Topicus.com Inc. (TSXV:TOI) in a joint release with Constellation Software Inc. (TSX:CSU) today announced financial results for the TSS Operating Group for the fourth quarter and year ended December 31, 2020. 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 Constellation Software Netherlands Holding Cooperatief U.A. (the “Coop” or the “Company”) 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. The information presented is based on the historical financial performance of the Coop, as predecessor to Topicus.com Inc. (“Topicus”), and does not take into account the transactions described under “Subsequent Events”.

Our board continues to be humbled by the Company’s employees who are embracing the continued disruption caused by COVID-19, as they support each other and focus on creating value and stronger relationships with our customers.

Q4 2020 Headlines:

  • Revenue grew 18% (3% organic growth) to €137.4 million compared to €116.9 million in Q4 2019.
  • Net income increased 15% to €12.9 million (€0.22 on a diluted per unit basis) from €11.2 million (€0.19 on a diluted per unit basis) in Q4 2019.
  • A number of acquisitions were completed for aggregate cash consideration of €39.0 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.0 million resulting in total consideration of €46.0 million.
  • Cash flows from operations (“CFO”) were €30.3 million, an increase of 59%, or €11.2 million, compared to €19.1 million for the comparable period in 2019.
  • Free cash flow available to shareholders1 (“FCFA2S”) increased €11.4 million to €23.9 million compared to €12.5 million for the same period in 2019.

2020 Headlines:

  • Revenue grew 18% (2% organic growth) to €494.0 million compared to €417.4 million in 2019.
  • Net income increased 37% to €63.7 million (€1.08 on a diluted per unit basis) from €46.5 million (€0.76 on a diluted per unit basis) in 2019.
  • A number of acquisitions were completed for aggregate cash consideration of €85.4 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €15.8 million resulting in total consideration of €101.2 million.
  • Cash flows from operations (“CFO”) were €151.9 million, an increase of 25%, or €30.5 million, compared to €121.4 million for the comparable period in 2019.
  • Free cash flow available to shareholders1 (“FCFA2S”) increased €26.7 million to €130.1 million compared to €103.4 million for the same period in 2019.
  1.  See Non-IFRS measures. 

Total revenue for the quarter ended December 31, 2020 was €137.4 million, an increase of 18%, or €20.5 million, compared to €116.9 million for the comparable period in 2019. For the 2020 fiscal year total revenues were €494.0 million, an increase of 18%, or €76.6 million, compared to €417.4 million for the 2019 fiscal year. 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 3% and 2% respectively.

Net income for the quarter ended December 31, 2020 was €12.9 million compared to net income of €11.2 million for the same period in 2019. On a per unit basis, this translated into a net income per diluted unit of €0.22 in the quarter ended December 31, 2020 compared to net income per diluted unit of €0.19 for the same period in 2019. For the fiscal year ended December 31, 2020, net income was €63.7 million or €1.08 per diluted unit compared to €46.5 million or €0.76 per diluted unit for the 2019 fiscal year. Diluted units outstanding decreased from 61.4 million to 59.1 million for the fiscal year ended December 31, 2020.

For the quarter ended December 31, 2020, CFO increased €11.2 million to €30.3 million compared to €19.1 million for the same period in 2019 representing an increase of 59%. For the fiscal year ended December 31, 2020, CFO increased €30.5 million to €151.9 million compared to €121.4 million for the 2019 fiscal year representing an increase of 25%.

For the quarter ended December 31, 2020, FCFA2S increased €11.4 million to €23.9 million compared to €12.5 million for the same period in 2019. For the fiscal year ended December 31, 2020, FCFA2S increased €26.7 million to €130.1 million compared to €103.4 million for the 2019 fiscal year representing an increase of 26%.

Subsequent Events

On January 4, 2021, (i) the Coop changed its name to Topicus.com Coöperatief U.A., (ii) Total Specific Solutions (TSS) B.V., a subsidiary of the Coop, paid a dividend in the aggregate amount of €54,600,000 to its holders of ordinary membership interests at such time, (iii) the Coop reorganized its articles of association to create a new class of ordinary units and a new class of preference units, (iv) the existing ownership interests in the Coop were exchanged for new ordinary units and new preference units; (v) Topicus issued 39,412,385 subordinate voting shares and 39,412,385 preferred shares to Constellation Software Inc. (“CSI”) in exchange (indirectly) for the ordinary units and preference units of the Coop held by CSI at such time, and (vi) CSI distributed, by way of a dividend-in-kind, 39,412,367 of the subordinate voting shares of Topicus held by CSI to CSI’s common shareholders of record on December 28, 2020.

On January 5, 2021, a subsidiary of the Coop, TPCS Holding B.V., completed the purchase of 100% of the shares of Topicus.com B.V. (“Topicus BV”), a Netherlands-based diversified vertical market software provider, from IJssel B.V. for a purchase price of €217,400,000, subject to adjustment.

The Coop now operates, together with Topicus BV, as Topicus.

As at February 10, 2021, there were 39,412,385 subordinate voting shares, 1 super voting share and 39,412,385 preferred shares of Topicus.com Inc. outstanding. The super voting share and the preferred shares are convertible into subordinate voting shares on a one-for-one basis. In addition, certain ordinary units and preference units of the Coop are, directly or indirectly, exchangeable for subordinate voting shares of Topicus.com Inc. on a one-for-one basis. As a result, an additional 90,429,434 subordinate voting shares of Topicus.com Inc. would be issuable upon the exercise of these conversion/exchange rights. On a fully-diluted basis, there would be 129,841,819 subordinate voting shares issued and outstanding.

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. 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,  
    2020   2019         2020   2019    
  (€ in millions, except percentages)   (€ in millions, except percentages)
                   
Net cash flows from operating activities   30.3   19.1         151.9   121.4    
Adjusted for:                  
Interest paid on lease obligations   (0.3 ) (0.2 )       (1.0 ) (0.8 )  
Interest paid on other facilities   (1.2 ) (0.7 )       (4.6 ) (2.5 )  
Credit facility transaction costs   -   (1.8 )       -   (1.8 )  
Payments of lease obligations   (4.3 ) (3.3 )       (13.8 ) (10.4 )  
Property and equipment purchased   (0.6 ) (0.6 )       (2.4 ) (2.6 )  
                   
Free cash flow available to shareholders   23.9   12.5         130.1   103.4    
                   
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.

Constellation Software Netherlands Holding Coöperatief U.A.
Consolidated Statements of Financial Position    
(In thousands of euros, except per unit amounts. Due to rounding, numbers presented may not foot.)
       
       
    December 31, 2020 December 31, 2019
       
Assets    
       
Current assets:    
  Cash 55,635   28,036  
  Accounts receivable 46,644   42,743  
  Unbilled revenue 12,609   9,571  
  Inventories 375   400  
  Other assets 14,461   12,551  
    129,724   93,302  
       
Non-current assets:    
  Property and equipment 8,782   8,575  
  Right of use assets 50,517   42,635  
  Deferred income taxes 1,946   1,170  
  Other assets 3,956   4,078  
  Intangible assets 446,213   393,783  
    511,415   450,242  
       
Total assets 641,139   543,543  
       
Liabilities and Members' Equity    
       
Current liabilities:    
  Revolving credit facility 19,482   49,169  
  Accounts payable and accrued liabilities 97,386   84,979  
  Deferred revenue 59,721   43,795  
  Provisions 1,222   2,042  
  Acquisition holdback payables 12,601   5,462  
  Lease obligations 13,953   11,549  
  Income taxes payable 12,576   3,580  
    216,941   200,576  
       
Non-current liabilities:    
  Term loan 32,572   32,274  
  Deferred income taxes 79,958   71,525  
  Acquisition holdback payables 608   1,012  
  Lease obligations 37,154   30,483  
  Other liabilities 9,225   5,279  
    159,518   140,572  
       
Total liabilities 376,459   341,148  
       
       
Members' equity:    
  Ordinary units 59,078   59,078  
  Accumulated other comprehensive income (loss) (2,113 ) (714 )
  Retained earnings 207,715   144,031  
    264,681   202,395  
       
       
Total liabilities and members' equity 641,139   543,543  

Constellation Software Netherlands Holding Coöperatief U.A.    
Consolidated Statements of Income      
(In thousands of euros, except per unit amounts. Due to rounding, numbers presented may not foot.)
         
         
    Years ended December 31,
    2020     2019  
         
         
Revenue      
License 14,395     8,068  
Professional services 119,522     111,915  
Hardware and other 6,192     4,677  
Maintenance and other recurring 353,877     292,740  
    493,986     417,399  
         
Expenses      
Staff 254,694     217,197  
Hardware 2,986     3,193  
Third party license, maintenance and professional services 45,515     39,962  
Occupancy 3,298     3,156  
Travel, telecommunications, supplies, software and equipment 12,888     14,643  
Professional fees 9,485     7,006  
Other, net 4,675     7,546  
Depreciation 18,703     15,210  
Amortization of intangible assets 50,381     46,301  
    402,626     354,213  
         
Finance costs and other 6,347     4,480  
    6,347     4,480  
         
Income before income taxes 85,013     58,707  
         
Current income tax expense (recovery) 28,961     20,555  
Deferred income tax expense (recovery) (7,632 )   (8,314 )
Income tax expense (recovery) 21,329     12,241  
         
Net income (loss) 63,684     46,466  
         
Weighted average units      
  Basic units outstanding 59,078,027     59,078,027  
  Diluted units outstanding 59,078,027     61,438,835  
         
Earnings per unit      
  Basic 1.08     0.79  
  Diluted 1.08     0.76  
         

Constellation Software Netherlands Holding Coöperatief U.A.      
Consolidated Statements of Comprehensive Income      
(In thousands of euros, except per unit amounts. Due to rounding, numbers presented may not foot.)
       
       
  Years ended December 31,
  2020     2019  
Net income 63,684     46,466  
       
Items that are or may be reclassified subsequently to net income:      
       
  Foreign currency translation differences from foreign operations and other (1,398 )   (207 )
       
Other comprehensive (loss) income for the period, net of income tax (1,398 )   (207 )
       
Total comprehensive income (loss) for the period 62,285     46,258  

Constellation Software Netherlands Holding Coöperatief U.A.  
Consolidated Statement of Changes in Members' Equity    
(In thousands of euros, except per unit amounts. Due to rounding, numbers presented may not foot.)
         
         
Year ended December 31, 2020        
  Ordinary units Accumulated other comprehensive (loss) income Retained earnings Total  
    Cumulative translation account and other    
         
Balance at January 1, 2020 59,078 (714 ) 144,031 202,395  
             
Total comprehensive income for the period:            
             
Net income - -   63,684 63,684  
             
Other comprehensive income (loss)            
             
Foreign currency translation differences from            
foreign operations and other - (1,398 ) - (1,398 )
             
Total other comprehensive income (loss)            
for the period - (1,398 ) - (1,398 )
             
Total comprehensive income (loss) for the period - (1,398 ) 63,684 62,285  
             
             
Balance at December 31, 2020 59,078 (2,113 ) 207,715 264,681  

Constellation Software Netherlands Holding Coöperatief U.A.  
Consolidated Statement of Changes in Members' Equity    
(In thousands of euros, except per unit amounts. Due to rounding, numbers presented may not foot.)
         
         
Year ended December 31, 2019            
             
  Ordinary Units Accumulated other comprehensive (loss) income   Retained earnings Total  
    Cumulative translation account and other        
             
Balance at January 1, 2019 59,078 (507 ) 97,236 155,806  
             
Total comprehensive income for the period:            
             
Net income - -   46,466 46,466  
             
Other comprehensive income (loss)            
             
Foreign currency translation differences from            
foreign operations and other - (207 ) - (207 )
             
Total other comprehensive income (loss) for the period - (207 ) - (207 )
             
Total comprehensive income (loss) for the period - (207 ) 46,466 46,258  
             
Capital contribution       330 330  
             
Balance at December 31, 2019 59,078 (714 ) 144,031 202,395  

Constellation Software Netherlands Holding Coöperatief U.A.      
Consolidated Statements of Cash Flows      
(In thousands of euros, except per unit amounts. Due to rounding, numbers presented may not foot.)
           
           
      Years ended December 31,
      2020     2019  
           
Cash flows from operating activities:      
  Net income 63,684     46,466  
  Adjustments for:      
    Depreciation 18,703     15,210  
    Amortization of intangible assets 50,381     46,301  
    Finance costs and other 6,347     4,480  
    Income tax expense (recovery) 21,329     12,241  
  Change in non-cash operating assets and liabilities      
    exclusive of effects of business combinations (note 24) 11,209     8,290  
  Income taxes (paid) received (19,787 )   (11,620 )
  Net cash flows from operating activities 151,866     121,366  
           
Cash flows from (used in) financing activities:      
  Interest paid on lease obligations (952 )   (777 )
  Interest paid on other facilities (4,643 )   (2,450 )
  Increase (decrease) in Revolving credit facility (30,000 )   5,000  
  Proceeds from issuance of term loan -     34,000  
  Repayments of other debt facilities -     (749 )
  Credit facility transaction costs -     (1,775 )
  Payments of lease obligations (13,776 )   (10,389 )
  Repayment of preferred units classified as a liability -     (9,723 )
  Repayment of unitholder loans (647 )   (19,487 )
  Net cash flows from (used in) in financing activities (50,018 )   (6,350 )
           
Cash flows from (used in) investing activities:      
  Acquisition of businesses (note 4) (85,390 )   (114,876 )
  Cash obtained with acquired businesses (note 4) 19,690     21,737  
  Post-acquisition settlement payments, net of receipts (7,011 )   (5,787 )
  Purchases of other investments -     (480 )
  Interest, dividends and other proceeds received 870     -  
  Property and equipment purchased (2,408 )   (2,565 )
  Net cash flows from (used in) investing activities (74,249 )   (101,970 )
           
Effect of foreign currency on      
  cash and cash equivalents 0     0  
           
Increase (decrease) in cash 27,599     13,046  
           
Cash, beginning of period 28,036     14,990  
           
Cash, end of period 55,635     28,036  
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