Solium Capital Inc.
TSX : SUM

Solium Capital Inc.

November 14, 2007 07:30 ET

Solium Capital Inc. Releases 2007 Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 14, 2007) - Solium Capital Inc. (TSX:SUM) ("Solium" or the "Company") today announced its financial results for the third quarter and nine months ended September 30, 2007.

The 2007 fiscal year continues to be a transformational year for Solium as the Company experiences strong revenue growth through continued investment in several strategic initiatives and ongoing operations to position the Company for further growth. Notable accomplishments include:

- The acquisition of Allecon Stock Associates, LLC ("Allecon"), a foundational building block for the Company's growth aspirations in the United States. Allecon brings talented staff and adds in excess of 140 clients and 50,000 participant accounts.

- Final implementation of a strategic relationship with Canaccord Capital Corporation ("Canaccord"). The first transaction based access and administration fees from Canaccord were experienced in the latter part of the second quarter and management anticipates this revenue will increase in subsequent quarters.

- Rollout of the StockVantage product which targets those companies with less elaborate outsourcing needs through a scaled down, self-service stock option administration platform. The product has received strong early acceptance in the marketplace.

- Listing of the common shares of the Company to the Toronto Stock Exchange ("TSX").

- Implementation in the third quarter of the Company's largest direct client to date with approximately 30,000 participants across several plan types. This client was formerly a client with Solium's channel partner GRS Securities Inc. and was won through a competitive tender process.

- Ongoing enhancement of the ShareworksTM platform to meet the needs of the U.S. market, new business and internal operational efficiencies and scalability.

- Increased investment in sales and marketing to support the U.S. and StockVantage initiatives.



Financial highlights for the quarter and nine months ended September 30,
2007:

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Three Months Ended September 30 Nine Months Ended September 30
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% %
2007 2006 Change 2007 2006 Change
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PARTICIPANTS
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Grant based(1) 120,381 56,810 112
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Share
purchase(1) 154,896 136,293 14
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FINANCIAL
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Revenue $3,344,542 $2,067,056 62 $8,656,983 $6,177,615 40
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Expenses $2,969,742 $1,645,731 80 $7,594,100 $4,882,883 59
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EBITDA(2) $579,063 $484,701 19 $1,463,171 $1,478,189 (1)
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Earnings
before taxes $374,800 $421,325 (11) $1,062,883 $1,294,732 (18)
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Net earnings $395,413 $437,374 (10) $1,117,496 $1,364,505 (18)
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Net earnings
per share
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Basic $0.014 $0.015 (7) $0.039 $0.048 (19)
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Diluted(3) $0.013 $0.015 (13) $0.037 $0.046 (20)
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Issued and
outstanding
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Common shares 29,997,939 28,537,326 5
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Diluted(4) 33,498,679 31,870,898 5
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Notes:

1. Grant based participants include participants in stock option plans,
share appreciation rights plans, and share unit 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. EBITDA is a non-GAAP financial measure which does not have any
standardized meaning prescribed by 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 or loss prior to the effect of
non-operating expenses such as interest, tax, depreciation and
amortization. The following is a reconciliation of EBITDA to net earnings
(loss):

Three months ended Nine months ended
September 30 September 30
---------------------------------------------
2007 2006 2007 2006
---------------------------------------------
EBITDA 579,063 484,701 1,463,171 1,478,189
Interest expense (48,887) - (48,887) -
Amortization expense (155,376) (63,376) (351,401) (183,457)
Income tax recovery 20,613 16,049 54,613 69,773
---------------------------------------------
Net earnings 395,413 437,374 1,117,496 1,364,505
---------------------------------------------
---------------------------------------------

3. Diluted earnings per share is calculated using the treasury stock method.

4. Diluted shares as presented equals issued and outstanding common shares
plus outstanding stock options.


Financial results

- Third quarter net earnings decreased by $41,961 between the comparable quarters and by $247,009 between the comparable nine month periods. Through the third quarter of 2007, Solium continued to make investments in key strategic initiatives to position the Company for future growth.

-- Consolidated results were reduced by a net loss of $212,231 for the quarter (2006 - $158,277) and by $695,478 for the nine month period (2006 - $460,321) relating to the U.S. operations.

-- Consolidated results were reduced by a net loss of $62,469 for the quarter and by $148,638 for the nine month period relating to the implementation and execution of the StockVantage initiative.

- Gross revenue increased by $1,277,486 between the comparable quarters and by $2,479,368 between the comparable nine month periods.

-- Direct access fee revenue increased from $1,016,197 to $2,153,975 between the comparable quarters, and from $2,890,637 to $4,645,080 between the comparable nine month periods of 2006 to 2007.

-- Direct transaction revenue increased from $324,913 to $439,080 between the comparable quarters, and from $1,087,979 to $1,470,127 between the comparable nine month periods of 2006 to 2007.

-- Gross revenue from Canadian operations was $2,593,141 in the quarter (2006 - $2,049,273), and $7,836,450 in the nine month period (2006 - $6,107,183). These results represent a growth of 27% and 28%, respectively.

-- Canadian gross revenue includes $19,371 relating to StockVantage.

-- Gross revenue from U.S. operations was $751,401 in the quarter (2006 - $17,783), and $820,533 in the nine month period (2006 -$70,432).

-- U.S. gross revenue includes $703,472 relating to Allecon.

- Total expenses in the third quarter increased by $1,324,011 between the comparable quarters and by $2,711,217 between the comparable nine month periods.

-- The Company expanded its personnel and operational capabilities in response to and in preparation for continued growth. In particular, start up costs were incurred in relation to the significant client that was implemented in the quarter.

-- The Company continues to invest in its U.S. operations and initiatives. Expenses incurred in the ongoing development of the U.S. operations were $858,848 in the third quarter (2006 - $176,060) and $1,410,855 in the nine month period (2006 - $530,753). Approximately $550,000 of operating expenses were added in the quarter with the addition of Allecon to consolidated results.

-- Increased amortization of $70,992 and interest expense of $48,887 was incurred in the third quarter as a result of the acquisition of Allecon.

-- Expenses incurred in connection with StockVantage totaled $81,840 in the third quarter and $168,143 in the nine month period.

-- The Company continues to invest in its Shareworks technology. Additional software development staff were hired in the latter part of 2006 and in the first nine months of 2007 to increase the resources focused on the continued development of our industry leading technology, with a focus on expanding functionality for the U.S. market. All research and development costs are currently expensed for accounting purposes.

-- In March 2007, the common shares of the Company were listed on the TSX. One-time TSX listing, legal and other associated fees totaling $112,217 were incurred with respect to the listing.

Operations

- 46 grant based incentive plans were implemented during the third quarter of 2007, including 19 plans onto the StockVantage platform.

- 10 share purchase plans were implemented during the third quarter of 2007.

- As at September 30, 2007, the Company had 44 corporate plans with approximately $1.1 million in expected annualized access fee revenue in the implementation pipeline for Shareworks. An additional 22 contracts with expected annualized access fee revenue of $60,000 were in implementation for StockVantage.

Other Corporate Matters

- On July 19, 2007, the Company acquired, through its wholly-owned United States subsidiary Solium Holdings USA Inc., all of the issued and outstanding membership interests (the "LLC Interests") of Allecon Stock Associates, LLC. The purchase price for the LLC Interests was US$6,125,000 in cash and 474,381 Solium common shares, subject to a working capital adjustment. At closing, US$5,125,000 in cash was paid and 237,191 Solium common shares were transferred. The working capital adjustment of US$936,313 was paid subsequent to the third quarter, and the remaining US$1,000,000 in cash, as reduced for any indemnifiable obligations payable to the Company, will be paid on July 19, 2008. The remaining 237,190 Solium common shares, as reduced for any indemnifiable obligations payable to the Company, will be released from escrow on July 19, 2009.

- In connection with the acquisition of Allecon, Solium obtained a $3.5 million term loan. The term loan is due on July 19, 2010, bears interest at the prime rate plus 1% per annum, and is repayable in monthly instalments of $97,222.


About Solium Capital Inc.

Solium Capital Inc. (TSX: SUM) specializes in the administration and execution of equity-based incentive and savings plans and is setting the industry standard for service excellence, industry knowledge and innovative technical leadership. Solium's technology platform, Shareworks, is a leading online solution that integrates the management of multiple equity plan types including stock options, share units, and employee share purchase plans on one comprehensive platform.

Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Assumptions have been made regarding, among other things, the Company's transition to new products and releases; a continuing increase in the number of customer transactions; the length of the sales cycles; the competitive environment; the ability to maintain or accurately forecast revenue from the Company's products or services; the ability of the Company to identify, hire, train, motivate and retain qualified personnel; currency fluctuations; the ability of the Company to develop, introduce and implement new products as well as enhancements or improvements for existing products that respond, in a timely fashion, to customer/product requirements and rapid technological change; risks associated with operations; the impact of any changes in the laws and regulations in the jurisdictions in which the Company operates; and the effect of new accounting pronouncements or guidance. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. The forward-looking statements 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. Such risks and uncertainties include, among others, general business and economic conditions; the overall performance of stock market(s); actions of competitors and partners; the regulatory environment; the corporate governance environment and regulatory reporting requirements for Solium's clients; product capability and acceptance; the Company's ability to generate sufficient cash flow from operations to meet its current and future obligations; and the Company's ability to access external sources of financing if required. The foregoing is not exhaustive and other risks are detailed from time to time in other continuous disclosure filings of the Company. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

The Management's Discussion and Analysis and the unaudited consolidated financial statements for the quarter ended September 30, 2007 referred to herein are available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.solium.com.

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