Press Releases


SEB reports results for Fiscal 2018

April 3, 2019 – Mississauga, ON

Conference Call Scheduled Monday, April 8, 2019, 11:00 A.M.

Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) today reported its financial results for the fiscal year ending November 30, 2018.

States John McKimm, President/CEO/CIO of Smart Employee Benefits Inc.,

“Fiscal year 2018 was a year of transition. The decision was made to sell Paradigm Consulting Group Inc. Additionally, the Benefits Processing business acquired in 2017 went through a major transformation in fiscal 2018, including a significant reduction in cost structure of approximately $3M on an annualized basis as more fully described below. Technology Division revenue declined in fiscal 2018, largely due to weakness in the federal government business and contractors transitioning to other contracts; the remainder due to contracts starting later than anticipated. This trend is expected to reverse in 2019 and beyond as starts have now begun on the new contracts and the contractor transition has declined.

The overall infrastructure cost of the Company has been reduced, particularly in the Benefits and Corporate Divisions. Benefits Division cost reductions are expected to be completed in April 2019.

SEB’s share price has not performed well for several years, despite the strengthening of the overall business, in particular the benefits processing opportunities which is the growth focus of the future. The share price weakness has made it difficult to access the equity capital required to strengthen the balance sheet and position the Company to take advantage of its many growth opportunities, without significant dilution. Scotia Capital Inc. was engaged in March 2019 to assist the Company in identifying and negotiating a transaction with a strategic investment partner. The SEB Board and Management believes this process will provide the optimal immediate value for shareholders, be operationally strategic to SEB, and provide the working capital to expedite the many growth opportunities. The SEB sales pipeline is the strongest it has ever been, particularly in Benefits Processing.”

Key Developments During the Year and Subsequent to Year-end

Sale of Paradigm Consulting Group Inc.

The Company signed a Letter of Intent (“LOI”) on September 18, 2018 with Golden Opportunities Fund Inc. (“Golden”), managed by Westcap Mgt. Ltd., to sell 100% of Paradigm Consulting Group Inc. (“Paradigm”) to a combination of Golden and Paradigm’s senior management.

On January 14, 2019, the Company signed a revised LOI which changed the terms of the sale of Paradigm. Under the revised terms SEB will sell 75% of Paradigm, 57% to Golden and up to 18% to Paradigm management. The purchase price includes a cash amount of up to $4.5M, cancellation of $3.0M of Paradigm preferred shares owned by Golden, which are convertible into SEB common shares, and a working capital adjustment. The targeted closing date is late April 2019.

Paradigm was originally acquired in 2015 to facilitate a local footprint in Saskatchewan and Manitoba for multiple RFP bids. Governments budgets for these RFPs were cancelled. SEB maintains the local presence with a 25% equity interest in Paradigm. The proceeds from the sale of 75% of Paradigm are more optimally utilized to reduce SEB’s debt.

Benefits Processing Business

The Company had expanded its benefits processing business through an acquisition on April 1, 2017. The transaction added over 250,000 plan members and 48 of Canada’s corporate elite as Benefits Processing clients. Key milestones since the acquisition include:

  • Renewals – 23 of 24 contracts up for renewal were renewed.
  • New Plan Members – approximately 60,000 net new plan members were added to the processing environment, utilizing one or more of SEB’s FlexPlus 19 benefit processing modules.
  • FlexPlus Processing Modules – The “FlexPlus” processing environment has significantly increased its functionality and value add to clients with the addition of 15 new processing modules, many of which are unique in the marketplace and are a significant competitive advantage.
  • New Revenue Models – The 19 FlexPlus modules can operate standalone or as an integrated “one processing environment”. They drive more than 20 unique benefit processing revenue models.
  • Decommissioning Old Platforms – The April 2017 acquisition came with clients operating on seven technology platforms. Five of these platforms have been decommissioned with over 98% of our client base moved to the “FlexPlus” platform in 2018. The annual cost savings is over $1.0M.
  • Transitioning to Azure – All FlexPlus environments have been transitioned to the Cloud. This minimizes capital expenditures, improves security and can be quickly and cost effectively deployed on a global basis. The annual cost savings is over $2M.
  • Voluntary Products – The “Voluntary Products” module was launched in 2018 which allows the purchase of online insurance solutions in minutes versus days and weeks. The penetration results during initial enrolment has been over 30% versus less than 5% with manual processes. SEB has launched six voluntary product solutions in partnership with various insurers, including critical illness insurance, term life, Health and Wellness, an Employee Discount Program (i.e. Venngo), Virtual (online) medical care (i.e. Equinox) and expects to launch home, auto, pet, contents insurance and specialized travel insurance in 2019. Voluntary Products is a significant growth initiative going forward.
  • Channel Partner Go-To-Market Business Model – SEB gained significant traction with its Channel Partner go-to-market business model in 2018. A key element of this go-to-market model is the “White-Label TPA” infrastructure. Discussions are ongoing with more than 20 partner organizations. Agreements and Letters of Intent have been executed with several, including MGAs, consulting organizations, insurance brokerages, insurers and payroll companies. The Channel Partner strategy turns cost centers to profit centers for Channel Partners.

The Company has invested tens of millions of dollars in its Benefit Processing solutions, the majority of which has been expensed. This has historically penalized earnings and cash flow. The Benefits Processing group today manages over 300,000 plan members with hundreds of millions of premium dollars and the capability to service a global client base in multiple languages. Significant profitability and positive cashflow is expected in 2019 and beyond. The cost structure has stabilized and the focus has moved to new sales initiatives.

Equity Financing

On February 28, 2018, the Company closed a $3.0M Preferred Share investment into Paradigm from Golden Opportunities Fund Inc. See above re sale of Paradigm to Golden. The majority of this financing was utilized to repay debt and for working capital.

Subsequent to the year end, on January 3, 2019, the Company also closed approximately $0.9M from existing shareholders of equity financing which was utilized for working capital.

Debt Financing

On July 26, 2018, SEB Administrative Services Inc., a subsidiary of the Company, closed a debt financing of $2.0M at an interest rate of 12% plus an initial discount of $0.1M.


Amounts shown in $’000






$ 83,498

$ 106,283

Gross Margin




Adjusted EBITDA








Net loss from continuing operations




Net income (loss) from discontinued operations




Net loss
* 2018 includes a one-time write-down of assets of $6,672

$ (13,137)

$ (8,501)

$ (8,501)


Comparative results for Fiscal 2018 and 2017 (from continuing operations)

Under IFRS accounting policies, when a material subsidiary is in the process of being sold at a reporting date, the financial reporting related to that subsidiary is segregated within the financial statements into single line items. Given that Paradigm is in the process of being sold (see above), its income statement and balance sheet have been extracted from the consolidated statements and reported on a few lines as ‘assets held for sale’ or ‘discontinued operations’.

1) Revenue:

Consolidated revenues declined on a restated comparative basis from 2017 to 2018 by $6.4M. The Technology Division declined by $10.3M, offset by an increase in the Benefits Division of $4.0M resulting from the full-year inclusion of revenues from the mid-market business acquisition discussed above.

2) Gross Margins:

Consolidated gross margin increased on a restated comparative basis from 2017 to 2018 by $1.6M. The Technology Division declined by $2.6M, offset by an increase in the Benefits Division of $4.1M resulting from the full-year inclusion of revenues from the mid-market business acquisition discussed above.

3) Operational Costs:

  • Salaries and other Compensation -Salaries and other compensation costs increased on a restated comparative basis from 2017 to 2018 by $1.6M. The Technology Division declined by $0.6M, offset by an increase in the Benefits Division of $2.1M resulting from the full-year inclusion of costs from the mid-market business acquisition discussed above.
  • Office and General Costs­ Office and general costs increased on a restated comparative basis from 2017 to 2018 by $1.1M. The Technology Division increased by $0.4M; also, there was an increase in the Benefits Division of $1.2M resulting from the full-year inclusion of costs from the mid-market business acquisition discussed above.
  • Professional Fees: – Professional fees increased on a restated comparative basis from 2017 to 2018 by $0.4M. The major factors were an increase in the SEB Corporate Division of $0.8M while the Technology Division declined by $0.4M. Professional fees varies with the amount of financing or acquisition/disposition activity during the year.

4) Non-Cash Expenses:

Non-Cash expenses include amortization, depreciation, changes in fair value of contingent liability and share-based (options) compensation. They totaled $3.2M in fiscal 2018 and $3.2M in 2017. The largest component is amortization of intangible assets (related to acquisition), which was $2.8M in fiscal 2018. These costs are expected to be largely amortized by fiscal 2020. The change in fair value of contingent liability is a reduction of the expected performance payments tied to acquisitions.

5) Write-down of assets:

The Company wrote down assets totaling $6.7M as follows:

  • Impairment of Goodwill and Intangible Assets

The Company performed an impairment test, as it does each year as part of the annual audit process. The testing consists of producing a discounted cash flow based on contracted or otherwise certain income forecasts. This year, the impairment calculations for certain businesses resulted in balances that were less than the recorded carrying value of the assets. Therefore, in accordance with the Company’s policies, the carrying value of those assets were written off to a total of $4.6M, made up of assets of $2.1M pertaining to the Technology Division and assets of $2.5M pertaining to the Benefits Division.

  • Allowance against a Receivable

The Company recorded an allowance of $2.1M against a Technology Division receivable taken on as part of an acquisition, based on assessment of collectability. The Company has security against the receivable which includes SEB shares which formed part of the consideration for the acquisition. The decline in the price of SEB shares is partly responsible for the decision to record the allowance.

6) Interest and Financing Costs:

Interest and financing costs declined by $2.5M due to, among other things, reduced financing fees and other costs associated with raising debt or equity financing. The Technology Division decreased by $0.9M and Corporate Division decreased by $1.7M.

7)  Income tax recovery:

The Company recorded an income tax recovery of $1.3M largely due to the elimination of deferred taxes due to the reduction of goodwill and intangible assets.

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.

Conference Call Details

Date/Time: Monday, April 8, 2019 at 11:00 A.M.

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 a

Conference Call Replay Numbers:

Canada & USA Toll Free: 1-855-669-9658
Code: 3222 followed by the # sign

Replay Duration: Available for one week until end of day Thursday, May 9, 2019.

For further information about SEB, please visit


All figures are in Canadian dollars unless otherwise stated.


John McKimm


Office (888) 939-8885 x 2354

Cell (416) 460-2817