TIA Tialis Essential It Plc

Notes to the Consolidated Financial Statements

1       Accounting policies

 

Tialis Essential IT 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 1.26 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.

 

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               2-13 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

 

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.

 

1.5   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.

 

1.6   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.

 

 

1.7 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.

 

1.8 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.

 

1.9 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.

 

1.10  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.

 

1.11  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.

 

1.12  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.

 

1.13  Pensions

The Group operates a defined contribution scheme.  Pension costs are charged directly to the income statement in the period to which they relate on an accruals basis.  The Group has no further payment obligations once contributions have been made.

 

The Group also operates two individual defined benefit plans, as a result of two employees who were TUPE'd into the Group. These are closed to any other employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.

 

The liability is recognised in the balance sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the reporting date less the fair value of the plan assets at the reporting date. If the defined benefit plan is in surplus an asset is only recognised if this is deemed recoverable.

 

The defined benefit obligation is calculated using the projected unit credit method. Annually the Group engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating the estimated period of the future payments ('discount rate').

 

The fair value of plan assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the company's policy for similarly held assets. This includes the use of appropriate valuation techniques.

 

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. These amounts together with the return on plan assets, less amounts included in net interest, are disclosed in other comprehensive income.

 

The cost of the defined benefit plan, recognised in profit or loss as employee costs, except where included in the cost of an asset, comprises:

(a)        the increase in pension benefit liability arising from employee service during the period; and

(b)        the cost of plan introductions, benefit changes, curtailments and settlements.

 

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised in profit or loss as 'finance expense/ income'.

 

The company also contributes to group personal pension policies, such contributions being charged against profits when paid.

 

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.

 

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 fee

 

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.

 

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 2023. There was no significant impact of new standards and interpretations adopted in the year.

 

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 2024, 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 1.22 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 10 to the financial statements. The judgement involves assessing the extent to which trading losses can be offset against future profits.

 

Useful economic lives of tangible and intangible assets - The annual depreciation and amortisation charge for tangible and intangible assets are sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. The remaining useful economic life of the Allvotec contract lists and assets are considered a source of estimation uncertainty.

 

Deferred Consideration - the Directors have exercised judgement on the costs that will arise for the deferred consideration and the valuation as shown in note 13 to the financial statements. At the year end, the deferred consideration amounted to £0.08m (31 December 2022: £nil).

 

2     Segment reporting

 

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 2023					Managed	Projects	Total
					services
Geographical regions					£000	£000	£000
United Kingdom					17,172	5,198	22,370
Europe					39	3	42
Total					17,211	5,201	22,412
Timing of revenue recognition
Goods transferred at a point in time					98	-	98
Services transferred over time					17,113	5,201	22,314
Total					17,211	5,201	22,412

 

The revenue from the largest customer was £18.7m (2022: £11.7 million) or 83% of total revenue (2022: 81%). No other customers account for more than 10% of revenue.

 

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

 

Contract balances

				2023	2022
				£000	£000
Receivables included within trade and other receivables				3,748	2,499
Contract assets				622	664
				4,370	3,163
Contract liabilities				(676)	(51)
Total				3,694	3,112

 

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     Expenses by nature

 

	2023		2022
	£000		£000
Direct staff costs	9,408		6,048
Third party cost of sales	6,354		3,360
Employee costs within administrative expenses	3,196		2,027
Amortisation of intangible assets	2,187		1,169
Depreciation	312		208
Share-based payments	11		-
Non-underlying items	713		421
Profit on sale of assets	(9)		-
Fair value profit on deferred consideration	22		-
Gain on the conversion of secured loan notes	-		(892)
Other administrative costs	1,434		1,078
Total cost of sales and administrative expenses	23,628		13,419

 

5     Auditor's remuneration

 

	2023		2022
	£000		£000
Audit of these financial statements	30		28
Amounts receivable by auditors and their associates in respect of:
Audit of financial statements of subsidiaries of the Company	50		45
Additional fees charged in respect of prior year's audit	-		14
Total	80		87

 

6     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:

	2023		2022
	£000		£000
Allvotec acquisition expense	242		-
Due diligence on potential acquisitions in the year	25		-
Employee share option plan set-up expense	49		-
One-off legal fees	9		-
Rebranding as Tialis from IDE Group	35		-
Restructuring and reorganisation costs	353		421
	713		421

 

Restructuring and reorganisation costs in the year ended 31 December 2023 and the year ended 31 December 2022 relate to costs incurred on the restructure of the Group, predominantly redundancy costs, of which £0.4 million are staff related as disclosed in note 9 (2022: £0.04 million). Other integration costs relate to the costs incurred in integrating the Allvotec acquisition. The redundancy costs include employment related costs of staff made redundant because of restructuring post the Allvotec acquisition. The legal and rebranding expenses were non-recurring expenses incurred during the year.

 

7     Finance Income

 

Continuing Operations	2023 £000		2022 £000
Unwinding of discounted liabilities	83		-
Interest received	19		10
	102		10

 

8     Finance costs

 

Continuing Operations	2023 £000		2022 £000
Interest expense on lease liabilities	84		98
Unwind of discount on trade payables	90		170
Interest expense in respect of convertible loan notes	9		12
Interest expense in respect of loan notes	475		2,054
	658		2,334

 

9     Employee benefits expense

 

Staff costs for the year for the Group, including Directors, relating to continuing operations amounted to:

 

	2023 £000		2022 £000
Wages and salaries	10,643		6,750
Social security costs	1,086		739
Other pension costs	876		586
Restructuring costs	380		-
	12,985		8,075

 

At 31 December 2023, the Group employed 284 staff, including Directors (2022: 191).

 

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
	2023		2022
Operations	250		168
Sales and Marketing	9		6
Administration	21		15
Directors	4		2
Total average monthly headcount	284		191

 

The Company employed an average of 5 employees during 2023 (2022: 2), which were the Non-Executive Chairman Andy Parker, the Non-Executive Director Nicolas Bedford and the Executive Directors Ian Smith and Matthew Riley, and the Chief Financial Officer. 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 2023 for the Group were as follows:

 

	Salary/fees		Salary/fees
	2023		2022
	£		£
Executive
Ian Smith1	221,000		221,000
Andy Parker	181,250		53,333
Non-Executive
Nicolas Bedford	40,000		-
Matthew Riley	36,667		-
Total	478,917		274,333

 

1.     Directors' emoluments to 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. On 1 February 2023, Andy Parker was reappointed Executive Chairman. Included in Andy Parker's salary/fees, there was a bonus of £25,000 paid during the year which is disclosed in the non-recurring costs - see note 6.

 

Social security costs in respect of Directors' emoluments were £32,168 (2022: £6,354). No pension contributions were made to any Director during the year (2022: £nil).

 

None of the Directors made any gains on the exercise of share options in 2023 or 2022.

 

10   Taxation

	2023		2022
	£000		£000
Current tax
Current year	-		-
Current tax	-		-
Deferred tax credit	(227)		(843)
Total tax credit	(227)		(843)

 

(a)         Tax on loss on ordinary activities

 

Reconciliation of the total income tax credit:
	2023		2022
	£000		£000
Loss before taxation from continuing operations	(1,772)		(1,280)
Tax using the United Kingdom corporation tax rate of 25% (2022: 19%)	(443)		(243)
Non-deductible expenses	312		(117)
Amortisation and impairment of goodwill and intangibles - non qualifying assets	-		-
Tax losses utilised - not previously recognised	(106)		(279)
Adjustment for rate change	(16)		(202)
Prior year adjustment	26		(2)
Total tax credit	(227)		(843)