Solium Releases 2018 Fourth Quarter and Year-end Financial Results

Financial figures expressed in U.S. dollars ("USD")

• Annual revenue increased by 26% to $108.3 million
• Cash position strong at $97.0 million
• Annual adjusted EBITDA increased by 22% from $12.5 million to $15.3 million
• Major projects on track

CALGARY, March 13, 2019 /CNW/ - Solium Capital Inc. (TSX: SUM) ("Solium" or the "Company") today announced its financial results for the fourth quarter and year ended December 31, 2018.

Financial and operating highlights for the fourth quarter and year ended December 31, 2018, compared to the same periods in 2017:

• Revenue increased by 18% to $27.1 million in the fourth quarter of 2018 and by 26% to $108.3 million for the year ended December 31, 2018;
• Adjusted EBITDA¹ increased by 136% to $4.2 million in the fourth quarter of 2018 and by 22% to $15.3 million for the year ended December 31, 2018;
• Earnings from operations was $1.4 million in the fourth quarter of 2018 and $4.1 million for the year ended December 31, 2018;
• Net earnings increased to $1.8 million in the fourth quarter of 2018 and increased by 46% to $4.9 million for the year ended December 31, 2018;
• Cash on hand as at December 31, 2018 totaled $97.0 million.

(1) Adjusted EBITDA is a non-IFRS financial measure. See definition and reconciliation to net earnings (loss) in Note 1 on page 4.

Key factors affecting the results for the year ended December 31, 2018:

• License revenue – License and subscription fees increased by $16.5 million or 29% for the year ended December 31, 2018 as compared to 2017. Based on local currencies, the growth was 27% as compared to 2017. Growth in license revenue is largely driven by the U.S. white label agreements, organic growth from new sales in all regions, and revenue from the acquired Capshare and Advanced-HR businesses.
  
  
• Transaction activity – In addition to the recurring license revenue that Solium collects for the use of its technology platforms, the Company also collects re-occurring transaction based revenue. Transaction based revenue increased by $3.4 million or 13% compared to 2017. The per-participant trading activity was 2% higher in 2018 compared to 2017 and 6% higher than the historical five-year average.
  
  
• Operating costs – Operating expenses (excluding 2017 sales tax adjustment) increased by $23.0 million or 28% compared to 2017. The increases are primarily driven by planned hiring to support the U.S. white label agreements; costs from the new businesses of Capshare, Solium Analytics and Advanced-HR; and the resulting incremental systems and infrastructure costs. The Company also incurred costs in the first half of 2018 associated with an investment opportunity that did not materialize, further contributing to the increase over 2017. The Company had 781 full-time equivalent employees (FTEs) at the end of 2018 compared to 677 FTEs at the end of 2017.

2018 acquisition:

• In February 2018, the Company acquired Advanced-HR, a U.S. company that provides compensation data and compensation planning software for private and venture backed companies. Advanced-HR provides compensation data through its products OptionDriver and OptionImpact to over 2,500 private companies and 120 venture capital firms.

Subsequent event:

• On February 10, 2019, Solium entered into a definitive arrangement agreement (the "Arrangement Agreement") with Morgan Stanley and a wholly-owned subsidiary of Morgan Stanley under which Morgan Stanley, through its wholly-owned subsidiary, will acquire all of the issued and outstanding Common Shares at a price of CAD$19.15 per Common Share (the "Arrangement"), subject to receipt of certain approvals. The total transaction was valued at approximately $900 million (CAD$1.1 billion) at the time of the announcement. Subject to receiving regulatory approvals the Arrangement is expected to close in the second quarter of 2019. Readers are referred to the management information circular (the "Arrangement Circular") of the Company dated March 12, 2019 relating to the special meeting of the Securityholders of the Company called to consider the Arrangement and posted on SEDAR for additional information regarding the Arrangement. The Arrangement Circular is not incorporated by reference into this press release.

Changes in significant accounting policies:

The Company has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases effective January 1, 2018. IFRS 9 Financial Instruments is also effective from January 1, 2018 but does not have an impact on the Company's financial information. For more information, refer to note 4 of the Company's Consolidated Financial Statements for the year ended December 31, 2018.

Selected financial information for the fourth quarter and year ended December 31, 2018:
(Expressed in thousands of USD except share, per share amounts and percentages)

	Three Months Ended December 31,			Year Ended December 31,
	2018 $	2017 $	% Change	2018 $	2017 $	% Change
Revenue	27,086	22,876	18%	108,344	86,086	26%
Operating expenses	25,643	23,054	11%	104,210	79,922	30%
Adjusted EBITDA^1	4,152	1,760	136%	15,270	12,481	22%
Earnings (loss) from operations	1,443	(178)	NM^3	4,134	6,164	(33%)
Net earnings (loss)	1,848	(458)	NM^3	4,900	3,358	46%
Net earnings (loss) per share^2
Basic	0.033	(0.008)	NM^3	0.087	0.067	30%
Diluted	0.032	(0.008)	NM^3	0.086	0.066	30%
Issued and outstanding (thousands)
Common Shares				56,724	55,866	2%
Diluted^2				60,555	59,510	2%

(1) Adjusted EBITDA is a non-IFRS financial measure. See definition and reconciliation to net earnings (loss) in Note 1 on page 4.

(2) Diluted net earnings (loss) per share and diluted shares outstanding are discussed in further detail in Notes 2 and 3 on page 4, respectively.

(3) NM denotes as not meaningful.

Regional breakdown of results:
(Expressed in thousands of USD except percentages)

Currently included in the International reportable segment are the results relating to the U.K., Europe, Australia, and Hong Kong operations.

	Three Months Ended December 31,
	Canada		U.S.		International		Consolidated
	2018	2017	2018	2017	2018	2017	2018	2017
Revenues	7,546	7,707	15,760	11,280	3,780	3,889	27,086	22,876
Adjusted EBITDA^1	2,256	1,287	2,224	515	(328)	(42)	4,152	1,760
Adjusted EBITDA %^1	30%	17%	14%	5%	(9%)	(1%)	15%	8%
Earnings (loss) from operations	1,418	380	825	(258)	(800)	(300)	1,443	(178)

	Year Ended December 31,
	Canada		U.S.		International		Consolidated
	2018	2017	2018	2017	2018	2017	2018	2017
Revenues	33,089	29,652	58,127	41,703	17,128	14,731	108,344	86,086
Adjusted EBITDA^1	9,310	8,307	5,051	4,889	909	(715)	15,270	12,481
Adjusted EBITDA %^1	28%	28%	9%	12%	5%	(5%)	14%	14%
Earnings (loss) from operations	5,323	5,253	(283)	2,472	(906)	(1,561)	4,134	6,164

(1) Adjusted EBITDA is a non-IFRS financial measure. See definition and reconciliation to net earnings (loss) in Note 1 on page 4.

During the three month period ended December 31, 2018 the Company had an overall increase in cash and cash equivalents of $0.9 million (2017: $29.9 million) and an overall decrease of cash and cash equivalents during the twelve month period ended December 31, 2018 of $3.2 million (2017: increase $36.5 million).

Total cash from operating activities was $7.2 million for the three month period ended December 31, 2018 (2017: $8.5 million) and $13.1 million for the year ended December 31, 2018 (2017: $15.0 million). Cash from financing activities was $0.5 million for the three month period ended December 31, 2018 (2017: $36.4 million) and $2.3 million for the year ended December 31, 2018 (2017: $38.1 million) as a result of the issuance of Common Shares from employee stock option exercises offset by payment of lease liabilities. Cash used in investing activities was $1.8 million for the three month period ended December 31, 2018 (2017: $15.5 million) and $11.4 million for the year ended December 31, 2018 (2017: $21.1 million). The cash used in investing activities in 2018 is primarily as a result of the Advanced-HR acquisition.

Working capital including cash and cash equivalents as at December 31, 2018 was $89.1 million (2017: $92.9 million). Included in working capital was trade and other receivables of $19.8 million (2017: $15.0 million) and trade payables and other accruals of $15.6 million (2017: $13.2 million).

Outlook

In Q4 2016 and Q2 2017, Solium entered into white label license agreements with U.S. partners Morgan Stanley and UBS Financial Services Inc., respectively and committed additional resources in 2018 to ensure the success of these projects. The Company is actively migrating clients with conversion expected to be completed in 2020, accommodating individual client needs and partner migration schedules.

Solium continues to invest for future revenue growth, and expects this to continue into 2019 resulting in some impact on profitability in the near term. The Company continues to invest in its capabilities and infrastructure – ensuring best-in-class technology and service – to drive long term investor returns.

Notes:
1.	Earnings before interest, taxes, depreciation and amortization ("EBITDA") and 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 income, income taxes, depreciation of property and equipment, depreciation of right of use assets, amortization of intangible assets, amortization of contract costs, foreign exchange gain or loss (on translation of working capital), share-based payments, adjustment of earn-out payable, and sales tax adjustment. 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 (loss):

		Three Months Ended December 31,		Year Ended December 31,
		2018	2017	2018	2017
	Adjusted EBITDA	4,152	1,760	15,270	12,481
	Foreign exchange gain (loss)	1,392	156	1,567	(448)
	Share-based payments	(906)	(786)	(3,423)	(2,437)
	Adjustment of earn-out payable	-	-	926	-
	Sales tax adjustment included in operating expense	-	361	-	1,302
	EBITDA	4,638	1,491	14,340	10,898
	Finance income	242	396	1,095	1,002
	Depreciation of property and equipment	(329)	(535)	(1,964)	(1,880)
	Depreciation of right of use assets	(491)	-	(1,911)	-
	Amortization of intangible assets	(771)	(823)	(3,060)	(2,712)
	Amortization of contract costs	(212)	(155)	(778)	(590)
	Income taxes	(1,229)	(832)	(2,822)	(3,360)
	Net earnings (loss)	1,848	(458)	4,900	3,358

2.	Diluted net earnings (loss) per share is calculated using the treasury stock method.
3.	Diluted shares as presented equals issued and outstanding Common Shares plus the effects of dilutive outstanding stock options and restricted share units.

About Solium Capital Inc.

Solium Capital Inc. (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance.  From offices in the United States, Canada, the United Kingdom, Europe, Australia and Hong Kong, 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 100 countries. Follow us @Solium and visit us at solium.com.

Certain statements included 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 projects with Morgan Stanley and UBS Financial Services Inc. including plans to hire additional employees, the anticipated timing of completing migrating the Morgan Stanley and UBS customers to Shareworks, the Company's investment strategy, including plans to continue to invest for future revenue growth and the impact thereof on short-term profitability and the anticipated timing of completing the Arrangement. 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, the competitive environment in which the Company operates, the Company's ability to realize the anticipated benefits from its investment in the partnerships with Morgan Stanley and UBS Financial Services Inc., the satisfaction of conditions to the completion of the Arrangement, the parties to the Arrangement Agreement complying with their obligations thereunder, and no event occurring that would give rise to the termination of the Arrangement Agreement. 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, product capability and acceptance, the inability to satisfy the conditions to the completion of the Arrangement, and the occurrence of an event that could give rise to the termination of the Arrangement Agreement. The foregoing is not exhaustive and other risks are detailed from time to time in other continuous disclosure documents of the Company, including the Company's annual information form for the year ended December 31, 2018. The risks associated with the Arrangement are further detailed in the Arrangement Circular. Readers are advised not to place undue reliance on forward-looking statements or information. The forward-looking statements and forward-looking information included in this press release are made as of the date of this press release. The Company does not intend to nor does it assume any obligation to update publicly or to revise any of the forward-looking statements or forward looking information, whether as a result of new information, subsequent events or otherwise, except as required by law.

The Management's Discussion and Analysis and the Consolidated Financial Statements for the year ended December 31, 2018 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: Heidi Christensen Brown, NATIONAL Capital Markets, 416.848.1389, [email protected]