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 second quarter ended June 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 six months ended June 30, 2021 and the accompanying notes, our Management Discussion and Analysis for the three and six months ended June 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.

Q2 2021 Headlines:

• Revenue increased 54% (8% organic growth) to €178.2 million compared to €115.6 million in Q2 2020.
• A €154.6 million non-cash gain related to the decrease in fair value of redeemable preferred securities was incurred in the quarter. The fair value of the preferred securities was primarily dependent on the price movement of Topicus’ Subordinate Voting Shares.
• Net income increased to €168.8 million (€0.11 on a diluted per share basis) from €14.1 million (€0.12 on a diluted per share basis) in Q2 2020 primarily resulting from the €154.6 million redeemable preferred securities gain.
• A number of acquisitions were completed for aggregate cash consideration of €5.2 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €1.1 million resulting in total consideration of €6.4 million.
• Cash flows from operations (“CFO”) decreased €26.3 million to negative €34.6 million compared to negative €8.3 million in Q2 2020.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased €17.0 million to negative €25.4 million compared to negative €8.5 million in Q2 2020.
• The holders of the Topicus Coop Preference Units (the “Preferred Securities”) elected to convert their Preferred Securities into Topicus Coop Ordinary Units, which conversion will become effective on February 1, 2022.
• Subsequent to June 30, 2021, the Company completed or entered into agreements to acquire a number of businesses for aggregate cash consideration of €49.6 million. Deferred payments associated with these acquisitions have an estimated value of €6.7 million resulting in total consideration of €56.3 million.

Total revenue for the quarter ended June 30, 2021 was €178.2 million, an increase of 54%, or €62.6 million, compared to €115.6 million for the comparable period in 2020. For the first six months of 2021 total revenues were €357.8 million, an increase of 52%, or €122.5 million, compared to €235.4 million for the comparable period in 2020. 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 8% and 7% respectively.

Net income for the quarter ended June 30, 2021 was €168.8 million compared to net income of €14.1 million for the same period in 2020 primarily resulting from the €154.6 million redeemable preferred securities income, €163.6 million of which is non-cash related. On a per share basis, this translated into net income per basic share of €2.97 and diluted share of €0.11 in the quarter ended June 30, 2021 compared to net income per basic share of €0.24 and diluted share of €0.12 for the same period in 2020. Diluted shares outstanding increased from 129.3 million to 129.8 million for the quarter ended June 30, 2021. For the six months ended June 30, 2021, net loss was €2,267.4 million or a loss €40.54 per basic and diluted share compared to income of €31.6 million or €0.53 per basic share and €0.27 per diluted share for the same period in 2020.

For the quarter ended June 30, 2021, CFO were negative €34.6 million compared to negative €8.3 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 six months ended June 30, 2021, CFO increased €13.1 million to €125.2 million compared to €112.1 million for the same period in 2020 representing an increase of 12%.

For the quarter ended June 30, 2021, FCFA2S was negative €25.4 million compared to negative €8.5 million for the same period in 2020. For the six months ended June 30, 2021, FCFA2S decreased €1.5 million to €66.8 million compared to €68.2 million for the same period in 2020 representing a decrease of 2%.

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 June 30,							Six months ended June 30,
			2021		2020					2021		2020
		(€ in millions, except percentages)							(€ in millions, except percentages)
Net cash flows from operating activities			(34.6	)	(8.3	)				125.2		112.1
Adjusted for:
Interest paid on lease obligations			(0.4	)	(0.2	)				(0.6	)	(0.4	)
Interest paid on other facilities			(1.0	)	(0.4	)				(2.5	)	(1.8	)
Credit facility transaction costs			(0.2	)	-					(2.4	)	-
Payments of lease obligations			(4.2	)	(3.1	)				(8.5	)	(6.3	)
Property and equipment purchased			(1.2	)	(0.6	)				(1.9	)	(1.3	)
			(41.5	)	(12.7	)				109.2		102.3
Less amount attributable to
Non-controlling interests			16.1		4.2					(42.4	)	(34.0	)
Free cash flow available to shareholders			(25.4	)	(8.5	)				66.8		68.2
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 BakshChief Financial Officer (416) 861-9677 info@topicus.comwww.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
		June 30, 2021		December 31, 2020		June 30, 2020
Assets
Current assets:
	Cash	65,218		55,635		55,385
	Accounts receivable	58,595		46,644		41,326
	Unbilled revenue	25,091		12,609		13,160
	Inventories	583		375		370
	Other assets	26,299		14,461		22,045
		175,786		129,724		132,287
Non-current assets:
	Property and equipment	15,532		8,782		7,910
	Right of use assets	56,021		50,517		44,946
	Deferred income taxes	4,831		1,946		800
	Other assets	4,875		3,956		4,094
	Intangible assets	688,088		446,213		399,062
		769,348		511,415		456,812
Total assets		945,134		641,139		589,100
Liabilities and Shareholders' Equity
Current liabilities:
	Revolving credit facility and current portion of term loans	30,018		19,482		-
	Redeemable preferred securities	66,614		-		-
	Accounts payable and accrued liabilities	97,597		97,386		72,202
	Deferred revenue	148,208		59,721		119,758
	Provisions	1,867		1,222		1,608
	Acquisition holdback payables	4,924		12,601		5,624
	Lease obligations	15,863		13,953		12,567
	Income taxes payable	10,333		12,576		5,143
		375,424		216,941		216,901
Non-current liabilities:
	Term loans	96,359		32,572		32,425
	Deferred income taxes	128,150		79,958		69,038
	Acquisition holdback payables	360		608		-
	Lease obligations	40,859		37,154		31,638
	Other liabilities	10,476		9,225		5,449
		276,204		159,518		138,549
Total liabilities		651,628		376,459		355,450
Shareholders' Equity:
	Preferred shares	2,047,473		-		-
	Capital stock	39,412		39,412		39,412
	Other equity	(999,460	)	-		-
	Accumulated other comprehensive income (loss)	(501	)	(1,409	)	(681	)
	Retained earnings (deficit)	(1,801,383	)	138,572		117,142
	Non-controlling interests	1,007,964		88,106		77,776
		293,505		264,680		233,650
Total liabilities and shareholders' equity		945,134		641,139		589,100

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 six months ended June 30, 2021 and 2020
Unaudited
		Three months ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
Revenue
License		6,209		2,536		11,139		5,733
Professional services		47,616		27,695		96,205		55,965
Hardware and other		1,498		1,146		2,843		2,408
Maintenance and other recurring		122,915		84,229		247,648		171,269
		178,238		115,607		357,834		235,375
Expenses
Staff		96,727		62,191		195,544		123,155
Hardware		658		480		1,292		1,229
Third party license, maintenance and professional services		20,068		10,790		35,789		21,384
Occupancy		1,442		905		2,815		1,768
Travel, telecommunications, supplies, software and equipment		4,741		3,138		8,953		6,936
Professional fees		2,447		1,827		4,967		3,764
Other, net		2,222		1,031		3,644		2,494
Depreciation		5,800		4,175		12,031		8,385
Amortization of intangible assets		20,617		12,323		41,028		24,095
		154,722		96,860		306,063		193,209
Redeemable preferred securities expense (income)		(154,611	)	-		2,302,185		-
Impairment of intangible and other non-financial assets		1,600		-		1,600		-
Finance and other expenses (income)		2,890		1,337		5,908		3,291
		(150,121	)	1,337		2,309,693		3,291
Income (loss) before income taxes		173,637		17,410		(2,257,922	)	38,876
Current income tax expense (recovery)		8,549		6,600		18,913		13,266
Deferred income tax expense (recovery)		(3,693	)	(3,261	)	(9,481	)	(5,951	)
Income tax expense (recovery)		4,856		3,340		9,431		7,315
Net income (loss)		168,781		14,071		(2,267,353	)	31,561
Net income (loss) attributable to:
Equity holders of Topicus		161,601		9,387		(1,903,522	)	21,055
Non-controlling interests		7,180		4,684		(363,831	)	10,506
Net income (loss)		168,781		14,071		(2,267,353	)	31,561
Weighted average shares
	Basic shares outstanding	54,421,997		39,412,386		46,958,654		39,412,386
	Diluted shares outstanding	129,841,819		118,156,055		129,519,008		118,156,055
Earnings (loss) per common share of Topicus
	Basic	2.97		0.24		(40.54	)	0.53
	Diluted	0.11		0.12		(40.54	)	0.27

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 six months ended June 30, 2021 and 2020
Unaudited
	Three months ended June 30,		Six months ended June 30,
	2021	2020	2021		2020
Net income (loss)	168,781	14,071	(2,267,353	)	31,561
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other	647	133	1,254		(306	)
Other comprehensive (loss) income for the period, net of income tax	647	133	1,254		(306	)
Total comprehensive income (loss) for the period	169,428	14,204	(2,266,100	)	31,255
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus	397	89	810		(204	)
Non-controlling interests	250	44	444		(102	)
Total other comprehensive income (loss)	647	133	1,254		(306	)
Total comprehensive income (loss) attributable to:
Equity holders of Topicus	161,999	9,475	(1,902,712	)	20,851
Non-controlling interests	7,430	4,728	(363,388	)	10,404
Total comprehensive income (loss)	169,428	14,204	(2,266,100	)	31,255

Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Six months ended June 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)	-		-	-		-		(1,903,522	)	(1,903,522	)	(363,831	)	(2,267,353	)
Other comprehensive income (loss)
Foreign currency translation differences from
foreign operations and other	-		-	-		810		-		810		444		1,254
Total other comprehensive income (loss)
for the period	-		-	-		810		-		810		444		1,254
Total comprehensive income (loss) for the period	-		-	-		810		(1,903,522	)	(1,902,712	)	(363,388	)	(2,266,100	)
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	)	(8	)	(37	)	2,602		2,566
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 June 30, 2021	2,047,473		39,412	(999,460	)	(501	)	(1,801,383	)	(714,459	)	1,007,964		293,505

Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Six months ended June 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)	-	-	-	-		21,055	21,055		10,506		31,561
Other comprehensive income (loss)
Foreign currency translation differences from
foreign operations and other	-	-	-	(204	)	-	(204	)	(102	)	(306	)
Total other comprehensive income (loss) for the period	-	-	-	(204	)	-	(204	)	(102	)	(306	)
Total comprehensive income (loss) for the period	-	-	-	(204	)	21,055	20,851		10,404		31,255
Balance at June 30, 2020	-	39,412	-	(681	)	117,142	155,873		77,776		233,650

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 six months ended June 30, 2021 and 2020
Unaudited
			Three months ended June 30,				Six months ended June 30,
			2021		2020		2021		2020
Cash flows from (used in) operating activities:
	Net income (loss)		168,781		14,071		(2,267,353	)	31,561
	Adjustments for:
		Depreciation	5,800		4,175		12,031		8,385
		Amortization of intangible assets	20,617		12,323		41,028		24,095
		Redeemable preferred securities expense (income)	(154,611	)	-		2,302,185		-
		Impairment of intangible and other non-financial assets	1,600		-		1,600		-
		Finance and other expenses (income)	2,890		1,337		5,908		3,291
		Income tax expense (recovery)	4,856		3,340		9,431		7,315
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations	(71,468	)	(42,575	)	41,446		54,895
	Income taxes (paid) received		(13,102	)	(995	)	(21,110	)	(17,475	)
	Net cash flows from (used in) operating activities		(34,637	)	(8,326	)	125,167		112,067
Cash flows from (used in) financing activities:
	Interest paid on lease obligations		(395	)	(217	)	(599	)	(430	)
	Interest paid on other facilities		(993	)	(405	)	(2,542	)	(1,823	)
	Increase (decrease) in Revolving Credit Facility		4,968		-		10,000		(50,000	)
	Proceeds from issuance of term loans		64		-		65,907		-
	Credit facility transaction costs		(151	)	-		(2,397	)	-
	Payments of lease obligations		(4,186	)	(3,095	)	(8,508	)	(6,251	)
	Repayment of unitholder loans		-		(647	)	-		(647	)
	Dividends paid		-		-		(54,600	)	-
	Net cash flows from (used in) in financing activities		(693	)	(4,364	)	7,261		(59,151	)
Cash flows from (used in) investing activities:
	Acquisition of businesses		(5,090	)	(19,569	)	(151,738	)	(26,627	)
	Cash obtained with acquired businesses		(722	)	5,014		14,246		6,732
	Post-acquisition settlement payments, net of receipts		(6,339	)	(3,713	)	(11,008	)	(4,863	)
	Receipt of additional subscription amount from the sellers of Topicus.com B.V.		27,589		-		27,589		-
	Interest, dividends and other proceeds received		-		392		-		492
	Property and equipment purchased		(1,167	)	(640	)	(1,933	)	(1,300	)
	Net cash flows from (used in) investing activities		14,270		(18,516	)	(122,844	)	(25,566	)
Effect of foreign currency on
	cash and cash equivalents		0		(0	)	0		(0	)
Increase (decrease) in cash			(21,059	)	(31,206	)	9,584		27,350
Cash, beginning of period			86,278		86,592		55,635		28,036
Cash, end of period			65,218		55,385		65,218		55,385