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Confirmed strong outlook for Digital Trust

Tinexta 12 August 2019 Update
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Tinexta

Confirmed strong outlook for Digital Trust

Interim results

Professional services

12 August 2019

Price

€12.48

Market cap

€582m

Net debt (€m) at end H119

140.2

Shares in issue

46.9m

Free float

34%

Code

TNXT

Primary exchange

Borsa Italiana STAR

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.6)

13.7

108.0

Rel (local)

2.5

16.7

124.0

52-week high/low

€14.36

€5.60

Business description

Tinexta has three business divisions: Digital Trust – solutions to improve digital security; Credit Information & Management – information services to help manage corporate credit; and Innovation & Marketing Services – consulting services to help clients develop and/or grow their businesses

Next events

Investor day

17 September 2019

Q319

14 November 2019

Analysts

Russell Pointon

+44 (0)20 3077 5757

Fiona Orford-Williams

+44 (0)20 3077 5739

Tinexta is a research client of Edison Investment Research Limited

Tinexta’s interim results confirmed the outlook is positive for its two largest and most profitable divisions, Digital Trust and Innovation & Marketing Services. Overall revenue and profit growth for the group was slower in Q2 than in Q1, mainly due to one-off costs and a decline in Credit Information & Management. We maintain our PBT forecasts for FY19 and increase our FY20 forecast by 1%. Our DCF-based valuation increases to €14.6 per share (from €14.2), which offers 17% potential upside from the current share price.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/17

174.8

30.5

0.46

0.14

27.1

1.1

12/18

238.7

48.6

0.74

0.23

16.9

1.8

12/19e

257.0

52.6

0.78

0.26

16.0

2.0

12/20e

271.4

58.3

0.86

0.28

14.5

2.2

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Digital Trust and Innovation & Marketing Services lead the way

While group Q219 organic revenue growth was 3.3% vs the 10.2% reported for Q119, growth remained strong in the two most important divisions, 10.5% in Digital Trust and 7.6% in Innovation & Marketing Services. On the other hand, the decline in Credit Information & Management accelerated in Q219, although good cost control resulted in an increase in margin. Group EBITDA net of non-recurring items (including ‘virtual stock options’, which were extraordinarily large during the period) declined organically by 11% in Q2. Most importantly the operating margin remained healthy. Excluding this charge, adjusted EBITDA for the group in H119 was €35.7m, a margin of 28.2% versus 25.6% in H118.

Our upgraded forecasts remain above guidance

We have increased our forecast EBITDA for FY19 and FY20 by c 3% and 6%, respectively, based on higher revenue growth assumptions for Digital Trust and Innovation & Marketing Services, but lower assumptions for Credit Information & Management. In addition, we increase the assumptions for EBITDA margin in all three divisions. We update our forecasts for IFRS 16, which adds €3.2m to EBITDA in FY19 and FY20, although this is offset in FY19 by the incentive charge for virtual stock options of €3.3m. We remain above management’s reiterated guidance for FY19 of revenue above €250m and EBITDA (pre IFRS 16 and incentive charge) between €68m and €70m.

Valuation: Attractive again

In our view, buoyant margins, growth prospects for the two largest divisions, and the benefits of the group’s strategic re-organisational programme point to upside in the valuation. We increase our DCF-based valuation from €14.2 to €14.6 per share, which offers 17% potential upside to the current share price. The EV/EBITDA multiples for FY19 and FY20 are 10.0x and 9.0x, respectively.

Q219: Revenue and profit growth moderated

Following strong Q119 results, group revenue growth moderated in Q219. Particular points to note from the H119 results were the strong performance in Digital Trust and Innovation & Marketing Services, and the accelerated decline in Credit Information & Management. Net of the ‘virtual stock option’ charge, group EBITDA for H119 would have expanded to €35.7m, a margin of 28.2%, from €29.2m in H118, a margin of 25.6%. Net debt increased to €140m, around 2x forecast FY19 EBITDA, almost entirely as a result of the adoption of IFRS 16, which added approximately €15m in lease-related debt.

Exhibit 1: Quarterly financials

€m

Q118

Q218

H118

Q119

Q219

H119

Revenue

51.6

62.9

114.5

59.7

66.9

126.6

– Digital Trust

21.8

23.9

45.7

25.2

26.6

51.7

– Credit Information & Management

18.4

18.7

37.2

19.4

18.5

37.9

– Innovation & Marketing Services

11.4

20.2

31.7

15.2

21.8

36.9

Organic revenue growth (%)

1.4

5.2

3.4

10.2

3.3

6.4

– Digital Trust

3.1

7.5

5.5

9.5

10.5

10.0

– Credit Information & Management

(0.1)

2.3

1.1

(3.1)

(10.2)

(6.7)

– Innovation & Marketing Services

0.9

6.1

3.5

32.9

7.6

16.7

EBITDA net of non-recurring items*

10.2

19.0

29.2

14.9

18.5

33.4

– Digital Trust

4.9

6.6

11.5

6.0

7.4

13.4

– Credit Information & Management

4.1

3.7

7.8

5.3

4.2

9.5

– Innovation & Marketing Services

2.9

10.1

13.0

5.9

11.5

17.4

– Other

(1.6)

(1.5)

(3.1)

(2.3)

(4.6)

(6.9)

EBITDA organic growth (%)

(3.3)

(1.6)

(2.4)

31.7

(11.2)

3.8

– Digital Trust

0.7

9.3

6.5

10.1

4.5

6.9

– Credit Information & Management

6.5

(10.5)

(2.4)

15.6

(2.5)

6.9

– Innovation & Marketing Services

(5.0)

3.9

(0.4)

98.3

10.8

30.2

Source: Tinexta, Edison Investment Research. Note: *EBITDA is net of non-recurring items but includes virtual stock options.

Organic revenue growth in Q219 was 3.3% vs 10.2% in Q119 equating to 6.4% for the first half. Comparatives for Q219 were tougher than for Q119 by approximately four percentage points, ie moving from 3.1% in Q118 to 7.5% in Q218. The two largest and most profitable businesses, Digital Trust and Innovation & Marketing Services, continued to generate the highest revenue growth, with growth accelerating at the former. Credit Information & Management’s organic revenue declined at a faster rate than in Q119 due to competitive pressures and declining demand due to the macro environment in Italy.

Organic EBITDA growth slowed in Q219, in part due to some non-recurring costs in Digital Trust as well as the deterioration at Credit Information & Management. The charge for virtual stock options, which is not expected to recur to the same extent, tipped the company into an organic EBITDA decline. H1 group EBITDA net of non-recurring items was €33.4m, at a margin of 26.4% (which adjusts to 28.2% excluding the impact in this period of the virtual stock option plan). The corresponding H118 margin was 25.6%.

Management has reiterated guidance: FY19 revenue greater than €250m (€238.7m in FY18) and EBITDA before IFRS 16 of €68–70m (€66m in FY18). There remains no official guidance on the impact of IFRS 16, but H119 included a benefit of €1.7m to EBITDA, which is consistent with our estimate at the time of the Q1 results of €3–4m for a full year. Netting off this IFRS uplift will be the charge of c €3.3m for virtual stock options, recorded in the Other business unit ie corporate costs, which reflects the share price performance. The virtual stock option is a cash charge and does not require the issue of new shares or options.

Tinexta generated €23.7m of free cash flow (FCF) in H119, an increase of 5% vs H118, which reflects a higher EBITDA margin, slightly higher working capital outflow and lower capex/ sales. The FCF would have been €3.3m higher if the virtual stock option charge was not taken.

Looking forward, we note that the third quarter tends to be a seasonally less important quarter than the second and fourth quarters.

Digital Trust (40% of revenue, 36% of EBITDA)

After a typically lower growth first quarter, in which organic growth was 9.5%, growth accelerated to 10.5% in Q219, resulting in 10% growth in H119. In contrast, organic EBITDA growth slowed to 4.5% in Q219 from 10.1% in Q119 as the division incurred extra costs of c €400k for help desk support for smaller clients from the start of 2019, when electronic invoicing became mandatory for private businesses in Italy. As a result the EBITDA margin declined by c 80bp, but as these costs should not recur in H219, our assumption that the FY19 margin will increase is underpinned, in our view. Given the performance in H119, we have upgraded our forecasts for FY19, as described later.

After the end of the first half, the main subsidiary, InfoCert, signed a commercial partnership with Verimi to extend and strengthen the digital services offered by the platform in Germany. This is Tinexta’s first entry into the German market, and unlike previous moves outside of Italy, it has not required a capital investment. It is too early to provide detailed guidance on the opportunity but this is an important step as Germany should ultimately become the largest market in Europe for digital trust services, as management believes the relative market sizes for digital trust services should correspond to GDP in each country. Management currently expects the partnership will achieve a similar margin to that achieved in Italy despite leveraging Verimi’s distribution network.

Credit Information & Management (33% of revenue, 24% of EBITDA)

The weaker market conditions evident at the start of the year have intensified such that the organic revenue decline accelerated from 3.1% in Q119 to 10.2% in Q219. The real estate valuation business continued to experience ‘strong’ growth, which we interpret as 5–6%, in which case we estimate the core credit information business could have declined by a percentage in the mid-teens. In the latter, spend by corporate clients was relatively weak in Q119, but there was a good recovery towards the end of Q219, after the company invested in new product packages and direct marketing. Conversely, spend by the company’s financial clients was resilient in Q119, but weakened during Q219 given the macro environment in Italy. Management believes that it is not losing market share and the decline simply reflects market conditions. Looking forward, a recovery in spend by financial clients in H219 is not expected, but there is some optimism for moderating the overall rate of decline as the recovery in spend by corporate clients continues. The acquisitions made in 2018 (Comas, Webber and Promozioni Servizi) continue to trade well, adding 8.7% to the division’s revenue in H119. Given the slowdown in Q219, we have downgraded our long-term revenue growth assumptions, as detailed later.

Further good control of costs, while incurring extra costs to stimulate demand among corporate clients, limited the organic EBITDA decline to 2.5% in Q219, which produced a higher margin of 22.9% in Q219 vs 20% in Q218. This includes some dilution from the acquisitions, made in 2018, which had a lower EBITDA margin of 23.7% in H119.

Innovation & Marketing Services (28% of revenue, 40% of EBITDA)

After an exceptionally strong Q119, which saw organic revenue growth of c 33%, growth moderated to a still healthy 7.6% in Q219. Warrant Hub, the innovation consultancy, and specifically the subsidised finance consulting business, continues to drive this growth. There was little commentary on Co.Mark, the export consultancy business, which is in a year of restructuring as a result of a change in management, following a modest performance in FY18. We remain optimistic for the outlook of Warrant Hub given the Italian government approval of a new Growth Decree, effective on 29 June 2019, to stimulate economic growth, including the renewal of the super and hyper-amortisation measures aimed at helping business investment, which Warrant Hub advises on.

This business unit continues to exhibit high operational gearing, given the nature of the fees, and the relatively fixed cost base with an organic increase in EBITDA of 10.8% in Q219, to give an EBITDA margin of 52.6%, vs 39.1% in Q119. Year-to-date, c 74% of incremental organic revenue has dropped through as organic EBITDA. Given this performance, we have upgraded our medium-term forecasts, as described below.

Forecasts: Upgraded with improved quality of growth

For the first time, we adopt IFRS 16 in our forecasts, which adds €3.2m to our estimates of EBITDA net of non-recurring items. In addition, we include the charge for virtual stock options reported in H119 of €3.3m. The table below summarises our changes to forecasts. Our forecast for EBITDA in FY19 of €72.4m remains above management’s guidance of €68–70m, which is pre IFRS and the charge for virtual stock options. On a conference call accompanying the results, management confirmed that it is confident of beating its guidance.

Exhibit 2: Changes to group forecasts

EPS* (€)

PBT* (€m)

EBITDA** (€m)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2019e

0.78

0.78

0.0

52.6

52.6

0.0

70.2

72.4

3.1

2020e

0.85

0.86

1.2

57.4

58.3

1.6

75.5

80.1

6.0

Source: Edison Investment Research. Note: *PBT and EPS are normalised. **EBITDA is net of non-recurring items but includes virtual stock options.

The changes to our forecasts for the business units are discussed below.

Exhibit 3: Changes to divisional forecasts

(€m)

FY19e

FY19e

Change

FY20e

FY20e

Change

old

new

%

old

new

%

Revenue

256.5

257.0

0.2%

272.9

271.4

(0.6)%

– Digital Trust

104.2

105.6

1.4%

114.6

116.2

1.4%

– Credit Information & Management

79.5

73.7

(7.3)%

81.9

73.6

(10.1)%

– Innovation & Marketing Services

72.8

77.7

6.8%

76.4

81.6

6.8%

EBITDA net of non-recurring items

70.2

72.4

3.0%

75.5

80.1

6.1%

– Digital Trust

27.8

29.7

7.2%

30.9

32.9

6.6%

– Credit Information & Management

17.7

16.9

(4.3)%

18.7

16.9

(9.3)%

– Innovation & Marketing Services

32.7

37.6

14.9%

34.5

39.5

14.5%

– Other

(7.9)

(11.9)

50.3%

(8.6)

(9.3)

8.6%

EBITDA margin (%)

27.4%

28.1%

27.7%

29.5%

– Digital Trust

26.6%

28.2%

27.0%

28.3%

– Credit Information & Management

22.3%

23.0%

22.8%

23.0%

– Innovation & Marketing Services

44.9%

48.3%

45.1%

48.4%

Source: Edison Investment Research

Given the acceleration in growth reported in Q219 we increase our forecast for Digital Trust’s organic growth in FY20 to 10% from the 9% we assumed in our initiation in April. This is consistent with our medium-term assumptions of 10% organic growth, which may prove to be conservative if international growth, including the entry to Germany, which is not in our forecasts, accelerates. We continue to assume 30% of incremental revenue drops through to EBITDA.

We have significantly increased our forecasts for Innovation & Marketing Services. In our initiation note, we assumed medium-term organic revenue growth of 5% from FY20 with a gradual build from 3% in FY19. Given the strong performance year-to-date, and the recently enacted Growth Decree in Italy, we now assume 10% organic revenue growth in FY19, which implies organic growth of 4.6% in H219 vs 7.6% in Q219. Comparatives in H219 are much tougher, 3.5% in H118 and 35.8% in H218. We also increase our margin estimates and now assume 60% of organic revenue growth drops through to EBITDA in FY19 and 50% thereafter, which is conservative compared with the 74% noted above. These assumptions produce an EBITDA margin pre IFRS 16 of 48.1% in FY19 and 48.2% in FY20 vs our previous respective estimates of 44.9% and 45.1%.

We have reduced our forecasts for Credit Information & Management. We assumed that organic revenue growth for FY19–21 would be 3% pa with the higher than average growth of real estate, ie 4–5%, offset by lower growth in the core credit information business, ie 1–2%. We continue to assume 4–5% organic growth for real estate in FY19 and FY20. For the core credit information, we assume 8% organic decline in FY19, given some recovery in corporate clients and no recovery in financial clients, and 3% decline in FY20. In aggregate, these assumptions produce an organic decline of 5% in FY19 and no growth in FY20. Management remains confident of generating an EBITDA margin of 23–24% in FY19; we stick to the low end of the range, which implies an H219 margin of 20.7% vs 25.1% in H119.

In aggregate, these assumptions produce group organic revenue growth of c 5.5% and organic EBITDA growth of 6% in FY19–20.

Financials

Tinexta generated €23.7m of FCF during H119 vs €22.7m in H118. FCF generation relative to sales deteriorated a little, which reflects the higher EBITDA margin offset by a slight increase in the working capital outflow. As expected, the company has been actively buying in minority shareholdings, taking the holding in Warrant from 70% to c 90% during H119 for c €23m. Following the period end, Tinexta purchased the final 10% of Co. Mark and 40% of Visura, so that both are now fully controlled. In aggregate, the cost of these minority purchases was €20m.

At 30 June, Tinexta had net debt of €140m vs €125m at the end of FY18. The adoption of IFRS 16 has added c €15m to net debt.

Valuation: Margins and growth undervalued

We have increased our DCF-based valuation by 3% to €14.6 per share from €14.2, which reflects the growth in EBITDA, the buyout of the minorities, and some roll forward of the model in time. The key assumptions beyond FY21 are a quick fade from 5–6% organic revenue growth to 3% in FY24 and annual increases in EBITDA margin from 29.6% in FY21 to 31.2% in FY30. We continue to use a WACC of 8.5% and terminal growth of 2%.

Tinexta’s EV/EBITDA multiples for FY19 and FY20 are 10.0x and 9.0x. Our forecasts now adopt IFRS 16, but as adoption by other companies and in analysts’ estimates will take time to feed through to consensus, peer group analysis comparison is not meaningful.

Exhibit 4: Financial summary

€000s

2016

2017

2018

2019e

2020e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

146,920

174,790

238,701

257,036

271,398

Cost of Sales

0

0

0

0

0

Gross Profit

146,920

174,790

238,701

257,036

271,398

EBITDA

 

 

29,274

40,630

65,959

72,355

80,058

Normalised operating profit

 

 

18,447

28,959

50,999

54,272

60,473

Amortisation of acquired intangibles

(1,029)

(1,861)

(2,849)

0

0

Exceptionals

0

0

0

0

0

Reported operating profit

17,418

27,098

48,150

54,272

60,473

Net Interest

(1,042)

1,523

(2,520)

(2,408)

(2,986)

Joint ventures & associates (post tax)

13

4

106

770

847

Exceptionals

0

0

0

0

0

Profit Before Tax (norm)

 

 

17,418

30,486

48,585

52,634

58,334

Profit Before Tax (reported)

 

 

16,389

28,625

45,736

52,634

58,334

Reported tax

(4,784)

(8,420)

(12,629)

(15,264)

(16,917)

Profit After Tax (norm)

12,334

21,519

35,169

37,370

41,417

Profit After Tax (reported)

11,605

20,205

33,107

37,370

41,417

Minority interests

(51)

(78)

(588)

(598)

(663)

Discontinued operations

0

0

0

0

0

Net income (normalised)

12,283

21,441

34,581

36,772

40,756

Net income (reported)

11,554

20,127

32,519

36,772

40,755

Basic average number of shares outstanding (m)

37

46

47

47

47

EPS– basic normalised (€)

 

 

0.33

0.46

0.74

0.78

0.86

EPS– diluted normalised (€)

 

 

0.33

0.46

0.74

0.78

0.86

EPS– basic reported (€)

 

 

0.31

0.43

0.70

0.78

0.86

Dividend (€)

0.09

0.14

0.23

0.26

0.28

Revenue growth (%)

18.3

19.0

36.6

7.7

5.6

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

19.9

23.2

27.6

28.1

29.5

Normalised Operating Margin

12.6

16.6

21.4

21.1

22.3

BALANCE SHEET

Fixed Assets

 

 

216,369

275,773

305,579

362,148

354,563

Intangible Assets

200,690

260,630

270,536

315,362

310,785

Tangible Assets

7,050

8,287

8,232

19,975

16,967

Investments & other

8,629

6,856

26,811

26,811

26,811

Current Assets

 

 

116,238

125,844

143,406

139,448

178,430

Stocks

1,001

2,072

1,344

1,447

1,528

Debtors

50,948

80,285

86,321

92,952

98,145

Cash & cash equivalents

60,431

36,987

35,136

24,444

58,152

Other financial assets

4,311

8,186

8,186

8,186

Other

3,858

2,189

12,419

12,419

12,419

Current Liabilities

 

 

(89,792)

(102,868)

(194,356)

(210,984)

(213,028)

Creditors

(33,185)

(47,725)

(93,905)

(97,290)

(99,334)

Tax and social security

(1,481)

(6,125)

(704)

(704)

(704)

Short term borrowings

(36,947)

(21,723)

(97,380)

(110,623)

(110,623)

Other

(18,179)

(27,295)

(2,367)

(2,367)

(2,367)

Long Term Liabilities

 

 

(119,246)

(155,535)

(109,085)

(124,085)

(124,085)

Long term borrowings

(100,839)

(123,800)

(70,667)

(85,667)

(85,667)

Other long term liabilities

(18,407)

(31,735)

(38,418)

(38,418)

(38,418)

Net Assets

 

 

123,569

143,214

145,544

166,527

195,880

Minority interests

187

537

3,757

4,355

5,018

Shareholders' equity

 

 

123,756

143,751

149,301

170,882

200,898

CASH FLOW

Net operating cash flow

 

 

20,038

32,151

43,405

54,512

60,758

Capex

(5,745)

(6,486)

(13,095)

(13,000)

(12,000)

Acquisitions/disposals

(36,993)

(61,072)

(33,182)

(46,652)

0

Net interest

(1,017)

(1,526)

(1,441)

(2,408)

(2,986)

Equity financing

48,179

1,078

1,080

0

0

Dividends

(3,820)

(6,977)

(12,067)

(16,389)

(12,064)

Other

1,076

4,219

(3,866)

0

0

Net Cash Flow

21,718

(38,613)

(19,166)

(23,937)

33,708

Opening net debt/(cash)

 

 

48,369

71,003

104,225

124,726

163,661

FX

0

0

0

0

0

Other non-cash movements

(44,352)

5,391

(1,335)

(14,998)

0

Closing net debt/(cash)

 

 

71,003

104,225

124,726

163,661

129,953

Source: Tinexta, Edison Investment Research


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Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Tinexta and prepared and issued by Edison, in consideration of a fee payable by Tinexta. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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