SEB Reports Financial Results for the Quarter Ending February 28,
2014
TORONTO, ONTARIO--(Marketwired - Apr 28, 2014) - Smart Employee
Benefits Inc. ("SEB" or "Company") (TSX-VENTURE:SEB) today reported
its financial results for the quarter ending February 28, 2014.
SEB Overview
SEB is a technology company with two 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's Benefits Practice is focused on two primary target markets
in Canada - employee group health benefits which exceed $37.0
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 benefit portion 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 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.
- Creating new unique benefits solutions made possible by the SEB
technology platform.
The progress SEB has made in 2011 through fiscal 2013 has
positioned the company in 2014 to achieve strong growth and
sustainable profitability.
SEB's 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 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 health 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.
SEB's Growth Strategy based on acquisitions and organic
initiatives
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.
The growth plan for 2014 is acquisition-based, complemented by
organic growth initiatives, with the objective of reaching
consolidated profitability within the fiscal year 2014 and
establishing a solid base of business and clients from which to
launch stronger organic growth initiatives. From the beginning of
Fiscal 2013 until now, SEB has closed 5 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.
SEB developments during the quarter ending February 28, 2014
- 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.
SEB developments subsequent to February 28, 2014
- March 14, 2013 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 quarter ended February 28, 2014
For the quarter ending February 28, 2014, SEB recorded a loss of
$1,092,950 which included non-cash costs of $312,743, made up of
accretion of interest of $90,431 related to SEB's Convertible
Financings, amortization of $197,084 and depreciation of $25,228.
The loss before interest, non-cash items and the minority interest
in the earnings of Inforica was $644,573.
Revenue for the quarter was $4,257,290 compared to $343,141 in
the comparable period ending February 28, 2013. The increase in
revenue was due to the inclusion of the all the revenues of Logitek
Technology Ltd. (compared to one month in the comparable quarter),
and all of the revenues of Somos Consulting Group Ltd. and the
Inforica group. The Compensation portion of Cost of revenues
primarily reflects the cost of contractors of Logitek, SOMOS and
Inforica placed with clients during the period subsequent to
acquisition, and not present in the previous comparable quarter,
resulting in the large increase. Of the other operations costs, the
largest was salaries and other compensation costs of $844,577 (a
portion of which was related to software development and
maintenance); the next was professional fees of $175,595, of which
$49,226 was related to the one-time costs of closing of the
Inforica acquisition as well as some audit and valuation costs.
The major sources of cash during the quarter were proceeds (net
of closing costs) from the convertible financing of $1,751,809 and
$254,800 from the exercise of warrants.
The unaudited condensed interim consolidated financial
statements and related MD&A for the period ended February 28,
2014, can be found on SEDAR at www.sedar.com under the profile of
Smart Employee Benefits.
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.
Smart Employee Benefits Inc.John McKimmPresident/Chief Executive
Officer(416) 460-2817john.mckimm@seb-inc.comSmart Employee Benefits
Inc.Shelly FrankVice-President, Marketing(888) 939-8885 x
358shelly.frank@seb-inc.comFirst Canadian Capital Corp.Dan
Boase416-742-5600 or
1-866-580-8891dboase@firstcanadiancapital.comFirst Canadian Capital
Corp.Eric Balog416-742-5600 or
1-866-580-8891ebalog@firstcanadiancapital.com
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