TOI Topicus Com 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 third quarter ended September 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 nine months ended September 30, 2021 and the accompanying notes, our Management Discussion and Analysis for the three and nine months ended September 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.

Q3 2021 Headlines:

• Revenue increased 46% (5% organic growth) to €177.1 million compared to €121.2 million in Q3 2020.  
• Net income decreased to €18.1 million (€0.09 on a diluted per share basis) from €19.3 million (€0.16 on a diluted per share basis) in Q3 2020.
• A number of 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 €3.0 million resulting in total consideration of €16.2 million.
• Cash flows from operations (“CFO”) decreased €1.0 million to €8.5 million compared to €9.5 million in Q3 2020.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased €3.1 million to negative €0.5 million compared to €2.6 million in Q3 2020.
• Subsequent to September 30, 2021, the Company completed an agreement to acquire a business in the oil and gas vertical for aggregate cash consideration of US$85.3 million (€73.6 million) on closing plus cash holdbacks of US$9.5 million (€8.2 million) and contingent consideration with a maximum value of US$5.0 million (€4.3 million). The Company will have an equity interest of 60% in the business. The remaining 40% equity interest will be owned by another subsidiary of Constellation Software Inc.

1. See Non-IFRS measures.

Total revenue for the quarter ended September 30, 2021 was €177.1 million, an increase of 46%, or €55.9 million, compared to €121.2 million for the comparable period in 2020. For the first nine months of 2021 total revenues were €535.0 million, an increase of 50%, or €178.4 million, compared to €356.6 million for the comparable period in 2020. 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 5% and 7% respectively.

Net income for the quarter ended September 30, 2021 was €18.1 million compared to net income of €19.3 million for the same period in 2020. On a per share basis, this translated into net income per basic and diluted share of €0.09 in the quarter ended September 30, 2021 compared to net income per basic share of €0.33 and diluted share of €0.16 for the same period in 2020.   For the nine months ended September 30, 2021, net loss was €2,249.3 million or a loss €32.78 per basic and diluted share compared to income of €50.8 million or €0.86 per basic share and €0.43 per diluted share for the same period in 2020.

For the quarter ended September 30, 2021, CFO were €8.5 million compared to €9.5 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 nine months ended September 30, 2021, CFO increased €12.1 million to €133.7 million compared to €121.6 million for the same period in 2020 representing an increase of 10%.

For the quarter ended September 30, 2021, FCFA2S was negative €0.5 million compared to €2.6 million for the same period in 2020. For the nine months ended September 30, 2021, FCFA2S decreased €4.5 million to €66.4 million compared to €70.8 million for the same period in 2020 representing a decrease of 6%.

Members’ Equity of Topicus Coop and Share Capital of Topicus

The Controlling / Non-Controlling interest ("NCI") percentage attributable to the common equity holders is based on Topicus.com Inc.’s ownership in the Topicus Coop.

Calculations as at September 30, 2021 are as follows:        

Topicus.com Inc.	39,870,435	61.4% Ordinary units in Topicus Coop
Joday Group*	19,665,642	30.3% Ordinary units in Topicus Coop
Ijssel*	5,384,832	8.3% Ordinary units in Topicus Coop
	64,920,909

* as defined in the Company’s Management's Discussion and Analysis for the three and nine month periods ended September 30, 2021

The NCI amount is 38.6% as at September 30, 2021.                        

As of February 1, 2022, all the preferred shares and preference units will be automatically converted to Subordinate voting shares and/or ordinary units, as applicable.

At that time, assuming no other changes occur, holdings will be as follows:

Topicus.com Inc.	79,282,820	61.1% Ordinary units in Topicus Coop
Joday Group*	39,331,284	30.3% Ordinary units in Topicus Coop
Ijssel*	11,227,714	8.6% Ordinary units in Topicus Coop
	129,841,818

* as defined in the Company’s Management's Discussion and Analysis for the three and nine month periods ended September 30, 2021

The NCI amount will then be 38.9%.

Further descriptions of the significant terms and conditions of the preferred shares and preference units are described in Note 9 to the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and nine month periods ended September 30, 2021.

The market capitalization of the company as reported by the Toronto Stock Venture Exchange is currently based on the 39,870,435 Subordinate voting shares outstanding and excludes all potentially dilutive securities and NCI. On a fully diluted basis and no NCI the market capitalization would be based on 129,841,818 shares. 

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 September 30,								Nine months ended September 30,
			2021			2020					2021			2020
		(€ in millions, except percentages)								(€ in millions, except percentages)
Net cash flows from operating activities			8.5			9.5					133.7			121.6
Adjusted for:
Interest paid on lease obligations			(0.3	)		(0.2	)				(0.9	)		(0.7	)
Interest paid on other facilities			(3.3	)		(1.6	)				(5.9	)		(3.5	)
Credit facility transaction costs			-			-					(2.4	)		-
Payments of lease obligations			(4.4	)		(3.3	)				(12.9	)		(9.5	)
Property and equipment purchased			(1.3	)		(0.5	)				(3.2	)		(1.8	)
			(0.8	)		3.9					108.4			106.2
Less amount attributable to
Non-controlling interests			0.3			(1.3	)				(42.0	)		(35.3	)
Free cash flow available to shareholders			(0.5	)		2.6					66.4			70.8
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.

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, 2021			December 31, 2020			September 30, 2020
Assets
Current assets:
	Cash	66,634			55,635			47,171
	Accounts receivable	57,091			46,644			37,275
	Unbilled revenue	29,688			12,609			13,753
	Inventories	654			375			454
	Other assets	25,005			14,461			14,928
		179,071			129,724			113,581
Non-current assets:
	Property and equipment	15,228			8,782			7,745
	Right of use assets	52,644			50,517			45,723
	Deferred income taxes	4,779			1,946			638
	Other assets	4,810			3,956			4,423
	Intangible assets	678,777			446,213			406,472
		756,239			511,415			465,001
Total assets		935,310			641,139			578,582
Liabilities and Shareholders' Equity
Current liabilities:
	Revolving credit facility and current portion of term loans	40,092			19,482			-
	Redeemable preferred securities	66,614			-			-
	Accounts payable and accrued liabilities	104,637			97,386			74,197
	Deferred revenue	106,082			59,721			82,213
	Provisions	2,216			1,222			1,032
	Acquisition holdback payables	5,811			12,601			8,385
	Lease obligations	15,798			13,953			12,329
	Income taxes payable	11,850			12,576			7,637
		353,100			216,941			185,793
Non-current liabilities:
	Term loans	95,961			32,572			32,794
	Deferred income taxes	125,654			79,958			68,952
	Acquisition holdback payables	485			608			-
	Lease obligations	37,624			37,154			32,569
	Other liabilities	11,855			9,225			5,690
		271,579			159,518			140,005
Total liabilities		624,679			376,459			325,798
Shareholders' Equity:
	Preferred shares	2,047,473			-			-
	Capital stock	39,412			39,412			39,412
	Other equity	(999,460	)		-			-
	Accumulated other comprehensive income (loss)	(834	)		(1,409	)		(766	)
	Retained earnings (deficit)	(1,794,229	)		138,572			129,992
	Non-controlling interests	1,018,267			88,106			84,146
		310,631			264,680			252,784
Total liabilities and shareholders' equity		935,310			641,139			578,582

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 nine months ended September 30 2021 and 2020
Unaudited
	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Revenue
License	4,638			3,794			15,777			9,528
Professional services	45,241			28,226			141,446			84,191
Hardware and other	1,143			1,397			3,986			3,804
Maintenance and other recurring	126,105			87,788			373,753			259,057
	177,126			121,205			534,961			356,580
Expenses
Staff	95,908			59,983			291,452			183,137
Hardware	738			1,058			2,030			2,287
Third party license, maintenance and professional services	17,311			11,243			53,100			32,626
Occupancy	1,260			870			4,075			2,637
Travel, telecommunications, supplies, software and equipment	4,717			3,003			13,670			9,939
Professional fees	3,394			2,438			8,361			6,203
Other, net	1,389			449			5,032			2,943
Depreciation	6,354			4,365			18,385			12,750
Amortization of intangible assets	21,026			12,472			62,054			36,567
	152,095			95,880			458,159			289,089
Redeemable preferred securities expense (income)	-			-			2,302,185			-
Impairment of intangible and other non-financial assets	-			-			1,600			-
Finance and other expenses (income)	2,161			1,402			8,069			4,693
	2,161			1,402			2,311,854			4,693
Income (loss) before income taxes	22,870			23,922			(2,235,051	)		62,798
Current income tax expense (recovery)	9,552			7,318			28,464			20,583
Deferred income tax expense (recovery)	(4,778	)		(2,657	)		(14,260	)		(8,608	)
Income tax expense (recovery)	4,773			4,661			14,205			11,976
Net income (loss)	18,097			19,262			(2,249,256	)		50,823
Net income (loss) attributable to:
Equity holders of Topicus	7,422			12,850			(1,896,100	)		33,905
Non-controlling interests	10,675			6,412			(353,156	)		16,918
Net income (loss)	18,097			19,262			(2,249,256	)		50,823
Weighted average shares
Basic shares outstanding	79,282,821			39,412,386			57,851,780			39,412,386
Diluted shares outstanding	129,841,819			118,156,055			129,627,794			118,156,055
Earnings (loss) per common share of Topicus
Basic	0.09			0.33			(32.78	)		0.86
Diluted	0.09			0.16			(32.78	)		0.43

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 nine months ended September 30 2021 and 2020
Unaudited
	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Net income (loss)	18,097			19,262			(2,249,256	)		50,823
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other	(731	)		(127	)		523			(433	)
Other comprehensive (loss) income for the period, net of income tax	(731	)		(127	)		523			(433	)
Total comprehensive income (loss) for the period	17,366			19,135			(2,248,733	)		50,389
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus	(453	)		(85	)		357			(289	)
Non-controlling interests	(278	)		(42	)		166			(144	)
Total other comprehensive income (loss)	(731	)		(127	)		523			(433	)
Total comprehensive income (loss) attributable to:
Equity holders of Topicus	6,969			12,765			(1,895,743	)		33,616
Non-controlling interests	10,398			6,369			(352,990	)		16,774
Total comprehensive income (loss)	17,366			19,135			(2,248,733	)		50,389

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
	PreferredShares		CapitalStock	Other equity		Accumulated othercomprehensive (loss) income		Retainedearnings(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 (note 12)	-		-	-		-		(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 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, 2020
	Attributable to equity holders of Topicus
	PreferredShares	CapitalStock	Other equity	Accumulated othercomprehensive (loss)income		Retainedearnings(deficit)	Total		Non-controllinginterests		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)	-	-	-	-		33,905	33,905		16,918		50,823
Other comprehensive income (loss)
Foreign currency translation differences from
foreign operations and other	-	-	-	(289	)	-	(289	)	(144	)	(433	)
Total other comprehensive income (loss) for the period	-	-	-	(289	)	-	(289	)	(144	)	(433	)
Total comprehensive income (loss) for the period	-	-	-	(289	)	33,905	33,616		16,774		50,389
Balance at September 30, 2020	-	39,412	-	(766	)	129,992	168,638		84,146		252,784

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 nine months ended September 30 2021 and 2020
Unaudited
			Three months ended September 30,						Nine months ended September 30,
			2021			2020			2021			2020
Cash flows from (used in) operating activities:
	Net income (loss)		18,097			19,262			(2,249,256	)		50,823
	Adjustments for:
		Depreciation	6,354			4,365			18,385			12,750
		Amortization of intangible assets	21,026			12,472			62,054			36,567
		Redeemable preferred securities expense (income)	-			-			2,302,185			-
		Impairment of intangible and other non-financial assets	-			-			1,600			-
		Finance and other expenses (income)	2,161			1,402			8,069			4,693
		Income tax expense (recovery)	4,773			4,661			14,205			11,976
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations	(36,687	)		(34,252	)		4,760			20,643
	Income taxes (paid) received		(7,231	)		1,633			(28,341	)		(15,842	)
	Net cash flows from (used in) operating activities		8,493			9,542			133,660			121,609
Cash flows from (used in) financing activities:
	Interest paid on lease obligations		(275	)		(227	)		(874	)		(657	)
	Interest paid on other facilities		(3,319	)		(1,633	)		(5,861	)		(3,456	)
	Increase (decrease) in revolving credit facility		10,000			-			20,000			(50,000	)
	Proceeds from issuance of term loans		-			-			65,907			-
	Repayments of term loans		(411	)		-			(411	)		-
	Credit facility transaction costs		-			-			(2,397	)		-
	Payments of lease obligations		(4,438	)		(3,256	)		(12,946	)		(9,507	)
	Repayment of unitholder loans		-			-			-			(647	)
	Dividends paid		-			-			(54,600	)		-
	Net cash flows from (used in) in financing activities		1,557			(5,115	)		8,818			(64,266	)
Cash flows from (used in) investing activities:
	Acquisition of businesses		(13,261	)		(19,711	)		(164,999	)		(46,338	)
	Cash obtained with acquired businesses		5,240			7,446			19,486			14,178
	Post-acquisition settlement payments, net of receipts		(366	)		(237	)		(11,373	)		(5,100	)
	Receipt of additional subscription amount from the sellers of Topicus.com B.V.		-			-			27,589			-
	Interest, dividends and other proceeds received		1,010			378			1,010			870
	Property and equipment purchased		(1,258	)		(518	)		(3,191	)		(1,818	)
	Net cash flows from (used in) investing activities		(8,634	)		(12,642	)		(131,479	)		(38,207	)
Effect of foreign currency on
	cash and cash equivalents		(0	)		0			(0	)		0
Increase (decrease) in cash			1,415			(8,215	)		10,999			19,135
Cash, beginning of period			65,218			55,385			55,635			28,036
Cash, end of period			66,634			47,171			66,634			47,171