of Directors’ Duties to Stakeholders (continued)
Environmental Policies
The Company’s Environmental Policy recognises the importance of our technology from a global challenge perspective. The
Company will regularly evaluate the environmental impact of its activities, products, and services, taking all actions necessary to
continually improve the Company’s and its products’ environmental performance.
At present, we are working towards achieving ISO-14001 certification and are undergoing a third-party gap analysis prior to the
certification audit.
Tialis Group has a Carbon Reduction Strategy which is published on the company website. We at Tialis Group are committed to
reducing our impact on the environment in order to help safeguard our planet for future generations. We have committed to a well-
below 2 degrees Celsius trajectory and to maintaining our scope 1 and scope 2 greenhouse gas emissions at a level 30% lower
than in our base year of 2018. We are also investing in an environmental management system certified to ISO 14001 to ensure that
we can monitor and manage our activities to meet our targets.
In addition to committing to maintaining our scope 1 and 2 emissions at 30% less than they were in 2018, we will also work to reduce
our overall greenhouse gas emissions (scopes 1, 2 and 3) by 2.5% every year from a 2022 baseline. We have engaged with Science
Based Targets (SBTi) to validate our 30% reduction target. SBTi has confirmed that our target of a 30% reduction from 2018 has
been accepted and will be published on their website. They have undertaken due diligence on the 2018 information we provided and
verified its accuracy. As the work we have done in the last few years has helped us achieve the 30% target already, we will now
ensure that we maintain this lower level.
As mentioned above, all employees have to complete a mandatory set of training courses, which include an environmental
awareness course.
Strategy
The market for IT managed services in the United Kingdom is highly fragmented and is served by a broad spectrum of businesses
from global telecommunication companies through hardware and software providers, system integrators and a range of independent
managed service providers of varying sizes through to companies providing individual elements of the IT managed services spectrum.
The market is growing, driven by the continued move towards off-premise solutions and mobile access to secure services.
Despite the continued challenges we met in 2022, the Board believes that the Group’s position between the very large system
integrators and the smaller competitors that may lack delivery structure, reputation, reliability, and financial strength remains a very
compelling one.
We have developed a delivery model that provides assurance and certainty for customers. This underlying platform is the core
strength of the Group and we will continue to consider augmenting underlying organic growth in the Manage business in 2022 with
acquisitions to leverage this platform should there be a compelling strategic and financial case.
The decision to dispose of Connect allows us to focus on the core business, as part of this decision-making process which should
result in the medium to longer term the Group returning to sustained profits. Through our long standing customer relationships, we
have demonstrated a commitment to service quality for over twenty years.
On behalf of the Board
Andy Parker Executive Chairman
5 May 2023
24 Dublin Street Edinburgh EH1 3PP
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
13
Directors’ Report
The Directors present their report together with the audited consolidated financial statements for the year ended 31 December
2022 for Tialis Essential IT PLC (formerly IDE Group Holdings PLC) (“Tialis” or the “Company”) and its subsidiaries (together, the
“Group”).
Principal Activity
The principal activity of the Group during the year was the provision of end-to-end solutions to enterprise scale end-customers, public
and private, concentrating on end-user device management and on-site support solutions. The Company is a holding company.
Review of the Year
The review of the year and the Directors’ strategy are set out in the Chairman’s Statement and in the separate Strategic Report. The
Company’s share reorganisation on 2 November 2022 is set out in Note 27.
Dividends
The Company did not pay a dividend during the year ended 31 December 2022 (2021: £nil). The Directors do not recommend the
payment of a dividend at 31 December 2022 (2021: £nil).
Directors
The Directors who held office during the period and up to the date of the Annual Report are as follows:
Ian Smith
Andy Parker
Nicolas Bedford (appointed 3 January 2023)
Matt Riley (appointed 1 February 2023)
Company Secretary
Delgany Corporate Services Limited
A brief biography of the current Directors can be found below:
Andy Parker – Non-Executive Chairman
On 10 August 2018 Andy was appointed as Non-Executive Director, on 5 October 2018 was appointed as Non-Executive Chairman
and for the period 15 October 2018 to 21 May 2020 held the position of Executive Chairman. On 1 June 2020 Andy reverted to the
role of Non-Executive Chairman. On 1 February 2023, Andy was reappointed Executive Chairman.
Andy is an experienced commercial, operational and financial professional. A chartered accountant, Andy has held a wide range of
commercial and finance roles culminating most recently in his tenure as Chief Executive Officer of Capita Group PLC, the FTSE 350
professional support services company. Andy has held a number of finance director roles during his career and is a highly
experienced public markets board director.
Andy is the Chair of the Remuneration Committee and a member of the Audit Committee.
Ian Smith – Executive Director
On 1 June 2018, Ian was appointed as Executive Director.
Ian has an extensive track record of investing in and managing technology companies and is co-founder and CEO of MXC Capital
Limited. Ian has sat on numerous boards and either led or been involved in a large number of transactions in the TMT sector. Ian
led strategic change and value accretion at Redstone PLC and Accumuli PLC and was previously deputy executive chairman and
CEO at Castleton Technology PLC.
Ian holds no direct beneficial interest in Tialis Group, however, is CEO and a substantial shareholder of MXC Capital Limited, a
substantial shareholder in the Company. Ian is a member of the Remuneration Committee and the Audit Committee.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Directors’ Report (continued)
14
Nicolas Bedford - Non-Executive Director
Nick Bedford was appointed as a Non-Executive Director on 4 January 2023. A chartered accountant, Nick is a highly experienced
finance professional who has worked for large PLCs, including Capita PLC and Misys PLC, supporting main board directors and
senior management on a financial, operational and commercial level. Nick also has significant experience in large corporates as well
as smaller enterprises and has previously been a member of Audit and Risk Committees.
Nick is the chair of the Audit Committee and a member of the Remuneration Committee.
Matthew Riley - Non-Executive Director
Matt Riley was appointed as a Non-Executive Director on 1 February 2023 following the purchase of profitable partner contracts
from Allvotec, a division of Daisy group. Matt was the founder and chairman of Daisy Group and he led Daisy Communications Ltd
and Daisy Group through rapid growth to become one of the UK’s leading end-to-end business technology and communications
service providers. Matt is an award-winning entrepreneur, winning the Bank of Scotland Entrepreneur Challenge and Ernst & Young’s
UK Young Entrepreneur of the Year in 2007 and the City Awards Dealmaker of the Year in 2012. He received the Comms Industry
Awards Lifetime Achievement Award in 2017 and the ICT Forum Outstanding Achievement Award in 2019.
Matt is a member of the Remuneration Committee.
Directors’ Indemnity Insurance
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third-party indemnity
provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year and is
currently in force. The Company also purchased and maintained Directors’ and Officers’ liability insurance throughout the financial
year in respect of itself and its Directors.
Re-election of Director
Ian Smith will retire in line with the terms of the articles of the Company and being eligible, will offer himself for re- election at the
forthcoming Annual General Meeting.
Directors’ Service Contracts
Details of the Directors’ service contracts and their respective notice terms are detailed in the Remuneration Committee report.
Directors’ Interests
At 31 December 2002, Ian Smith held 118,000 Ordinary Shares in the Company representing 0.54% of the issued ordinary share
capital on that date through his Self-Invested Pension Plan.
Mr Smith is also Chief Executive Officer and a substantial shareholder of MXC Capital Limited (MXC).
MXC owned 83.4% (2021: 34.8%)of the issued share capital of the Company at 31 December 2022. Together, Mr Smith and MXC
owned 83.9% (2021: 34.8%) of the issued share capital of the Company at 31 December 2022.
The Directors had no direct interests in the ordinary shares of the Company at 31 December 2022, or at 31 December 2021.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Directors’ Report (continued)
15
Significant Shareholders
At 31 December 2022 and at 18 April 2023, being the latest practicable date before the publication of the Annual Report, the
Company is aware of the following significant interests in its ordinary, voting share capital:
31 December 2022
31 December 2022
18 April 2023
18 April 2023
Shareholder name
Number
%
Number
%
MXC Capital Limited1
18,204,685
83.4%
18,204,685
75.5%
Allvotec Limited
-
-
2,289,295
9.5%
Kestrel Partners LLP
1,225,001
8.2%
1,225,001
5.1%
1 MXC Capital Limited is a related party; Ian Smith, Executive Director, is Chief Executive Officer and a substantial shareholder
of MXC Capital Limited.
Auditor
A resolution is to be proposed at the forthcoming AGM for the re-appointment of Barnes Roffe LLP as auditor to the Company, at a
rate of remuneration to be determined by the Audit Committee.
Financial Risk Management Objectives and Policy
The Company’s financial risk management objectives and policies are described in note 25 to the financial statements.
Capital structure
The Company has two classes of share capital which is divided into Ordinary shares of 1p each and Deferred shares of 2.49p.
Details of the Company’s issued share capital can be found in note 27 to the financial statements.
Resolutions passed in the Annual General Meeting and following General Meeting 2 November 2022
The Members passed the following resolutions in the Annual General Meeting and General Meeting held on 2 November 2022 with
a vote in favour of each resolution in excess of 99%:
1.
Special Resolution to change the name of the Company to Tialis Essential IT PLC from IDE Group Holdings plc;
2.
Ordinary Resolution to approve the creation of Deferred Shares as a new class of shares having the rights and being subject
to the restrictions set out in the Articles of Association as amended 2 November 2022;
3.
Ordinary Resolution to approve the subdivision of the Company’s existing Ordinary Shares of 2.5p into Redenominated
Ordinary Shares of 0.01p each and a Deferred Shares of 2.49p;
4.
Ordinary Resolution to approve the consolidation of the Redenominated Ordinary Shares by a factor of 100 in order to reduce
the number of ordinary shares in issue;
5.
Ordinary Resolution to authorise the Directors for the purposes of section 551 of the Companies Act 2006 to allot and issue
shares;
6.
Special Resolution to authorise the directors to dis-apply pre-emption rights, as set out in the notice of meeting; and
7.
Special Resolution to approve the amendment of the Company’s Articles of Association as set out in the notice of meeting.
Employee involvement
The flow of information to staff has been maintained by our staff email bulletins and staff meetings. Members of the management
team regularly discuss matters of current interest and concern to the business with members of staff; in particular in regard to
providing information on performance indicators, encouraging employee participation and engendering a common awareness of
financial and economic factors which affect the Group’s performance.
The Group continues to focus on building channels that ensure the company is effectively listening and responding to employees. In
doing so, we can identify opportunities to better meet employee needs and interests, reflecting these where possible in the principal
decisions taken by the company.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Directors’ Report (continued)
16
Disabled persons
The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability without discrimination of any kind.
Management actively pursues both the employment of disabled persons whenever a suitable vacancy arises and the continued
employment and retraining of employees who become disabled whilst employed by the company. Particular attention is given to
training, career development and promotion of disabled employees with a view to encouraging them to play an active role in our
development.
Disclosure of Information to the Auditor
Each of the Directors who was in office on the date of approval of these financial statements, having made enquiries of their fellow
Directors, confirms that:
•
To the best of each Director’s knowledge and belief, there is no information relevant to the preparation of their report of
which the Group’s auditor is unaware; and
•
Each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant
audit information and to establish that the Group’s auditor is aware of that information.
Future Developments
Future developments and current trading and prospects are set out in the Chairman’s Statement and the Financial Review.
On behalf of the Board
Ian Smith
Executive Director
5 May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
17
Remuneration Committee Report
Remuneration Committee
At 31 December 2022, the Remuneration Committee comprised Andy Parker (Chair), and Ian Smith. Nick Bedford and Matt Riley,
appointed as Non-Executive Directors in January and February 2023, have been appointed as members of the Remuneration
Committee in 2023.
The Remuneration Committee is responsible for determining and agreeing with the Board the framework for the remuneration of
Executive Directors and other designated senior executives and, within agreed terms of reference, determining the total individual
remuneration packages of such persons, including, where appropriate, bonuses, incentive payments and share options or other
share awards. The remuneration of Non-Executive Directors is a matter for the Executive Directors. No director is involved in any
decision as to his or her own remuneration or benefits.
As noted in the Corporate Governance Report set out in these Financial Statements, the Board acknowledges that the lack of
independent non-executive Directors in 2020 did not comply with the standards of the QCA Corporate Governance Code in terms
of composition of the Board and its Committees. With a Board comprising two Directors for the majority of the year being reported,
no specific meetings of the Remuneration Committee were held in 2022 and relevant matters were discussed by the Board as a whole.
For further details of the Remuneration Committee, please refer to the Corporate Governance report in these financial statements.
Remuneration Policy
The Remuneration Committee is aware that the remuneration package should be sufficiently competitive to attract, retain and
motivate individuals capable of achieving the Group’s objectives and thereby enhancing shareholder value.
Basic Salary and Benefits
Basic salaries for the Executive Directors are reviewed in January each year. The benefits provided to the Executive Directors may
include contributions to a Group defined contribution pension scheme, private medical insurance for themselves, their spouse and
their children, life assurance cover of 4 times salary, critical illness and income protection cover, a company car allowance and
annual leave of 25 days.
Performance Related Bonus
The Remuneration Committee determines the criteria for the award of performance bonuses for the Executive Directors in advance of
each year. The bonuses are pensionable. Non-Executive Directors do not receive a bonus.
Fees
The Board, within the limits stipulated by the Articles of Association and following recommendations by the Executive Directors,
determines Non-Executive Directors’ fees. The annual fees are £53,000 (2021: £40,000) for a Non-Executive Director and £53,333
(2021: £40,000) for a Non-Executive Chairman.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
18
Remuneration Committee Report (continued)
Directors’ emoluments
For Directors who held office during the year, emoluments for the year ended 31 December 2022 were as follows:
Salary/fees
Benefits
Pension
2022 total
2021
total
£
£
£
£
£
Executive
Ian Smith1
221,000
-
-
221,000
221,000
Non-Executive
Andy Parker2
53,333
-
-
53,333
40,000
Total
274,333
-
-
274,333
261,000
1.
Director's emoluments in respect of Ian Smith were paid to MXC Advisory Limited, a subsidiary of MXC Capital Limited.
2.
Andy Parker stepped down from his role as Executive Chairman to become Non-Executive Chairman on 1 June 2020.
The Executive Directors’ salaries are paid by subsidiary companies within the Group. The Non-Executive Director fees and the
fee to MXC Advisory Limited for Ian Smith’s services are paid by the Company.
Andy Parker
Chair, Remuneration Committee
On behalf of the Board
5 May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
19
Corporate Governance Statement
Introduction
The Directors attach great importance to maintaining high standards of corporate governance to help achieve the Company’s goals.
To that end they have adopted the principles set out in the Quoted Companies Alliance Corporate Governance Code for Small and
Mid- Size Quoted Companies (the ‘QCA Code’) 2018. The QCA Code, which is constructed around 10 broad principles, sets out a
standard of minimum best practice for small and mid-size quoted companies, including AIM companies. Companies are required to
disclose how the implementation of the QCA Code has been applied or, to the extent not done so, to explain any areas of departure
from its requirements.
We have considered how we apply each principle to the extent that the Board judges these to be appropriate for our circumstances,
and below we provide an explanation of the approach taken in relation to each. Our compliance with the QCA Code is based on the
Company’s current practices.
Our objective is to secure the long-term success of the Group by establishing a sustainable and profitable operating model with an
appropriate underlying cost base. The Board believes that applying sensible corporate governance practices at this crucial stage of
the Company’s development can only help achieve our goals.
We have identified a number of areas where we are not in full compliance with the guidelines of the QCA Code and these are
Principle 5, Principle 7 and Principle 9. We explain in detail under the relevant principle why we have departed from the guidelines
in these areas.
We operate in the way the Board believes is most suited to the Group at its current stage of development. With the appointment of
two new non-executive directors in 2023, the Group has established a strong leadership team and an appropriate cost base to enable
it to focus on growing the business to secure its long-term sustainable success whilst creating long-term value for shareholders and
stakeholders alike.
We trust that the result of our efforts to date provide stakeholders with access to the information they need and the confidence that the
Board holds corporate governance compliance in the highest regard.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Corporate Governance Statement (continued)
20
Principle 1 – Establish a strategy and business model which promote long-term value for shareholders.
The Board’s objective is to secure long-term success by establishing a sustainable and profitable operating model with an appropriate
underlying cost base in order to create long-term value for shareholders and stakeholders. The Board has set out its strategy and
business model in the Strategic Report of the Annual Report and Financial Statements, giving further information in the Chairman’s
Statement and the Financial Review about how we performed against our stated strategy. The Strategic Report includes information
on the principal risks and uncertainties faced by the Group and how we have acted to reduce our exposure to risk.
The Strategic Report describes how the Group’s flexible and technically skilled workforce enable it to deliver and support critical
services and solutions in a highly secure environment and how the Group seeks to differentiate itself through innovation, reliability
and value.
The Board will continue to monitor its progress against its stated strategy.
Principle 2 – Seek to understand and meet shareholder needs and expectations.
Tialis Group is committed to open communication with all its shareholders.
Copies of the Annual Report and Financial Statements are issued to all shareholders who have requested them and copies are
available on the Group’s investor website www.idegroup.com. The Group’s interim results are also made available on the website.
The Group makes full use of its investor website to provide information to shareholders and other interested parties.
The Board reviews proxy voting reports and any significant dissent is discussed with relevant shareholders and, if necessary, action
is taken to resolve any issues. In compliance with best practice, the level of proxy votes (for, against and vote withheld) lodged on
each resolution is declared at all general meetings and announced.
Shareholders are given the opportunity to raise questions at the Annual General Meeting (“AGM”) and the Directors are available
both before and after the meeting for further discussion with shareholders.
Andy Parker, Non-Executive Chairman, and Ian Smith, Executive Director, are primarily responsible for communicating with
investors.
Meetings via the Company’s broker are offered to major institutional shareholders to discuss strategy, financial performance and
investment activity immediately after the full year and interim results announcements. The Directors are available to meet with major
shareholders if such meetings are requested. Feedback from such meetings with shareholders is provided to the Board to ensure
the Directors have a balanced understanding of the issues and concerns of major shareholders.
The Board receives share register analysis reports to monitor the Company’s shareholder base and help identify the types of
investors on the register.
Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for long-term success.
The Group recognises its employees, customers, suppliers, advisors, banks and shareholders as forming part of the wider
stakeholder group. Management identifies key relationships within the business and effort is directed to ensuring these relationships
are managed appropriately. Regular reviews are undertaken to ensure any issues are addressed promptly.
The Board reviews its top clients and suppliers in its Board meetings and these are identified in packs provided to the Board.
The Company has a good relationship with its Nomad, broker and other advisers. Feedback from investors is provided by the broker
as well as through direct engagement with investors by the Board.
The Company meets frequently with customers and communicates regularly with suppliers. There is a feedback system in place and
issues raised can be addressed.
The Company’s internal stakeholders are its employees. The Group is committed to employment policies which follow best practice,
based on equal opportunities for all employees, irrespective of ethnic origin, religion, political opinion, gender, marital status,
disability, age or sexual orientation.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Corporate Governance Statement (continued)
21
Staff policies
The Group's employment policies are designed to ensure that they meet the statutory, social and market practices in the United
Kingdom. The Group systematically provides employees with information on matters of concern to them, consulting them or their
representatives regularly, so that their views can be taken into account when making decisions that are likely to affect their interests.
Employee involvement in the Group is encouraged, as achieving a common awareness on the part of all employees on the financial
and economic factors affecting the Group, plays a major role in maintaining its relationship with its staff.
The Group gives full and fair consideration to applications for employment from disabled persons, having regard to their particular
aptitude and abilities. Appropriate arrangements are made for the continued employment and training, career development and
promotion of disabled persons employed by the Group. If members of staff become disabled, the Group continues employment,
either in the same or an alternative position, with appropriate retraining being given, if necessary.
The Board believes that its investment in the wider stakeholder network is expected to assist the Company’s management in
achieving its long-term goals creating an environment of trust and communication which will have positive implications for the long-
term success of the Company.
Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the organisation.
Risk assessment and evaluation is an essential part of the Company’s planning and an important aspect of the Group’s internal
control system. The business and management of the Company and its subsidiaries are the collective responsibility of the Board. At
each meeting, the Board considers and reviews the trading performance of the Group. The Board has a formal written schedule of
matters reserved for its review and approval. These include the approval of the annual budget, major capital expenditure, investment
proposals, the interim and annual results and a review of the overall system of internal control and risk management.
Having undertaken significant reorganisation and restructuring of the Group during the course of 2022, the Board continues to identify
the most critical risks and challenges facing the business and to take the necessary steps to mitigate these risks by strengthening its
control systems. The risks were significantly reduced following disposal of Connect in 2021, which has also simplified the group. The
revised and refined system of risk management is designed to manage rather than eliminate the risk of failure to achieve business
objectives and is explained in the Strategic Report under the heading Principal Risks and Uncertainties. The Board has established
a risk register which is bespoke to the Group’s business. At least twice a year the risk register is reviewed and the Board considers
the appropriateness of the risks identified and the mitigating action taken by management on a risk by risk basis with a particular
focus on those deemed most critical.
Principle 5 – Maintain the board as a well-functioning, balanced team led by the Chair.
Andy Parker, who joined the Board as a Non-Executive director in August 2018, was first appointed as Executive Chairman in
October 2018. He is a chartered accountant and has held a wide range of commercial and finance roles including acting as Chief
Executive Officer of Capita Group PLC, the FTSE 100 professional support services company. Andy has also held a number of
finance director roles during his career and is a highly experienced public markets board director. As Andy was previously an
executive chairman, he is not considered to be an independent director. Andy is Chair of the remuneration committee and a member
of the audit committee.
Ian Smith is an Executive Director and he led the Group’s strategic and operational review in 2018. Whilst Ian holds no beneficial
interest in Tialis Group, he is the Chief Executive Officer and a substantial shareholder of MXC Capital which is a substantial
shareholder of the Company and as such is not considered to be an independent director. Ian is a member of the audit and
remuneration committees.
Nick Bedford, who was appointed as a Non-Executive Director on 4 January 2023, is an independent director. Nick, a chartered
accountant and a highly experienced finance professional who has worked for large PLCs, including Capita PLC and Misys PLC is
chair of the Company’s audit committee. He is also a member of the remuneration committee.
Matt Riley was appointed as a Non-Executive Director on 1 February 2023 following the purchase of profitable partner contracts
from Allvotec, a division of Daisy group. Matt was the founder and chairman of Daisy Group and he led Daisy Communications Ltd
and Daisy Group through rapid growth to become one of the UK’s leading end-to-end business technology and communications
service providers. Matt is an independent director and a member of the Remuneration Committee.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Corporate Governance Statement (continued)
22
The Board currently comprises one Non-Executive Director and one Executive Director, supported by senior managers, and it
oversees and implements the Company’s corporate governance programme. As chairman, Andy leads the Board and is responsible
for the Company’s approach to corporate governance and the application of the principles of the QCA Code.
Each board member commits sufficient time to fulfil their duties and obligations to the Board and the Company. They attend regular
board meetings and join ad hoc board calls and offer availability for consultation when needed. The contractual arrangements
between the Directors and the Company specify the minimum time commitments which are considered sufficient for the proper
discharge of their duties. However, in exceptional circumstances all board members understand the need to commit additional time.
Detailed board packs include information on all business units and financial performance and are circulated ahead of board meetings.
Key issues are highlighted and explained, providing board members with sufficient information to enable a relevant discussion in the
board meeting.
Board and committee meetings
The Board is supported by its Audit Committee and its Remuneration Committee.
Attendances of Directors at Board and committee meetings convened in 2022, and which they were eligible to attend, are set out
below:
Director
Board Meetings
Attended
Remuneration
Committee
Attended
Audit Committee
Attended
Number of meetings in year
12
0
2
Andy Parker
12/12
N/A
2/2
Ian Smith
12/12
N/A
2/2
Departures from the Code
Size and balance of the board
In 2022 the Company had only two Directors on the Board whilst the Group underwent significant periods of change and its focus
had been on implementing the revised strategy. The Company acknowledged that wasnot a long-term solution and in the first two
months of 2023, appointed two independent non-executive directors which have strengthened the strategic and governance
capabilities of the board.
Remuneration Committee
The Remuneration Committee did not convene in 2022. Instead, matters such as remuneration of new appointments to the Board
and senior management were handled by the Chief Executive Officer and Chairman. Whilst no director was involved in determining his
or her own remuneration, the Board recognises that this is a departure from the Code.
In January and February 2023, two new non-executive directors were appointed to the Board, both of whom have also been
appointed as members of the Remuneration Committee.
Principle 6 – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
The members of the Board and their experience and skills etc are set out in the Directors’ Report and the Financial Statements
identify the members of the Board at the time of publication and describes the relevant experience, skills and qualities they bring.
The Chairman believes that the Board has a suitable mix of skills and competencies in order to drive the Group’s strategy following
completion of the Strategic and Operational Review and is best placed to secure the future of the Company and create long-term
value for all stakeholders.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Corporate Governance Statement (continued)
23
The nature of the Company’s business requires the Directors to keep their skillset up to date. Periodic updates to the Board on
regulatory matters are given by Company’s professional advisers. The Company’s financial adviser and Nomad and lawyers are
consulted on any significant matters where the Board believes external expertise is required.
External advisers attend board meetings as invited by the Chairman to report and/or discuss specific matters relevant to the
Company and the markets in which they operate. Additionally, MXC Advisory Limited, which is part of the same group as the
significant shareholder MXC Capital Limited, is a retained financial adviser principally focused on acquisitions and provides the
services of Ian Smith, Executive Director.
The Company Secretary advises the Board on corporate governance and regulatory matters, attends the Board meetings and reports
directly to the Chairman on governance matters. In keeping with best practice as set out the in the QCA guidelines the Company
has split the role of Chief Financial Officer (who attends the board whilst not a statutory director) and Company Secretary.
Andy Parker and Ian Smith are primarily responsible for communicating with investors.
Departures from the Code
The Company accepts that not having any independent Directors is not ideal. The Board recognises the need for at least one
independent director and is looking to find appropriate candidates to fulfil that role and enhance the balance and skillset of the Board.
Principle 7 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.
The Board regularly reviews the effectiveness of its performance as that of its committees and individual Directors. The Directors’
Report in the Annual Report and Financial Statements identifies the members of the Board at the time of its publication and describes
the relevant experience, skills and qualities they bring.
Board appointments are made after consultation with advisers in all cases and with major shareholders in some cases. The Nomad
undertakes due diligence on all new potential board candidates. Board members all have appropriate notice periods so that if a
board member indicates his/her intention to step down, there is sufficient time to appoint a replacement, whether internal or external.
All Directors are required to retire by rotation and seek re-election every three years.
Principle 8 – Promote a corporate culture that is based on ethical values and behaviours.
The Board firmly believes that sustained success will best be achieved by adhering to our corporate culture of treating all our
stakeholders fairly and with respect.
Accordingly, in dealing with each of the Company’s principal stakeholders, we encourage our staff to operate in an honest and
respectful manner. The Board believes that achieving a common awareness across all employees plays a major role in maintaining
good employee relations. The Group’s culture of honesty and respect is reflected in the continued support and dedication shown by
employees to deliver value to our customers during what has been a challenging year.
The Company is committed to promoting a culture based on ethical values and behaviours across the business. Policies are in place
covering key matters such as bribery, protection of intellectual property and sensitive information, conflicts of interest, whistleblowing
and anti-slavery. These are vigorously enforced and monitored. The Group has invested a great deal of work to improve its Corporate
and Social Responsibility throughout 2022. This included external auditing and improvements to a number of sustainability and
decarbonisation functions throughout the business.
Central to the Company’s culture and values are Collaboration, Respect, Excellence, Speed, Trust and Accountability, known to the
Company’s employees as CRESTA. Information on how the Company’s beliefs are applied to the business is set out on the website.
Certifications
The Company is proud to have been awarded ISO/IEC 20000-1, ISO 9001, and ISO 27001. Details of these and other certifications
are included on the website: https://www.idegroup.com/about/certification/
Additionally, Tialis Group started the process towards the attainment of ISO 14001. This has resulted in a number of external ratings
including achieving a silver award from Ecovadis. Work is underway with a goal of achieving gold status in 2022.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Corporate Governance Statement (continued)
24
Principle 9 – Maintain governance structures and processes that are fit for purpose and support good decision-making
by the board.
The principal governance structures and processes of the Company and its subsidiaries are the collective responsibility of the Board
and its Committees. At each Board meeting, the Board considers and reviews the trading performance of the Group. The Board has
a formal written schedule of matters reserved for its review and approval. These include the approval of the annual budget, major
capital expenditure, investment proposals, the interim and annual results and a review of the overall system of internal control and
risk management.
Audit Committee
The duties of the Audit Committee include reviewing, in draft form, the Company’s annual and half-yearly report and accounts and
providing advice to the Board. Members of the Audit Committee are also responsible for reviewing and supervising the financial
reporting process and internal control systems of Tialis Group. The Audit Committee is currently comprised of one Non-Executive
Director and one Executive Director
Remuneration Committee
The Remuneration Committee is responsible for determining the policy for Directors’ remuneration and setting remuneration for the
Company’s chair, executive Directors and senior management including share option schemes and any bonus arrangements. No
director plays any role in determining his or her own remuneration. The Remuneration Committee is currently comprised of two Non-
Executive Directors and two Executive Directors.
Departures from the Code
The Remuneration Committee did not convene in 2022. Instead, matters such as remuneration of new appointments to the Board
and senior management were handled by the Chief Executive Officer and Chairman. Whilst no director was involved in determining his
or her own remuneration, the Board recognises that this is a departure from the Code.
In 2023, the Board has appointed two independent directors both of whom are on the Remuneration Committee.
Principle 10 – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders.
The Company reports formally to its shareholders and the market generally twice each year with the release of its interim and full
year results. The full year results are audited by an external firm of auditors.
The Annual Report and Financial Statements set out how the corporate governance of the Company has been applied in the period
under review.
These reports contain full details of all the principal events of the relevant period together with an assessment of current trading
and future prospects and the reports are made available via the Company’s website to anyone who wishes to review them.
The Group maintains a regular dialogue with stakeholders including shareholders to enable interested parties to make informed
decisions about the Company and its performance. The Board believes that transparency in its dealings offers a level of comfort to
stakeholders and an understanding that their views will be listened to. This proved to be of utmost importance during 2022 which was
a period of significant change and challenge for the Company. The Board intends to continue its policy of communication for the
mutual benefit of the Company and its stakeholders.
The Board discloses the result of general meetings by way of announcement and discloses the proxy voting numbers to those
attending the meetings. In order to improve transparency, the Board implemented a policy to announce proxy voting results following
the Annual General Meeting in November 2022, as it had committed to do. In the event that a significant portion of voters vote
against a resolution, an explanation of what actions the Board intends to take to understand the reasons behind the vote will be
included. The proxy voting results were published.
Andy Parker
Executive Chairman
Date: 5 May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
25
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year. The directors have
elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare the group financial
statements in accordance with UK-adopted international Accounting Standards and have elected under company law to prepare the
company financial statements in accordance with UK-adopted International Accounting Standards and applicable law.
The group and company financial statements are required by law and UK-adopted International Accounting Standards to present
fairly the financial position of the group and the company and the financial performance of the group. The Companies Act 2006
provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and
fair view are references to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of the profit or loss of the group for that period.
In preparing each of the group and company financial statements, the directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b.
make judgements and accounting estimates that are reasonable and prudent;
c.
state whether they have been prepared in accordance with UK-adopted International Accounting Standards.
d.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Tialis
Essential IT PLC (formerly IDE Group Holdings plc) website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Ian Smith
Executive Director
On behalf of the Board
5 May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
26
Report of the Audit Committee
I am pleased to present the Audit Committee’s report for the year ended 31 December 2022. The following pages provide an insight
into how the Audit Committee discharged its responsibilities during the year and the key topics that it considered in doing so.
Composition
During 2022 the Audit Committee comprised Andy Parker, Non-Executive Chairman of the Group in 2022 (since appointed Executive
Chairman in February 2023) and Ian Smith, Executive Director. Andy Parker chaired the Audit Committee and was considered by
the Board to have recent and relevant financial experience and the other member has competence and experience relevant to the
Company’s sector of operation. Other members of senior management may also be invited to attend the meetings as guests,
including the interim chief financial officer.
The Board acknowledges that the lack of independent non-executive Directors did not comply with the standards of the QCA
Corporate Governance Code in terms of composition of the Board and its Committees. With the appointment of two new independent
Non-Executive Directors in the first two months of 2023, the situation has been rectified with Nick Bedford appointed as Chair of the
Audit Committee. Nick is a chartered accountant.
Role and Responsibilities
The Audit Committee determines and examines any matters relating to the financial affairs of the Group including the terms of
engagement of the Group’s auditors and, in consultation with the auditors, the scope of the audit. The Audit Committee meets at
least twice in each financial year, either in a dedicated meeting or as part of a Board meeting.
The Audit Committee is responsible for monitoring the integrity of the Company’s financial statements, reviewing significant financial
reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems. In addition, it considers
the financial performance, position and prospects of the Group and the Company and ensures they are properly monitored and
reported on. It oversees the relationship with the Auditor (including advising on their appointment, agreeing the scope of the audit
and reviewing the audit findings).
The Board and the Audit Committee do not consider it appropriate for the current size of the Group to establish an internal audit
function.
Principal activities during the year
The Committee held two dedicated meetings during the year under review and considered the following:
•
An overview of the planned work by the external auditors on the 2022 audit including the scope and regulatory requirements
of the audit and audit findings.
•
The financial statements for the year ended 31 December 2021; and
•
The draft interim results for the period ended 30 June 2022 were considered in a meeting of the Board.
The Committee is planning the following activities during 2023:
•
Review the Company’s procedures, systems and controls for the prevention of bribery or fraud;
•
Review the adequacy and security of the Company’s arrangements for its employees to raise concerns, in confidence,
about possible wrongdoing in financial reporting or other matters. The Committee believe that these arrangements allow
proportionate and independent investigation of such matters and appropriate follow up action;
•
Review the Committee’s internal audit role, in the absence of an external provider of an internal audit service.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
27
Report of the Audit Committee (continued)
External Auditor
RSM UK Audit LLP (“RSM”) has been the external Auditor of the Group since 2019. On 1st November 2022 Barnes Roffe were
appointed as the new external Auditors of the Group. The continued appointment of Barnes Roffe is to be reviewed by the Committee
each year, taking into account relevant legislation, guidance and best practice appropriate for a Company of Tialis’ size and nature.
The Committee will consider a number of areas when reviewing the external Auditor appointment, namely its performance in
discharging the audit, the scope of the audit and terms of engagement, its independence and objectivity, and its reappointment and
remuneration.
The fees paid to RSM and Barnes Roffe during the financial year are set out in note 6 to the Group’s consolidated financial
statements. In addition to audit services RSM and Barnes Roffe have provided services in connection with the corporate simplification
programme.
Attendance at Audit Committee Meetings
Please see the report in the Corporate Governance Report in this document for attendance by the members of the Audit Committee.
Andy Parker
Chair of the Audit Committee
5 May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
28
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIALIS ESSENTIAL IT PLC
(FORMERLY IDE GROUP HOLDINGS PLC)
Opinion
We have audited the financial statements of Tialis Essential IT PLC (formerly IDE Group Holdings plc) (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2022 which comprise the consolidated statement of comprehensive income,
statements of financial position for the group and parent company, statements of changes in equity for the group and parent company,
statements of cash flows for the group and parent company and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted International Accounting
Standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2022 and of the group’s loss for the year then ended;
•
the group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards;
•
the parent company financial statements have been properly prepared in accordance with UK-adopted International Accounting
Standards and as applied in accordance with the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
• Impairment of software licences
• Loan note conversion
Parent Company
• Valuation of investments
Materiality
Group
• Overall materiality: £135,000 (2021: £167,000)
• Performance materiality: £101,250 (2021: £125,000)
Parent Company
• Overall materiality: £135,000 (2021: £167,000)
• Performance materiality: £101,250 (2021: £125,000)
Scope
Our audit procedures covered 100% of revenue, 100% of total assets and 100% of loss
before tax.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
29
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the group financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the key audit matter
Loan Note Conversion – parent company and group
The conversion of the loan notes during the year as outlined
in the Chairmans Statement gives rise to a risk that both loan
notes and equity are materially misstated.
We have obtained copies of the underlying agreements
and verified the interest calculations up until conversion.
The fair value of the shares issued was verified to the
market value at the date of conversion.
The gain on conversion of the loan notes has been
recalculated and agreed to the amounts disclosed in the
Statement of Comprehensive income and the share
capital amounts have been verified to the statutory books
and records.
We also assessed the disclosures made and application
of the standard in line with IFRS.
Impairment of software licences – group only
As detailed in Note 15 to the financial statements, the group
recognises customer contracts and relationships, which
management test for impairment on an annual basis in line
with accounting standards.
There is a risk that the uncertainty surrounding the trade of
the subsidiary could result in a material error in respect of
the recoverability of this balance.
We have considered the validity of forecasts provided for
each of the entities acquired and verified the assumptions
used in the goodwill calculations.
We have considered the assumptions used in the
preparation of discounted cash flows for the entities
acquired forming the basis for management’s impairment
review, and have reviewed management’s sensitivity
analysis in respect of key assumptions.
We also assessed the disclosures made and application
of the standard in line with IFRS.
Valuation of investments – parent company only
There is a risk that the uncertainty surrounding the trade of
each subsidiary could result in a material error in respect of
the recoverability of investments.
We have obtained and reviewed the detailed workings to
support the initial recognition of investments.
We have considered the validity of forecasts provided for
each of the entities acquired and verified the assumptions
used in the calculations of the Investments value.
We have considered the assumptions used in the
preparation of discounted cash flows utilised in
management’s impairments of investments.
We also assessed the disclosures made and application
of the standard in line with IFRS.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
30
audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole,
could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the
misstatements. Based on our professional judgement, we determined materiality as follows:
Group
Parent company
Overall materiality
£135,000 (2021: £167,000)
£135,000 (2021: £167,000)
Basis for determining overall
materiality
0.9% of Revenue
1% of net assets
Rationale for benchmark
applied
Revenue is considered to be the most
appropriate measure used to assess the
performance of the group during the
period in which it is seeking to grow
revenues and return to profitability.
Net assets are considered to be the
appropriate measure as the company’s
activity is to hold investments in group
companies.
Performance materiality
£101,250 (2021: £125,000)
£101,250 (2021: £125,000))
Basis for determining
performance materiality
75% of overall materiality
75% of overall materiality
Reporting of misstatements
to the Audit Committee
Misstatements in excess of £6,800 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
Misstatements in excess of £6,800 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
An overview of the scope of our audit
The group consists of the parent company, one trading company (Tialis Essential IT Manage Limited Formerly IDE Group Manage Limited)
and 5 other entities which were dormant or non-trading. The parent and trading company are based in the UK.
The coverage achieved by our audit procedures was:
Number of
components
Revenue
Total assets
Profit/Loss before
tax
Full scope audit
1
100%
100%
100%
Specific audit
procedures*
1
0%
0%
0%
Total
2
100%
100%
100%
* Specific audit procedures were performed in order to obtain sufficient and appropriate coverage over the group’s loss before tax and
borrowings.
Analytical procedures at group level were performed for the remaining 13 components.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
31
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to
continue to adopt the going concern basis of accounting included:
•
obtaining an understanding of management’s going concern evaluation and reviewing cashflow forecasts;
•
evaluating management’s ability to accurately forecast performance through comparison of historic performance against
forecast;
•
performing sensitivity analysis to understand the impact of reasonably possible outcomes, or changes to assumptions; and
•
testing the integrity and mechanical accuracy of the forecast model.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
•
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 25, the directors are responsible for the preparation of
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
32
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate
audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and
disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and
regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-
compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due
to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through
designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's
operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team:
•
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the group
and parent company operate in and how the group and parent company are complying with the legal and regulatory framework;
•
inquired of management, and those charged with governance, about their own identification and assessment of the risks of
irregularities, including any known actual, suspected or alleged instances of fraud;
•
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how
and where the financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit engagement
team included:
UK-adopted IAS and
Companies Act 2006
Review of the financial statement disclosures and testing to supporting
documentation;
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance regulations
Inspection of advice received from external tax advisors.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
33
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue cut-off
For a sample of contract assets and liabilities, recalculating the revenue recognised
(and the associated accrual/deferral), based upon the terms of the underlying
contracts and invoices; and
For samples of monthly and quarterly billed revenue transactions, in the identified
cut-off periods, verifying that revenue has been recognised in the correct period.
Management override of
controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
MARIO CIENTANNI (Senior Statutory Auditor)
For and on behalf of Barnes Roffe LLP, Statutory Auditor
Chartered Accountants
Charles Lake House
Causeway
Crossways Business Park
Dartford
DA2 6QA
Date: 5 May 2023
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
34
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Year ended
Year ended
31 December
31 December
Note
2022
2021
£000
£000
Continuing operations
Revenue
3
14,463
14,456
Cost of sales
5
(9,408)
(8,185)
Gross profit
5,055
6,271
Other operating income
4
-
40
Administrative expenses excluding impairment
5
(4,011)
(5,151)
Impairment charge on intangibles
15
-
(1,833)
Impairment credit on trade receivables
-
139
Total administrative expenses
(4,011)
(6,845)
Adjusted EBITDA*
1,950
3,099
Non underlying items
7
(421)
(433)
Depreciation
14
(208)
(321)
Amortisation
15
(1,169)
(1,169)
Gain on the conversion of secured loan notes
892
-
Impairment charge on intangibles
15
-
(1,833)
Impairment credit on trade receivables
17
-
139
Charges for share-based payments
28
-
(16)
Operating profit/(loss)
1,044
(534)
Finance income
9
10
-
Finance costs
10
(2,334)
(2,453)
Loss on ordinary activities before taxation
(1,280 )
(2,987)
Income tax
12
843
1,204
Loss for the year from continuing operations
(437)
(1,783)
Derecognition of foreign currency reserve
(150)
-
Loss for the year from discontinued operations
8
-
(193)
Loss for the year and total comprehensive loss attributable to owners of the
parent company
(587)
(1,976)
From continuing operations
Basic and diluted loss per share
13
(0.10) p
(0.39) p
From discontinued operations
Basic and diluted loss per share
13
(0.04)p
(0.04) p
Total basic and diluted loss per share
13
(0.14) p
(0.43) p
* Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charge, non-underlying items, loss on disposal of fixed
assets and share-based payments
The notes on pages 40 to 75 are an integral part of these financial statements.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
35
Statements of Financial Position
As at 31 December 2022
Note
Group
Company
2022
2021
2022
2021
£000
£000
£000
£000
Non-current assets
Property, plant and equipment
14
1,076
813
-
-
Intangible assets
15
7,062
8,231
-
-
Investments
16
-
-
18,211
7,877
Deferred tax asset
12
3,108
2,265
-
-
Trade and other receivables
17
100
313
9
16,842
11,346
11,622
18,220
24,719
Current assets
Trade and other receivables
17
3,661
3,969
79
31
Cash and cash equivalents
18
414
349
3
2
4,075
4,318
82
33
Total assets
15,421
15,940
18,302
24,752
Current liabilities
Trade and other payables
19
4,544
5,318
778
2,445
Contract liabilities
20
51
49
-
-
Borrowings
22
210
246
-
-
Provisions
21
-
157
-
-
4,805
5,770
778
2,445
Non-current liabilities
Trade and other payables
19
-
730
-
-
Borrowings
22
4,255
17,737
3,490
17,027
Convertible loan notes
23
143
131
143
131
Provisions
21
245
202
-
-
4,643
18,800
3,633
17,158
Total liabilities
9,448
24,570
4,411
19,603
Net (liabilities)/assets
5,973
(8,630)
13,891
5,149
Equity attributable to equity holders of the parent
Share capital
27
12,586
12,418
12,586
12,418
Share premium
50,754
35,882
50,754
35,882
Equity reserve
58
58
58
58
Retained earnings
(57,425)
(56,838)
(49,507)
(43,209)
Foreign currency translation reserve
-
(150)
-
-
Total equity
5,973
(8,630)
13,891
5,149
The notes on pages 40 to 75 are an integral part of these financial statements. The Company made a loss of £6.3 million in the year ended 31
December 2022 (2021: Loss £3.1 million) and in accordance with s408 of the Companies Act 2006 has not presented a company statement of
comprehensive income. These financial statements were approved by the Bord of Directors on 5 May 2023 and were signed on its behalf by:
Ian Smith
Executive Director
Company registered number: SC368538
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
36
Statements of Changes in Equity
for the year ended 31 December 2022
Group
Share
Capital (a)
Share
Premium (b)
Equity
reserve (c)
Retained
Earnings (d)
Foreign
currency
translation
reserve(e)
Total
equity
£000
£000
£000
£000
£000
£000
Balance at 1 January 2021
10,020
35,439
967
(54,878)
(150)
(8,602)
Loss for the financial year and total comprehensive expense
-
-
-
(1,976)
-
(1,976)
Shares issued for redemption of convertible loan notes (note
27)
2,398
443
(909)
-
-
1,932
Transactions with owners recorded directly in equity
Share based payments charge
-
-
-
16
-
16
At 31 December 2021
12,418
35,882
58
(56,838)
(150)
(8,630)
Balance at 1 January 2022
12,418
35,882
58
(56,838)
(150)
(8,630)
Loss for the financial year and total comprehensive expense
-
-
-
(587)
-
(587)
Shares issued for the conversion of secured loan notes and
in lieu of a bonus to an employee (note 27)
168
14,872
-
-
-
15,040
Transactions with owners recorded directly in equity
Derecognition of foreign exchange reserve
-
-
-
-
150
150
At 31 December 2022
12,586
50,754
58
(57,425)
-
5,973
(a) Share capital represents the nominal value of equity shares and deferred 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.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
37
Statements of Changes in Equity (continued)
for the year ended 31 December 2022
Company
Share
Capital (a)
Share
Premium (b)
Equity
reserve (c)
Retained
Earnings (d)
Total
equity
£000
£000
£000
£000
£000
Balance at 1 January 2021
10,020
35,439
967
(40,116)
6,310
Total comprehensive loss for the year
Loss for the year
-
-
-
(3,109)
(3,109)
Shares issued for redemption of convertible loan notes (note 27)
2,398
443
(909)
-
1,932
Share based payments charge
-
-
-
16
16
Balance at 31 December 2021
12,418
35,882
58
(43,209)
5,149
Total comprehensive loss for the year
Loss for the year
-
-
-
(6,298)
(6,298)
Shares issued for conversion of secured loan notes (note 27)
168
14,872
-
-
15,040
Share based payment charge
-
-
-
-
-
Balance at 31 December 2022
12,586
50,754
58
(49,507)
13,891
(a) Share capital represents the nominal value of equity shares and deferred 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
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
38
Statements of Cash Flows
for the year ended 31 December 2022
Group
Note
2022
2021
£000
£000
Cash flows from operating activities
Profit/(loss) from continuing operations:
(1,280)
(2,987)
Profit/(loss) from discontinued operations
-
(193)
Total loss before tax
(1,280)
(3,180)
Adjustments for:
Depreciation of property, plant and equipment
14
208
321
Amortisation of intangible assets
15
1,169
1,169
Profit/(loss) on disposal of discontinued operations
8
-
(1,286)
Impairment charge on goodwill and intangibles 15
-
1,833
Impairment credit on trade receivables 17
-
(139)
Net finance expenses
9,10
2,324
2,453
Share based payments
28
-
16
Gain on conversion of secured loan notes
(892)
-
Decrease/(increase) in trade and other receivables
521
(133)
Increase/(decrease) in trade and other payables and contract liabilities
(461)
(513)
Increase/(decrease) in provisions
(114)
47
Net cash generated from operating activities
1,475
588
Cash flows from investing activities
Acquisition of property, plant and equipment
(208)
(28)
Disposal of subsidiaries (cash disposed and expenses)
-
(586)
Net cash used in investing activities
(208)
(614)
Cash flows from financing activities
Interest received
10
-
Interest paid
(268)
(334)
Supplier finance repaid
(558)
(550)
New loans and borrowings, net of expenses
-
1,000
Nimoveri loan note repaid
(100)
-
Repayment of lease liabilities
22
(286)
(434)
Net cash generated from/ (absorbed by) financing activities
(1,202)
(318)
Net (decrease)/increase in cash and cash equivalents
65
(344)
Cash and cash equivalents at 1 January
349
693
Cash and cash equivalents at 31 December
414
349
Cash and cash equivalents comprise
Cash at bank
18
414
349
414
349
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
39
Statements of Cash Flows (continued)
for the year ended 31 December 2022
Company
Note
2022
2021
£000
£000
Cash flows from operating activities
Loss before tax for the year
(6,298)
(3,109)
Adjustments for:
Net financial expenses
2,067
2,032
Impairment in investment in subsidiaries
2,000
-
Share based payments
-
16
(2,231)
(1,061)
Decrease in trade and other receivables
(49)
(931)
Increase in trade and other payables
239
702
Decrease in provision
-
(50)
Net cash used in operating activities
(2,041)
(1,340)
Cash flows from investing activities
Amounts repaid by subsidiaries
2,042
335
Net cash generated from investing activities
2,042
335
Cash flows from financing activities
New loans and borrowings, net of expenses
-
1,000
Net cash generated from financing activities
-
1,000
Net decrease in cash and cash equivalents
1
(5)
Cash and cash equivalents at 1 January
2
7
Cash and cash equivalents at 31 December
18
3
2
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
40
Notes to the Consolidated Financial Statements
1
Accounting policies
Tialis Essential IT PLC (formerly IDE Group Holdings PLC) (“Tialis Group”) is a company incorporated in Scotland, domiciled in
the United Kingdom and limited by shares which are publicly traded on AIM, the market of that name operated by the London Stock
Exchange. The registered office is 24 Dublin Street, Edinburgh EH1 3PP and the principal place of business is in the United
Kingdom.
The principal activity of the Group is the provision of network, cloud and IT managed services.
The principal accounting policies, which have been applied consistently in the preparation of these consolidated and parent
company financial statements throughout the year and all by subsidiary companies are set out below.
1.1 Basis of preparation
The consolidated and parent company financial statements of Tialis Group have been prepared on the going concern basis and in
accordance with UK-adopted International Accounting Standards. The consolidated financial statements have been prepared
under the historical cost convention. The Company has elected to take the exemption under section 408 of the Companies Act
2006 to not present the parent Company’s Income Statement.
The accounting framework requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in
note 1.25 in the accounting policies. The financial statements are prepared in GBP (being the functional currency of the Group)
and rounded to the nearest £1,000.
Going concern
The Directors have produced detailed trading and cashflow forecasts. In reaching their conclusion on the going concern basis of
accounting, the Directors note and rely on the improved trading performance, the positive cash generation that the business is now
experiencing and the current signed order book. A reverse stress test of the model has been run to determine at what level of
shortfall in revenues the Group would run out of cash. Given the committed orders already obtained and the visibility of future
revenues, the directors do not consider it likely that revenues could drop to such an extent that the Group would run out of cash.
They have also considered the impact of any delayed customer payments and have developed plans to mitigate any such delays
to ensure that the group can continue to settle its liabilities as they fall due and operate as a going concern. The directors therefore
have an expectation that the Group and Company have adequate resources available to them to continue in operational existence
for a period of at least 12 months from the date of approval of these financial statements. Accordingly, the Group and Company
continue to adopt the going concern basis in preparing these consolidated financial statements.
1.2 Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition
of a subsidiary is the total of the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree
and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling
interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate
share of the recognised amounts of the acquiree’s identifiable net assets.
Acquisition related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated on
consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with policies adopted
by the Group.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
41
Notes to the Consolidated Financial Statements (continued)
1
Accounting policies (continued)
1.3 Investments
Investments in subsidiaries are held at cost less accumulated impairment losses. A formal assessment of the recoverability of the
investment values is undertaken on an annual basis by the Directors. Where indicators of impairment are identified, fixed asset
investments are impaired accordingly.
1.4 Intangible assets
Goodwill
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of any non-
controlling interest over the fair value of the net identifiable assets acquired and liabilities assumed. If this consideration is lower
than the fair value of the net assets of the subsidiary acquired, the difference is recognised in the income statement as a bargain
purchase.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purposes of impairment testing, goodwill acquired in a business combination is allocated to a cash generating unit.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Other intangible assets arising from business combinations
Intangible assets that meet the criteria to be separately recognised as part of a business combination are carried at cost (which is
equal to their fair value at the date of acquisition) less accumulated amortisation and impairment losses. An intangible asset
acquired as part of a business combination is recognised outside of goodwill if the asset is separable or arises from contractual or
other legal rights and its fair value can be measured reliably. Intangible assets acquired in this manner include trademarks and
customer contracts. They are amortised over their estimated useful lives on a straight-line basis as follows:
•
Customer contracts and related relationships
13 years
•
Trademarks
5 years
Impairment and amortisation charges are included within the administrative expenses line in the income statement.
Technology development
Expenditure on internally developed technology is capitalised if it can be demonstrated that:
- it is technically feasible to develop the technology for it to be used or sold
- adequate resources are available to complete the development
- there is an intention to complete and for the Group to use or sell the technology
- use or sale of the asset will generate future economic benefits, and
- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group expects to benefit from using or selling the assets
developed. The amortisation expense is included within the administrative expenses line in the income statement. Development
expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the
consolidated income statement as incurred.
Software and licensing
Separately acquired software and licenses are shown at historical cost less accumulated amortisation and impairment losses.
They are amortised over their estimated useful lives on a straight-line basis as follows:
•
Software and licensing
8 years
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
42
1
Accounting policies (continued)
1.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. The cost includes
the original price of the asset and the cost attributable to bringing the asset to its current working condition for its intended use.
Depreciation, down to residual value, is calculated on a straight-line basis over the estimated useful life of the asset, which is
reviewed on an annual basis, as follows:
•
Leasehold property
Over remaining lease term
•
Network infrastructure
3 - 10 years
•
Equipment, fixtures and fittings
3 - 5 years
An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item
is de-recognised.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost
of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the
site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of
the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term,
the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
1.6 Impairment of assets
Goodwill is not subject to amortisation and is reviewed for impairment annually or more frequently if events or changes in
circumstances indicate the carrying value may be impaired. As at the acquisition date, any goodwill acquired is allocated to each
of the cash generating units expected to benefit from the business combination’s synergies. Impairment is determined by assessing
the recoverable amount of each cash generating unit to which the goodwill relates. When the recoverable amount of the cash
generating unit is less than the carrying amount, including goodwill, an impairment loss is recognised.
Other intangible assets and property, plant and equipment are subject to amortisation and depreciation and are reviewed for
impairment whenever events or changes in circumstances indicate the carrying values may not be recoverable. If any such
indication exists and where the carrying value exceeds the estimated recoverable amount, the assets or cash generating units are
written down to their recoverable amount.
The recoverable amount of intangible assets and property, plant and equipment is the greater of the fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to their present values using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the recoverable amount is determined by the cash generating unit to
which the asset belongs. Fair value less costs to sell is, where known, based on actual sales price net of costs incurred in
completing the disposal. Non-financial assets, other than goodwill, that were impaired in previous periods are reviewed annually
to assess whether the impairment is still relevant.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
1
Accounting policies (continued)
43
1.7 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction from proceeds.
1.8 Leases
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual
value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period
in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there
is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
1.9 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event where it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows at a risk-free rate that reflects current market assessments of the time value of money
and, where appropriate, the risks specific to the liability.
1.10 Current and deferred income tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided for on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes, with the following exceptions:
•
where the temporary difference arises from the initial recognition of goodwill or an asset or liability in a transaction that is
not a business combination that at the time of the transaction neither affects accounting nor taxable profit or loss;
•
in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future; and
•
deferred income tax assets are recognised only to the extent that it is probable that taxable profits will be available against
which deductible temporary differences carried forward tax credits or tax losses can be utilised.
1.11 Trade and other receivables
Trade receivables, which principally represent amounts due from customers, are recognised at amortised cost as they meet the IFRS
9 classification test of being held to collect, and the cash flow characteristics represent solely payments of principal and interest.
The Group has applied the Simplified Approach applying a provision matrix based on number of days past due to measure lifetime
expected credit losses and after taking into account customers with different credit risk profiles and current and forecast trading
conditions.
Trade receivables are written-off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a
repayment plan with the company. The Group’s trade and other receivables are non-interest bearing.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
1
Accounting policies (continued)
44
1.12 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original
maturity of three months or less.
For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as
defined above.
1.13 Foreign currencies
The presentational currency of the Group is Pound Sterling (£) and the Group conducts the majority of its business in Sterling.
Transactions in foreign currencies are initially recorded in the presentational currency by applying the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the presentational
currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.
1.14 Accrual for employee benefits, including holiday pay
Provision is made for employee benefits, including holiday pay, to the extent of the liability as if all employees of the Group had left
the business at its reporting date.
1.15 Financial assets and liabilities
The Group’s financial assets and liabilities mainly comprise cash, borrowings, trade and other receivables and trade and other
payables. These are accounted for in accordance with the relevant accounting policy note.
Trade and other payables are not interest bearing and are stated at their amortised cost.
1.16 Convertible loan notes
The component parts of convertible loans issued by the Company are classified separately as financial liabilities and equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
At the date of issue, the fair value of the liability portion of convertible loan notes is determined using a market interest rate for a
comparable loan note with no conversion option. This amount is recorded as a liability on an amortised cost basis using the effective
interest method until the loan notes are redeemed or converted either during or at the end of the term of the convertible loan notes.
The remainder of the carrying amount of the loan notes is allocated to the conversion option and shown within equity and is not
subsequently remeasured. When the conversion option remains unexercised at the maturity date of the convertible note, the balance
recognised in equity will be transferred to retained earnings. No gain or loss is recognised in the income statement upon conversion
or expiration of the conversion options.
1.17 Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains
and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised in the finance cost line in
the income statement.
1.18 Finance costs
Loans are carried at fair value on initial recognition, net of unamortised issue costs of debt. These costs are amortised over the
loan term.
All other borrowing costs are recognised in the income statement on an accruals basis, using the effective rate method.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
45
Notes to the Consolidated Financial Statements (continued)
1
Accounting policies (continued)
1.19 Revenue
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary
course of the Group’s activities. Revenue is shown net of Valued Added Tax, returns, rebates and discounts and after the
elimination of sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below.
Recurring revenue
The largest portion of the Group’s revenues relates to a number of network, cloud and IT managed services, which the Group
offers to its customers. All of the revenue in this category is contracted and includes a full range of support, maintenance,
subscription and service agreements. Revenue for these types of services is recognised as the services are provided on the basis
that the customer simultaneously receives and consumes the benefits provided by the Group’s performance of the services over
the contract term. In terms of performance obligations, the customer can benefit from each service on its own and the Group’s
promise to transfer the service to the customer is separately identifiable from other promises in the contract. The transaction price
for each service is allocated to each performance obligation. The costs incurred for these revenue streams typically match the
revenue pattern. A contract liability is recognised when billing occurs ahead of revenue recognition. A contract asset is recognised
when the revenue recognition criteria were met but in accordance with the underlying contract, the sales invoice has not been
issued yet.
Project revenue
These project services include mainly installation and consultancy services. Performance obligations are met once the hours or
days have been worked. Revenue is therefore recognised over time based on the hours or days worked at the agreed price per
hour or day. The costs incurred for this revenue stream generally match the revenue pattern, as a significant portion of consultancy
costs relate to staff costs, which are recognised as incurred. Consultancy services are generally provided on a time and material
basis.
1.20 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received
and the Group will comply with all attached conditions.
1.21 Non-underlying items
It is the policy of the Group to identify certain costs, which are material either because of their size or nature, separately on the
face of the Income Statement in order that the underlying profitability of the business can be clearly understood. These costs are
identified as non-underlying items, and comprise;
a)
Professional fees incurred in sourcing and completing acquisitions and disposals including legal expenses
b)
Professional fees incurred in restructuring and refinancing acquisitions
c)
Integration costs which are incurred by the Group when integrating one trading business into another, including
rebranding of acquired businesses
d)
Redundancy costs, including employment related costs of staff made redundant up to the date of their leaving as a
consequence of integration
e)
Property costs such as lease termination penalties and vacant property provisions and third-party advisor fees
1.22 Discontinued operations
Cash flows and operations that relate to a major component of the business that has been disposed of or is classified as held for
sale or distribution are shown separately from continuing operations.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
46
1.23 Segmental reporting
The Chief Operating Decision Maker has been identified as the Executive Board. The Chief Operating Decision Maker reviews the
Group’s internal reporting in order to assess performance and allocate resources. For management reporting purposes and
operationally, the continuing operations of the Group consist of Tialis IT Essential Manage Limited for this year and the prior year.
1.24 Standards and interpretations not yet applied by the Group
For the purposes of the preparation of these consolidated financial statements, the Group has applied all standards and
interpretations that are effective for accounting periods beginning on or after 1 January 2022. There was no significant impact of
new standards and interpretations adopted in the year, which include:
•
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and –FRS 16) - effective 1
Jan 2022
No new standards, amendments or interpretations to existing standards that have been published and that are mandatory for the
Group’s accounting periods beginning on or after 1 January 2022, or later periods, have been adopted early. The new standards
and interpretations are not expected to have any significant impact on the financial statements when applied.
1.25 Critical accounting estimates and judgements
Estimates
The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that
match the accounting estimate. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial year are discussed below:
Recoverability of deferred tax asset –This includes estimates of the level of future profitability, and a judgement as to the likelihood
of the group undergoing a restructure of its finances which would result in significant finance cost savings.
A change in the estimate of future profits would result in an equivalent change to the deferred tax asset recognised of 25% of the
change in profits. There are no reasonably plausible scenarios which would result in the future profitability not being sufficient to
enable full recovery of the tax losses in the assessment period.
Impairment of intercompany balances - The directors use estimates in assessing the level of impairment of intercompany balances at
each period end, including the likely methods of recovery of the balances and future profitability of the underlying trade which would
enable repayments to be made.
Judgements
In the process of applying the Group’s accounting policies, management makes various judgements which can significantly affect
the amounts recognised in the financial statements. Critical judgements are considered to be:
Classification of non-underlying items - the Directors have exercised judgement when classifying certain costs arising during
integration and strategic reorganisation projects. The Directors believe that these costs are all related to the types of costs
described in 1.21 above and are appropriately classified.
Recoverability of deferred tax asset – the Directors have exercised judgement on the recoverability of tax losses attributable to future
trading profits generated by the Group, and in doing so this has given rise to a deferred tax asset, details of which are shown in note
12 to the financial statements. The judgement involves assessing the extent to which trading losses can be offset against future
profits.
Impairment of software licences - As set out in note 15, the directors performed an impairment review in respect of software
licences in 2021, which had a carrying amount at the previous balance sheet date of £1.8m. The impairment review was triggered
both because the licences were not yet in use, and because of an indicator of impairment due to planned expansion which didn’t
materialise, and the sale of the Connect business, which meant the licences had no addressable market. Following the review the
licences were fully impaired. The directors’ judgement is that it is very unlikely that the benefit of trying to earn revenues for the
licences would exceed the cost of funding the activities that would be required.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
47
2
Segment reporting
With the sale of the Connect and Nimoveri Businesses in 2021 the Group has only one operating segment, the Manage Business.
3
Revenue
Disaggregation of revenue from contracts with customers is as follows:
Year ended 31 December 2022
Managed
Projects
Total
services
Geographical regions
£000
£000
£000
United Kingdom
10,770
3,632
14,402
Europe
61
-
61
Total
10,831
3,632
14,463
Timing of revenue recognition
Goods transferred at a point in time
84
-
84
Services transferred over time
10,747
3,632
14,379
Total
10,831
3,632
14,463
The revenue from the largest customer was £11.7m (2021: £6.8 million) or 84% of total revenue (2021: 63%). No other customers
account for more than 10% of revenue.
Year ended 31 December 2021
Managed
Projects
Total
Services
Geographical regions
£000
£000
£000
United Kingdom
10,704
3,716
14,420
Europe
13
23
36
Total
10,717
3,739
14,456
Timing of revenue recognition
Goods transferred at a point in time
48
-
48
Services transferred over time
10,669
3,739
14,408
Total
10,717
3,739
14,456
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
48
Contract balances
2022
2021
£000
£000
Receivables included within trade and other receivables
2,499
2,677
Contract assets
664
837
3,163
3,514
Contract liabilities
(51)
(49)
Total
3,112
3,465
Contract assets predominantly relate to fulfilled obligations in respect of projects and managed services which are billed monthly
and in arrears. At the point where completed work is invoiced, the contract asset is derecognised, and a corresponding receivable
recognised. Contract liabilities relate to consideration received from customers in advance of work being completed.
The Group’s standard payment terms are 30 days from the date of invoice. Refunds are only due in the exceptional circumstances
where the Group does not meet the performance obligations set out in a contract. The majority of revenue for services is invoiced
monthly, sometimes quarterly, in advance, and goods are invoiced on delivery.
Unsatisfied performance obligations
All contracts for the provision of services are for periods of one year or less or are billed based on resources utilised. As permitted
under IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
4
Other operating income
Other operating income comprises government grants receivable.
5
Expenses by nature
2022
2021
£000
£000
Direct staff costs
6,048
4,902
Third party cost of sales
3,360
3,283
Employee costs within administrative expenses
2,027
2,133
Amortisation of intangible assets
1,169
1,169
Depreciation
208
321
Impairment charge on intangible assets
-
1,833
Share-based payments
-
16
Non-underlying items
421
433
Impairment credit on trade receivables
-
(139)
Gain on the conversion of secured loan notes
(892)
-
Other administrative costs
1,078
1,079
Total cost of sales and administrative expenses
13,419
15,030
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
49
6
Auditor’s remuneration
2022
2021
£000
£000
Audit of these financial statements
28
59
Amounts receivable by auditors and their associates in respect of:
Audit of financial statements of subsidiaries of the Company
45
59
Additional fees charged in respect of prior year’s audit
14
33
Total
87
151
7
Non-underlying costs
In accordance with the Group’s policy in respect of non-underlying costs, the following charges were incurred for the year in relation
to continuing operations:
2022
2021
£000
£000
Restructuring and reorganisation costs
421
433
421
433
Restructuring and reorganisation costs in the year ended 31 December 2022 and the year ended 31 December 2021 relate to
costs incurred on the restructure of the Group, predominantly redundancy costs, of which £29k are staff related as disclosed in
note 11 (2021: £0.3 million) and £0.25m for cost relating to the loan note conversion.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
50
8
Discontinued operations
On 19 October 2021, the Group completed the sale of 100% of the issued share capital of IDE Group Connect Limited, Nimoveri
Holdings Limited, and Nimoveri Limited, to CloudCoCo Group PLC for a consideration of £250,000 to enable management to focus
on growth of the Manage business. Immediately prior to the sale, Tialis Essential IT PLC (formerly IDE Group Holdings PLC) wrote-
off the inter-company loan of £15,235,000 owed to Tialis Essential IT PLC (formerly IDE Group Holdings PLC) and its subsidiaries.
Financial performance
Period ended
Discontinued Operations
31 December
2021
£000
Revenue
10,542
Cost of sales
(9,708)
Gross profit
834
Other operating income
95
Administrative expenses
(2,486)
Operating loss
(1,557)
Finance costs
(16)
Loss for the year from discontinued operations
(1,573)
Tax
-
Gain on sale of subsidiaries
1,380
Profit/(loss) for the financial period from discontinued operations
(193)
Carrying amounts of assets and liabilities disposed
£000
Cash and cash equivalents
490
Trade and other receivables
557
Other current assets
1,228
Deferred tax asset
592
Property, plant and equipment
17
Goodwill
196
Total assets
3,080
Trade and other payables
(4,304)
Total liabilities
(4,304)
Net Liabilities disposed
(1,224)
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
51
8 Discontinued operations (continued)
Details of the sale of the subsidiaries
£000
Cash consideration receivable
250
Carrying amount of net liabilities sold
1,224
Less disposal costs incurred
(94)
Gain on sale
1,380
Period ended
Cashflow statement
19 October
2021
£’000
Net cash generated from/ (used in) operating activities
211
Net cash used in investing activities
(27)
Net cash used in financing activities
(139)
Net cash generated from/ (used in) the subsidiaries sold
45
9
Finance Income
Continuing Operations
2022
£000
2021
£000
Interest received
10
-
10
-
10 Finance costs
Continuing Operations
2022
£000
2021
£000
Interest expense on lease liabilities
98
84
Unwind of discount on trade payables
170
242
Interest expense in respect of convertible loan notes
12
80
Interest expense in respect of loan notes
2,054
2,039
Other interest
-
8
2,334
2,453
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
52
11 Employee benefits expense
Staff costs for the year for the Group, including Directors, relating to continuing operations amounted to:
2022
£000
2021
£000
Wages and salaries
6,750
6,065
Social security costs
739
552
Other pension costs
586
418
Restructuring costs
-
267
8,075
7,302
At 31 December 2022, the Group employed 191 staff, including Directors (2021: 166).
The average monthly number of persons employed by the Group during the year, including Directors, analysed by category, and
relating to continuing operations, was as follows:
Number of employees
2022
2021
Operations
168
131
Sales and Marketing
6
7
Administration
15
26
Directors
2
2
Total average monthly headcount
191
166
The Company employed an average of 2 employees during 2022 (2021: 2), which were the Non-Executive Chairman Andy Parker and
the Executive Director Ian Smith. Their remuneration is as shown below. No social security costs were payable.
For Directors who held office during the year, emoluments for the year ended 31 December 2022 for the Group were as follows:
Salary/fees
Salary/fees
2022
2021
£
£
Executive
Ian Smith1
221,000
221,000
David Templeman
-
72,885
Non-Executive
Andy Parker
53,333
40,000
Sebastian White2
-
2,500
Total
274,333
336,385
1. Directors’ emoluments to Ian Smith were paid to MXC Advisory Limited, a subsidiary of MXC Capital Limited
2. Directors’ emoluments to Sebastian White were paid to Kestrel Partners LLP
Social security costs in respect of Directors’ emoluments were £6,354 (2021: £16,799). Pension contributions were made to a
defined contribution scheme in respect of one participating Director in 2022 of £nil (2021: £1,500).
None of the Directors made any gains on the exercise of share options in 2022 or 2021.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
53
12 Taxation
2022
2021
£000
£000
Current tax
Current year
-
-
Current tax
-
-
Deferred tax credit
(843)
(1,204)
Total tax credit
(843)
(1,204)
(a)
Tax on loss on ordinary activities
Reconciliation of the total income tax credit:
2022
2021
£000
£000
Profit/(loss) before taxation from continuing operations
(1,280)
(2,987)
Tax using the United Kingdom corporation tax rate of 19% (2021: 19%)
(243)
(568)
Non-deductible expenses/(income)
Amortisation and impairment of goodwill and intangibles – non qualifying assets
(117)
-
95
-
Tax losses utilised – not previously recognised
(279)
(188)
Adjustment for rate change
(202)
(543)
Prior year adjustment
(2)
-
Total tax credit
(843)
(1,204)
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
54
12
Taxation (continued)
(b)
Deferred tax (asset)/liability
2022
2021
£000
£000
At 1 January
(2,265)
(1,653)
On discontinued operations
-
592
Credit to income statement
(843)
(1,204)
At 31 December
(3,108)
(2,265)
(Asset)
Liability
Net (asset)/
liability
£000
£000
£000
At 1 January 2021
(3,439)
1,786
(1,653)
Disposal of discontinued operations
592
-
592
Credit to income statement
Timing differences in respect of tangible assets
(47)
-
(47)
Timing differences in respect of intangible assets
-
272
272
Short term timing differences
(2)
-
(2)
Recognition of losses
(1,427)
-
(1,427)
(1,476)
272
(1,204)
At 31 December 2021
(4,323)
2,058
(2,265)
Credit to income statement
-
-
-
Timing differences in respect of tangible assets
140
-
140
Timing differences in respect of intangible assets
-
(292)
(292)
Short term timing differences
4
-
4
Recognition of losses
(695)
-
(695)
(551)
(292)
(843)
At 31 December 2022
(4,874)
1,766
(3,108)
Deferred tax liabilities arose in respect of the amortisation of intangible assets recognised on acquisitions as follows:
2022
£000
2021
£000
Fixed asset timing differences
1,766
2,058
At 31 December
1,766
2,058
Deferred tax assets arose in respect of trade losses and fixed asset and other differences, details as follows:
2022
£000
2021
£000
Tax losses recognised
4,454
3,758
Other temporary differences
5
9
Depreciation in advance of capital allowances
415
556
At 31 December
4,874
4,323
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
55
Deferred tax assets are recognised for tax losses carried forward of £15.8 million (2021: £15.0 million) to the extent that the
realisation of the related tax benefit through future taxable profits is probable. In assessing recoverability, management considers
that the appropriate period over which profits can be assessed with a reasonable degree of certainty, and therefore used to offset
the losses, is the period to 31 December 2029. The future taxable profits are assumed to include the impact of the planned
conversion of borrowings to equity.
The evidence supporting the recognition of the deferred tax asset for losses is the partial use of losses in the year.
The Group had unrecognised trading losses carried forward at 31 December 2022 of £3.1 million (2021: £3.1 million). The Company
has no deferred tax assets or deferred tax liabilities as at 31 December 2022 or 31 December 2021.
The Finance Bill 2022, which was substantively enacted on 24 May 2022, included the announcement that the corporation tax rate
for years starting from April 2023 would increase to 25% on profits over £250,000 and that the rate for small profits under £50,000
will remain at 19% and there will be a tapered rate for businesses with profits under £250,000 so that they pay less than the main
rate. Deferred tax balances have been re-measured at the reporting date taking into account the new rate of tax.
13
Earnings per share
Basic earnings per share has been calculated using the loss after tax for the year for continuing operations of £0.4 million (2021: Loss
£1.8 million), a loss after tax for the year for discontinued operations of £0.2 million (2021 loss: £0.2 million) and a weighted average
number of ordinary shares of 418,575,630 (2021: 461,185,527). The weighted average number of ordinary shares for the purpose
of calculating the basic and diluted measures is the same. This is because the outstanding warrants details of which are given in
note 28, would have the effect of reducing the loss from continuing operations per ordinary share and therefore would be anti-dilutive
under the terms of IAS 33.
Continuing operations
2022
2021
Basic and diluted loss per share (pence)
(0.10) p
(0.39) p
Discontinued operations
Basic and diluted loss per share (pence)
(0.04)p
(0.04) p
Total basic and diluted loss per share
(0.14 )p
(0.43) p
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
56
14
Property, plant and equipment
Group
Group
Leasehold
property
Network
infrastructure
Equipment,
fixtures,
and fittings
Total
£000
£000
£000
£000
Cost
At 1 January 2022
1,549
3,029
337
4,915
Additions
272
103
116
491
Disposals
-
(2,970)
(337)
(3,307)
At 31 December 2022
1,821
162
116
2,099
Accumulated depreciation
At 1 January 2022
784
2,990
328
4,102
Charge for the year
170
28
10
208
Disposals
-
(2,959)
(328)
(3,287)
At 31 December 2022
954
59
10
1,023
Net carrying amount
31 December 2022
867
103
106
1,076
31 December 2021
765
39
9
813
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
57
14
Property, plant and equipment (continued)
Group
Leasehold
property
Network
infrastructure
Equipment,
fixtures,
and fittings
Total
£000
£000
£000
£000
Cost
At 1 January 2021
2,181
14,637
3,726
20,544
Disposal of discontinued operations
(632)
(7,179)
(2,279)
(10,090)
Acquisitions
-
-
28
28
Disposals
-
(4,429)
(1,138)
(5,567)
At 31 December 2021
1,549
3,029
337
4,915
Accumulated depreciation
At 1 January 2021
1,144
14,558
3,634
19,336
Disposal of discontinued operations
(632)
(7,172)
(2,269)
(10,073)
Charge for the year – continuing operations
191
33
97
321
Charge for the year – discontinued operations
-
-
4
4
Impairment – discontinued operations
81
-
-
81
Disposals
-
(4,429)
(1,138)
(5,567)
At 31 December 2021
784
2,990
328
4,102
Net carrying amount
31 December 2021
765
39
9
813
31 December 2020
1,037
79
92
1,208
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
58
14
Property, plant and equipment (continued)
Right of use assets
The carrying amounts of property, plant and equipment include right of use assets as detailed below:
Leasehold
Network
Infrastructure
Equipment,
Fixtures &
Fittings
Total
Cost
£000
£000
£000
£0000
At 1 January 2021
2,054
85
307
2,446
Disposal – discontinued operations
(505)
(85)
(29)
(619)
At 31 December 2021
1,549
-
278
1,827
Additions - continuing operations
272
-
11
283
Disposal - continuing operations
-
-
(278)
(278)
At 31 December 2022
1,821
-
11
1,832
Accumulated depreciation
At 1 January 2021
1,017
85
261
1,363
Charge for the year- continuing operations
191
-
33
224
Charge for the year- discontinued operations
-
-
4
4
Impairment – discontinued operations
70
-
-
70
Disposal – discontinued operations
(494)
(85)
(26)
(605)
At 31 December 2021
784
-
272
1,056
Charge for the year - continuing operations
170
-
8
178
Disposal - continuing operations
-
-
(278)
(278)
At 31 December 2022
954
-
2
956
Net carrying amount
31 December 2022
867
-
9
876
31 December 2021
765
-
6
771
Additions to the right-of-use assets during the year were £0.3 million (2021: £nil).
The depreciation charge for the year of £0.2 million (2021: £0.2 million) relates to continuing operations and has been charged to
administrative expenses.
Company
The Company has no property, plant and equipment at 31 December 2022 or at 31 December 2021.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
59
15
Intangible assets
Group
Goodwill Trademarks
Customer
contracts and
related
relationships
Technology
development
Software
and
Licensing
Total
£000
£000
£000
£000
£000
£000
Cost:
At 1 January 2021
32,452 1,707 29,076
935
1,833 66,003
Disposal – discontinued operation
(16,854)
-
(13,880) -
- (30,734)
At 31 December 2021
15,598 1,707 15,196
935 1,833 35,269
Additions
-
- - - -
-
At 31 December 2022
15,598 1,707 15,196
935 1,833 35,269
Impairment and amortisation:
At 1 January 2021
32,256 1,707 19,676
935 - 54,574
Amortisation for the year – continuing operations*
-
- 1,169 - - 1,169
Impairment charge – continuing operations
-
-
- -
1,833 1,833
Disposal - discontinued operations
(16,658)
-
(13,880) - - (30,538)
At 31 December 2021
15,598 1,707 6,965
935
1,833 27,038
Amortisation for the year – continuing operations*
-
- 1,169 - - 1,169
At 31 December 2022
15,598 1,707 8,134
935 1,833 28,207
Net carrying amount:
At 31 December 2022
-
- 7,062 - - 7,062
At 31 December 2021
-
- 8,231 -
-
8,231
*£1.2 million of the amortisation charge is included in the loss for the year from continued operations in the Income Statement within
administrative expenses.
The remaining unamortised life of the intangible assets at 31 December 2022 is as follows:
•
Tialis IT Essential Manage customer contracts and related relationships – 6 years, net carrying value £7.1 million.
Impairment of licences
In 2020 Tialis Group invested in software licences at the year-end amounting to £1.8 million. These licences were purchased with
a view to a planned expansion of the group, resale to our clients in our Connect Business and for operational use in the Connect
Business. Because the planned expansion didn’t materialise and with the sale of the Connect Business in 2021, the directors
believe that the Group would be unable to obtain the full benefit of the licences in its remaining business (see also note 1.25). The
directors consider that the investment required to be able to sell the licences to third parties would exceed any potential benefit.
Accordingly, these software licenses have been impaired and written down to £nil in 2021.
Company
The company had no intangible assets at 1 January 2021, 31 December 2021 or 31 December 2022.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
60
16
Investments
Company
2022
£000
2021
£000
At 1 January 2021
7,877
7,877
Additions
20,211
-
Impairment of investment in subsidiary companies
(9,877)
-
At 31 December
18,211
7,877
The Company has the following investments in subsidiaries:
Country of
Class of
Ownership
Incorporation
shares held
2022
2021
Held directly by Tialis Essential IT PLC
IDE Group Limited
England1
Ordinary
100%
100%
Connexions4London Limited3
Scotland2
Ordinary
100%
100%
Selection Services Investments Limited3
Scotland2
Ordinary
100%
100%
Selection Services Limited3
England1
Ordinary
100%
100%
Tialis Essential IT Financing Limited
England1
Ordinary
100%
100%
Held indirectly by Tialis Essential IT PLC
Tialis Essential IT Manage Limited
England1
Ordinary
100%
100%
IDE Group Protect Limited3
England1
Ordinary
100%
100%
IDE Group Subholdings Limited
England1
Ordinary
100%
100%
IDE Group Voice Limited
England1
Ordinary
100%
100%
Holdfast Systems Limited3
England1
Ordinary
100%
100%
1
Registered office is located at Unit 2, Quadrant Court, Crossways Business Park, Greenhithe, Dartford, England, DA9 9AY.
2
Registered office is located at 24 Dublin Street, Edinburgh EH1 3PP.
3
In solvent liquidation at the year-end 31 December 2022.
At 31 December, the only trading subsidiary of the Company was Tialis Essential IT Manage Limited (31 December 2021: Tialis
Essential IT Manage Limited (formerly, IDE Group Manage Limited).
As part of the group restructuring in November 2022, the investment in Tialis Essential IT Financing Limited was transferred from
IDE Group Limited to Tialis Essential IT PLC for £20.2m.
Tialis Essential IT Manage Limited’s activity consists of IT Managed services.
All of the remaining subsidiaries are non-trading.
IDE Group Subholdings Limited, IDE Group Voice Limited, Tialis Essential IT Financing Limited, and IDE Group Limited, are
exempt from the requirements of the Companies Act relating to the audit of individual accounts by virtue of Section 479A and the
parent company has guaranteed all their liabilities at the reporting date.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
61
17
Trade and other receivables
Group
Company
Current
2022
£000
2021
£000
2022
£000
2021
£000
Trade receivables
2,499
2,677
-
-
Less provision for impairment of trade receivables
-
-
-
-
Trade receivables – net
2,499
2,677
-
-
Contract assets
664
837
-
-
Prepayments and other receivables
498
455
2
-
Taxation and social security
-
-
77
31
3,661
3,969
79
31
Group
Company
Non-current
2022
£000
2021
£000
2022
£000
2021
£000
Other receivables
100
313
-
-
Amounts due from subsidiary undertakings
-
-
9
65,575
Provision against amounts due from subsidiary undertakings
-
-
-
(48,733)
100
313
9
16,842
In accordance with IFRS 9, the Group reviews the amount of credit loss associated with its trade receivables, and contract assets.
Customer credit risk is managed according to strict credit control policies. The majority of the Group’s revenues are derived from
national or multi-national organisations with no prior history of default with the Group. There is low incidence of default in the top
50 customers. In respect of these customers credit risk is deemed lower on customers that contribute higher revenue due to an
increased dependency on the group’s services for business continuity, and because they are larger more secure businesses.
The Group has applied the Simplified Approach applying a provision matrix based on categorisation of the customer based on total
revenue received by the group per annum to measure lifetime expected credit losses and after taking into account customers with
different credit risk profiles and current and forecast trading conditions and the days past due. The historical loss rates will be
adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the
receivables.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
62
17
Trade and other receivables (continued)
At period end, customers were categorised into three categories based on spend in the last 12 months:
1. Top 10
2. Top 50
3. Other
Impairment was calculated based on the category the customer falls in to:
Category
Impairment Rate
Carrying amount
credit loss allowance
(net of VAT)
2022
2021
2022
2021
2022
2021
%
%
£000
£000
£000
£000
Top 10
0
0
2,499
2,677
-
-
Top 50
2
2
-
-
-
-
Other
5
5
-
-
-
-
Specific
100
100
-
-
-
-
2,499
2,677
-
-
The group is exposed to credit concentration risk with its largest customer comprising 82% (2021: 74%) of outstanding trade
receivables.
Specific provisions are also made based on known issues or changes in the lifetime expected credit loss. As at 31 December 2022,
trade receivables of £nil (2021: £nil) were impaired and fully provided for.
Movements on the Group provision for impairment of trade receivables are as follows:
Group
2022
2021
£000
£000
At 1 January
-
519
Increase in impairment provision
-
-
Provision relating to discontinued operations
-
(317)
Write offs
-
(63)
Released during the year
-
(139)
At 31 December
-
-
-
The creation and release of a provision for impaired receivables has been in the main included in “administrative expenses” in the
Income Statement, with an amount being set against contract assets, £nil (2021: £nil). The other asset classes within the Group’s
trade and other receivables do not contain impaired assets.
Amounts due from subsidiary undertakings
The Company has funded the trading activities of its principal subsidiaries by way of inter-company loans. The amounts advanced
do not have any specific terms relating to their repayment, are unsecured and are interest free. As all loans to subsidiaries are to
be treated as due on demand, they fall within the scope of IFRS 9.
In accordance with IFRS 9, the Company is required to make an assessment of expected credit losses. Having considered the
quantum and probability of credit losses expected to arise, management concluded that no additional impairment charge was
required for expected credit loss. There is no movement in the provision.
The calculation of the allowance for lifetime expected credit losses requires a significant degree of estimation and judgement, in
particular in determining the probability weighted likely outcome for each scenario considered to determine the expected credit loss
in each scenario. Should the assumptions in the business plan vary, this could have a significant impact on the carrying value of the
intercompany loans in following periods.
The recoverability is sensitive to the probability of the achievement of future cash flows; however, given the trading projections and
the level of provisions, there is currently no reasonably plausible scenario in which the provision would alter materially. A breakdown
of the balances is set out in note 29.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
63
18
Cash and cash equivalents
Group
Company
2022
2021
2022
2021
£000
£000
£000
£000
Cash and cash equivalents
414
349
3
2
The table below shows the balance with the major counterparty in respect of cash and cash equivalents.
Group
Company
2022
2021
2022
2021
Credit rating
£000
£000
£000
£000
A
414
349
3
2
19
Trade and other payables
Group
Company
2022
2021
2022
2021
£000
£000
£000
£000
Non-Current
Trade and other payables
-
730
-
-
-
730
-
-
Current
Trade payables
2,719
3,079
536
949
Amounts due to subsidiary undertakings
-
-
175
1,203
Other payables
-
100
-
42
Taxation and social security
846
752
-
-
Accruals
979
1,387
67
251
4,544
5,318
778
2,445
Amounts due to subsidiary undertakings are unsecured, interest free and are repayable on demand.
20
Contract liabilities
Group
Company
2022
2021
2022
2021
£000
£000
£000
£000
Contract liabilities recognisable within 12 months
51
49
-
-
Contract liabilities recognisable after 12 months
-
-
-
-
Total contract liabilities
51
49
-
-
Income is deferred to the Statement of Financial Position when invoicing of revenue to customers occurs ahead of revenue
recognition in the Income Statement.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
64
21
Provisions
Property provision
Dilapidation provisions are built up over the associated lease based on estimates of costs of work required to fulfil the Group’s
contractual obligation under the lease agreements to return the property to the same condition as at the commencement of the
lease. The provision is not expected to be utilised until 2026.
Other provisions
Other provisions primarily relate to committed costs under various onerous supplier contracts across hosting, connectivity,
hardware and software services, for example costs in relation to empty racks within data centres which have to be paid for
regardless of whether populated or not and costs in relation to excess software licences which are not used. The onerous contract
provisions all resolved in the current financial year.
Group
Property
provision
Other
provision
Total
£000
£000
£000
Balance at 1 January 2022
202
157
359
Increase in year
43
-
43
Utilised
-
(157)
(157)
Balance at 31 December 2022
245
-
245
2022
2021
£000
£000
Non-current
245
202
Current
-
157
245
359
Company
Other
Provision
Total
£000
£000
Balance at 1 January 2022
Released in the year
-
-
50
(50)
Balance at 31 December 2022
-
-
Non-current
-
-
Current
-
-
-
-
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (continued)
65
22
Borrowings
Group
Company
2022
2021
2022
2021
£000
£000
£000
£000
Non-current
Lease liabilities
765
710
-
-
Loan Note 2025
- 1,061
-
1,061
Loan Notes
3,490
15,966
3,490
15,966
4,255
17,737
3,490
17,027
Group
Company
2022
2021
2022
2021
£000
£000
£000
£000
Current
Nimoveri Loan Notes
-
100
-
-
Lease liabilities
210
146
-
-
210
246
-
-
The carrying value is not materially different to the fair value of these liabilities.
In January 2019 the Company issued £5.3 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 £4.7 million in
total of secured 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. The security comprises a debenture over all the assets
of the Group.
In December 2019 the Company issued an additional £1.5 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%.
On 1 June 2021 the Group completed the acquisition of Nimoveri Holdings Limited for £100,000 paid in cash on completion and
the issue of £100,000 0% loan notes by IDE Group Limited, a Group company (the “Nimoveri Loan Notes”). The Nimoveri Loan
Notes are secured over the assets of Nimoveri Holdings Limited and redeemable on 31 December 2021. On 13 December 2021
both parties agreed the Nimoveri Loan Notes would be repaid in four equal monthly instalments commencing 31 January 2022.
The Nimoveri Loan Notes were fully repaid during the financial year ended 31 December 2022.
The Company issued a further loan note (“Loan Note 2025”) net of expenses for proceeds of £1m on 1 December 2021. The terms
of the loan were that the rate of interest is 1.5% per month if repaid by 31 January 2022, 2.5% per month if repaid by 28 February
2022 and 3% per month if repaid by 31 March 2022. If not repaid by 31 March 2022 the amount due at that date including fees
(£1.1875m) is then subject to interest at 20.4% per annum compound. The maturity date is 23 December 2025. The Loan Note
2025 was included in the 2 November 2022 conversion.
On 2 November 2022 the members meeting at the Annual General Meeting, and then at the General Meeting that followed, voted
to convert £15.9 million of loan notes (including fees and interest) into share capital. Details of the capital reorganisation and
consolidation are set out in Note 26.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
66
Notes to the Consolidated Financial Statements (continued)
22
Borrowings (continued)
Lease liabilities
The present value of lease liabilities is as follows:
31 December 2022
Group
Gross
contractual
amounts
payable
Interest
Carrying
amount
2022
2022
2022
£000
£000
£000
Less than one year
288
78
210
Between one and five years
894
129
765
1,182
207
975
31 December 2021
Group
Gross
contractual
amounts
Carrying
payable
Interest
amount
2021
2021
2021
£000
£000
£000
Less than one year
214
68
146
Between one and five years
829
150
679
Greater than five years
32
1
31
1,075
219
856
The Company has no lease liabilities at 31 December 2022 (31 December 2021: nil)
Reconciliation of borrowings:
Group
Non-current
Lease liabilities
Current
Lease liabilities
Non-current
Borrowings
Convertible
Loan Notes
Supplier
Finance
Current
Borrowings
Total
Borrowings
£000
£000
£000
£000
£000
£000
£000
Balance at 1 January 2022
710
146
17,027
131
1,649
100
19,763
Non-cash changes
Transfer from current to non-current
55
(55)
-
-
-
-
-
New finance leases
405
-
-
-
-
405
Loan note interest
-
-
2,054
12
-
-
2,066
Interest
-
-
-
-
170
-
170
Lease interest
-
98
-
-
-
-
98
Conversion
-
-
(15,591)
-
-
-
(15,591)
Cash flows
Lease interest paid
-
(98)
-
-
-
-
(98)
Repayment
-
-
-
-
(558)
-
(558)
Interest paid
-
-
-
-
(170)
-
(170)
Nimoveri loan note repaid
-
-
-
-
-
(100)
(100)
Repayment of lease liabilities
-
(286)
-
-
-
-
(286)
Balance at 31 December 2022
765
210
3,490
143
1,091
-
5,699
The total cash outflow for leases in the year including interest was £384,000 (2021: £518,000).
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
67
Notes to the Consolidated Financial Statements (continued)
Company
Lease
liabilities
Current
Borrowings
Non-current
Borrowings
Total
Borrowings
£000
£000
£000
£000
Balance at 1 January 2022
-
-
17,027
17,027
Non-cash changes
Loan note interest
-
-
2,054
2,054
Conversion of secured loan notes
-
-
(15,591)
(15,591)
Balance at 31 December 2022
-
-
3,490
3,490
23
Convertible loan notes
Group and Company
£000
Balance at 1 January 2022
131
Interest unwound
12
Balance at 31 December 2022
143
On 21 August 2018, as part of a wider fundraising, the Company issued £2.55 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
Essential IT plc 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 have a fair value of £2.54 million, split into an equity component (£0.96 million) and a debt component (£1.58 million).
On 7 June 2021 £2,397,519 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.
24
Financial instruments by category
The objectives of the Group’s treasury activities are to manage financial risk, secure cost-effective funding where necessary and
minimise adverse effects of fluctuations in the financial markets on the value of the Group’s financial assets and liabilities, on
reported profitability and on cash flows of the Group.
The Group’s principal financial instruments for fundraising are convertible loan notes and loan notes. The Group has various other
financial instruments such as cash, trade receivables and trade payables that arise directly from its operations.
Group
2022
2021
Assets
£000
£000
Amortised cost:
Trade receivables net of credit loss provision
2,499
2,677
Contract assets
664
837
Other receivables
498
455
Cash and cash equivalents
414
349
Total
4,075
4,318
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
68
Notes to the Consolidated Financial Statements (continued)
24
Financial instruments by category (continued)
Company
2022
2021
Assets
£000
£000
Amortised cost:
Amounts due from subsidiary undertakings
9
16,842
Cash and cash equivalents
3
2
Total
12
16,844
The carrying amount of these assets is equivalent to their fair value. At 31 December 2022, trade receivables are reported net of
the expected credit loss provision of £nil (2021: £nil million), amounts due from subsidiary undertakings are reported net of the
expected credit loss provision of £nil (2021: £48.7 million)
Group
2022
2021
Liabilities at amortised cost
£000
£000
Trade payables
2,719
3,809
Accruals and other payables
979
1,486
Lease liabilities
975
856
Loan, net of expenses
-
1,061
Convertible loan notes
143
131
Loan Notes
3,490
16,066
Total
8,306
23,409
Company
2022
2021
Liabilities
£000
£000
Trade payables
536
948
Accruals and other payables
67
293
Intercompany payables
175
1,203
Loan, net of expenses
-
1,061
Convertible loan notes
143
131
Loan Notes
3,490
15,966
Total
4,411
19,602
The carrying amount of these liabilities is equivalent to their fair value.
The Group has not entered into any derivative financial instruments in the current or preceding period.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
69
Notes to the Consolidated Financial Statements (continued)
25
Financial risk management
The Group’s activities are exposed to a variety of financial risks: market risk (including cash flow interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out centrally under policies approved by the Board of Directors. Management identifies, evaluates and
seeks to mitigate financial risks. The Board of Directors provides principles for overall risk management as well as policies covering
specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative
financial instruments, and investments of excess liquidity.
Cash flow interest risk
The Group pays interest on its borrowings.
The Group has no borrowings at variable rates which would expose the Group to cash flow interest rate risk. Borrowings issued at
fixed rates expose the Group to fair value interest rate risk. The Group does not enter into derivatives.
Price risk
The Group is not exposed to significant commodity or security price risk.
Credit risk
Credit risk is managed at a subsidiary level. Credit risk arises from cash and cash equivalents as well as credit exposures to
customers, including outstanding receivables. Individual risk limits are set based on internal and external ratings and reviewed by
management. The utilisation of credit limits is regularly monitored with appropriate action taken by management in the event of the
breach of a credit limit. The Group has applied the simplified approach applying a provision matrix based on number of days past due
to measure lifetime expected credit losses and after taking into account customers with different credit risk profiles and current and
forecast trading conditions. The Group has recognised a provision in respect of trade receivables of £nil (2021: £nil)
Liquidity risk
Management reviews cash forecasts of trading companies of the Group in accordance with practice and limits set by the Group.
The Group’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to
meet these.
The parent company’s operations expose it to the following risks:
Interest rate risk
The Company pays interest on its loan note borrowings. These are at fixed rates and therefore there is no exposure to cash flow
interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company does not enter
into derivatives.
Credit risk
The Company is exposed to credit risk mainly in respect of inter-company receivables. Details of the approach to credit loss
provisions in respect of intercompany receivables is set out in note 17 and note 30.
The tables below analyse the Group and the Company’s financial liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date. These amounts disclosed in the table are the contracted
undiscounted cash flows. Balances within 12 months equal their carrying balances as the impact of discounting is not significant.
Group
Within 1
year
1-2 years
More than
2 years
Total
At 31 December 2022
£000
£000
£000
£000
Trade and other payables
4,544
-
-
4,544
Lease liabilities
210
728
37
975
Convertible loan notes
-
-
143
143
Loan Notes
-
-
3,490
3,490
4,754
728
3,670
9,152
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
70
Notes to the Consolidated Financial Statements (continued)
25
Financial risk management (continued)
Group
Within 1
year
1-2 years
More than
2 years
Total
At 31 December 2021
£000
£000
£000
£000
Trade and other payables
6,379
730
-
7,109
Lease liabilities
214
415
446
1,075
Loan Note 2025
-
-
1,061
1,061
Convertible loan notes
-
-
152
152
Loan Notes
100
-
16,517
16,617
6,693
1,145
18,176
26,014
Company
Within 1
year
1-2 years
More than
2 years
Total
At 31 December 2022
£000
£000
£000
£000
Trade and other payables
536
-
-
536
Intercompany payables
175
-
-
175
Convertible loan notes
-
-
143
143
Loan Notes
-
-
3,490
3,490
711
-
3,633
4,344
Company
Within 1
year
1-2 years
More than
2 years
Total
At 31 December 2021
£000
£000
£000
£000
Trade and other payables
2,414
-
-
2,414
Intercompany payables
1,203
-
-
1,203
Convertible loan notes
-
-
131
131
Loan Notes
-
-
17,578
17,578
3,617
-
17,709
21,326
26
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s future growth and its ability to continue as a going
concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The
Group operates in the network and cloud hosting sector, which, from time-to-time requires substantial fixed asset investments, but
the Group is financed predominately by equity.
In order to maintain or adjust the capital structure, the Group has previously both issued new shares, bank debt and bank facilities,
and both unsecured and secured loan notes. The Group monitors capital on the basis of the ratio of net debt to Adjusted EBITDA.
As at 31 December 2022 the ratio was 2.3. Net debt as at 31 December 2022 is calculated as total bank borrowings, as at 31
December 2022 nil, and loan notes (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet)
,plus loans, less cash and cash equivalents. Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation, impairment charge, non-underlying items, (loss)/gain on disposal of fixed assets and share-based payments.
The loan note instrument under which the Secured Loan Notes were issued does not contain any covenants, however, the Group
continues to carefully monitor its capital position. The Group adopts a risk-averse position with respect to borrowings and maintains
significant headroom to ensure that any unexpected situations do not create financial stress.
The Group has not proposed a dividend for the current or prior year.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
71
Notes to the Consolidated Financial Statements (continued)
27
Called up share capital – Group and Company
Shares issued and fully paid
2022
2021
£000
£000
496,702,792 ordinary shares at 2.5p
-
12,418
21,829,449 ordinary shares at 1p
218
-
496,702,800 deferred shares at 2.49p
12,368
-
Shares issued and fully paid
12,586
12,418
Shares issued and fully paid
2022
2021
£000
£000
Beginning of the year
12,418
10,020
Issued during 2021 on redemption of £2,397,519 of convertible loan notes
-
2,398
Issued during the year on conversion of secured loan notes (see below)
167
-
Issued during the year in lieu of 2021 staff bonus (see below)
1
-
Shares issued and fully paid
12,586
12,418
Share capital allotted, called up and fully paid
2022
2022
2021
No. Ordinary
Shares
No.
Deferred
Shares
No. Ordinary
Shares
Beginning of the year 496,702,792 shares at 2.5p
496,702,792
-
400,802,032
Issued during 2021 of 95,900,760 shares at 2.5p on redemption of convertible loan notes
-
-
95,900,760
Issue to the Company Secretary of 8 new shares at 2.5p
8
-
-
Sub-division of 496,702,780 shares into a redenominated 0.01p share and a deferred share
2.49p
-
496,702,800
-
Consolidation of 496,702,800 redenominated 0.01p share to 4,967,028 shares at 1p
(491,735,772)
-
-
Issue of 16,758,421 shares at 1p on conversion of secured loan notes
16,758,421
-
-
Issue of 104,000 shares at 1p in lieu of 2021 staff bonus (first tranche of three tranches)
104,000
-
-
End of the year
21,829,449
496,702,800
496,702,792
The par value of the shares new Ordinary shares is 1p and the Deferred shares is 2.49p (2021: old Ordinary shares 2.5p).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
The holders of Deferred shares are not entitled to receive dividends, nor are they entitled to vote. The holders of Deferred shares
are entitled to £1 for the entire class on winding up. The Company at anytime may, at its option, redeem all the Deferred shares
for £1. The Directors’ consider the Deferred shares of no economic value.
On 11 May 2021 95,900,760 new ordinary shares of 2.5p each were issued following the receipt of conversion notices from
Kestrel Opportunities and Kestrel Partners LLP for the conversion of 78,638,640 and 17,262,120 new ordinary shares of 2.5p
respectively.
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
72
Notes to the Consolidated Financial Statements (continued)
27
Called up share capital – Group and Company (continued)
On 2 November 2022 the Members at the Annual General Meeting followed by the General Meeting passed several resolutions
as set out in the Directors’ Report on page 13. The capital reorganisation consisted of the following steps:
1.
The amendment of the Articles of Association to set out the rights and restrictions attaching to the new Deferred shares;
2.
the sub-division of each existing Ordinary share into 2 new shares – a redenominated Ordinary share of 0.01p and a
Deferred share of £2.49p each; and
3.
every 100 redenominated Ordinary share of 0.01p be consolidated into a new Ordinary share of 1p each.
Shareholders with fewer than 100 existing Ordinary shares as at 2 November 2022 ceased to be a shareholder.
The 8 existing shares issued to the Company Secretary and fractional entitlements to a new Ordinary share, where any holding
was not precisely divisible by 100, no fractional share certificates were issued. The Board decided in the best interest of the
Company was to aggregate the fractional shares and sell them in the market. The £33 proceeds of the sale was donated to the
Prince’s Trust, a charity registered with the charities commission with Charity number 1079675 and which was selected by the
Board in accordance with article 15 of the Company’s Articles of Association.
On 2 November 2022 £20,995,862 secured loan notes (including interest and fees), held by MXC at a rate equivalent to 70 pence
in the pound, were converted into 16,476,574 new Ordinary shares of 1p at an assumed share price of £0.892 per new ordinary
share. Another 3 secure loan note holders converted their 1,578 secure loan notes to new Ordinary 1p shares on the same terms
as the MXC conversion receiving. Fees relating to the capital reorganisation were £250,000.
On 24 November 2022 104,000 new Ordinary 1p shares were allotted to a member of staff in lieu of one-third of his 2021 bonus.
As at 31 December 2022 the Company has a total number of shares in issue of 518,532,249 with a total nominal value of
£12,586,194. The Company has 21,829,449 new Ordinary shares of 1p and 496,702,800 Deferred shares of 2.49p
28
Share-based payment
The share-based payment charge comprises:
2022
2021
£000
£000
Equity-settled share-based charges arising from warrants
-
16
Total charge
-
16
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
73
Notes to the Consolidated Financial Statements (continued)
28
Share-based payment (continued)
MXC warrants
Number
Warrants as at 1 January 2022
20,040,101
Lapsed during the year
(20,040,10)
Warrants as at 31 December 2022
-
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in warrants during the
year:
2022
2022
2021
2021
Number
WAEP
Number
WAEP
Opening balance
20,040,101
£0.17
20,040,101
£0.17
Lapsed during the year
(20,040,101)
£0.17
(20,040,101)
-
Closing balance
-
-
-
-
There were no warrants exercisable at 31 December 2022 (2021: 20,040,101). All warrants expired during the year.
The amount charged to the income statement in respect of the share-based payments was £nil (2021: £16,000).
On 24 November 2022 104,000 new Ordinary 1p shares were allotted to a member of staff in lieu of one-third of his 2021 bonus.
As these new shares were issued at market value no additional accounting was required under IFRS 2.
29
Pensions
The Group operates a defined contribution pension schemes for eligible employees. The charge for the year ended 31 December
2022 relating to continuing operations is £0.7 million (continuing operations 2021: £0.4 million). An amount of £0.06 million is
included in creditors being outstanding contributions at 31 December 2022 (2021: £0.06 million).
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
74
Notes to the Consolidated Financial Statements (continued)
30
Related parties
Key management comprise of the Directors, Chief Financial Officer, the Group Managing Director, and the Group Director.
Directors’ emoluments are disclosed in note 11.
Key management personnel
Total remuneration for key management personnel
2022
2021
£000
£000
Compensation
622
1,187
Social security
19
134
Pension contributions to money purchase pension scheme
73
30
Total
889
1,351
Number of key management personnel accruing benefits under defined contributions
3
3
Ian Smith, Executive Director at 31 December 2022, held 0.54% (2021: 0%) through his Self-Invested Pension Plan. Mr Smith is also
Chief Executive Officer and a substantial shareholder of MXC Capital Limited (MXC). MXC owned 83.4% (2021: 34.8%) of the issued
share capital of the Company at 31 December 2022. Together, Mr Smith and MXC owned 83.9% (2021: 34.8%) of the issued share
capital of the Company at 31 December 2022.
During the year, the Group and Company paid MXC Capital Markets LLP, a subsidiary of MXC, for corporate finance advice and other
services amounting to £30,000 (2021: £29,000). The balance owed to MXC Capital Markets LLP as at 31 December 2022 was
£33,000 (2021: £91,800).
In addition, the Group paid MXC Advisory Limited, a subsidiary of MXC, fees of £221,000 (2021: £200,083) in respect of the
services of Ian Smith as Executive Director. The balance owed to MXC Advisory Limited as at 31 December 2022 was £265,200
(2021: £612,123).
The Group also paid MXC Guernsey Limited, a subsidiary of MXC Capital Limited in the past in respect of underwriting of loan
notes and guarantee fee of the finance leases with Lombard. The balance owed to MXC Guernsey as at 31 December 2022 was
£nil (2021: £29,560).
During the year, Kestrel Partners LLP invoiced the Company £nil (2021: £2,500) in respect of the services of Sebastian White as
Non-Executive Director. The balance owed to Kestrel Partners LLP as at 31 December 2022 was £nil (2021: £nil).
The Company had the following balances with its subsidiary companies:
2022
2021
Receivables
£000
£000
IDE Group Limited
-
53,664
Tialis Essential IT Manage Limited
-
11,846
IDE Group Voice Limited
-
3
IDE Group Protect Limited
9
9
Tialis Essential IT Financing Limited
-
52
IDE Group Subholdings Limited
-
1
Total
9
65,575
Tialis Essential IT PLC
(formerly IDE Group Holdings plc)
Annual report and financial statements
Year ended 31 December 2022
75
Notes to the Consolidated Financial Statements (continued)
2022
2021
Payables
£000
£000
Cupid.com inc
-
1,033
Castle Digital services inc
-
61
Tialis Essential IT Manage Limited
66
-
Selection Services Limited
Hooya Digital Limited
Connexions4London Limited
Aggregated Telecom Limited
61
42
5
1
61
42
5
1
Total
175
1,203
31
Contingent liabilities
There is a contingent liability in respect of tax owed of £499,404 (2021: £819,047) by a former owner, when the business
was privately owned relating to a tax scheme from 2006.We expect this to be settled by the individual in instalments in
2023. The Board is confident there will be no recourse to the Group as the Group would only have a liability if the individual
is unable to pay, which management considers highly unlikely.
32
Other commitments
None.
33
Post balance sheet event
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 £2.037 million. The acquisition will
bring 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 initial acquisition of £2.037 million was satisfied through the issue of 2,289,295 ordinary shares of 1p each in the Company.
An estimated £0.1 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.
34
Group reorganisation
During the year ended 31 December 2022, there was an internal reorganisation of the group structure impacting many non-trading
subsidiaries of the Company. Several of the Company's non-trading subsidiaries were put into liquidation on a solvent liquidation
basis and since all subsidiaries are under common control of the Company, all the trade and assets were transferred to the
Company or one of its subsidiaries under the predecessor values method of accounting. All subsidiaries were wholly owned either
directly or indirectly by the Company.
35
Ultimate controlling party
Following the Secure Loan Note exchange on 2nd November 2022 MXC Capital Limited, a company incorporated and domiciled in
Guernsey, became the ultimate controlling party with 83.4% of the voting shares. There is no ultimate controlling party of MXC
Capital Limited.
1765844