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, 2023. 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, 2023 and the accompanying notes, our Management’s Discussion and Analysis for the three and six months ended June 30, 2023 and the Annual Consolidated Financial Statements of Topicus.com Inc. 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.sedarplus.ca and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedarplus.ca.

Q2 2023 Headlines:

• Revenue increased 23% (6% organic growth) to €272.1 million compared to €220.6 million in Q2 2022.  
• Net income increased to €23.5 million (€0.18 on a diluted per share basis) from €20.1 million (€0.16 on a diluted per share basis).  
• Acquisitions were completed for aggregate cash consideration of €63.4 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.6 million resulting in total consideration of €71.1 million.
• Cash flows from operations (“CFO”) increased €16.7 million to negative €15.4 million compared to negative €32.0 million in Q2 2022 representing an increase of 52%.
• Free cash flow available to shareholders1 (“FCFA2S”) increased €13.7 million to negative €13.1 million compared to negative €26.8 million in Q2 2022 representing an increase 51%.

Total revenue for the quarter ended June 30, 2023 was €272.1 million, an increase of 23%, or €51.5 million, compared to €220.6 million for the comparable period in 2022. For the first six months of 2023 total revenues were €536.5 million, an increase of 26%, or €112.1 million, compared to €424.4 million for the comparable period in 2022. 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 7%. 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, 2023 increased €3.4 million to €23.5 million compared to €20.1 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.18 in the quarter ended June 30, 2023 compared to net income per basic and diluted share of €0.16 for the same period in 2022. For the six months ended June 30, 2023 net income increased €4.1 million to €44.6 million compared to €40.5 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.35 in the six months ended June 30, 2023 compared to €0.30 for the same period in 2022.   

For the quarter ended June 30, 2023, CFO were negative €15.4 million compared to negative €32.0 million for the same period in 2022. 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, 2023, CFO increased €14.6 million to €158.6 million compared to €144.0 million for the same period in 2022 representing an increase of 10%.  

For the quarter ended June 30, 2023, FCFA2S was negative €13.1 million compared to negative €26.8 million for the same period in 2022. For the six months ended June 30, 2023, FCFA2S increased €53.3 million to €88.0 million compared to €34.7 million for the same period in 2022 representing an increase of 153%. The increase for the six month period is primarily as a result of the dividend paid to the Preferred Securities holders during the quarter ended March 31, 2022.   

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, and the proceeds from sale of interest rate caps. 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,
			2023		2022					2023		2022
		(€ in millions)							(€ in millions)
Net cash flows from operating activities			(15.4	)	(32.0	)				158.6		144.0
Adjusted for:
Interest paid on lease obligations			(0.3	)	(0.3	)				(0.7	)	(0.6	)
Interest paid on other facilities			(3.5	)	(2.4	)				(6.6	)	(4.0	)
Proceeds from sale of interest rate cap			5.5		-					5.5		-
Credit facility transaction costs			(0.2	)	-					(0.2	)	-
Payments of lease obligations			(5.5	)	(5.1	)				(10.8	)	(9.6	)
Property and equipment purchased			(1.9	)	(1.6	)				(3.9	)	(3.6	)
Dividends paid to redeemable preferred securities holders			-		-					-		(66.6	)
			(21.3	)	(41.4	)				142.0		59.7
Less amount attributable to
non-controlling interests			8.2		14.5					(54.0	)	(24.9	)
Free cash flow available to shareholders			(13.1	)	(26.8	)				88.0		34.7
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, 2023	December 31, 2022		June 30, 2022
Assets
Current assets:
	Cash								172,315	136,772		159,728
	Accounts receivable								130,456	95,790		92,317
	Unbilled revenue								48,701	41,036		42,925
	Inventories								4,268	1,419		902
	Other assets								54,657	34,778		36,500
									410,396	309,795		332,372
Non-current assets:
	Property and equipment								20,372	19,579		19,582
	Right of use assets								57,919	54,412		57,927
	Deferred income taxes								7,044	19,978		8,307
	Other assets								12,161	17,030		11,502
	Intangible assets								942,297	874,000		872,887
									1,039,793	984,999		970,205
Total assets									1,450,189	1,294,794		1,302,577
Liabilities and Shareholders' Equity
Current liabilities:
	Topicus Revolving Credit Facility and current portion of term and other loans								168,228	201,275		151,570
	Loan from CSI								30,281	30,867		-
	Accounts payable and accrued liabilities								162,868	174,824		142,840
	Deferred revenue								241,980	116,989		197,492
	Provisions								1,682	1,884		1,076
	Acquisition holdback payables								14,878	14,009		18,416
	Lease obligations								19,280	18,824		18,927
	Income taxes payable								16,510	11,467		14,457
									655,707	570,141		544,779
Non-current liabilities:
	Term and other loans								65,807	41,280		101,421
	Loan from CSI								-	-		31,602
	Deferred income taxes								147,382	150,521		145,731
	Acquisition holdback payables								1,289	2,316		3,078
	Lease obligations								39,684	36,634		40,076
	Other liabilities								26,273	26,118		20,410
									280,434	256,869		342,317
Total liabilities									936,141	827,009		887,096
Shareholders' Equity:
	Capital stock								39,412	39,412		39,412
	Accumulated other comprehensive income (loss)								851	(232	)	1,576
	Retained earnings (deficit)								255,528	226,919		192,970
	Non-controlling interests								218,258	201,685		181,523
									514,048	467,784		415,481
Total liabilities and shareholders' equity									1,450,189	1,294,794		1,302,577

 

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,
							2023			2022			2023			2022
Revenue
License							7,847			6,418			14,825			11,885
Professional services							71,974			56,481			141,314			106,589
Hardware and other							3,705			2,293			6,385			4,534
Maintenance and other recurring							188,557			155,425			373,989			301,374
							272,083			220,616			536,513			424,383
Expenses
Staff							155,841			123,809			305,949			235,704
Hardware							2,545			1,515			4,123			2,234
Third party license, maintenance and professional services							21,340			18,625			41,888			36,099
Occupancy							2,560			1,804			5,026			3,341
Travel, telecommunications, supplies, software and equipment							10,703			8,450			20,267			14,548
Professional fees							4,557			3,779			8,837			7,576
Other, net							964			4,762			7,178			9,182
Depreciation							7,695			7,008			14,990			13,203
Amortization of intangible assets							29,985			26,010			57,946			48,989
							236,191			195,763			466,204			370,875
Finance and other expenses (income)							4,447			(51	)		9,396			1,680
							4,447			(51	)		9,396			1,680
Income (loss) before income taxes							31,445			24,904			60,912			51,828
Current income tax expense (recovery)							14,898			11,041			27,226			22,263
Deferred income tax expense (recovery)							(6,905	)		(6,237	)		(10,894	)		(10,894	)
Income tax expense (recovery)							7,993			4,805			16,332			11,370
Net income (loss)							23,452			20,099			44,580			40,458
Net income (loss) attributable to:
Equity holders of Topicus							14,572			12,526			28,472			24,097
Non-controlling interests							8,880			7,573			16,108			16,362
Net income (loss)							23,452			20,099			44,580			40,458
Weighted average shares
	Basic shares outstanding						81,889,764			80,097,017			81,889,764			80,011,366
	Diluted shares outstanding						129,841,819			129,841,819			129,841,819			129,841,819
Earnings (loss) per common share of Topicus
	Basic						0.18			0.16			0.35			0.30
	Diluted						0.18			0.16			0.35			0.30

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.)
Unaudited
							Three months ended June 30,				Six months ended June 30,
							2023		2022		2023		2022
Net income (loss)							23,452		20,099		44,580		40,458
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other							2,999		3,444		2,203		4,871
Other comprehensive (loss) income for the period, net of income tax							2,999		3,444		2,203		4,871
Total comprehensive income (loss) for the period							26,451		23,543		46,784		45,329
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus							1,320		1,325		1,083		1,956
Non-controlling interests							1,679		2,119		1,120		2,915
Total other comprehensive income (loss)							2,999		3,444		2,203		4,871
Total comprehensive income (loss) attributable to:
Equity holders of Topicus							15,892		13,850		29,555		26,052
Non-controlling interests							10,559		9,693		17,228		19,277
Total comprehensive income (loss)							26,451		23,543		46,784		45,329

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, 2023
			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, 2023			-	39,412	-	(232	)	226,919	266,099	201,685		467,784
Total comprehensive income (loss) for the period:
Net income (loss)			-	-	-	-		28,472	28,472	16,108		44,580
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of income tax		-	-	-	1,083		-	1,083	1,120		2,203
Total other comprehensive income (loss)
	for the period		-	-	-	1,083		-	1,083	1,120		2,203
Total comprehensive income (loss) for the period			-	-	-	1,083		28,472	29,555	17,228		46,784
Transactions with owners, recorded directly in equity
	Other movements in non-controlling interests and equity		-	-	-	-		137	137	70		207
	Dividends paid to non-controlling interests		-	-	-	-		-	-	(726	)	(726	)
Balance at June 30, 2023			-	39,412	-	851		255,528	295,791	218,258		514,048

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		-		-	-		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		-		-	(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 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,
								2023			2022			2023			2022
Cash flows from (used in) operating activities:
	Net income (loss)							23,452			20,099			44,580			40,458
	Adjustments for:
		Depreciation						7,695			7,008			14,990			13,203
		Amortization of intangible assets						29,985			26,010			57,946			48,989
		Finance and other expenses (income)						4,447			(51	)		9,396			1,680
		Income tax expense (recovery)						7,993			4,805			16,332			11,370
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations						(75,465	)		(79,639	)		41,134			48,989
	Income taxes (paid) received							(13,474	)		(10,255	)		(25,752	)		(20,673	)
	Net cash flows from (used in) operating activities							(15,367	)		(32,023	)		158,626			144,014
Cash flows from (used in) financing activities:
	Interest paid on lease obligations							(347	)		(277	)		(653	)		(556	)
	Interest paid on other facilities							(3,505	)		(2,432	)		(6,565	)		(3,987	)
	Proceeds from sale of interest rate cap							5,516			-			5,516			-
	Net increase (decrease) in Topicus Revolving Credit Facility							45,000			45,000			35,000			100,000
	Proceeds from issuance of term and other loans							21,941			-			26,218			346
	Increase (decrease) in loan from Vela Software Group							(468	)		7,904			(468	)		6,086
	Repayments of term and other loans							(4,497	)		(1,052	)		(72,941	)		(1,669	)
	Credit facility transaction costs							(175	)		-			(238	)		-
	Payments of lease obligations							(5,543	)		(5,063	)		(10,805	)		(9,574	)
	Other financing activities							-			(580	)		-			(580	)
	Dividends to non-controlling interests							(726	)		-			(726	)		-
	Dividends paid to redeemable preferred securities holders							-			-			-			(66,614	)
	Net cash flows from (used in) in financing activities							57,197			43,500			(25,663	)		23,452
Cash flows from (used in) investing activities:
	Acquisition of businesses							(63,252	)		(94,502	)		(88,048	)		(107,659	)
	Cash obtained with acquired businesses							4,611			24,935			5,583			27,612
	Post-acquisition settlement payments, net of receipts							(6,567	)		(671	)		(11,055	)		(2,431	)
	Interest, dividends and other proceeds received							-			3,028			-			3,028
	Property and equipment purchased							(1,888	)		(1,587	)		(3,869	)		(3,613	)
	Net cash flows from (used in) investing activities							(67,096	)		(68,798	)		(97,388	)		(83,064	)
Effect of foreign currency on
	cash and cash equivalents							317			(0	)		(31	)		(0	)
Increase (decrease) in cash								(24,950	)		(57,321	)		35,543			84,402
Cash, beginning of period								197,265			217,049			136,772			75,326
Cash, end of period								172,315			159,728			172,315			159,728