CALGARY, August 8, 2012 — Solium Capital Inc. (“Solium” or the “Company”) today announced its financial results for the second quarter and six month period ended June 30, 2012.

The Company’s revenues from operations for the three and six month periods ended June 30, 2012 were consistent with those in the same periods of 2011. Revenue was $11.9 million for the second quarter of 2012 (2011: $11.4 million) and $24.6 million for the six month period ended June 30, 2012 (2011: $24.5 million). Earnings from operations increased to $1.7 million for the second quarter of 2012 (2011: $1.1 million) and to $4.6 million for the six month period ended June 30, 2012 (2011: $4.0 million).

Excluding the impact of the Computershare matter discussed below, adjusted EBITDA increased to $2.7 million in the second quarter of 2012 (2011: $2.2 million) and to $6.8 million in the six month period ended June 30, 2012 (2011: $6.2 million), and net earnings were $0.5 million in the second quarter of 2012 (2011: $0.5 million) and $2.5 million in the six month period ended June 30, 2012 (2011: $2.8 million).

Inclusive of all items, net earnings were $8.3 million in the second quarter of 2012 (2011: $0.5 million) and $10.3 million in the six month period ended June 30, 2012 (2011: $2.8 million). The key factors affecting the results in the three and six month periods ended June 30, 2012 are:

  • Computershare – On April 3, 2012, the Company received notice from Computershare of its decision to retain stock options 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 second quarter income statement is a gain of $15.6 million partially offset by a charge to intangible assets and goodwill of $7.8 million.

  • Strategic initiatives – The Company incurred significant expenses during the first six months of 2012 in establishing its new operations in the UK, obtaining a brokerage license in Canada, and pursuing other potential business opportunities.

  • SRED ITC’s – In the second quarter of 2012, the Company applied for investment tax credits under the Canadian and Alberta governments’ scientific and experimental development (“SRED”) programs. The application represented a claim for 2011 SRED expenditures. Based on the history of successful SRED claims made in previous years, the Company accrued $645,000 as a reduction to operating expenses in the second quarter of 2012 (2011: $Nil), and $1.3 million in the six months ended June 30, 2012 (2011: $Nil) relating to SRED claims.

  • CapMX Acquisition – On May 15, 2012, the Company closed the acquisition of the CapMX business of SVB Analytics, Inc. CapMX provides record keeping services for grant based incentive plans and awards to private companies and venture capital investors in the United States.

Financial results for the quarter and six month period ended June 30, 2012:

Three Months Ended June 30

Six Months Ended June 30

2012

2011

%

Change

2012

2011

%

Change

Revenue

$11,916,176 $11,400,2555% $24,568,848 $24,4571340.5%

Expenses before income taxes1 $10,210,099 $10,528,465 (3%) $20,261,694 $20,669,905 (2%)
Adjusted EBITDA1 $2,683,364 $2,214,296 21% $6,828,062 $6,176,471 11%
Earnings from operations $1,659,704 $1,132,331 47% $4,594,124 $4,033,469 14%
Earnings before income taxes2 $9,539,363 $871,790 994% $12,140,440 $3,787,229 221%
Net earnings3 $8,328,563 $546,688 1,423% $10,297,785 $2,806,112 267%
Net earnings per share4
Basic $0.199 $0.013 1,431% $0.246 $0.067 258%
Earnings before income taxes2 $9,539,363 $871,790 994% $12,140,440 $3,787,229 221%
Three Months Ended December 31

Year Ended December 31

2009

2008

%

Change

2009

2008

%

Change

Expenses $4,283,572 $3,917,753 9% $16,616,466 $15,824,679 5%
EBITDA3 Earnings before taxes $893,228 $777,885 $672,877 $453,758 33% 71%

$3,783,920 $3,075,012

$2,240,273 $1,215,176

69% 153%

Net earnings $387,058 $358,173 8%

$1,722,974

$674,116

156%

Net earnings per share
Basic $0.012 $0.012 $0.056 $0.022 155%
Diluted4 $0.012 $0.012 $0.055 $0.022 150%
Issued and outstanding
Common shares 31,105,279 30,623,679 1.6%
Diluted5 33,816,779 33,656,179 0.5%

Notes:

  1. Grant based participants include participants in stock option plans, share appreciation rights plans, share unit plans and restricted stock award plans. Participants may be utilizing more than one product module at once. Consequently, the total number of unique participants utilizing Shareworks is lower than the sum of all participants noted in the above table.

  2. Transaction administration revenue includes transaction administration fees, brokerage access and administration fees, money movement fees and foreign currency margin.

  3. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP financial measure which does not have any standardized meaning prescribed by Canadian GAAP (generally accepted accounting principles) and is therefore unlikely to be comparable to similar measures presented by other issuers. EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses such as interest, tax, depreciation and amortization. Management uses EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors EBITDA against budget and past results on a regular basis. The measure is a key component in determining the annual bonus pool for staff and management. The following is a reconciliation of EBITDA to net earnings:


Three months ended December 31

Year ended December 31

2008

2009

2008

2009

EBITDA

893,228

672,877

3,783,920

2,240,273

Interest expense

(8,324)

(29,938)

(53,665)

(161,967)

Amortization expense

(107,019)

(189,181)

(655,243)

(863,130)

Income tax expense

(390,827)

(95,585)

(1,352,038)

(541,060)

Net earnings

387,058

358,173

1,722,974

674,116



4. Diluted 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 and restricted share units.

HIGHLIGHTS OF FINANCIAL PERFORMANCE

  • Revenue from Canadian operations was $5.9 million in the second quarter of 2012 (2011: $5.5 million) and $12.6 million in the six month period ended June 30, 2012 (2011: $12.1 million), while revenue from U.S. operations was $6.0 million in the second quarter of 2012 (2011: $5.9 million) and $12.0 million in the six month period ended June 30, 2012 (2011: $12.4 million).


  • Adjusted EBITDA in Canada was $1.3 million in the second quarter of 2012 (2011: $1.5 million) and $3.8 million in the six month period ended June 30, 2012 (2011: $3.9 million), while adjusted EBITDA in the U.S. was $1.4 million in the second quarter of 2012 (2011: $0.8 million) and $3.1 million in the six months ended June 30, 2012 (2011: $2.2 million).


  • Excluding the impact of the Computershare matter, net earnings from Canadian operations were $0.6 million in the second quarter of 2012 (2011: $1.0 million) and $2.2 million in the six month period ended June 30, 2012 (2011: $3.1 million), while net losses from U.S. operations were $0.1 million in the second quarter of 2012 (2011: loss $0.5 million) and net earnings were $0.2 million in the six month period ended June 30, 2012 (2011: loss $0.3 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.

  • Excluding the impact of the Computershare matter, net earnings per share was $0.012 in the second quarter of 2012 (2011: $0.013) and $0.059 in the six month period ended June 30, 2012 (2011: $0.067).

  • During the six month period ended June, 30, 2012, the Company had a net cash outflow of $0.7 million (2011: outflow $0.5 million). Cash generated from operations was $3.2 million (2011: $3.1 million), and net cash outflow from investing activities was $3.7 million during the six month period ended June 30, 2012 (2011: $3.1 million).

  • Working capital as at June 30, 2012 was $14.6 million (December 31, 2011: $9.6 million).

– ENDS –

About Solium Capital Inc.

Solium (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance. From our operation centers in the United States, Canada, the UK and Australia, our innovative SaaS technology powers share plan administration and equity transactions for more than 2,800 clients with employees in 80 countries. Follow us @Solium and visit us online at www.www.shareworks.com.

For more information, please contact

Investor relations

Mike Broadfoot
CEO and Managing Director
Solium
investorrelations@solium.com

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

Public relations

Scott Valentine
Vice President
Solium
403.472.5446
scott.valentine@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. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. 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. 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, 2012 referred to herein will be available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.www.shareworks.com.