Lumine Group Inc. Announces Results for the Three and Twelve Months Ended December 31, 2023

TORONTO, March 4, 2024 /CNW/ - Lumine Group Inc. ("Lumine Group" or "the Company") announces financial results for the three and twelve months ended December 31, 2023. All amounts referred to in this press release are in US dollars unless otherwise stated.

The following press release should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2023, management's discussion and analysis ("MD&A") for the year ended December 31, 2023, all of which can be found on SEDAR+ at www.sedarplus.ca. Additional information about Lumine Group is also available on SEDAR+ and on Lumine Group's website www.luminegroup.com.

Q4 2023 Headlines:

• Revenue grew 110% to $143.1 million compared to $68.3 million in the same quarter prior year.
• The Company generated operating income of $41.6 million during the quarter, a 294% increase from $10.6 million in the same quarter prior year.
• An expense of $1,525.0 million was incurred in the quarter related primarily to the increase in fair value of the redeemable preferred and special securities, of which, $1,504.8 million is related to the convertible shares and $20.2 million is related to the dividend payable. Fair value of the preferred and special securities is primarily dependent on the price movement of the Company's subordinate voting shares.
• The Company generated a net loss of $1,506.1 million during the quarter, from net loss of $1.1 million in the same quarter prior year. The net loss is primarily related to the redeemable preferred and special securities expense.
• Cash flows from operations ("CFO") increased $16.7 million to $26.4 million compared to $9.6 million in Q4 2022, representing an increase of 174%.
• Free cash flow available to shareholders ("FCFA2S") increased $12.5 million to $20.3 million compared to $7.7 million in Q4 2022, representing an increase of 161%.

Year-to-Date Q4 2023 Headlines:

• Revenue grew 95% to $499.7 million compared to $255.7 million in the same twelve-month period prior year.
• The Company generated operating income of $144.7 million in the twelve-month period ended December 31, 2023, an increase of 115% from $67.3 million in the same period prior year.
• An expense of $2,871.0 million was incurred in the twelve-month period ended December 31, 2023 related to the increase in fair value of the redeemable preferred and special securities, of which, $2,802.5 million is related to the convertible shares and $68.5 million is related to the dividend payable. Fair value of the preferred and special securities is primarily dependent on the price movement of the Company's subordinate voting shares.
• The Company generated a net loss of $2,826.3 million during the twelve-month period ended December 31, 2023, from net income of $27.4 million in the same period prior year. The net loss is primarily related to the redeemable preferred and special securities expense.
• CFO increased $73.6 million to $108.2 million compared to $34.6 million in the twelve-month period ended December 31, 2022, representing an increase of 213%.
• FCFA2S increased $58.5 million to $88.8 million compared to $30.3 million in the twelve-month period ended December 31, 2022, representing an increase of 193%.

Total revenue for the three months ended December 31, 2023 was $143.1 million, an increase of 110%, or $74.8 million, compared to $68.3 million for the comparable period in 2022. For the twelve months ended December 31, 2023, total revenue was $499.7 million, an increase of 95%, or $243.9 million, compared to $255.7 million for the comparable period in 2022. The increase for the three and twelve months ended December 31, 2023 compared to the same periods in the prior year is primarily attributable to revenues from new acquisitions. Organic growth is -3% and 0%, respectively, for the three and twelve months ended December 31, 2023, after adjusting for the impact of changes in the valuation of the US dollar against most major currencies in which the Company transacts business. For acquired companies, organic growth is calculated as the difference between actual revenues achieved by each business in the financial period following acquisition, compared to the estimated revenues they achieved in the corresponding financial period preceding the date of acquisition by the Company. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Operating income for the three months ended December 31, 2023 was $41.6 million compared to $10.6 million for the same period in 2022. For the twelve months ended December 31, 2023, operating income was $144.7 million compared to $67.3 million for the same period in 2022. The increase for the three and twelve month periods is primarily attributable to growth from acquisitions. Operating income is not a standardized financial measure and might not be comparable to measures disclosed by other issuers. See "Non-IFRS Measures".

Net loss for the three months ended December 31, 2023 was $1,506.1 million compared to net loss of $1.1 million for the same period in 2022. Net loss for the twelve months ended December 31, 2023 was $2,826.3 million compared to net income of $27.4 million for the same period in 2022. The decrease in net income for the three and twelve month periods is primarily attributable to an expense of $1,525.0 million for the three months ended December 31, 2023 and $2,871.0 million for the twelve months ended December 31, 2023 related to fair value adjustments and accrued dividends on the redeemable preferred and special securities issued in relation to the acquisition of WideOrbit and public listing of Lumine Group.

For the three months ended December 31, 2023, CFO increased $16.7 million to $26.4 million compared to $9.6 million for the same period in 2022 representing an increase of 174%. For the twelve months ended December 31, 2023, CFO increased $73.6 million to $108.2 million compared to $34.6 million for the same period in 2022 representing an increase of 213%. The primary reason for the increase is that CFO includes the impact of changes in non-cash operating assets and liabilities exclusive of effects of business combinations or, changes in non-cash operating working capital ("NCOWC") which improved during the year ended December 31, 2023 compared to the same period prior year.

For the three months ended December 31, 2023, FCFA2S increased $12.5 million to $20.3 million compared to $7.7 million for the same period in 2022 representing an increase of 161%. For the twelve months ended December 31, 2023, FCFA2S increased $58.5 million to $88.8 million compared to $30.3 million for the same period in 2022 representing an increase of 193%. The increase in the three and twelve months ended December 31, 2023 is driven by higher CFO compared to the same periods in 2022 partly offset by interest paid on bank debt. FCFA2S is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.  See "Non-IFRS Measures".

Non-IFRS Measures

Operating income (loss) refers to income (loss) before income taxes, amortization of intangible assets, redeemable Preferred and Special Share expense, and finance and other expenses (income). We believe that operating income is useful supplemental information as it provides an indication of the profitability of the Company related to its core operations. Operating income (loss) is not a recognized measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Accordingly, readers are cautioned that operating income (loss) should not be construed as an alternative to net income (loss).

The following table reconciles operating income to net income:

	Three months ended December 31,		Year ended December 31,
	2023	2022	2023	2022
Net income (loss)	(1,506.1)	(1.1)	(2,826.3)	27.4
Adjusted for:
Amortization of intangible assets	22.9	9.3	81.2	31.8
Redeemable preferred and special         securities expense	1,525.0	-	2,871.0	-
Finance and other expense (income)	1.1	0.8	11.1	(0.4)
Income tax expense (recovery)	(1.3)	1.5	7.6	8.5
Operating income (loss)	41.6	10.6	144.7	67.3

Free cash flow available to shareholders ''FCFA2S'' refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on bank debt, transaction costs on bank debt, repayments of lease obligations, dividends paid to redeemable preferred and special securities holders, and property and equipment purchased. The Company believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Lumine Group does not make any acquisitions, or investments, and does not repay any debts. While the Company could use the FCFA2S to pay dividends or repurchase shares, the Company's objective is to invest all of its FCFA2S in acquisitions which meet the Company's hurdle rate.

FCFA2S is not a recognized measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.

The following table reconciles FCFA2S to net cash flows from operating activities:

	Three months ended December 31,		Year ended December 31,
	2023	2022	2023	2022
Net cash flows from operating activities:	26.4	9.6	108.2	34.6
Adjusted for:
Interest paid on lease obligations	(0.2)	(0.1)	(0.6)	(0.2)
Interest paid on other facilities	(4.0)	(0.2)	(10.4)	(0.2)
Credit facility transaction costs	(0.2)	(0.3)	(1.9)	(0.3)
Payment of lease obligations	(1.5)	(0.8)	(5.3)	(2.8)
Dividends paid	-	-	(0.0)	-
Property and equipment purchased	(0.3)	(0.5)	(1.1)	(0.8)
Free cash flow available to shareholders	20.3	7.7	88.8	30.3

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 Lumine Group 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 Lumine Group assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.

About Lumine Group Inc.

Lumine Group acquires, strengthens, and grows, vertical market software businesses in the communications and media industry. Learn more at www.luminegroup.com. 

Consolidated Statements of Financial Position
(In thousands of USD.  Due to rounding, numbers presented may not foot.)

	December 31, 2023	December 31, 2022
		Adjusted^1
Assets
Current assets:
Cash	$                146,509	$                  67,085
Accounts receivable	104,955	64,849
Unbilled revenue	39,858	9,805
Inventories	521	60
Other assets	40,392	23,087
	332,235	164,886
Non-current assets:
Property and equipment	4,164	3,115
Right of use assets	11,973	5,349
Deferred income taxes	6,197	2,931
Other assets	13,063	8,492
Intangible assets and goodwill	780,164	208,053
	815,561	227,940
Total assets	$             1,147,796	$                392,826
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$                      97,722	$                 65,362
Due to related parties, net	2,380	35,466
Current portion of bank debt	3,071	975
Deferred revenue	91,752	61,547
Provisions	-	22
Acquisition holdback payables	319	1,242
Lease obligations	6,358	2,069
Income taxes payable	12,873	8,413
Preferred and Special Securities	4,469,996	-
	4,684,471	175,096
Non-current liabilities:
Deferred income taxes	136,874	34,025
Bank debt	149,636	18,138
Lease obligations	6,921	4,719
Other liabilities	12,995	7,068
	306,426	63,950
Total liabilities	4,990,897	239,046
Equity:
Capital stock	-	-
Contributed surplus	(1,015,661)	162,692
Accumulated other comprehensive income (loss)	(6,296)	(8,912)
Retained earnings (deficit)	(2,821,144)	-
	(3,843,101)	153,780
Subsequent events
Total liabilities and equity	$                1,147,796	$             392,826

^{___________________________
1} The Company has restated its comparative financial information to include the results of Lumine Holdings from January 1, 2022. Refer to Note 2(b) to the Company's annual consolidated financial statements.

Consolidated Statements of Income (Loss)
(In thousands of USD, except per share amounts. Due to rounding, numbers presented may not foot.)

		Year ended December 31,
					2023	2022
						Adjusted^2
Revenue
License					$            46,140	$     38,731
Professional services					89,312	49,771
Hardware and other					19,864	7,273
Maintenance and other recurring					344,353	159,970
					499,669	255,745
Expenses
Staff					252,941	134,316
Hardware					13,042	4,617
Third party license, maintenance and        professional services					29,445	11,040
Occupancy					3,680	2,936
Travel, telecommunications, supplies,        software and equipment					21,497	11,610
Professional fees					16,561	12,289
Other, net					9,913	6,334
Depreciation					7,890	5,303
Amortization of intangible assets					81,223	31,836
					436,192	220,281
Redeemable Preferred and Special        Securities expense					2,870,997	-
Finance and other expenses (income)					11,085	(414)
					2,882,082	(414)
Income (loss) before income taxes					(2,818,605)	35,878
Current income tax expense (recovery)					24,795	15,742
Deferred income tax expense (recovery)					(17,146)	(7,266)
Income tax expense (recovery)					7,649	8,476
Net income (loss)					$    (2,826,254)	$        27,402
Weighted average shares outstanding:
Basic					72,499,119	63,582,713
Diluted					245,076,178	197,812,346
Earnings per share:
Basic					$         (38.98)	$            0.43
Diluted					$         (38.98)	$            0.14

^{______________________
2} The Company has restated its comparative financial information to include the results of Lumine Holdings from January 1, 2022. Refer to Note 2(b) to the Company's annual consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)
(In thousands of USD. Due to rounding, numbers presented may not foot.)

				Year ended December 31,
				2023	2022
					Adjusted^3
Net income (loss)				$     (2,826,254)	$        27,402
Items that are or may be reclassified subsequently to net        income (loss):
Foreign currency translation differences from foreign        operations and other				2,616	(12,141)
Other comprehensive (loss) income for the year, net of income tax				2,616	(12,141)
Total comprehensive income (loss) for the year				$     (2,823,638)	$          15,261

^{__________________________________
3} The Company has restated its comparative financial information to include the results of Lumine Holdings from January 1, 2022. Refer to Note 2(b) to the Company's annual consolidated financial statements.

Consolidated Statement of Changes in Equity
(In thousands of USD.  Due to rounding, numbers presented may not foot.)

Year ended December 31, 2023
	Capital stock	Contributed surplus	Accumulated other comprehensive (loss) income	Retained earnings (deficit)	Total equity
Balance at January 1, 2023	$             -	$       162,692	$        (8,912)	$               -	$      153,780
Total comprehensive income (loss) for the year:
Net income (loss)	-	-	-	(2,826,254)	(2,826,254)
Other comprehensive income (loss):
Foreign currency translation differences from foreign operations and        other	-	-	2,616	-	2,616
Total other comprehensive income (loss) for the year	-	-	2,616	-	2,616
Total comprehensive income (loss) for the year	-	-	2,616	(2,826,254)	(2,823,638)
Transaction with Parent, recorded directly in equity
Capital contributions by Parent	-	22,451	-	-	22,451
Amalgamation with Lumine Group (Holdings) Inc.	-	(1,200,804)	-	-	(1,200,804)
Special Share conversion	-	-	-	5,110	5,110
Balance at December 31, 2023	$             -	$  (1,015,661)	$        (6,296)	$ (2,821,144)	$ (3,843,101)

Consolidated Statement of Changes in Equity
(In thousands of USD.  Due to rounding, numbers presented may not foot.)

Adjusted^4
Year ended December 31, 2022
	Capital stock	Contributed surplus	Accumulated other comprehensive (loss) income	Retained earnings  (deficit)	Net parent investment	Total equity
Balance at January 1, 2022	$             -	$                 -	$          3,229	$               -	$     169,920	$      173,149
Total comprehensive income (loss) for the year:
Net income (loss)	-	-	-	-	27,402	27,402
Other comprehensive income (loss):
Foreign currency translation differences from foreign        operations and other	-	-	(12,141)	-	-	(12,141)
Total other comprehensive income (loss) for the year	-	-	(12,141)	-	-	(12,141)
Total comprehensive income (loss) for the year	-	-	(12,141)	-	27,402	15,261
Transactions with Parent, recorded directly in equity
Capital contributions	-	-	-	-	76,400	76,400
Dividends to Parent	-	-	-	-	(111,030)	(111,030)
Acquisition of Lumine Portfolio entities		162,692			(162,692)	-
Balance at December 31, 2022	$             -	$       162,692	$        (8,912)	$               -	$               -	$      153,780

^{_____________________________
4} The Company has restated its comparative financial information to include the results of Lumine Holdings from January 1, 2022. Refer to Note 2(b) to the Company's annual consolidated financial statements.

Consolidated Statements of Cash Flows
(In thousands of USD.  Due to rounding, numbers presented may not foot.)

				Year ended December 31,
				2023	2022
					Adjusted^5
Cash flows from (used in) operating activities:
Net income (loss)				$ (2,826,254)	$     27,402
Adjustments for:
Depreciation				7,890	5,303
Amortization of intangible assets				81,223	31,836
Contingent consideration adjustments				(729)	(2,130)
Preferred and Special Securities expense (income)				2,870,997	-
Finance and other expenses (income)				11,085	(414)
Income tax expense (recovery)				7,649	8,476
Change in non-cash operating assets and liabilities exclusive of        effects of business combinations				(12,483)	(26,755)
Income taxes (paid) received				(31,150)	(9,093)
Net cash flows from (used in) operating activities				108,228	34,625
Cash flows from (used in) financing activities:
Interest paid on lease obligations				(626)	(204)
Interest paid on bank debt				(10,377)	(192)
Cash transferred from (to) Parent				(11,137)	104,871
Proceeds from issuance of bank debt				185,914	19,666
Repayments of bank debt				(50,897)	(244)
Transaction costs on bank debt				(1,935)	(316)
Payments of lease obligations				(5,282)	(2,781)
Issuance of Preferred Shares to Parent				181,484	-
Dividends paid				(24)	-
Net cash flows from (used in) in financing activities				287,119	120,800
Cash flows from (used in) investing activities:
Acquisition of businesses				(352,349)	(113,186)
Cash obtained with acquired businesses				41,286	5,295
Post-acquisition settlement payments, net of receipts				(5,938)	(6,669)
Property and equipment purchased				(1,141)	(783)
Other investing activities				(238)	-
Net cash flows from (used in) investing activities				(318,380)	(115,343)
Effect of foreign currency on cash and cash equivalents				2,456	(107)
Increase (decrease) in cash				79,424	39,975
Cash, beginning of period				67,085	27,110
Cash, end of period				$     146,509	$     67,085

^{______________________________________
5} The Company has restated its comparative financial information to include the results of Lumine Holdings from January 1, 2022. Refer to Note 2(b) to the Company's annual consolidated financial statements.

SOURCE Lumine Group Inc

David Nyland, Chief Executive Officer, Lumine Group, [email protected], [phone]