Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Fourth Quarter and Year Ended December 31, 2022

Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Fourth Quarter and Year Ended December 31, 2022

GlobeNewswire

Published

TORONTO, Feb. 07, 2023 (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 fourth quarter and year ended December 31, 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 Annual Consolidated Financial Statements of Topicus.com Inc. (or the “Company”) for the year ended December 31, 2022, 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, 2022, 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.

*Q4 2022 Headlines:*

· Revenue increased 27% (6% organic growth) to €263.7 million compared to €207.6 million in Q4 2021.  
· Net income increased to €28.7 million (€0.21 on a diluted per share basis) from €27.0 million (negative €0.17 on a diluted per share basis).
· Acquisitions were completed for aggregate cash consideration of €10.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €2.9 million resulting in total consideration of €13.4 million.
· Cash flows from operations (“CFO”) increased €5.3 million to €48.1 million compared to €42.8 million in Q4 2021 representing an increase of 12%.
· Free cash flow available to shareholders^1 (“FCFA2S”) decreased €2.1 million to €18.6 million compared to €20.6 in Q4 2021.*2022 Headlines:*

· Revenue increased 23% (4% organic growth) to €916.7 million compared to €742.5 million in 2021.
· Net income was €87.6 million (€0.66 on a diluted per share basis) compared to a net loss of €2,222.2 million (negative €30.16 on a diluted per share basis) in 2021.
· A number of acquisitions were completed for total consideration of €183.1 million including holdbacks and contingent consideration.
· Cash flows from operations (“CFO”) increased €26.6 million to €203.0 million compared to €176.4 million in 2021.
· Free cash flow available to shareholders^1 (“FCFA2S”) decreased €32.7 million to €54.2 million compared to €86.8 million in 2021.Total revenue for the quarter ended December 31, 2022 was €263.7 million, an increase of 27%, or €56.1 million, compared to €207.6 million for the comparable period in 2021. For the twelve months ended December 31, 2022 total revenues were €916.7 million, an increase of 23%, or €174.1 million, compared to €742.5 million for the comparable period in 2021. The increase for both the three and twelve 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% 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 December 31, 2022 increased €1.7 million to €28.7 million compared to €27.0 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.21 in the quarter ended December 31, 2022 compared to net income per basic and diluted share of negative €0.17 for the same period in 2021. For the twelve months ended December 31, 2022, net income was €87.6 million or €0.66 per basic and diluted share compared to a net loss of €2,222.2 million or €30.16 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the twelve months ended December 31, 2021 primarily resulted from the €2,302.2 million redeemable preferred securities expense. Diluted shares outstanding increased from 129.7 million to 129.8 million for the twelve months ended December 31, 2022.

For the quarter ended December 31, 2022, CFO increased €5.3 million to €48.1 million compared to €42.8 million for the same period in 2021 representing an increase of 12%. For the twelve months ended December 31, 2022, CFO increased €26.6 million to €203.0 million compared to €176.4 million for the same period in 2021 representing an increase of 15%.   

For the quarter ended December 31, 2022, FCFA2S decreased €2.1 million to €18.6 million compared to €20.6 million for the same period in 2021 representing a decrease of 10%. For the twelve months ended December 31, 2022, FCFA2S decreased €32.7 million to €54.2 million compared to €86.8 million for the same period in 2021 representing a decrease of 38%. The decline for the twelve month period is primarily as a result of the dividend paid to the Preferred Securities holders.

^______________________________
1 See Non-IFRS measures. 

*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 December 31,       Year ended December 31,       2022   2021       2022   2021     (€ in millions)   (€ in millions)                        
*Net cash flows from operating activities*     48.1   42.8       203.0   176.4 * *
*Adjusted for:*                       * *
Interest paid on lease obligations     (0.3 ) (0.3 )     (1.2 ) (1.2 )
Interest paid on other facilities     (4.4 ) (2.0 )     (11.8 ) (7.9 )
Credit facility transaction costs     (3.1 ) (0.2 )     (3.2 ) (2.5 )
Payments of lease obligations     (5.2 ) (4.5 )     (20.0 ) (17.5 )
Property and equipment purchased     (2.5 ) (2.2 )     (7.3 ) (5.4 )
Dividends paid to redeemable preferred securities holders     -   -       (66.6 ) -                               32.5   33.6       92.8   142.0  
Less amount attributable to                        
non-controlling interests     (14.0 ) (13.0 )     (38.7 ) (55.2 )                        
Free cash flow available to shareholders     18.6   20.6       54.2   86.8                          
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

*S**OURCE: TOPICUS.COM INC.*

*Topicus.com Inc.*
Consolidated Statements of Financial Position  
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)         December 31, 2022 December 31, 2021      
Assets          
Current assets:     Cash 136,772   75,326   Accounts receivable 95,790   70,725   Unbilled revenue 41,036   32,592   Inventories 1,419   570   Other assets 34,778   21,776     309,795   200,989        
Non-current assets:     Property and equipment 19,579   15,326   Right of use assets 54,412   54,382   Deferred income taxes 19,978   6,831   Other assets 17,030   6,655   Intangible assets 874,000   744,136     984,999   827,330        
Total assets 1,294,794   1,028,319        
Liabilities and Shareholders' Equity          
Current liabilities:     Topicus Revolving Credit Facility and current portion of term loans 201,275   46,489   Loan from CSI 30,867   29,116   Redeemable preferred securities -   66,614   Accounts payable and accrued liabilities 174,824   135,993   Deferred revenue 116,989   82,179   Provisions 1,884   1,893   Acquisition holdback payables 14,009   8,876   Lease obligations 18,824   16,234   Income taxes payable 11,467   11,400     570,141   398,794        
Non-current liabilities:     Term and other loans 41,280   96,113   Deferred income taxes 150,521   125,004   Acquisition holdback payables 2,316   945   Lease obligations 36,634   38,955   Other liabilities 26,118   12,877     256,869   273,893        
Total liabilities 827,009   672,687              
Shareholders' Equity:     Preferred shares -   2,047,473   Capital stock 39,412   39,412   Other equity -   (1,009,996 ) Accumulated other comprehensive income (loss) (232 ) (380 ) Retained earnings (deficit) 226,919   (1,782,113 ) Non-controlling interests 201,685   1,061,236     467,784   355,632        
Total liabilities and shareholders' equity 1,294,794   1,028,319        *Topicus.com Inc.*   
Consolidated Statements of Income (Loss)   
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)       Year ended December 31, 2022     2021        
Revenue      
License 31,745     26,709  
Professional services 239,674     196,565  
Hardware and other 10,553     6,189  
Maintenance and other recurring 634,710     513,078   916,681     742,541  
Expenses      
Staff 508,721     398,171  
Hardware 5,831     2,985  
Third party license, maintenance and professional services 76,577     72,027  
Occupancy 7,649     5,665  
Travel, telecommunications, supplies, software and equipment 32,807     20,383  
Professional fees 16,206     12,956  
Other, net 20,463     6,788  
Depreciation 27,866     24,603  
Amortization of intangible assets 107,078     85,060   803,195     628,640        
Redeemable preferred securities expense (income) -     2,302,185  
Impairment of intangible and other non-financial assets -     1,600  
Finance and other expenses (income) 9,068     10,748   9,068     2,314,533        
Income (loss) before income taxes 104,418     (2,200,632 )      
Current income tax expense (recovery) 43,859     39,494  
Deferred income tax expense (recovery) (27,051 )   (17,894 )
Income tax expense (recovery) 16,808     21,600        
Net income (loss) 87,610     (2,222,233 )      
Net income (loss) attributable to:      
Equity holders of Topicus 52,928     (1,884,042 )
Non-controlling interests 34,682     (338,191 )
Net income (loss) 87,610     (2,222,233 )      
Weighted average shares      
Basic shares outstanding 80,488,504     63,318,650  
Diluted shares outstanding 129,841,819     129,681,740        
Earnings (loss) per common share of Topicus      
Basic 0.66     (30.16 )
Diluted 0.66     (30.16 )      *Topicus.com Inc.*
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)       Year ended December 31, 2022   2021      
Net income (loss) 87,610   (2,222,233 )      
Items that are or may be reclassified subsequently to net income (loss):            
Foreign currency translation differences from foreign operations and other 1,264   1,427        
Other comprehensive (loss) income for the year, net of income tax 1,264   1,427        
Total comprehensive income (loss) for the year 88,874   (2,220,806 )      
Total other comprehensive income (loss) attributable to:      
Equity holders of Topicus 148   635  
Non-controlling interests 1,116   792  
Total other comprehensive income (loss) 1,264   1,427        
Total comprehensive income (loss) attributable to:      
Equity holders of Topicus 53,075   (1,883,407 )
Non-controlling interests 35,798   (337,399 )
Total comprehensive income (loss) 88,874   (2,220,806 )      *Topicus.com Inc.*

Consolidated Statement of Changes in Shareholders' Equity (Deficiency)    
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)                  
Year ended December 31, 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 year:                                  
Net income (loss) -   - -   -   52,928   52,928   34,682   87,610                    
Other comprehensive income (loss)                                  
Foreign currency translation differences from                 foreign operations and other, net of income tax -   - -   148   -   148   1,116   1,264                    
*Total other comprehensive income (loss)*                 *for the year* *-*   *-* *-*   *148*   *-*   *148*   *1,116*   *1,264*                    
*Total comprehensive income (loss) for the year* *-*   *-* *-*   *148*   *52,928*   *53,075*   *35,798*   *88,874*                    
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 ) 24,341   24,152                     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 -   - -   -   6,029   6,029   (6,029 ) -                    
*Balance at December 31, 2022* *-*   *39,412* *-*   *(232* *)* *226,919*   *266,099*   *201,685*   *467,784*                    *Topicus.com Inc.*

Consolidated Statement of Changes in Shareholders' Equity (Deficiency)    
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)                  
Year ended December 31, 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 year:                                  
Net income (loss) -   - -   -   (1,884,042 ) (1,884,042 ) (338,191 ) (2,222,233 )                  
Other comprehensive income (loss)                                  
Foreign currency translation differences from                 foreign operations and other -   - -   635   -   635   792   1,427                    
*Total other comprehensive income (loss) for the year* *-*   *-* *-*   *635*   *-*   *635*   *792*   *1,427*                    
*Total comprehensive income (loss) for the year* *-*   *-* *-*   *635*   *(1,884,042* *)* *(1,883,407* *)* *(337,399* *)* *(2,220,806* *)*                                    
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 -   - -   267   (218 ) 49   1,399   1,448                     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 -   - (18,297 ) -   -   (18,297 ) 18,297   -                     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 )                   Issuance of equity of a subsidiary in conjunction with the acquisition of Geosoftware -   - -   -   -   -   17,950   17,950                    
*Balance at December 31, 2021* *2,047,473*   *39,412* *(1,009,996* *)* *(380* *)* *(1,782,113* *)* *(705,604* *)* *1,061,236*   *355,632*                    *Topicus.com Inc.*

Consolidated Statements of Cash Flows   
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)           Year ended December 31,   2022     2021          
Cash flows from (used in) operating activities:       Net income (loss) 87,610     (2,222,233 ) Adjustments for:       Depreciation 27,866     24,603   Amortization of intangible assets 107,078     85,060   Redeemable preferred securities expense (income) -     2,302,185   Impairment of intangible and other non-financial assets -     1,600   Finance and other expenses (income) 9,068     10,748   Income tax expense (recovery) 16,808     21,600   Change in non-cash operating assets and liabilities       exclusive of effects of business combinations 504     (8,044 ) Income taxes (paid) received (45,925 )   (39,098 ) Net cash flows from (used in) operating activities 203,008     176,423          
Cash flows from (used in) financing activities:       Interest paid on lease obligations (1,171 )   (1,159 ) Interest paid on other facilities (11,847 )   (7,875 ) Net increase (decrease) in Topicus Revolving Credit Facility 85,000     25,000   Proceeds from issuance of term and other loans 8,592     67,227   Proceeds from issuance of loan from CSI -     28,362   Increase (decrease) in loan from Vela Software Group (1,817 )   2,207   Contribution from Vela Software Group towards the acquisition of Geosoftware -     17,950   Contribution from Vela Software Group towards the acquisition of Subsurface 7,905     -   Repayments of term and other loans (4,375 )   (411 ) Credit facility transaction costs (3,207 )   (2,548 ) Payments of lease obligations (20,025 )   (17,459 ) Other financing activities (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 (8,155 )   56,694          
Cash flows from (used in) investing activities:       Acquisition of businesses (153,828 )   (241,507 ) Cash obtained with acquired businesses 38,126     19,929   Post-acquisition settlement payments, net of receipts (13,430 )   (15,061 ) Receipt of additional subscription amount from the sellers of Topicus.com B.V. -     27,589   Interest, dividends and other proceeds received 3,028     1,010   Property and equipment purchased (7,303 )   (5,385 ) Net cash flows from (used in) investing activities (133,407 )   (213,425 )        
Effect of foreign currency on       cash and cash equivalents              
Increase (decrease) in cash 61,445     19,692          
Cash, beginning of year 75,326     55,635          
Cash, end of year 136,772     75,326  

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