Tinexta — Strongest year since FY18

Tinexta (MIL: TNXT)

Last close As at 18/05/2024

EUR18.64

−0.07 (−0.37%)

Market capitalisation

EUR880m

More on this equity

Research: TMT

Tinexta — Strongest year since FY18

Tinexta enjoyed its strongest year for underlying profit growth in FY23 since FY18 which, given the recent challenging macro environment, is testimony to the changes in its business portfolio. Management has a consistent strategy of strengthening its market leadership, greater coordination between and integration of its divisions, M&A and expanding geographic coverage. Management’s new guidance suggests an even better year for underlying profit in FY24 and high-teens growth over the next three years, which looks at odds with its prospective valuation multiples that are at a discount to its own long-term average multiples and our DCF-based valuation of €28.5/share.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

TMT

Tinexta

Strongest year since FY18

Professional services

20 March 2024

FY23 results

Price

€17.99

Market cap

€821m

Net debt (€m) at 31 December 2023 (prior to acquisition of ABF Group for c €157m)

102

Shares in issue

45.5m

Free float

44.3%

Code

TNXT

Primary exchange

Euronext STAR Milan

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.3)

(10.9)

(10.5)

Rel (local)

(13.0)

(20.6)

(32.1)

52-week high/low

€20.6

€14.6

Business description

Tinexta provides 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

Q124 results

14 May 2024

H124 results

2 August 2024

Q324 results

8 November 2024

Analysts

Russell Pointon

+44 (0)20 3077 5700 3077 5700

Max Hayes

+44 (0)20 3077 5700

Tinexta is a research client of Edison Investment Research Limited

Tinexta enjoyed its strongest year for underlying profit growth in FY23 since FY18 which, given the recent challenging macro environment, is testimony to the changes in its business portfolio. Management has a consistent strategy of strengthening its market leadership, greater coordination between and integration of its divisions, M&A and expanding geographic coverage. Management’s new guidance suggests an even better year for underlying profit in FY24 and high-teens growth over the next three years, which looks at odds with its prospective valuation multiples that are at a discount to its own long-term average multiples and our DCF-based valuation of €28.5/share.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/22

357.2

73.6

1.06

0.51

16.9

2.8

12/23

395.8

76.4

0.97

0.46

18.6

2.6

12/24e

479.4

125.5

1.62

0.19

11.1

1.1

12/25e

529.1

141.5

1.83

0.35

9.8

1.9

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

FY23 profits in line with management’s expectations

Tinexta’s FY23 results were in line with management’s expectations and marginally (c 1%) behind our estimates at the adjusted EBITDA level, due to a better overall margin on slightly lower-than-expected revenue. Underlying adjusted EBITDA growth of c 9% was the highest since FY18’s c 12%. At the divisional level, Digital Trust (DT) performed better than we expected, Cyber Security (CS) was in line (much better margin on weaker revenue growth) and Business Innovation (BI) was below our estimates, due to external factors. Underlying free cash flow growth from continuing operations of c 31% was well ahead of revenue and EBITDA growth.

Upgrades due to M&A

Management’s new guidance for FY24 points to very attractive rates of growth, including an improvement in the rate of underlying adjusted EBITDA growth to 10% versus 9% in FY23. This should be further boosted to 28–32% y-o-y growth by M&A, mainly the recent acquisition of ABF Group, Tinexta’s largest ever transaction. On a three-year view, management expects all three divisions to generate double-digit revenue growth to give 12–14% compound growth, and each to enjoy margin leverage to give an impressive CAGR for adjusted EBITDA of 17–19%. We have upgraded our adjusted EBITDA forecasts for FY24 and FY25 by 10–12%, including ABF Group, partially offset by a more cautious outlook for BI.

Valuation: Discount to DCF and historical multiples

Rolling forward our DCF to take account of Tinexta’s FY23 results and using the pro forma net debt that incorporates the acquisition of ABF Group leads to a reduction in our valuation to €28.5/share (€30/share previously), which still suggests strong upside from the current share price. The undervaluation is supported by a prospective FY24 EV/EBITDA of 8.7x versus its long-term average of 10.2x.

FY23 profit in line despite increasing macro weakness

Strong revenue growth and margin leverage

Tinexta’s FY23 results were in line with management’s updated expectations and broadly in line with our most recent estimates, which we marginally upgraded with the Q323 results. Revenue grew by c 11% y-o-y to €396m and adjusted EBITDA by c 9% to €103m. On an underlying basis, revenue growth of 9.7% was slightly behind management’s guidance of 11–15% from the start of the year, but better margin leverage meant that EBITDA growth of 8.6% was within the expected range at that time of 8–12%. We would highlight that momentum in underlying revenue and adjusted EBITDA improved versus the prior year’s c 6% and c 5% growth rates.

Exhibit 1: Summary income statement

€m

FY22

FY23

FY23e

FY23 versus Edison

Group revenue

357.2

395.8

411.0

(4%)

Growth y-o-y

18.4%

10.8%

15.1%

Organic y-o-y

6.4%

9.7%

10.8%

- Digital Trust

157.0

181.6

179.6

1%

Organic y-o-y

9.5%

13.1%

10.0%

- Cyber Security

77.5

89.4

100.8

(11%)

Organic y-o-y

4.1%

15.3%

21.0%

- Business Innovation

125.7

131.0

138.2

(5%)

Organic y-o-y

6.0%

4.2%

10.0%

- Other

(3.0)

(6.2)

(7.5)

(17%)

Group adjusted EBITDA

94.8

103.0

104.1

(1%)

Margin

26.5%

26.0%

25.3%

Growth y-o-y

23.9%

8.7%

9.9%

Organic y-o-y

4.8%

8.6%

17.0%

- Digital Trust

47.3

54.5

53.6

2%

Margin

30.1%

30.0%

29.9%

- Cyber Security

10.3

15.0

14.7

2%

Margin

13.3%

16.8%

14.6%

- Business Innovation

51.6

48.9

53.2

(8%)

Margin

41.1%

37.3%

38.5%

- Other

(14.5)

(15.4)

(17.4)

(11%)

Reported EBITDA

86.3

93.8

94.1

(0%)

Operating profit

51.6

52.4

55.7

(6%)

Margin

14.5%

13.2%

13.5%

Growth y-o-y

0.1

1.5%

7.9%

Net finance and associates

(6.5)

(1.8)

(2.3)

(23%)

Reported PBT

45.1

50.6

53.4

(5%)

Tax

(12.5)

(16.4)

(16.5)

Tax rate

28%

32%

31%

Net profit from continuing operations

32.6

34.3

36.8

(7%)

DPS (€)

0.51

0.46

0.47

(2%)

Source: Tinexta, Edison Investment Research

We look at the performance of the individual divisions in the next section, but in Exhibit 1 we can see there were some notable differences versus expectations. Overall group profitability (ie adjusted EBITDA) margin was better than we had estimated, albeit it did dip a little from 26.5% in FY22 to 26%. The dip primarily reflects a change in mix with a lower-than-expected margin for the largest and most profitable division, BI, partly compensated for by a better-than-expected margin for smallest and lowest margin division, CS.

A greater relative increase in the interest rates on cash deposits versus what was paid on borrowings in FY23 versus FY22 despite a higher average net debt position in FY23 than the prior year helped to reduce the net financial charge.

The lower absolute dividend of €0.47 (€0.51 in FY22) reflects a slightly higher payout ratio of 34% (FY22: 32%), and the prior year included greater gains recognised on the disposal of Innolva (c €46m) than the (c €36m) gain recognised on the disposal of Re Valuta in FY23.

Digital Trust star performer, Cyber Security margin surprise

All Tinexta’s divisions contributed to the overall growth in group revenue but the drivers to that growth were slightly different than expected. On the plus side, DT outperformed with strong underlying growth of c 13% versus 10% guidance. On the negative side, both CS’s (c 15%) and BI’s (c 4%) revenue growth underperformed guidance of 30% and 15%, respectively.

The quarterly results show the typical high Q4 weighting (c 32%) of annual revenue and profits (c 45% of adjusted EBITDA), mainly due to the seasonality of CS and BI – the latter has a very high margin. It was clear as the year progressed that DT was going to exceed guidance. However, growth in FY23 for both CS and BI was a little short of what management had expected.

Exhibit 2: Divisional summary

€m

FY22

Q123

Q223

Q323

Q423

FY23

Group revenue

357.2

86.1

96.4

87.1

126.2

395.8

Growth y-o-y

18.4%

10.1%

7.3%

10.7%

14.2%

10.8%

Organic y-o-y

6.4%

10.1%

7.3%

8.6%

12.0%

9.7%

- Digital Trust

157.0

42.4

44.0

43.8

51.4

181.6

Organic y-o-y

9.5%

11.6%

13.3%

13.9%

13.6%

13.1%

- Cyber Security

77.5

20.7

21.9

20.2

26.6

89.4

Organic y-o-y

4.1%

14.9%

16.6%

12.4%

16.7%

15.3%

- Business Innovation

125.7

24.0

32.1

24.4

50.4

131.0

Organic y-o-y

6.0%

6.4%

(2.1%)

0.5%

9.6%

4.2%

Group Adjusted EBITDA

94.8

15.0

23.0

19.0

46.1

103.0

Margin

26.5%

17.4%

23.8%

21.8%

36.5%

26.0%

Growth y-o-y

23.9%

3.1%

1.8%

7.2%

15.2%

8.7%

Organic y-o-y

4.8%

3.1%

1.8%

7.4%

14.9%

8.6%

- Digital Trust

47.3

11.6

12.7

13.3

16.9

54.5

Margin

30.1%

27.4%

28.9%

30.4%

32.8%

30.0%

Organic y-o-y

14.3%

12.3%

18.5%

14.0%

15.9%

15.2%

- Cyber Security

10.3

2.1

2.7

3.2

7.0

15.0

Margin

13.3%

10.2%

12.3%

15.7%

26.3%

16.8%

Organic y-o-y

2.3%

79.2%

45.6%

79.9%

26.6%

45.2%

- Business Innovation

51.6

4.9

11.4

5.8

26.7

48.9

Margin

41.1%

20.4%

35.5%

23.9%

53.0%

37.3%

Organic y-o-y

2.0%

(23.2%)

(16.3%)

(24.7%)

11.8%

(5.4%)

- Other

(14.5)

(3.7)

(3.9)

(3.3)

(4.6)

(15.4)

Source: Tinexta

DT’s revenue growth, which management believes is ahead of market growth, was broad based across its two main product categories: off-the-shelf products and enterprise solutions. From an operations perspective, a new business unit was added to focus on international integration, there was a change in management at CertEurope and the company has increased the number of specialists to develop sales with larger and multinational customers. Ascertia’s performance appears to be encouraging, with management highlighting that it has provided positive surprises and has won some large tenders. DT’s underlying margin improved by 1pp y-o-y to 30.7% in FY23. The minor 10bp dilution in reported margin was due to the first-time consolidation of Ascertia.

CS’s underlying revenue growth of 15% was lower than management expected at the start of the year of 30% growth, but it was ahead of management’s estimate for market growth of 12%. The lower-than-expected revenue was more than made up for by CS’s profit performance of c 45% yoy growth versus guidance of c 43% growth, which was attributable to greater growth in its higher-margin services: advisory, implementation services and managed security services. The key operational accomplishments of FY23 included strengthening of the offer; strategic partnerships with companies such as Google; the launch of the cyber intelligence platform; and the scaling up of the anti-money laundering solution. The division also benefited from cross-selling opportunities with DT.

BI’s financial performance in FY23 demonstrated its typical high Q4 seasonality, but results for the year – organic revenue growth of c 4% and adjusted EBITDA decline of c 5% – were below management’s guidance at the start of the year for growth in revenue of 15% and adjusted EBITDA of 5%. Growth was held back by wider market issues that had been flagged through the year, such as lower rates of deductibility offered by the government on investment made by clients and a lack of financial support by government for increasing exports. Operationally, early in the year, the main subsidiary, Warrant Hub, completed the consolidation of a number of divisional companies to form a complete digital and innovation proposition for clients. Later in the year, Warrant Hub completed the merger with the other main subsidiary, Co. Mark, with the aim of establishing itself as a European leader in integrated consulting services for the sustainable development of companies.

Cash flow and balance sheet

On an absolute basis, free cash flow (cash from operating activities less investment in tangibles and intangibles) declined by 24% to €36.9m, but this was heavily influenced by the effects of M&A in FY23 versus the prior year. On an underlying basis free cash flow from continuing operations increased by c 31% to c €52m.

FY23 was a relatively quiet year from an M&A perspective versus FY22, with the main acquisitions being the 20% stake in Defence Tech, the initial 65% stake in Ascertia and the remaining 40% stake in CertEurope. In December 2023 Tinexta announced the acquisition of an initial 73.9% in ABF Group, Tinexta’s largest ever acquisition with an enterprise value of €155m, which was completed in January 2024.

Net debt by the end of the year was €102m, an increase from c €78m at the end of FY22. This represented c 1x adjusted EBITDA. This was slightly higher than the indicated 0.7–0.8x at the time of Q3 results, due mainly to an increase in the put obligation for CS and a small bolt-on acquisition.

New business plan, financial guidance and estimates

As is typical with the publication of preliminary results, management provided its first detailed guidance for FY24 and for the next three financial years (FY24–26), which is summarised in Exhibit 3. The guidance does not include contributions from any M&A to be announced from here on, but does include the expected contribution from the acquisition of ABF Group, which was completed in January 2024.

Exhibit 3: Management’s guidance for growth

Growth y-o-y

Revenue FY24

Adjusted EBITDA FY24

Revenue FY24–26 CAGR

Adjusted EBITDA FY24–26 CAGR

Digital Trust

14-16%

17-19%

10-12%

15-17%

- organic

8-10%

11-13%

N/A

N/A

- M&A (implied)

6%

6%

N/A

N/A

Cyber Security

14-16%

21-23%

11-13%

15-17%

- organic

14-16%

21-23%

N/A

N/A

Business Innovation

38-40%

43-45%

19-21%

22-24%

- organic

7-9%

5-7%

N/A

N/A

- M&A (implied)

31%

38%

N/A

N/A

Group

21-23%

28-32%

12-14%

17-19%

- organic

7%

10%

N/A

N/A

- M&A (implied)

14%

18%

N/A

N/A

Source: Tinexta and Edison Investment Research

FY24 plan: Higher profit growth than FY23

Looking at the guidance for FY24, management expects lower, but still very healthy, underlying revenue growth (7%) than Tinexta enjoyed in FY23 (9.7%). Further margin leverage is expected to generate a greater rate of growth in adjusted EBITDA of 10%, which is slightly ahead of FY23’s 8.6% growth. All the divisions are expected to generate strong (ie well above GDP) rates of growth, and all except BI are expected to see progress in their adjusted EBITDA margins. Acquisitions (ie the remainder of the first full year contribution by Ascertia and the first-time contribution by ABF Group) are targeted to boost year-on-year growth in revenue and adjusted EBITDA by 14% and 18%, respectively.

In FY24, in addition to the underlying growth of the market, DT is expected to benefit from its new organisational model that was finalised in February; a strong pipeline of new clients, including outside Europe; further revenue synergies with CS; and benefits from the adoption of eiDAS 2.0. With respect to the latter, the long-awaited update of the electronic Identification, Authentication and Trust Services regulations, adopted by the European Parliament in February 2024, will make cross-border identity verification a reality, and therefore should provide a boost to Tinexta’s growth.

Management expects CS’s growth in FY24 to benefit from continued development of its proprietary platforms, more efficient selling from a unified salesforce and further investment in its own capacity, on top of the strong underlying growth of the market.

The external environment for BI looks more favourable in FY24 given the recent approval by the Italian government to provide incentives, such as tax credits on investment, under the Transition 5.0 Plan for companies that invest in the transition to green energy or improve energy efficiency. This follows similar credits under the Transition 4.0 Plan, which provides tax incentives for companies that invest in the digital transition.

New three-year plan: High-teens profit growth

Turning to the new three-year plan for FY24–FY26, management expects strong compound growth rates for revenue of 12–14% and adjusted EBITDA of 17–19%, including double-digit growth for both revenue and adjusted EBITDA, as well as higher margins for all three divisions.

In addition to the above divisional and group revenue and profit guidance, management expects net debt/adjusted EBITDA to increase to 1.7–1.9x by the end of FY24, and then reduce to 0.8–1.0x by the end of FY26 in the absence of any further M&A.

Dividend distributions in FY24 will be 30% of net profit, but this will gradually increase to 40% of net profit by the end of the plan.

We show our revised estimates for FY24 and FY25, and introduce the new estimates for FY26 in Exhibit 4. This draws together all the key drivers to the changes in estimates for FY24 and FY25, such as the change to the FY23 base versus our prior estimates and management’s new guidance for FY24–FY26. Our FY26 estimates include the acquisition of ABF Group, which we have not previously included in our estimates.

Changes to estimates

At the group level our FY24 and FY25 revenue estimates have increased by c 4% and our adjusted EBITDA estimates by c 10–12%, mainly due to the contribution from ABF Group. As an overall summary, at the divisional level our revenue estimates for FY24 are at the top of management’s guidance for DT, and in the middle of the guided ranges for CS and BI.

Exhibit 4: Changes to estimates

€m

FY23 reported

FY24e new

FY25e new

FY26e new

FY23e old

FY24e old

FY25e old

FY23 reported versus FY23e

FY24e change %

FY25e change %

Group revenue

395.8

479.4

529.1

582.0

411.0

462.3

507.6

(3.7%)

3.7%

4.2%

Growth y-o-y

10.8%

21.1%

10.4%

10.0%

12.0%

12.5%

9.8%

(1.2%)

8.7%

0.6%

Organic

9.7%

8.1%

10.4%

10.0%

14.0%

11.2%

9.8%

(4.3%)

(3.1%)

0.6%

- Digital Trust

181.6

210.7

231.8

254.9

179.6

202.8

223.0

1.2%

3.9%

3.9%

Growth y-o-y

15.7%

16.0%

10.0%

10.0%

12.0%

12.9%

10.0%

3.7%

3.1%

0.0%

Organic

13.1%

10.0%

10.0%

10.0%

12.0%

10.0%

10.0%

1.1%

0.0%

0.0%

- Cyber Security

89.4

102.8

113.1

124.4

100.8

111.8

124.1

(11.3%)

(8.1%)

(8.9%)

Growth y-o-y

15.3%

15.0%

10.0%

10.0%

30.0%

11.0%

11.0%

(14.7%)

4.0%

(1.0%)

Organic

15.3%

15.0%

10.0%

10.0%

30.0%

11.0%

11.0%

(14.7%)

4.0%

(1.0%)

- Business Innovation

131.0

180.8

200.7

220.7

138.2

156.2

173.4

(5.2%)

15.7%

15.7%

Growth y-o-y

4.2%

38.0%

11.0%

10.0%

10.0%

13.0%

11.0%

(5.8%)

25.0%

0.0%

Organic

4.2%

7.0%

11.0%

10.0%

10.0%

13.0%

11.0%

(5.8%)

(6.0%)

0.0%

- Intra-group

(6.2)

(14.8)

(16.4)

(18.0)

(7.5)

(8.5)

(13.0)

(17.2%)

75.0%

25.7%

Group adjusted EBITDA

103.0

134.7

151.7

168.5

104.1

120.7

137.8

(1.1%)

11.6%

10.1%

Margin

26.0%

28.1%

28.7%

28.9%

25.3%

26.1%

27.1%

0.7%

2.0%

1.5%

Growth y-o-y

8.7%

30.8%

12.7%

11.0%

9.9%

15.9%

14.2%

(1.3%)

14.9%

(1.5%)

Organic

8.6%

9.6%

12.7%

11.0%

9.2%

15.1%

14.2%

(0.6%)

(5.5%)

(1.5%)

- Digital Trust

54.5

64.9

74.6

85.8

53.6

62.5

72.5

1.7%

3.8%

2.9%

Margin

30.0%

30.8%

32.2%

33.7%

29.9%

30.8%

32.5%

0.2%

(0.0%)

(0.3%)

Growth y-o-y

15.3%

19.0%

15.0%

15.0%

13.3%

16.6%

16.0%

2.0%

2.4%

(1.0%)

- Cyber Security

15.0

18.4

20.8

23.1

14.7

18.4

21.2

1.6%

(0.1%)

(1.8%)

Margin

16.8%

17.9%

18.4%

18.6%

14.6%

16.5%

17.1%

2.1%

1.4%

1.3%

Growth y-o-y

45.2%

23.0%

13.0%

11.0%

43.0%

25.0%

15.0%

2.2%

(2.0%)

(2.0%)

- Business Innovation

48.9

69.9

80.4

88.4

53.2

60.6

69.1

(8.1%)

15.2%

16.3%

Margin

37.3%

38.7%

40.1%

40.1%

38.5%

38.8%

39.9%

(1.2%)

(0.2%)

0.2%

Growth y-o-y

(5.4%)

43.0%

15.0%

10.0%

3.0%

14.0%

14.0%

(8.4%)

29.0%

1.0%

- Other

(15.4)

(18.5)

(24.1)

(28.9)

(17.4)

(20.9)

(25.1)

(11.3%)

(11.3%)

(4.0%)

Source: Tinexta, Edison Investment Research

The main changes to our divisional estimates in FY24 and FY25 are:

DT’s revenue and profit estimates have increased by 3–4% in both years due to the outperformance in FY23, and our future organic revenue growth assumptions remain unchanged at 10% pa.

CS revenue estimates have reduced by c 8% in both years to reflect the lower FY23 base and the change to management’s underlying guidance. At the FY22 results, management forecast a three-year CAGR for revenue of 17%, including 30% growth in FY23. Now, management guides to a lower three-year CAGR of 11–13% on the lower FY23 base. The lower revenue expectations for FY24 onwards are compensated for by a higher expected margin so that absolute profit expectations are relatively unchanged.

BI’s revenue estimates have increased by c 16% to reflect the acquisition of ABF Group, offset by the lower FY23 base versus our prior expectations and lower underlying growth than previously. The new three-year guidance includes the first-time and significant contribution from ABF Group. At c €41m revenue in FY24 per management’s guidance, it increases the division’s scale by 30%. It also significantly boosts the future organic growth profile as, according to the initial acquisition announcement, it was expected to grow revenue by 20–23% during the earnout phase, effectively adding 6–7% to organic revenue growth after the first year. The new three-year revenue CAGR of 19–21% for FY24–26 compares with guidance from this time last year for FY23–25 of 13% organic growth. ABF is also more profitable than the rest of the division, with a guided FY24 margin of c 46% versus BI’s 37% margin in FY23, so it should be very helpful to future growth rates.

Environment, social and governance (ESG)

FY23 was a very busy year from an ESG perspective with an initial focus on engagement and assessment involving all of the divisional CEOs and operating units. The ESG KPIs and targets will be disclosed in the company’s FY23 annual report.

The key areas of focus for management are as follows:

Exhibit 5: Tinexta’s ESG plan 2024–25

Source: Tinexta capital markets day presentation, March 2024

Valuation

Rolling forward our DCF-based valuation to take account of Tinexta’s FY23 results, and using the pro forma net debt that incorporates the acquisition of ABF Group, leads to a reduction in our DCF-based valuation to €28.5/share (€30 previously). Our DCF uses a WACC of 8%, which includes a cost of equity of 9.2% (risk free rate of 3.7%, equity risk premium of 7.8% (source: Damodaran) and a beta of 0.7 (source: LSEG)) and a post-tax cost of debt of 2.7%.

In Exhibits 6 and 7 we show Tinexta’s prospective EV/sales and EV/EBITDA multiples for FY24–FY26 versus its historical multiples (ie its high, average and low multiples in the prior years). The prospective EV/sales multiple drops from 2.4x in FY24 to 2.0x in FY26 and suggests the share price looks undervalued versus its long-term average of 2.5x, especially given management’s expected growth rates. We come to a similar conclusion when we look at the prospective EV/EBITDA multiples for FY24 of 8.7x and FY26 of 6.9x, which are below the long-term average of 10.2x.

Exhibit 6: Tinexta’s EV/sales multiple

Exhibit 7: Tinexta’s EV/EBITDA multiple

Source: Tinexta, Edison Investment Research, LSEG. Note: Priced at 14 March 2024.

Source: Tinexta, Edison Investment Research, LSEG. Note: Priced at 14 March 2024

Exhibit 6: Tinexta’s EV/sales multiple

Source: Tinexta, Edison Investment Research, LSEG. Note: Priced at 14 March 2024.

Exhibit 7: Tinexta’s EV/EBITDA multiple

Source: Tinexta, Edison Investment Research, LSEG. Note: Priced at 14 March 2024

Exhibit 8: Financial summary

€m

2021

2022

2023

2024e

2025e

2026e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

301.5

357.2

395.8

479.4

529.1

582.0

Operating costs

(225.1)

(262.4)

(292.8)

(344.7)

(377.4)

(413.6)

Adjusted EBITDA

 

 

76.5

94.8

103.0

134.7

151.7

168.5

EBITDA

 

 

71.3

86.3

93.8

124.2

142.7

159.5

Operating profit (before amort. and excepts.)

 

 

61.1

77.6

79.6

134.7

151.7

168.5

Amortisation of acquired intangibles

(11.0)

(17.5)

(17.9)

(57.0)

(57.0)

(57.0)

Exceptionals

(2.6)

(6.4)

(4.9)

(5.5)

(4.5)

(4.5)

Share-based payments

(2.6)

(2.1)

(4.4)

(5.0)

(4.5)

(4.5)

Reported operating profit

45.0

51.6

52.4

67.2

85.7

102.5

Net Interest

(3.1)

(6.2)

(1.6)

(9.0)

(10.0)

(8.0)

Joint ventures & associates (post tax)

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

57.5

73.6

76.4

125.5

141.5

160.2

Profit Before Tax (reported)

 

 

41.7

45.1

50.6

58.0

75.5

94.2

Reported tax

(13.0)

(12.5)

(16.4)

(19.1)

(24.9)

(31.1)

Profit After Tax (norm)

40.3

52.2

51.7

84.1

94.8

107.4

Profit After Tax (reported)

28.7

32.6

34.3

38.9

50.6

63.1

Minority interests

(1.2)

(2.4)

(6.9)

(9.2)

(10.6)

(11.9)

Discontinued operations

10.0

45.5

35.6

0.0

0.0

0.0

Net income (normalised)

39.1

49.8

44.9

74.9

84.3

95.5

Net income (reported)

37.5

75.7

63.0

29.7

40.0

51.3

Average Number of Shares Outstanding (m)

47.2

46.8

46.5

46.3

46.0

45.8

EPS - normalised (c)

 

 

84.7

108.5

98.5

165.0

186.7

212.8

EPS - normalised fully diluted (c)

 

 

82.8

106.4

96.5

161.7

183.0

208.5

EPS - basic reported (€)

 

 

0.81

1.65

1.38

0.65

0.89

1.14

Dividend (c)

30.00

51.00

46.00

19.21

34.77

44.78

Revenue growth (%)

12.1

18.4

10.8

21.1

10.4

10.0

EBITDA Margin before non-recurring costs (%)

25.4

26.5

26.0

28.1

28.7

28.9

Normalised Operating Margin

20.3

21.7

20.1

28.1

28.7

28.9

BALANCE SHEET

Fixed Assets

 

 

602.9

574.0

654.7

782.7

749.3

717.7

Intangible Assets

550.4

487.3

541.4

671.0

639.0

608.2

Tangible Assets

25.2

48.4

51.2

49.6

48.2

47.4

Investments & other

27.4

38.3

62.1

62.1

62.1

62.1

Current Assets

 

 

213.2

403.5

364.4

256.9

318.4

385.0

Stocks

1.3

1.9

2.1

2.1

2.1

2.1

Debtors

119.5

129.5

148.3

180.0

198.6

218.5

Cash & cash equivalents

68.3

115.3

161.7

22.5

65.4

112.1

Other financial assets

4.1

125.8

26.0

26.0

26.0

26.0

Other

20.0

31.0

26.4

26.4

26.4

26.4

Current Liabilities

 

 

(207.5)

(260.9)

(314.2)

(331.4)

(333.9)

(339.2)

Creditors

(146.8)

(156.4)

(184.2)

(206.4)

(213.9)

(224.1)

Tax and social security

(3.6)

(2.9)

(2.9)

(2.9)

(2.9)

(2.9)

Short term borrowings

(54.1)

(93.6)

(121.3)

(116.3)

(111.3)

(106.3)

Other

(3.1)

(8.0)

(5.8)

(5.8)

(5.8)

(5.8)

Long Term Liabilities

 

 

(357.9)

(314.6)

(249.5)

(249.5)

(249.5)

(249.5)

Long term borrowings

(281.5)

(235.2)

(172.9)

(172.9)

(172.9)

(172.9)

Other long term liabilities

(35.0)

(42.4)

(36.0)

(36.0)

(36.0)

(36.0)

Net Assets

 

 

250.8

402.0

455.4

458.7

484.3

514.1

Minority interests

(46.9)

(36.4)

(45.7)

(45.7)

(45.7)

(45.7)

Shareholders' equity

 

 

203.9

365.7

409.7

413.0

438.6

468.4

CASH FLOW

Operating Cash Flow before interest

 

 

72.5

72.8

75.1

100.4

110.9

123.1

Capex and intangibles

(16.2)

(24.1)

(38.2)

(28.0)

(23.6)

(25.4)

Acquisitions/disposals

(92.8)

84.5

24.4

(157.0)

0.0

0.0

Net interest

(2.3)

(2.4)

0.3

(9.0)

(10.0)

(8.0)

Equity financing

(9.3)

(8.1)

(3.1)

(10.0)

(10.0)

(10.0)

Dividends

(12.5)

(20.8)

(33.4)

(30.6)

(19.5)

(27.9)

Borrowings

42.9

(40.2)

(41.4)

0.0

0.0

0.0

Other

6.6

1.4

130.1

0.0

0.0

0.0

Net Cash Flow

(24.6)

48.6

44.7

(139.2)

42.8

46.8

Opening net debt/(cash)

 

 

91.9

264.4

77.6

102.0

236.2

188.4

Closing net debt/(cash)

 

 

264.4

77.6

102.0

236.2

188.4

136.6

Source: Tinexta accounts, Edison Investment Research


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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.

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

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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

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