Tialis Essential IT H1 2025: Lower revenue, better margins, and two chunky contract wins
Tialis Essential IT has posted its unaudited interim results for the six months to 30 June 2025. Headline revenue fell year on year, but margins improved and Adjusted EBITDA nudged up. The big story sits outside the period: two multi-year wins worth about £65 million combined that materially lift revenue visibility into 2026 and beyond.
Management is keeping guidance in line with market expectations and expects a stronger H2, underpinned by an £8 million annual-value sales pipeline and expanding partner relationships.
Key numbers at a glance
| Metric | H1 2025 | H1 2024 |
|---|---|---|
| Revenue | £8.8 million | £10.7 million |
| Gross profit | £2.6 million | £3.0 million |
| Gross margin | 29.2% | 28.0% |
| Adjusted EBITDA* | £1.0 million | £0.9 million |
| Operating loss | £0.7 million | £0.7 million |
| Loss after tax | £0.9 million | £0.9 million |
| Operating cash flow | £0.3 million | £1.4 million |
| Cash at period end | £0.5 million | £0.6 million |
| Bank borrowings | £3.5 million | £4.0 million (current + non-current) |
| Net debt | £3.8 million | £4.4 million |
| Sales pipeline (annual value) | £8 million | not disclosed |
*Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, impairment, non-underlying items, loss on disposal of fixed assets and share-based payments.
Top-line softness, but margin quality improved
Revenue dipped to £8.8 million, mainly due to delayed customer orders in a tough market and the earlier-than-expected in-sourcing of two significant contracts. That hurts in the short term, but the Board frames the conditions as cyclical with underlying demand remaining robust.
Encouragingly, gross margin stepped up to 29.2% from 28.0%, helped by cost efficiencies and tighter overhead control. Adjusted EBITDA edged up to £1.0 million despite the revenue decline, while administrative expenses fell to £3.3 million. On statutory measures, amortisation and impairment of £0.7 million and a £0.6 million fair value loss on deferred consideration kept the Group in an operating loss of £0.7 million, with a loss after tax of £0.9 million. Loss per share improved to 3.58p.
Cash, debt and liquidity: modest progress, but headroom matters
Operating cash generation was £0.3 million, lower year on year as working capital tailwinds were more muted. Tialis repaid £0.5 million of bank borrowings in the period and ended H1 with £0.5 million of cash and £3.5 million of bank debt. Net debt was £3.8 million, better than £4.4 million a year ago.
The Group’s revolving credit facility runs to 8 September 2027 at SONIA plus a 3.75% margin. Financial covenants were met in H1. There is also a £0.3 million unsecured convertible loan note at 15% that can convert at 40p per share, maturing in three years and three months from 9 September 2024.
Order book boost: £50m framework and £15m government win
Post period end, Tialis landed two substantial multi-year pieces of work:
- A follow-on framework with a long-standing customer worth approximately £50 million over five years, covering Lifecycle Services, Tech Bars, End User Support and Field Engineering.
- A new contract with a major UK Government department responsible for environmental policy, agriculture and rural communities. This is about £15 million over five years, started on 1 September 2025, and spans the same workplace services suite.
Why it matters: these wins significantly enhance revenue visibility for the next financial year and beyond. They also validate the focus on Lifecycle Services and end-user support where Tialis has scale from the Allvotec acquisition. Execution and staffing will be key, but the economics should be attractive if delivery is tight.
Growth moves: building a pool of permanent capital
Tialis is deliberately broadening its model from pure managed services into a small pool of assets and investments that can generate both cash and capital growth.
AI Auxesis: early revenues and partner traction
In April, Tialis created AI Auxesis Limited, funding £125,000 for a 50% stake, with Ian Smith and Andy Mills injecting £62,500 each for 25% holdings apiece and receiving an uncapped 10% per shareholder profit share on capital gains. The Company issued 208,333 new shares at 60p to fund its contribution.
Commercially, AI Auxesis reports a global partnership agreement with Genesys via QPC, a new alliance with IPI, and several enterprise wins across telecoms, banking and luxury automotive. Consulting services contributed £44,000 of revenue in H1 – small today, but the partner pipeline reads promising.
Digital Petcare: debt-to-equity pivot
Tialis acquired a £1.485 million loan to Digital Petcare at 12% and subsequently refinanced it: £500,000 converted into a 14.14% equity stake, £700,000 rolled into a new 24-month loan at 12%, and £285,000 repaid. This blend gives yield today and equity upside if the business scales.
CloudCoCo: minority stake
In June, Tialis bought MXC’s c.10.6% equity position in CloudCoCo Group PLC, held within a new investments subsidiary. No valuation uplift is claimed here – just a strategic toehold aligned with the managed services theme.
Allvotec earn-out, share issues and dilution watch
Allvotec continues to underpin the core services book, with renewals and extensions agreed. As a result, the deferred and contingent consideration due to Daisy HoldCo Limited has increased to £1.638 million, to be settled in shares at 70p. The fair value uplift to this liability created a £582,000 charge in the income statement.
After the period end, Tialis issued 2,631,134 shares at 64p to fund the June acquisitions, and will seek shareholder approval to issue 2,339,883 shares to Daisy HoldCo to settle the Allvotec consideration. Dilution is therefore a live factor for holders, albeit used to consolidate assets and lock in contract renewals that drive visibility.
Governance and related parties
Two experienced non-executives, Rachel Horsefield and Peter Hallett, joined the Board on 8 September 2025, which is a welcome deepening of oversight and commercial breadth.
Related party disclosures are extensive. MXC owned 75.22% of Tialis at 30 June 2025, with Ian Smith owning a further 2.64%. Group companies paid MXC entities for services during the period, and the convertible loan note was issued to MXC Capital Limited. The disclosures are clear, but concentrated ownership means governance discipline needs to stay front and centre.
Outlook: cautious tone, but setup for a stronger H2
The Board remains cautious given the macro backdrop, yet expects full-year trading to be in line with current market expectations. The sales pipeline of £8 million annual value, the new large contracts, and an expanded partner network – including a large global systems integrator added in Q2 – all point to a firmer H2 and improved 2026 visibility.
My take: steady operational progress, big wins change the narrative
- Positives: margin improvement, stable Adjusted EBITDA, net debt down, bank repayment, and two significant multi-year wins that should underpin growth and cash generation.
- Negatives: revenue decline from delays and in-sourcing, low cash balance, ongoing statutory losses, and dilution from share issuances and deferred consideration.
Overall, H1 reads like a stabilisation half with cost discipline doing the heavy lifting. The post-period contract awards are the real swing factor – they materially strengthen the order book and validate the strategy around Lifecycle Services. If delivery lands cleanly and investments like AI Auxesis and Digital Petcare begin to contribute more meaningfully, the profit and cash profile should improve. Execution and working capital management will be the key watch items into year end.
