- Revenue increased by 15%
- Adjusted EBITDA increased by 16%
- Cash increased to $19.7 million
CALGARY, Nov. 5, 2012 /CNW/ - Solium Capital Inc. ("Solium" or the "Company") today announced its financial results for the third quarter and nine month period ended September 30, 2012.
Financial and operating highlights for the third quarter and nine month period of 2012:
- Revenue increased by 15% to $12.3 million for the third quarter of 2012 and by 5% to $36.9 million for the nine month period of 2012;
- Earnings from operations increased by 52% to $1.5 million for the third quarter of 2012 and by 21% to $6.1 million for the nine month period of 2012;
- Adjusted EBITDA1 increased by 16% to $2.5 million in the third quarter of 2012 and by 12% to $9.3 million in the nine month period of 2012;
- Adjusted net earnings3 increased to $0.4 million in the third quarter of 2012 (2011: loss $1.0 million) and by 57% to $2.9 million in the nine month period of 2012;
- The Company accelerated its investment in the UK market during the third quarter of 2012 following positive progress on the development of new clients in the UK;
- Subsequent to the end of the quarter, on October 8, 2012, the Company announced that it plans to acquire all of the outstanding shares of OptionEase Inc., the leading provider of applications for fair-market-value accounting and compliance in the United States. The transaction is expected to close in November 2012. The completion of the transaction is subject to customary closing conditions;
- Subsequent to the end of the quarter, in early October 2012, the Company opened an office in Sydney, Australia. The Company's initial business in Australia is with a global financial institution, which is expected to go live on Solium's Shareworks platform in Q1 2013.
Key factors affecting financial results for the third quarter and nine month period of 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 on the Company's income statement for the nine month period ended September 30, 2012 was a gain of $15.6 million partially offset by a charge to intangible assets and goodwill of $7.8 million.
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 third quarter of 2011 was not applicable in the third quarter of 2012. The unrealized foreign exchange loss on the liability due to Computershare has been reported in other comprehensive income in the third quarter and nine month period of 2012.
CapMX Acquisition - The acquisition of CapMX on May 15, 2012 resulted in an increase in revenue and earnings. CapMX provides record keeping service for grant based incentive plan and awards to private companies and venture capital investors 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 $300,000 as a reduction to operating expenses in the third quarter of 2012 (2011: $Nil), and $1.6 million in the nine month period of 2012 (2011: $Nil) relating to SRED claims.
Selected financial information for the third quarter and nine month period of 2012:
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Expenses before income taxes||$11,223,842||$11,317,445||(1%)||$23,652,250||$31,987,350||(26%)|
|Earnings from operations||$1,538,638||$1,015,586||52%||$6,132,762||$5,049,055||21%|
|Earnings before income taxes2||$1,122,991||($591,309)||$13,263,431||$3,195,920||315%|
|Net earnings per share4||$0.010||$0.257|
|Issued and outstanding||41,792,919|
Revenue from Canadian operations was $6.0 million in the third quarter of 2012 (2011: $5.3 million) and $18.6 million in the nine month period ended September 30, 2012 (2011: $17.4 million), while revenue from U.S. operations was $6.3 million in the third quarter of 2012 (2011: $5.5 million) and $18.3 million in the nine month period ended September 30, 2012 (2011: $17.8 million).
Adjusted EBITDA1 in Canada was $1.1 million in the third quarter of 2012 (2011: $1.3 million) and $4.9 million in the nine month period ended September 30, 2012 (2011: $5.2 million), while adjusted EBITDA1 in the U.S. was $1.4 million in the third quarter of 2012 (2011: $0.8 million) and $4.4 million in the nine months ended September 30, 2012 (2011: $3.1 million).
Net earnings from Canadian operations, excluding the impact of the Computershare matter, were $0.2 million in the third quarter of 2012 (2011: loss $0.5 million) and $2.5 million in the nine month period ended September 30, 2012 (2011: $2.5 million), while net earnings from U.S. operations were $0.2 million in the third quarter of 2012 (2011: loss $0.4 million) and net earnings were $0.4 million in the nine month period ended September 30, 2012 (2011: loss $0.7 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, was $0.010 in the third quarter of 2012 (2011: loss $0.023) and $0.069 in the nine month period ended September 30, 2012 (2011: $0.044).
During the nine month period ended September 30, 2012, the Company had a net cash inflow of $2.8 million (2011: $2.1 million). Cash generated from operations was $7.5 million (2011: $4.9 million), and net cash outflow from investing activities was $3.9 million during the nine month period ended September 30, 2012 (2011: $1.3 million). Working capital as at September 30, 2012 was $16.2 million (December 31, 2011: $9.6 million).
Solium has obtained a brokerage license in Canada and initiated the migration of Canadian trade flow into the Canadian brokerage business in the third quarter of 2012. Revenue benefits for the third quarter were minimal but are expected to accelerate over the coming quarters.
The Company is progressing with the establishment of operations in the UK and expects to begin realizing incremental revenue in Q4 2012 as new clients go live on the Shareworks platform.
The Company's solid financial results highlight the commercial benefits of its significant investments made in the Shareworks platform over the past 18 months. The Company will continue to invest in Shareworks to achieve the first and only equity administration platform with end to end global capabilities on a single platform.
|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 September 30||Nine months ended September 30|
|Foreign exchange loss||(324,822)||(1,270,507)||(201,555)||(814,007)|
|Gain on extinguishment of amount due to Computershare||-||-||15,630,180||-|
|Intangibles and goodwill charge||-||-||(7,796,894)||-|
|Income tax expense||(692,475)||(371,025)||(2,535,130)||(1,352,142)|
|2.||Earnings before income taxes excluding the impact of the Computershare matter was $1,122,991 in the third quarter of 2012 and $5,430,145 in the nine months ended September 30, 2012.|
|3.||Net earnings excluding the impact of the Computershare matter were $430,516 in the third quarter of 2012 and $2,895,015 in the nine months ended September 30, 2012.|
|4.||Diluted net earnings per share is calculated using the treasury stock method.|
|5.||Basic earnings per share excluding the impact of the Computershare matter was $0.010 for the three months ended September 30, 2012 and $0.069 for the nine months ended September 30, 2012.|
|6.||Diluted shares as presented equals issued and outstanding common shares plus outstanding stock options and restricted share units.|
About Solium Capital Inc.
Solium Capital Inc. (TSX: SUM), a software- as-a-service company, is a leading global provider of web-based stock plan administration technology and services. Solium's software helps companies automate and manage their stock option and purchase plans, by providing unrivalled comprehensive regulatory and financial reporting capabilities. Founded in 1999, Solium has offices in Canada, the United States, United Kingdom and Australia.
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 expected closing date of the OptionEase transaction, 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, the realization of revenues from UK operations and the ability of the Company to become the first and only equity administration platform with end to end global capabilities on a single platform. 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 condensed consolidated interim financial statements for the three and nine month periods ended September 30, 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