Tinexta — Management anticipates stronger growth in FY23

Tinexta (MIL: TNXT)

Last close As at 15/06/2024

EUR16.73

−0.61 (−3.52%)

Market capitalisation

EUR819m

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Research: TMT

Tinexta — Management anticipates stronger growth in FY23

Tinexta’s FY22 results demonstrated strong growth but were just shy of our expectations, mainly due to lower growth than expected from the Cyber Security (CS) division. Management’s new guidance suggests greater profit growth in FY23 than was delivered in FY22, before any contributions from recently announced and likely further mergers and acquisitions (M&A) are considered. The growth plan continues to focus on strengthening Tinexta’s position in its reference markets, M&A, internationalisation of the divisions and cross-selling opportunities. We downgrade our FY23 and FY24 EBITDA estimates by 7–8% to reflect the new guidance. Our DCF-based valuation of €29.5/share (€38.7 previously) suggests the company’s share price is attractively valued.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

TMT

Tinexta

Management anticipates stronger growth in FY23

FY22 results

Professional services

20 March 2023

Price

€20.1

Market cap

€949m

Net debt (€m) at 31 December 2022

77.6

Shares in issue

47.2m

Free float

44.3%

Code

TNXT

Primary exchange

Euronext STAR Milan

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(18.0)

(11.6)

(25.6)

Rel (local)

(10.9)

(17.7)

(28.9)

52-week high/low

€27.84

€17.90

Business description

Tinexta offers innovative solutions for the digital transformation and growth of companies, professionals and institutions. It has three divisions: Digital Trust, Business Innovation and Cyber Security.

Next events

Q123 results

10 May 2023

H123 results

2 August 2023

Q323 results

10 November 2023

Analysts

Russell Pointon

+44 (0)20 3077 5700

Max Hayes

+44 (0)20 3077 5700

Tinexta is a research client of Edison Investment Research Limited

Tinexta’s FY22 results demonstrated strong growth but were just shy of our expectations, mainly due to lower growth than expected from the Cyber Security (CS) division. Management’s new guidance suggests greater profit growth in FY23 than was delivered in FY22, before any contributions from recently announced and likely further mergers and acquisitions (M&A) are considered. The growth plan continues to focus on strengthening Tinexta’s position in its reference markets, M&A, internationalisation of the divisions and cross-selling opportunities. We downgrade our FY23 and FY24 EBITDA estimates by 7–8% to reflect the new guidance. Our DCF-based valuation of €29.5/share (€38.7 previously) suggests the company’s share price is attractively valued.

Year

end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/21**

301.5

57.8

0.83

0.30

24.3

1.5

12/22

357.2

71.0

1.07

0.51

18.7

2.5

12/23e

410.4

80.0

1.04

0.46

19.4

2.3

12/24e

456.7

94.2

1.19

0.26

16.9

1.3

12/25e

501.5

109.8

1.42

0.34

14.2

1.7

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

FY22: Cyber Security dampened group growth

Tinexta’s year-on-year revenue and adjusted EBITDA growth of 18% to €357m and 24% to €95m, respectively, included organic growth of 6% and 5%, respectively. The results were 2–3% below our expectations and management’s updated guidance, primarily due to lower growth than expected from CS. FY22 was a significant year with a dramatic reshaping of the group towards a focus on its highest-growth divisions, and the receipt of investment from external parties to help drive future growth. By the year-end, the net debt position had improved significantly to €78m (0.8x adjusted EBITDA), from €264m at end FY21, providing significant potential for further M&A.

FY23–25: Higher growth with margin leverage

Management is more optimistic about Tinexta’s growth prospects in FY23, with guidance of organic growth in revenue of 11–15% and adjusted EBITDA of 8–12%, and double-digit growth rates expected in FY23–25. The guidance includes an anticipated strong recovery for CS, which we believe is in ‘show me’ mode for investors given its performance since acquisition. We downgrade our FY23 and FY24 EBITDA estimates by 7-8% to reflect the new guidance and introduce estimates for FY25. In addition to the enhanced profit growth prospects, shareholders will be rewarded with an enhanced dividend payout ratio in outer years of the three-year plan of 35% of net profit versus 30% in FY23.

Valuation: DCF highlights attractive valuation

The wider market weakness has brought Tinexta’s valuation to attractive levels relative to our DCF-based valuation, which has reduced to €29.5/share (€38.7 previously) to reflect our lower forecasts and a higher WACC due to changes in bond yields.

FY22 results: Cyber Security dampens growth

Income statement: Revenue and margin growth

Exhibit 1: Summary income statement

€m

FY21

FY22

FY22e

FY22 versus Edison

Group revenue

301.5

357.2

365.3

(2%)

Growth y-o-y

N/D

18.4%

21.1%

Organic y-o-y

N/D

6.4%

10.8%

– Digital Trust

131.3

157.0

158.5

(1%)

Organic y-o-y

11.0%

9.5%

10.0%

– Cyber Security

72.8

77.5

88.1

(12%)

Organic y-o-y

104.2%

4.1%

21.0%

– Business Innovation

98.3

125.7

120.5

4%

Organic y-o-y

11.3%

6.0%

10.0%

– Other

(0.9)

(3.0)

(1.8)

63%

Group adjusted EBITDA

76.5

94.8

97.3

(3%)

Margin

25.4%

26.5%

26.6%

Growth y-o-y

N/D

23.9%

27.3%

Organic y-o-y

N/D

4.8%

17.0%

– Digital Trust

36.4

47.3

46.1

3%

Margin

27.7%

30.1%

29.1%

– Cyber Security

10.1

10.3

13.1

(21%)

Margin

13.9%

13.3%

14.9%

– Business Innovation

41.9

51.6

51.1

1%

Margin

42.6%

41.1%

42.4%

– Other

(11.9)

(14.5)

(13.0)

12%

Reported EBITDA

71.3

86.3

90.5

(5%)

Operating profit

45.0

51.6

53.4

(3%)

Margin

14.9%

14.5%

14.6%

Growth y-o-y

14.7%

18.7%

Net finance

(3.3)

(6.5)

(4.4)

47%

Reported PBT

41.7

45.1

49.0

(8%)

Tax

(13.0)

(12.5)

(15.7)

Tax rate

31%

28%

32%

Net profit from continuing operations

28.7

32.6

33.3

(2%)

Profit from discontinued operations

10.0

45.5

Total net profit

38.7

78.1

DPS (€)

0.30

0.51

0.29

75%

Source: Tinexta, Edison Investment Research

Tinexta’s FY22 revenue grew by c 18% y-o-y to €357.2m, adjusted EBITDA by c 24% to €94.8m and operating profit by c 15% to €51.6m. In addition to organic revenue growth of c 6% and adjusted EBITDA growth of c 5%, there was a significant contribution from M&A, adding 12% to revenue and 19% to EBITDA growth.

While the results represented strong growth for the year, they were shy of our estimates and management’s guidance. Revenue was 2% below our forecast of €365.3m and adjusted EBITDA was 3% below our estimated €97.3m, mainly due to underperformance by CS (see below).

At the start of FY22, management guided to organic revenue growth of 10–12%, total revenue growth of 18–20% and adjusted EBITDA growth of 20–22%. This included the expected results for the Credit Information & Management (CIM) division that was subsequently sold, and was before the outbreak of war in Ukraine and subsequent economic weakening, which is likely to have negatively affected results versus initial guidance. At the start of FY22, management estimated a three-year revenue CAGR (FY22–24) of 6% for CIM, therefore the disposal should have been accretive to Tinexta’s growth. At the H122 phase, following the announcement of CIM’s disposal, FY22 guidance was updated to organic revenue growth of 10–12%, total revenue growth of 21–23%, organic adjusted EBITDA growth of 8–10% and total adjusted EBITDA growth of 25–27%. On the publication of Tinexta’s Q322 results, the guidance focused on only total growth, which was reiterated.

The higher interest charge was solely attributable to a higher contingent consideration adjustment on acquisitions, while the underlying interest charge was consistent with the prior year.

Tinexta’s effective tax rate of 28% was lower than our forecast 32%, and the prior year’s 31%.

The capital gain on the sale of Innolva, part of CIM, of €45.5m enabled management to propose a significantly higher dividend for the year of €0.51 versus €0.30 in the prior year, a 70% increase. The capital gain relating to the sale of ReValuta, the remaining part of CIM, was realised on completion of the transaction on 7 March 2023 and will therefore benefit FY23 results.

Divisional performance

At the divisional level, the revenue of Business Innovation (BI) (previously named Innovation & Marketing Services) was 4% above our prior estimates, while Digital Trust (DT) was marginally (ie 1%) below our estimate, and CS was significantly lower, by 12%. From a profit perspective, the underperformance versus our expectations was driven by adjusted EBITDA for both DT and BI that was above our forecasts, while CS, the smallest and least profitable division, was 21% below our estimate, and central costs were higher.

The increase in Tinexta’s adjusted EBITDA margin to 26.5%, from 25.4% in the prior year, was broadly in line with our expected margin of 26.6%. However, the drivers were slightly different than we expected; DT exceeded our expectations while CS and BI were lower than we expected.

Exhibit 2: Business unit performance

€m

Q122

Q222

Q322

Q422

FY22

Group revenue

78.1

89.9

78.7

110.5

357.2

Growth y-o-y

21.9%

18.8%

16.9%

16.9%

18.4%

Organic y-o-y

N/D

6.2%

3.1%

6.4%

6.4%

– Digital Trust

38.0

38.9

37.0

43.1

157.0

Organic y-o-y

7.7%

8.5%

12.8%

9.3%

9.5%

– Cyber Security

18.0

18.8

18.0

22.8

77.5

Organic y-o-y

7.1%

5.4%

1.9%

2.4%

4.1%

– Business Innovation

21.0

32.8

24.3

46.0

125.7

Organic y-o-y

19.4%

5.8%

(7.4%)

7.9%

6.0%

Group adjusted EBITDA

14.5

22.6

17.7

40.0

94.8

Margin

18.6%

25.1%

22.5%

36.2%

26.5%

Growth y-o-y

24.5%

18.2%

9.1%

35.5%

23.9%

Organic y-o-y

N/D

0.1%

(14.9%)

19.3%

4.8%

– Digital Trust

10.4

10.7

11.7

14.5

47.3

Margin

27.3%

27.6%

31.6%

33.7%

30.1%

Organic y-o-y

19.4%

12.1%

14.5%

12.7%

14.3%

– Cyber Security

1.2

1.8

1.8

5.5

10.3

Margin

6.5%

9.8%

9.8%

24.3%

13.3%

Organic y-o-y

(39.4%)

18.8%

(24.7%)

29.9%

2.3%

– Business Innovation

6.3

13.6

7.7

23.9

51.6

Margin

30.2%

41.5%

31.8%

52.0%

41.1%

Organic y-o-y

14.2%

(5.8%)

(28.8%)

41.4%

2.0%

– Other

(3.4)

(3.7)

(3.5)

(4.0)

(14.5)

Source: Tinexta

DT’s 9.5% organic revenue growth in FY22 was broadly in line with management’s guidance from the start of the year of 10%, and follows slightly stronger growth of 11% in the prior year, which was helped by an easier COVID-19 comparative. The November 2021 acquisition of CertEurope took total revenue growth for FY22 to 19.6%. DT’s growth was driven by further product enhancements and the addition of new customers, which boosted volumes. As is typical, the revenue growth fed through to higher growth in adjusted EBITDA, 14% organic and 30% total growth for the year, taking the FY22 margin to an all-time high of 30.1%. The higher margin reflects some benefit from CertEurope, which has a higher margin (we estimate at 41.9% in the first 12 months since being acquired) than the underlying business, which also enjoyed operating leverage with an increase in the margin to 28.7% from FY21’s 27.4%.

CS’s FY22 organic revenue growth of c 4% was significantly below management’s three-year (FY22–24) guidance from the start of 2022 of 19%. The acquisition of LAN & WAN contributed a further c 2% to growth. Management highlighted that demand was negatively affected by international geopolitics and inflationary issues, as well as the mix shifts highlighted through 2022. Through the first nine months of 2022, CS’s organic revenue growth was running at just over 5%, and management was confident that Q322’s delays to spend would reverse in Q422; however, the reversal was lower than expected, leading to a further increase in the revenue backlog, which should be supportive for growth in FY23. The lower-than-expected revenue growth, previously highlighted mix shifts and internal investment to build the organisational and commercial structure led to adjusted EBITDA growth of 2% being below management’s expectations. At the start of the year, management guided to a three-year CAGR for adjusted EBITDA of 31% for FY22–24. CS’s adjusted EBITDA margin declined from 13.9% in FY21 to 13.3% in FY22.

BI’s revenue enjoyed its typical Q4 strength with organic revenue growth of c 8%, taking the FY22 growth rate to 6%. Growth was driven by consulting services, while demand for subsidised instruments was negatively affected by the macroeconomic weakness. The acquisitions of Evalue (January 2022), Enhancers (April 2022), Plannet (July 2022) and Forvalue (July 2021) contributed a further c 22% revenue growth, taking total growth to 27.8%. BI’s FY22 adjusted EBITDA margin of 41.1% was marginally below FY21’s 42.6%, reflecting the contribution of the above acquisitions that have lower margins than the underlying businesses. Q422 was very strong from a profit perspective, with an adjusted EBITDA margin of 45% versus 21.4% in the prior year.

Balance sheet and cash flow

In absolute terms and relative to revenue, Tinexta’s FY22 free cash flow generation was lower than the prior year. Tinexta generated €49m of free cash flow in FY22 versus €56m in FY21. The main changes in FY22 from the prior year were a small working capital outflow in FY22 versus an inflow in the prior year; lower cash tax payment; higher combined spend on tangible and intangible assets of c €24m in FY22 versus FY21’s €16m; and €2m less cash generated by CIM.

At the period end, Tinexta’s cash position increased to c €117m from c €68m at the end of FY21. Beyond the free cash generation highlighted above, the most significant movements were acquisitions of €73m, disposals of €129m (Innolva, the CIM division) and internal investments by minorities of €70m (of the €100m expected from Bregal Milestone for an initial c 12% of InfoCert in the DT division) and €55m (from Intesa Sanpaolo for 12% of Warrant Hub in the BI division). The remaining €30m investment from Bregal Milestone was received by Tinexta at the start of February 2023, taking Bregal’s minority stake in InfoCert to 16%.

The above cash flow produced a significant improvement in Tinexta’s net debt position to c €78m at the period end, from €264m at the end of FY21. The slight delay in the receipt of proceeds for the sale of ReValuta (part of CIM) led to the period end net debt/adjusted EBITDA being 0.8x, versus management’s expectation of 0.6x at the Q322 stage.

New business plan and financial guidance

As is customary at the start of the year, management introduced guidance for FY23 and its new three-year business plan (ie for FY23–25).

The key pillars of the medium-term plan are consistent with prior years: strengthen leadership in reference markets; strengthen the integrated offer, selective M&A and internationalisation; enhance corporate culture including further focus on environmental, social and governance issues; and maintain a strong focus on the financials.

The financial guidance for the business units and Tinexta as a whole for FY23 and FY23–25 is as follows:

Exhibit 3: Management’s guidance for organic growth

Revenue FY23

Adjusted EBITDA FY23

Revenue FY23–25 CAGR

Adjusted EBITDA FY23–25 CAGR

Digital Trust

10%

11%

10%

14%

Cyber Security

30%

43%

17%

27%

Business Innovation

15%

5%

13%

11%

Group

11–15%

8–12%

Low/mid-double-digit

Double-digit

Source: Tinexta

The guidance does not include any contribution from the recently announced deals: 20% of Defence Tech Holding, which will be equity accounted; 65% of Ascertia; any future potential M&A; or any benefits from Italy’s EU-funded post-COVID National Recovery and Resilience Plan (Piano Nazionale di Ripresa e Resilienza).

Management is more optimistic about the outlook for FY23 than it delivered in FY22, with expected organic revenue growth of 11–15% versus FY22’s c 6%. The key deltas in management’s expectations for FY23 versus 2002 are a significant improvement for CS, with guided organic revenue growth of 30% versus the c 4% delivered in FY22, and BI, with guidance for 15% organic growth following FY22’s 6%. The guided 10% organic revenue growth for DT is consistent with results delivered over the long term.

From a profit perspective, higher margins are anticipated for DT and CS in FY23, but not for BI due to the mix effects of lower-margin acquisitions. In aggregate, these combine to produce expected organic adjusted EBITDA growth for the group of 8–12%, lower than the indicated revenue growth of 11–15%, in part due to the increased relative contribution of CS, which has a lower margin than the rest of the group. Within the guidance, management assumes inflation of 6%.

Moving to the medium-term business plan, the strong FY23 organic revenue growth rates for CS and BI are expected to moderate in the outer years (ie post FY23) to still-high three-year CAGRs for 2023–25 of 17% and 13% respectively, while DT’s growth rate is expected to be stable, and the same as last year’s FY22–24 guidance. There is greater optimism for BI’s growth prospects (13% CAGR) than at the start of 2022 (7% CAGR FY22–24), which is testimony to the accretive nature of its acquisitions and reflects the increasing benefits from Intesa Sanpaolo. Conversely, the lower FY23–25 guidance for CS’s organic revenue growth of 17% following its 4% delivered growth in FY22 indicates a reduction in management’s medium-term growth expectations versus this time last year, when a three-year (FY22–24) CAGR of 19% was anticipated. The new three-year 17% revenue CAGR implies low double-digit growth in FY24 and FY25 if CS achieves the 30% FY23 guidance.

As for FY23, management anticipates margin leverage for DT and CS in FY23–25, including accelerating growth for DT after FY23, but not for BI. In aggregate, double-digit profit growth is expected. The medium-term targets assume general inflation of 3% by the end of the plan.

Shareholder returns will improve with a projected greater dividend payout ratio of 35% of net profit by the end of the three years, from 30% in FY23.

In the absence of further M&A, management estimates the company will have net cash by the end of FY23 and FY25.

New forecasts

In the table below we show our new estimates for FY24 and introduce new estimates for FY25, which are in line with management’s guidance.

Exhibit 4: New FY23–25 estimates for Tinexta

€m

FY22e

FY22

FY23e new

FY24e new

FY25e new

FY23e old

FY24e old

FY23e change %

FY24e change %

Group revenue

365.3

357.2

410.4

456.7

501.5

408.2

455.8

1%

0%

Growth y-o-y

21.1%

18.4%

14.9%

11.3%

9.8%

11.7%

11.7%

Organic y-o-y

10.8%

6.4%

14.9%

11.3%

9.8%

– Digital Trust

158.5

157.0

172.7

189.9

208.9

173.6

191.2

(1%)

(1%)

Growth y-o-y

20.7%

19.5%

10.0%

10.0%

10.0%

10%

10%

Organic

10.0%

9.5%

10.0%

10.0%

10.0%

– Cyber Security

88.1

77.5

100.8

111.8

124.1

104.9

122.7

(4%)

(9%)

Growth y-o-y

21.0%

6.4%

30.0%

11.0%

11.0%

19%

17%

Organic

21.0%

4.1%

30.0%

11.0%

11.0%

– Business Innovation

120.5

125.7

144.5

163.3

181.3

132.5

145.1

9%

13%

Growth y-o-y

22.5%

27.8%

15.0%

13.0%

11.0%

10%

9%

Organic

10.0%

6.0%

15.0%

13.0%

11.0%

– Intra-group

(1.8)

(3.0)

(7.5)

(8.4)

(12.9)

(2.9)

(3.2)

161%

161%

Group adjusted EBITDA

97.3

94.8

104.1

119.7

136.7

113.2

128.6

(8%)

(7%)

Margin

26.6%

26.5%

25.4%

26.2%

27.2%

27.7%

28.2%

Growth y-o-y

27.3%

23.9%

9.8%

15.1%

14.1%

16.3%

13.6%

– Digital Trust

46.1

47.3

52.5

60.4

70.0

52.1

59.2

1%

2%

Margin

29.1%

30.1%

30.4%

31.8%

33.5%

30.0%

30.9%

Growth y-o-y

26.7%

30.0%

11.0%

15.0%

16.0%

13.0%

13.7%

– Cyber Security

13.1

10.3

14.7

18.4

21.2

18.4

22.6

(20%)

(18%)

Margin

14.9%

13.3%

14.6%

16.5%

17.1%

17.5%

18.4%

Growth y-o-y

30.0%

2.1%

43.0%

25.0%

15.0%

39.8%

23.0%

– Business Innovation

51.1

51.6

54.2

61.8

70.5

57.4

62.9

(5%)

(2%)

Margin

42.4%

41.1%

37.5%

37.9%

38.9%

43.3%

43.3%

Growth y-o-y

22.0%

23.3%

5.0%

14.0%

14.0%

12.2%

9.6%

– Other

(13.0)

(14.5)

(17.4)

(20.9)

(25.1)

(14.6)

(16.0)

20%

30%

Growth y-o-y

9.3%

21.9%

20.0%

20.0%

20.0%

12.0%

10.0%

Source: Edison Investment Research

Our revenue estimates for FY23 and FY24 are broadly unchanged, with year-on-year growth of c 15% and c 11% respectively. The key features of the changes to forecasts are an upgrade for BI, offset by lower estimates for CS and higher intra-group eliminations.

Our adjusted EBITDA estimates for FY23 and FY24 are downgraded by 8% and 7%, respectively, giving year-on-year growth of c 10% and c 15%, respectively. The main divisional drivers of the downgrades are CS, BI and higher central costs/intra-group eliminations.

For FY25, we forecast revenue growth of c 10% and adjusted EBITDA growth of c 14% to give three-year CAGRs of 11% and 12%, respectively.

Valuation: Well supported by lowered DCF-based valuation

Our DCF-based valuation reduces to €29.5/share, from €38.7 previously, implying good upside from the current share price. The lower valuation reflects the above downgrade to our forecasts and a higher WACC of 8% (6.8% previously) that takes account of changes in interest rates (Italian 10year bond yield of 4.2%) and a higher company specific beta of 0.8x (source: Refinitiv).

In the charts below, we show Tinexta’s prospective EV/sales and EV/EBITDA multiples for FY23–25 versus its long-term high, average (quoted in charts) and low multiples.

Exhibit 5: Tinexta’s EV/sales multiple

Exhibit 6: Tinexta’s EV/EBITDA multiple

Source: Tinexta, Edison Investment Research, Refinitiv

Source: Tinexta, Edison Investment Research, Refinitiv

Exhibit 5: Tinexta’s EV/sales multiple

Source: Tinexta, Edison Investment Research, Refinitiv

Exhibit 6: Tinexta’s EV/EBITDA multiple

Source: Tinexta, Edison Investment Research, Refinitiv

The prospective EV/sales multiples for FY23–25 of 3.0x, 2.7x and 2.4x compare with its long-term average of 2.4x since 2014, but the long-term average is skewed by the lower valuations in Tinexta’s formative years when profitability was lower. The prospective EV/EBITDA multiples of 11.7x, 10.1x and 8.9x are more in line with the long-term average of 10.2x despite the improved profitability of the group.

Exhibit 7: Financial summary

€m

2021R

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

(2.3)

(6.4)

(6.0)

(5.0)

(4.0)

Share-based payments

(2.8)

(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)

(0.3)

(0.3)

(0.3)

Exceptionals

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

57.8

71.0

80.0

94.2

109.8

Profit Before Tax (reported)

 

 

41.7

45.1

52.5

66.7

84.3

Reported tax

(13.0)

(12.5)

(16.3)

(20.0)

(24.4)

Profit After Tax (norm)

40.3

52.6

55.2

65.9

78.0

Profit After Tax (reported)

28.7

32.6

36.3

46.7

59.8

Minority interests

(1.2)

(2.4)

(6.7)

(10.8)

(12.4)

Discontinued operations

10.0

45.5

35.0

0.0

0.0

Net income (normalised)

39.1

50.2

48.5

55.2

65.6

Net income (reported)

37.5

75.7

64.5

35.9

47.5

Average Number of Shares Outstanding (m)

47.2

46.7

46.7

46.5

46.2

EPS – normalised (c)

 

 

84.7

109.4

105.7

120.9

144.5

EPS – normalised fully diluted (c)

 

 

82.8

107.5

103.8

118.7

141.8

EPS – basic reported (€)

 

 

0.81

1.65

1.41

0.79

1.05

Dividend (€)

0.30

0.51

0.46

0.26

0.34

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

558.5

534.0

508.1

Intangible Assets

550.4

487.3

471.9

447.3

421.4

Tangible Assets

25.2

48.4

48.4

48.4

48.4

Investments & other

27.4

38.3

38.3

38.3

38.3

Current Assets

 

 

213.2

403.5

496.9

544.1

612.3

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

205.6

236.0

288.6

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

471.5

482.3

513.1

Minority interests

(46.9)

(36.4)

(67.0)

(68.1)

(69.3)

Shareholders' equity

 

 

203.9

365.7

404.5

414.2

443.8

CASH FLOW

Operating Cash Flow

 

 

72.5

72.8

81.1

89.6

103.8

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)

(27.4)

(31.0)

(23.0)

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

88.7

30.4

52.5

Opening net debt/(cash)

 

 

91.9

264.4

77.6

(11.3)

(41.7)

Closing net debt/(cash)

 

 

264.4

77.6

(11.3)

(41.7)

(94.2)

Source: Tinexta, Edison Investment Research


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 £60,000 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 2023 Edison Investment Research Limited (Edison).

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

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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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 £60,000 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 2023 Edison Investment Research Limited (Edison).

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

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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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