Solium Capital Inc.
TSX : SUM

Solium Capital Inc.

March 05, 2008 09:00 ET

Solium Capital Inc. Releases 2007 Fourth Quarter and Year-End Results

CALGARY, ALBERTA--(Marketwire - March 5, 2008) - Solium Capital Inc. ("Solium" or the "Company") (TSX:SUM) today announced its financial results for the fourth quarter and year ended December 31, 2007.

Financial highlights for the quarter and year ended December 31, 2007:



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Three
Months Ended Year Ended
December 31 December 31
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2007 2006 % 2007 2006 %
Change Change
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PARTICIPANTS
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Grant based(i) 117,212 63,123 86
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Share
purchase(i) 135,151 140,622 (4)
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FINANCIAL
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Revenue $ 3,887,287 $ 2,518,169 54 $12,544,270 $ 8,695,784 44
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Expenses $ 3,546,574 $ 1,695,494 109 $11,140,674 $ 6,578,377 69
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EBITDA(ii) $ 588,095 $ 891,943 (34) $ 2,051,264 $ 2,370,132 (13)
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Earnings
before taxes $ 340,713 $ 822,675 (59) $ 1,403,596 $ 2,117,407 (34)
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Net earnings $ 126,946 $ 1,112,902 (89) $ 1,244,442 $ 2,477,407 (50)
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Net earnings
per share
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Basic $ 0.004 $ 0.039 (90) $ 0.043 $ 0.087 (51)
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Diluted(iii) $ 0.004 $ 0.038 (89) $ 0.040 $ 0.083 (52)
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Issued and
outstanding
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Common
shares 29,999,598 28,603,899 5
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Diluted(iv) 33,616,179 31,708,398 6
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Notes:
(i) 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.

(ii) 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 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:

Three months ended December 31 Year ended December 31
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2007 2006 2007 2006
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EBITDA 588,095 891,943 2,051,264 2,370,132
Interest expense (68,055) - (116,942) -
Amortization expense (179,327) (69,268) (530,726) (252,725)
Income tax (expense)
recovery (213,767) 290,227 (159,154) 360,000
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Net earnings 126,946 1,112,902 1,244,442 2,477,407
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(iii) Diluted earnings per share is calculated using the treasury stock
method.
(iv) Diluted shares as presented equals issued and outstanding common
shares plus outstanding stock options.


Overview

In the fourth quarter of 2007, Solium continued to execute on several key areas of its business strategy.

- Direct Sales Growth - The Company continues to experience healthy growth in its direct sales clients. Recurring access fees from direct sales clients have grown to $2,418,499 in the fourth quarter of 2007 (2006 - $1,105,894) and $7,063,580 in fiscal 2007 (2006 - $3,997,083). Participants have increased to over 250,000 (2006 - approximately 200,000) collectively using either grant-based or share purchase functionality on Shareworks™.

- Market Expansion - The Company continues to strengthen its position in the U.S. market. Through the acquisition of Allecon Stock Associates, LLC ("Allecon") on July 19, 2007, the Company gained talented staff and added approximately 50,000 participant accounts in the U.S. At December 31, 2007, 33% of its monthly access fees were being earned from U.S. clients (2006 - 2%).

- Revenue Enhancement - The Company has diversified its revenue stream with the 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, totaling approximately $55,000 in fiscal 2007. Management anticipates this revenue will continue to increase over subsequent quarters.

- Product Diversification - The Company has diversified its product offering with the rollout of the StockVantage™ product during 2007. The StockVantage product 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 with 63 plans implemented onto the platform by the end of fiscal 2007.

- Product Innovation - The Company continues to make ongoing enhancements to the Shareworks platform to meet the needs of the U.S. market, new business and internal operational efficiencies and scalability.

Financial results

- Net earnings decreased by $985,956 between the comparable quarters and by $1,232,965 between fiscal years 2007 and 2006. Through the fourth quarter of 2007, Solium continued to make investments in its key strategic initiatives to position the Company for future growth.

-- Consolidated results were reduced by a net loss of $117,379 in the fourth quarter of 2007 (2006 - $48,778) and by $814,406 in fiscal 2007 (2006 - $510,258) relating to the U.S. operations.

-- Consolidated results were reduced by a net loss of $81,494 in the fourth quarter of 2007 and by $230,133 in fiscal 2007 relating to the implementation and execution of the StockVantage initiative.

- Gross revenue increased by $1,369,118 between the comparable quarters and by $3,848,486 between fiscal years 2007 and 2006.

-- Direct access fee and implementations revenue was $2,546,287 in the fourth quarter of 2007 (2006 - $1,142,242) and was $7,341,478 in fiscal 2007 (2006 - $4,102,204).

-- Direct transaction revenue was $681,653 in the fourth quarter of 2007 (2006 - $375,124) and was $2,160,251 in fiscal 2007 (2006 - $1,463,104).

-- Channel revenue from GRS Securities Inc. was $486,833 in the fourth quarter of 2007 (2006 - $748,967) and was $2,492,403 in fiscal 2007 (2006 - $2,671,878). The decrease was mainly due to the movement of a significant client from GRS Securities Inc. to being a direct sales client of Solium in the third quarter of 2007. The client was won through a competitive tender process.

-- Gross revenue from Canadian operations was $2,770,122 in the fourth quarter of 2007 (2006 - $2,293,256), and $10,606,572 in fiscal 2007 (2006 - $8,400,990). These results represent a growth of 21% and 26%, respectively.

-- Canadian gross revenue includes $51,648 in the fourth quarter of 2007 and $71,154 in fiscal 2007 relating to StockVantage.

-- Gross revenue from U.S. operations was $1,117,166 in the fourth quarter of 2007 (2006 - $224,361), and $1,937,698 in fiscal 2007 (2006 - $294,794).

- Total expenses in the fourth quarter increased by $1,851,080 between the comparable quarters and by $4,562,297 between fiscal years 2007 and 2006.

-- The Company expanded its personnel and operational capabilities in response to and in preparation for continued growth.

-- The Company continues to invest in its U.S. operations and initiatives. Expenses incurred in the ongoing development of the U.S. operations were $1,248,366 in the fourth quarter of 2007 (2006 - $273,139) and $2,779,989 in fiscal 2007 (2006 - $805,052).

-- Increased amortization of $72,785 in the fourth quarter and $130,698 in fiscal 2007, along with increased interest expense of $68,055 in the fourth quarter and $116,942 in fiscal 2007, were incurred as a result of the acquisition of Allecon.

-- Expenses incurred in connection with StockVantage totaled $133,142 in the fourth quarter and $301,286 in fiscal 2007.

-- The Company continues to invest in its Shareworks technology. Additional software development staff were hired in the latter part of 2006 and throughout 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.

- Income taxes in the fourth quarter of 2007 were $213,767 (2006 - $290,227 recovery) and $159,154 in fiscal 2007 (2006 - $360,000 recovery). Future tax assets previously recorded for Canadian tax loss carryforwards were partially utilized during the period. Tax loss carryforwards for the Canadian parent company have been fully recorded onto the balance sheet and, as at December 31, 2007, $485,000 of these future tax assets remain to be applied against cash taxes payable in 2008.

Operations

- 95 grant based incentive plans were implemented by the Company during 2007, including 63 plans that were implemented onto the StockVantage platform.

- 17 share purchase plans were implemented by the Company during 2007.

- As at December 31, 2007, the Company had 45 corporate plans with approximately 45,000 participants and $1.6 million in expected annualized access fee revenue in the implementation pipeline for Shareworks. An additional 21 contracts with expected annualized access fee revenue of $76,000 were in implementation for StockVantage.

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 and the future-oriented financial information contained herein 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 Company utilizes future-oriented financial information for budgeting and planning purposes and the information may not be appropriate for other purposes.

The Management's Discussion and Analysis and the audited consolidated financial statements for the year ended December 31, 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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