Smart Employee Benefits Inc. ("SEB" or the "Company") (TSX VENTURE:SEB), today
reported its financial results for the fiscal year ending November 30, 2013.
SEB is a technology company with two primary divisions, the Benefits Division
and the Technology Division, providing business processes software, solutions
and services to corporate and government clients with specialty practices
focused on managing group benefit solutions and health claims processing
environments. The core expertise of the SEB Group of Companies is managing and
reporting on Big Data, including transaction processing in complex global Supply
Chain environments. This expertise is uniquely adaptable to the "Benefits" and
"Health-Care" industries.
SEB History
John McKimm, President and CEO states: "SEB was founded in January 2011 with the
acquisition of SES Benefits Inc., a company focused on selling its adjudication
technology services to the employee health benefits marketplace. During 2011 and
2012, SEB's objective was to use the adjudication technology as the backbone to
build a fully integrated end to end "Administration - Adjudication - Billing
Payment - Reporting" technology platform. This platform would enable a services
business model targeting the processing of health benefits in an industry
characterized by archaic and inflexible technology infrastructure. While
enhancements continue, the core development was completed in fiscal 2013. SEB
began its client acquisition strategy in early 2013. The focus was to acquire,
make investments in or joint venture with organizations in the benefits industry
where the SEB technology platform introduced a significant competitive
advantage.
SEB's Benefits division is focused on two primary target markets in Canada -
employee group health benefits which exceed $35.0 billion annually and
government funded health benefits (federal and provincial) which are in excess
of $25.0 billion. SEB's technology platform is easily adaptable to managing the
end-to-end business processes in both environments. Of the $60.0 plus billion
market in Canada, the employee group health benefits portion of the market has
grown over 80% in the past decade.
SEB's business growth strategy for developing the benefits business has the
following components:
-- Maintaining the leading technology platform for managing group benefit
solutions and health claims processing environments. This includes
developing unique benefit solutions made possible by the technology
platform.
-- Acquiring and making investments in existing benefit administration
businesses and technology companies serving the corporate and government
markets with the objective of expanding SEB's health benefit processing
footprint across Canada.
-- Transitioning to the SEB technology environment the benefits-processing
(administration, claims-adjudication and reporting) currently outsourced
by the acquired businesses to third parties.
-- Developing a significant footprint in managing federal and provincial
government health benefit programs.
The progress SEB has made in the 2011 through fiscal 2013 period has positioned
the Company well for anticipated strong growth and sustainable profitability in
fiscal 2014."
Technology Platform Provides Competitive Advantage in Benefits Management
SEB has spent over $6 million since 2011 automating the administration, payment
processing/billing and reporting modules of its technology platform and
integrating these modules into an already proven leading edge adjudication
platform.
SEB's technology platform manages the total business processing services for
group benefit solutions and health claims processing on one fully-integrated
technology environment. The SEB technology platform is open architecture, rules
based and modular, and allows clients to utilize either a fully integrated
solution or modules. SEB's real time "rules-based adjudication" environment is
very unique, and when combined with the fully-integrated Administration, Payment
Processing, Billing and Reporting modules, will provide very sophisticated and
highly competitive solutions to the marketplace, both in Canada and globally.
SEB can administer, adjudicate and report for all benefit types in one fully
integrated environment. Rules creation is an administrative, not a programming
exercise. Highly customized and flexible processing solutions can be created
easily and cost effectively. Reporting is the most detailed in the industry with
self-serve functionality including real time access to standard reports and data
mining capabilities for customized reports. The largest current implementation
of the SEB Adjudication Environment is Oman Insurance in Dubai.
The Benefits division of SEB operates as a Third Party Administrator ("TPA") and
technology provider supporting unique benefit solutions. The immediate
opportunity for SEB is to increase the capture and retention of revenue by
providing fully integrated services and solutions, currently being outsourced by
most TPAs and Insurers to third parties.
Acquisitions Underpin SEB's Growth Strategy
Through acquisitions, SEB is acquiring the client relationships and vendor
status to support a complementary organic growth model with both employers and
government business opportunities. On the employee group benefit side,
acquisitions and investments target TPAs, as well as broker and consultant
organizations that provide solutions and services to employers. The objective is
to secure the client relationships and transition many of the front and
back-office business processes to the SEB technology environment over time; in
effect, capturing revenue that was previously being outsourced. On the
government side, SEB is targeting technology companies (primarily IT) that have
established vendor relationships, security clearances and project references
that are required to bid on government outsourcing contracts.
Fiscal 2013
The growth plan for 2013 was acquisition based. The plan for 2014 is
acquisition-based, complemented by organic growth initiatives. The objective is
to reach consolidated profitability within the fiscal year 2014 and establishing
a solid base of business and clients from which to expedite organic growth
initiatives. From the beginning of fiscal 2013 until now, SEB has closed five
acquisitions and has announced a sixth that is expected to give the Company a
solid base of sustainable profitable revenue in excess of $25 million and
established offices in Toronto, Ottawa, North Bay, UAE and India. Historically,
the consolidated annual revenues for these six acquisitions exceed $25 million.
These transactions bring a solid profitable base of business and clients, both
corporate and government.
Fiscal 2013 Announcements
In the period since the beginning of the 2013 fiscal year, the following have
occurred:
-- December 27, 2012-SEB closed a convertible notes financing of $554,000.
-- February 7, 2013-SEB closed the acquisition of Logitek Technology Ltd.
-- February 7, 2013-Latiq Qureshi, President and CEO of Logitek, joined the
Board of Directors.
-- February 27, 2013-SEB closed an equity placement of $1,106,000 at $0.35
per unit.
-- March 5, 2013-SEB closed the acquisition of the SOMOS Group of
Companies.
-- April 1, 2013-Christine Hrudka joined the Board of Directors.
-- April 23, 2013-SEB granted 1,219,000 options to 57 key employees within
SEB and its subsidiaries and the new director, Christine Hrudka.
-- May 8, 2013-Ron Barbaro, previously the Lead Director of the Board of
Directors was appointed Chairman of the Board. This step transitioned
the Chairman position from an inside director to an independent
director.
-- May 14, 2013-SEB closed a convertible-notes financing of $1,025,000,
acquired by independent directors of SEB, one of whom is the Chairman.
-- September 6, 2013-SEB closed a convertible-notes financing of $975,000,
of which $840,000 was acquired by a pro-group or insiders of SEB.
-- October 22, 2013-SEB announced it had reached agreement to acquire
Stroma Services Consulting Ltd, a provider of software, consulting, and
training services having a significant presence with clients in health
care. The transaction is expected to close shortly.
-- November 18, 2013-SEB closed an equity private placement of $500,000;
consisting of 1,250,000 units at a purchase price of $0.40 per unit,
with each unit consisting of 1 common share of SEB and 1 common share
purchase warrant of SEB.
Post Fiscal 2013 Announcements
-- December 2, 2013-SEB closed the acquisition of a 50% interest in the
Inforica Group of Companies through its wholly owned subsidiary, Logitek
Technology Ltd.
-- February 12, 2014-SEB closed a $2,000,000 convertible note offering.
-- March 14, 2014-SEB closed the acquisition of Adeeva Nutritionals Canada
Inc. and the Wellness assets and business of Dr. James Meschino Health
and Wellness.
-- March 18, 2014-SEB's wholly owned subsidiary, Somos Consulting Group
Ltd., closed the acquisition of Antian Professional Services Inc.
Financial Results for the year ended November 30, 2013
For the year ending November 30, 2013, SEB recorded a loss of $3,960,711 which
included non-cash items of $765,826, made up of a Stock-based compensation cost
of $265,717, accretion of non-cash interest of $185,871 related to SEB's
Convertible Financings, amortization of $497,616, depreciation of $128,185 and
deferred tax recovery of $(311,563). Of the other operations costs, the largest
was salaries and other compensation costs of $3,195,585 (the largest portion of
which was related to software development and maintenance); the next was
professional fees of $648,126, much of which was related to the one-time costs
of closing of the financings and acquisitions. Cash used in operating activities
was $2,657,391. Revenue for the year was $10,153,539 compared to $294,298 in the
14 month comparable period ending November 30, 2012. The increase in revenue was
due to the inclusion of the revenues of the acquired companies; Logitek
Technology Ltd. for the period from February through November ($3,457,140) and
Somos Consulting Group Ltd. for the period from March through November
($6,453,293).
The yearly comparative in the financial statements is the period October 1, 2011
to November 30, 2012. Following completion in July, 2012 of the qualifying
transaction ("RTO") by which the Company became publicly traded, SEB elected to
use November 30 as its year-end for financial reporting purposes. The
comparative statements are that of Smart Employee Solutions Inc., the target
company in the RTO, for the period until the RTO after which the statements
reflect the post-RTO combined company Smart Employee Benefits Inc.
The consolidated financial statements and related MD&A for the period ended
November 30, 2013, can be found on SEDAR at www.sedar.com under the profile of
Smart Employee Benefits Inc.
Certain information in this news release constitutes forward-looking statements.
When used in this news release, the words "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "seek", "propose", "estimate",
"expect", and similar expressions, as they relate to the Company, are intended
to identify forward-looking statements. In particular, this news release
contains forward-looking statements with respect to, among other things,
business objectives, expected growth, results of operations, performance,
business projects and opportunities and financial results. These statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those anticipated in such
forward-looking statements. Such statements reflect the Company's current views
with respect to future events based on certain material factors and assumptions
and are subject to certain risks and uncertainties, including without
limitation, changes in market, competition, governmental or regulatory
developments, general economic conditions and other factors set out in the
Company's public disclosure documents. Many factors could cause the Company's
actual results, performance or achievements to vary from those described in this
news release, including without limitation those listed above. These factors
should not be construed as exhaustive. Should one or more of these risks or
uncertainties materialize, or should assumptions underlying forward-looking
statements prove incorrect, actual results may vary materially from those
described in this news release and such forward-looking statements included in,
or incorporated by reference in this news release, should not be unduly relied
upon. Such statements speak only as of the date of this news release. The
Company does not intend, and does not assume any obligation, to update these
forward-looking statements. The forward-looking statements contained in this
news release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
FOR FURTHER INFORMATION PLEASE CONTACT:
MEDIA CONTACTS:
Smart Employee Benefits Inc.
John McKimm
President/Chief Executive Officer
(416) 460-2817
john.mckimm@seb-inc.com
Smart Employee Benefits Inc.
Shelly Frank
Vice-President, Marketing
(888) 939-8885 x 358
shelly.frank@seb-inc.com
First Canadian Capital Corp.
Dan Boase
416-742-5600 or 1-866-580-8891
dboase@firstcanadiancapital.com
First Canadian Capital Corp.
Eric Balog
416-742-5600 or 1-866-580-8891
ebalog@firstcanadiancapital.com
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