Tialis's Advisory Pact With Its Own AI Subsidiary Reveals What the Company Really Is

Tialis announced today that it has formalized a 12-month strategic advisory agreement with AI Auxesis Limited to advise on growth, financing, and stakeholder strategy. AI Auxesis Limited is Tialis's own 50%-owned subsidiary.

A company hiring its own half-owned subsidiary for strategic advice. The agreement runs for a year, starting August 2026. Under the arrangement, Tialis pays AI Auxesis a recurring fee — disclosed in filings as £1,766 per month — for guidance on where Tialis should go.

The monthly fee adds up to roughly £21,000 a year. That's small. The structure is what matters.

AI Auxesis was created in April 2025 to house "consultancy and investment in AI and automation". It's run by Andy Mills and Ian Smith, who each took a 25% stake in the subsidiary by subscribing for Tialis shares at 60 pence per share. Tialis owns the remaining 50%. So Mills and Smith each own a quarter of the advisory unit, while Tialis shareholders own half of it. The other quarter appears to be held by a third party.

Since its creation, AI Auxesis has made one known investment: £250,000 in QPC, a cloud contact center analytics firm. That's the entirety of its disclosed activity. In return for this venture, the advisory unit now receives a guaranteed monthly retainer from its parent.

Now look at what actually keeps Tialis solvent.

The core business — IT managed services, end-user device management, on-site support — is shrinking. Revenue fell from £20.8 million in FY2024 to £17.7 million in FY2025, then to £7.6 million in the first half of 2026 versus £8.8 million the prior year. Customers are insourcing IT contracts. Orders are being delayed. Management calls it a "challenging financial market environment."

The margins on the remaining business hold up — 29% gross margin all through this period. But the top line is contracting faster than overhead is being cut. Adjusted EBITDA dropped from £1 million in the first half of 2025 to £600,000 in the first half of 2026. The company posted a net loss of £400,000 in the period, improved from £900,000 a year earlier, but still a loss.

The thing producing actual value for Tialis is not AI consultancy. It's a 50% joint venture with Liberty Global called MXLG Acquisitions Limited. MXLG returned to profitability in the first half of 2026, contributing £807,000 to Tialis's EBITDA — more than the entire core managed services business produced on its own. The investment value of MXLG sits at £7.06 million.

Put it together: a company with £17.7 million in annual revenue from a declining core business. A joint venture that contributes more profit than the core. A half-owned "AI consultancy" that has made one small investment and now receives £21,000 a year to advise its parent. And £2.36 million in bank borrowings with £300,000 in cash on the balance sheet.

The market capitalization is roughly £19 million. The book value of net assets is £13.5 million. The company carries a retained earnings deficit of £64 million — a hole created by years of share issuances that never translated into proportional earnings. The board is working through a court process to cancel the share premium account and extinguish deferred shares, which would create distributable reserves for potential buybacks. That's the capital move that actually changes the numbers.

I'm not reading the advisory pact as a sign of deep incompetence. It's small enough in absolute terms that it could be a way to structure compensation for Mills and Smith while giving AI Auxesis a floor of operating cash. Small companies often find creative ways to align incentives between directors and the companies they build. The question isn't whether £21,000 is wasted. It's what the arrangement tells you about where the company thinks value will come from.

The narrative the company has built is that it's an IT managed services provider evolving toward AI consultancy and strategic investment. The evidence says the AI piece has not produced any visible revenue, and the strategic investment piece — MXLG — is the single most valuable relationship on the balance sheet, and it has nothing to do with AI.

Tialis is a £19 million company with a declining core business and one profitable joint venture. The advisory agreement with its own AI subsidiary adds one more layer to an already complex corporate structure without adding anything to the economics. What would have been more revealing: if Tialis had told shareholders, "Our core business is shrinking. Our real value is a joint venture with Liberty Global. We're trying to build something new, but it hasn't worked yet." Instead, the company has wrapped the same story in a new label and formalized a monthly payment to the label's owner.

The test for this investment is straightforward. Does MXLG continue to generate and grow EBITDA at a rate that justifies the market capitalization? And does the core managed services business stabilize — not grow, just stop declining — so the company can generate enough cash to service its £2.36 million in debt without raising equity? If the answer to both is yes, the AI consultancy may eventually matter. If the answer to either is no, the structure of the advisory agreement becomes less interesting than the question of whether there's enough in the business to cover the debt.