Serenic Reports Strong Finish to Fiscal 2011 Year End
Edmonton, Alberta, Canada (June 23, 2011) – Serenic Corporation (the “Company” or “Serenic”) (TSX-V:SER), an international software developer specializing in integrated financial management and human capital management solutions for Non-Profit organizations, government agencies, and Microsoft Dynamics NAV users, is pleased to announce its financial results for the three months ended February 28, 2011 (“Q4”) and year ended February 28, 2011(“Fiscal 2011”).
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 fiscal year ended February 28, 2011 for more information.
- Serenic posted a strong finish in Q4 to the 2011 year as compared to the previous year. Revenue increased by $646,347 or 26.4%, due to a 70.5% increase in new software license sales in Q4 year over year. In addition, there was a 14.1% increase in recurring maintenance revenue resulting from a larger client base and high retention rates of those clients. Client services sales declined by 9.6% in the quarter.
- Lower expenses were recorded in the current quarter primarily due to reduced amortization expense and the capitalization of development costs pertaining to BudgetVision, the newest module developed for the Serenic Navigator ERP software suite. Higher compensation costs were incurred in Q4 this year over last, due to wage and benefit enhancements that were implemented in the past year to remain competitive. The foreign exchange loss increased because of the strengthening Canadian dollar relative to the U.S. dollar and income tax expense increased due to profitability in the quarter.
- The increase in revenue and gross profit coupled with the reduction in expenses resulted in a $564,183 increase in net income to $409,923 in Q4, 2011. Due to the increase in net income, EBITDA increased to $557,400 in sharp contrast to the EBITDA loss of $41,373 in the comparable period last year.
Fiscal 2011 Corporate Highlights
- Serenic continued to make significant progress in becoming a major global provider of financial software applications to not-for-profit and international non-governmental organizations. New reseller partner additions announced in Fiscal 2011 included two UK based organizations, Touch Stone and Probitas, and the Netherlands based Cherry-T organization. New customer additions occurred in North America, Africa, and Europe, and included several high profile organizations such as American Refugee Committee, Mercy Corps, Denver Mental Health Center and Human Rights Watch.
- We continued to secure future opportunities by rolling out BudgetVision, a new product that enhances the Serenic Navigator software suite. We also released a new software-as-a-service (“SaaS”) or cloud computing version of our Navigator application, which accommodates entry into a large new market that we have not historically been able to serve. These developments all contribute to creating greater value for the Company over time, which is ultimately expected to benefit all stakeholders.
- Serenic received, as in previous years, several awards of distinction, including appointments again to Microsoft’s Inner Circle and President’s Clubs for outstanding dedication to customer service through the delivery of innovative business solutions, and recognition as one of the top growth companies identified by Alberta Venture Magazine’s 2011 Fast Growth 50 List.
- Several alternatives to maximize shareholder value were investigated and considered during Fiscal 2011 but all proposals were rejected because management believes they did not reflect adequate fair value for Serenic shareholders. Initiatives in this regard will continue.
- Despite the US dollar devaluing by nearly 8% against the Canadian dollar (our reporting currency) during Fiscal 2011, the Company operated profitably, generated positive EBITDA and increased cash which exceeded $4.1 million at fiscal year-end.
Fiscal 2011 Financial Highlights
- Revenue was similar to last year, despite the 7.1 percent decrease in the U.S. to Canadian foreign exchange rate which negatively impacted the Company, as nearly all of our revenue is derived in U.S. dollars. Had the foreign exchange rate remained constant from last year, revenue would have been approximately $11,357,000 in Canadian dollars, and would have represented a year over year increase of $618,000 or 5.8%.
- Software license sales increased year over year, including international sales which accounted for 19% of total license revenue in Fiscal 2011. Revenue from software maintenance contracts increased, as did training revenues. Client services revenues did not increase year over year primarily due to a temporary stoppage on a large implementation contract being performed by one of our reseller partners.
- Serenic generated more gross profit this year than last, as gross profit increased from $7,562,573 or 70.4% of sales last year, to $7,820,614 or 74.1% of sales this year. The higher revenues and a shift in the sales mix to more profitable revenue components accounted for this increase.
- Expenses were $377,098 higher this year, totalling $7,614,558 versus $7,237,460 last year, due to higher staff compensation, marketing and administrative costs which were somewhat offset by a reduction in amortization expense. As previously noted, the Company developed a new product, BudgetVision, and the reduction in total expense due to capitalization of development costs was $137,995 less than in the prior year.
- The higher gross profit this year was offset by higher expenses and resulted in income before tax of $136,108 this year, nearly the same as last year’s figure of $142,433. With income tax expense this year of $53,302 and an income tax recovery last year of $155,251, reported net income this year was $82,806, versus $297,684 recorded for last year. EBITDA of $581,388 was recorded for the current year, versus $804,622 for last year.
- The Company continues to operate on a positive cash basis. At year-end, our cash balances exceeded $4.1 million, a healthy increase of $683,699 over the prior year.
Please refer to the latest financial statements and MD&A filed on www.sedar.com for full financial analysis and details.
Serenic’s management continues to believe the outlook remains positive. The strategy for Fiscal 2012 is to continue organic growth of core operations through prudent re-investment of our resources, to maintain EBITDA positive results as we grow our business and to continue to explore and pursue scenarios to maximize value for our shareholders beyond what organic growth would produce.
From an operational perspective, this will entail continued pursuit of new business through our traditional reseller and direct channel business models, accelerating activities that pertain to international markets, and aggressive new campaigns to market our SaaS product, Navigator On-line. We have also enacted an internal initiative termed “The Year of the Customer”, which involves revamping current processes and systems throughout the company in an effort to better support and serve our customers and partners and to ensure their ongoing satisfaction and loyalty.
From a corporate development focus, we will continue exploration and pursuit of various strategic opportunities to maximize shareholder value, including but not limited to, a capital structure review, strategic partnerships, and/or merger and acquisition scenarios. Management strongly believes that the current market capitalization of the Company does not adequately reflect Serenic’s fair value and is determined to take judicious action that would best serve the interests of shareholders to rectify this situation, as soon as practical.
With $4.1 million of cash on hand at Fiscal 2011 year end and no long term debt, the Company is adequately financed to operate as anticipated. The management team is excited and committed to achieve the objectives as stated, and we anticipate another fruitful year of advancement for the Company.