The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

Solium Releases 2013 Second Quarter Financial Results

Wednesday, August 07, 2013

Solium Releases 2013 Second Quarter Financial Results

08:00 EDT Wednesday, August 07, 2013
  • Revenue increased by 31%
  • Adjusted EBITDA increased by 10%
  • Cash position strong at $17.3 million

CALGARY, Aug. 7, 2013 /CNW/ - 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,     Six Months Ended June 30,
    2013   2012   2012
Adjusted1
  % Change
from
Adjusted
  2013   2012   2012
Adjusted1
  % Change
from
Adjusted
Revenue   $15,649,246   $11,916,176   $11,916,176   31%   $33,799,814   $24,568,848   $24,568,848   38%
Expenses before income                                
  taxes   $13,684,666   $2,376,813   $10,210,099   34%   $27,927,361   $12,428,408   $20,261,694   38%
Adjusted EBITDA2   $2,940,489   $2,683,364   $2,683,364   10%   $8,353,616   $6,828,062   $6,828,062   22%
Earnings from operations   $1,717,759   $1,659,704   $1,659,704   3%   $5,959,783   $4,594,124   $4,594,124   30%
Earnings before income                                
  taxes   $1,964,580   $9,539,363   $1,706,077   15%   $5,872,453   $12,140,440   $4,307,154   36%
Net earnings3   $1,349,111   $6,470,081   $495,277   172%   $4,021,894   $8,439,303   2,464,499   63%
                                 
Net earnings per share4                                
    Basic   $0.032   $0.155   $0.012   167%   $0.095   $0.202   $0.059   61%
    Diluted   $0.030   $0.154   $0.011   173%   $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 liabiliy 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-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, and the growth of the 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 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 .  

SOURCE: Solium Capital Inc.

For further information:

Investor relations

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

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

The Globe at your Workplace
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections