Constellation Software Inc. and Topicus.com Inc. Announce


TORONTO, Nov. 03, 2022 (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, 2022. 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, 2022 and the accompanying notes, our Management’s Discussion and Analysis for the three and nine months ended September 30, 2022 and the Annual Consolidated Financial Statements of Topicus.com Inc. for the year ended December 31, 2021, 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, 2021, 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 2022 Headlines:

  • Revenue increased 29% (3% organic growth) to €228.6 million compared to €177.1 million in Q3 2021.
  • Net income increased to €18.4 million (€0.15 on a diluted per share basis) from €18.1 million (€0.09 on a diluted per share basis).
  • Acquisitions were completed for aggregate cash consideration of €35.7 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.9 million resulting in total consideration of €43.6 million.
  • Cash flows from operations (“CFO”) increased €2.4 million to €10.9 million compared to €8.5 million in Q3 2021 representing an increase of 29%.
  • Free cash flow available to shareholders1 (“FCFA2S”) was negative €0.5 million for both Q3 2022 and Q3 2021.
  • On October 28, 2022 the Company’s credit facility was amended increasing the amount available to borrow to €550 million from €300 million.

1. See Non-IFRS measures.

Total revenue for the quarter ended September 30, 2022 was €228.6 million, an increase of 29%, or €51.5 million, compared to €177.1 million for the comparable period in 2021. For the first nine months of 2022 total revenues were €653.0 million, an increase of 22%, or €118.0 million, compared to €535.0 million for the comparable period in 2021. 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 3% and 4% respectively. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Net income for the quarter ended September 30, 2022 increased €0.3 million to €18.4 million compared to €18.1 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.15 in the quarter ended September 30, 2022 compared to €0.09 for the same period in 2021. For the nine months ended September 30, 2022, net income was €58.9 million or €0.45 per basic and diluted share compared to a net loss of €2,249.3 million or €32.78 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the nine months ended September 30, 2021 primarily resulted from the €2,302.2 million redeemable preferred securities expense. Diluted shares outstanding increased from 129.5 million to 129.8 million for the nine months ended September 30, 2022.

For the quarter ended September 30, 2022, CFO increased €2.4 million to €10.9 million compared to €8.5 million for the same period in 2021 representing an increase of 29%. 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, 2022, CFO increased €21.3 million to €154.9 million compared to €133.7 million for the same period in 2021 representing an increase of 16%.

For the quarter ended September 30, 2022, FCFA2S was negative €0.5 million compared to negative €0.5 million for the same period in 2021. For the nine months ended September 30, 2022, FCFA2S decreased €30.6 million to €35.7 million compared to €66.3 million for the same period in 2021 representing a decrease of 46%. The decline is primarily as a result of the dividend paid to the Preferred Securities holders.

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, dividends paid to redeemable preferred securities holders, 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,  
      2022 2021       2022 2021  
    (€ in millions)   (€ in millions)
                     
Net cash flows from operating activities     10.9   8.5         154.9   133.7    
Adjusted for:                    
Interest paid on lease obligations     (0.3 ) (0.3 )       (0.9 ) (0.9 )  
Interest paid on other facilities     (3.4 ) (3.3 )       (7.4 ) (5.9 )  
Credit facility transaction costs     (0.1 )         (0.1 ) (2.4 )  
Payments of lease obligations     (5.2 ) (4.4 )       (14.8 ) (12.9 )  
Property and equipment purchased     (1.2 ) (1.3 )       (4.8 ) (3.2 )  
Dividends paid to redeemable preferred securities holders               (66.6 )    
                     
      0.6   (0.8 )       60.3   108.4    
Less amount attributable to                    
non-controlling interests     (1.2 ) 0.3         (24.6 ) (42.1 )  
                     
Free cash flow available to shareholders     (0.5 ) (0.5 )       35.7   66.3    
                     
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, 2022 December 31, 2021 September 30, 2021
           
Assets        
           
Current assets:        
  Cash   135,797 75,326   66,634  
  Accounts receivable   83,182 70,725   57,091  
  Unbilled revenue   44,335 32,592   29,688  
  Inventories   1,336 570   654  
  Other assets   35,413 21,776   25,005  
      300,063 200,989   179,071  
           
Non-current assets:        
  Property and equipment   19,328 15,326   15,228  
  Right of use assets   56,854 54,382   52,644  
  Deferred income taxes   9,135 6,831   4,779  
  Other assets   16,439 6,655   4,810  
  Intangible assets 896,251 744,136   678,777  
      998,007 827,330   756,239  
           
Total assets   1,298,070 1,028,319   935,310  
           
Liabilities and Shareholders’ Equity        
           
Current liabilities:        
  Topicus Revolving credit facility and current portion of term loans 156,945 46,489   40,092  
  Loan from CSI   33,707 29,116    
  Redeemable preferred securities   66,614   66,614  
  Accounts payable and accrued liabilities   139,581 135,993   104,637  
  Deferred revenue   152,486 82,179   106,082  
  Provisions   1,186 1,893   2,216  
  Acquisition holdback payables   14,527 8,876   5,811  
  Lease obligations   19,040 16,234   15,798  
  Income taxes payable   16,826 11,400   11,850  
      534,299 398,794   353,100  
           
Non-current liabilities:        
  Term and other loans   106,201 96,113   95,961  
  Deferred income taxes   147,642 125,004   125,654  
  Acquisition holdback payables   2,578 945   485  
  Lease obligations   38,931 38,955   37,624  
  Other liabilities   23,879 12,877   11,855  
      319,231 273,893   271,579  
           
Total liabilities   853,530 672,687   624,679  
           
           
Shareholders’ Equity:        
  Preferred shares   2,047,473   2,047,473  
  Capital stock   39,412 39,412   39,412  
  Other equity   (1,009,996 ) (999,460 )
  Accumulated other comprehensive income (loss)   1,828 (380 ) (834 )
  Retained earnings (deficit)   205,812 (1,782,113 ) (1,794,229 )
  Non-controlling interests   197,488 1,061,236   1,018,267  
      444,541 355,632   310,631  
           
           
           
Total liabilities and shareholders’ equity   1,298,070 1,028,319   935,310  
           
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.)
                 
             
Unaudited                
    Three months ended September 30,   Nine months ended September 30,
    2022     2021     2022     2021  
                 
Revenue                
License   6,409     4,638     18,294     15,777  
Professional services   59,576     45,241     166,165     141,446  
Hardware and other   2,039     1,143     6,573     3,986  
Maintenance and other recurring   160,565     126,105     461,940     373,753  
    228,589     177,126     652,972     534,961  
Expenses                
Staff   128,687     95,908     364,392     291,452  
Hardware   1,575     738     3,809     2,030  
Third party license, maintenance and professional services 18,602     17,311     54,701     53,100  
Occupancy   2,039     1,260     5,379     4,075  
Travel, telecommunications, supplies, software and equipment   8,399     4,717     22,947     13,670  
Professional fees   3,960     3,394     11,536     8,361  
Other, net   3,722     1,389     12,903     5,032  
Depreciation   7,333     6,354     20,536     18,385  
Amortization of intangible assets   28,905     21,026     77,894     62,054  
    203,222     152,095     574,098     458,159  
                 
Redeemable preferred securities expense (income)             2,302,185  
Impairment of intangible and other non-financial assets             1,600  
Finance and other expenses (income)   1,700     2,161     3,380     8,069  
    1,700     2,161     3,380     2,311,854  
                 
Income (loss) before income taxes   23,666     22,870     75,494     (2,235,051 )
                 
Current income tax expense (recovery)   11,934     9,552     34,198     28,464  
Deferred income tax expense (recovery)   (6,690 )   (4,778 )   (17,584 )   (14,260 )
Income tax expense (recovery)   5,245     4,773     16,614     14,205  
                 
Net income (loss)   18,421     18,097     58,880     (2,249,256 )
                 
Net income (loss) attributable to:                
Equity holders of Topicus   11,834     7,422     35,931     (1,896,100 )
Non-controlling interests   6,587     10,675     22,949     (353,156 )
Net income (loss)   18,421     18,097     58,880     (2,249,256 )
                 
Weighted average shares                
Basic shares outstanding   80,477,481     79,282,821     80,168,445     57,851,780  
Diluted shares outstanding   129,841,819     129,841,819     129,841,819     129,627,794  
                 
Earnings (loss) per common share of Topicus              
Basic   0.15     0.09     0.45     (32.78 )
Diluted   0.15     0.09     0.45     (32.78 )
                 
                 
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.)
                 
             
Unaudited            
    Three months ended September 30,   Nine months ended September 30,
    2022   2021   2022   2021
                 
Net income (loss)   18,421   18,097     58,880   (2,249,256 )
                 
Items that are or may be reclassified subsequently to net income (loss):              
                 
Foreign currency translation differences from foreign operations and other 1,742   (731 )   6,613   523  
                 
Other comprehensive (loss) income for the period, net of income tax 1,742   (731 )   6,613   523  
                 
Total comprehensive income (loss) for the period 20,164   17,366     65,493   (2,248,733 )
                 
Total other comprehensive income (loss) attributable to:              
Equity holders of Topicus   252   (453 )   2,208   357  
Non-controlling interests   1,490   (278 )   4,405   166  
Total other comprehensive income (loss) 1,742   (731 )   6,613   523  
                 
Total comprehensive income (loss) attributable to:              
Equity holders of Topicus   12,086   6,969     38,138   (1,895,743 )
Non-controlling interests   8,078   10,398     27,354   (352,990 )
Total comprehensive income (loss)   20,164   17,366     65,493   (2,248,733 )
                 
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, 2022                
    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, 2022
2,047,473   39,412   (1,009,996 ) (380 ) (1,782,113 ) (705,604 ) 1,061,236   355,632  
                     
Total comprehensive income (loss) for the period:
                 
                     
Net income (loss)         35,931   35,931   22,949   58,880  
                     
Other comprehensive income (loss)
                 
                     
Foreign currency translation differences from                  
  foreign operations and other, net of income tax       2,208     2,208   4,405   6,613  
                     
Total other comprehensive income (loss)
                 
  for the period       2,208     2,208   4,405   6,613  
                     
Total comprehensive income (loss) for the period
      2,208   35,931   38,138   27,354   65,493  
                     
Transactions with owners, recorded directly in equity                  
                     
  Conversion of preferred shares to subordinate voting shares (2,047,473 )   2,047,473            
                     
  Conversion of non-controlling interest preferred units to ordinary units and other movements in non-controlling interests     912,788       912,788   (912,788 )  
                     
  Net acquisition of non-controlling interest associated with business combinations and other movements     (23 ) (0 ) (166 ) (189 ) 24,478   24,289  
                     
  Reductions of non-controlling interest associated with disposals             (873 ) (873 )
                     
  Reclassification of other equity to retained earnings (deficit)     (1,950,242 )   1,950,242        
                     
  Exchange of Topicus Coop ordinary units held by non-controlling interests to subordinate voting shares of Topicus         1,919   1,919   (1,919 )  
                     
Balance at September 30, 2022
  39,412     1,828   205,812   247,052   197,488   444,541  
                     
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         (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 Statements of Cash Flows              
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
                     
               
Unaudited                
        Three months ended September 30,   Nine months ended September 30,
        2022     2021     2022     2021  
                     
Cash flows from (used in) operating activities:              
  Net income (loss)   18,421     18,097     58,880     (2,249,256 )
  Adjustments for:                
    Depreciation   7,333     6,354     20,536     18,385  
    Amortization of intangible assets 28,905     21,026     77,894     62,054  
    Redeemable preferred securities expense (income)               2,302,185  
    Impairment of intangible and other non-financial assets               1,600  
    Finance and other expenses (income)   1,700     2,161     3,380     8,069  
    Income tax expense (recovery) 5,245     4,773     16,614     14,205  
  Change in non-cash operating assets and liabilities              
    exclusive of effects of business combinations (40,471 )   (36,687 )   8,517     4,760  
  Income taxes (paid) received (10,211 )   (7,231 )   (30,884 )   (28,341 )
  Net cash flows from (used in) operating activities 10,922     8,493     154,937     133,660  
                     
Cash flows from (used in) financing activities:              
  Interest paid on lease obligations   (310 )   (275 )   (866 )   (874 )
  Interest paid on other facilities   (3,430 )   (3,319 )   (7,417 )   (5,861 )
  Increase (decrease) in Topicus Revolving Credit Facility 5,000     10,000     105,000     20,000  
  Proceeds from issuance of term and other loans 7,808         8,154     65,907  
  Increase (decrease) in loan from Vela Software Group   (7,904 )       (1,817 )    
  Contribution from Vela Software Group towards the acquisition of Subsurface 7,905         7,905      
  Repayments of term and other loans (2,706 )   (411 )   (4,375 )   (411 )
  Credit facility transaction costs (145 )       (145 )   (2,397 )
  Payments of lease obligations   (5,203 )   (4,438 )   (14,777 )   (12,946 )
  Other financing activities   (15 )       (595 )    
  Dividends paid to redeemable preferred securities holders           (66,614 )    
  Dividends paid to common shareholders             (54,600 )
  Net cash flows from (used in) in financing activities 1,000     1,557     24,452     8,818  
                     
Cash flows from (used in) investing activities:              
  Acquisition of businesses (35,660 )   (13,261 )   (143,319 )   (164,999 )
  Cash obtained with acquired businesses   9,872     5,240     37,484     19,486  
  Post-acquisition settlement payments, net of receipts (8,869 )   (366 )   (11,300 )   (11,373 )
  Receipt of additional subscription amount from the sellers of Topicus.com B.V.             27,589  
  Interest, dividends and other proceeds received     1,010     3,028     1,010  
  Property and equipment purchased (1,197 )   (1,258 )   (4,810 )   (3,191 )
  Net cash flows from (used in) investing activities (35,853 )   (8,634 )   (118,918 )   (131,479 )
                     
Effect of foreign currency on              
  cash and cash equivalents 0     (0 )   0     (0 )
                     
Increase (decrease) in cash (23,931 )   1,415     60,471     10,999  
                     
Cash, beginning of period 159,728     65,218     75,326     55,635  
                     
Cash, end of period 135,797     66,634     135,797     66,634  
                     

Topicus com Inc



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