MISSISSAUGA, ONTARIO — (Marketwired) — 04/28/17 — Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSX VENTURE: SEB) has made significant progress during the first 5 months of fiscal 2017. SEB has closed approximately $5.9M of new equity, the majority subscribed for by insiders and existing shareholders. The President/ CEO/ CIO acquired over 30% of the equity offering. In addition, the company has closed $22.5M of Debt Facilities with a major Canadian Bank. This debt consolidation saves over $1.5 million annually of interest charges and terms out short term debt incurred in the course of acquisitions for up to 5 years. Debt Service is estimated at approximately 35% of the Technology Division (“TD”) cash flows. The Company also closed the acquisition of Aon Hewitt Inc–s (“Aon”) mid market health and welfare 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. This book of business consists of 48 corporate clients representing over 250,000 plan members across Canada. SEB also acquired several highly complementary technology platforms and added approximately 150 employees across Canada and India.
The above transactions position SEB for strong growth in fiscal 2017. The SEB Group currently has over $100.0M of sales and in excess of $500.0M of backlogs, renewal and option year contracts with over 200 clients.
The consolidated financial results for the first quarter ending February 28, 2017 were relatively flat compared to the same quarter the prior year. The Technology Division continued to generate strong performance during the quarter with backlog increasing significantly, although revenue declined slightly and operating earnings declined, largely due to weakness in western Canada. This weakness is expected to be fully recovered in the second quarter. The Benefits Division (“BD”) gained solid traction post the quarter with the Aon transaction. Corporate costs declined significantly. The details are as follows:
1) CONSOLIDATED RESULTS
2) DIVISIONAL PERFORMANCE
3) CONSOLIDATED EARNINGS (LOSS)
4) EQUITY FINANCING
5) DEBT FINANCING ($22.5M)
6) THE AON TRANSACTION
States John McKimm, President/CEO/CIO of SEB, “The Aon Transaction adds not only long term clients to SEB–s benefits administrations business, it also adds a strategic relationship with one of the largest benefits consulting organizations in the world. A further positive is the “Flex Plus” administration platform, which SEB believes to be one of the most comprehensive “Flex Systems” in the market place. SEB has made substantial investment over the past 5 years in its health benefits processing solutions. The “Flex Plus” platform enhances SEB–s Processing Solutions capabilities in administering “Flex” benefits plans. SEB–s Benefits Exchange Platform is believed to be the most comprehensive in the industry and the only one that manages “All Benefits Types in One Environment”. The current Aon administration environment contributes revenue per plan member of between $50 to $70 per annum. The average benefit plan in Canada today pays processing fees between $250 to $600 per annum per plan member. These processing fees are scattered among multiple service providers. SEB–s Benefits Exchange Platform can consolidate these services and provide benefits clients with “One Processing Environment for All Benefits Types”. This includes Administration (Traditional or Flex), Adjudication, Claims Payment, Billing, Health Spending Accounts, Disability Management, Health and Wellness, Fraud prevention, detailed Real Time Reporting and Analytics, Audit, Pharmacy Benefits Management (“PBM”) solutions, New Voluntary Products Purchases, all on “ONE BENEFITS CARD” and in “ONE PROCESSING ENVIRONMENT”. This is unique in the industry, both in Canada and globally. SEB, with the Aon transaction has the opportunity to capture up to 100% of the processing fees, the majority of which are currently being outsourced to multiple parties.”
Management Comments
States McKimm, President/CEO/CIO, “SEB has made significant progress in the past 5 months. The Technology Division now has over $450 million of backlog, renewals and option year contracts. The division continues to be a strong performer. The Benefits Division has over $50 million of backlog contracts. The Aon transaction has given SEB the opportunity for significant organic growth if SEB can transition clients over time to SEB–s Benefits Exchange Platform. Virtually all the processing in a health benefits plan can be managed in one environment for all benefits types on the SEB platform. It allows SEB to capture in excess of $300 of processing fees per plan member and provide clients processing functionality they are not getting today without spending more money. This is unique in the benefits processing industry. The refinancing with a major Canadian Bank has significantly improved the balance sheet and generated over $1.5 million of new free cash flow from interest savings. SEB is well positioned for growth in both revenue and cash flow in fiscal 2017.”
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Replay Duration: Available for one week until end of day May 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 .
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.
Contacts:
MEDIA AND INVESTOR CONTACTS: Smart Employee Benefits Inc.
John McKimm
President/CEO/CIO
Office (888) 939-8885 x 354 or Cell (416) 460-2817
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