CSU Constellation Software Inc

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 first quarter ended March 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 Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2022 and the accompanying notes, our Management’s Discussion and Analysis for the three months ended March 31, 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.

Q1 2022 Headlines:

• Revenue increased 13% (3% organic growth) to €203.8 million compared to €179.6 million in Q1 2021.
• Net income increased to €20.4 million (€0.14 on a diluted per share basis) from a net loss net of €2,436.1 million (€52.40 on a diluted per share basis) primarily due to the €2,456.8 million redeemable preferred securities expense in Q1 2021.
• 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 €5.7 million resulting in total consideration of €18.8 million.
• Cash flows from operations (“CFO”) increased €16.2 million to €176.0 million compared to €159.8 million in Q1 2021 representing an increase of 10%.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased €30.1 million to €61.4 million compared to €91.5 million in Q1 2021 representing a decrease of 33%.
• On January 31, 2022, a dividend was paid in cash on the Topicus Preferred Shares and Topicus Coop Preference Units in the aggregate amount of €66.6 million. Of this, €40.4 million was paid to CSI, €20.2 million was paid to the Joday Group and €6.0 million was paid to Ijssel B.V.
• On February 1, 2022, all of the issued and outstanding Topicus Preferred Shares and Topicus Coop Preference Units were converted to Topicus Subordinate Voting Shares and Topicus Coop Ordinary Units respectively.
• Subsequent to March 31, 2022, the Company completed or entered into agreements to acquire a number of businesses for aggregate cash consideration of €36.3 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.1 million resulting in total consideration of €43.4 million.
• On March 22, 2022, Topicus announced its intention to submit a public tender offer for the entire issued share capital of Sygnity S.A., a software company listed on the Warsaw Stock Exchange (WSE: SGN) at a price of PLN (Polish zloty) 12.00 per ordinary share. The public tender offer was submitted on April 11, 2022. The anticipated acquisition is subject to customary closing conditions, including operational control of the business by Topicus, and is expected to be completed by June 30, 2022.

Total revenue for the quarter ended March 31, 2022 was €203.8 million, an increase of 13%, or €24.2 million, compared to €179.6 million for the comparable period in 2021. The increase for the three-month period compared to the same period in the prior year is primarily attributable to growth from acquisitions as the Company experienced organic growth of 3%. 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 March 31, 2022 was €20.4 million compared to a net loss of €2,436.1 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.14 in the quarter ended March 31, 2022 compared to a net loss per basic and diluted share of €52.40 for the same period in 2021. The net loss per basic and diluted share for the quarter ended March 31, 2021 primarily resulted from the €2,456.8 million redeemable preferred securities expense, €2,442.1 million of which is non-cash related.

For the quarter ended March 31, 2022, CFO increased €16.2 million to €176.0 million compared to €159.8 million for the same period in 2021 representing an increase of 10%.

For the quarter ended March 31, 2022, FCFA2S decreased €30.1 million to €61.4 million compared to €91.5 million for the same period in 2021 representing an decrease of 33%. The decline is primarily as a result of the dividend paid to the redeemable 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.

The change in the FCFA2S calculation to exclude dividends paid to redeemable preferred securities holders was as a result of the February 1, 2022 dividend paid on the preferred securities issued in conjunction with the acquisition of Topicus.com B.V. As of February 2, 2022 there are no outstanding preferred securities.

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 endedMarch 31,
		2022		2021
	(€ in millions, except percentages)
Net cash flows from operating activities		176.0		159.8
Adjusted for:
Interest paid on lease obligations		(0.3	)	(0.2	)
Interest paid on other facilities		(1.6	)	(1.5	)
Credit facility transaction costs		-		(2.2	)
Payments of lease obligations		(4.5	)	(4.3	)
Property and equipment purchased		(2.0	)	(0.8	)
Dividends paid to redeemable preferred securities holders		(66.6	)	-
		101.1		150.7
Less amount attributable to non-controlling interests		(39.6	)	(59.2	)
Free cash flow available to shareholders		61.4		91.5
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 BakshChief Financial Officer (416) 861-9677 info@topicus.comwww.topicus.com

SOURCE: TOPICUS.COM INC.

_____________________________

1.  See Non-IFRS measures. 

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
		March 31, 2022	December 31, 2021		March 31, 2021
Assets
Current assets:
	Cash	217,049	75,326		86,278
	Accounts receivable	89,916	70,725		71,079
	Unbilled revenue	35,124	32,592		22,553
	Inventories	687	570		568
	Other assets	35,068	21,776		53,900
		377,844	200,989		234,377
Non-current assets:
	Property and equipment	15,776	15,326		15,797
	Right of use assets	54,203	54,382		58,742
	Deferred income taxes	7,064	6,831		5,035
	Other assets	8,250	6,655		4,908
	Intangible assets	741,528	744,136		710,942
		826,820	827,330		795,424
Total assets		1,204,665	1,028,319		1,029,801
Liabilities and Shareholders' Equity
Current liabilities:
	Revolving credit facility and current portion of term loans	101,688	46,489		24,625
	Loan from CSI	-	29,116		-
	Redeemable preferred securities	-	66,614		3,694,452
	Accounts payable and accrued liabilities	153,174	135,993		133,481
	Deferred revenue	223,851	82,179		193,158
	Provisions	1,444	1,893		1,198
	Acquisition holdback payables	11,365	8,876		11,040
	Lease obligations	16,747	16,234		15,676
	Income taxes payable	12,687	11,400		14,520
		520,957	398,794		4,088,150
Non-current liabilities:
	Term loans	95,446	96,113		96,613
	Loan from CSI	29,713	-		-
	Deferred income taxes	125,378	125,004		139,751
	Acquisition holdback payables	1,531	945		-
	Lease obligations	38,279	38,955		44,194
	Other liabilities	16,185	12,877		10,014
		306,532	273,893		290,573
Total liabilities		827,490	672,687		4,378,723
Shareholders' Equity:
	Preferred shares	-	2,047,473		-
	Capital stock	39,412	39,412		39,412
	Other equity	-	(1,009,996	)	(991,700	)
	Accumulated other comprehensive income (loss)	261	(380	)	(899	)
	Retained earnings (deficit)	179,646	(1,782,113	)	(1,962,757	)
	Non-controlling interests	157,855	1,061,236		(432,979	)
		377,175	355,632		(3,348,921	)
Total liabilities and shareholders' equity		1,204,665	1,028,319		1,029,801

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 March 31,
		2022			2021
Revenue
License		5,467			4,930
Professional services		50,108			48,589
Hardware and other		2,242			1,345
Maintenance and other recurring		145,949			124,733
		203,767			179,596
Expenses
Staff		111,895			98,817
Hardware		719			634
Third party license, maintenance and professional services		17,475			15,721
Occupancy		1,537			1,373
Travel, telecommunications, supplies, software and equipment		6,098			4,212
Professional fees		3,797			2,520
Other, net		4,419			1,422
Depreciation		6,195			6,231
Amortization of intangible assets		22,978			20,411
		175,112			151,341
Redeemable preferred securities expense (income)		-			2,456,796
Finance and other expenses (income)		1,731			3,018
		1,731			2,459,814
Income (loss) before income taxes		26,924			(2,431,559	)
Current income tax expense (recovery)		11,222			10,363
Deferred income tax expense (recovery)		(4,657	)		(5,788	)
Income tax expense (recovery)		6,565			4,575
Net income (loss)		20,359			(2,436,134	)
Net income (loss) attributable to:
Equity holders of Topicus		11,571			(2,065,123	)
Non-controlling interests		8,788			(371,011	)
Net income (loss)		20,359			(2,436,134	)
Weighted average shares
	Basic shares outstanding	79,924,764			39,412,386
	Diluted shares outstanding	129,841,819			129,322,452
Earnings (loss) per common share of Topicus
	Basic	0.14			(52.40	)
	Diluted	0.14			(52.40	)

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 March 31,
	2022		2021
Net income (loss)	20,359		(2,436,134	)
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other	1,427		607
Other comprehensive (loss) income for the period, net of income tax	1,427		607
Total comprehensive income (loss) for the period	21,786		(2,435,528	)
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus	631		413
Non-controlling interests	796		194
Total other comprehensive income (loss)	1,427		607
Total comprehensive income (loss) attributable to:
Equity holders of Topicus	12,202		(2,064,711	)
Non-controlling interests	9,584		(370,817	)
Total comprehensive income (loss)	21,786		(2,435,528	)

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
Three months ended March 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 period:
Net income (loss)		-		-	-		-		11,571		11,571		8,788		20,359
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of income tax	-		-	-		631		-		631		796		1,427
Total other comprehensive income (loss)
	for the period	-		-	-		631		-		631		796		1,427
Total comprehensive income (loss) for the period		-		-	-		631		11,571		12,202		9,584		21,786
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	)	10		(53	)	(66	)	(177	)	(243	)
	Reclassification of other equity to retained earnings (deficit)	-		-	(1,950,242	)	-		1,950,242		-		-		-
Balance at March 31, 2022		-		39,412	-		261		179,646		219,320		157,855		377,175

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
Three months ended March 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 period:
Net income (loss)			-	-	-		-		(2,065,123	)	(2,065,123	)	(371,011	)	(2,436,134	)
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other		-	-	-		413		-		413		194		607
Total other comprehensive income (loss) for the period			-	-	-		413		-		413		194		607
Total comprehensive income (loss) for the period			-	-	-		413		(2,065,123	)	(2,064,711	)	(370,817	)	(2,435,528	)
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	)	220		191		2,602		2,793
	Issuance of redeemable preferred securities		-	-	(1,001,469	)	-				(1,001,469	)	(124,797	)	(1,126,267	)
	Dividends to shareholders of the Company		-	-	-				(36,425	)	(36,425	)	(18,175	)	(54,600	)
Balance at March 31, 2021			-	39,412	(991,700	)	(899	)	(1,962,757	)	(2,915,943	)	(432,979	)	(3,348,921	)

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 March 31,
			2022			2021
Cash flows from (used in) operating activities:
	Net income (loss)		20,359			(2,436,134	)
	Adjustments for:
		Depreciation	6,195			6,231
		Amortization of intangible assets	22,978			20,411
		Redeemable preferred securities expense (income)	-			2,456,796
		Finance and other expenses (income)	1,731			3,018
		Income tax expense (recovery)	6,565			4,575
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations	128,627			112,914
	Income taxes (paid) received		(10,418	)		(8,008	)
	Net cash flows from (used in) operating activities		176,037			159,803
Cash flows from (used in) financing activities:
	Interest paid on lease obligations		(280	)		(203	)
	Interest paid on other facilities		(1,555	)		(1,550	)
	Increase (decrease) in revolving credit facility		55,000			5,032
	Proceeds from issuance of term loans		346			65,843
	Increase (decrease) in loan from Vela Software Group		(1,817	)		-
	Repayments of term loans		(617	)		-
	Credit facility transaction costs		-			(2,245	)
	Payments of lease obligations		(4,511	)		(4,323	)
	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		(20,048	)		7,954
Cash flows from (used in) investing activities:
	Acquisition of businesses		(13,158	)		(146,648	)
	Cash obtained with acquired businesses		2,677			14,968
	Post-acquisition settlement payments, net of receipts		(1,760	)		(4,668	)
	Property and equipment purchased		(2,026	)		(766	)
	Net cash flows from (used in) investing activities		(14,267	)		(137,115	)
Effect of foreign currency on
	cash and cash equivalents		(0	)		(0	)
Increase (decrease) in cash			141,722			30,643
Cash, beginning of period			75,326			55,635
Cash, end of period			217,049			86,278