CALGARY, November 5, 2013

  • Revenue increased by 37%
  • Adjusted EBITDA increased by 85%
  • Cash position strong at $20.6 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 three and nine month periods ended September 30, 2013.

Financial and operating highlights for the three and nine month periods ended September 30, 2013:

  • Revenue increased by 37% to $16.9 million in the third quarter of 2013 and by 37% to $50.7 million in the nine month period ended September 30, 2013;
  • Adjusted EBITDA2 increased by 85% to $4.6 million in the third quarter of 2013 and by 39% to $12.9 million in the nine month period ended September 30, 2013;
  • Net earnings1,3 increased by 407% to $2.2 million in the third quarter of 2013 and by 114% to $6.2 million in the nine month period ended September 30, 2013 (when excluding the impact of the Computershare liability extinguishment in the nine month period results for 2012); and
  • Cash on hand as at September 30, 2013 was $20.6 million with no significant debt on the balance sheet except for the contingent liability of $2.8 million due to Computershare.

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

Trading activity – As in the first two quarters of the year, the Company continued to experience strong participant share trading activity and corresponding transaction based revenue in the third quarter of 2013.

Acquisitions – CapMX, OptionEase, Corporate Focus and RSSOne were acquired in 2012 and early 2013. Revenue, expenses and a loss from operations were recorded from these acquired businesses in the three and nine month periods ended September 30, 2013. The Company achieved positive EBITDA and cash flow from these acquired businesses commencing in the third quarter of 2013 as a result of synergies. For comparison, revenue and expenses were recorded for the CapMX business only for the three months ended September 30, 2012 and for four of the nine months ended September 30, 2012, as this acquisition occurred in the second quarter of 2012.

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

Selected financial information for the three and nine month periods ended September 30, 2013:

(in thousands of Canadian dollars except per share amount)

Three Months Ended September 30,

2013

2012

2012

Adjusted1

% Change from Adjusted

Revenue

$16,884

$12,347

$12,347

37%

Expenses before income taxes

$13,699

$11,234

$11,234

22%

Adjusted EBITDA2

$4,591

$2,480

$2,480

85%

Earnings from operations

$3,400

$1,539

$1,539

121%

Earnings before income taxes

$3,185

$1,123

$1,123

184%

Net earnings3

$2,181

$431

$431

407%

Net earnings per share4
  Basic

$0.051

$0.010

$0.010

410%

  Diluted

$0.048

$0.010

$0.010

380%

Issued and outstanding
  Common shares
  Diluted5

Nine Months Ended September 30,

2013

2012

2012

Adjusted1

% Change from Adjusted

Revenue

$50,684

$36,916

$24,568,848

37%

Expenses before income taxes

$41,626

$23,652

$20,261,694

32%

Adjusted EBITDA2

$12,944

$9,309

$6,828,062

39%

Earnings from operations

$9,360

$6,133

$4,594,124

53%

Earnings before income taxes

$9,057

$13,263

$4,307,154

67%

Net earnings3

$6,203

$8,870

2,464,499

114%

Net earnings per share4
  Basic

$0.148

$0.212

$0.059

114%

  Diluted

$0.140

$0.211

$0.058

106%

Issued and outstanding
  Common shares

43,043

41,793

41,793

3%

  Diluted5

47,749

45,998

45,998

4%


Comparative amounts for the nine month period ended September 30, 2012 discussed below exclude the impact of the extinguishment of the Computershare liability recorded during the second quarter of 2012 (see Note 1 below).

Currently included in the Canadian reportable segment are the results relating to the establishment of operations in the U.K. and Australia.

Revenue from Canadian operations was $7.9 million in the third quarter of 2013 (2012: $6.0 million) and $24.6 million in the nine month period ended September 30, 2013 (2012: $18.6 million), while revenue from U.S. operations was $9.0 million in the third quarter of 2013 (2012: $6.3 million) and $26.1 million in the nine month period ended September 30, 2013 (2012: $18.3 million).

Adjusted EBITDA in Canada was $2.7 million in the third quarter of 2013 (2012: $1.1 million) and $7.9 million in the nine month period ended September 30, 2013 (2012: $4.9 million), while adjusted EBITDA in the U.S. was $1.9 million in the third quarter of 2013 (2012: $1.4 million) and $5.0 million in the nine months ended September 30, 2013 (2012: $4.4 million).

Net earnings from Canadian operations were $1.7 million in the third quarter of 2013 (2012: $0.2 million) and $5.3 million in the nine month period ended September 30, 2013 (2012: $2.5 million), while net earnings from U.S. operations were $0.5 million in the third quarter of 2013 (2012: $0.2 million) and $0.9 million in the nine month period ended September 30, 2013 (2012: $0.4 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.

Net earnings per share was $0.051 in the third quarter of 2013 (2012: $0.010) and $0.148 in the nine month period ended September 30, 2013 (2012: $0.069).

During the nine month period ended September 30, 2013, the Company had overall net cash inflow of $5.9 million (2012: $2.8 million). Cash generated from operations inclusive of working capital changes was $6.3 million (2012: $7.5 million), and net cash outflow from investing activities was $1.5 million during the nine month period ended September 30, 2013 (2012: $3.9 million). Working capital as at September 30, 2013 was $15.4 million (December 31, 2012: $7.0 million).

Outlook

Transaction activity continued to be stronger in the third quarter of 2013 relative to levels in 2012. A loss from operations was generated in the third quarter and the nine month period ended September 30, 2013 for the acquisitions completed in 2012 and early 2013. However, the Company achieved a positive contribution to Adjusted EBITDA and cash flow in the third quarter of 2013 as a result of synergies.

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 international operations in the three and nine month periods ended September 30, 2013. The Company expects organic growth in international markets as new direct clients go live on the Shareworks platform and the Barclays white-label arrangement gains momentum.

The contingent liability of $2.8 million due to Computershare is payable if the revenue generated by Solium from the clients acquired from Computershare during the 12 months preceding the third anniversary of the acquisition date is greater than or equal to a certain threshold. Based on interim calculations, management has determined that there is uncertainty as to whether the revenue for the twelve months ending November 7, 2013 will reach the required threshold. As a result, subsequent to review and agreement by Computershare, the liability due to Computershare may be reversed and a gain on this extinguishment may be recognized in the fourth quarter of 2013.

Notes:

  1. For comparative purposes, results for the nine month period ended September 30, 2012 have been adjusted to remove the impact of the unusual gain of $15.6 million on extinguishment of the amount due to Computershare, the intangibles and goodwill charge of $7.8 million, and the associated deferred income tax expense impact of $1.9 million (“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:

    (in thousands of Canadian dollars except per share amount)

  3. Three months ended September 30

    Nine months ended September 30

    2013

    2012

    2013

    2012

    Adjusted EBITDA

    4,591

    2,480

    12,944

    9,309

    Foreign exchange gain

    (111)

    (325)

    8

    (202)

    Gain on extinguishment of amount due to Computershare

    15,630

    Intangibles and goodwill charge

    (7,797)

    EBITDA

    4,480

    2,155

    12,952

    16,940

    Finance costs

    (104)

    (91)

    (311)

    (501)

    Amortization expense

    (1,191)

    (941)

    (3,584)

    (3,175)

    Income tax expense

    (1,004)

    (692)

    (2,854)

    (4,394)

    Net earnings

    2,181

    431

    6,203

    8,870

  4. Deferred income tax expense of $1.9 million 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.
  5. Diluted net earnings per share is calculated using the treasury stock method.
  6. 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-based incentive plans administration, financial reporting and compliance. From 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 integrating businesses acquired in 2012 and 2013, continued investments in Shareworks, the requirement to make contingent cash payments to Computershare, and the growth of the U.K. and Australian 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 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 nine month periods ended September 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