EDMONTON, ALBERTA–(Marketwired – Jun 24, 2013) –
Serenic Corporation (the “Company” or “Serenic”) (TSX
VENTURE:SER), an international software developer
specializing in integrated financial management and human capital
management (“HCM”) solutions for Non-Profit organizations,
government agencies, and Microsoft Dynamics NAV users, announces
its financial results for the three months and year ended February
28, 2013.
Financial results are summarized as follows:
Three months ended:
Year ended:
Feb 28, 2013
Feb 29, 2012
Increase
Feb 28, 2013
Feb 29, 2012
Increase
$
$
%
$
$
%
Revenue
3,905,255
2,787,885
40.1
12,071,865
10,860,633
11.2
Net income (loss)
575,636
47,580
1,109.8
39,110
(176,375
)
122.2
Basic and diluted income (loss) per share
0.04
0.00
400.0
0.00
(0.01
)
125.0
EBITDA
(1)
778,151
62,046
1,154.2
547,153
175,654
211.5
EBITDA as a % of sales
19.9
%
2.2
%
804.5
4.5
%
1.6
%
181.3
Weighted average common shares outstanding – basic
14,511,647
15,105,683
14,732,450
15,164,562
EBITDA represents earnings before interest, taxes,
depreciation, amortization, and stock based compensation. Please
review the Serenic Management Discussion and Analysis for the year
ended February 28, 2013 for more information.
Summary of Operations in Fiscal 2013
The Company had two principal objectives during the year – to
increase organic growth and to investigate opportunities to enhance
shareholder value. With regards to the first objective, Serenic is
pleased to announce that it achieved this goal which management
believes will assist in achieving the second objective in the long
run. Revenue increased by $1,211,232 or 11.2% to $12,071,865; gross
profit increased by $708,840 or 9.5%; and the Company recorded net
income of $39,110, an improvement over the last year’s loss of
$176,375. EBITDA also increased significantly by $371,499 or 211.5%
from $175,654 in the prior year to $547,153 this year.
The previously announced transition to the Microsoft Global
Road to Repeatability (“GR2R”) program and volume based sales model
affected every area of the Company to a significant degree. Product
strategies and features bundling were re-examined and revised, and
many new features to support the new strategies were designed and
coded into the new version of Serenic Navigator that has recently
been released. In parallel with this, marketing strategies and
programs were also revised and a new sales group was formed to
develop the new highly prescriptive sales model, which will reduce
the extensive customer interaction which characterized our
historical (highly consultative) sales methodology. Extensive time
was spent developing simplified pricing models which had to align
with Microsoft’s revised pricing. The Client Services group
invested considerable time to research how to adopt and deploy
“RapidStart”, a streamlined model for implementing software and
which should promote higher productivity from this group.
Concurrently, work continued on the development of the Company’s
new version of DonorVision, that has now been released. This new
product provides NFP organizations with an improved method of donor
management through this customer relationship management (“CRM”)
based product, which will be marketed as a cloud application but
which may still be integrated into Serenic Navigator and its
companion products. The Company is looking forward to executing its
revised strategies in the new and future fiscal years.
The Company continued to progress with respect to other areas
during the year. New reseller partners were added in Africa,
Switzerland, Canada, England and the United States; however,
because it frequently takes a new reseller partner as long as
twelve months to become productive, the payback for increasing the
partner reseller channel is expected to commence in Fiscal 2014.
Changes were also made to the Company’s internal sales personnel in
Fiscal 2013, in order to better accommodate the changing mix of
business, from the highly consultative to the more prescriptive
sales models.
The Company renewed its normal course issuer bid during the
year, and purchased and cancelled 551,000 shares at a cost of
$139,287 in Fiscal 2013.
The Company explored several opportunities to potentially
increase shareholder value and liquidity during Fiscal 2013,
however, none of the scenarios investigated would have generated
fair value for shareholders and additional work in this area
continues.
Fiscal 2013 Financial Highlights
Serenic Navigator license sales increased by 31.8% over the
prior year with direct license sales up 43.7%. Sales through our
partner reseller channel also improved and increased 24.5% over the
prior year. International license sales were approximately the same
as last year due to the continued contribution of our African
reseller partners. New license sales of our HCM products declined
13.1% from the prior year. The Company has initiated steps to
reverse this decline in Fiscal 2014 and beyond, including the
addition of a volume sales strategy for HCM products and the
provision of significantly enhanced human resource functionality
offerings currently scheduled to commence in Q4 of Fiscal 2014.
Revenue from client services declined from the prior year.
Revenue from this segment is driven by direct license sales and
therefore through the first three quarters of the year, the demand
for implementation services declined commensurately.
Revenue from software maintenance contracts continued to
increase due to the addition of new clients and a high software
maintenance contract renewal rate from our existing customers who
choose to keep their solutions updated with the latest versions of
the Serenic Navigator and HCM products.
Gross profit increased overall due to the increase in revenue,
except for the client services which declined due to its reduction
in revenue. The gross margin on license sales was consistent year
over year while it improved 3.2% in respect of client services
revenue due to a more favourable mix of more profitable
transactions. The gross margin on software maintenance contracts
declined by 3.4% due to the influence of certain contracts where
vendor costs were a higher than normal portion of the maintenance
revenue earned.
Higher revenues generated an improvement in gross profit of
$708,840. Of this amount, higher expenses and a change from income
tax recovery to income tax expense absorbed $506,575 of the gross
profit increase resulting in a net income increase of $215,485 or
122.2% over the net loss of the prior year. The improvement in net
income caused EBITDA to increase by $371,499 to $547,153, an
improvement over the EBITDA of $175,654 generated in the prior
year.
Cash assets at fiscal year-end increased to $4,332,578 in 2013
from $3,935,658 in 2012 as a result of the improved financial
performance.
Quarter Highlights
Software license sales increased by $1,122,678 or 164.1% to
$1,807,000 from the same period last year due to significant
license sales completed in the current quarter. Client services
revenue declined by 16.6% as a reduced level of direct software
license sales made earlier in the year reduced demand for services.
Software maintenance contract and other revenue improved by 8.6% to
$1,480,261 due to high contract renewal rates with existing
customers and new clients being added.
Gross profit increased by $789,088 or 40.7% primarily due to
the increase in software license sales where the associated gross
profit increased by $843,516 to $1,305,399.
Expenses rose by $161,361 or 8.4%. Salaries and employee
benefits rose by $158,220 or 10.0%, sales and marketing costs were
flat quarter over quarter and general and administrative costs
declined by $120,383. Cost capitalization related to new Company
products declined by $132,777 due to product development nearing
completion, which generated an effective expense increase.
The strong increase in revenue and gross profit in the current
quarter caused net income to increase to $575,636 from $47,580
recorded last year. EBITDA also rose sharply to $778,151, an
increase of $716,105 over last year’s figure.
Please refer to the latest financial statements and MD&A
filed on
www.sedar.comfor full financial
analysis and details.
Outlook
Serenic has released its new versions of Serenic Navigator and
Serenic DonorVison. This software will progress Serenic’s new sales
model collaboratively with Microsoft’s volume model, wherein
software will be marketed and deployed utilizing a highly
prescriptive, “low-touch” customer experience. Management believes
that this approach will ultimately be able to deliver higher sales
volumes from a large segment of the NFP market that the Company has
not previously been able to address. As well, we will continue our
traditional sales methodology which uses highly consultative
prospect communications and offers functionally rich solutions to
those organizations who wish to continue to deploy on-premise
licenses and to customize their software. Both of these strategies
will be augmented by optional hosting of the software solutions on
the new Microsoft Azure cloud based platform, which will feature
attractive monthly payment plans and allow clients to avoid higher
initial cash outlays. With respect to the Company’s human capital
management solutions, management’s plan is to initiate similar
strategies to foster higher volume sales opportunities for payroll
and human resource management solutions.
In regards to corporate development, the primary objective
remains to be that of optimizing shareholder value, which might
entail a capital structure change, new strategic ventures, and/or
merger and acquisition scenarios. Management strongly believes that
the market capitalization of the Company as reflected in its
current share price does not adequately reflect Serenic’s fair
value, and we will take appropriate action when that action would
best serve the interests of shareholders.
We believe the Company remains adequately financed to operate as
anticipated. Given the foundational work and investment over the
past few years, and initiation of the volume sales strategies in
collaboration with Microsoft in Fiscal 2013, Management is very
excited to execute the 2014 business plan. Management remains
confident that our course of action will ultimately generate
greater value for our shareholders over the longer term.
Share Appreciation Rights Plan
On June 18, 2013, the Board of Directors approved the creation
of a Share Appreciation Rights Plan (the “SARs Plan”), to be
utilized in lieu of or in conjunction with the Company’s Stock
Option Plan, as a mechanism to incent individuals engaged by the
Company. Pursuant to the terms of the SARs Plan, Share Appreciation
Rights (“SARs”) may be granted to directors, officers, employees
and consultants of the Company. SARs granted under the SARs Plan
vest immediately, expire in five years or 90 days after a grantee’s
termination of engagement with the Company, and upon exercise, pay
to the grantee an amount equal to the difference between the Issue
price and the Maturity price of the SARs. The Issue Price is the
volume weighted average price of the Company’s shares as traded on
the TSX Venture Exchange during the twenty trading days prior to
the date of issue of the SAR, less discounts similar to those
allowed for stock options under TSX Venture Exchange regulations.
The Maturity Price is the volume weighted average price of the
Company’s shares as traded on the TSX Venture Exchange during the
twenty trading days prior to the date the grantee wishes to
exercise the SARs. The total number of outstanding SARs authorized
by the Board of Directors shall not exceed ten percent (10%) of the
outstanding shares of the Company and the Board of Directors may
further revise the maximum number of allowed SARS and other terms
of the Plan as deemed appropriate.
On June 18, 2013, the Company granted in lieu of stock options,
a total of 250,000 SARs to the Directors and Officers. 50,000 SARs
were granted to each of Dwayne Kushniruk, Randy Keith, Ron Odynski
and Doug Thomson, and 25,000 SARs were granted to each of David Tam
and Paul Johnston. All SARs were granted with an Issue Price of
$0.18.
About Serenic Corporation
Serenic Corporation publishes mission-critical software products
for not-for-profits (NFP), educational institutions and
governments. The Company’s products are based on leading
application and technology platforms from Microsoft, including
Dynamics NAV, SQL Server, and .NET, and are distributed in North
America and internationally through value-added resellers and a
direct sales organization. Serenic Corporation is the exclusive
developer of human resource management and payroll products for
Microsoft Dynamics NAV ERP users in North America. Serenic has
offices in Edmonton, Alberta and Denver, Colorado and staff located
in Canada, England, Africa and throughout the USA.
ON BEHALF OF THE BOARD OF DIRECTORS
SERENIC CORPORATION
Dwayne Kushniruk, Chairman
Forward Looking Statements
This release contains forward-looking information within the
meaning of applicable securities laws (“forward-looking
statements”) that relate to Serenic’s products and potential
benefits derived therefrom; and other matters. Such forward-looking
statements involve known and unknown risks, uncertainties,
assumptions and other factors that may cause the actual results,
performance or achievements to differ materially from the
anticipated results, performance or achievements or developments
expressed or implied by such forward-looking statements. Such
factors include, but are not limited to, the factors and
assumptions discussed in the section entitled, “Risks and
Uncertainties” in Managements’ Discussion and Analysis filed with
the Alberta and British Columbia Securities Commissions. Readers
are cautioned not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made.
We do not undertake or accept any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements to reflect any change in our expectations or any change
in events, conditions or circumstances on which any such statement
is based.
The TSX Venture Exchange has not reviewed and does not
accept responsibility for the adequacy or accuracy of this
release.
Serenic Corporation
Dwayne Kushniruk
Chairman
dkushniruk@serenic.com
Serenic Corporation
Paul Johnston
CFO
1-877-426-5385 x 509
pjohnston@serenic.com
www.serenic.com
Cantech Communications
Nick Waddell
Investor Relations
Toll Free: (877) 737-3642 x144
ir@serenic.com