SEB REPORTS RESULTS FOR THIRD QUARTER, 2018

Conference Call Scheduled Thursday, November 1, 2018, 4:00 PM ET

October 30, 2018 – Mississauga, ON: Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) today reported its financial results for the three and nine-month periods ending August 31, 2018.

States John McKimm, President/CEO/CIO of Smart Employee Benefits Inc., “Consolidated results for Gross Margin, Adjusted EBITDA and EBITDA for the nine months ended August 31, 2018 showed steady improvement from the comparable periods in 2017 and 2016. Trailing 12 month comparisons showed improvement with Gross Margin of $29.5 million and Adjusted EBITDA of $2.8 million. Gross Margin was up $2.5 million and EBITDA up $4.1 million versus November 30, 2017.”

Trailing Twelve Months (“TTM”) Compariosns

($000s) Aug 31/18 TTM   Nov 30/17 (FY)   Nov 30/16 (FY)
Revenue

$104,620

$106,283

$97,228

Gross Margin

29,491

26,951

18,909

Adjusted EBITDA

2,755

3,022

2,079

EBITDA

4,670

554

(504)

The Benefits Division (“BD”) has shown steady improvement. Revenues are growing, gross margins are strong, 22 of 23 client contracts (representing over 100,000 employees) that have matured since April 2017 have been renewed. Many have included the opportunity for enhanced services provided by one or more of SEB’s new “FlexPlus” modules. SEB has also decommissioned 4 of the 7 software platforms which were acquired from Aon, transitioning the clients to the “FlexPlus” environment. Additional platform decommissionings are targeted in early 2019 which are expected to contribute to significant cost savings. SEB’s Benefit Processing Solutions have all been moved to Microsoft Azure, SEB’s cloud solution of choice, which allows SEB to launch its “FlexPlus” platform globally to Channel Partners. SEB also announced during the quarter the launch of its Voluntary Benefits Platform which supports the introduction of the first five Voluntary Benefits Solutions. The Voluntary Benefits Products add significant value to SEB clients and their employees in a very cost-effective manner. The SEB Voluntary Benefits Platform allows group benefit employees to buy benefit solutions, including insurance products, in minutes, not days and weeks.”

The Technology Division (“TD”) EBITDA has been relatively stable. TD contracts (Backlog, Option Years, Evergreen) wins and renewals remain healthy. Cost structures are well in hand.

On September 18, 2018, SEB signed a Letter of Intent with Golden Opportunities Fund Inc. (“Golden”), managed by Westcap Mgt. Ltd., to sell 100% of Paradigm Consulting Group Inc. (“Paradigm”) to Golden in conjunction with Paradigm’s senior management. The purchase price includes a cash amount, cancellation of $3.0 million of Paradigm preferred shares owned by Golden, which are convertible into SEB common shares, and a working capital adjustment.  Closing is targeted for November 30, 2018, subject to final due diligence and regulatory and board approval. The cash proceeds from the sale will be used to repay debt of approximately $8.0 million and reduce revolving credit facilities.

Corporate Costs on a cash basis have declined. The issuance of options added over $741K of non-cash expenses to corporate costs on a 9 month YTD basis.

McKimm goes on to state “SEB has invested heavily in its Benefits Processing Solutions over the past number of years. This has penalized consolidated EBITDA. In 2017, SEB gained serious traction in the Benefits Division with the Aon transaction. Today we have over 50 name brand clients representing over 330,000 employees and over $1 Billion of premium. SEB’s benefit processing solutions are in the market and proven. Our Flex Plus platform is capable of managing Flex, Traditional and Multi-Employer environments in both French and English and has 19 modules, all operating in “One Processing Environment”. This is a unique competitive advantage for SEB to provide leading edge, cost effective, user friendly solutions to our clients and their plan members. The tens of millions of dollars SEB has invested in our “One Processing Environment” solutions, combined with our “Channel Partner” go-to-market model, now has major traction in the Canadian marketplace. Our results continue to show steady improvement and our cost structure is highly scalable with substantial profit margin growth with every new dollar of revenue”.

CONSOLIDATED PERFORMANCE

($000s)

Three months ended August 31

Nine months ended August 31

 

2018

2017

2018

2017

Revenue

$ 23,617

$ 26,543

$ 74,901

$ 76,564

Cost of revenues

16,699

18,983

53,817

58,020

Gross Margin

6,918

7,559

21,084

18,544

Gross Margin as a % of Revenue

29.3%

28.5%

28.1%

24.2%

Operating costs

6,287

6,852

18,795

15,867

Professional fees

63

521

838

1,682

Adjusted EBITDA

569

186

1,452

995

Change in fair value of contingency

(141)

-

(141)

-

Share based compensation

217

41

742

201

AON transition/decommissioning costs

-

1,736

162

2,714

Transaction costs

6

44

13

1,486

EBITDA

$ 486

$ (1,634)

$ 675

$ (3,407)

Net loss from continuing operations

$ (1,307)

$ (3,784)

$ (5,149)

$ (9,190)

All comparisons (except where noted) are between Q3 of Fiscal 2018 and Q3 of Fiscal 2017.

  • Consolidated revenues were $23.6M compared to $26.5M in the third quarter prior year ($74.9M compared to $76.6M for the nine months). The BD’s revenues increased by $106K in the quarter and $4.1M YTD.  The YTD increases are attributable to the acquisition of the book of business acquired April 2017 from Aon. The TD revenues were reduced largely due to a one-time $10M contract in 2017 which was not immediately replaced in 2018. The TD has won many multi-year contracts expected to begin in Q4 2018; contracts which had been anticipated to begin earlier in the year, but were delayed. The full replacement of the $10M contract revenues is expected in Fiscal 2019.
  • Gross Margin (GM) was $6.9M for the third quarter, $641K lower than the same quarter the previous year; however, YTD GM showed an impressive increase to $21.1M, a $2.5M improvement from the same period prior year. This is largely attributable to the BD.
  • Adjusted EBITDA (as described in the MD&A for the quarter) was $569K for this Q3, versus $186K the previous Q3. YTD Adjusted EBITDA was $1.5M compared to $1.0M. The strength is attributable to the BD.
  • EBITDA (as described in the MD&A for the quarter) was $486K for the quarter versus a negative $1.6M the previous year, an improvement of $2.1M. For the nine months then ended EBITDA was $675K, a $4.1M improvement from the prior year.  The primary difference being the inclusion of non-recurring transition and transaction costs in the prior year.
  • Interest Costs for the quarter declined by $129K from the prior year, a notable improvement.
  • Consolidated loss for the quarter was $1.3M versus $3.8M ($5.1M versus $9.2M for the nine months). Contributing factors towards the improvement include a reduction in professional fees of $844K (YTD) and reduced transition/transaction costs of $4.0M (YTD), offset by non-cash expenses (“NCE”) such as share-based compensation and intangible amortization.  Total NCE for the first three quarters was $4.1M.

 

DIVISIONAL PERFORMANCE

SEB’s strategic objective is to become one of the leading technology companies within the health benefits industry in Canada and to launch in the U.S. and globally through strategic channel partners. SEB has over a dozen channel partner discussions ongoing. Focused effort in this arena has led to dramatic growth of the Company’s BD which has improved its nine-month revenues by $4.1M over the previous year.  The BD has relied on the TD to develop and support its infrastructure.  Management believes that operational capacity within the BD will allow for future growth with minimal additional costs in the TD resulting in significantly higher margins.

  • The TD’s YTD revenue decreased $6.1M largely due to a one-time $10M contract that ended in 2017 and was slow to be replaced in 2018. EBITDA was $4.6M compared to $3.4M in the previous year. The third quarter had over $120M of new contract wins and renewals. Contracts (Backlog, Option Year, Renewal) remain over $400M.
  • The BD’s YTD revenue was $9.8M an increase of $4.1M over the previous year. The new products platform, and several cross-selling initiatives are expected to significantly increase these revenues in Fiscal 2019. EBITDA for the nine months was a loss of $867K versus a loss of $4.1M for the same period the previous year. EBITDA is expected to be positive in Q4 and into Fiscal 2019.
    1. During the past nine months, 22 of 23 contracts were renewed as they matured, and five new clients were added, representing approximately 165K plan members.  Contract Backlog has grown to over $75M.
    2. Significant expense was incurred YTD in transitioning existing clients to the FlexPlus environment from the various legacy environments acquired from Aon. This is expected to result in  significant annual cost savings. Additional costs were incurred in client implementations. Several new client implementation developments projects are in process. These transition and implementation costs are recovered over the life of the contracts.
    3. Development initiatives, in the form of new functionalities and new modules, were also ongoing during the quarter. BD has launched FlexPlus Chat, FlexPlus Pay and Flex Plus Connect. Existing clients are already subscribing for these new modules.
  • Corporate total costs before divisional allocation improved $1.0M during the first three quarters of 2018 compared to prior year.

 

MANAGEMENT COMMENTS

John McKimm, President/CEO/CIO of SEB, states:

“SEB has progressed significantly year over year. Our TD maintains a solid base of business with multiple years of healthy EBITDA. Our BD has gained solid traction with the Aon transaction in April 2017. Our “One Processing Environment” technology environment for health benefits manages over 90% of all processing activities associated with a health benefits transaction and integrates additional automated solution modules including Voluntary Products, Disability Management, Health & Wellness, Employee Discount Programs, Human Resource Solutions, etc. Our “White Label Channel Partner” go-to-market strategy is also gaining strong traction. We have more than a dozen Joint Venture negotiations in progress. For our “Channel Partners”, we turn “Cost Centres to Profit Centres” as their back-office technology partners. This strategy is unique in the marketplace. During the period since November 2017, on a consolidated basis, we have finalized over $150M of contracts, of which approximately $70M is new business and the remainder renewals of multi-year contracts. Our Contracts (Backlog, Option Year, Evergreen) are maintaining a base of over $500M. Management believes SEB is well positioned for strong organic growth in revenue, EBITDA and earnings over the next three years with annual revenue under contract in excess of $100M per annum.”

 

CONFERENCE CALL DETAILS

Date/Time: Thursday, November 1, 2018 at 4:00 PM ET.

Canada & USA Toll Free Dial In: 1-800-319-4610

Toronto Toll Dial In: 1-416-915-3239

Callers should dial in 5-10 minutes prior to the scheduled start time and simply ask to join the call. 

Webcast Link: access at http://services.choruscall.ca/links/sebq320181101.html

Conference Call Replay Numbers:

Canada & USA Toll Free: 1-855-669-9658
Code: 2764 followed by the # sign

Replay Duration: Available for one week until end of day Thursday, November 8, 2018.

 

ABOUT SEB

SEB is a Business Process Automation and Outsourcing Technology Company providing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored benefit plans on a BPO (Business Processing Outsourcing) business model, globally. This is a major growth focus, SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and healthcare organizations. SEB’s technology infrastructure of over 800 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s Benefits Processing Solutions into client environments. SEB’s Benefits Processing Solutions can be game changing for SEB clients.

The core expertise of SEB is automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Benefits Processing Channel Partners.

For further information about SEB, please visit www.seb-inc.com.

The forward-looking information contained in this release represents the Company’s current expectations and, accordingly, is subject to change. However, the Company expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

All figures are in Canadian dollars unless otherwise stated.

 

INVESTOR CONTACT:

John McKimm, President/CEO/CIO
Smart Employee Benefits Inc.
Tel: 416.460.2817
john [dot] mckimm [at] seb-inc [dot] com
www.seb-inc.com

 

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

SEB SIGNS LETTER OF INTENT TO SELL PARADIGM CONSULTING GROUP

September 24, 2018 – Regina, SK and Mississauga, ON: Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV:SEB) announces that on September 18, 2018, it has signed a Letter of Intent with Golden Opportunities Fund Inc. (“Golden”), managed by Westcap Mgt. Ltd., to sell 100% of Paradigm Consulting Group Inc. (“Paradigm”). The acquirer will be Golden in conjunction with Paradigm’s senior management.  The purchase price will be shared between Golden and Paradigm management. The purchase price includes a cash amount, cancellation of $3.0 million of Paradigm preferred shares owned by Golden, which are convertible into SEB common shares, and a working capital adjustment.  Closing is targeted for November 30, 2018, subject to final due diligence and regulatory and board approval. The cash proceeds from the sale will be used to repay debt of approximately $8.0 million and reduce revolving credit facilities.

States John McKimm, President/CEO/CIO of SEB, “SEB has made the strategic decision to focus on its Canadian Federal Government business and the “InsureTech” sector, leveraging its technological resources and platforms to deliver to corporate and government clients world-class insurance and benefits administration and processing solutions.  SEB will retain a strategic business relationship with Paradigm and Golden post-closing, particularly as it relates to opportunities for deployment of SEB’s benefits administration and processing solutions in the Saskatchewan and Manitoba markets.”

About Golden Opportunities Fund

Golden Opportunities Fund (“Golden”) is a Retail Venture Capital fund launched as the first provincial fund in Saskatchewan in 1999 and later in Manitoba in 2009.  The Fund is managed by Westcap Mgt. Ltd.  Golden invests capital from its 28,000 shareholders in small and medium sized growth companies.  Since its inception Golden has invested more than $350 million in 132 different companies impacting local economies, communities and families.

About SEB

SEB’s business is “IT Managed Services”, focused on Business Process Automation and Outsourcing providing software, solutions and services to a national and global client base on multi-year contracts. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and healthcare organizations.

INVESTOR CONTACTS:

John McKimm, President/CEO/CIO

Smart Employee Benefits Inc.

Tel: 416.460.2817

john [dot] mckimm [at] seb-inc [dot] com

www.seb-inc.com

Bill Mitoulas, Investor Relations

Venture North Capital Inc.

Tel: 416.479.9547

billm [at] venturenorthcapital [dot] com

www.venturenorthcapital.com

 

The forward-looking information contained in this release represents the Company’s current expectations and, accordingly, is subject to change. However, the Company expressly disclaims

any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

 

All figures are in Canadian dollars unless otherwise stated.

MICROSOFT AZURE THE CLOUD SOLUTION OF CHOICE FOR SEB’s BENEFIT PROCESSING SOLUTIONS

July 16, 2018 – Mississauga, ON – SEB Administrative Services Inc. (“SEB Admin”), a wholly owned subsidiary of Smart Employee Benefits Inc. (TSXV: SEB), a technology leader in benefits administration and data processing services, is pleased to announce that it will use Microsoft Azure as its global cloud solution to power its technology solutions focused on health benefits processing for both employer and government funded benefit programs.

“Microsoft Azure will enhance SEB Admin’s global reach and ability to build, deploy, scale, and manage applications to accelerate FlexPlus platform development, adding new experiences and significant value to our clients and their employees,” said Mohamad El Chayah, President & CEO, SEB Administrative Services Inc. FlexPlus platform currently renders benefits administration services to more than 330,000 members.

With 54 Azure regions across the globe and a worldwide content delivery network, SEB Admin can deploy FlexPlus and localize the application experiences for its customers wherever they are in the world. Azure’s ExpressRoute and Service Bus robust messaging and networking capabilities enable hybrid applications to be managed from a single console with Microsoft System Center.

Azure provides a rich set of application services and allows for the development of SEB Admin FlexPlus Exchange for Small and Medium Businesses using any language, tool, or framework.  “We’re excited to see SEB Admin expand its global reach with Microsoft Azure as the foundation,” said John Bruno, General Manager, Azure Global Infrastructure, Microsoft Corp. “Using Azure IaaS and PaaS services allows SEB Admin to rapidly develop and deliver content-rich health, wealth, and retirement processing solution to its customers.”

ABOUT SEB ADMIN:

SEB Admin provides benefit processing solutions including Administration (flex, traditional, multi-employer), adjudication, claims payment and reporting. Our technology platforms manage total business processing services for group benefit solutions and health claims processing in one, open-architecture, fully-integrated, rules-based and modular environment, allowing clients to utilize separate modules or a fully-integrated solution. SEB Admin’s “One Processing Environment, All Benefit Types, One Benefit Card” cloud enabled solutions are among the most cost effective, user friendly and customizable in the industry, allowing real time reporting, analytics and fraud detection when the fully integrated platform is implemented. Our Add-on Modules include Health & Wellness, Online Voluntary Products, Sales and Administration, Disability Management Portal, Absentee Management, Human Resource Solutions and with Venngo, Employee Discount Programs. Our processing solutions are applicable to both employer and government funded benefit programs. SEB Admin’s “One Processing Environment” with single sign on connectivity for all benefit types including health, pension and other rewards programs are unique in the industry. Our solutions are all cloud enabled and delivered via a fully outsourced, co-outsourced or SaaS model.

ABOUT SEB:

SEB is a technology company providing Business Process Automation and Outsourcing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud-enabled SaaS processing solutions for managing employer and government sponsored health benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and health care organizations. SEB’s technology infrastructure of over 800 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB Admin’s benefits processing solutions into client environments. SEB Admin’s Benefits Processing Solutions can be game changing for SEB Admin’s clients.

The core expertise of SEB is automating and managing business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB Admin’s client acquisition model in benefits processing is “Channel Partnerships” where SEB Admin’s processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB Admin’s solutions are cloud enabled and can be delivered on a SaaS platform. SEB Admin’s solutions turn cost centers to profit centers for our Channel Partners.

Forward-Looking Statements

This news release is intended for information purposes only. Statements made in this news release may contain “forward looking” information about the company’s future business prospects. These statements while expressed in good faith and believed to have a reasonable basis are subject to risk and uncertainties that could cause actual results to differ materially from those set forth or implied by such forward looking statements. Investors should consult a professional advisor before making any investment decision.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

For further information about SEB Admin, please visit:
www.seb-admin.com.

 

MEDIA CONTACT:

Mohamad El Chayah, President                                             

SEB Administrative Services Inc.

Tel: 416.418.0619

mohamad [dot] elchayah [at] seb-admin [dot] com

www.seb-admin.com

 

INVESTOR CONTACTS:

John McKimm, President/CEO/CIO

Smart Employee Benefits Inc.

Tel: 416.460.2817

john [dot] mckimm [at] seb-inc [dot] com

www.seb-inc.com

 

Bill Mitoulas, Investor Relations

Venture North Capital Inc.

Tel: 416.479.9547

billm [at] venturenorthcapital [dot] com

http://www.venturenorthcapital.com

SEB RENEWS OVER 120,000 BENEFIT PLAN MEMBERS ON MULTI-YEAR CONTRACTS

July 10, 2018 – Mississauga, ON – SEB Administrative Services Inc. (“SEB Admin”), a subsidiary of Smart Employee Benefits Inc. (TSXV: SEB), a technology leader in benefits administration and data processing services, is pleased to announce the renewal of 19 benefit administration contracts over the past 9 months and the addition of 6 new FlexPlus modules to SEB Admin’s benefit processing solution, bringing the total modules to 16. These modules drive more than 20 unique revenue models. The renewed contracts represent more than $350 Million of benefit premiums for over 120,000 plan members. They include a number of Canada’s top 100 employers. The renewals are multiyear contracts driving incremental growth for SEB Admin. SEB Admin’s new modules provide more unique features and greater automation driving enhanced end user experiences and more cost efficiencies for both clients and SEB Admin.

The new modules include:

  • FlexPlus Pay – This module is a fully integrated, comprehensive and automated direct Billing Solution for Invoicing, Payments and Reporting. FlexPlus Pay provides overall administrative efficiencies for managing Employees on leave and retirees. This is a manual process for many employers.
  • FlexPlus Connect – FlexPlus Connect Integration Portal is a “single point of interface” for Clients and their Employees. It integrates third-party applications, including HR Solutions, Pension Solutions and Financial Planning Solutions, as well as other FlexPlus Modules, like Benefits Administration, Claims Adjudication, Health & Wellness, Disability Management, Absence Management, Employee Discount Programs and On-Line Sales Solutions (Voluntary Insurance Products and other products including Automated Underwriting). This module positions SEB Admin exceptionally well to add significant value to Channel Partners who provide Pension and other benefit processing services.
  • FlexPlus Chat – This module allows for webchat functionality when contacting and interacting with SEB Admin’s Customer Service Centre. Just like call data, FlexPlus Chat historical data is housed in Canada. This Module significantly enhances the interaction of our clients and their plan members with their Benefit Plan.
  • FlexPlus Mobile – FlexPlus Mobile, an adaptive Web and App Technology. It is designed to expansively reach all employees and improve benefits education and active participation in their Benefit Plans. Over 84.0% of Canadians have a cell phone – FlexPlus Mobile provides anytime accessibility and fast efficient communication for greater awareness of enrolment windows and their deadlines on a very cost-effective basis.
  • FlexPlus Care – This module provides clients with a secure digital environment for FlexPlus plan members to interact with medical professionals and get the health care they need from virtually anywhere.
  • FlexPlus Venngo Workperks – FlexPlus members now have the best available discounts in the marketplace using location-based discount services, including in-store and on-line redemptions. FlexPlus Venngo Workperks is the most cost-effective, fully-managed, easy-to-use Employee Discount Program available to employees today and includes over 2200 discount programs.

The FlexPlus modules add significant value to employees and employers. They also add new revenue models. They can be deployed as stand alone or part of a fully integrated solution in “One Processing Environment”.

Mohamad El Chayah, President and CEO of SEB Admin, states, “SEB Admin’s FlexPlus Benefits Processing Platform provides leading modular processing solutions in “One Processing Environment”. In April, 2017 SEB Admin acquired the Canadian mid-market benefits administration business of Aon, including 48 enterprise clients and approximately 265,000 plan members. Since then, SEB Admin has signed contracts adding over 60,000 new plan members. Today, SEB Admin has contracts managing over 330,000 plan members representing over $1B of premium. New technologies are disrupting and transforming health care around us everyday, in Canada and globally. SEB Admin’s benefits processing solutions contribute to this transformation by enhancing the way plan sponsors and plan members provision, re-provision, consume and re-consume their benefit plans. FlexPlus’s ability to transmit data in real time between carriers and HRIS systems is critical for our clients. Moreover, FlexPlus provides our clients access to a highly automated and cost-effective eco-system with strong analytics and reporting for reduced fraud and error rates. Our solutions are equally applicable to employer and government funded benefit programs and to a global marketplace. SEB Admin has 16 FlexPlus benefit processing modules, which can operate standalone or as “One Processing Environment”, with single sign-on. The more of SEB Admin’s modules that are included in the Client’s benefit processing ecosystem, the greater efficiencies and functionalities the client will enjoy, including better analytics, reporting and fraud identification”.

ABOUT SEB ADMIN:

SEB Admin provides benefit processing solutions including Administration (flex, traditional, multi-employer), adjudication, claims payment and reporting. Our technology platforms manage total business processing services for group benefit solutions and health claims processing in one, open-architecture, fully-integrated, rules-based and modular environment, allowing clients to utilize separate modules or a fully-integrated solution. SEB Admin’s “One Processing Environment, All Benefit Types, One Benefit Card” cloud enabled solutions are among the most cost effective, user friendly and customizable in the industry, allowing real time reporting, analytics and fraud detection when the fully integrated platform is implemented. Our Add-on Modules include Health & Wellness, Online Voluntary Products, Sales and Administration, Disability Management Portal, Absentee Management, Human Resource Solutions and with Venngo, Employee Discount Programs. Our processing solutions are applicable to both employer and government funded benefit programs. SEB Admin’s “One Processing Environment” with single sign on connectivity for all benefit types including health, pension and other rewards programs are unique in the industry. Our solutions are all cloud enabled and delivered via a fully outsourced, co-outsourced or SaaS model.

ABOUT SEB:

SEB is a technology company providing Business Process Automation and Outsourcing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored health benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and health care organizations. SEB’s technology infrastructure of over 800 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s benefits processing solutions into client environments. SEB’s Benefits Processing Solutions can be game changing for SEB clients.

The core expertise of SEB is automating and managing business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turns cost centers to profit centers for our Channel Partners.

Forward-Looking Statements

This news release is intended for information purposes only. Statements made in this news release may contain “forward looking” information about the company’s future business prospects. These statements while expressed in good faith and believed to have a reasonable basis are subject to risk and uncertainties that could cause actual results to differ materially from those set forth or implied by such forward looking statements. Investors should consult a professional advisor before making any investment decision.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

 

For further information about SEB Admin, please visit:
www.seb-admin.com.

MEDIA CONTACT:

Mohamad El Chayah, President

SEB Administrative Services Inc.

Tel: 416.418.0619

mohamad [dot] elchayah [at] seb-admin [dot] com

www.seb-admin.com

 

INVESTOR CONTACT:

John McKimm, President/CEO/CIO

Smart Employee Benefits Inc.

Tel: 416.460.2817

john [dot] mckimm [at] seb-inc [dot] com

www.seb-inc.com

 

Bill Mitoulas, Investor Relations

Venture North Capital Inc.

Tel: 416.479.9547

billm [at] venturenorthcapital [dot] com

http://www.venturenorthcapital.com

SEB LAUNCHES EQ CARE VIRTUAL MEDICAL CLINIC SERVICES TO OVER 330,000 BENEFIT PLAN MEMBERS

July 5, 2018 – Mississauga, ON SEB Administrative Services Inc. (“SEB Admin”), a subsidiary of Smart Employee Benefits Inc. (“SEB”), TSXV: SEB, a leader in benefits administration and data processing services, have entered into an agreement with Equinoxe Virtual Clinic Corporation (“EQ”), to add their virtual medical clinic program, EQ Care, to the SEB Admin FlexPlus Platform.

ABOUT VIRTUAL MEDICAL CARE:

Virtual Medical Care transforms healthcare for employees and employers. It allows employees to use their smartphone, tablet or computer to access medical care. Its many benefits for employees include reduced wait times to see a doctor, reduces hospital stays, empowers patients in better managing their healthcare, reduces emergency visits, improves patient safety to mention a few benefits. For employers it contributes to healthier employees, less absenteeism and lower healthcare costs for benefit plans. As demand in the healthcare system in Canada increases, healthcare providers are looking to new solutions such as virtual healthcare and mobile healthcare to provide cost efficient solutions that allow better, faster and more convenient access to care. Thousands of mobile health applications are already available, and this number grows daily. Experts in the industry believe the “Virtualization of Healthcare” is here to stay. Virtual healthcare today includes online access to doctors, nurses, other medical practitioners, renew prescriptions, etc. Today’s market in Canada is estimated to be in the tens of millions of dollars with exponential growth into the hundreds of millions as virtual healthcare becomes a cornerstone of the healthcare road map of the future for governments, employers, insurers and patients. 

Mohamad El Chayah, President and CEO of SEB Admin, states, “We are in the midst of a technology revolution that is disrupting and transforming Health Care around us every day. SEB’s objective is to provide our clients with state of the art technology and benefit solutions in managing their benefit environments. We see in Equinoxe and the EQ Care program a substantial value for our clients and their employees. FlexPlus combined with EQ Care will provide a secure virtual digital environment for FlexPlus plan members to interact with doctors effectively and conveniently, get the care they need, from virtually anywhere. SEB Admin currently administers benefits to over 330,000 plan members for over 50 of Canada’s largest employers. The EQ Care program will be offered as a “Voluntary Benefit” purchased as an adjunct to an employee benefit plan, either funded by its employer fully or co-funded with the employee. The increase in cost to an average benefit plan is less than 3%. Several SEB clients have already tested virtual healthcare. We believe virtual healthcare will become a staple of employee benefit plan designs of the future. Multiple insurance companies are already including “Virtual Healthcare” as a benefit plan design option”.

Daniel Martz, CEO of EQ said, “Equinoxe has been providing care to Canadians for over 28 years and our success has been our ability to stay at the forefront of change. We see great synergy between SEB Admin and EQ Care’s virtual medical clinic services, as we commit to help organizations and their employees get faster and better access to care and treatment, 7 days a week, across all Canadian Provinces and Territories, in both official languages”.

ABOUT SEB ADMIN:

SEB Admin provides benefit processing solutions including Administration (flex, traditional, multi-employer), adjudication, claims payment and reporting. Our technology platforms manage total business processing services for group benefit solutions and health claims processing in one, open-architecture, fully-integrated, rules-based and modular environment, allowing clients to utilize separate modules or a fully-integrated solution. SEB Admin’s “One Processing Environment, All Benefit Types, One Benefit Card” cloud enabled solutions are among the most cost effective, user friendly and customizable in the industry, allowing real time reporting, analytics and fraud detection when the fully integrated platform is implemented. Our Add-on Modules include Health & Wellness, Online Voluntary Products, Sales and Administration, Disability Management Portal, Absentee Management, Human Resource Solutions and with Venngo, Employee Discount Programs. Our processing solutions are applicable to both employer and government funded benefit programs. SEB Admin’s “One Processing Environment” with single sign on connectivity for all benefit types including health, pension and other rewards programs are unique in the industry. Our solutions are all cloud enabled and delivered via a fully outsourced, co-outsourced or SaaS model.

ABOUT EQUINOXE:

Equinoxe LifeCare is an ISO 9001:2015 and certified health care management company which has been in operation for 28 years. Equinoxe Virtual Clinic Corporation, a subsidiary of Equinoxe LifeCare, offers a leading online and mobile-enabled virtual medical care service, EQ Care , through which plan members can access personalized healthcare via their smartphone, tablet or computer; provided by leading Canadian Doctors, Nurses, mental health practitioners and other specialists, in complete confidentiality, from the comfort of home or wherever they may be. EQ Care is the only bilingual, national virtual care platform, through which well over 130,000 virtual medical consultations have been successfully managed.

ABOUT SEB:

SEB is a technology company providing Business Process Automation and Outsourcing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored health benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and health care organizations. SEB’s technology infrastructure of over 800 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s benefits processing solutions into client environments. SEB’s Benefits Processing Solutions can be game changing for SEB clients.

The core expertise of SEB is automating and managing business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Channel Partners.

Forward-Looking Statements

This news release is intended for information purposes only. Statements made in this news release may contain “forward looking” information about the company’s future business prospects. These statements while expressed in good faith and believed to have a reasonable basis are subject to risk and uncertainties that could cause actual results to differ materially from those set forth or implied by such forward looking statements. Investors should consult a professional advisor before making any investment decision.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

 

For further information about SEB Admin, please visit:
www.seb-admin.com.

For further information about Equinoxe Virtual Clinic Corporation, please visit:

https://eqcare.com/en/groups

 

MEDIA CONTACTS:

Mohamad El Chayah, President

SEB Administrative Services Inc.

Tel: 416.418.0619

mohamad [dot] elchayah [at] seb-admin [dot] com

www.seb-admin.com

Daniel Muroff, CEO

Equinoxe Virtual Clinic Corporation

Tel: 514.687.1653

dmuroff [at] equinoxe [dot] ca

 

INVESTOR CONTACT:

John McKimm, President/CEO/CIO

Tel: 416.460.2817

john [dot] mckimm [at] seb-inc [dot] com

www.seb-inc.com

SEB REPORTS RESULTS FOR FIRST QUARTER, 2018

SEB REPORTS RESULTS FOR FIRST quarter, 2018

Conference Call Scheduled Wednesday, May 2, 2018, 11:30AM EST

April 30, 2018 – Mississauga, ON: Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) today reported its financial results for the three-month period ending February 28, 2018.

 

Three months ended February 28

 

2018

2017

Revenue

$  25,510,434

$  23,147,959

Cost of revenues

18,527,677

19,427,565

Gross Margin

6,982,757

3,720,394

Gross Margin as a % of Revenue

27.4%

16.1%

Operating costs

6,567,698

3,202,834

Professional fees

156,439

458,107

Adjusted EBITDA

258,620

59,453

Share based compensation

49,826

54,873

Transaction costs

 -

160,105

EBITDA

208,794

(155,525)

Interest and financing fees

608,262

913,715

Depreciation and amortization

1,149,195

1,133,045

Income tax

1,764

634

Net loss

$ (1,550,427)

$ (2,202,919)

 

CONSOLIDATED PERFORMANCE

The first quarter is typically the slowest quarter for SEB, largely due to the Christmas holidays and a shorter billing period in February. There are approximately ten less billing days than other quarters which translates to a 15% to 20% reduction in normalized revenue. There is also an impact on SEB’s profitability as a result of approximately 45% of SEB’s workforce being employee based and their costs prevail even on non-billable days. SEB is transitioning more and more business to “Managed Services” type business which will reduce the impact of fewer billing days. Growth in the Benefits Processing business will also reduce this seasonal impact. However, year over year, the results have been positive and within our expectations. We expect strong performance throughout the remainder of the year, with the fourth quarter being our strongest quarter, typical of past years.

All comparisons (except where noted) are between Q1 of Fiscal 2018 and Q1 of Fiscal 2017.

  • Consolidated revenue was $25.5M for the quarter versus $23.1M for the same quarter in the previous year. The $2.4M increase is attributable to the benefits processing business acquired April, 2017 from Aon. The Technology Division was relatively flat quarter over quarter.
  • Gross Margin was $7.0M for the quarter, up from $3.7M the same quarter the previous year. Over 80% of the increase is attributed to the growth in the benefits business from the Aon transaction.
  • Adjusted EBITDA (as described in the MD&A for the quarter) was $258.6K for the quarter, versus $59.5K the previous quarter.
  • EBITDA (as described in the MD&A for the quarter) was $208.8K versus a negative $155.5K the previous year, an improvement of $364.3K. The only adjustment in Q1/18 to Adjusted EBITDA was non-cash share-based compensation of $49.8K.
  • Interest, Financing and Transaction Costs were $608.3K for the quarter, versus $1.074M the previous year. The $22.5M of debt refinancing with the Bank of Montreal (April 2017) and the paydown of debt significantly reduced interest costs by over $2.0M, annually.
  • Consolidated loss for the period was $1.6M in Q1/18 versus $2.2M for Q1/17. Contributing factors to the improvement include a reduction in professional fees of $302K and a reduction of $305K in interest and financing costs, partly as a result of the refinancing which occurred in April, 2017. Non-cash expenses included in the loss for the quarter were approximately $1.2M.

DIVISIONAL PERFORMANCE

  • The Technology Division revenue was relatively flat to the same quarter last year at $23.1M for the quarter. Operating income was $958K for the quarter compared to $941K the previous year’s first quarter. The first quarter had over $120M of new contract wins and renewals. Contracts (Backlog, Option Year, Renewal) remain over $450M.
  • The Benefits Division revenue was $3.3M for the quarter vs $0.5M the previous year. The Aon Transaction together with the new products platform sales  and several cross selling initiatives is expected to significantly increase these revenues in the coming months. The operating loss for the quarter was $276K vs $507K for the same quarter the previous year.
    1. Since the Aon transaction closed in April, 2017, 18 contracts were renewed of which 6 were in Q1/18;  2 net new clients also went live in Q1/18. Contract Backlog remains over $60.0M.
    2. Significant expense was incurred during the quarter in transitioning existing clients to the FlexPlus environment from the various legacy environments acquired from Aon. By November, 2018 we expect less than 10% of our clients will be operating on legacy environments. This is expected to result in hundreds of thousands of dollars of annual cost savings. Additional costs were incurred in new client implementations. Several new client implementations are in process. These transition and implementation costs are typically recovered over the life of the contracts.
    3. Development initiatives, in the form of new functionalities and new modules, were also ongoing during the quarter.
  • Corporate total costs were $474K in Q1 F2018 versus $589K in Q1 F2017.

TRAILING TWELVE MONTHS (“TTM”) COMPARISONS

 

TTM

FISCAL YEAR

FISCAL YEAR

 

FEB 28/18

    NOV 30/17

NOV 30/16

Revenue

$108,645,312

$106,282,838

$97,227,776

Gross Margin

30,213,091

26,950,729

18,908,694

Adjusted EBITDA

3,221,128

3,021,987

2,080,129

EBITDA

$918,135

$553,842

$(503,550)

Revenue, on TTM basis, increased over the fiscal years 2017 and 2016 by $2.4M and $11.4M, respectively. At a minimum, the $2.4M increase in the first quarter is expected to prevail quarterly throughout the year. Additionally, during the quarter over $150M of contracts were signed, of which approximately $70M were new multi-year contracts and the remainder were renewals, the majority starting in the third quarter.

Gross Margins for the TTMs are $30.2M vs $27.0M for fiscal 2017 and $18.9M for fiscal 2016. SEB has a very scalable fixed cost structure and has reached the point where over 60 percent of the growth in gross margin dollars are forecast to go to EBITDA.

Adjusted EBITDA for the TTM was $3.2M vs $3.0M for fiscal 207 and $2.1M for fiscal 2016. Continued growth is expected during the year.

EBITDA for the TTM grew to $918K from $554K in fiscal 2017 and a loss of $504K in fiscal 2016. The primary difference between Adjusted EBITDA and EBITDA is one-time costs. In 2017, the majority of the one-time costs were associated with the costs of transitioning the Aon infrastructure from Aon to SEB. In the first quarter, the only adjustment was non-cash share compensation (i.e. option valuations).

PREFERRED SHARE FINANCING

On February 28, 2018 SEB closed a private placement with a major Canadian Investment Fund, pursuant to which the Company received $3,000,000 in gross proceeds. The Company’s wholly-owned indirect subsidiary, Paradigm Consulting Group Inc. (“Paradigm”), issued 3,000,000 preferred shares (“Preferred Shares”) at a price of $1.00 each. The Preferred Shares are entitled to a quarterly 8% cumulative dividend and a bonus equal to 20% of the gain in enterprise value of Paradigm, payable at the maturity date of May 31, 2023. Each Preferred Share (at its issue price) is exchangeable into one Common Share of SEB at $0.45 per Common Share until November 30, 2019 and at $0.50 per Common Share at any time after November 30, 2019 until November 30, 2022.

CONVERTIBLE NOTES FINANCING

Post the quarter, SEB finalized the terms of a Convertible Note financing for $650,000 for a two-year term, ending April 25, 2020. The interest terms are 5% per annum with a conversion over the term at $0.50 per SEB common share. This financing was an extension of an existing Vendor Take Back facility issued on an acquisition.

MANAGEMENT COMMENTS

John McKimm, President/CEO/CIO of SEB, states:

“SEB has progressed significantly year over year. Our Technology Division maintains a solid base of business with multiple years of healthy EBITDA and significant growth expected in fiscal 2018. Our Benefits Processing business has gained solid traction with the Aon transaction in April 2017. Our “One Processing Environment” technology environment for health benefits manages over 90% of all processing associated with a benefits transaction and integrates additional automated solution modules including Voluntary Products, Disability Management, Health & Wellness, Employee Discount Programs and Human Resource Solutions. Our “White Label Channel Partners” go to market strategy is also gaining strong traction. We have more than a dozen Joint Venture negotiations in progress. For our “Channel Partners”, we turn “Cost Centres to Profit Centres” as their back-office technology partners. This strategy is unique in the marketplace. During the period since November 2017, on a consolidated basis, we have finalized over $150M of contracts, of which approximately $70M is new business and the remainder renewals of multi-year contracts. We have, since 2016, removed over $5M of cost structure through integration and consolidation of business processes, infrastructure costs and financing costs. Our debt has been significantly reduced during the year, with the majority of our debt being with a major Canadian bank and over 80% of the remainder being insiders. Our Contracts (Backlog, Option Year Renewals) are maintaining a base of over $500M. SEB is well positioned for strong organic growth in revenue, EBITDA and earnings over the next three years with annual revenue under contract of over $100M per annum.”

 

CONFERENCE CALL DETAILS

Date/Time: Wednesday, May 2, 2018 at 11:30 AM ET.

Canada & USA Toll Free Dial In: 1-800-319-4610

Toronto Toll Dial In: 1-416-915-3239

Callers should dial in 5-10 minutes prior to the scheduled start time and simply ask to join the call. 

Webcast Link: access at http://services.choruscall.ca/links/sebq120180502.html

Conference Call Replay Numbers:

Canada & USA Toll Free: 1-855-669-9658
Code: 2247 followed by the # sign

Replay Duration: Available for one week until end of day May 9, 2018.

ABOUT SEB

SEB is a Business Process Automation and Outsourcing Technology Company providing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored benefit plans on a BPO (Business Processing Outsourcing) business model, globally. This is a major growth focus, SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and healthcare organizations. SEB’s technology infrastructure of over 860 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s Benefits Processing Solutions into client environments. SEB’s Benefits Processing Solutions can be game changing for SEB clients. SEB currently administers over $1B of Premiums for more than 50 of Canada’s corporate elite companies, representing over 330,000 plan members.  SEB’s revenues are over $100M with contracts (backlog, evergreen, option year) valued at over $500M.

The core expertise of SEB is automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Benefits Processing Channel Partners.

For further information about SEB, please visit www.seb-inc.com.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS RELEASE REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

All figures are in Canadian dollars unless otherwise stated.

MEDIA AND INVESTOR CONTACTS:

John McKimm

President/CEO/CIO

Office (888) 939-8885 x 354

Cell (416) 460-2817

john [dot] mckimm [at] seb-inc [dot] com

 

Bill Mitoulas

Venture North Capital Inc.

(416) 837-7147

billm [at] venturenorthcapital [dot] com

 

SEB REPORTS 2017 ANNUAL

SEB Reports Fourth Quarter and Full Year Results

April 2, 2018 – Mississauga, ON: Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) today reported its financial results for the fourth quarter fiscal year ending November 30, 2017.

COMPARATIVE RESULTS FOR FISCAL 2017, 2016, 2015

Sales, gross margins and EBITDA reached the highest levels since the inception of the Company. Comparative numbers for fiscal 2015, 2016 and 2017 are:

 

For the Years ended November 30

 

2017

2016

2015

Revenue

$ 106,282,838

 $ 97,227,776

 $ 42,579,694

Cost of revenues

79,332,109

78,319,077

31,961,805

Gross Margin

26,950,729

18,908,699

10,617,889

Gross Margin as a % of Revenue

25.4%

19.4%

24.9%

Operating costs

23,350,386

15,423,596

9,762,238

One-time costs related to AON integration

(724,092)

-

-

Adjusted operating costs

22,626,294

15,423,596

9,762,238

Professional fees

1,302,449

1,404,975

1,658,136

Adjusted EBITDA

3,021,986

2,080,128

(802,485)

AON transition costs

1,990,354

-

-

One-time costs related to AON integration

724,092

-

-

Total AON-related integration and transition

2,714,446

-

-

Change in fair value of contingent liability

(2,102,505)

476,052

(128,350)

Gain on sale of portion of business

-

-

(1,124,837)

Share based compensation

320,321

270,890

673,659

Transaction costs

1,535,883

 1,836,737

1,010,127

Write down of intangibles

-

-

551,516

EBITDA

$ 553,840

$ (503,552)

$ (1,784,601)

 

KEY ACCOMPLISHMENTS DURING FISCAL 2017

  • Aon Transaction –  This transaction closed April 1, 2017 and was fully transitioned to the SEB environment between July 1, 2017 and September 30, 2017. This transaction added over 265,000 plan members and 48 of Canada’s corporate elite as Benefits Processing clients. It resulted in SEB having one of the largest Third Party Administrator (“TPA”) client bases in Canada.
  • Equity Financing – The company closed approximately $9.4 Million of equity during Fiscal 2017. Subsequent to year end, an additional $3.0 Million Preferred Shares via an SEB Subsidiary was invested by a strategic investor. The majority of this financing was utilized to repay debt and for working capital.
  • Debt Financing – On April 20, 2017, SEB closed $22.5 Million of financing with the Bank of Montreal; in the form of a $12.0 Million Operating Credit Facility and $10.5 Million of Term Loans. These facilities allowed SEB to consolidate much of its higher cost, short term debt resulting from acquisitions.
  • Cost Reduction – Since 2016, the company has reduced operating costs by over $5.0 Million, annually, with over $2.0 Million being interest and financing and the remainder operational (people and infrastructure).  The majority of these savings will be reflected in fiscal 2018.

Contracts – The Company has over $500 Million of contracts (backlog, option years, evergreen) measured out 7 years. The majority of the Company’s business is multi-year with over 80% of revenues being government, healthcare and insurance.

COMPARATIVE QUARTERLY ANALYSIS, FISCAL 2017

The fourth quarter, 2017 recorded the highest ever sales, gross margin and adjusted EBITDA in the Company’s history. There has been steady improvement throughout the year as cost reductions and operational strategies begin to be positively reflected in financial results. Continued improvement is expected in fiscal 2018 as the full benefit of the integration strategies and cost savings are realized. The comparative analysis of quarterly results in fiscal 2017 are:

  • Sales: Increased to $29.7 Million, from $26.5 Million in Q3, $26.9 Million in Q2 and $23.1 Million in Q1 of 2017. This is largely attributed to growth in the Benefits Processing.
  • Gross Margin: Increased to $8.4 Million, from $7.6 Million in Q3, $7.3 Million in Q2 and $3.7 Million in Q1 of 2017. As a percent of revenue, gross margins were 28.3% in Q4, 28.5% in Q3, 27.0% in Q2 and 16.1% in Q1, respectively.
  • Adjusted EBITDA: Increased to $1.9 Million, from $1.3 Million in Q3, a loss of $0.23 Million in Q2 and $0.06 Million in Q1 of 2017.

COMPARATIVE RESULTS FOR FISCAL YEARS 2017, 2016, 2015

1)     Revenue: 

Grew 9.3% to $106.3 Million in fiscal 2017. This is up from $97.2 Million in fiscal 2016 and $42.6 Million in fiscal 2015. The growth is largely attributed to growth in the Benefits Processing Business via the Aon Acquisition.

2)     Gross Margins:

Grew 42.5% to $27.0 Million in fiscal 2017. This is up from $18.9 Million in fiscal 2016 and $10.6 Million in fiscal 2015. As a percent of sales, gross margins were 25.4%, 19.4% and 24.9%, respectively. The growth in the Benefits Processing business is the largest contributor to growth. Gross Margin percentages are forecast to continue to increase as benefits processing revenues grow.

 3)     Operational Costs:

Grew 51.4% to $22.6 Million in fiscal 2017, up from $15.4 Million in fiscal 2016 and $9.8 Million in fiscal 2015. As a percent of sales, operating costs were 21.3%, 15.9% and 22.9%, respectively. The Benefits Processing business has significantly higher fixed costs than the Non-Benefits processing and outsourcing business which contributed to the increase in 2017. Both business divisions are highly scalable, however, the Benefits Processing business has much higher margins once the fixed costs are covered. Going forward, management expects over 70% of every gross margin dollar to go to operating earnings in the Benefits Processing business. Gross margins in the Benefits Processing are between 70% and 90% depending on the revenue stream. Operating costs as a percent of sales are expected to reduce significantly as gross margin dollars grow.

A)   Salaries and other Compensation -  are the largest component of Operating Costs.  They were $16.6 Million in fiscal 2017, $10.4 Million in fiscal 2016 and $5.8 Million in fiscal 2015. As a percent of revenue they were 15.6%, 10.7% and 13.6%, respectively. The increase in fiscal 2017 is largely due to the addition of approximately 160 employees in Benefits Processing Division arising from the Aon Transaction.

B)    Office and General Costs­ – were $6.7 Million in fiscal 2017, $5.0 Million in fiscal 2016 and $4.0 Million in fiscal 2015. As a percent of sales, they were 6.3%, 5.2% and 9.4%, respectively. In fiscal 2017, SEB added two offices in India, one in Montreal and one in Toronto to accommodate the growth in the Benefits Processing from the Aon Transaction. Management expects these costs will grow at a much slower pace than the related revenues.

 4)     Non-Cash Expenses:

Non-Cash expenses include amortization, depreciation, changes in fair value of contingent liability and share based (options) compensation. They totaled $5.1 Million in fiscal 2017, $5.3 Million in 2016 and $3.2 Million in 2015. The largest component is amortization of intangible assets (related to acquisition), which was $4.5 Million in fiscal 2017. These costs are expected to be fully amortized by fiscal 2020. The change in fair value of contingent liability is a reduction of the expected performance payments tied to an acquisition.

 5)     AON Transition Costs – One Time:

One-time costs related to the Aon acquisition and integration totaled $2.7 Million. The Aon acquisition was completed April 1, 2017. The full operating environment was transitioned to SEB between July 1, 2017 and October 1, 2017, during which period there was a one-time, short term duplication of cost structure. SEB has materially reduced the operating costs of the Aon acquisition and expect continued reductions in 2018, primarily due to technology and infrastructure efficiencies.

 6)     Interest and Financing Costs:

These costs were $4.3 Million in fiscal 2017, $3.1 Million in 2016 and $1.8 Million in 2015. The increase in costs in 2017 are largely related to the debt assumed with the Maplesoft acquisition and the refinancing costs incurred in 2017. Management is forecasting a reduction in financing costs of over $2.0 Million in fiscal 2018.

 7)     Professional Fees:

Professional fees declined to $1.4 Million from $1.8 Million. These fees largely fluctuate with financings and acquisitions. A steady state professional fees cost structure is in the $1.0 Million range.

 8)       Adjusted EBITDA and EBITDA:

Adjusted EBITDA reflects the adding back to EBITDA one-time costs and non-cash compensation expenses. The largest add back is the one-time transition costs allotted to the Aon transaction ($2,714,446). Adjusted EBITDA was $3.0 Million for fiscal 2017, up from $2.0 Million in 2016 and a loss of $0.8 Million in 2015. Continued improvement is forecast in 2018.

9)     Consolidated Earnings (Loss), Operating Income:

The Company recorded a net loss of $9.1 million for fiscal 2017 versus $8.0 million in fiscal 2016. The largest component of the increase in the loss is the net effect (before taxes) of the Aon acquisition, namely the operating income from the business for the period of $0.3 million, less the Transition Costs of $2.7 million; costs which have ceased by the end of Q3 of Fiscal 2017 and will not reoccur in Fiscal 2018. Non-cash expenses contributing to the loss totaled $5.1 Million in fiscal 2017 and $5.3 Million in 2016.

 

States John McKimm, President, CEO, CIO:

“Fiscal 2017 has been a watershed year for SEB. Consolidated revenues in fiscal 2017 reached new highs as did gross margin dollars, Adjusted EBITDA and contract values. SEB now has 11 offices in Canada, the Middle East and India, over 200 active clients, over 400 full time employees and over 500 contract employees. The Company has been investing heavily in benefits processing solutions since its inception which has penalized cash flow from its other outsourcing and processing businesses. The Aon transaction, closed in April, 2017, has given the Company significant traction in the benefits processing industry. Today the Company administers over $1.0 Billion of Benefits premium for over 330,000 plan members and the Benefits Processing business is now self-funding. The Company’s “Channel Partner Go-to-Market Strategy” and its “One Processing Environment” Benefits Exchange Platform are the cornerstones of future growth in Benefits processing and gained excellent traction in 2017 with the Aon Transaction.  SEB’s sales pipeline currently includes over 20 “White Label Channel Partner” strategic opportunities in Canada, the USA and the Middle East. The major investment in benefits processing technology is now largely maintenance, client enhancements and upgrades. All benefit processing solutions are market ready and deployed and the technology risk is gone. SEB is well positioned for significant revenue and EBITDA growth in fiscal 2018 and beyond.”

OPTIONS ISSUED TO DIRECTORS

On March 3, 2018, SEB issued 200,000 options to each of 7 Independent Directors on the Board of SEB. The options had a term of 36 months, an exercise price of $0.23 and vested 25% every 6 months.

ABOUT SEB

SEB is a Business Process Automation and Outsourcing Technology Company providing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and healthcare organizations. SEB’s technology infrastructure of over 860 multi-certified technical professionals, in 11 offices across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s Benefits Processing Solutions into client environments. SEB’s “One Processing Environment” Benefits Processing Solutions can be game changing for SEB clients.

The core expertise of SEB is automating and outsourcing business processes utilizing SEB proprietary software solutions and services combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Benefits Processing Channel Partners.

For further information about SEB, please visit www.seb-inc.com.

 THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS RELEASE REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

All figures are in Canadian dollars unless otherwise stated.

MEDIA AND INVESTOR CONTACTS:

John McKimm

President/CEO/CIO

Office (888) 939-8885 x 354

Cell (416) 460-2817

john [dot] mckimm [at] seb-inc [dot] com

SEB CLOSES STRATEGIC PRIVATE PLACEMENT WITH GOLDEN OPPORTUNITIES FUND

March 2, 2018 – Regina, Saskatchewan and Mississauga, Ontario – Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) is pleased to announce that it has closed a private placement (the “Private Placement”) for aggregate gross proceeds of $3,000,000 from Golden Opportunities Fund Inc. (“Golden”), a Retail Venture Capital fund that invests into Saskatchewan and Manitoba growth companies. This transaction both strengthens SEB’s balance sheet and working capital and creates significant strategic value in business development initiatives in Saskatchewan and Manitoba, including multiple P3 (Private Public Partnership) initiatives SEB is pursuing.

John McKimm, SEB President/CEO/CIO states, “Golden Opportunities Fund and its manager Westcap Mgt. Ltd. (“Westcap”) are very well-respected capital partners in Saskatchewan and Manitoba and we are confident they will add significant value to the business of SEB, beyond just providing capital.   SEB has identified numerous out-sourcing opportunities in the Western Canadian marketplace where Westcap, Golden and SEB are strategically aligned in execution.”

Proceeds were raised through the issuance of 3,000,000 cumulative redeemable retractable non-voting preferred shares (each a “Preferred Share”) at a price of $1.00 per Preferred Share.  The Preferred Shares were issued by Paradigm Consulting Group Inc. (“Paradigm”), a Saskatchewan information technology company and an indirect wholly owned subsidiary of SEB.

The Preferred Shares are entitled to an 8% cumulative dividend paid quarterly and a Bonus Return.  The Bonus Return can be earned one of two ways:

  1. Participating in Enterprise Value Gain of Paradigm: An amount equal to 20% of the gain in the enterprise value of Paradigm (the “Bonus Return”) over the timeframe to maturity; payable at the maturity date of May 31, 2023 (“Maturity”) OR
  2. Conversion to SEB Common Shares: Conversion of the Preferred Shares to SEB Common Shares.  Each Preferred Share (at its issue price) is exchangeable into one Common Share of the Company at $0.45 per Common Share until November 30, 2019 and at $0.50 per Common Share at any time after November 30, 2019 and up to November 30, 2022.  Up to $60,000 of accrued but unpaid dividends may be converted into Common Shares subject to TSX Venture Exchange Approval at the time of such conversion.

The exchange price of the Preferred Shares will be adjusted if SEB issues equity below the exchange price in effect at such time and such dilution exceeds 10% of SEB’s current basic share capital of 160,953,149 Common Shares, on the basis of a narrow-based weighted average ratchet, provided that the adjusted exchange price shall not be less than $0.25 per Common Share.

In certain circumstances, the Preferred Shares may be redeemed in increments of not less than $300,000 if the trading price of SEB’s Common Shares closes at higher than $1.00 per Common Share for 30 consecutive days on TSX Venture Exchange.

If the Preferred Shares have not been redeemed by the Company within 90 days after Maturity, the Preferred Shares (including accrued but unpaid dividends and Bonus Return) will convert into a demand secured debenture of the Company (a “Debenture”) with an interest rate of 15% per annum. In certain circumstances prior to Maturity (including failure to pay dividends for two consecutive quarters, failure to pay the Bonus Return, failure to issue the Common Shares on exchange or a material default by the Company under any agreement for the borrowing of money), the face value of the Preferred Shares (including accrued but unpaid dividends and Bonus Return) will convert into a Debenture except with an interest rate of 18% per annum.

The Preferred Shares are subject to a hold period expiring four months and a day after the later of (i) February 28, 2018 and (ii) the date Paradigm becomes a reporting issuer in any province or territory.  Any Common Shares issued on exchange of the Preferred Shares will be subject to a four-month hold period, expiring on June 29, 2018.

Proceeds of the Private Placement will be used for general working capital purposes.

Golden Opportunities Fund Inc. will be entitled to have one individual appointed to the board of directors of Paradigm.

Venture North Capital Inc. Engaged as Investor Relations Consultant

The Company announces that it has engaged Venture North Capital Inc. (“Venture North”) to provide strategic investor relations and shareholder communications services.  Venture North will be focused on increasing investor awareness while introducing SEB to its network of investment advisors, investment dealers, institutions and other financial professionals.

Venture North is based in Toronto and provides investor relations services to a number of small cap companies.  Venture North is arm’s length to SEB and does not own any securities of SEB, other than as set out below.

Under the terms of the engagement, which is for an initial six-month term, Venture North will be paid $5,000 per month.  It will also be granted 500,000 options having an exercise price to be set at the closing share price on or about March 5, 2018, which vest over a year as to 125,000 per quarter in accordance with the policies of the TSX Venture Exchange.  The above engagement is subject to regulatory approval. 

About SEB

SEB is a Business Process Automation and Outsourcing Technology Company providing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and healthcare organizations. SEB’s technology infrastructure of over 860 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s Benefits Processing Solutions into client environments. SEB’s Benefits Processing Solutions can be game changing for SEB clients. SEB currently administers over $1B of Premiums for more than 50 of Canada’s corporate elite companies, representing over 330,000 plan members.  SEB’s revenues are over $100M with contracts (backlog, evergreen, option year) valued at over $500M.

The core expertise of SEB is automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Benefits Processing Channel Partners.

About Golden Opportunities Fund

Golden Opportunities Fund (“Golden”) is a Retail Venture Capital fund launched as the first provincial fund in Saskatchewan in 1999 and later in Manitoba in 2009.  The Fund is managed by Westcap Mgt. Ltd.  Golden invests capital from its 28,000 shareholders in small and medium sized growth companies.  Since its inception Golden has invested more than $350 million in 132 different companies impacting local economies, communities and families.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States.  The securities described in this news release have not been and will not be registered under the United States Securities Act of 1933, as amended (the

“U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward Looking Information

The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, including statements regarding the Company’s areas of focus, other than statements of historical facts, which address the Company’s expectations, should be considered as forward-looking statements and therefore subject to various risks and uncertainties. The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “objective”, “hope” and “continue” (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

Such forward-looking statements are based on knowledge of the environment in which the Company currently operates, but because of the factors listed herein, as well as other factors beyond the Company’s control, actual results may differ materially from the expectations expressed in the forward-looking statements. Investors are cautioned not to put undue reliance on forward-looking statements. The Company undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events, other than as required by applicable law.

 

MEDIA AND INVESTOR CONTACT:

John McKimm
President/CEO/CIO
Office (888) 939-8885 x 354
Cell (416) 460-2817
john [dot] mckimm [at] seb-inc [dot] com

SEB ANNOUNCES CLOSING OF UNIT OFFERING

December 4, 2017 – Mississauga, Ontario – Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) announces that it has closed a unit offering (the “Offering”) for aggregate gross proceeds of $1,883,900.

Proceeds were raised through the issuance of 8,970,952 units (each a “Unit”) at a price of $0.21 per Unit.  Each Unit consists of one common share of the Company (each a “Common Share”) and one-half transferable common share purchase warrant of the Company (each whole such warrant, a “Warrant”).  Each Warrant is exercisable into one Common Share of the Company at a price of $0.30 per share and has a term of 18 months from the date of issuance.

Finders that introduced subscribers to the Offering were issued Common Shares equal to 7% of the number of Units issued to such subscribers, as well as finder warrants (each a “Finder Warrant”) equal to 7% of the number of Units issued to such subscribers. Finders were issued an aggregate of 292,633 Common Shares and 292,633 Finder Warrants. Each Finder Warrant is exercisable into one Unit at $0.30 per Unit for a period of 18 months from closing.

All securities issued in connection with the Offering will be subject to a four-month hold period.  The hold periods will expire for the first tranche closing, on March 30, 2018; and for the second tranche closing, on March 31, 2018.

Proceeds of the Offering will be used for repayment of debt and general working capital purposes.

About SEB

SEB is a technology company providing Business Process Automation and Outsourcing software, solutions and services to a national and global client base. SEB has a specialty growth focus in cloud enabled SaaS processing solutions for managing employer and government sponsored health benefit plans on a BPO (Business Processing Outsourcing) business model, globally. SEB currently serves corporate and government clients across Canada and internationally. Over 80% of SEB’s revenues derive from government, insurance and health care organizations. SEB’s technology infrastructure of over 860 multi-certified technical professionals, across Canada and globally, is a critical competitive advantage in supporting the implementation and management of SEB’s benefits processing solutions into client environments. SEB’s Benefits Processing Solutions can be game changing for SEB clients.

The core expertise of SEB is automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s client acquisition model in benefits processing is “Channel Partnerships” where SEB processing solutions both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered on a SaaS platform. SEB solutions turn cost centers to profit centers for our Channel Partners.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States.  The securities described in this news release have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward Looking Information

The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, including statements regarding the Company’s areas of focus, other than statements of historical facts, which address the Company’s expectations, should be considered as forward-looking statements and therefore subject to various risks and uncertainties. The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “objective”, “hope” and “continue” (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

Such forward-looking statements are based on knowledge of the environment in which the Company currently operates, but because of the factors listed herein, as well as other factors beyond the Company’s control, actual results may differ materially from the expectations expressed in the forward-looking statements. Investors are cautioned not to put undue reliance on forward-looking statements. The Company undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events, other than as required by applicable law.

MEDIA AND INVESTOR CONTACT:

John McKimm
President/CEO/CIO
Office (888) 939-8885 x 354
Cell (416) 460-2817
john [dot] mckimm [at] seb-inc [dot] com

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