TORONTO, ONTARIO — (Marketwired) — 07/26/13 — Smart Employee Benefits Inc. (“SEB” or “Company”) (TSX VENTURE: SEB), today reported its financial results for the three month period ending May 31, 2013.
SEB is a technology company providing business processes software, solutions and services to corporate and government clients with specialty practices focused on managing group benefit solutions and health claims processing environments. The core expertise of the SEB Group of Companies is managing and reporting on Big Data, including transaction processing in complex global environments. This expertise is uniquely suited to the “Benefits” and “Health-Care” industries.
John McKimm, President and CEO states:
“SEB is focused on two primary target markets in Canada – employee group benefits which exceed $33.0 billion annually and government funded benefits (federal and provincial) which are in excess of $23.0 billion. SEB-s technology platform is easily adaptable to managing the end-to-end business processes in both environments. Of the $56.0 billion market in Canada, the employee group benefit portion has been growing over 80% in the past decade.”
SEB-s three-fold business growth strategy consists of:
Technology Platform Provides Competitive Advantage
SEB has spent over $4.0 million since 2011 automating the administration, payment processing/billing and reporting modules of its platform and integrating these modules into an already proven leading edge adjudication platform.
SEB-s technology platform manages the total business processing services for group benefit solutions and health claims processing on one fully-integrated technology environment. The SEB technology platform is open architecture, rules based and modular, and allows clients to utilize either a fully integrated solution or modules. SEB-s “rules-based adjudication” environment is very unique and when combined with a fully-integrated Administration – Payment Processing/Billing – Real-Time, Self-Serve Reporting modules will provide unique and highly competitive solutions to the marketplace, both in Canada and globally. SEB can administer, adjudicate and report for all benefit types in one fully integrated environment. Rules creation is an administrative, not a programming exercise. Highly customized and flexible processing solutions can be created easily and cost effectively. The largest current implementation of the SEB Adjudication Environment is Oman Insurance in Dubai.
The health benefits division of SEB operates as a licensed TPA and broker. The opportunity for SEB is to increase the capture of revenue by providing fully integrated services and solutions, currently being outsourced by most TPAs and Insurers to third parties.
Acquisitions Underpin SEB-s Growth Strategy
Through acquisitions, SEB intends to acquire the client relationships and vendor status to support a complementary organic growth model with both employers and government business opportunities. On the employee group benefit side, acquisitions target TPAs (Third Party Administrators), as well as broker and consultant organizations that provide solutions and services to employers. The objective is to secure the client relationships and transition many of the front and back-office business processes to the SEB technology environment over time; in effect, capturing revenue that was previously being outsourced. On the government side, SEB is targeting technology companies (primarily IT) that have established vendor relationships, security clearances and project references that are required to bid on government contracts.
Fiscal 2013 – Progress to Date
The growth plan for 2013 is acquisition-based, with the objective of reaching consolidated profitability within the fiscal year and establishing a solid base of business and clients from which to launch organic growth initiatives. In this fiscal year, SEB has closed two acquisitions. Historically, the consolidated annual revenues for these companies exceeded $12.0 million. These transactions bring both a solid profitable base of business and clients, both corporate and government, and they expand technology operations and infrastructure in both Toronto and Ottawa, each a major centre targeted for SEB growth. A third acquisition has been announced, and is expected to close imminently.
Recent Announcements
In the six months of this fiscal year, the following have occurred:
Financial Results for Quarter Ending May 31, 2013 – Revenue Increases by $2,956,331 Over First Quarter Revenue of $343,141
For the 3 month period ending May 31, 2013, SEB recorded a loss of $1,281,475, which included non-cash costs of $541,160, made up of a Stock-based compensation cost of $335,091, accretion of non-cash interest of $43,870 related to SEB-s Convertible Financings, and amortization of $167,199. Of the other costs the largest was Salaries and other compensation costs of $936,508 (the largest portion of which was related to software development and maintenance); the next was Professional Fees of $178,288, much of which was related to the one-time costs of closing of the financings and acquisitions. Cash used in operating activities was $372,585, down from $744,665 in the first quarter. Revenue for the quarter was $3,299,472 compared to $57,520 in the comparable quarter last year and $343,141 in the first quarter ending February 28, 2013.
The quarterly comparative in the financial statements is the period April 1, 2012 to June 30, 2012. Following completion in July, 2012 of the RTO by which the Company became publicly traded, SEB elected to use November 30 as its year-end for financial reporting purposes. The comparative statements are that of Smart Employee Solutions Inc., the target company in the RTO, which had been using September 30 as its year end.
The consolidated financial statements and related MD&A for the period ended May 31, 2013, can be found on SEDAR at under the profile of Smart Employee Benefits.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Smart Employee Benefits Inc.
John McKimm
Chief Executive Officer
(416) 460-2817
Smart Employee Benefits Inc.
Shelly Frank
VP Marketing
(888) 939-8885 Ext 358
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