Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Second Quarter Ended June 30, 2023

Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Second Quarter Ended June 30, 2023

GlobeNewswire

Published

TORONTO, Aug. 03, 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 second quarter ended June 30, 2023. 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, 2023 and the accompanying notes, our Management’s Discussion and Analysis for the three and six months ended June 30, 2023 and the Annual Consolidated Financial Statements of Topicus.com Inc. 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.sedarplus.ca and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedarplus.ca.

*Q2 2023 Headlines:*

· Revenue increased 23% (6% organic growth) to €272.1 million compared to €220.6 million in Q2 2022.  
· Net income increased to €23.5 million (€0.18 on a diluted per share basis) from €20.1 million (€0.16 on a diluted per share basis).  
· Acquisitions were completed for aggregate cash consideration of €63.4 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.6 million resulting in total consideration of €71.1 million.
· Cash flows from operations (“CFO”) increased €16.7 million to negative €15.4 million compared to negative €32.0 million in Q2 2022 representing an increase of 52%.
· Free cash flow available to shareholders^1 (“FCFA2S”) increased €13.7 million to negative €13.1 million compared to negative €26.8 million in Q2 2022 representing an increase 51%.Total revenue for the quarter ended June 30, 2023 was €272.1 million, an increase of 23%, or €51.5 million, compared to €220.6 million for the comparable period in 2022. For the first six months of 2023 total revenues were €536.5 million, an increase of 26%, or €112.1 million, compared to €424.4 million for the comparable period in 2022. 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 7%. 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, 2023 increased €3.4 million to €23.5 million compared to €20.1 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.18 in the quarter ended June 30, 2023 compared to net income per basic and diluted share of €0.16 for the same period in 2022. For the six months ended June 30, 2023 net income increased €4.1 million to €44.6 million compared to €40.5 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.35 in the six months ended June 30, 2023 compared to €0.30 for the same period in 2022.   

For the quarter ended June 30, 2023, CFO were negative €15.4 million compared to negative €32.0 million for the same period in 2022. 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, 2023, CFO increased €14.6 million to €158.6 million compared to €144.0 million for the same period in 2022 representing an increase of 10%.  

For the quarter ended June 30, 2023, FCFA2S was negative €13.1 million compared to negative €26.8 million for the same period in 2022. For the six months ended June 30, 2023, FCFA2S increased €53.3 million to €88.0 million compared to €34.7 million for the same period in 2022 representing an increase of 153%. The increase for the six month period is primarily as a result of the dividend paid to the Preferred Securities holders during the quarter ended March 31, 2022.   

*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, and the proceeds from sale of interest rate caps. 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,       2023  2022        2023  2022      (€ in millions)   (€ in millions)                    
*Net cash flows from operating activities*     (15.4 ) (32.0 )       158.6   144.0    
*Adjusted for:*                    
Interest paid on lease obligations     (0.3 ) (0.3 )       (0.7 ) (0.6 )  
Interest paid on other facilities     (3.5 ) (2.4 )       (6.6 ) (4.0 )  
Proceeds from sale of interest rate cap     5.5   -         5.5   -    
Credit facility transaction costs     (0.2 ) -         (0.2 ) -    
Payments of lease obligations     (5.5 ) (5.1 )       (10.8 ) (9.6 )  
Property and equipment purchased     (1.9 ) (1.6 )       (3.9 ) (3.6 )  
Dividends paid to redeemable preferred securities holders     -   -         -   (66.6 )                           (21.3 ) (41.4 )       142.0   59.7    
Less amount attributable to                     non-controlling interests     8.2   14.5         (54.0 ) (24.9 )                      
Free cash flow available to shareholders     (13.1 ) (26.8 )       88.0   34.7                        
^Due to rounding, certain totals may not foot.                    

*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.*  
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, 2023 December 31, 2022 June 30, 2022                      
Assets                                        
Current assets:                   Cash             172,315 136,772   159,728 Accounts receivable           130,456 95,790   92,317 Unbilled revenue           48,701 41,036   42,925 Inventories             4,268 1,419   902 Other assets           54,657 34,778   36,500                 410,396 309,795   332,372                      
Non-current assets:                 Property and equipment           20,372 19,579   19,582 Right of use assets           57,919 54,412   57,927 Deferred income taxes           7,044 19,978   8,307 Other assets           12,161 17,030   11,502 Intangible assets 942,297 874,000   872,887                 1,039,793 984,999   970,205                      
Total assets             1,450,189 1,294,794   1,302,577                      
Liabilities and Shareholders' Equity                                
Current liabilities:                 Topicus Revolving Credit Facility and current portion of term and other loans 168,228 201,275   151,570 Loan from CSI           30,281 30,867   - Accounts payable and accrued liabilities       162,868 174,824   142,840 Deferred revenue           241,980 116,989   197,492 Provisions             1,682 1,884   1,076 Acquisition holdback payables         14,878 14,009   18,416 Lease obligations           19,280 18,824   18,927 Income taxes payable           16,510 11,467   14,457                 655,707 570,141   544,779                      
Non-current liabilities:                 Term and other loans           65,807 41,280   101,421 Loan from CSI           - -   31,602 Deferred income taxes           147,382 150,521   145,731 Acquisition holdback payables         1,289 2,316   3,078 Lease obligations           39,684 36,634   40,076 Other liabilities           26,273 26,118   20,410                 280,434 256,869   342,317                      
Total liabilities             936,141 827,009   887,096                                            
Shareholders' Equity:                 Capital stock           39,412 39,412   39,412 Accumulated other comprehensive income (loss)   851 (232 ) 1,576 Retained earnings (deficit)           255,528 226,919   192,970 Non-controlling interests           218,258 201,685   181,523                 514,048 467,784   415,481                                                                  
Total liabilities and shareholders' equity         1,450,189 1,294,794   1,302,577                      
*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,             2023    2022    2023    2022                           
Revenue                      
License         7,847     6,418     14,825     11,885  
Professional services       71,974     56,481     141,314     106,589  
Hardware and other       3,705     2,293     6,385     4,534  
Maintenance and other recurring     188,557     155,425     373,989     301,374               272,083     220,616     536,513     424,383  
Expenses                      
Staff         155,841     123,809     305,949     235,704  
Hardware         2,545     1,515     4,123     2,234  
Third party license, maintenance and professional services 21,340     18,625     41,888     36,099  
Occupancy         2,560     1,804     5,026     3,341  
Travel, telecommunications, supplies, software and equipment 10,703     8,450     20,267     14,548  
Professional fees       4,557     3,779     8,837     7,576  
Other, net         964     4,762     7,178     9,182  
Depreciation         7,695     7,008     14,990     13,203  
Amortization of intangible assets     29,985     26,010     57,946     48,989               236,191     195,763     466,204     370,875                            
Finance and other expenses (income)   4,447     (51 )   9,396     1,680               4,447     (51 )   9,396     1,680                            
Income (loss) before income taxes     31,445     24,904     60,912     51,828                            
Current income tax expense (recovery)   14,898     11,041     27,226     22,263  
Deferred income tax expense (recovery)   (6,905 )   (6,237 )   (10,894 )   (10,894 )
Income tax expense (recovery)     7,993     4,805     16,332     11,370                            
Net income (loss)       23,452     20,099     44,580     40,458                            
Net income (loss) attributable to:                  
Equity holders of Topicus     14,572     12,526     28,472     24,097  
Non-controlling interests       8,880     7,573     16,108     16,362  
Net income (loss)       23,452     20,099     44,580     40,458                            
Weighted average shares                     Basic shares outstanding     81,889,764     80,097,017     81,889,764     80,011,366   Diluted shares outstanding     129,841,819     129,841,819     129,841,819     129,841,819                            
Earnings (loss) per common share of Topicus               Basic         0.18     0.16     0.35     0.30   Diluted         0.18     0.16     0.35     0.30                                                      

*Topicus.com Inc.*                  
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)            
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)                                      
Unaudited                         Three months ended June 30,   Six months ended June 30,             2023   2022   2023   2022                          
Net income (loss)       23,452   20,099   44,580   40,458                          
Items that are or may be reclassified subsequently to net income (loss):                                         Foreign currency translation differences from foreign operations and other 2,999   3,444   2,203   4,871                          
Other comprehensive (loss) income for the period, net of income tax 2,999   3,444   2,203   4,871                          
Total comprehensive income (loss) for the period 26,451   23,543   46,784   45,329                          
Total other comprehensive income (loss) attributable to:              
Equity holders of Topicus     1,320   1,325   1,083   1,956
Non-controlling interests       1,679   2,119   1,120   2,915
Total other comprehensive income (loss) 2,999   3,444   2,203   4,871                          
Total comprehensive income (loss) attributable to:              
Equity holders of Topicus     15,892   13,850   29,555   26,052
Non-controlling interests       10,559   9,693   17,228   19,277
Total comprehensive income (loss)     26,451   23,543   46,784   45,329                          

*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, 2023                     *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, 2023* *-* *39,412* *-* *(232* *)* *226,919* *266,099* *201,685*   *467,784*                      
Total comprehensive income (loss) for the period:                                    
Net income (loss) - - - -   28,472 28,472 16,108   44,580                      
Other comprehensive income (loss)                                    
Foreign currency translation differences from                 foreign operations and other, net of income tax - - - 1,083   - 1,083 1,120   2,203                      
*Total other comprehensive income (loss)*                 *for the period* *-* *-* *-* *1,083*   *-* *1,083* *1,120*   *2,203*                      
*Total comprehensive income (loss) for the period* *-* *-* *-* *1,083*   *28,472* *29,555* *17,228*   *46,784*                      
Transactions with owners, recorded directly in equity                                     Other movements in non-controlling interests and equity - - - -   137 137 70   207                       Dividends paid to non-controlling interests - - - -   - - (726 ) (726 )                    
*Balance at June 30, 2023* *-* *39,412* *-* *851*   *255,528* *295,791* *218,258*   *514,048*                      

*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 -   - -   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 -   - (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 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,               2023     2022     2023     2022                              
Cash flows from (used in) operating activities:               Net income (loss)     23,452     20,099     44,580     40,458   Adjustments for:                     Depreciation     7,695     7,008     14,990     13,203     Amortization of intangible assets 29,985     26,010     57,946     48,989     Finance and other expenses (income)   4,447     (51 )   9,396     1,680     Income tax expense (recovery) 7,993     4,805     16,332     11,370   Change in non-cash operating assets and liabilities                 exclusive of effects of business combinations (75,465 )   (79,639 )   41,134     48,989   Income taxes (paid) received (13,474 )   (10,255 )   (25,752 )   (20,673 ) Net cash flows from (used in) operating activities (15,367 )   (32,023 )   158,626     144,014                              
Cash flows from (used in) financing activities:               Interest paid on lease obligations   (347 )   (277 )   (653 )   (556 ) Interest paid on other facilities   (3,505 )   (2,432 )   (6,565 )   (3,987 ) Proceeds from sale of interest rate cap   5,516     -     5,516     -   Net increase (decrease) in Topicus Revolving Credit Facility 45,000     45,000     35,000     100,000   Proceeds from issuance of term and other loans 21,941     -     26,218     346   Increase (decrease) in loan from Vela Software Group (468 )   7,904     (468 )   6,086   Repayments of term and other loans (4,497 )   (1,052 )   (72,941 )   (1,669 ) Credit facility transaction costs (175 )   -     (238 )   -   Payments of lease obligations   (5,543 )   (5,063 )   (10,805 )   (9,574 ) Other financing activities   -     (580 )   -     (580 ) Dividends to non-controlling interests   (726 )   -     (726 )   -   Dividends paid to redeemable preferred securities holders -     -     -     (66,614 ) Net cash flows from (used in) in financing activities 57,197     43,500     (25,663 )   23,452                              
Cash flows from (used in) investing activities:               Acquisition of businesses (63,252 )   (94,502 )   (88,048 )   (107,659 ) Cash obtained with acquired businesses   4,611     24,935     5,583     27,612   Post-acquisition settlement payments, net of receipts (6,567 )   (671 )   (11,055 )   (2,431 ) Interest, dividends and other proceeds received -     3,028     -     3,028   Property and equipment purchased (1,888 )   (1,587 )   (3,869 )   (3,613 ) Net cash flows from (used in) investing activities (67,096 )   (68,798 )   (97,388 )   (83,064 )                            
Effect of foreign currency on               cash and cash equivalents 317     (0 )   (31 )   (0 )                            
Increase (decrease) in cash (24,950 )   (57,321 )   35,543     84,402                              
Cash, beginning of period 197,265     217,049     136,772     75,326                              
Cash, end of period 172,315     159,728     172,315     159,728                              

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