Press Releases


SEB reports results for third quarter, 2018

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)




Gross Margin




Adjusted EBITDA








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”.



Three months ended August 31

Nine months ended August 31






$ 23,617

$ 26,543

$ 74,901

$ 76,564

Cost of revenues





Gross Margin





Gross Margin as a % of Revenue





Operating costs





Professional fees





Adjusted EBITDA





Change in fair value of contingency





Share based compensation





AON transition/decommissioning costs





Transaction costs






$ 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.


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.


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.”



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

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



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

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.



John McKimm


Office (888) 939-8885 x 2354

Cell (416) 460-2817


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