- Revenue increased by 9% year over year
- Adjusted EBITDA increased by 9% year over year
- Cash position strong at $14.7 million
CALGARY, March 19, 2013 /CNW/ - Solium Capital Inc. ("Solium" or the "Company") today announced its financial results for the fourth quarter and year ended December 31, 2012.
Financial and operating highlights for the fourth quarter and year ended December 31, 2012:
- Revenue increased by 24% to $13.4 million for the fourth quarter of 2012 and by 9% to $50.3 million for the year ended December 31, 2012;
- Earnings from operations increased by 15% to $1.5 million for the fourth quarter of 2012 and by 20% to $7.7 million for the year ended December 31, 2012;
- Adjusted EBITDA1 stayed stable at $2.5 million in the fourth quarter of 2012 and increased by 9% to $11.9 million in the year ended December 31, 2012;
- Adjusted net earnings3 increased by 69% to $1.4 million in the fourth quarter of 2012 and by 61% to $4.3 million in the year ended December 31, 2012;
- Cash inflow from operations increased by 19% to $11.4 million while cash used in investing activities increased to $13.9 million in the year ended December 31, 2012;
- Cash on hand as at December 31, 2012 was $14.7 million with no significant debt on the balance sheet except for $2.0 million of convertible notes and the contingent liability of $2.5 million due to Computershare. The convertible notes automatically converted to common shares in February 2013;
- On April 3, 2012, the U.S. $17.3 million amount due to Computershare was extinguished and ceased to be an obligation of Solium;
- The Company closed the acquisition of the following businesses that provide record keeping technologies and services for capitalization tables, equity based incentive plans administration, financial reporting and compliance to private companies in the United States:
- CapMx assets of SVB Analytics, Inc. on May 15, 2012
- OptionEase Inc. on November 14, 2012
- Corporate Focus on December 31, 2012
- On December 20, 2012, the Company acquired intellectual property previously known as the Private Company Analysis Tool ("PCAT"), an innovative capitalization tables modeling tool for private companies and the various venture capital firms, private equity firms, law firms and accounting firms that are associated with them;
- The Company's first client in the UK market went live during the fourth quarter of 2012 with the implementation of the Barclays Bank white-label relationship;
- The Company opened an office in Sydney, Australia during the fourth quarter of 2012. The Company's initial business in Australia is with a global financial institution, which went live on Solium's Shareworks platform in Q1 2013.
Key factors affecting financial results for the fourth quarter and year ended December 31, 2012:
Computershare - On April 3, 2012, the Company received notice from Computershare of its decision to retain a stock option and restricted stock administration business that it acquired on December 31, 2011 as part of a larger transaction. As a consequence of this decision, effective April 3, 2012, the U.S. $17.3 million amount due to Computershare as at December 31, 2011 was extinguished and ceased to be an obligation of Solium. The impact of this event was a gain of $15.6 million partially offset by a charge to intangible assets and goodwill of $8.4 million. The charge to intangible assets and goodwill included a charge of $7.8 million recorded in the second quarter of 2012, and a charge of $0.6 million recorded in the fourth quarter of 2012 following an update to the calculations. In the fourth quarter of 2012, $1.9 million of deferred tax expense was recorded mainly in relation to the impact of the extinguishment and charges to intangible assets and goodwill, following the finalization of the associated tax calculations for these events during the year.
Acquisitions - The acquisitions of CapMX on May 15, 2012 and OptionEase on November 14, 2012 resulted in an increase in revenue and earnings for the fourth quarter and year ended December 31, 2012. CapMX and OptionEase provide record keeping technologies and service for capitalization tables and equity based incentive plans to private companies in the United States.
Strategic initiatives - The Company continued to make strategic investments to establish operations in the UK, launch its brokerage business in Canada to capture trade flow revenue from its Canadian operations, and pursue other potential business opportunities.
SRED ITC's - Based on the Company's successful SRED claims made in previous years, the Company accrued $0.3 million as a reduction to operating expenses in the fourth quarter of 2012 (2011: $0.5 million), and $1.9 million in the year ended December31, 2012 (2011: $0.5 million) relating to SRED claims.
Decreased expenses in the U.S. - Certain costs incurred in the year ended December 31, 2011 associated with the transition of the Computershare business, which was acquired in 2010, did not re-occur in the year ended December 31, 2012 as a result of the successful integration of the Computershare business during 2011.
Foreign exchange - On January 1, 2012, the Company designated the U.S. denominated liability due to Computershare as a hedge against the Company's net investment in its U.S. operations. As a result of the hedge accounting, the unrealized foreign exchange loss on the liability due to Computershare which was reported in net earnings in the fourth quarter of 2011 was not applicable in the fourth quarter of 2012. The unrealized foreign exchange loss on the liability due to Computershare has been reported in other comprehensive income in the fourth quarter and year ended December 31, 2012.
Selected financial information for the fourth quarter and year ended December 31, 2012:
|Three Months Ended December 31,||Year Ended December 31,|
|Expenses before income taxes||$12,412,174||$9,387,011||32%||$36,064,424||$41,374,361||(13%)|
|Earnings from operations||$1,549,602||$1,342,086||15%||$7,682,364||$6,391,141||20%|
|Earnings before income taxes2||$1,012,767||$1,433,696||(29%)||$14,276,198||$4,629,616||208%|
|Adjusted net earnings3||$1,446,365||$856,909||69%||$4,341,380||$2,700,687||61%|
|Net earnings per share4|
|Adjusted net earnings per share4, 5|
|Issued and outstanding|
Revenue from Canadian operations was $6.7 million in the fourth quarter of 2012 (2011: $5.6 million) and $25.2 million in the year ended December 31, 2012 (2011: $22.9 million), while revenue from U.S. operations was $6.7 million in the fourth quarter of 2012 (2011: $5.2 million) and $25.1 million in the year ended December 31, 2012 (2011: $23.1 million).
Adjusted EBITDA1 in Canada was $0.9 million in the fourth quarter of 2012 (2011: $1.6 million) and $5.9 million in the year ended December 31, 2012 (2011: $6.8 million), while adjusted EBITDA1 in the U.S. was $1.6 million in the fourth quarter of 2012 (2011: $1.0 million) and $6.0 million in the year ended December 31, 2012 (2011: $4.1 million).
Net earnings from Canadian operations, excluding the impact of the Computershare matter, intangibles and goodwill charges, and deferred tax expense adjustment, were $0.3 million in the fourth quarter of 2012 (2011: $1.3 million) and $2.8 million in the year ended December 31, 2012 (2011: $3.9 million), while adjusted net earnings from U.S. operations were $1.1 million in the fourth quarter of 2012 (2011: loss $0.4 million) and $1.5 million in the year ended December 31, 2012 (2011: loss $1.2 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.
Net earnings per share, excluding the impact of the Computershare matter, intangible asset and goodwill charges, and deferred tax expense adjustment, was $0.035 in the fourth quarter of 2012 (2011: $0.021) and $0.104 in the year ended December 31, 2012 (2011: $0.065).
During the year ended December 31, 2012, the Company had a net cash outflow of $2.2 million (2011: inflow $4.5 million). Cash generated from operations was $11.4 million (2011: $9.6 million), and net cash outflow from investing activities was $13.9 million during the year ended December 31, 2012 (2011: $1.8 million). Working capital as at December 31, 2012 was $7.0 million (December 31, 2011: $9.6 million).
Solium exited 2012 in a strong financial position. The year was marked by growth on a variety of levels, many of which are expected to continue into 2013 and beyond. The acquisitions of CapMX, OptionEase, Corporate Focus and PCAT in 2012 extended the Company's reach to better serve private market companies by adding important intellectual property and increased functionality to be built into the flagship Shareworks platform. The Company anticipates that these businesses will have a positive contribution to net earnings once the businesses are fully integrated into Solium. Solium will continue to invest in Shareworks, the first and only equity administration platform with end to end global capabilities on a single platform.
The Company continues to grow its footprint geographically. Revenue commenced by the Company's UK operations in Q4 2012. Solium 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.
The addition of the Canadian brokerage license obtained in Q2 2012 provided a positive incremental addition to revenue in the year ended December 31, 2012. Although still relatively small, the Company expects to realize benefits from this new product as the trade flow from its Canadian clients migrates to this brokerage platform.
The Company will continue to look for additional revenue-generating opportunities by integrating its expertise in technology into the financial services ecosystem.
|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 extinguishment of amount 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 following is a reconciliation of Adjusted EBITDA to net earnings:
|Three months ended December 31||Year ended December 31|
|Foreign exchange gain (loss)||157,046||431,669||(44,509)||(382,338)|
| Gain on extinguishment of amount due to
|Intangibles and goodwill charge||(593,741)||-||(8,390,635)||-|
|Income tax expense||(2,018,625)||(576,787)||(4,553,755)||(1,928,929)|
|2.||Earnings before income taxes excluding the impact of the Computershare matter and the intangibles and goodwill charges were $1,606,508 in the fourth quarter of 2012 and $7,036,653 in the year ended December 31, 2012.|
|3.||Net earnings excluding the impact of the Computershare matter, the intangibles and goodwill charges, and the deferred tax expense adjustment were $1,446,365 in the fourth quarter of 2012 and $4,341,380 in the year ended December 31, 2012.|
|Diluted net earnings per share is calculated using the treasury stock method.|
|4.||Basic earnings per share excluding the impact of the Computershare matter, the intangibles and goodwill charges, and the deferred tax expense adjustment was $0.034 for the fourth quarter of 2012 and $0.103 for the year ended December 31, 2012.|
|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 administration, financial reporting and compliance. From our 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 implementations of the Shareworks platform, the timing and anticipated benefits from the migration of Canadian trade flow into the Canadian brokerage business, and the realization of revenues from 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 satisfaction and timing of receipt of required shareholder and regulatory approvals and other conditions to closing, 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 audited consolidated financial statements for the year ended December 31, 2012 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:
CEO and Managing Director
Aaron Kabucis, CFA
TMX | Equicom
416.815.0700 x 230