Had a quick look at the financials and on the slumping s/p it may be a buy soon (6.6c at time of writing).

December qtr cash flow shows about $2.5M operating c/f which is good but I'm taking out PPE and capitalised development which brings it down to $2,047k. This is a good quarter so it may not be fair to annualise it, but if you did, there's about $8M positive c/f and with current market cap of $90M that's about 11x.

Looking at the Dec half yearly, P&L is negative but I'm adjusting that in a number of ways to estimate the "real" profit.

Add back D&A but subtract the PPE and capitalised dev. Also, there are a lot of one-off costs so you could argue for an underlying profit of about $2.75M which for a half is still not great. If it's stacked towards the most recent quarter, then it's a green shoot to watch.

Third straw in the wind is the growth. Seems like the sales teams are starting to cross-sell, some of the longer lead-time government contracts are bearing fruit and there's been some spending on the NOC which may increase margin in the future. It's not SaaS but there are some high margin retainers and services in the mix as well as consulting type professional services.

If you buy the growth story, then the positive c/f makes this a buy but there's a lot of risk that green shoots will die in the next news.

Q3 cash flow should be out soon and that will add some confidence to the picture.

TNT is a roll-up of many security companies. The hope is to reach economies of scale, market dominance and pricing power. There are risks that they overpaid, that key staff will leave, that there are overlaps and negative synergies. Acquisition makes the books hard to understand and there could be contingent liabilities. Acquisitions increase debt and/or dilute shareholders through equity issue. It's often hard to work out if there is any net benefit to shareholders. Some acquisitions are done just for management ego.

I'm always suspicious of growth by acquisition. It's almost impossible to estimate the on-going profitability or organic growth rate. This is not an analysis of TNT's acquisitions, just a catalogue of the generic risks.

Here's a timeline of relevant announcements back to 2019 - I may have missed some.

• 7/12/21 Tesserent acquires Pearson and Claricent
• 19/8/21 Acquires Loop Secure
• 16/3/21 Tesserent Acquires Secure Logic
• 12/11/20 Joint Venture with Optic Security Group and iQ3 completion
• 17/12/20 Tesserent acquires NZ based Lateral Security
• 24/9/20 Acquires iQ3
• 28/8/20 Acquires Ludus Cybersecurity
• 26/8/20 Acquires Airloom
• 23/7/20 Acquires Seer
• 26/3/20 Completes acquisition of north
• 10/12/19 Tesserent to acquire north and completes PS&C transaction
• 10/12/19 PSC & Ltd Sale of NTH Consulting Pty Ltd and Completion of S
• 3/10/19 PSZ: Sale of Security Agreement
• 3/10/19 Acquires PS&C Security Division
• 18/4/19 Acquires security advisory and Splunk consultancy business
• 7/1/19 Signs $3m HoA for security and networking solution

Some of these acquisitions may have remaining liabilities. Planning to do a valuation soon.