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

T.CSU, V.TOI

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
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
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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