Solium Capital Inc.

Solium Capital Inc.

August 10, 2007 18:00 ET

Solium Capital Inc. Releases 2007 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 10, 2007) - Solium Capital Inc. ("Solium" or the "Company") (TSX:SUM) today announced its financial results for the second quarter and six months ended June 30, 2007.

The 2007 fiscal year continues to be a transformational year for Solium as the Company experiences strong revenue growth while continuing to invest for future anticipated 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.

- Execution and implementation of the strategic relationship with Canaccord Capital Corporation ("Canaccord"). The first transactionally based administration fees from Canaccord were experienced in 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 but that must still administer and account for their equity plans. Management believes that the product has received early acceptance in the marketplace.

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

- Implementation in early July of the Company's largest direct share purchase plan to date with approximately 30,000 participants.

- Ongoing enhancement of the Shareworks™ platform.

Financial highlights for the quarter and six months ended June 30, 2007:

Three Months Ended June 30 Six Months Ended June 30
2007 2006 % 2007 2006 %
Change Change
Stock options(1) 49,196 47,354 4
Share units(1) 17,790 7,428 139
Stock appreciation
rights(1) 8,299 2,259 267
Share purchase(1) 140,451 134,860 4
Revenue $2,706,054 $2,010,179 35 $5,312,441 $4,110,556 29
Expenses $2,462,198 $1,749,876 41 $4,624,358 $3,237,149 43
EBITDA(2) $ 345,688 $ 322,700 7 $ 884,106 $ 993,488 (11)
Earnings before
taxes $ 243,856 $ 260,303 (6) 688,083 873,407 (21)
Net earnings $ 270,356 $ 231,478 17 $ 722,083 $ 927,131 (22)
Net earnings
per share
Basic $ 0.010 $ 0.008 25 $ 0.025 $ 0.033 (24)
Diluted(3) $ 0.009 $ 0.008 13 $ 0.024 $ 0.031 (23)
Issued and
Common shares 28,705,150 28,537,326 0.6
Diluted(4) 31,864,298 31,750,898 0.4

1. 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

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 June 30 Six months ended June 30
2007 2006 2007 2006
EBITDA 345,688 322,700 884,106 993,488
Amortization expense (101,832) (62,397) (196,023) (120,081)
Income tax (expense)
recovery 26,500 (28,825) 34,000 53,724
Net earnings 270,356 231,478 722,083 927,131

3. Diluted earnings per share is calculated using the treasury stock
4. Diluted shares as presented equals issued and outstanding common shares
plus outstanding stock options.

Financial results

- Second quarter net earnings were $270,356 (2006 - $231,478), an increase of 17% from 2006. Net earnings for the six month period were $722,083 (2006 - $927,131), a decrease of 22%.

- Second quarter gross revenue was $2,706,054 (2006 - $2,010,179), an increase of 35% from 2006. Gross revenue for the six month period was $5,312,441 (2006 - $4,110,556), an increase of 29%.

-- Gross revenue from Canadian operations was $2,666,209 in the second quarter (2006 - $1,988,427), and $5,243,309 in the six month period (2006 - $4,057,906). These results represent a growth of 34% and 29%, respectively.

-- Gross revenue from U.S. operations was $39,845 in the second quarter (2006 - $21,752), and $69,132 ($52,650) in the six month period. These results represent a growth of 83% and 31%, respectively.

- Total expenses in the second quarter were $2,462,198 (2006 - $1,749,876) and $4,264,358 in the six month period (2006 - $3,237,149). This represents an increase of 41% and 43%, respectively.

- Expenses were affected by the following factors:

-- The Company is expanding its personnel and operational capabilities in preparation for continued growth that is expected from clients currently in the sales pipeline, including a client of approximately 30,000 participants that went live in July 2007.

-- The Company continues to invest in its U.S. operations and initiatives. Expenses incurred in the ongoing development of the U.S. operations were $320,329 in the second quarter (2006 - $217,670) and $552,379 in the six month period (2006 - $331,372).

-- At the end of the first quarter, the Company launched the new product called StockVantage. Expenses incurred in connection with StockVantage totaled $79,316 in the second quarter and $86,303 in the six 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 six months of 2007 to increase the resources focused on developing improvements to the technology. All research and development costs are currently expensed for accounting purposes.

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


- Nine corporate plans were implemented onto Shareworks during the second quarter, adding approximately $225,000 in expected annualized access fee revenue. One plan was a U.S. based client with expected annualized access fee revenue of approximately $6,000.

- As at June 30, 2007, the Company had in progress, 28 corporate plans with approximately 43,000 participants and $1.7 million in expected annualized access fee revenue being implemented onto Shareworks. Seven of the plans are U.S. based clients with expected annualized access fee revenue of approximately $115,000. Implementation of these plans is expected to be completed throughout the remainder of 2007.

- One of the clients in implementation at June 30, 2007, with approximately 30,000 participants, was a client of GRS Securities Inc., Solium's channel partner. This client has now transitioned to a direct sales client of Solium following implementation in July 2007. This transition will increase the Company's future gross revenues but is not expected to materially affect future reported net earnings.

- Since June 2007, the Company has ten contracts with approximately $33,000 in expected annualized access fee revenue being implemented onto StockVantage. Implementation of these plans is planned for the third quarter.

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 ("Allecon"). The purchase price for the LLC Interests was US$6,125,000 in cash and 474,381 Solium common shares. On a proforma basis, including the unaudited Allecon results, consolidated revenues for Solium would be approximately $7.4 million and consolidated net earnings would be approximately $1.1 million for the six month period ended June 30, 2007.

- In connection with the acquisition of Allecon, Solium obtained a new $5,300,000 secured credit facility with a Canadian chartered bank and drew $3,500,000 on such facility in the form of a term loan. The term loan is due on July 19, 2010 and bears interest at the prime rate plus 1% per annum.

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 June 30, 2007 referred to herein are available on SEDAR at under Solium Capital Inc., or at

Contact Information

  • Solium Capital Inc.
    Jeff English
    President & CEO
    (403) 515-3910 ext. 246 or 1-877-380-7793
    Solium Capital Inc.
    Lynn Leong
    (403) 515-3910 ext. 115 or 1-877-380-7793