SEC Info℠

Home

Search

My Interests

Help

Sign In

Please Sign In

Constellation Software Inc – ‘F-7 POS’ on 8/8/14 – EX-2.9

On:  Friday, 8/8/14, at 4:43pm ET   ·   Effective:  8/8/14   ·   Accession #:  1193125-14-303242   ·   File #:  333-197568

Previous ‘F-7 POS’:  None   ·   Next:  ‘F-7 POS’ on 4/20/15   ·   Latest:  ‘F-7 POS’ on 8/25/23

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

 Text Wildcards:  ? (any letter/digit),  * (many).  Search Logic:  for Documents:  & (and),  | (or);  for Text:  | (anywhere),  "(&)" (near).  Details... 

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/08/14  Constellation Software Inc        F-7 POS     8/08/14    6:1.7M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-7 POS     Post-Effective Amendment to an F-7                  HTML    237K 
 3: EX-2.10     Plan of Acquisition, Reorganization, Arrangement,   HTML    281K 
                          Liquidation or Succession                              
 2: EX-2.9      Plan of Acquisition, Reorganization, Arrangement,   HTML    355K 
                          Liquidation or Succession                              
 4: EX-3.1      Articles of Incorporation/Organization or By-Laws   HTML      7K 
 5: EX-3.3      Articles of Incorporation/Organization or By-Laws   HTML      6K 
 6: EX-5.1      Opinion re: Legality                                HTML    467K 

Exhibit 2.9

Condensed Consolidated Interim Financial Statements

(In U.S. dollars)

CONSTELLATION

SOFTWARE INC.

For the three and six months ended June 30, 2014 and 2013

CONSTELLATION SOFTWARE INC.

Condensed Consolidated Interim Statements of Financial Position

(In thousands of U.S. dollars)

(Unaudited)

See accompanying notes to the condensed consolidated interim financial statements.

1

CONSTELLATION SOFTWARE INC.

Condensed Consolidated Interim Statements of Income

(In thousands of U.S. dollars, except per share amounts)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

See accompanying notes to the condensed consolidated interim financial statements.

2

CONSTELLATION SOFTWARE INC.

Condensed Consolidated Interim Statements of Comprehensive Income

(In thousands of U.S. dollars, except per share amounts)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

See accompanying notes to the condensed consolidated interim financial statements.

3

CONSTELLATION SOFTWARE INC.

Condensed Consolidated Interim Statements of Changes in Equity

(In thousands of U.S. dollars)

(Unaudited)

Six months ended June 30, 2014

See accompanying notes to the condensed consolidated interim financial statements.

4

CONSTELLATION SOFTWARE INC.

Condensed Consolidated Interim Statements of Changes in Equity

(In thousands of U.S. dollars)

(Unaudited)

Six months ended June 30, 2013

See accompanying notes to the condensed consolidated interim financial statements.

5

CONSTELLATION SOFTWARE INC.

Condensed Consolidated Interim Statements of Cash Flows

(In thousands of U.S. dollars)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

See accompanying notes to the condensed consolidated interim financial statements.

6

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

Notes to the condensed consolidated interim financial statements

7

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

1. Reporting entity

Constellation Software Inc. (“Constellation”) is a company domiciled in Canada. The address of Constellation’s registered office is 20 Adelaide Street East, Suite 1200, Toronto, Ontario, Canada. The condensed consolidated interim financial statements of Constellation as at and for the period ended June 30, 2014 comprise Constellation and its subsidiaries (together referred to as the “Company”) and the Company’s interest in associates. The Company is engaged principally in the development, installation and customization of software relating to the markets listed below, and in the provision of related professional services and support.

Public Sector:

Private Sector:

8

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

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 2013 annual consolidated financial statements.

The policies applied in these condensed consolidated interim financial statements are based on International Financial Reporting Standards (IFRS), issued and outstanding as of July 31, 2014, the date the Board of Directors approved the condensed consolidated interim financial statements. Any subsequent changes to IFRS that are given effect in the Company’s annual consolidated financial statements for the year ending December 31, 2014 could result in a restatement of these condensed consolidated interim financial statements.

These condensed consolidated interim financial statements should be read in conjunction with the Company’s 2013 annual consolidated financial statements.

(b) Basis of measurement

The condensed consolidated interim financial statements have been prepared on the historical cost basis except for available-for-sale financial assets, 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 2013 annual consolidated 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. Significant accounting policies

Except as disclosed below, the significant accounting policies used in preparing these condensed consolidated interim financial statements are unchanged from those disclosed in the Company’s 2013 annual consolidated financial statements, and have been applied consistently to all periods presented in these condensed consolidated interim financial statements.

9

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

The accounting policies have been applied consistently by the Company‘s subsidiaries.

(a) New standards and interpretations adopted

Amendments to IAS 32, Offsetting Financial Assets and Liabilities

IAS 32 has been amended to include additional presentation requirements for financial assets and liabilities that can be offset in the statement of financial position. The Company adopted the amendments to IAS 32 in its consolidated financial statements for the annual period beginning January 1, 2014. The adoption of the amendments did not have a material impact on the financial statements.

Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)

In May 2013, the IASB issued Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36). The amendments apply retrospectively for annual periods beginning on or after January 1, 2014. The IASB has issued amendments to reverse the unintended requirement in IFRS 13 Fair Value Measurement to disclose the recoverable amount of every cash-generating unit to which significant goodwill or indefinite-lived intangible assets have been allocated. Under the amendments, recoverable amount is required to be disclosed only when an impairment loss has been recognized or reversed. The Company adopted the amendments in its financial statements for the annual period beginning on January 1, 2014. As the amendments impact certain disclosure requirements only, the adoption of the amendments did not have a material impact on the financial statements.

(b) New standards and interpretations not yet adopted

IFRS 9 Financial Instruments

IFRS 9 replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement, on the classification and measurement of financial assets. The Standard eliminates the existing IAS 39 categories of held to maturity, available-for-sale and loans and receivable.

Financial assets will be classified into one of two categories on initial recognition:

Gains and losses on remeasurement of financial assets measured at fair value will be recognized in profit or loss, except that for an investment in an equity instrument which is not held-for-trading, IFRS 9 provides, on initial recognition, an irrevocable election to present all fair value changes from the investment in other comprehensive income (OCI). The election is available on an individual share-by-share basis. Amounts presented in OCI will not be reclassified to profit or loss at a later date. IFRS 9 also includes a new general hedge accounting standard which will align hedge accounting more closely with risk management.

The mandatory effective date is not yet determined, however, early adoption of the new standard is still permitted. The Company does not intend to early adopt IFRS 9 in its financial statements for the annual period beginning on January 1, 2015.

10

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

Annual Improvements to IFRS

In December 2013, the IASB issued narrow-scope amendments to a total of nine standards. Most of the amendments will apply prospectively for annual periods beginning on or after July 1, 2014. The Company intends to apply these amendments in its financial statements for the annual periods beginning on January 1, 2015. The extent of the impact of adoption of the amendments has not yet been determined.

IFRS 15 Revenue from Contracts with Customers

On May 28, 2014 the IASB issued IFRS 15 Revenue from Contracts with Customers. The new standard is effective for fiscal years ending on or after December 15, 2016 and is available for early adoption. The standard contains a single model that applies to contracts with customers. The Company intends to adopt IFRS 15 in its financial statements for the annual period beginning on January 1, 2017. The extent of the impact of adoption of the standard has not yet been determined.

4. Business acquisitions

(a) During the six month period ended June 30, 2014, the Company closed eleven acquisitions for aggregate cash consideration of $27,597 plus cash holdbacks of $4,098 and contingent consideration with an estimated fair value of $6,580 resulting in total consideration of $38,275. The contingent consideration is payable on the achievement of certain financial targets in the post-acquisition period. The obligation for contingent consideration for acquisitions during the period ended June 30, 2014 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 weighted probability of the expected contingent consideration to be paid and inclusion of a discount rate as appropriate. As part of these arrangements, which included both maximum, or capped, and unlimited contingent consideration amounts, the estimated increase to the initial consideration is not expected to exceed a maximum of $6,580. Aggregate contingent consideration of $26,468 (December 31, 2013 - $18,452) has been reported in the statement of financial position at its estimated fair value relating to applicable acquisitions completed in the current and prior periods. Changes made to the estimated fair value of contingent consideration are included in other expenses, net in the condensed consolidated interim statements of income. An expense of $300 and $268 has been recorded for the three and six months ended June 30, 2014, as a result of such changes (recovery of $9 and $32 for the three and six months ended June 30, 2013).

There were no acquisitions during the period that were deemed to be individually significant. Of the eleven acquisitions, the Company acquired 100% of the shares of six businesses and acquired the net assets of the other five businesses. The cash holdbacks are payable over a one year period and are adjusted, as necessary, for such items as working capital or net tangible asset assessments, as defined in the agreements, and claims under the respective representations and warranties of the purchase and sale agreements.

The acquisitions during the period include software companies catering to the following markets; fleet and facility management, local government, fitness, asset management, para transit operators, metal service centres, tour operators, auto clubs, home and community care, long-term care and public transit operators all of which are software businesses similar to existing businesses operated by the Company. The acquisitions have been accounted for using the acquisition method with the results of operations included in these condensed consolidated interim financial statements from the date of each acquisition. Seven of the acquisitions have been included in the Public reportable segment and four have been included in the Private reportable segment.

The goodwill recognized in connection with these acquisitions is primarily attributable to the application of Constellation’s best practices to improve the operations of the companies acquired, synergies with existing

11

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

businesses of Constellation, and other intangibles that do not qualify for separate recognition including assembled workforce. Goodwill in the amount of $nil is expected to be deductible for income tax purposes.

The gross contractual amounts of acquired receivables was $8,939; however the Company has recorded an allowance of $380 as part of the acquisition accounting to reflect contractual cash flows that are not expected to be collected.

Due to the complexity and timing of certain acquisitions made, the Company is in the process of determining and finalizing the estimated fair value of the net assets acquired as part of the acquisitions closed during 2014 and the last two quarters of 2013. The amounts determined on a provisional basis generally relate to net asset assessments and measurement of the assumed liabilities, including acquired contract liabilities. The cash consideration associated with these provisional estimates totals $425,981.

The aggregate impact of acquisition accounting applied in connection with business acquisitions in the six month period ended June 30, 2014 is as follows:

(b) The 2014 business acquisitions had no significant impact on revenues or net income for the six months ended June 30, 2014. There was also no significant impact on the Company’s revenues or net income on a pro-forma basis for the six months ended June 30, 2014.

12

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

5. Other assets and other liabilities

(a) Other assets

(b) Other liabilities

13

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

6. Intangible assets

7. Bank indebtedness

On March 13, 2012, the Company entered into a new revolving credit facility with a syndicate of Canadian chartered banks and U.S. banks in the amount of $300,000 (December 31, 2013- $300,000). The revolving credit facility bears a variable interest rate and is due in full on February 29, 2016 with no fixed repayments required over the term to maturity. Interest rates are calculated at prime or LIBOR plus interest rate spreads based on a leverage table. The credit facility is collateralized by substantially all of the Company’s assets including the assets of the majority of the Company’s material subsidiaries. The credit facility contains standard events of default which if not remedied within a cure period would trigger the repayment of any outstanding balance. Certain other subsidiaries also guarantee this facility. The facility is available for acquisitions, working capital needs, and other general corporate purposes and for the needs of the Company’s subsidiaries until 2016. As at June 30, 2014, $124,100 (December 31, 2013 – $149,200) had been drawn from this credit facility, and letters of credit totaling $14,314 (December 31, 2013 - $5,000) were issued, which limits the borrowing capacity on a dollar-for-dollar basis. Transaction costs associated with the line-of-credit were included as part of the carrying amount of the liability and are being amortized through profit or loss using the effective interest rate method. Amortized costs recognized in the three and six month period ended June 30, 2014 relating to this line-of-credit amounted to $129 and $258 respectively (June 30, 2013 - $129 and $258 respectively). As at June 30, 2014, the carrying amount of such costs totaling $867 (December 31, 2013 - $1,125) has been classified as part of bank indebtedness in the condensed consolidated interim statement of financial position.

On December 6, 2013, the Company amended the credit facility to facilitate the acquisition of Total Specific Solutions (“TSS”). A new one year $350,000 term facility was added solely for the purposes of funding the TSS acquisition and related expenses (the “TSS Acquisition Facility”).

On June 24, 2014 Constellation Software Netherlands Holding Cooperatief U.A. (“CNH”), a subsidiary of Constellation and the indirect owner of 100% of TSS, entered into a €150,000 (approximately $205,000) term and €10,000 (approximately $14,000) multicurrency revolving credit facility (the “CNH Facility”) with a number of

14

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

European and North American financial institutions. The CNH Facility bears interest at a rate calculated at EURIBOR plus interest rate spreads based on a leverage table. The CNH Facility is collateralized by substantially all of the assets owned by CNH and its subsidiaries which includes substantially all of the assets of TSS and its subsidiaries. The CNH Facility contains standard events of default which if not remedied within a cure period would trigger the repayment of any outstanding balance. On June 24, 2014, €130,000 (approximately $177,000) was drawn on the term component of the CNH Facility and used to repay a portion of the TSS Acqusition Facility. €30,000 must be repaid in instalments over the next six years, and €100,000 is non-amortizing and due in seven years. The remaining €20,000 term component of the CNH Facility is currently available and if drawn must be repaid in five equal instalments starting on June 24, 2018. As at June 30, 2014 no amounts had been drawn on the €10,000 multicurrency revolving component of the CNH Facility. The revolving component of the CNH Facility is available for acquisitions, working capital needs, and other general corporate purposes until June 24, 2020. Transaction costs associated with the CNH Facility have been included as part of the carrying amount of the liability and are being amortized through profit or loss using the effective interest rate method. As at June 30, 2014, the carrying amount of such costs relating to this facility totalling approximately $7,000 (€5,000) has been classified as part of bank indebtedness in the condensed consolidated interim statement of financial position.

The CNH Facility and Constellation’s other credit facilities are independent of each other. The CNH Facility is not guaranteed by Constellation or its subsidiaries nor is Constellation or its subsidiaries subject to the terms of the CNH Facility other than, in each case, CNH and its subsidiaries. Similarly, CNH and its subsidiaries did not guarantee Constellation’s other credit facilities and are not subject to the provisions thereof. Constellation’s credit facilities impose limitations on the aggregate amount of investment that Constellation may make in CNH and its subsidiaries and the financial results of CNH and its subsidiaries are not included for the purposes of determining compliance by Constellation with the financial covenants in Constellation’s other credit facilities. The CNH Facility imposes limitations on the amount of distributions that CNH and its subsidiaries may make to Constellation.

On June 24, 2014, the Company further amended the Constellation credit facility to accommodate the CNH financing. The $350,000 TSS Acquisition Facility was reduced to a $150,000 term facility to reflect the payment received from the proceeds of the CNH Facility.

The TSS Acquisition Facility is non-amortizing, bears interest at a rate calculated at prime or LIBOR plus interest rate spreads based on a leverage table consistent with the spreads applicable to Constellation’s revolving credit facility, and matures on December 31, 2014. The TSS Acquisition Facility is subject to the existing security requirements of Constellation revolving credit facility, which includes security covering the majority of Constellation’s and its subsidiaries’ (other than CNH and its subsidiaries) present and future real and personal property, assets and undertakings, and is subject to various debt covenants. As at June 30, 2014, approximately $146,000 had been drawn from the TSS Acquisition Facility.

8. Provisions

The provisions balance is comprised of various individual provisions for onerous contracts and other estimated liabilities of the Company of uncertain timing or amount.

15

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

9. Income taxes

Income tax expense is recognized on management’s best estimate of the actual income tax rate for the interim period applied to the pre-tax income of the interim period for each entity in the consolidated group. As a result of foreign exchange fluctuations, acquisitions and ongoing changes due to intercompany transactions amongst entities operating in different jurisdictions, the Company has determined that a reasonable estimate of a weighted average annual tax rate cannot be determined on a consolidated basis. The Company’s consolidated effective tax rate in respect of continuing operations for the three and six months ended June 30, 2014 was 31% and 37% respectively (three and six months ended June 30, 2013 was 29% and 27% respectively).

10. Capital and other components of equity

Dividends

During the six months ended June 30, 2014 the Board of Directors approved and the Company declared dividends of $2.00 per common share. The dividend declared in the quarter ended June 30, 2014 representing $21,192 was paid and settled on July 3, 2014. The dividend declared in the quarter ended June 30, 2013 representing $21,192 was paid and settled on July 3, 2013.

A dividend of $1.00 per share representing $21,192 was accrued as at December 31, 2013 and subsequently paid and settled on January 3, 2014.

16

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

11. Finance and other income and finance costs

The Company enters into forward foreign exchange contracts from time to time with the objective of mitigating volatility in profit or loss in respect of financial liabilities. During the period, the Company did not purchase any additional forward foreign exchange contracts. The Company had one forward contract outstanding as at December 31, 2013 with a value of $19,343 and the contract was settled on January 3, 2014.

12. Earnings per share

Basic and diluted earnings per share

17

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)

13. Financial instruments

Fair values versus carrying amounts

The carrying values of accounts receivable, accounts payable, accrued liabilities, the majority of acquisition holdbacks and bank debt, approximate their fair values due to the short-term nature of these instruments. Bank debt is subject to market interest rates.

The Company has transaction costs associated with its current line of credit. As a result at June 30, 2014, the fair value of the line of credit is $124,100 and the carrying value is $123,233. (December 31, 2013: fair value of $149,200, carrying value of $148,075). The fair value and the carrying value of the TSS Acquisition Facility is $145,920 (December 31, 2013: fair value of $329,438 and carrying value of $329,095). The fair value of the CNH Facility is $177,372 and the carrying value is $170,321.

The fair values of available-for-sale financial assets, being equity investments, at the reporting date are determined by the quoted market values for each investment.

Fair value hierarchy

The table below analyzes financial instruments carried at fair value, by valuation method.

In the table below, the Company has segregated all financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The Company has no financial assets or liabilities measured using level 2 inputs.

Financial assets and financial liabilities measured at fair value as at June 30, 2014 and December 31, 2013 in the consolidated financial statements are summarized below. The Company has no additional financial liabilities measured at fair value after initial recognition other than those recognized in connection with business combinations.

18

CONSTELLATION SOFTWARE INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of U.S. dollars, except per share amounts and as otherwise indicated)

Three and six months ended June 30, 2014 and 2013

(Unaudited)