Constellation Software Inc. and Topicus.com Inc. Announce Results for Topicus.com Inc. for the Third Quarter Ended September 30, 2022

Topicus.com Inc.

TORONTO, Nov. 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 third quarter ended September 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 nine months ended September 30, 2022 and the accompanying notes, our Management’s Discussion and Analysis for the three and nine months ended September 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.

Q3 2022 Headlines:

• Revenue increased 29% (3% organic growth) to €228.6 million compared to €177.1 million in Q3 2021.

• Net income increased to €18.4 million (€0.15 on a diluted per share basis) from €18.1 million (€0.09 on a diluted per share basis).

• Acquisitions were completed for aggregate cash consideration of €35.7 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.9 million resulting in total consideration of €43.6 million.

• Cash flows from operations (“CFO”) increased €2.4 million to €10.9 million compared to €8.5 million in Q3 2021 representing an increase of 29%.

• Free cash flow available to shareholders¹ (“FCFA2S”) was negative €0.5 million for both Q3 2022 and Q3 2021.

• On October 28, 2022 the Company’s credit facility was amended increasing the amount available to borrow to €550 million from €300 million.

1. See Non-IFRS measures.

Total revenue for the quarter ended September 30, 2022 was €228.6 million, an increase of 29%, or €51.5 million, compared to €177.1 million for the comparable period in 2021. For the first nine months of 2022 total revenues were €653.0 million, an increase of 22%, or €118.0 million, compared to €535.0 million for the comparable period in 2021. 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 3% 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 September 30, 2022 increased €0.3 million to €18.4 million compared to €18.1 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.15 in the quarter ended September 30, 2022 compared to €0.09 for the same period in 2021. For the nine months ended September 30, 2022, net income was €58.9 million or €0.45 per basic and diluted share compared to a net loss of €2,249.3 million or €32.78 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the nine months ended September 30, 2021 primarily resulted from the €2,302.2 million redeemable preferred securities expense. Diluted shares outstanding increased from 129.5 million to 129.8 million for the nine months ended September 30, 2022.

For the quarter ended September 30, 2022, CFO increased €2.4 million to €10.9 million compared to €8.5 million for the same period in 2021 representing an increase of 29%. 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, 2022, CFO increased €21.3 million to €154.9 million compared to €133.7 million for the same period in 2021 representing an increase of 16%.

For the quarter ended September 30, 2022, FCFA2S was negative €0.5 million compared to negative €0.5 million for the same period in 2021. For the nine months ended September 30, 2022, FCFA2S decreased €30.6 million to €35.7 million compared to €66.3 million for the same period in 2021 representing a decrease of 46%. 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 September 30,							Nine months ended September 30,
			2022		2021					2022		2021
		(€ in millions)							(€ in millions)
Net cash flows from operating activities			10.9		8.5					154.9		133.7
Adjusted for:
Interest paid on lease obligations			(0.3	)	(0.3	)				(0.9	)	(0.9	)
Interest paid on other facilities			(3.4	)	(3.3	)				(7.4	)	(5.9	)
Credit facility transaction costs			(0.1	)	-					(0.1	)	(2.4	)
Payments of lease obligations			(5.2	)	(4.4	)				(14.8	)	(12.9	)
Property and equipment purchased			(1.2	)	(1.3	)				(4.8	)	(3.2	)
Dividends paid to redeemable preferred securities holders			-		-					(66.6	)	-
			0.6		(0.8	)				60.3		108.4
Less amount attributable to
non-controlling interests			(1.2	)	0.3					(24.6	)	(42.1	)
Free cash flow available to shareholders			(0.5	)	(0.5	)				35.7		66.3
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, 2022	December 31, 2021		September 30, 2021
Assets
Current assets:
	Cash		135,797	75,326		66,634
	Accounts receivable		83,182	70,725		57,091
	Unbilled revenue		44,335	32,592		29,688
	Inventories		1,336	570		654
	Other assets		35,413	21,776		25,005
			300,063	200,989		179,071
Non-current assets:
	Property and equipment		19,328	15,326		15,228
	Right of use assets		56,854	54,382		52,644
	Deferred income taxes		9,135	6,831		4,779
	Other assets		16,439	6,655		4,810
	Intangible assets		896,251	744,136		678,777
			998,007	827,330		756,239
Total assets			1,298,070	1,028,319		935,310
Liabilities and Shareholders' Equity
Current liabilities:
	Topicus Revolving credit facility and current portion of term loans		156,945	46,489		40,092
	Loan from CSI		33,707	29,116		-
	Redeemable preferred securities		-	66,614		66,614
	Accounts payable and accrued liabilities		139,581	135,993		104,637
	Deferred revenue		152,486	82,179		106,082
	Provisions		1,186	1,893		2,216
	Acquisition holdback payables		14,527	8,876		5,811
	Lease obligations		19,040	16,234		15,798
	Income taxes payable		16,826	11,400		11,850
			534,299	398,794		353,100
Non-current liabilities:
	Term and other loans		106,201	96,113		95,961
	Deferred income taxes		147,642	125,004		125,654
	Acquisition holdback payables		2,578	945		485
	Lease obligations		38,931	38,955		37,624
	Other liabilities		23,879	12,877		11,855
			319,231	273,893		271,579
Total liabilities			853,530	672,687		624,679
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)		1,828	(380	)	(834	)
	Retained earnings (deficit)		205,812	(1,782,113	)	(1,794,229	)
	Non-controlling interests		197,488	1,061,236		1,018,267
			444,541	355,632		310,631
Total liabilities and shareholders' equity			1,298,070	1,028,319		935,310

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 September 30,						Nine months ended September 30,
		2022			2021			2022			2021
Revenue
License		6,409			4,638			18,294			15,777
Professional services		59,576			45,241			166,165			141,446
Hardware and other		2,039			1,143			6,573			3,986
Maintenance and other recurring		160,565			126,105			461,940			373,753
		228,589			177,126			652,972			534,961
Expenses
Staff		128,687			95,908			364,392			291,452
Hardware		1,575			738			3,809			2,030
Third party license, maintenance and professional services		18,602			17,311			54,701			53,100
Occupancy		2,039			1,260			5,379			4,075
Travel, telecommunications, supplies, software and equipment		8,399			4,717			22,947			13,670
Professional fees		3,960			3,394			11,536			8,361
Other, net		3,722			1,389			12,903			5,032
Depreciation		7,333			6,354			20,536			18,385
Amortization of intangible assets		28,905			21,026			77,894			62,054
		203,222			152,095			574,098			458,159
Redeemable preferred securities expense (income)		-			-			-			2,302,185
Impairment of intangible and other non-financial assets		-			-			-			1,600
Finance and other expenses (income)		1,700			2,161			3,380			8,069
		1,700			2,161			3,380			2,311,854
Income (loss) before income taxes		23,666			22,870			75,494			(2,235,051	)
Current income tax expense (recovery)		11,934			9,552			34,198			28,464
Deferred income tax expense (recovery)		(6,690	)		(4,778	)		(17,584	)		(14,260	)
Income tax expense (recovery)		5,245			4,773			16,614			14,205
Net income (loss)		18,421			18,097			58,880			(2,249,256	)
Net income (loss) attributable to:
Equity holders of Topicus		11,834			7,422			35,931			(1,896,100	)
Non-controlling interests		6,587			10,675			22,949			(353,156	)
Net income (loss)		18,421			18,097			58,880			(2,249,256	)
Weighted average shares
Basic shares outstanding		80,477,481			79,282,821			80,168,445			57,851,780
Diluted shares outstanding		129,841,819			129,841,819			129,841,819			129,627,794
Earnings (loss) per common share of Topicus
Basic		0.15			0.09			0.45			(32.78	)
Diluted		0.15			0.09			0.45			(32.78	)

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 September 30,					Nine months ended September 30,
		2022		2021			2022		2021
Net income (loss)		18,421		18,097			58,880		(2,249,256	)
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other		1,742		(731	)		6,613		523
Other comprehensive (loss) income for the period, net of income tax		1,742		(731	)		6,613		523
Total comprehensive income (loss) for the period		20,164		17,366			65,493		(2,248,733	)
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus		252		(453	)		2,208		357
Non-controlling interests		1,490		(278	)		4,405		166
Total other comprehensive income (loss)		1,742		(731	)		6,613		523
Total comprehensive income (loss) attributable to:
Equity holders of Topicus		12,086		6,969			38,138		(1,895,743	)
Non-controlling interests		8,078		10,398			27,354		(352,990	)
Total comprehensive income (loss)		20,164		17,366			65,493		(2,248,733	)

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, 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)		-		-		-		-		35,931		35,931		22,949		58,880
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of income tax	-		-		-		2,208		-		2,208		4,405		6,613
Total other comprehensive income (loss)
	for the period	-		-		-		2,208		-		2,208		4,405		6,613
Total comprehensive income (loss) for the period		-		-		-		2,208		35,931		38,138		27,354		65,493
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	)	24,478		24,289
	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	-		-		-		-		1,919		1,919		(1,919	)	-
Balance at September 30, 2022		-		39,412		-		1,828		205,812		247,052		197,488		444,541

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		-		-		-		-		(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 Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
				Three months ended September 30,						Nine months ended September 30,
				2022			2021			2022			2021
Cash flows from (used in) operating activities:
	Net income (loss)			18,421			18,097			58,880			(2,249,256	)
	Adjustments for:
		Depreciation		7,333			6,354			20,536			18,385
		Amortization of intangible assets		28,905			21,026			77,894			62,054
		Redeemable preferred securities expense (income)		-			-			-			2,302,185
		Impairment of intangible and other non-financial assets		-			-			-			1,600
		Finance and other expenses (income)		1,700			2,161			3,380			8,069
		Income tax expense (recovery)		5,245			4,773			16,614			14,205
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations		(40,471	)		(36,687	)		8,517			4,760
	Income taxes (paid) received			(10,211	)		(7,231	)		(30,884	)		(28,341	)
	Net cash flows from (used in) operating activities			10,922			8,493			154,937			133,660
Cash flows from (used in) financing activities:
	Interest paid on lease obligations			(310	)		(275	)		(866	)		(874	)
	Interest paid on other facilities			(3,430	)		(3,319	)		(7,417	)		(5,861	)
	Increase (decrease) in Topicus Revolving Credit Facility			5,000			10,000			105,000			20,000
	Proceeds from issuance of term and other loans			7,808			-			8,154			65,907
	Increase (decrease) in loan from Vela Software Group			(7,904	)		-			(1,817	)		-
	Contribution from Vela Software Group towards the acquisition of Subsurface			7,905			-			7,905			-
	Repayments of term and other loans			(2,706	)		(411	)		(4,375	)		(411	)
	Credit facility transaction costs			(145	)		-			(145	)		(2,397	)
	Payments of lease obligations			(5,203	)		(4,438	)		(14,777	)		(12,946	)
	Other financing activities			(15	)		-			(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			1,000			1,557			24,452			8,818
Cash flows from (used in) investing activities:
	Acquisition of businesses			(35,660	)		(13,261	)		(143,319	)		(164,999	)
	Cash obtained with acquired businesses			9,872			5,240			37,484			19,486
	Post-acquisition settlement payments, net of receipts			(8,869	)		(366	)		(11,300	)		(11,373	)
	Receipt of additional subscription amount from the sellers of Topicus.com B.V.			-			-			-			27,589
	Interest, dividends and other proceeds received			-			1,010			3,028			1,010
	Property and equipment purchased			(1,197	)		(1,258	)		(4,810	)		(3,191	)
	Net cash flows from (used in) investing activities			(35,853	)		(8,634	)		(118,918	)		(131,479	)
Effect of foreign currency on
	cash and cash equivalents			0			(0	)		0			(0	)
Increase (decrease) in cash				(23,931	)		1,415			60,471			10,999
Cash, beginning of period				159,728			65,218			75,326			55,635
Cash, end of period				135,797			66,634			135,797			66,634