Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Second Quarter Ended June 30, 2022

TORONTO, Aug. 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 second quarter ended June 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 six months ended June 30, 2022 and the accompanying notes, our Management’s Discussion and Analysis for the three and six months ended June 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.

Q2 2022 Headlines:

  • Revenue increased 24% (6% organic growth) to €220.6 million compared to €178.2 million in Q2 2021.  
  • Net income decreased to €20.1 million (€0.16 on a diluted per share basis) from €168.8 million (€2.97 on a basic per share basis and €0.11 on a diluted per share basis) primarily due to the €154.6 million redeemable preferred securities gain in Q2 2021.
  • Acquisitions were completed for aggregate cash consideration of €94.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €28.3 million resulting in total consideration of €122.8 million.
  • Cash flows from operations (“CFO”) increased €2.6 million to negative €32.0 million compared to negative €34.6 million in Q2 2021 representing an increase of 8%.
  • Free cash flow available to shareholders1 (“FCFA2S”) decreased €1.4 million to negative €26.8 million compared to €25.4 million in Q2 2021 representing a decrease of 5%.  
  • Subsequent to June 30, 2022, the Company completed or entered into agreements to acquire a number of businesses for aggregate cash consideration of €29.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €0.9 million resulting in total consideration of €30.4 million.

Total revenue for the quarter ended June 30, 2022 was €220.6 million, an increase of 24%, or €42.4 million, compared to €178.2 million for the comparable period in 2021. For the first six months of 2022 total revenues were €424.4 million, an increase of 19%, or €66.5 million, compared to €357.8 million for the comparable period in 2021. The increase for both the three and six-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 6% and 4%. 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 June 30, 2022 declined €148.7 million to €20.1 million compared to €168.8 million for the same period in 2021. The decline primarily resulted from the €154.6 million redeemable preferred securities income, €163.6 million of which is non-cash related that was recorded in Q2 2021 with no similar expense in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.16 in the quarter ended June 30, 2022 compared to net income per basic share of €2.97 and diluted share of €0.11 for the same period in 2021. For the six months ended June 30, 2022, net income was €40.5 million or €0.30 per basic and diluted share compared to a net loss of €2,267.4 million or €40.54 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the six months ended June 30, 2021 primarily resulted from the €2,456.8 million redeemable preferred securities expense, €2,442.1 million of which is non-cash related. Diluted shares outstanding increased from 129.5 million to 129.8 million for the six months ended June 30, 2021.  

For the quarter ended June 30, 2022, CFO were negative €32.0 million compared to negative €34.6 million for the same period in 2021. 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 six months ended June 30, 2022, CFO increased €18.8 million to €144.0 million compared to €125.2 million for the same period in 2021 representing an increase of 15%.  

For the quarter ended June 30, 2022, FCFA2S was negative €26.8 million compared to negative €25.4 million for the same period in 2021. For the six months ended June 30, 2022, FCFA2S decreased €32.1 million to €34.7 million compared to €66.8 million for the same period in 2021 representing a decrease of 48%. 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
June 30,
      Six months ended
June 30,
 
      2022   2021         2022   2021    
    (€ in millions, except percentages)   (€ in millions, except percentages)
                     
Net cash flows from operating activities     (32.0 ) (34.6 )       144.0   125.2    
Adjusted for:                    
Interest paid on lease obligations     (0.3 ) (0.4 )       (0.6 ) (0.6 )  
Interest paid on other facilities     (2.4 ) (1.0 )       (4.0 ) (2.5 )  
Credit facility transaction costs       (0.2 )         (2.4 )  
Payments of lease obligations     (5.1 ) (4.2 )       (9.6 ) (8.5 )  
Property and equipment purchased     (1.6 ) (1.2 )       (3.6 ) (1.9 )  
Dividends paid to redeemable preferred securities holders               (66.6 )    
                     
      (41.4 ) (41.5 )       59.7   109.2    
Less amount attributable to                    
  non-controlling interests     14.5   16.1         (25.0 ) (42.4 )  
                     
Free cash flow available to shareholders     (26.8 ) (25.4 )       34.7   66.8    
                     
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
[email protected]
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                    
                  June 30, 2022 December 31, 2021 June 30, 2021  
                         
Assets                    
                         
Current assets:                    
  Cash             159,728 75,326   65,218    
  Accounts receivable           92,317 70,725   58,595    
  Unbilled revenue           42,925 32,592   25,091    
  Inventories             902 570   583    
  Other assets           36,500 21,776   26,299    
                  332,372 200,989   175,786    
                         
Non-current assets:                  
  Property and equipment         19,582 15,326   15,532    
  Right of use assets           57,927 54,382   56,021    
  Deferred income taxes         8,307 6,831   4,831    
  Other assets           11,502 6,655   4,875    
  Intangible assets 872,887 744,136   688,088    
                  970,205 827,330   769,348    
                         
Total assets             1,302,577 1,028,319   945,134    
                         
Liabilities and Shareholders’ Equity            
                         
Current liabilities:                  
  Revolving credit facility and current portion of term loans   151,570 46,489   30,018    
  Loan from CSI           29,116      
  Redeemable preferred securities       66,614   66,614    
  Accounts payable and accrued liabilities       142,840 135,993   97,597    
  Deferred revenue           197,492 82,179   148,208    
  Provisions             1,076 1,893   1,867    
  Acquisition holdback payables         18,416 8,876   4,924    
  Lease obligations           18,927 16,234   15,863    
  Income taxes payable         14,457 11,400   10,333    
                  544,779 398,794   375,424    
                         
Non-current liabilities:                  
  Term loans           101,421 96,113   96,359    
  Loan from CSI           31,602      
  Deferred income taxes         145,731 125,004   128,150    
  Acquisition holdback payables         3,078 945   360    
  Lease obligations           40,076 38,955   40,859    
  Other liabilities           20,410 12,877   10,476    
                  342,317 273,893   276,204    
                         
Total liabilities             887,096 672,687   651,628    
                         
                         
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)     1,576 (380 ) (501 )  
  Retained earnings (deficit)         192,970 (1,782,113 ) (1,801,383 )  
  Non-controlling interests         181,523 1,061,236   1,007,964    
                  415,481 355,632   293,505    
                         
                         
                         
Total liabilities and shareholders’ equity       1,302,577 1,028,319   945,134    
                         
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 June 30,   Six months ended June 30,
              2022     2021     2022     2021  
                           
Revenue                      
License         6,418     6,209     11,885     11,139  
Professional services       56,481     47,616     106,589     96,205  
Hardware and other       2,293     1,498     4,534     2,843  
Maintenance and other recurring     155,425     122,915     301,374     247,648  
              220,616     178,238     424,383     357,834  
Expenses                      
Staff         123,809     96,727     235,704     195,544  
Hardware         1,515     658     2,234     1,292  
Third party license, maintenance and professional services 18,625     20,068     36,099     35,789  
Occupancy         1,804     1,442     3,341     2,815  
Travel, telecommunications, supplies, software and equipment             8,450     4,741     14,548     8,953  
Professional fees       3,779     2,447     7,576     4,967  
Other, net         4,762     2,222     9,182     3,644  
Depreciation         7,008     5,800     13,203     12,031  
Amortization of intangible assets     26,010     20,617     48,989     41,028  
              195,763     154,722     370,875     306,063  
                           
Redeemable preferred securities expense (income)     (154,611 )       2,302,185  
Impairment of intangible and other non-financial assets     1,600         1,600  
Finance and other expenses (income)   (51 )   2,890     1,680     5,908  
              (51 )   (150,121 )   1,680     2,309,693  
                           
Income (loss) before income taxes     24,904     173,637     51,828     (2,257,922 )
                           
Current income tax expense (recovery)   11,041     8,549     22,263     18,913  
Deferred income tax expense (recovery)   (6,237 )   (3,693 )   (10,894 )   (9,481 )
Income tax expense (recovery)     4,805     4,856     11,370     9,431  
                           
Net income (loss)       20,099     168,781     40,458     (2,267,353 )
                           
Net income (loss) attributable to:                  
Equity holders of Topicus     12,526     161,601     24,097     (1,903,522 )
Non-controlling interests       7,573     7,180     16,362     (363,831 )
Net income (loss)       20,099     168,781     40,458     (2,267,353 )
                           
Weighted average shares                    
Basic shares outstanding     80,097,017     54,421,997     80,011,366     46,958,654  
Diluted shares outstanding     129,841,819     129,841,819     129,841,819     129,519,008  
                           
Earnings (loss) per common share of Topicus              
Basic         0.16     2.97     0.30     (40.54 )
Diluted         0.16     0.11     0.30     (40.54 )
                           
                           
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 months ended June 30,   Six months ended June 30,
              2022   2021   2022   2021  
                           
Net income (loss)       20,099   168,781   40,458   (2,267,353 )
                           
Items that are or may be reclassified subsequently to net income (loss):              
                           
Foreign currency translation differences from foreign operations and other 3,444   647   4,871   1,254  
                           
Other comprehensive (loss) income for the period, net of income tax 3,444   647   4,871   1,254  
                           
Total comprehensive income (loss) for the period 23,543   169,428   45,329   (2,266,100 )
                           
Total other comprehensive income (loss) attributable to:              
Equity holders of Topicus     1,325   397   1,956   810  
Non-controlling interests       2,119   250   2,915   444  
Total other comprehensive income (loss) 3,444   647   4,871   1,254  
                           
Total comprehensive income (loss) attributable to:              
Equity holders of Topicus     13,850   161,999   26,052   (1,902,712 )
Non-controlling interests       9,693   7,430   19,277   (363,388 )
Total comprehensive income (loss)     23,543   169,428   45,329   (2,266,100 )
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                  
Six months ended June 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)       24,097   24,097   16,362   40,458  
                     
Other comprehensive income (loss)                
                     
Foreign currency translation differences from                
  foreign operations and other, net of income tax     1,956     1,956   2,915   4,871  
                     
Total other comprehensive income (loss)                
  for the period     1,956     1,956   2,915   4,871  
                     
Total comprehensive income (loss) for the period     1,956   24,097   26,052   19,277   45,329  
                     
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 ) (54 ) (78 ) 15,470   15,393  
                     
  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       799   799   (799 )  
                     
Balance at June 30, 2022   39,412   1,576   192,970   233,958   181,523   415,481  
                     
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                    
Six months ended June 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)       (1,903,522 ) (1,903,522 ) (363,831 ) (2,267,353 )  
                       
Other comprehensive income (loss)                  
                       
Foreign currency translation differences from                  
  foreign operations and other     810     810   444   1,254  
                       
Total other comprehensive income (loss) for the period     810     810   444   1,254    
                       
Total comprehensive income (loss) for the period     810   (1,903,522 ) (1,902,712 ) (363,388 ) (2,266,100 )  
                       
                       
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     (29 ) (8 ) (37 ) 2,602   2,566    
                       
  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 June 30, 2021 2,047,473   39,412 (999,460 ) (501 ) (1,801,383 ) (714,459 ) 1,007,964   293,505    
                       
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 June 30,   Six months ended June 30,
                2022     2021     2022     2021  
                             
Cash flows from (used in) operating activities:              
  Net income (loss)     20,099     168,781     40,458     (2,267,353 )
  Adjustments for:                  
    Depreciation     7,008     5,800     13,203     12,031  
    Amortization of intangible assets 26,010     20,617     48,989     41,028  
    Redeemable preferred securities expense (income)       (154,611 )       2,302,185  
    Impairment of intangible and other non-financial assets       1,600         1,600  
    Finance and other expenses (income)   (51 )   2,890     1,680     5,908  
    Income tax expense (recovery) 4,805     4,856     11,370     9,431  
  Change in non-cash operating assets and liabilities              
    exclusive of effects of business combinations (79,639 )   (71,468 )   48,989     41,446  
  Income taxes (paid) received (10,255 )   (13,102 )   (20,673 )   (21,110 )
  Net cash flows from (used in) operating activities (32,023 )   (34,637 )   144,014     125,167  
                             
Cash flows from (used in) financing activities:              
  Interest paid on lease obligations   (277 )   (395 )   (556 )   (599 )
  Interest paid on other facilities   (2,432 )   (993 )   (3,987 )   (2,542 )
  Increase (decrease) in revolving credit facility 45,000     4,968     100,000     10,000  
  Proceeds from issuance of term loans     64     346     65,907  
  Increase (decrease) in loan from Vela Software Group   7,904         6,086      
  Repayments of term loans (1,052 )       (1,669 )    
  Credit facility transaction costs     (151 )       (2,397 )
  Payments of lease obligations   (5,063 )   (4,186 )   (9,574 )   (8,508 )
  Other financing activities   (580 )       (580 )    
  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 43,500     (693 )   23,452     7,261  
                             
Cash flows from (used in) investing activities:              
  Acquisition of businesses (94,502 )   (5,090 )   (107,659 )   (151,738 )
  Cash obtained with acquired businesses   24,935     (722 )   27,612     14,246  
  Post-acquisition settlement payments, net of receipts (671 )   (6,339 )   (2,431 )   (11,008 )
  Receipt of additional subscription amount from the sellers of Topicus.com B.V.     27,589         27,589  
  Interest, dividends and other proceeds received 3,028         3,028      
  Property and equipment purchased (1,587 )   (1,167 )   (3,613 )   (1,933 )
  Net cash flows from (used in) investing activities (68,798 )   14,270     (83,064 )   (122,844 )
                             
Effect of foreign currency on              
  cash and cash equivalents (0 )   0     (0 )   0  
                             
Increase (decrease) in cash (57,321 )   (21,059 )   84,402     9,584  
                             
Cash, beginning of period 217,049     86,278     75,326     55,635  
                             
Cash, end of period 159,728     65,218     159,728     65,218  
                             


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