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
EBITDA1
|
4,152
|
1,760
|
136%
|
15,270
|
12,481
|
22%
|
|
Earnings (loss) from
operations
|
1,443
|
(178)
|
NM3
|
4,134
|
6,164
|
(33%)
|
|
Net earnings
(loss)
|
1,848
|
(458)
|
NM3
|
4,900
|
3,358
|
46%
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share2
|
|
|
|
|
|
|
|
Basic
|
0.033
|
(0.008)
|
NM3
|
0.087
|
0.067
|
30%
|
|
Diluted
|
0.032
|
(0.008)
|
NM3
|
0.086
|
0.066
|
30%
|
|
|
|
|
|
|
|
|
Issued and
outstanding (thousands)
|
|
|
|
|
|
|
|
Common
Shares
|
|
|
|
56,724
|
55,866
|
2%
|
|
Diluted2
|
|
|
|
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
EBITDA1
|
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
EBITDA1
|
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.