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 second quarter ended June 30, 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 and six months ended June 30, 2022 and the accompanying notes, our Management’s Discussion and Analysis for the three and six months ended June 30, 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.

Q2 2022 Headlines:

• Revenue increased 24% (6% organic growth) to €220.6 million compared to €178.2 million in Q2 2021.  
• Net income decreased to €20.1 million (€0.16 on a diluted per share basis) from €168.8 million (€2.97 on a basic per share basis and €0.11 on a diluted per share basis) primarily due to the €154.6 million redeemable preferred securities gain in Q2 2021.
• Acquisitions were completed for aggregate cash consideration of €94.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €28.3 million resulting in total consideration of €122.8 million.
• Cash flows from operations (“CFO”) increased €2.6 million to negative €32.0 million compared to negative €34.6 million in Q2 2021 representing an increase of 8%.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased €1.4 million to negative €26.8 million compared to €25.4 million in Q2 2021 representing a decrease of 5%.  
• Subsequent to June 30, 2022, the Company completed or entered into agreements to acquire a number of businesses for aggregate cash consideration of €29.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €0.9 million resulting in total consideration of €30.4 million.

Total revenue for the quarter ended June 30, 2022 was €220.6 million, an increase of 24%, or €42.4 million, compared to €178.2 million for the comparable period in 2021. For the first six months of 2022 total revenues were €424.4 million, an increase of 19%, or €66.5 million, compared to €357.8 million for the comparable period in 2021. 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 6% and 4%. 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 June 30, 2022 declined €148.7 million to €20.1 million compared to €168.8 million for the same period in 2021. The decline primarily resulted from the €154.6 million redeemable preferred securities income, €163.6 million of which is non-cash related that was recorded in Q2 2021 with no similar expense in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.16 in the quarter ended June 30, 2022 compared to net income per basic share of €2.97 and diluted share of €0.11 for the same period in 2021. For the six months ended June 30, 2022, net income was €40.5 million or €0.30 per basic and diluted share compared to a net loss of €2,267.4 million or €40.54 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the six months ended June 30, 2021 primarily resulted from the €2,456.8 million redeemable preferred securities expense, €2,442.1 million of which is non-cash related. Diluted shares outstanding increased from 129.5 million to 129.8 million for the six months ended June 30, 2021.  

For the quarter ended June 30, 2022, CFO were negative €32.0 million compared to negative €34.6 million for the same period in 2021. 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, 2022, CFO increased €18.8 million to €144.0 million compared to €125.2 million for the same period in 2021 representing an increase of 15%.  

For the quarter ended June 30, 2022, FCFA2S was negative €26.8 million compared to negative €25.4 million for the same period in 2021. For the six months ended June 30, 2022, FCFA2S decreased €32.1 million to €34.7 million compared to €66.8 million for the same period in 2021 representing a decrease of 48%. The decline is primarily as a result of the dividend paid to the 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.

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 endedJune 30,							Six months endedJune 30,
			2022		2021					2022		2021
		(€ in millions, except percentages)							(€ in millions, except percentages)
Net cash flows from operating activities			(32.0	)	(34.6	)				144.0		125.2
Adjusted for:
Interest paid on lease obligations			(0.3	)	(0.4	)				(0.6	)	(0.6	)
Interest paid on other facilities			(2.4	)	(1.0	)				(4.0	)	(2.5	)
Credit facility transaction costs			-		(0.2	)				-		(2.4	)
Payments of lease obligations			(5.1	)	(4.2	)				(9.6	)	(8.5	)
Property and equipment purchased			(1.6	)	(1.2	)				(3.6	)	(1.9	)
Dividends paid to redeemable preferred securities holders			-		-					(66.6	)	-
			(41.4	)	(41.5	)				59.7		109.2
Less amount attributable to
non-controlling interests			14.5		16.1					(25.0	)	(42.4	)
Free cash flow available to shareholders			(26.8	)	(25.4	)				34.7		66.8
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
									June 30, 2022	December 31, 2021		June 30, 2021
Assets
Current assets:
	Cash								159,728	75,326		65,218
	Accounts receivable								92,317	70,725		58,595
	Unbilled revenue								42,925	32,592		25,091
	Inventories								902	570		583
	Other assets								36,500	21,776		26,299
									332,372	200,989		175,786
Non-current assets:
	Property and equipment								19,582	15,326		15,532
	Right of use assets								57,927	54,382		56,021
	Deferred income taxes								8,307	6,831		4,831
	Other assets								11,502	6,655		4,875
	Intangible assets								872,887	744,136		688,088
									970,205	827,330		769,348
Total assets									1,302,577	1,028,319		945,134
Liabilities and Shareholders' Equity
Current liabilities:
	Revolving credit facility and current portion of term loans								151,570	46,489		30,018
	Loan from CSI								-	29,116		-
	Redeemable preferred securities								-	66,614		66,614
	Accounts payable and accrued liabilities								142,840	135,993		97,597
	Deferred revenue								197,492	82,179		148,208
	Provisions								1,076	1,893		1,867
	Acquisition holdback payables								18,416	8,876		4,924
	Lease obligations								18,927	16,234		15,863
	Income taxes payable								14,457	11,400		10,333
									544,779	398,794		375,424
Non-current liabilities:
	Term loans								101,421	96,113		96,359
	Loan from CSI								31,602	-		-
	Deferred income taxes								145,731	125,004		128,150
	Acquisition holdback payables								3,078	945		360
	Lease obligations								40,076	38,955		40,859
	Other liabilities								20,410	12,877		10,476
									342,317	273,893		276,204
Total liabilities									887,096	672,687		651,628
Shareholders' Equity:
	Preferred shares								-	2,047,473		2,047,473
	Capital stock								39,412	39,412		39,412
	Other equity								-	(1,009,996	)	(999,460	)
	Accumulated other comprehensive income (loss)								1,576	(380	)	(501	)
	Retained earnings (deficit)								192,970	(1,782,113	)	(1,801,383	)
	Non-controlling interests								181,523	1,061,236		1,007,964
									415,481	355,632		293,505
Total liabilities and shareholders' equity									1,302,577	1,028,319		945,134

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 June 30,						Six months ended June 30,
							2022			2021			2022			2021
Revenue
License							6,418			6,209			11,885			11,139
Professional services							56,481			47,616			106,589			96,205
Hardware and other							2,293			1,498			4,534			2,843
Maintenance and other recurring							155,425			122,915			301,374			247,648
							220,616			178,238			424,383			357,834
Expenses
Staff							123,809			96,727			235,704			195,544
Hardware							1,515			658			2,234			1,292
Third party license, maintenance and professional services							18,625			20,068			36,099			35,789
Occupancy							1,804			1,442			3,341			2,815
Travel, telecommunications, supplies, software and equipment							8,450			4,741			14,548			8,953
Professional fees							3,779			2,447			7,576			4,967
Other, net							4,762			2,222			9,182			3,644
Depreciation							7,008			5,800			13,203			12,031
Amortization of intangible assets							26,010			20,617			48,989			41,028
							195,763			154,722			370,875			306,063
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)							(51	)		2,890			1,680			5,908
							(51	)		(150,121	)		1,680			2,309,693
Income (loss) before income taxes							24,904			173,637			51,828			(2,257,922	)
Current income tax expense (recovery)							11,041			8,549			22,263			18,913
Deferred income tax expense (recovery)							(6,237	)		(3,693	)		(10,894	)		(9,481	)
Income tax expense (recovery)							4,805			4,856			11,370			9,431
Net income (loss)							20,099			168,781			40,458			(2,267,353	)
Net income (loss) attributable to:
Equity holders of Topicus							12,526			161,601			24,097			(1,903,522	)
Non-controlling interests							7,573			7,180			16,362			(363,831	)
Net income (loss)							20,099			168,781			40,458			(2,267,353	)
Weighted average shares
Basic shares outstanding							80,097,017			54,421,997			80,011,366			46,958,654
Diluted shares outstanding							129,841,819			129,841,819			129,841,819			129,519,008
Earnings (loss) per common share of Topicus
Basic							0.16			2.97			0.30			(40.54	)
Diluted							0.16			0.11			0.30			(40.54	)

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 June 30,				Six months ended June 30,
							2022		2021		2022		2021
Net income (loss)							20,099		168,781		40,458		(2,267,353	)
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other							3,444		647		4,871		1,254
Other comprehensive (loss) income for the period, net of income tax							3,444		647		4,871		1,254
Total comprehensive income (loss) for the period							23,543		169,428		45,329		(2,266,100	)
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus							1,325		397		1,956		810
Non-controlling interests							2,119		250		2,915		444
Total other comprehensive income (loss)							3,444		647		4,871		1,254
Total comprehensive income (loss) attributable to:
Equity holders of Topicus							13,850		161,999		26,052		(1,902,712	)
Non-controlling interests							9,693		7,430		19,277		(363,388	)
Total comprehensive income (loss)							23,543		169,428		45,329		(2,266,100	)

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
Six months ended June 30, 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)			-		-	-		-		24,097		24,097		16,362		40,458
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of income tax		-		-	-		1,956		-		1,956		2,915		4,871
Total other comprehensive income (loss)
	for the period		-		-	-		1,956		-		1,956		2,915		4,871
Total comprehensive income (loss) for the period			-		-	-		1,956		24,097		26,052		19,277		45,329
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	)	(54	)	(78	)	15,470		15,393
	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		-		-	-		-		799		799		(799	)	-
Balance at June 30, 2022			-		39,412	-		1,576		192,970		233,958		181,523		415,481

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
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 Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
								Three months ended June 30,						Six months ended June 30,
								2022			2021			2022			2021
Cash flows from (used in) operating activities:
	Net income (loss)							20,099			168,781			40,458			(2,267,353	)
	Adjustments for:
		Depreciation						7,008			5,800			13,203			12,031
		Amortization of intangible assets						26,010			20,617			48,989			41,028
		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)						(51	)		2,890			1,680			5,908
		Income tax expense (recovery)						4,805			4,856			11,370			9,431
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations						(79,639	)		(71,468	)		48,989			41,446
	Income taxes (paid) received							(10,255	)		(13,102	)		(20,673	)		(21,110	)
	Net cash flows from (used in) operating activities							(32,023	)		(34,637	)		144,014			125,167
Cash flows from (used in) financing activities:
	Interest paid on lease obligations							(277	)		(395	)		(556	)		(599	)
	Interest paid on other facilities							(2,432	)		(993	)		(3,987	)		(2,542	)
	Increase (decrease) in revolving credit facility							45,000			4,968			100,000			10,000
	Proceeds from issuance of term loans							-			64			346			65,907
	Increase (decrease) in loan from Vela Software Group							7,904			-			6,086			-
	Repayments of term loans							(1,052	)		-			(1,669	)		-
	Credit facility transaction costs							-			(151	)		-			(2,397	)
	Payments of lease obligations							(5,063	)		(4,186	)		(9,574	)		(8,508	)
	Other financing activities							(580	)		-			(580	)		-
	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							43,500			(693	)		23,452			7,261
Cash flows from (used in) investing activities:
	Acquisition of businesses							(94,502	)		(5,090	)		(107,659	)		(151,738	)
	Cash obtained with acquired businesses							24,935			(722	)		27,612			14,246
	Post-acquisition settlement payments, net of receipts							(671	)		(6,339	)		(2,431	)		(11,008	)
	Receipt of additional subscription amount from the sellers of Topicus.com B.V.							-			27,589			-			27,589
	Interest, dividends and other proceeds received							3,028			-			3,028			-
	Property and equipment purchased							(1,587	)		(1,167	)		(3,613	)		(1,933	)
	Net cash flows from (used in) investing activities							(68,798	)		14,270			(83,064	)		(122,844	)
Effect of foreign currency on
	cash and cash equivalents							(0	)		0			(0	)		0
Increase (decrease) in cash								(57,321	)		(21,059	)		84,402			9,584
Cash, beginning of period								217,049			86,278			75,326			55,635
Cash, end of period								159,728			65,218			159,728			65,218