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 fourth quarter and year ended December 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 Annual Consolidated Financial Statements of Topicus.com Inc. (or the “Company”) for the year ended December 31, 2022, 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, 2022, 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.

Q4 2022 Headlines:

• Revenue increased 27% (6% organic growth) to €263.7 million compared to €207.6 million in Q4 2021.  
• Net income increased to €28.7 million (€0.21 on a diluted per share basis) from €27.0 million (negative €0.17 on a diluted per share basis).
• Acquisitions were completed for aggregate cash consideration of €10.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €2.9 million resulting in total consideration of €13.4 million.
• Cash flows from operations (“CFO”) increased €5.3 million to €48.1 million compared to €42.8 million in Q4 2021 representing an increase of 12%.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased €2.1 million to €18.6 million compared to €20.6 in Q4 2021.

2022 Headlines:

• Revenue increased 23% (4% organic growth) to €916.7 million compared to €742.5 million in 2021.
• Net income was €87.6 million (€0.66 on a diluted per share basis) compared to a net loss of €2,222.2 million (negative €30.16 on a diluted per share basis) in 2021.
• A number of acquisitions were completed for total consideration of €183.1 million including holdbacks and contingent consideration.
• Cash flows from operations (“CFO”) increased €26.6 million to €203.0 million compared to €176.4 million in 2021.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased €32.7 million to €54.2 million compared to €86.8 million in 2021.

Total revenue for the quarter ended December 31, 2022 was €263.7 million, an increase of 27%, or €56.1 million, compared to €207.6 million for the comparable period in 2021. For the twelve months ended December 31, 2022 total revenues were €916.7 million, an increase of 23%, or €174.1 million, compared to €742.5 million for the comparable period in 2021. 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 6% 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 December 31, 2022 increased €1.7 million to €28.7 million compared to €27.0 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.21 in the quarter ended December 31, 2022 compared to net income per basic and diluted share of negative €0.17 for the same period in 2021. For the twelve months ended December 31, 2022, net income was €87.6 million or €0.66 per basic and diluted share compared to a net loss of €2,222.2 million or €30.16 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the twelve months ended December 31, 2021 primarily resulted from the €2,302.2 million redeemable preferred securities expense. Diluted shares outstanding increased from 129.7 million to 129.8 million for the twelve months ended December 31, 2022.

For the quarter ended December 31, 2022, CFO increased €5.3 million to €48.1 million compared to €42.8 million for the same period in 2021 representing an increase of 12%. For the twelve months ended December 31, 2022, CFO increased €26.6 million to €203.0 million compared to €176.4 million for the same period in 2021 representing an increase of 15%.   

For the quarter ended December 31, 2022, FCFA2S decreased €2.1 million to €18.6 million compared to €20.6 million for the same period in 2021 representing a decrease of 10%. For the twelve months ended December 31, 2022, FCFA2S decreased €32.7 million to €54.2 million compared to €86.8 million for the same period in 2021 representing a decrease of 38%. The decline for the twelve month period is primarily as a result of the dividend paid to the Preferred Securities holders.

______________________________1 See Non-IFRS measures. 

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 December 31,						Year ended December 31,
			2022		2021				2022		2021
		(€ in millions)						(€ in millions)
Net cash flows from operating activities			48.1		42.8				203.0		176.4
Adjusted for:
Interest paid on lease obligations			(0.3	)	(0.3	)			(1.2	)	(1.2	)
Interest paid on other facilities			(4.4	)	(2.0	)			(11.8	)	(7.9	)
Credit facility transaction costs			(3.1	)	(0.2	)			(3.2	)	(2.5	)
Payments of lease obligations			(5.2	)	(4.5	)			(20.0	)	(17.5	)
Property and equipment purchased			(2.5	)	(2.2	)			(7.3	)	(5.4	)
Dividends paid to redeemable preferred securities holders			-		-				(66.6	)	-
			32.5		33.6				92.8		142.0
Less amount attributable to
non-controlling interests			(14.0	)	(13.0	)			(38.7	)	(55.2	)
Free cash flow available to shareholders			18.6		20.6				54.2		86.8
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.
Consolidated Statements of Financial Position
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
		December 31, 2022		December 31, 2021
Assets
Current assets:
	Cash	136,772		75,326
	Accounts receivable	95,790		70,725
	Unbilled revenue	41,036		32,592
	Inventories	1,419		570
	Other assets	34,778		21,776
		309,795		200,989
Non-current assets:
	Property and equipment	19,579		15,326
	Right of use assets	54,412		54,382
	Deferred income taxes	19,978		6,831
	Other assets	17,030		6,655
	Intangible assets	874,000		744,136
		984,999		827,330
Total assets		1,294,794		1,028,319
Liabilities and Shareholders' Equity
Current liabilities:
	Topicus Revolving Credit Facility and current portion of term loans	201,275		46,489
	Loan from CSI	30,867		29,116
	Redeemable preferred securities	-		66,614
	Accounts payable and accrued liabilities	174,824		135,993
	Deferred revenue	116,989		82,179
	Provisions	1,884		1,893
	Acquisition holdback payables	14,009		8,876
	Lease obligations	18,824		16,234
	Income taxes payable	11,467		11,400
		570,141		398,794
Non-current liabilities:
	Term and other loans	41,280		96,113
	Deferred income taxes	150,521		125,004
	Acquisition holdback payables	2,316		945
	Lease obligations	36,634		38,955
	Other liabilities	26,118		12,877
		256,869		273,893
Total liabilities		827,009		672,687
Shareholders' Equity:
	Preferred shares	-		2,047,473
	Capital stock	39,412		39,412
	Other equity	-		(1,009,996	)
	Accumulated other comprehensive income (loss)	(232	)	(380	)
	Retained earnings (deficit)	226,919		(1,782,113	)
	Non-controlling interests	201,685		1,061,236
		467,784		355,632
Total liabilities and shareholders' equity		1,294,794		1,028,319

Topicus.com Inc.
Consolidated Statements of Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
	Year ended December 31,
	2022			2021
Revenue
License	31,745			26,709
Professional services	239,674			196,565
Hardware and other	10,553			6,189
Maintenance and other recurring	634,710			513,078
	916,681			742,541
Expenses
Staff	508,721			398,171
Hardware	5,831			2,985
Third party license, maintenance and professional services	76,577			72,027
Occupancy	7,649			5,665
Travel, telecommunications, supplies, software and equipment	32,807			20,383
Professional fees	16,206			12,956
Other, net	20,463			6,788
Depreciation	27,866			24,603
Amortization of intangible assets	107,078			85,060
	803,195			628,640
Redeemable preferred securities expense (income)	-			2,302,185
Impairment of intangible and other non-financial assets	-			1,600
Finance and other expenses (income)	9,068			10,748
	9,068			2,314,533
Income (loss) before income taxes	104,418			(2,200,632	)
Current income tax expense (recovery)	43,859			39,494
Deferred income tax expense (recovery)	(27,051	)		(17,894	)
Income tax expense (recovery)	16,808			21,600
Net income (loss)	87,610			(2,222,233	)
Net income (loss) attributable to:
Equity holders of Topicus	52,928			(1,884,042	)
Non-controlling interests	34,682			(338,191	)
Net income (loss)	87,610			(2,222,233	)
Weighted average shares
Basic shares outstanding	80,488,504			63,318,650
Diluted shares outstanding	129,841,819			129,681,740
Earnings (loss) per common share of Topicus
Basic	0.66			(30.16	)
Diluted	0.66			(30.16	)

Topicus.com Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
	Year ended December 31,
	2022		2021
Net income (loss)	87,610		(2,222,233	)
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other	1,264		1,427
Other comprehensive (loss) income for the year, net of income tax	1,264		1,427
Total comprehensive income (loss) for the year	88,874		(2,220,806	)
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus	148		635
Non-controlling interests	1,116		792
Total other comprehensive income (loss)	1,264		1,427
Total comprehensive income (loss) attributable to:
Equity holders of Topicus	53,075		(1,883,407	)
Non-controlling interests	35,798		(337,399	)
Total comprehensive income (loss)	88,874		(2,220,806	)

Topicus.com Inc.
Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Year ended December 31, 2022
		Attributable to equity holders of Topicus
		Preferred Shares		Capital Stock	Otherequity		Accumulatedothercomprehensive(loss) income		Retainedearnings (Deficit)		Total		Non-controllinginterests		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 year:
Net income (loss)		-		-	-		-		52,928		52,928		34,682		87,610
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of income tax	-		-	-		148		-		148		1,116		1,264
Total other comprehensive income (loss)
	for the year	-		-	-		148		-		148		1,116		1,264
Total comprehensive income (loss) for the year		-		-	-		148		52,928		53,075		35,798		88,874
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	)	24,341		24,152
	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	-		-	-		-		6,029		6,029		(6,029	)	-
Balance at December 31, 2022		-		39,412	-		(232	)	226,919		266,099		201,685		467,784

Topicus.com Inc.
Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Year ended December 31, 2021
		Attributable to equity holders of Topicus
		Preferred Shares		Capital Stock	Otherequity		Accumulatedothercomprehensive(loss) income		Retainedearnings(deficit)		Total		Non-controllinginterests		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 year:
Net income (loss)		-		-	-		-		(1,884,042	)	(1,884,042	)	(338,191	)	(2,222,233	)
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other	-		-	-		635		-		635		792		1,427
Total other comprehensive income (loss) for the year		-		-	-		635		-		635		792		1,427
Total comprehensive income (loss) for the year		-		-	-		635		(1,884,042	)	(1,883,407	)	(337,399	)	(2,220,806	)
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	-		-	-		267		(218	)	49		1,399		1,448
	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	-		-	(18,297	)	-		-		(18,297	)	18,297		-
	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	)
	Issuance of equity of a subsidiary in conjunction with the acquisition of Geosoftware	-		-	-		-		-		-		17,950		17,950
Balance at December 31, 2021		2,047,473		39,412	(1,009,996	)	(380	)	(1,782,113	)	(705,604	)	1,061,236		355,632

Topicus.com Inc.
Consolidated Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
		Year ended December 31,
		2022			2021
Cash flows from (used in) operating activities:
	Net income (loss)	87,610			(2,222,233	)
	Adjustments for:
	Depreciation	27,866			24,603
	Amortization of intangible assets	107,078			85,060
	Redeemable preferred securities expense (income)	-			2,302,185
	Impairment of intangible and other non-financial assets	-			1,600
	Finance and other expenses (income)	9,068			10,748
	Income tax expense (recovery)	16,808			21,600
	Change in non-cash operating assets and liabilities
	exclusive of effects of business combinations	504			(8,044	)
	Income taxes (paid) received	(45,925	)		(39,098	)
	Net cash flows from (used in) operating activities	203,008			176,423
Cash flows from (used in) financing activities:
	Interest paid on lease obligations	(1,171	)		(1,159	)
	Interest paid on other facilities	(11,847	)		(7,875	)
	Net increase (decrease) in Topicus Revolving Credit Facility	85,000			25,000
	Proceeds from issuance of term and other loans	8,592			67,227
	Proceeds from issuance of loan from CSI	-			28,362
	Increase (decrease) in loan from Vela Software Group	(1,817	)		2,207
	Contribution from Vela Software Group towards the acquisition of Geosoftware	-			17,950
	Contribution from Vela Software Group towards the acquisition of Subsurface	7,905			-
	Repayments of term and other loans	(4,375	)		(411	)
	Credit facility transaction costs	(3,207	)		(2,548	)
	Payments of lease obligations	(20,025	)		(17,459	)
	Other financing activities	(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	(8,155	)		56,694
Cash flows from (used in) investing activities:
	Acquisition of businesses	(153,828	)		(241,507	)
	Cash obtained with acquired businesses	38,126			19,929
	Post-acquisition settlement payments, net of receipts	(13,430	)		(15,061	)
	Receipt of additional subscription amount from the sellers of Topicus.com B.V.	-			27,589
	Interest, dividends and other proceeds received	3,028			1,010
	Property and equipment purchased	(7,303	)		(5,385	)
	Net cash flows from (used in) investing activities	(133,407	)		(213,425	)
Effect of foreign currency on
	cash and cash equivalents	0			0
Increase (decrease) in cash		61,445			19,692
Cash, beginning of year		75,326			55,635
Cash, end of year		136,772			75,326