Condensed Consolidated Interim Financial Statements (In U.S. dollars)
CONSTELLATION
SOFTWARE INC.
For the three months ended March 31, 2024 and 2023 Unaudited
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Financial Position
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited
March 31, 2024 December 31, 2023 | March 31, 2023 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 2,078 | $ | 1,284 | $ | 1,010 | |
Accounts receivable | 1,205 | 1,145 | 1,012 | ||||
Unbilled revenue | 360 | 326 | 282 | ||||
Inventories | 59 | 51 | 50 | ||||
Other assets (note 5) | 568 | 542 | 450 | ||||
4,270 | 3,348 | 2,803 | |||||
Non-current assets: | |||||||
Property and equipment | 142 | 143 | 128 | ||||
Right of use assets | 311 | 312 | 285 | ||||
Deferred income taxes | 157 | 110 | 108 | ||||
Other assets (note 5) | 308 | 286 | 182 | ||||
Intangible assets (note 6) | 6,734 | 6,682 | 5,324 | ||||
7,651 | 7,533 | 6,028 | |||||
Total assets | $ | 11,921 | $ | 10,881 | $ | 8,831 | |
Liabilities and Shareholders' Equity | |||||||
Current liabilities: | |||||||
Debt with recourse to Constellation Software Inc. (note 7) | $ | 276 | $ | 861 | $ | 480 | |
Debt without recourse to Constellation Software Inc. (note 8) | 348 | 225 | 199 | ||||
Redeemable preferred securities (note 9) | - | 814 | 409 | ||||
Accounts payable and accrued liabilities | 1,298 | 1,433 | 1,117 | ||||
Dividends payable (note 12) | 21 | 21 | 21 | ||||
Deferred revenue | 2,267 | 1,757 | 1,995 | ||||
Provisions (note 10) | 8 | 9 | 9 | ||||
Acquisition holdback payables | 174 | 173 | 139 | ||||
Lease obligations | 113 | 112 | 98 | ||||
Income taxes payable (note 11) | 135 | 88 | 120 | ||||
4,640 | 5,493 | 4,585 | |||||
Non-current liabilities: | |||||||
Debt with recourse to Constellation Software Inc. (note 7) | 1,832 | 863 | 590 | ||||
Debt without recourse to Constellation Software Inc. (note 8) | 1,470 | 1,385 | 793 | ||||
Deferred income taxes | 633 | 610 | 496 | ||||
Acquisition holdback payables | 105 | 86 | 68 | ||||
Lease obligations | 235 | 236 | 217 | ||||
Other liabilities (note 5) | 255 | 246 | 236 | ||||
4,530 | 3,426 | 2,400 | |||||
Total liabilities | 9,169 | 8,919 | 6,986 | ||||
Shareholders' equity (note 12): | |||||||
Capital stock | 99 | 99 | 99 | ||||
Accumulated other comprehensive income (loss) | (145) | (99) | (128) | ||||
Retained earnings | 2,358 | 1,876 | 1,454 | ||||
Non-controlling interests (notes 1, 9 and 18) | 439 | 85 | 419 | ||||
2,752 | 1,961 | 1,845 | |||||
Subsequent events (notes 12 and 19) | |||||||
Total liabilities and shareholders' equity | $ | 11,921 | $ | 10,881 | $ | 8,831 |
See accompanying notes to the condensed consolidated interim financial statements.
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CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Income (loss)
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Three months ended March 31, | ||||
2024 | 2023 | |||
Revenue | ||||
License | $ | 88 | $ | 81 |
Professional services | 470 | 411 | ||
Hardware and other | 59 | 57 | ||
Maintenance and other recurring | 1,737 | 1,369 | ||
2,353 | 1,919 | |||
Expenses | ||||
Staff | 1,293 | 1,068 | ||
Hardware | 35 | 35 | ||
Third party license, maintenance and professional services | 215 | 185 | ||
Occupancy | 14 | 13 | ||
Travel, telecommunications, supplies, software and equipment | 112 | 89 | ||
Professional fees | 38 | 36 | ||
Other, net | 50 | 38 | ||
Depreciation | 44 | 39 | ||
Amortization of intangible assets (note 6) | 242 | 193 | ||
2,042 | 1,695 | |||
Foreign exchange loss (gain) | (18) | 10 | ||
IRGA/TSS Membership liability revaluation charge (note 7) | 81 | 39 | ||
Finance and other expense (income) (note 13) | (9) | (7) | ||
Bargain purchase gain (note 4) | (2) | (1) | ||
Impairment of intangible and other non-financial assets (note 6) | 10 | 2 | ||
Redeemable preferred securities expense (income) (note 9) | 58 | 188 | ||
Finance costs (note 13) | 67 | 36 | ||
186 | 267 | |||
Income (loss) before income taxes | 125 | (43) | ||
Current income tax expense (recovery) (note 11) | 127 | 103 | ||
Deferred income tax expense (recovery) (note 11) | (75) | (62) | ||
Income tax expense (recovery) | 52 | 40 | ||
Net income (loss) | 74 | (83) | ||
Net income (loss) attributable to: | ||||
Common shareholders of Constellation Software Inc. (notes 1 and 18) | 105 | 94 | ||
Non-controlling interests (notes 1, 9, and 18) | (31) | (177) | ||
Net income (loss) | 74 | (83) | ||
Earnings per common share of Constellation Software Inc. | ||||
Basic and diluted (note 14) | $ | 4.95 | $ | 4.44 |
See accompanying notes to the condensed consolidated interim financial statements.
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CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Comprehensive Income (loss)
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Three months ended March 31,
20242023
Net income (loss) | $ | 74 | $ | (83) |
Items that are or may be reclassified subsequently to net income (loss): | ||||
Foreign currency translation differences from foreign operations and other, ne | (48) | 16 | ||
Other comprehensive income (loss), net of income tax | (48) | 16 | ||
Total comprehensive income (loss) | $ | 25 | $ | (67) |
Total other comprehensive income (loss) attributable to: | ||||
Common shareholders of Constellation Software Inc. (notes 1, 9 and 18) | (40) | 10 | ||
Non-controlling interests (notes 1, 9 and 18) | (8) | 6 | ||
Total other comprehensive income (loss) | $ | (48) | $ | 16 |
Total comprehensive income (loss) attributable to: | ||||
Common shareholders of Constellation Software Inc. (notes 1, 9 and 18) | 65 | 105 | ||
Non-controlling interests (notes 1, 9 and 18) | (40) | (171) | ||
Total comprehensive income (loss) | $ | 25 | $ | (67) |
See accompanying notes to the condensed consolidated interim financial statements.
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CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited
Three months ended March 31, 2024 | Equity Attributable to Common Shareholders of CSI | |||||||||||
Non-controlling | Total equity | |||||||||||
Capital | Accumulated | Retained | Total | |||||||||
stock | other | earnings | interests | |||||||||
comprehensive | ||||||||||||
income (loss) | ||||||||||||
Balance at January 1, 2024 | $ | 99 | $ | (99) | $ | 1,876 | $ | 1,877 | 85 | $ | 1,961 | |
Total comprehensive income (loss): | ||||||||||||
Net income (loss) | - | - | 105 | 105 | (31) | 74 | ||||||
Other comprehensive income (loss) | ||||||||||||
Foreign currency translation differences from | ||||||||||||
foreign operations and other, net of tax | - | (40) | - | (40) | (8) | (48) | ||||||
Total other comprehensive income (loss) | - | (40) | - | (40) | (8) | (48) | ||||||
Total comprehensive income (loss) | - | (40) | 105 | 65 | (40) | 25 | ||||||
Transactions with owners, recorded directly in equity | ||||||||||||
Non-controlling interests arising from business combinations | - | - | - | - | (0) | (0) | ||||||
Conversion of Lumine Special Shares to subordinate voting shares of | ||||||||||||
Lumine and settlement of accrued dividend on Lumine Special Shares | ||||||||||||
through the issuance of subordinate voting shares of Lumine (note 9) | - | - | - | - | 872 | 872 | ||||||
Conversion of Lumine Preferred Shares to subordinate voting shares of | ||||||||||||
Lumine and settlement of accrued dividend on Lumine Preferred Shares | ||||||||||||
through the issuance of subordinate voting shares of Lumine (note 1) | (6) | 400 | 394 | (394) | - | |||||||
Other movements in non-controlling interests | - | - | (1) | (1) | 1 | 0 | ||||||
Dividends paid to non-controlling interests (note 18) | - | - | - | - | (85) | (85) | ||||||
Dividends to shareholders of the Company (note 12) | - | - | (21) | (21) | - | (21) | ||||||
Balance at March 31, 2024 | $ | 99 | $ | (145) | $ | 2,358 | $ | 2,313 | $ | 439 | $ | 2,752 |
See accompanying notes to the condensed consolidated interim financial statements.
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CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Three months ended March 31, 2023
Equity Attributable to Common Shareholders of CSI | Non-controlling | Total equity | ||||||||||
Capital | Accumulated | Retained | Total | |||||||||
stock | other | earnings | interests | |||||||||
comprehensive | ||||||||||||
income (loss) | ||||||||||||
Balance at January 1, 2023 | $ | 99 | $ | (150) | $ | 1,763 | $ | 1,713 | $ | 221 | $ | 1,933 |
Total comprehensive income (loss): | ||||||||||||
Net income (loss) | - | - | 94 | 94 | (177) | (83) | ||||||
Other comprehensive income (loss) | ||||||||||||
Foreign currency translation differences from | - | |||||||||||
foreign operations and other, net of tax | - | 10 | 10 | 6 | 16 | |||||||
Total other comprehensive income (loss) | - | 10 | - | 10 | 6 | 16 | ||||||
Total comprehensive income (loss) | - | 10 | 94 | 105 | (171) | (67) | ||||||
Transactions with owners, recorded directly in equity | ||||||||||||
Special dividend of Lumine Subordinate Voting Shares (note 1 and 12) | - | 12 | (378) | (366) | 366 | - | ||||||
Acquisition of non-controlling interests | - | - | - | - | (1) | (1) | ||||||
Conversion of Lumine Special Shares to subordinate voting shares of | ||||||||||||
Lumine | - | - | - | - | 1 | 1 | ||||||
Other movements in non-controlling interests | - | 0 | (4) | (4) | 4 | (0) | ||||||
Dividends to shareholders of the Company (note 12) | - | - | (21) | (21) | - | (21) | ||||||
Balance at March 31, 2023 | $ | 99 | $ | (128) | $ | 1,454 | $ | 1,426 | $ | 419 | $ | 1,845 |
See accompanying notes to the condensed consolidated interim financial statements.
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CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Cash Flows
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Three months ended March 31, | |||||
2024 | 2023 | ||||
Cash flows from (used in) operating activities: | |||||
Net income (loss) | $ | 74 | $ | (83) | |
Adjustments for: | |||||
Depreciation | 44 | 39 | |||
Amortization of intangible assets (note 6) | 242 | 193 | |||
IRGA/TSS Membership liability revaluation charge (note 7) | 81 | 39 | |||
Finance and other expense (income) (note 13) | (9) | (7) | |||
Bargain purchase (gain) (note 4) | (2) | (1) | |||
Impairment of intangible and other non-financial assets (note 6) | 10 | 2 | |||
Redeemable preferred securities expense (income) (note 9) | 58 | 188 | |||
Finance costs (note 13) | 67 | 36 | |||
Income tax expense (recovery) | 52 | 40 | |||
Foreign exchange loss (gain) | (18) | 10 | |||
Change in non-cash operating assets and liabilities | |||||
exclusive of effects of business combinations (note 17) | 208 | 268 | |||
Income taxes paid | (68) | (91) | |||
Net cash flows from (used in) operating activities | 737 | 632 | |||
Cash flows from (used in) financing activities: | |||||
Interest paid on lease obligations | (3) | (3) | |||
Interest paid on debt | (41) | (26) | |||
Increase (decrease) in CSI facility (note 7) | (578) | (51) | |||
Increase (decrease) in Topicus revolving credit debt facility without recourse | |||||
to CSI | 114 | (11) | |||
Proceeds from issuance of Senior Notes (note 7) | 1,000 | - | |||
Proceeds from issuance of debt facilities without recourse to CSI | 112 | 180 | |||
Repayments of debt facilities without recourse to CSI | (18) | (86) | |||
Other financing activities | (2) | 2 | |||
Dividends paid to non-controlling interests (note 18) | (85) | - | |||
Debt transaction costs | (11) | (2) | |||
Payments of lease obligations | (29) | (25) | |||
Distribution to the Joday Group (note 7) | (64) | - | |||
Principal repayments to the Joday Group pursuant to the Call Notice (note 7) | (22) | - | |||
Dividends paid to common shareholders of the Company (note 12) | (21) | (21) | |||
Net cash flows from (used in) in financing activities | 351 | (43) | |||
Cash flows from (used in) investing activities: | |||||
Acquisition of businesses (note 4) | (223) | (452) | |||
Cash obtained with acquired businesses (note 4) | 35 | 45 | |||
Post-acquisition settlement payments, net of receipts | (76) | (72) | |||
Purchases of investments and other assets | (0) | (31) | |||
Proceeds from sales of other investments and other assets | 4 | 119 | |||
Decrease (increase) in restricted cash | (11) | - | |||
Interest, dividends and other proceeds received | 5 | 3 | |||
Property and equipment purchased | (10) | (10) | |||
Net cash flows from (used in) investing activities | (277) | (398) | |||
Effect of foreign currency on | (17) | 7 | |||
cash | |||||
Increase (decrease) in cash | 794 | 199 | |||
Cash, beginning of period | $ | 1,284 | $ | 811 | |
Cash, end of period | $ | 2,078 | $ | 1,010 | |
See accompanying notes to the condensed consolidated interim financial statements. |
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CONSTELLATION SOFTWARE INC.
Notes to Condensed Consolidated Interim Financial Statements
(In millions of U.S. dollars, except per share amounts and as otherwise indicated) (Due to rounding, numbers presented may not foot)
Three months ended March 31, 2024 and 2023 (Unaudited)
Notes to the condensed consolidated interim financial statements
1. | Reporting entity | 11. | Income taxes |
2. | Basis of presentation | 12. | Capital and other components of equity |
3. | Material accounting policies | 13. | Finance and other expense (income) and finance costs |
4. | Business acquisitions | 14. | Earnings per share |
5. | Other assets and other non-current liabilities | 15. | Financial instruments |
6. | Intangible assets | 16. | Contingencies |
7. | Debt with recourse to CSI | 17. | Changes in non-cash operating assets and liabilities |
8. | Debt without recourse to CSI | 18. | Non-controlling interests |
9. | Redeemable preferred securities | 19. | Subsequent events |
10. Provisions
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CONSTELLATION SOFTWARE INC.
Notes to Condensed Consolidated Interim Financial Statements
(In millions of U.S. dollars, except per share amounts and as otherwise indicated) (Due to rounding, numbers presented may not foot)
Three months ended March 31, 2024 and 2023 (Unaudited)
1. Reporting entity
Constellation Software Inc. is a company domiciled in Canada. The address of Constellation Software Inc.'s registered office is 20 Adelaide Street East, Suite 1200, Toronto, Ontario, Canada. The condensed consolidated interim financial statements of Constellation Software Inc. as at and for the three month period ended March 31, 2024 comprise Constellation Software Inc. and its subsidiaries (together referred to as "Constellation", "CSI", or the "Company") and the Company's interest in associates. The Company is engaged principally in the development, installation and customization of software as well as in the provisioning of related professional services and support for customers globally across over 100 diverse markets.
Preferred Share Investment in Lumine Group Inc. ("Lumine")
At the beginning of the period, the Company owned 63,582,712 preferred shares ("Lumine Preferred Shares") in the capital of the Company's subsidiary, Lumine. The Lumine Preferred Shares were non-voting and under certain conditions were redeemable at the option of CSI for a redemption price of $21.74 (the "Initial Face Value") per share. The redemption price was to either be settled in cash or through the issuance of a variable number of subordinate voting shares of Lumine ("Lumine Subordinate Voting Shares") based on the terms of the Lumine Preferred Shares, or any combination thereof. The Lumine Preferred Shares were also convertible into Lumine Subordinate Voting Shares at a conversion ratio of 1:2.4302106 at any time. The Lumine Preferred Shares entitled CSI to a fixed annual cumulative dividend of 5% per annum on the Initial Face Value.
On March 25, 2024, all of the Lumine Preferred Shares were converted into Lumine Subordinate Voting Shares, and additional Lumine Subordinate Voting Shares were issued in satisfaction of the amounts owing in connection with the accrued dividends on the Lumine Preferred Shares. As of March 31, 2024, CSI holds 157,553,539 Lumine Subordinate Voting Shares.
Subsequent to the conversion, CSI continues to consolidate Lumine and now reflects an equity interest of 61.40% (December 31, 2023 - 0%) in Lumine and a non-controlling interest of 38.60% (December 31, 2023 - 100%).
2. Basis of presentation
(a) Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and using the accounting policies disclosed in Note 3 of the Company's 2023 annual consolidated financial statements, available on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.com, except as disclosed herein.
These condensed consolidated interim financial statements were approved and authorized for issuance by the Board of Directors of the Company on May 10, 2024.
These condensed consolidated interim financial statements should be read in conjunction with the Company's 2023 annual consolidated financial statements.
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CONSTELLATION SOFTWARE INC.
Notes to Condensed Consolidated Interim Financial Statements
(In millions of U.S. dollars, except per share amounts and as otherwise indicated) (Due to rounding, numbers presented may not foot)
Three months ended March 31, 2024 and 2023 (Unaudited)
(b) Basis of measurement
The condensed consolidated interim financial statements have been prepared on the historical cost basis except for certain assets and liabilities initially recognized in connection with business combinations, derivative financial instruments and contingent consideration related to business acquisitions, which are measured at their estimated fair value.
(c) Functional and presentation of currency
The condensed consolidated interim financial statements are presented in U.S. dollars, which is Constellation's functional currency.
(d) Use of estimates and judgements
The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses, consistent with those disclosed in the 2023 annual consolidated financial statements and described in these condensed consolidated interim financial statements. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Estimates are based on historical experience and other assumptions that are considered reasonable in the circumstances. The actual amount or values may vary in certain instances from the assumptions and estimates made. Changes will be recorded, with corresponding effect in profit or loss, when, and if, better information is obtained.
3. Material accounting policies
Unless otherwise noted in the condensed consolidated interim financial statements, the material accounting policies used in preparing these condensed consolidated interim financial statements are unchanged from those disclosed in the Company's 2023 annual consolidated financial statements and have been applied consistently to all periods presented in these condensed consolidated interim financial statements.
The accounting policies have been applied consistently by Constellation's subsidiaries.
4. Business acquisitions
During the three-month period ended March 31, 2024, the Company completed a number acquisitions for aggregate cash consideration of $223 plus cash holdbacks of $55 and contingent consideration with an estimated acquisition date fair value of $10. The total consideration resulting from the acquisitions in the three-month period ended March 31, 2024 was $288. The contingent consideration is payable on the achievement of certain financial targets in the post-acquisition periods. The obligation for contingent consideration for acquisitions during the three-month period ended March 31, 2024 has been recorded at its estimated fair value at the various acquisition dates. The estimated fair value of the applicable contingent consideration is calculated using the estimated financial outcome and resulting expected contingent consideration to be paid and inclusion of a discount rate as appropriate. For these arrangements, which include both maximum, or capped, and unlimited contingent consideration amounts, the estimated increase to the initial consideration is not expected to exceed $19. Aggregate contingent consideration of $164 (December 31, 2023 - $192) has been reported in the condensed consolidated interim statement of financial
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Constellation Software Inc. published this content on 10 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 May 2024 21:09:12 UTC.