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Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Third Quarter Ended September 30, 2021

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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