Serenic Reports Improved Financial Results for Quarter and Year Ended February 28, 2013

EDMONTON, Alberta, Canada (June 24, 2013) – Serenic Corporation (TSX-V: 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:

(1) 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 for full financial analysis and details.


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. or shareholders.

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, Africa and throughout the USA.


By:  "Dwayne Kushniruk"
Serenic Corporation

For further information contact:
Dwayne Kushniruk or
Paul Johnston, CFO
Phone: 1-877-426-5385 x 509

Investor Relations
Cantech Communications
Nick Waddell
Toll free: (877) 737-3642 x144

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.

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