Solium Releases 2013 Fourth Quarter and Year-end Financial Results

• Revenue increased by 35% year over year
• Adjusted EBITDA increased by 42% year over year
• Cash position strong at $46.3 million

CALGARY, March 19, 2014 /CNW/ - Solium Capital Inc. ("Solium" or the "Company") today announced its financial results for the fourth quarter and year ended December 31, 2013.

Financial and operating highlights for the fourth quarter and year ended December 31, 2013:

• Revenue increased by 30% to $17.4 million for the fourth quarter of 2013 and by 35% to $68.1 million for the year ended December 31, 2013;
  
  
• Earnings from operations increased by 70% to $2.6 million for the fourth quarter of 2013 and by 56% to $12.0 million for the year ended December 31, 2013;
  
  
• Adjusted EBITDA¹ increased by 53% to $3.9 million in the fourth quarter of 2013 and increased by 42% to $16.8 million in the year ended December 31, 2013;
  
  
• Adjusted net earnings³ increased by 7% to $1.8 million in the fourth quarter of 2013 and increased by 75% to $8.0 million in the year ended December 31, 2013;
  
  
• Cash on hand and short term investments as at December 31, 2013 totaled $46.3 million with no debt on the balance sheet;
  
  
• In November 2013, the Company issued, pursuant to a public offering, 3,565,920 common shares at a price of $6.45 per share for gross proceeds of $23 million ($21.5 million net proceeds);
  
  
• In the fourth quarter, the Company again achieved a positive contribution to Adjusted EBITDA and cash flow from the acquisitions that had been completed in 2012 and early 2013.

Key factors affecting financial results for the fourth quarter and year ended December 31, 2013:

• Trading Activity - The Company experienced stronger participant share trading activity and corresponding transaction based revenue in the quarter and year ended December 31, 2013 compared to the corresponding periods in the prior year.
  
  
• Computershare - The Company had a contingent obligation to pay additional cash consideration of U.S. $3 million if the revenue generated by Solium from the clients that had been acquired in 2010 from Computershare was greater than or equal to a certain threshold during the 12 calendar months preceding the third anniversary of the closing of the acquisition.  The Company has determined that the threshold was not met and therefore the carrying value of the contingent obligation was reversed in the fourth quarter of 2013. The impact of this on the Company's consolidated statement of comprehensive income for the year ended December 31, 2013 was a gain of $2.9 million, a charge to intangible assets of $3.8 million, and a deferred income tax recovery of $1.5 million. The calculations made by the Company to determine that the additional cash consideration is not payable are currently being reviewed by Computershare.  If Computershare disagrees with Solium's calculations, they may be submitted to a third party auditor for review pursuant to the terms of the original acquisition agreement.
  
  
• Acquisitions -The Company achieved a positive contribution to Adjusted EBITDA and cash flow in 2013 from businesses acquired in 2012.
  
  
• Strategic initiatives - The Company continued to incur strategically driven expenses during the year ended December 31, 2013, pursuing potential business growth opportunities. This includes the continued development of a global equity administration platform and geographical service expansion into the United Kingdom ("U.K.") and Australia. The Company is pleased with the progress and results achieved to date with the above strategic initiatives.
  
  
• SRED ITC's -The Company recorded $0.9 million as a reduction to operating expenses in 2013 (2012:  $1.9 million) relating to Canadian scientific research and experimental development ("SRED") claims. The amount recorded in 2012 included SRED claims for two previous years as well as the claim for 2012, while the amount recorded in 2013 included only the claim for 2013.

Selected financial information for the fourth quarter and year ended December 31, 2013:

(In thousands of Canadian dollars except per share amount)

				Three Months Ended December 31,										Year Ended December 31,
				2013			Restated 2012			% Change				2013			Restated 2012			% Change
Revenue				$17,395			$13,425			30%				$68,079			$50,341			35%
Operating expenses				$14,759			$11,876			25%				$56,082			$42,658			31%
Earnings from operations				$2,636			$1,549			70%				$11,997			$7,682			56%
Adjusted EBITDA^1				$3,889			$2,548			53%				$16,833			$11,856			42%
Net earnings^2				$2,500			$1,596			57%				$8,703			$10,466			(17%)
Adjusted net earnings^3				$1,803			$1,678			7%				$8,006			$4,573			75%
Net earnings per share^4
	Basic			$0.056			$0.038			47%				$0.202			$0.250			(19%)
	Diluted			$0.053			$0.038			39%				$0.191			$0.247			(23%)
Adjusted net earnings per share^3,4
	Basic			$0.040			$0.040			-				$0.186			$0.109			71%
	Diluted			$0.038			$0.040			(5%)				$0.175			$0.108			62%
Issued and outstanding
	Common shares													46,905			41,909			12%
	Diluted^5													51,384			47,092			9%

Revenue from Canadian operations was $8.3 million in the fourth quarter of 2013 (2012: $6.6 million) and $33.0 million in the year ended December 31, 2013 (2012: $25.2 million), while revenue from U.S. operations was $9.1 million in the fourth quarter of 2013 (2012: $6.8 million) and $35.1 million in the year ended December 31, 2013 (2012: $25.1 million).

Adjusted EBITDA¹ in Canada was $1.4 million in the fourth quarter of 2013 (2012: $0.9 million) and $9.3 million in the year ended December 31, 2013 (2012: $5.9 million), while Adjusted EBITDA¹ in the U.S. was $2.5 million in the fourth quarter of 2013 (2012: $1.6 million) and $7.5 million in the year ended December 31, 2013 (2012: $6.0 million).

Net earnings for the fourth quarter and year ended December, 31 2012 have been restated to give effect to the restatement of income tax expense resulting from the increase of certain deferred income tax assets in the U.S. of $0.5 million and the reduction to the current tax payable at December 31, 2012 by $0.2 million.  The adjustments have resulted in an income tax recovery of $0.6 million for the three months December 31, 2012 (previously stated 2012 - $2.0 million) and $3.8 million for the year ended December 31, 2012 (previously stated 2012 - $4.6 million).

Adjusted net earnings³ from Canadian operations were $0.9 million in the fourth quarter of 2013 (2012: $0.3 million) and $6.2 million in the year ended December 31, 2013 (2012: $2.8 million), while adjusted net earnings³ from U.S. operations were $0.9 million in the fourth quarter of 2013 (2012: $1.4 million) and $1.8 million in the year ended December 31, 2013 (2012: $1.8 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.

Net earnings per share was $0.056 in the fourth quarter of 2013 (2012: $0.038) and $0.202 in the year ended December 31, 2013 (2012: $0.250). Adjusted net earnings³ per share was $0.040 in the fourth quarter of 2013 (2012: $0.040) and $0.186 in the year ended December 31, 2013 (2012: $0.109).

During the year ended December 31, 2013, the Company had overall cash inflow of $9.8 million (2012: outflow $2.2 million).  Funds from operations were $15.5 million for the year ended December 31, 2013 (2012: $10.8 million), while total cash inflow from operations inclusive of working capital changes was $11.8 million (2012: $11.4 million).  Net cash inflow from financing activities was $22.9 million (2012: $0.03 million) as a result of the equity financing which closed in November 2013, and net cash outflow from investing activities was $25.2 million (2012: outflow $13.9 million) due to the investment of funds in short term highly liquid bank-issued bearer deposit notes. Working capital as at December 31, 2013 was $41.9 million (December 31, 2012: $7.3 million).

Outlook

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 will continue to invest in its international operations, increasing the size of its U.K. and Australian offices.  The Company expects organic growth in international markets to increase.

On January 10, 2014, Solium completed the acquisition of GlobalSharePlans, a leading online provider of regulatory and tax information for companies with global equity incentive plans.  GlobalSharePlans has been rebranded to Solium GSP.  With this acquisition, the Company now has an office located in Spain.

Notes:

1.		Adjusted earnings before interest, taxes, depreciation and amortization  ("Adjusted EBITDA") is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers.  Adjusted EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses such as finance costs, income tax, amortization, foreign exchange gain or loss, gain on reversal and extinguishment of amounts due to Computershare, and intangibles and goodwill charges.  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 measure is a component in determining the annual bonus pool for staff and management.
		The following is a reconciliation of Adjusted EBITDA to net earnings:

									Three months ended December 31						Year ended December 31
									2013	Restated 2012					2013			Restated 2012
					Adjusted EBITDA				3,889	2,548					16,833			11,856
					Foreign exchange gain (loss)				620	157					628			(44)
					Gain on reversal of contingent obligation to Computershare				2,948	-					2,948			-
					Gain on extinguishment of amount due to Computershare				-	-					-			15,630
					Intangibles and goodwill charges				(3,752)	(594)					(3,752)			(8,391)
					EBITDA				3,705	2,111					16,657			19,051
					Finance costs				(41)	(100)					(352)			(601)
					Amortization expense				(1,253)	(999)					(4,837)			(4,174)
					Income tax recovery (expense)				89	584					(2,765)			(3,810)
					Net earnings				2,500	1,596					8,703			10,466

2.		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.  In addition, income tax expense in Q4 2012 has been restated to give effect to the increase of certain deferred income tax assets in the U.S. of $0.5 million and to reduce the current tax payable at December 31, 2012 by $0.2 million.
3.		The following  is a reconciliation of adjusted net earnings to net earnings:

										Three months ended December 31					Year ended December 31
										2013	Restated 2012				2013		Restated 2012
					Adjusted net earnings					1,803	1,678				8,006		4,573
					Gain on reversal of contingent obligation to Computershare					2,948	-				2,948		-
					Gain on extinguishment of amount due to Computershare					-	-				-		15,630
					Intangibles and goodwill charges					(3,752)	(594)				(3,752)		(8,391)
					Deferred tax recovery (expense)					1,501	512				1,501		(1,346)
					Net earnings					2,500	1,596				8,703		10,466

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 issuable on conversion of the convertible notes (which were converted in February 2014).

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, Europe 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 on Twitter @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 continued investments in Shareworks, the requirement to make contingent cash payments to Computershare, and the growth of international operations and international markets.  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 accuracy of its calculations respecting the Computershare contingent obligation, 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, general economic conditions, 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 audited consolidated financial statements for the year ended December 31, 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.

Investor relations
Conrad Seguin
TMX | Equicom
416.815.0700 x 251
[email protected]