Last close As at 05/08/2026
EUR15.00
— 0.00 (0.00%)
Market capitalisation
EUR709m
Research: TMT
Tinexta’s Q123 results reflect trends that are consistent with prior years for the Digital Trust (DT) and Business Innovation (BI) divisions, coupled with a reassuring boost from a rebound in growth by Cyber Security (CS). The conservative balance sheet with an almost net cash position at the end of Q123 should enable Tinexta to undertake further M&A, which could provide scope for upgrades to profit estimates. We increase our DCF-based valuation to €30.4/share (€29.5 previously).
Tinexta |
Cyber Security rebound in Q123 |
Q123 results |
Professional services |
12 May 2023 |
Share price performance
Business description
Next events
Analysts
Tinexta is a research client of Edison Investment Research Limited |
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Tinexta’s Q123 results reflect trends that are consistent with prior years for the Digital Trust (DT) and Business Innovation (BI) divisions, coupled with a reassuring boost from a rebound in growth by Cyber Security (CS). The conservative balance sheet with an almost net cash position at the end of Q123 should enable Tinexta to undertake further M&A, which could provide scope for upgrades to profit estimates. We increase our DCF-based valuation to €30.4/share (€29.5 previously).
Year |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/21 |
301.5 |
57.5 |
0.83 |
0.30 |
22.1 |
1.6 |
12/22 |
357.2 |
73.6 |
1.07 |
0.51 |
17.2 |
2.8 |
12/23e |
410.4 |
80.8 |
1.06 |
0.48 |
17.3 |
2.6 |
12/24e |
456.7 |
95.0 |
1.21 |
0.26 |
15.2 |
1.4 |
12/25e |
501.5 |
110.6 |
1.44 |
0.35 |
12.7 |
1.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q123 results ‘in line’ with seasonality
Tinexta’s Q123 revenue and adjusted EBITDA grew by c 10% y-o-y to €86.1m and by 3% to €15.0m, respectively. The growth was driven by DT (revenue +12%, adjusted EBITDA +12%) and a welcome rebound by CS (revenue +15%, adjusted EBITDA +79%) following a relatively disappointing FY22 versus initial expectations as clients deferred spend, while management invested ahead of expected growth. BI (revenue +6%, adjusted EBITDA -23%) demonstrated its typical seasonality, with lower demand for subsidised finance services in the period following peak demand in Q4 of a financial year, and profitability given changes in revenue mix. The omission of Tinexta’s typical disclosure of the drivers of growth between organic and the contribution from M&A merely reflects the very limited contribution from M&A in the first quarter. Free cash flow generation was helped by further working capital improvements and the expected cash inflows from M&A (Bregal capital injection and the sale of ReValuta) helped to significantly reduce Tinexta’s period-end net debt position to a conservative €3.8m (€77.6m end FY22), which naturally provides opportunity for ongoing M&A.
FY22 guidance reiterated
Management has reiterated its FY23 guidance on the back of what is referred to as an ‘in line’ set of results, while recognising the seasonality of the businesses (Q123 reported revenue represents 21% of our FY23 estimate of c €410m). We make no change to our underlying estimates but incorporate the April 2023 acquisition of 20% of Defence Tech Holding (DTH) for €25m, which adds c €1m of post-tax associate income on an annualised basis to our prior forecasts.
Valuation: Well supported by DCF
The recent share price weakness has widened the discount to our DCF-based valuation of €30.4/share (€29.5 previously), which has increased as we incorporate the acquisition of DTH and update the net debt position.
Exhibit 1: Financial summary
€m |
2021 |
2022 |
2023e |
2024e |
2025e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
301.5 |
357.2 |
410.4 |
456.7 |
501.5 |
Operating costs |
(225.1) |
(262.4) |
(306.4) |
(337.0) |
(364.8) |
||
EBITDA |
|
|
76.5 |
94.8 |
104.1 |
119.7 |
136.7 |
EBITDA (not adjusted) |
|
|
71.3 |
86.3 |
94.1 |
109.7 |
128.7 |
Operating profit (before amort. and excepts.) |
|
|
61.1 |
77.6 |
83.1 |
96.7 |
111.3 |
Amortisation of acquired intangibles |
(11.0) |
(17.5) |
(17.5) |
(17.5) |
(17.5) |
||
Exceptionals |
(2.6) |
(6.4) |
(6.0) |
(5.0) |
(4.0) |
||
Share-based payments |
(2.6) |
(2.1) |
(4.0) |
(5.0) |
(4.0) |
||
Reported operating profit |
45.0 |
51.6 |
55.6 |
69.2 |
85.8 |
||
Net Interest |
(3.1) |
(6.2) |
(2.8) |
(2.2) |
(1.2) |
||
Joint ventures & associates (post tax) |
(0.2) |
(0.2) |
0.5 |
0.5 |
0.5 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
57.5 |
73.6 |
80.8 |
95.0 |
110.6 |
Profit Before Tax (reported) |
|
|
41.7 |
45.1 |
53.3 |
67.5 |
85.1 |
Reported tax |
(13.0) |
(12.5) |
(16.5) |
(20.3) |
(24.7) |
||
Profit After Tax (norm) |
40.3 |
52.4 |
55.7 |
66.5 |
78.5 |
||
Profit After Tax (reported) |
28.7 |
32.6 |
36.8 |
47.3 |
60.4 |
||
Minority interests |
(1.2) |
(2.4) |
(6.7) |
(10.8) |
(12.4) |
||
Discontinued operations |
10.0 |
45.5 |
37.6 |
0.0 |
0.0 |
||
Net income (normalised) |
39.1 |
50.0 |
49.0 |
55.7 |
66.2 |
||
Net income (reported) |
37.5 |
75.7 |
67.7 |
36.5 |
48.0 |
||
Average Number of Shares Outstanding (m) |
47.2 |
46.8 |
46.4 |
46.1 |
45.9 |
||
EPS - normalised (c) |
|
|
84.7 |
108.8 |
107.7 |
123.2 |
147.1 |
EPS - normalised fully diluted (c) |
|
|
82.8 |
106.7 |
105.6 |
120.8 |
144.1 |
EPS - basic reported (€) |
|
|
0.81 |
1.65 |
1.49 |
0.81 |
1.07 |
Dividend (€) |
0.30 |
0.51 |
0.48 |
0.26 |
0.35 |
||
Revenue growth (%) |
12.1 |
18.4 |
14.9 |
11.3 |
9.8 |
||
EBITDA Margin before non-recurring costs (%) |
25.4 |
26.5 |
25.4 |
26.2 |
27.2 |
||
Normalised Operating Margin |
20.3 |
21.7 |
20.2 |
21.2 |
22.2 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
602.9 |
574.0 |
594.9 |
582.8 |
570.6 |
Intangible Assets |
550.4 |
487.3 |
489.2 |
485.1 |
482.0 |
||
Tangible Assets |
25.2 |
48.4 |
42.4 |
34.4 |
25.4 |
||
Investments & other |
27.4 |
38.3 |
63.3 |
63.3 |
63.3 |
||
Current Assets |
|
|
213.2 |
403.5 |
460.0 |
494.3 |
549.2 |
Stocks |
1.3 |
1.9 |
1.9 |
1.9 |
1.9 |
||
Debtors |
119.5 |
129.5 |
143.4 |
160.2 |
175.9 |
||
Cash & cash equivalents |
68.3 |
115.3 |
168.8 |
186.2 |
225.5 |
||
Other financial assets |
4.1 |
125.8 |
125.8 |
125.8 |
125.8 |
||
Other |
20.0 |
31.0 |
20.2 |
20.2 |
20.2 |
||
Current Liabilities |
|
|
(207.5) |
(260.9) |
(269.3) |
(281.2) |
(292.7) |
Creditors |
(146.8) |
(156.4) |
(169.8) |
(181.7) |
(193.2) |
||
Tax and social security |
(3.6) |
(2.9) |
(2.9) |
(2.9) |
(2.9) |
||
Short term borrowings |
(54.1) |
(93.6) |
(93.6) |
(93.6) |
(93.6) |
||
Other |
(3.1) |
(8.0) |
(3.0) |
(3.0) |
(3.0) |
||
Long Term Liabilities |
|
|
(357.9) |
(314.6) |
(314.6) |
(314.6) |
(314.6) |
Long term borrowings |
(281.5) |
(235.2) |
(235.2) |
(235.2) |
(235.2) |
||
Other long-term liabilities |
(35.0) |
(42.4) |
(42.4) |
(42.4) |
(42.4) |
||
Net Assets |
|
|
250.8 |
402.0 |
471.0 |
481.2 |
512.5 |
Minority interests |
(46.9) |
(36.4) |
(67.0) |
(68.1) |
(69.3) |
||
Shareholders' equity |
|
|
203.9 |
365.7 |
404.0 |
413.1 |
443.2 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
72.5 |
72.8 |
70.3 |
77.7 |
90.6 |
Capex and intangibles |
(16.2) |
(24.1) |
(23.0) |
(16.0) |
(17.0) |
||
Acquisitions/disposals |
(92.8) |
84.5 |
40.8 |
0.0 |
0.0 |
||
Net interest |
(2.3) |
(2.4) |
(2.8) |
(2.2) |
(1.2) |
||
Equity financing |
(9.3) |
(8.1) |
(10.0) |
(10.0) |
(10.0) |
||
Dividends |
(12.5) |
(20.8) |
(28.4) |
(32.0) |
(23.2) |
||
Borrowings |
42.9 |
(40.2) |
0.0 |
0.0 |
0.0 |
||
Other |
6.6 |
1.4 |
30.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(24.6) |
48.6 |
51.9 |
17.5 |
39.2 |
||
Opening net debt/(cash) |
|
|
91.9 |
264.4 |
77.6 |
25.6 |
8.1 |
Closing net debt/(cash) |
|
|
264.4 |
77.6 |
25.6 |
8.1 |
(31.1) |
Source: Tinexta accounts, Edison Investment Research
|
|
Research: Investment Companies
Henderson Smaller Companies Investment Trust (HSL) has been managed by Neil Hermon for the last 20 years. He explains that small-cap stock price weakness in 2022 was due to valuation compression and was not a reflection of lower earnings; in essence macroeconomic events outweighed business trends at the micro level. However, the manager believes the interest rate cycle is close to peaking given that inflation is rolling over and the UK economy is relatively weak. Hermon considers the valuations of small-cap UK growth stocks to be ‘very appealing’ and believes that there could be a significant pickup in merger and acquisition (M&A) activity in a more robust economic environment when credit is more freely available.