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Constellation Software Inc. and Topicus.Com Inc. Announce


TORONTO, Nov. 03, 2021 (GLOBE NEWSWIRE) — Topicus.com Inc. (TSXV:TOI) in a joint release with Constellation Software Inc. (TSX:CSU) today announced financial results for Topicus.com Inc. (“Topicus” or the “Company”) for the third quarter ended September 30, 2021. Please note that all amounts referred to in this press release are in Euros unless otherwise stated.

The following press release should be read in conjunction with the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2021 and the accompanying notes, our Management Discussion and Analysis for the three and nine months ended September 30, 2021 and the Annual Consolidated Financial Statements of Constellation Software Netherlands Holding Cooperatief U.A. (the “Topicus Coop” or “CSNH”) for the year ended December 31, 2020, which we prepared in accordance with International Financial Reporting Standards (“IFRS”) and the Company’s annual Management’s Discussion and Analysis for the year ended December 31, 2020, which can be found on SEDAR at www.sedar.com and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedar.com.

Q3 2021 Headlines:

  • Revenue increased 46% (5% organic growth) to €177.1 million compared to €121.2 million in Q3 2020.  
  • Net income decreased to €18.1 million (€0.09 on a diluted per share basis) from €19.3 million (€0.16 on a diluted per share basis) in Q3 2020.
  • A number of acquisitions were completed for aggregate cash consideration of €13.2 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €3.0 million resulting in total consideration of €16.2 million.
  • Cash flows from operations (“CFO”) decreased €1.0 million to €8.5 million compared to €9.5 million in Q3 2020.
  • Free cash flow available to shareholders1 (“FCFA2S”) decreased €3.1 million to negative €0.5 million compared to €2.6 million in Q3 2020.
  • Subsequent to September 30, 2021, the Company completed an agreement to acquire a business in the oil and gas vertical for aggregate cash consideration of US$85.3 million (€73.6 million) on closing plus cash holdbacks of US$9.5 million (€8.2 million) and contingent consideration with a maximum value of US$5.0 million (€4.3 million). The Company will have an equity interest of 60% in the business. The remaining 40% equity interest will be owned by another subsidiary of Constellation Software Inc.
  1. See Non-IFRS measures.

Total revenue for the quarter ended September 30, 2021 was €177.1 million, an increase of 46%, or €55.9 million, compared to €121.2 million for the comparable period in 2020. For the first nine months of 2021 total revenues were €535.0 million, an increase of 50%, or €178.4 million, compared to €356.6 million for the comparable period in 2020. The increase for both the three and nine month periods compared to the same periods in the prior year is primarily attributable to growth from acquisitions as the Company experienced organic growth of 5% and 7% respectively.

Net income for the quarter ended September 30, 2021 was €18.1 million compared to net income of €19.3 million for the same period in 2020. On a per share basis, this translated into net income per basic and diluted share of €0.09 in the quarter ended September 30, 2021 compared to net income per basic share of €0.33 and diluted share of €0.16 for the same period in 2020.   For the nine months ended September 30, 2021, net loss was €2,249.3 million or a loss €32.78 per basic and diluted share compared to income of €50.8 million or €0.86 per basic share and €0.43 per diluted share for the same period in 2020.

For the quarter ended September 30, 2021, CFO were €8.5 million compared to €9.5 million for the same period in 2020. Many of the businesses invoice customers for annual software maintenance fees in Q1 each year resulting in a disproportionate amount of cash being received in the first quarter as compared to the remaining three quarters. For the nine months ended September 30, 2021, CFO increased €12.1 million to €133.7 million compared to €121.6 million for the same period in 2020 representing an increase of 10%.

For the quarter ended September 30, 2021, FCFA2S was negative €0.5 million compared to €2.6 million for the same period in 2020. For the nine months ended September 30, 2021, FCFA2S decreased €4.5 million to €66.4 million compared to €70.8 million for the same period in 2020 representing a decrease of 6%.

Members’ Equity of Topicus Coop and Share Capital of Topicus

The Controlling / Non-Controlling interest (“NCI”) percentage attributable to the common equity holders is based on Topicus.com Inc.’s ownership in the Topicus Coop.

Calculations as at September 30, 2021 are as follows:        

Topicus.com Inc. 39,870,435 61.4% Ordinary units in Topicus Coop
Joday Group* 19,665,642 30.3% Ordinary units in Topicus Coop
Ijssel*          5,384,832 8.3% Ordinary units in Topicus Coop
         64,920,909  

* as defined in the Company’s Management’s Discussion and Analysis for the three and nine month periods ended September 30, 2021

The NCI amount is 38.6% as at September 30, 2021.                        

As of February 1, 2022, all the preferred shares and preference units will be automatically converted to Subordinate voting shares and/or ordinary units, as applicable.

At that time, assuming no other changes occur, holdings will be as follows:

Topicus.com Inc. 79,282,820 61.1% Ordinary units in Topicus Coop
Joday Group* 39,331,284 30.3% Ordinary units in Topicus Coop
Ijssel*        11,227,714 8.6% Ordinary units in Topicus Coop
        129,841,818  

* as defined in the Company’s Management’s Discussion and Analysis for the three and nine month periods ended September 30, 2021

The NCI amount will then be 38.9%.

Further descriptions of the significant terms and conditions of the preferred shares and preference units are described in Note 9 to the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and nine month periods ended September 30, 2021.

The market capitalization of the company as reported by the Toronto Stock Venture Exchange is currently based on the 39,870,435 Subordinate voting shares outstanding and excludes all potentially dilutive securities and NCI. On a fully diluted basis and no NCI the market capitalization would be based on 129,841,818 shares. 

Forward Looking Statements

Certain statements herein may be “forward looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Topicus or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Topicus assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.

Non-IFRS Measures

Free cash flow available to shareholders ‘‘FCFA2S’’ refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on other facilities, credit facility transaction costs, repayments of lease obligations, and property and equipment purchased, and includes interest and dividends received. The portion of this amount applicable to non-controlling interests is then deducted. Topicus believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Topicus does not make any acquisitions, or investments, and does not repay any debts. While Topicus could use the FCFA2S to pay dividends or repurchase shares, Topicus’ objective is to invest all of our FCFA2S in acquisitions which meet Topicus’ hurdle rate.

FCFA2S is not a recognized measure under IFRS and, accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.

The following table reconciles FCFA2S to net cash flows from operating activities:

      Three months ended September 30,       Nine months ended September 30,  
      2021   2020       2021   2020  
    (€ in millions, except percentages)   (€ in millions, except percentages)
                     
Net cash flows from operating activities     8.5     9.5         133.7     121.6    
Adjusted for:                    
Interest paid on lease obligations     (0.3 )   (0.2 )       (0.9 )   (0.7 )  
Interest paid on other facilities     (3.3 )   (1.6 )       (5.9 )   (3.5 )  
Credit facility transaction costs                 (2.4 )      
Payments of lease obligations     (4.4 )   (3.3 )       (12.9 )   (9.5 )  
Property and equipment purchased     (1.3 )   (0.5 )       (3.2 )   (1.8 )  
                     
      (0.8 )   3.9         108.4     106.2    
Less amount attributable to                    
Non-controlling interests     0.3     (1.3 )       (42.0 )   (35.3 )  
                     
Free cash flow available to shareholders     (0.5 )   2.6         66.4     70.8    
                     
Due to rounding, certain totals may not foot.                    
Comparative financial information amended to reflect the Combination as if it occurred before the start of the earliest period presented.
 

About Topicus.com Inc.

Topicus’ subordinate voting shares are listed on the Toronto Venture Stock Exchange under the symbol “TOI”. Topicus acquires, manages and builds vertical market software businesses.

About Constellation Software Inc.

Constellation’s common shares are listed on the Toronto Stock Exchange under the symbol “CSU”. Constellation acquires, manages and builds vertical market software businesses.

For further information:
Jamal Baksh
Chief Financial Officer
(416) 861-9677
info@topicus.com
www.topicus.com

SOURCE: TOPICUS.COM INC.

 
Topicus.com Inc.
Condensed Consolidated Interim Statements of Financial Position
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
         
Unaudited      
    September 30, 2021   December 31, 2020   September 30, 2020
         
Assets      
         
Current assets:      
  Cash 66,634     55,635     47,171  
  Accounts receivable 57,091     46,644     37,275  
  Unbilled revenue 29,688     12,609     13,753  
  Inventories 654     375     454  
  Other assets 25,005     14,461     14,928  
    179,071     129,724     113,581  
         
Non-current assets:      
  Property and equipment 15,228     8,782     7,745  
  Right of use assets 52,644     50,517     45,723  
  Deferred income taxes 4,779     1,946     638  
  Other assets 4,810     3,956     4,423  
  Intangible assets 678,777     446,213     406,472  
    756,239     511,415     465,001  
         
Total assets 935,310     641,139     578,582  
         
Liabilities and Shareholders’ Equity      
         
Current liabilities:      
  Revolving credit facility and current portion of term loans 40,092     19,482      
  Redeemable preferred securities 66,614          
  Accounts payable and accrued liabilities 104,637     97,386     74,197  
  Deferred revenue 106,082     59,721     82,213  
  Provisions 2,216     1,222     1,032  
  Acquisition holdback payables 5,811     12,601     8,385  
  Lease obligations 15,798     13,953     12,329  
  Income taxes payable 11,850     12,576     7,637  
    353,100     216,941     185,793  
         
Non-current liabilities:      
  Term loans 95,961     32,572     32,794  
  Deferred income taxes 125,654     79,958     68,952  
  Acquisition holdback payables 485     608      
  Lease obligations 37,624     37,154     32,569  
  Other liabilities 11,855     9,225     5,690  
    271,579     159,518     140,005  
         
Total liabilities 624,679     376,459     325,798  
         
         
Shareholders’ Equity:      
  Preferred shares 2,047,473          
  Capital stock 39,412     39,412     39,412  
  Other equity (999,460 )        
  Accumulated other comprehensive income (loss) (834 )   (1,409 )   (766 )
  Retained earnings (deficit) (1,794,229 )   138,572     129,992  
  Non-controlling interests 1,018,267     88,106     84,146  
    310,631     264,680     252,784  
         
         
Total liabilities and shareholders’ equity 935,310     641,139     578,582  
         
 
Topicus.com Inc.
Condensed Consolidated Interim Statements of Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
               
Three and nine months ended September 30 2021 and 2020
Unaudited
  Three months ended September 30,   Nine months ended September 30,
  2021   2020   2021   2020
               
Revenue              
License 4,638     3,794     15,777     9,528  
Professional services 45,241     28,226     141,446     84,191  
Hardware and other 1,143     1,397     3,986     3,804  
Maintenance and other recurring 126,105     87,788     373,753     259,057  
  177,126     121,205     534,961     356,580  
Expenses              
Staff 95,908     59,983     291,452     183,137  
Hardware 738     1,058     2,030     2,287  
Third party license, maintenance and professional services 17,311     11,243     53,100     32,626  
Occupancy 1,260     870     4,075     2,637  
Travel, telecommunications, supplies, software and equipment 4,717     3,003     13,670     9,939  
Professional fees 3,394     2,438     8,361     6,203  
Other, net 1,389     449     5,032     2,943  
Depreciation 6,354     4,365     18,385     12,750  
Amortization of intangible assets 21,026     12,472     62,054     36,567  
  152,095     95,880     458,159     289,089  
               
Redeemable preferred securities expense (income)         2,302,185      
Impairment of intangible and other non-financial assets         1,600      
Finance and other expenses (income) 2,161     1,402     8,069     4,693  
  2,161     1,402     2,311,854     4,693  
               
Income (loss) before income taxes 22,870     23,922     (2,235,051 )   62,798  
               
Current income tax expense (recovery) 9,552     7,318     28,464     20,583  
Deferred income tax expense (recovery) (4,778 )   (2,657 )   (14,260 )   (8,608 )
Income tax expense (recovery) 4,773     4,661     14,205     11,976  
               
Net income (loss) 18,097     19,262     (2,249,256 )   50,823  
               
Net income (loss) attributable to:              
Equity holders of Topicus 7,422     12,850     (1,896,100 )   33,905  
Non-controlling interests 10,675     6,412     (353,156 )   16,918  
Net income (loss) 18,097     19,262     (2,249,256 )   50,823  
               
Weighted average shares              
Basic shares outstanding 79,282,821     39,412,386     57,851,780     39,412,386  
Diluted shares outstanding 129,841,819     118,156,055     129,627,794     118,156,055  
               
Earnings (loss) per common share of Topicus              
Basic 0.09     0.33     (32.78 )   0.86  
Diluted 0.09     0.16     (32.78 )   0.43  
               
               
 
Topicus.com Inc.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
               
Three and nine months ended September 30 2021 and 2020
Unaudited
  Three months ended September 30,   Nine months ended September 30,
  2021   2020   2021   2020
               
Net income (loss) 18,097     19,262     (2,249,256 )   50,823  
               
Items that are or may be reclassified subsequently to net income (loss):              
               
Foreign currency translation differences from foreign operations and other (731 )   (127 )   523     (433 )
               
Other comprehensive (loss) income for the period, net of income tax (731 )   (127 )   523     (433 )
               
Total comprehensive income (loss) for the period 17,366     19,135     (2,248,733 )   50,389  
               
Total other comprehensive income (loss) attributable to:              
Equity holders of Topicus (453 )   (85 )   357     (289 )
Non-controlling interests (278 )   (42 )   166     (144 )
Total other comprehensive income (loss) (731 )   (127 )   523     (433 )
               
Total comprehensive income (loss) attributable to:              
Equity holders of Topicus 6,969     12,765     (1,895,743 )   33,616  
Non-controlling interests 10,398     6,369     (352,990 )   16,774  
Total comprehensive income (loss) 17,366     19,135     (2,248,733 )   50,389  
               
 
Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
                 
Unaudited
Nine months ended September 30, 2021
  Attributable to equity holders of Topicus    
  Preferred
Shares
Capital
Stock
Other equity Accumulated other
comprehensive (loss) income
Retained
earnings
(Deficit)
Total Non-controlling interests Total equity
                 
Balance at January 1, 2021   39,412   (1,409 ) 138,572   176,575   88,106   264,680  
                 
Total comprehensive income (loss) for the period:                
                 
Net income (loss)       (1,896,100 ) (1,896,100 ) (353,156 ) (2,249,256 )
                 
Other comprehensive income (loss)                
                 
Foreign currency translation differences from                
foreign operations and other     357     357   166   523  
                 
Total other comprehensive income (loss)                
for the period     357     357   166   523  
                 
Total comprehensive income (loss) for the period     357   (1,896,100 ) (1,895,743 ) (352,990 ) (2,248,733 )
                 
Transactions with owners, recorded directly in equity                
                 
Issuance of Topicus Coop Ordinary Units to non-controlling interests   9,770   127     9,896   (9,896 )  
                 
Net acquisition of non-controlling interest associated with acquisitions and other movements     92   (276 ) (184 ) 2,508   2,324  
                 
Issuance of Redeemable preferred securities   (1,001,469 )     (1,001,469 ) (124,797 ) (1,126,267 )
                 
Dividends to common shareholders of the Company (note 12)       (36,425 ) (36,425 ) (18,175 ) (54,600 )
                 
Reclassification of Redeemable preferred securities of Topicus from liabilities to preferred shares 2,073,205         2,073,205     2,073,205  
                 
Reclassification of Redeemable preferred securities of Topicus Coop from liabilities to non-controlling interest           1,442,910   1,442,910  
                 
Exchange of Topicus Coop ordinary units held by non-controlling interests to subordinate voting shares of Topicus   (7,760 )     (7,760 ) 7,760    
                 
Accrued dividends to preferred shareholders of Topicus recorded subsequent to the Notification of Conversion (25,731 )       (25,731 )   (25,731 )
                 
Accrued dividends to preference unit holders of Topicus Coop recorded subsequent to the Notification of Conversion           (17,157 ) (17,157 )
                 
Balance at September 30, 2021 2,047,473   39,412 (999,460 ) (834 ) (1,794,229 ) (707,637 ) 1,018,267   310,631  
                 
 
Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
                 
Unaudited
Nine months ended September 30, 2020
                 
  Attributable to equity holders of Topicus    
  Preferred
Shares
Capital
Stock
Other equity Accumulated other
comprehensive (loss)
income
Retained
earnings
(deficit)
Total Non-controlling
interests
Total equity
                 
Balance at January 1, 2020 39,412 (477 ) 96,087 135,022   67,372   202,395  
                 
Total comprehensive income (loss) for the period:                
                 
Net income (loss)   33,905 33,905   16,918   50,823  
                 
Other comprehensive income (loss)                
                 
Foreign currency translation differences from                
foreign operations and other (289 ) (289 ) (144 ) (433 )
                 
Total other comprehensive income (loss) for the period (289 ) (289 ) (144 ) (433 )
                 
Total comprehensive income (loss) for the period (289 ) 33,905 33,616   16,774   50,389  
                 
Balance at September 30, 2020 39,412 (766 ) 129,992 168,638   84,146   252,784  
                 
 
Topicus.com Inc.
Condensed Consolidated Interim Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
                   
Three and nine months ended September 30 2021 and 2020
Unaudited
      Three months ended September 30,   Nine months ended September 30,
      2021   2020   2021   2020
                   
Cash flows from (used in) operating activities:              
  Net income (loss) 18,097     19,262     (2,249,256 )   50,823  
  Adjustments for:              
    Depreciation 6,354     4,365     18,385     12,750  
    Amortization of intangible assets 21,026     12,472     62,054     36,567  
    Redeemable preferred securities expense (income)         2,302,185      
    Impairment of intangible and other non-financial assets         1,600      
    Finance and other expenses (income) 2,161     1,402     8,069     4,693  
    Income tax expense (recovery) 4,773     4,661     14,205     11,976  
  Change in non-cash operating assets and liabilities              
    exclusive of effects of business combinations (36,687 )   (34,252 )   4,760     20,643  
  Income taxes (paid) received (7,231 )   1,633     (28,341 )   (15,842 )
  Net cash flows from (used in) operating activities 8,493     9,542     133,660     121,609  
                   
Cash flows from (used in) financing activities:              
  Interest paid on lease obligations (275 )   (227 )   (874 )   (657 )
  Interest paid on other facilities (3,319 )   (1,633 )   (5,861 )   (3,456 )
  Increase (decrease) in revolving credit facility 10,000         20,000     (50,000 )
  Proceeds from issuance of term loans         65,907      
  Repayments of term loans (411 )       (411 )    
  Credit facility transaction costs         (2,397 )    
  Payments of lease obligations (4,438 )   (3,256 )   (12,946 )   (9,507 )
  Repayment of unitholder loans             (647 )
  Dividends paid         (54,600 )    
  Net cash flows from (used in) in financing activities 1,557     (5,115 )   8,818     (64,266 )
                   
Cash flows from (used in) investing activities:              
  Acquisition of businesses (13,261 )   (19,711 )   (164,999 )   (46,338 )
  Cash obtained with acquired businesses 5,240     7,446     19,486     14,178  
  Post-acquisition settlement payments, net of receipts (366 )   (237 )   (11,373 )   (5,100 )
  Receipt of additional subscription amount from the sellers of Topicus.com B.V.         27,589      
  Interest, dividends and other proceeds received 1,010     378     1,010     870  
  Property and equipment purchased (1,258 )   (518 )   (3,191 )   (1,818 )
  Net cash flows from (used in) investing activities (8,634 )   (12,642 )   (131,479 )   (38,207 )
                   
Effect of foreign currency on              
  cash and cash equivalents (0 )   0     (0 )   0  
                   
Increase (decrease) in cash 1,415     (8,215 )   10,999     19,135  
                   
Cash, beginning of period 65,218     55,385     55,635     28,036  
                   
Cash, end of period 66,634     47,171     66,634     47,171  
                   

 

 

Topicus com Inc



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