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Smart Employee Benefits Inc set for strong performance in both divisions in fiscal 2018

Last updated: 16:01 12 Apr 2018 EDT, First published: 11:01 12 Apr 2018 EDT

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SEB is a SaaS (software as as service) focused tech group

Shares in tech group Smart Employee Benefits Inc (CVE:SEB) ticked her Thursday as it revealed it had closed  more than C$150mln of multiyear contracts since November last year.

Of this, around C$70mln is new net business that will start coming on-line in the second half of this year, it added.

The contract renewals and new contract wins represent an estimated C$35mln of gross margin over the life of the contracts.

Gross margin has grown from C$10.6mln in 2015 to C$27mln in 2017, and with forecasts at C$36mln for 2018.

"Both operating divisions are contributing to a positive EBITDA," said John McKimm, president and chief executive.

"The infrastructure of the core technology business is a significant competitive advantage in driving growth and profit margins in benefit processing.

"Both operating units are forecast to experience strong performance in fiscal 2018 and beyond.

"Our recurring revenue over the next several years exceeds $100-million per year with forecast recurring gross margins of over $30-million per year.

"Revenue and gross margin growth in both operating units is to a large degree cumulative, year over year, which adds significantly to the stability of the company's base business and creates a strong platform for organic growth."

In benefits processing, the firm has closed over C$20mln of contracts with an average term of five years since November 30, 2017.

The company has renewed 13 clients representing around 75,000 plan members and closed six new clients representing around 50,000 lives.

In technology,  SEB has closed over C$134mln of contracts since November 2017.

Approximately C$68mln are renewals of existing contracts and C$66mln are new net business, largely with existing clients.

Shares in Toronto added 4.55% to C$0.23.

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