Press Releases


SEB reports results for third quarter, 2017 and schedules conference call

October 30, 2017 – Mississauga, Ontario


and Schedules Conference Call

Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) has made significant progress during fiscal 2017, as follows:

  1. Aon Transaction—-The Company closed the acquisition of the Aon Hewitt Inc. (“Aon”) mid market health benefits administration business in Canada and structured a strategic sales and marketing alliance with Aon.  Aon is one of the largest benefit consulting companies in the world operating in over 100 countries.
  2. Debt Financing—SEB closed $22.5M of debt facilities with a major Canadian Bank. These financings converted short term debt issued or assumed in the course of making acquisitions to longer terms of four to five years.  This improved the Company’s working capital ratio and is expected to save over $1.5M annually in interest and financing charges.
  3. Equity Financing—The Company has closed approximately $9.1M of new equity since the beginning of November 2016, with over 70% from insiders and existing shareholders, including over 30% from the CEO and companies related to the CEO.
  4. U.S. Joint Venture—In October, the Company executed a letter of intent to enter into a joint-venture agreement with NeST Technology Ltd., a US technology company. The intent of the venture is to form a new company, owned 50% by SEB and 50% by NeST, which will provide back-office processing and administration services for Third Party Administrators and Professional Employer Organizations in the USA. Concurrent with the signing of the joint venture agreement, NeST invested $960,000 into an SEB equity financing.
  5. Cost Reductions—the Company has reduced annual costs by over $5.5M going forward, through a combination of $2M in integration programs in the Technology Division, $2M post-transition reductions in the Aon business operating infrastructure, and $1.5M in Interest and Financing costs through debt consolidation. The majority of these savings will be realized beginning fiscal 2018.

The above transactions strengthen the Company’s balance sheet and position SEB for strong growth going into the future.  The Company expects to generate in excess of $100.0M of sales for fiscal 2017 and currently has more than $500.0M of backlog, renewal and option year contracts with over 200 clients. The Company continued during the quarter to invest in its Benefits Division, with the largest investments (all costs expensed) being the transition of the Aon business, approximately $330,000 invested in the Health & Wellness platform and over $200,000 in sales and marketing initiatives for Benefits. The Company currently has over 20 white-label and joint-venture Benefits transactions in progress, representing several million plan members in Canada, the U.S.A and in the Middle East.


  1. Consolidated Revenue from Continuing Operations – was $26.5M versus $24.4M the previous year. The $2.1M increase in revenue results primarily from the Benefits Division. The Technology Division was consistent with the previous year. Typically the third quarter is the weakest for the Technology Division, primarily due to summer vacations.
  2. Consolidated Gross Margin – was $7.6M for the quarter, up from $4.3M the previous year. As a percent of revenue, consolidated gross margin was 28.5% in Q3/17 versus 17.5% in Q3/16. This is due to growth of the Benefits Division. Gross margin percentage in the Technology Division also improved to 20.1% in Q3/17 versus 16.9% in Q3/16. Continued improvement is expected going forward in the gross margin of both the Benefits Division and the Technology Division.
  3. Salaries and Other Compensation –  costs were 19.5% of sales in Q3/17, versus 15.4% in Q2/17 and 8.0% in Q3/16. This cost structure increased largely due to additional employee staff in the Benefits Division and additional sales and marketing efforts in Technology Division. This cost structure is highly scalable and is expected to reduce back to previous levels as sales grow in the Benefits Division. The Technology Division has fewer employees and more contractors. Contractors costs are in cost of sales.
  4. Office and General Expenses – were 5.8% of sales in Q3/17, down from 6.2% in Q2/17 but up from 4.6% in Q3/16. This expense ratio is highly scalable and is expected to improve as sales grow and with the Aon business being fully transitioned as of August 31, 2017.
  5. Professional Fees –  were 2.0% of sales in Q3/17 up from 1.5% of sales in Q3/16 and down from 2.6% in Q2/17. These cost ratios are expected to remain in this general vicinity for the near future.
  6. Operating Income Prior to Non-Cash expenses- was $318,923 in Q3/17 versus $811,502 in Q3/16 and $749,029 for Q2/17. Operating income was reduced primarily due to the combination of extra costs required to transition the Aon business, the duplication of operating costs for the Aon business and the investment in the Health and Wellness platform, all of which was expensed.
  7. Interest and Financing Fees- were $685,820 for Q3/17 versus $693,908 for Q3/16 and $1,120,826 for Q2/17. The Bank Financing which closed April 20, 2017 has been a significant portion of this reduction.
  8. Non-cash expense –  consisting of amortization, depreciation and shared based compensation was relatively flat in both dollar amounts and as a percentage of sales. Amortization attributable to acquisitions is the largest component representing over 94% of non-cash expenses. The majority of these costs will be fully amortized by fiscal 2019.
  9. Transition Cost for Aon Transaction – were $1,735,564 in Q3/17. These costs are related to the Aon transaction and are one-time. The transition period ended as of August 31, 2017 so further costs of this nature are not expected.
  10. Transaction costs – in Q3/17 were $226,564, down from $558,153 in Q3/16 and $925,646 in Q2/17. These costs are driven by transaction activity during the quarter and are not related to the operating results.
  11. The Company reported Net Loss – of $3.8M for Q3/17 versus $1.8M for Q3/16 and $3.2M in Q2/17. Approximately $1.2M of these losses are related to non-cash expenses, primarily amortization and deprecation. The Aon one time transition costs were $1.7M. One time transaction costs (legal and accounting) associated with equity financings and other transactions were $0.2M.



  1. The Technology Division revenue was $23.6M for the quarter versus $24.6M the previous quarter. The change is largely due to seasonal slowness. Operating income was $1.9M versus $1.7M the previous quarter, primarily due to gross margin improvements, which are expected to continue.
  2. The Benefits Division revenue was $3.0M for the quarter versus $2.3M the previous quarter, largely due to the Aon acquisition being in place for the full quarter. Operating results for the quarter was a loss of $0.9M versus $0.05M the previous quarter.

As part of the acquisition of the Aon benefits business, SEB agree to pay one-time Transition Fees while it built the infrastructure necessary to manage the business. The total fees for the quarter were recorded as “Transition costs” at $1.79M. The transition was completed as planned on August 31, at which point no further fees are expected.

  1. The Corporate Division reported an operating loss of $0.7M, down from a loss of $1.2M the previous quarter, the largest decrease arising from reduced professional costs related to the equity and debt financing.


The acquisition of Aon’s mid-market health benefits administration business in Canada represents 48 clients, many with globally recognized brands, with over 250,000 plan members. As a part of this transaction SEB added several complementary technology platforms and approximately 160 employees across Canada and India. The Agreement also included a strategic business relationship with Aon Hewitt where SEB’s technology solutions enable future business initiatives.

States John McKimm, President /CEO/CIO of SEB, “The Aon Transaction adds both long-term clients to SEB’s benefits administrations business, and a strategic relationship with one of the largest benefits consulting organizations in the world. A further positive is the ‘Flex Plus’ administration platform and other technology applications, which SEB believes to be one of the most comprehensive ‘Flex Systems’ in the market place. “

  1. SEB has made over $20.0M of investment during the past five years in its health benefits processing solutions. The “Flex Plus” platform enhances SEB’s Processing Solutions capabilities. SEB has enhanced the functionality of “Flex-Plus” with additional capability from its own administration solutions and believes it has one of the most comprehensive and user-friendly multi-employer flex systems in the market place.
  2. Today SEB provides fully automated processing of health benefits plans including Administration Solutions (Traditional or Flex), Adjudication, Claim Payment, Billing, Real Time Reporting, Analytics and Fraud Analytics. SEB offers Total Integrated Processing Functionality on a “White-Label joint venture” basis on a Channel Partner business model. SEB solutions, among other capability, includes custom preferred provider networks, portals custom EDI capability, PBM (pharmacy benefit management) functionality, new products portal which automates the application and underwriting process for new insurance products reducing approval terms to minutes from months, white-labelled benefit cards, integrated disability management, portal automating the case management process, health and wellness anticipated solutions, health spending account, etc. SEB benefits processing Solutions are unique in that it provides fully automated processing for “All Benefits Types, One Processing Environment- One Benefit Card”. SEB solutions allow “Convergence” of processing in a world where disaggregation is the norm. The technology solutions acquired from Aon enhance SEB’s total processing capabilities.

SEB also provides a nationally focused fully bilingual Contact Centre based in Montreal with the leading contact center software in the industry today.

An average employee benefit plan costs approximately $3,000 per employee per annum. Typical processing fees account for approximately 10% of this premium. SEB’s fully integrated processing solutions capture over 90% of these processing services. Currently SEB has over 300,000 plan members operating on one or more of its processing solutions, representing over $1Billion of premium. SEB’s “Convergence Strategy” is to transition the clients over time to “One Processing Environment”, increasing its % of the processing fees. All SEB benefits processing solutions are fully supported and managed by over 900 full time contractors and personnel across Canada and globally.


1.   The new financing arrangements with a major Canadian bank consist of an operating demand facility of up to $12.0M, a demand $5.5M term loan facility with repayment amortized over four years (the “Senior Term Facility”) and a $5.0M subordinated term loan facility (the “Junior Term Facility”). The Senior Term Facility has interest terms consistent with fully secured senior debt. The Junior Term Facility is a five year, subordinated term facility with the mezzanine arm of the bank with monthly interest only and a balloon payment at the end of the term. The Junior Term Facility has interest terms consistent with secured subordinate debt facilities.

The new credit facilities consolidate and replace the aggregate $4.8M of credit facilities that the Company’s wholly owned Technology Division subsidiaries had with the same major Canadian bank, as well as the Company’s asset-based credit facilities of $12.5M with a major international Asset Based Lender (ABL).  The new credit facilities also repay the term debt of Maplesoft Group Inc. (a wholly owned subsidiary of the Company) and repay select convertible notes at the public company level. States John McKimm President/CEO/CIO, “the new credit facilities are expected to significantly reduce interest costs and reduce SEB’s balance sheet risk.”


  1. The Company has closed (in several tranches) equity financings since the beginning of November 2016 totaling $9.1M. In total 49,547,165 shares and 29,801,540 warrants were issued. Insiders and existing shareholders acquired over 70% of this equity financing.


Date/Time: Friday, November 3, 2017 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

Conference Call Replay

Canada & USA Toll Free: 1-855-669-9658
Outside Canada & USA Call: 1-604-674-8052
Code: 1832 followed by the # sign

Replay Duration: Available for one week until end of day November 10, 2017.

About SEB

Smart Employee Benefits Inc.’s global infrastructure is comprised of two operating divisions: Technology and Benefits. The Technology Division currently serves corporate and government clients across Canada and internationally. The Benefits Division focuses on offering SaaS and BPO solutions in the Health Benefits Sector to corporate and government clientele. The Benefits Division operates as a client of the Technology Division. The Technology Division is a critical competitive advantage in supporting the implementation of SEB’s benefits processing solutions into client environments. Benefits Processing is a high-growth specialty practice area.

The core expertise of both divisions is data processing. Emphasis is on automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships.

For further information about SEB, please visit


All figures are in Canadian dollars unless otherwise stated.


John McKimm
Office (888) 939-8885 x 354
Cell (416) 460-2817