Thank you, Donna. Welcome everyone.

As most of you know, we go directly to questions during these conference calls. So, Donna is going to provide you with instructions for how to queue up.

Donna, please go ahead.

Just on the organic growth in the quarter, probably above trend, is there anything you can specifically highlight that was strong in the quarter?

Nothing really jumped out at me, Tom.

It’s positive in all the...

It’s very diversified, if that’s a fair statement, is there or was there any one jurisdiction or vertical that seemed to be stronger than the others?

No, it seemed to be across the board in the subs. We had pretty good backlogs throughout the North American operations.

Europe was a little less optimistic about the outlook, but the Q itself, for the quarter itself, I think it was pretty good.

Okay. And any comments like year-end budget type flushes, not that there is a material amount in your business per se, but nothing, no theme there?

Yes, I always wonder about that myself and try and keep my eyes open for it. When people take revenue, but don’t get cash, it usually turns up in extended receivables or work.

And so we are pretty vigilant about that kind of thing and nothing outstandingly obvious.

Okay, very good. And just on the guidance for next quarter, can you give us a little bit of high level color around like obviously hardware and such is going to affect the margins, can you give us a little bit of color around what’s in that guidance?

I think there is some seasonality around cleanses as well?

No, we build up our numbers from the ground up, and when we looked at them, they are considerably different than what the analysts had in their models. And so we figured we should remark upon it.

2 things appear to be driving it from our perspective. One is new acquisitions, which have come in with lower margins than our overall average for existing businesses.

And secondly, European margins aren’t as strong. My sense is the European economy isn’t as buoyant as the North American one.

In fact, in North America we are doing some hiring to deal with the backlog and our initiatives. So, we are fairly bullish.

Okay. How much of the new acquisitions is more transition-type margin?

And then some of that will improve over time versus for whatever reason that vertical or what have you may have lower margins in it?

Yes, I was having lunch with Steve Sadler from Enghouse a week or so ago. And we were talking about Europe; they have just done an acquisition over there.

And there seems to be an accepted wisdom that margins in Europe are lower, but when I look at it, I do tend to see higher revenues per person in much of Europe, although that’s not always the same in the U.K. And obviously social costs are higher in many other countries.

I don’t really see a reason for margins to be lower over the long-haul in those countries. Like the barriers to entry, if anything, are higher; the markets are more prescribed and smaller, but what we have experienced ourselves is that margins have been lower in Europe in our longest tenured European subsidiaries.

So, I don’t know if it’s fundamental or just tradition.

Okay. And the question I get a lot on your pipeline, I don’t know if you can categorize this well, but I assume there is a nice ranking of most attractive opportunities, and certainly, it must be a matrix around availability and obviously that relates to price.

You have done a lot of acquisitions over the last quarter and last year. Are we getting into the kind of A minus, B plus type opportunities or is it more just about availability and timing?

As a rule, we have generally had more resources than opportunities. And I think that’s still the case.

Okay. And finally John, I think you’re $44-ish million in debt.

The facility is about $300 million. Is that correct, is that still the number?

Yes, it’s $300 million for 4 years starting last year.

Just some follow-up questions on the European acquisitions. In your press release, you mentioned that some of the European acquisitions are internationally profitable and so how should we think about the timeframe it might take and the work involved to get those back to profitability?

We don’t have that much experience in Europe plus a number of the acquisitions are in the sectors that right now are not in great shape in Europe. So, for instance, we bought our largest business in the marine sector.

We picked up one recently in the flat glass processing sector. We have as you know a bunch in the public sector in Europe and that also has been under a lot of pressure.

So, a lot of the sectors that we are in are not doing great. And the timing and the sector will certainly have an impact on how quickly they improve.

Obviously, if we are losing money, we are not happy and we are going to do what we can on the expense side, but you can’t always move quickly in Europe.

Okay. And from a working capital perspective, is there anything we should be aware about, should we expect to see DSOs creep up as by virtue of these European acquisitions?

Again, I don’t think that there is anything fundamental that would make that the case.

Okay. And can you quantify the proportion of revenue coming from Europe at this point, I know that it was 19% for 2012, but I am assuming on a run-rate basis, are you more sort of in the 25% to 30% range or?

I don’t think it’s that high, but we have people beavering through wads of paper here to see if we’ve got a crisper answer.

And also I mean historically we have seen some seasonality whereby your Q1 margin is just tends to be weaker than subsequent quarters. And so as we look at the margin guidance you provided, is that sort of an additional factor in there or would that impact the pretty modest relative to the other factors you highlighted?

No, the seasonal variation occurs because of how we pay our bonuses. It tends to drive payroll deductions to the maximums often in the first quarter, and so subsequent payroll deductions to which we contribute are not as significant in the later quarters.

And so you will always get a sort of seasonal blip in margins in Q1, downward blip.

Just a follow-up on the margin guidance here. Could you maybe highlight what your thinking is for some of the drivers that could move margin from 14% to 18% in Q1?

Is it mostly just a function of Europe or is it a function of the bodies being hired? Like how should we think about the breakdown for that range?

And all of those things are going to affect it. So, we always forecast hiring, but it always takes us longer than we would hope to actually bring people on board and get them trained and deployed.

And so that will be a factor, the revenue recognition on hardware transactions tends to be a ship-and-recognize kind of revenue rec. And so that can drive top line and to some extent bottom line.

On the licenses and services side, we tend to do percent complete for the vast majority of those and so it tends to be less volatile and a little more predictable and obviously for maintenance it’s pretty predictable and…

Okay. And just switching gears to the revenue side a little bit, it looks like professional services was pretty strong in Q4, should we read into that as a good positive leading indicator for organic growth in Q1 and maybe the rest of 2013?

I didn’t read that into it.

Okay, okay. And then just a quick question for John here in terms of the tax rate of 15% sort of a good rate that we should be used -- that we can use going forward?

It’s averaged out in ‘12 and I think we have given that indication in the past that’s the range we are using. It’s difficult to predict because our losses are in various jurisdictions.

Yes.

And, but for 2013 we’re reasonably comfortable with the same range we have given in the past.

Okay. And just one final one before I pass the line here.

The customer dispute sort of thing that you press-released back in December, I’m just wondering how that $10 million were -- if you were to collect that, would that flow through the income statement or how would that sort of look in the financials?

I guess I don’t care as long as we get the cash.

Doug Taylor on for Scott Penner. Just another follow-up on the European acquisitions, are these acquisitions being made with the same ROI hurdles as your other deals or are they somewhat lower?

No, we are using the same ROI hurdles and a slightly more joined SI [ph] when we look to the future.

Okay, fair enough. John a question for you, are there any charges related to these deals in your adjusted EBITDA guidance for Q1?

No, I mean we expense our transaction costs for all the deals and Q4 was a very active quarter. So, you would have seen all the expenses flow through in Q4.

And Q1 year-to-date we’ve only done 1 significant European acquisition.

Okay, you’ve stated that your intention to increase investments in North America address backlog in staff and new growth initiatives. Can you provide a little more color onto what those growth initiatives are and when you expect to see that contributing to organic growth?

They tend to be manifold and so very hard to sort of say it’s this initiative, it’s that initiative. We have obviously got some larger ones and some smaller ones.

When we embark on initiatives, we have discovered that if you have dedicated staff they tend to work way better than if you are trying to timeshare a bunch of people. The old homily about taking 20% of your time and building brilliant new initiatives does not in our experience work.

So, many of our operating groups and business units have carved out small teams to work on things that they think have potential and I had been seeing more and more and more of that over the course of the last couple of years. So, that’s starting to gather some momentum and experience some success.

In addition to that as backlog builds we tend to hire PS related people and they take a little while to come up to speed. They tend not be as productive in the short-term, but a year or 2 in they tend to sort of start generating decent margins on the incremental investment.

Okay. You had a very active couple of quarters, even a year for acquisitions.

What about the current environment has made it attract to get deals done and do you expect these conditions to prevail in the near-term?

I think we are optimistic that there will be opportunities for us in Europe. We are deploying resources there to find them.

We believe that as long as the economy there is less buoyant, there is more likely to be more opportunities. And so I’m kind of keen on spending time and money in that space.

In North America we haven’t seen as good a pipeline of opportunities. We have also been able to do some deals or investments where we bought from corporations.

Those are always attractive to us because they tend to be a little bigger and may not be viewed as core assets for the corporations that are selling. Whereas entrepreneurs, when we buy from them, it’s often their single biggest asset and they are more likely to time their exits to when the economy is doing better.

And so right now, I’d love to see some more small entrepreneur real businesses in the acquisition pipeline, but we are not seeing a whole lot of them.

Okay. Last one for me, how often does the board review the dividend payout?

Quarterly, annually? And when would the next review be?

So, we did this quarterly dividends for this quarter and we will do the same thing next quarter.

Mark, maybe you can talk about the key product initiatives, particularly Trapeze and Harris in terms of if there is any major product redevelopments or launches are planned on those 2 businesses in the year?

Paul, we don’t do a lot of major stuff. Occasionally, we do rewrites.

Trapeze has been pretty good about consistently updating the technology in their platforms over the years without sort of any big blips up and down. At Harris, they have done rewrites on a number of their platforms over the years.

And I can’t think of any sort of $10 million initiative to do a rewrite on a major platform. It tends to be more piecemeal.

We rewrite 1 module, we rewrite the next, we gradually move them in, and that sort of thing. And the same thing applies to the add-on products.

They tend not to be anywhere near as large in terms of potential as the core products and hence the size of the initiatives isn’t as great and the risk of failure isn’t as great and you sort of edge your way into it.

So, pretty much what I would have guessed, but it’s fair to say that R&D spend this year or the plans that you guys have submitted looks largely more aimed towards some core maintenance and then some add-ons and those selective add-ons are likely in the larger groups?

No, I don’t think so. So, for instance, we have major add-ons in a number of the groups.

So, it isn’t a top down driven R&D approach, it’s very much bottoms up and if the clients want it, that always gets the highest priority, because the people are willing to write checks, it’s the best indication there’s a market.

Fair enough. On the hardware side of things, John, is it fair to think the agreement you concluded in February that once we get through sort of a partial quarter here that hardware expense should tick down fairly materially post Q1 or is there something else that we are missing here in terms of some of the European deals?

There is nothing you are missing. There is a significant hardware component, which we have had for a couple of years, which relates to our business, PTS business in Switzerland, so that obviously will not go away, but the incremental hardware expense in Q4 which we broke out for you in the MD&A, that will go away.

Okay, that’s what we thought. The last one on my side would be with M&A moving to Europe, Mark, is there any more infrastructure investment you need to sort of make in Europe to deal with localization infrastructure there or I know you are going to run the businesses separately, but any shift or thought to facing more in Europe?

No. We try -- as you know it’s a very small head office, I think with 13 or 14 people.

We are not about to establish a European venue in Brussels or anything, particularly not Brussels. So, I don’t see a whole lot of buildup.

There will be a few guys who work virtually out of one of our offices or another doing M&A.

Got it. But nothing overtaxed of everything else, no major incremental lift on that?

We have been adding tax personnel marginally here, but some of our operating groups are adding them as well.

And then the last one on the legal dispute, the only thing you left off that was just any wild guess on timing in terms of when that eventually resolves, is it sort of hopefully cleared its way through in F2013?

The judicial system is a constant learning opportunity for me. I cannot predict how it will play out.

It’s an interesting comment that you are looking to continue to acquire in Europe in that there were the ROI hurdles in line with your historical metrics. Is there anything that you’re seeing at these recent European acquisitions that you didn’t foresee when you made the acquisitions?

Not yet, but give me time.

Okay, and relates to that, PTS, I think in the first quarter did negative 7% margins and then you ramped that business up to double-digit margins in a couple of quarters. Could you outline how you are able to improve margins on PTS so quickly and then what factors may or may not apply to some of the recent European acquisitions?

So, on PTS, acquisition accounting is a very nasty thing. It tends to smooth out margins and give you good margins right off the bat.

And so one of the reasons why we always gave you cash flow accounting as well as financial accounting -- debt based financial accounting at the time we did PTS was because you just can’t look at GAAP/IFRS accounting on acquisitions. So, the -- that aside, obviously the cash flows from the acquisition have been good, part of that thesis was that we could get some working capital out of the business, but it didn’t need to be quite as capital intensive as when we bought it.

And part of thesis was that the recurring revenues were a very attractive proportion of that business and it had been very focused on new name sales and a number of its competitors had been pricing new name sales for perfection, which many of them have not experienced and the pricing would improve in that particular market. Obviously the local management have done a spectacular job with the business.

It wasn’t like we loaded up our crack team of folks from North America and flew them over. It was a made-in-Switzerland solution and the guys did a great job with the business.

And at a very high level, could you share -- do you have any metrics you can share maybe just anecdotally on historical performance on your ability or the acquired company’s ability to improve the margins post-acquisition, like is it something like you are able to improve them 10 basis points or anything along those lines you could provide?

It’s all over the map. Some of the businesses we buy are so awesome, good.

All we hope is that we don’t screw it up. Those are often really tight businesses run by entrepreneurs who have been doing it for years.

And some of the others are orphans inside of large corporations that aren’t much loved and have performed poorly for years, and so it varies all over the map.

Okay. And one more question from me, in regard to Q1 revenue guidance, the sequential decline, is that -- is there any CSI Tech revenue for the full quarter in that guidance?

The only portion in Q1 is up until the day we sold it off, so I think it’s about a month, most of revenue in Q1.

And in terms of sequential drops I mean, Q1 margins nearly always lower than Q4 margins in our business historically.

Mark, can you maybe give us a bit of color on your target growth rates maybe for 1, 2, 3 years out? We are trying to get a better handle on modeling the business on a longer term basis and it’d be kind of helpful to have some sort of order of magnitude on that side.

If I had a hope and aspiration for the company around organic growth, it would be 5% plus, that’s hard to do, but it certainly adds tremendously to both intrinsic value and the quality of the business if you achieve it, generally means you are taking market share in the kind of markets in which we compete and that’s a very healthy sign. In addition to that, the acquired growth is really a function of the opportunities that are out there.

If we were awash in opportunities, we’d grow very, very quickly; if we weren’t we’d grow much less quickly and deploy the capital by returning it to shareholders.

So, there is no real targeted growth rate that’s internal?

No, I hate the idea of having arbitrarily targeted a particular growth rate, because it tends to influence behavior and takes away from the discipline of a round return on capital employed.

Okay, fair enough. And if you look at your base of absolutions you made over the past number of years, my guess is that a bulk of it is actually in the small, medium enterprise market.

So, you look at some of those common themes that have been around for the past few years and you and I have talked about this before is that clouds SaaS operations are certainly getting more presence. What are your clients saying about that and are you guys doing it to position your products into that market or you are just going to go with what you have right now?

No, we are definitely investing in it. It’s getting a lot of buzz and so we are having to respond to the fact that clients are asking for it.

Sometimes when we do those re-writes and offer these solutions in a cloud form, we find that it’s something that clients like the idea of being available, but aren’t immediately willing to adopt and change from their legacy systems. And so, I think you got to be very careful about putting the cart before the horse, spending way too much money on SaaS rewrites that unfortunately don’t end up paying back for long periods of time.

And then I suspect that many of the cloud centric players that are out there are going to fall into that category.

Okay and then one final question in regards to more at your operating level, has there been any turnover or the retention pretty good here still and I just wanted to get a bit of perspective on that?

Yes, the senior level of retention is extremely good.

Mark, I just wonder if you could comment a bit on the public sector market and I apologize if you went over this early in the call, I missed the first couple of minutes, but I guess what I am looking at is sort of what is the potential impact in the U.S. on any sequesterization at the federal level and also what sort of the market looking like to you guys on a state level budgets in the U.S.?

So, we do extremely little with state level government or even, for that matter, federal government directly. We largely work with municipalities.

Now, there are also housing authorities with whom we work, and they do get a chunk of their funding from the Feds, just as the municipal transit authorities get a chunk of their funding from the Feds. So, I don’t doubt there will be some trickle-down effect, we haven’t yet seen it.

Okay, great, and in terms of the PTS business, how is the pipeline looking in that business today versus sort of a year ago, is it expanding? And obviously you won a contract in Germany recently; is -- are you seeing more strength in Europe than you are in the U.S.

in that business?

Can’t really talk to the growth pipeline, it’s I just don’t follow what the contracts that are underbid are for that particular sector.

Okay, Donna, thank you very much. Thank you everyone for attending the call.

Look forward to seeing you at the AGM if you can make it out. It’s at least for me, always a great opportunity to talk to shareholders individually and to have you meet a bunch of the management team from Constellation.

Bye-bye now. Thank you.