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Press release from Marketwire

Solium Capital Inc. Releases 2010 Second Quarter Results

Monday, August 16, 2010

Solium Capital Inc. Releases 2010 Second Quarter Results09:00 EDT Monday, August 16, 2010 CALGARY, ALBERTA--(Marketwire - Aug. 16, 2010) - Solium Capital Inc. ("Solium" or the "Company") (TSX:SUM) today announced its financial results for the second quarter and six months ended June 30, 2010. Second quarter 2010 compared to second quarter 2009 -- Revenue increased by 16% to $5.6 million -- EBITDA increased by 22% to $881,637 -- Net earnings increased by 46% to $356,060 -- EPS increased by 38% to $0.011 Six months ended June 30, 2010 compared to six months ended June 30, 2009 -- Revenue increased by 19% to $11.5 million -- EBITDA increased by 26% to $2.3 million -- Net earnings increased by 54% to $1.2 million -- EPS increased by 56% to $0.039 The first six months of 2010 was characterized by a moderate recovery of participant share trading and associated transaction activity as the share prices of many clients gained strength over the prior year. Along with the increase in transaction volumes, transaction based revenues increased during the quarter. The increase in participant share trading activity was the largest contributor to the increase in revenue and earnings for the second quarter and six months ended June 30, 2010 as compared to the same periods from 2009. Financial results for the quarter and six months ended June 30, 2010: Three Months Ended June 30 Six Months Ended June 30 % % 2010 2009 Change 2010 2009 Change Revenue $5,589,877 $4,801,386 16% $11,464,412 $ 9,674,170 19% Expenses $4,851,287 $4,261,360 14% $ 9,460,784 $ 8,280,494 14% EBITDA(1) $ 881,637 $ 723,477 22% $ 2,284,575 $ 1,811,764 26% Earnings from operations $ 679,547 $ 693,941 (2%) $ 2,006,535 $ 1,461,997 37% Earnings before taxes $ 738,590 $ 540,026 37% $ 2,003,628 $ 1,393,676 44% Net earnings $ 356,060 $ 244,067 46% $ 1,219,732 $ 791,645 54% Net earnings per share Basic $ 0.011 $ 0.008 38% $ 0.039 $ 0.025 56% Diluted(2) $ 0.011 $ 0.008 38% $ 0.039 $ 0.025 56% Issued and outstanding Common shares 31,159,433 31,162,279 (0.1%) Diluted(3) 33,735,406 33,656,179 0.2% Notes: 1. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a non-GAAP financial measure which does not have any standardized meaning prescribed by Canadian GAAP (generally accepted accounting principles) and is therefore unlikely to be comparable to similar measures presented by other issuers. EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses such as interest, tax, depreciation and amortization. Management uses EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors EBITDA against budget and past results on a regular basis. The measure is a key component in determining the annual bonus pool for staff and management. The following is a reconciliation of EBITDA to net earnings: Three months ended Six months ended June June 30 30 ----------------------------------------------- 2010 2009 2010 2009 ----------------------------------------------- EBITDA 881,637 723,477 2,284,575 1,811,764 Interest expense (1,499) (14,354) (6,852) (34,002) Amortization expense (141,548) (169,097) (274,095) (384,085) Income tax expense (382,530) (295,959) (783,896) (602,032) ----------------------------------------------- Net earnings 356,060 244,067 1,219,732 791,645 ----------------------------------------------- ----------------------------------------------- 2. Diluted earnings per share is calculated using the treasury stock method. 3. Diluted shares as presented equals issued and outstanding common shares plus outstanding stock options and restricted share units. HIGHLIGHTS OF FINANCIAL PERFORMANCE -- Revenue from Canadian operations was $4,241,638 in the second quarter of 2010 (2009 - $3,475,752) and $8,471,218 in the six months ended June 30, 2010 (2009 - $6,945,206), while revenue from US operations was $1,348,239 in the second quarter of 2010 (2009 - $1,325,634) and $2,993,194 in the six month period ended June 30, 2010 (2009 - $2,728,964). -- Share trading activity in Canada relative to the number of direct sales participants in the second quarter of 2010 was 79% of the annual average for the previous 5 years (2009 - 54%), and in the six months ended June 30, 2010 was 82% of the annual average for the previous 5 years (2009 - 48%). -- Total expenses in the second quarter of 2010 were $4,851,287 (2009 - $4,261,360) and $9,460,784 in the six month period ended June 30, 2010 (2009 - $8,280,494). -- Cash on hand as at June 30, 2010 was $4.5 million (December 31, 2009 - $5.9 million). -- Cash totaling $695,801 was generated during the second quarter of 2010, while $1.4 million was used during the six months ended June 30, 2010. 2009 performance bonuses and 2009 income taxes, both previously accrued for items, were paid out in the first quarter of 2010 contributing to the usage of cash in the first six months of 2010. Cash generated from operations was $661,529 in the second quarter of 2010 (2009 - $577,133), and $1.8 million in the six months ended June 30, 2010 (2009 - $1.4 million). -- Working capital as at June 30, 2010 was $5.6 million (December 31, 2009 - $4.5 million). -- Long-term debt as at June 30, 2010 was $97,143 (December 31, 2009 - $679,030). The final repayment on this debt subsequently occurred on July 19, 2010, thereby fully retiring the obligation. -- In 2009, the Company initiated a Normal Course Issuer Bid ("NCIB") program to purchase, for cancellation, up to 502,000 common shares. This NCIB expired on June 21, 2010. A cumulative total of 179,700 common shares were purchased through the NCIB at a total cost of $213,924. BUSINESS DEVELOPMENT -- On August 15, 2010, the Company signed an agreement to acquire the North American employee stock option and Transcentive businesses of Computershare Ltd. ("Computershare"). Under the terms of the agreement, substantially all of Computershare's property, assets and client contracts associated with this business will be purchased in exchange for 7,775,000 common shares of Solium, and additional potential cash consideration of U.S.$3 million contingent on revenue generated by Solium from the acquired business in the third year after the acquisition. -- The Company will also enter into a transition services agreement under which Computershare will provide certain services and intellectual property for up to five years at a cost of $22 million over five years. At the end of this period, Solium will own all of the intellectual property associated with Computershare's product offerings in this business. -- The transaction is expected to close in the fourth quarter of 2010. The completion of the transaction is subject to customary closing conditions, including obtaining the approval of the Toronto Stock Exchange and required regulatory approval. About Solium Capital Inc.Solium Capital Inc. (TSX:SUM) specializes in the administration and execution of equity-based incentive and savings plans and is setting the industry standard for service excellence, industry knowledge and innovative technical leadership. Solium's technology platform, Shareworks, is a leading online solution that integrates the management of multiple equity plan types including stock options, share units, and employee share purchase plans on one comprehensive platform.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. Forward-looking statements or information include but are not limited to expectations regarding future revenues, earnings, capital expenditures, and operating and other costs; business strategy and objectives; market trends; acquisition and disposition plans; the sufficiency of cash and working capital for future operations; and the timing and the completion of various development projects. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Assumptions have been made regarding, among other things, the Company's transition to new products and releases; the number of customer transactions; the length of the sales cycles; the competitive environment; the ability to maintain or accurately forecast revenue from the Company's products or services; the ability of the Company to identify, hire, train, motivate and retain qualified personnel; currency fluctuations; the ability of the Company to develop, introduce and implement new products as well as enhancements or improvements for existing products that respond, in a timely fashion, to customer/product requirements and rapid technological change; risks associated with operations; the impact of any changes in the laws and regulations in the jurisdictions in which the Company operates; and the effect of new accounting pronouncements or guidance. Although the Company 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 the Company 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. Such risks and uncertainties include, among others, general business and economic conditions; the overall performance of stock market(s); actions of competitors and partners; the regulatory environment; the corporate governance environment and regulatory reporting requirements for Solium's clients; product capability and acceptance; the Company's ability to generate sufficient cash flow from operations to meet its current and future obligations; and the Company's ability to access external sources of financing if required. The foregoing is not exhaustive and other risks are detailed from time to time in other continuous disclosure filings of the Company. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. These forward-looking statements and future-oriented financial information contained herein are made as of the date of the Management's Discussion and Analysis. The Company utilizes future-oriented financial information for budgeting and planning purposes and the information may not be appropriate for other purposes.The Management's Discussion and Analysis and the interim consolidated financial statements for the three and six months ended June 30, 2010 referred to herein will be available on SEDAR at under Solium Capital Inc., or at FURTHER INFORMATION PLEASE CONTACT: Media Contacts: Solium Capital Inc. Jeff English President & CEO (403) 450-6002 or (877) 380-7793 or Solium Capital Inc. Lynn Leong EVP, Finance & Admin (403) 450-6015 or (877) 380-7793