CALGARY, August 7, 2013

  • Revenue increased by 31%
  • Adjusted EBITDA increased by 10%
  • Cash position strong at $17.3 million

Solium Capital Inc. (“Solium” or the “Company”), the leading provider of software as a service for global equity-based incentive plans administration, financial reporting and compliance, today announced its financial results for the second quarter and six month period ended June 30, 2013.

Financial and operating highlights for the three and six month periods ended June 30, 2013:

  • Revenue increased by 31% to $15.6 million in the second quarter of 2013 and by 38% to $33.8 million for the six month period ended June 30, 2013;
  • Adjusted EBITDA2 increased by 10% to $2.9 million in the second quarter of 2013 and by 22% to $8.4 million in the six month period ended June 30, 2013;
  • Net earnings1,3 increased by 172% to $1.3 million in the second quarter of 2013 and by 63% to $4.0 million in the six month period ended June 30, 2013 (when excluding the impact of the Computershare liability extinguishment in the second quarter and six month period results for 2012);
  • Cash on hand as at June 30, 2013 was $17.3 million with no significant debt on the balance sheet except for the contingent liability of $2.8 million due to Computershare; and
  • Announced the appointment of Jim Wulforst as President of Solium U.S.A.  Mr. Wulforst brings over 25 years of financial services experience, including an eleven year tenure with Fidelity Investments, with seven years as Senior Vice President of Fidelity’s stock plan services. Mr. Wulforst joins Solium from E*TRADE Financial Corporate Services Inc., where he was President for six years.

Key factors affecting financial results in the three and six month periods ended June 30, 2013:

Acquisitions – CapMX, OptionEase, and Corporate Focus were each acquired in 2012 subsequent to the first quarter of 2012 and the RSSOne business was acquired in the second quarter of 2013.  Revenue, expenses and a loss from operations were recorded from these acquired businesses in the three and six month periods ended June 30, 2013 compared to one month of revenue and expenses recorded from the CapMX business acquired in the second quarter of 2012.

Trading activity – The Company experienced strong participant share trading activity and corresponding transaction based revenue in the six month period ended June 30, 2013.  Trading activity in the second quarter of 2013 was slightly stronger than the second quarter of 2012; however, trading activity in the second quarter of 2013 followed the expected seasonal pattern with a decrease as compared to the first quarter of 2013.

Strategic initiatives – The Company continued to incur significant strategically driven expenses during the second quarter and the six month period ended June 30, 2013, pursuing potential business growth opportunities.  This includes the continued development of a global equity administration platform and geographical expansion into the U.K and Australia.  The Company is pleased with the progress and results achieved to date with the above strategic initiatives.

SRED income tax credits (“ITCs”) – The Company accrued $0.2 million of ITCs as a reduction to operating expenses in the second quarter of 2013 (2012: $0.6 million) and $0.3 million in the six month period ended June 30, 2013 (2012: $1.3 million) relating to SRED claims.  Accruals for 2012 included SRED claims for two previous years.

Selected financial information for the second quarter and six month period ended June 30, 2013:

 

Three Months Ended June 30,

 

 

 

 

2013

2012

2012

Adjusted1

% Change from Adjusted

Revenue

$15,649,246

$11,916,176

$11,916,176

31%

Expenses before income taxes

 

$13,684,666

$2,376,813

$10,210,099

34%

Adjusted EBITDA2

$2,940,489

$2,683,364

$2,683,364

10%

Earnings from operations

$1,717,759

$1,659,704

$1,659,704

3%

Earnings before income taxes

 

$1,964,580

$9,539,363

$1,706,077

15%

Net earnings3

$1,349,111

$6,470,081

$495,277

172%

 

Net earnings per share4

 

Basic

$0.032

$0.155

$0.012

167%

Diluted

$0.030

$0.154

$0.011

173%

 

Issued and outstanding

 

Common shares

 

Diluted5

 


Six Months Ended June 30,

2013

2012

2012

Adjusted1

% Change from Adjusted

Revenue

$33,799,814

$24,568,848

$24,568,848

38%

Expenses before income taxes

$27,927,361

$12,428,408

$20,261,694

38%

Adjusted EBITDA2

$8,353,616

$6,828,062

$6,828,062

22%

Earnings from operations

$5,959,783

$4,594,124

$4,594,124

30%

Earnings before income taxes

$5,872,453

$12,140,440

$4,307,154

36%

Net earnings3

$4,021,894

$8,439,303

2,464,499

63%

Net earnings per share4
Basic

$0.095

$0.202

$0.059

61%

Diluted

$0.091

$0.201

$0.058

57%

Issued and outstanding
Common shares

42,814,462

41,779,974

41,779,974

2%

Diluted5

47,123,783

45,415,837

45,415,837

4%


Comparative 2012 amounts discussed below are all excluding the impact of the extinguishment of the Computershare liability recorded during the second quarter of 2012 (See Note 1 below).

Revenue from Canadian operations was $7.1 million in the second quarter of 2013 (2012: $5.9 million) and $16.7 million in the six month period ended June 30, 2013 (2012: $12.6 million) while revenue from U.S. operations was $8.6 million in the second quarter of 2013 (2012: $6.0 million) and $17.1 million in the six month period ended June 30, 2013 (2012: $12.0 million).

Adjusted EBITDA in Canada was $1.4 million in the second quarter of 2013 (2012: $1.3 million) and $5.2 million in the six month period ended June 30, 2013 (2012: $3.8 million) while adjusted EBITDA in the U.S. was $1.5 million in the second quarter of 2013 (2012: $1.4 million) and $3.1 million in the six months ended June 30, 2013 (2012: $3.1 million).

Net earnings from Canadian operations were $1.0 million in the second quarter of 2013 (2012: $0.6 million) and $3.6 million in the six month period ended June 30, 2013 (2012: $2.2 million) while net earnings from U.S. operations were $0.4 million in the second quarter of 2013 (2012: loss $0.1 million) and $0.4 million in the six month period ended June 30, 2013 (2012: $0.2 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.

Net earnings per share was $0.032 in the second quarter of 2013 (2012: $0.012) and $0.095 in the six month period ended June 30, 2013 (2012: $0.059).

During the six month period ended June, 30, 2013, the Company had overall net cash inflow of $2.5 million (2012: outflow $0.7 million).  Cash generated from operations inclusive of working capital changes was $3.0 million (2012: $3.2 million), and net cash outflow from investing activities was $1.2 million during the six month period ended June 30, 2013 (2012: $3.9 million).  Working capital as at June 30, 2013 was $11.6 million (December 31, 2012: $7.0 million).

Outlook

Positive results in the second quarter of 2013 built on the growth experienced in 2012.  Transaction activity displayed normal seasonal patterns in the second quarter of 2013 and continued to be strong relative to levels in 2012.  While the acquisitions completed in 2012 generated a loss from operations in the second quarter and the six month period ended June 30, 2013, the Company anticipates that these businesses will have a positive contribution to Adjusted EBITDA once they are fully integrated into Solium over the next twelve months.  Solium will continue to invest in Shareworks to stay ahead of competitors as the only equity administration platform with end to end global capabilities on a single platform.

Solium continued to make progress in its UK operations in the second quarter and the six month period ended June 30, 2013.  The Company expects organic growth to continue in the UK going forward as new direct clients go live on the Shareworks platform and the Barclays white-label arrangement gains momentum.

Notes:

1. For comparative purposes, 2012 results have been adjusted to remove the impact of the unusual gain of $15,630,180 on extinguishment of the amount due to Computershare, the intangibles and goodwill charge of $7,796,894, and the associated deferred income tax expense impact of $1,858,482 (“the Computershare liability extinguishment”).

2. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding the impacts of foreign exchange gain or loss and one-time gains or losses (“Adjusted EBITDA”) are non-IFRS financial measures which do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers.  EBITDA and Adjusted EBITDA provide useful information to users as they reflect the net earnings prior to the effect of non-operating expenses such as finance costs, income tax, amortization, and foreign exchange gain or loss.  Management uses Adjusted EBITDA in measuring the financial performance of the Company.  Management monitors Adjusted EBITDA against budget and past results on a regular basis.

The following is a reconciliation of Adjusted EBITDA to net earnings:

Three months ended June 30

Six months ended June 30

2013

2012

2013

2012

Adjusted EBITDA

2,940,489

2,683,364

8,353,616

6,828,062

Foreign exchange gain

353,655

137,087

119,528

123,267

Gain on extinguishment of amount due to Computershare

15,630,180

15,630,180

Intangibles and goodwill charge

(7,796,894)

(7,796,894)

EBITDA

3,294,144

10,653,737

8,473,144

14,784,615

Finance costs

(106,834)

(90,714)

(206,858)

(410,237)

Amortization expense

(1,222,730)

(1,023,660)

(2,393,833)

(2,233,938)

Income tax expense

(615,469)

(3,069,282)

(1,850,559)

(3,701,137)

Net earnings

1,349,111

6,470,081

4,021,894

8,439,303

3. Deferred income tax expense of $1,858,482 recorded and previously reported in Q4 2012 that was related to the Computershare liability extinguishment, has been re-classified to Q2 2012 for comparative purposes.

4. Diluted net earnings per share is calculated using the treasury stock method.

5. Diluted shares as presented equals issued and outstanding common shares plus outstanding stock options, restricted share units and shares to be issued on conversion of the convertible notes.

About Solium Capital Inc.

Solium Capital Inc. (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance. From our operation centers in the United States, Canada, the United Kingdom and Australia, our innovative software-as-a-service (SaaS) technology powers share plan administration and equity transactions for more than 3,000 corporate clients with employee participants in more than 150 countries. Follow us @Solium and visit us at solium.com.

Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, or similar words suggesting future outcomes or statements regarding an outlook. Specific forward-looking statements in this press release include statements with respect to the timing and success of implementations of the Shareworks platform, the timing and anticipated benefits from the migration of Canadian trade flow into the Canadian brokerage business, and the realization of revenues from UK operations. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect, including assumptions with respect to the satisfaction and timing of receipt of required shareholder and regulatory approvals and other conditions to closing, the ability of the Company to identify, hire, train, motivate and retain qualified personnel, the Company’s ability to maintain or accurately forecast revenue from its products and services and the competitive environment in which the Company operates. Although Solium believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because Solium can give no assurance that such expectations will prove to be correct. The forward-looking statements and information are based on Solium’s current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including general business and economic conditions, actions of competitors and partners, the regulatory environment and product capability and acceptance. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.

The Management’s Discussion and Analysis and the condensed consolidated interim financial statements for the three and six month periods ended June 30, 2013 referred to herein will be available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.solium.com.

For further information:

Investor relations

Aaron Kabucis, CFA
TMX | Equicom
416.815.0700 x 230
akabucis@tmxequicom.com