CALGARY, March 14, 2017 — Solium Capital Inc. (TSX: SUM) (“Solium” or the “Company”) today announced its financial results for the fourth quarter and year ended December 31, 2016. All dollar figures are in U.S. dollars unless otherwise stated.

  • Revenue increased by 7% year-over-year
  • Adjusted EBITDA decreased by 3% year-over-year
  • Cash position strong at $63.7 million

Financial and operating highlights for the fourth quarter and year ended December 31, 2016:

  • In the fourth quarter, the Company entered into a license agreement with Morgan Stanley, whereby Solium’s Shareworks platform will become the equity administration platform supporting Morgan Stanley’s Global Stock Plan Services business;
  • Revenue increased by 12% to $18.9 million for the fourth quarter of 2016 and by 7% to $77.2 million for the year ended December 31, 2016;
  • Earnings from operations increased by 30% to $1.5 million for the fourth quarter of 2016 and decreased by 29% to $7.0 million for the year ended December 31, 2016;
  • Adjusted EBITDA1 increased by 25% to $2.6 million in the fourth quarter of 2016 and decreased by 3% to $13.4 million in the year ended December 31, 2016;
  • Net earnings decreased by 38% to $0.8 million in the fourth quarter of 2016 and by 51% to $4.0 million in the year ended December 31, 2016; and
  • Cash on hand as at December 31, 2016 totaled $63.7 million with no debt on the balance sheet.

Key factors affecting financial results for the year ended December 31, 2016:

  • Organic growth in license revenue – The Company experienced increased license and subscription fees during 2016 as compared to 2015. Based on local currencies, the growth was 5% as compared to 2015. With the fluctuation in foreign exchange rates to convert CAD and international currencies to USD, license and subscription fee revenue increased by $1.8 million or 4% compared to 2015.
  • Transaction activity – In addition to the recurring license revenue that Solium collects for the use of its Shareworks platform, the Company also collects re-occurring transaction based revenue. Transaction based revenue increased by $2.5 million or 13% compared to 2015. The per participant trading activity was 23% higher in 2016 compared to 2015 and 10% higher than the historical five-year rolling average.
  • Global expansion – Operating expenses (excluding a change in estimate to SRED claims and sales tax adjustment) increased when compared to the same periods in 2015. Operating expenses increased by $4.4 million compared to 2015 as a result of the Company’s continued buildout of its global platform and operations, including the opening of its Barcelona client service center in July 2016. The increase compared to 2015 is primarily driven by an increase in the number of full-time equivalent employees (FTEs) and other costs required to support the Company’s international expansion. The Company had 520 FTEs at the end of 2016 compared to 468 FTEs at the end of 2015.
  • Sales tax adjustment – During the preparation of the Consolidated Financial Statements for the year ended December 31, 2016, the Company identified an adjustment was required for historical sales tax that has not been charged on certain software-as-a-service (SaaS) revenues. As a result, a charge to operating expenses of $0.3 million was made in 2016, and $0.4 million to 2015.
  • Scientific Research and Experimental Development Investment Tax Credits – During 2016, the Canada Revenue Agency completed its audit of the Company’s 2013 claim for scientific research and experimental development (“SRED”) credits and has denied the full amount of the claim. Accordingly, the Company decreased its accrual for estimated 2013 to 2015 SRED claims receivable to zero, resulting in a charge to operating expenses of $2.2 million for 2016. The Company will continue to actively pursue SRED tax credits.

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