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
and six months ended August 31, 2011.
Financial results are summarized as follows:
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(Unaudited)
Three months ended:
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Increase
Aug 31, 2011 Aug 31, 2010 (decrease)
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$ $ %
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Revenue 3,003,582 2,925,593 2.7%
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Net income (loss) 57,015 (7,198) 892.1%
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Basic and diluted income
(loss) per share - - -
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EBITDA (1) 169,229 99,255 70.5%
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EBITDA as a % of sales 5.6% 3.4% 2.2%
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Weighted average common shares
outstanding-basic 15,188,871 15,190,458
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(Unaudited)
Six months ended:
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Increase
Aug 31, 2011 Aug 31, 2010 (decrease)
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$ $ %
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Revenue 5,581,900 6,045,874 (7.7)%
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Net income (loss) (120,360) 1,690 (7,222)%
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Basic and diluted income
(loss) per share (0.01) - -
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EBITDA (1) 109,005 239,735 (54.5)%
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EBITDA as a % of sales 2.0% 4.0% (2.0)%
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Weighted average common shares
outstanding-basic 15,189,665 15,190,349
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(1) EBITDA represents earnings before interest, taxes,
depreciation, amortization, and stock based compensation. Please
review the Serenic Management Discussion and Analysis for the
quarter ended August 31, 2011 for more information.
Quarter Highlights
-- Revenue increased by 16.5% over the first quarter in this fiscal year
and by 2.7% over the same period last year. In North America, sales were
up due to increased license sales over the same quarter last year and
higher recurring revenue from existing customers who purchased
additional user licenses and functionality. International license sales
were also higher, principally due to the sale of a license to a sub-
Saharan African government for their initial user group. HCM sales were
down this quarter over last year, as the sale of a large payroll system
in Q2 of last year was not similarly matched in the current quarter. The
increase in revenue in this quarter occurred despite the negative effect
of lower foreign exchange rates of the Canadian to U.S. dollar compared
to the same period last year.
-- Serenic's revenues continue to be negatively impacted by the declining
foreign exchange rate, which decreased from an average of $1.0423 Cdn to
U.S. in Q2 of Fiscal 2011 to $0.9723 Cdn to U.S. in Q2 of Fiscal 2012.
Revenue is almost entirely U.S. dollar based while expenses are paid in
both U.S. and Canadian dollars; therefore, both revenue and net income
are negatively impacted by a decreasing value in the U.S. dollar.
-- Gross profit increased over the previous quarter and the same period
last year. Gross profit from client services increased as the Company
utilized more internal personnel than more costly contractors for client
services and the gross profit from software maintenance contracts
improved commensurate with the increase in this revenue.
-- Expenses were essentially the same in Q2, year over year. While an
increased number of personnel, international recruitment costs and
higher marketing expenses drove costs up, reduced consultant costs for
IFRS conversion and corporate development projects coupled with the
decline in the Canadian to U.S. dollar foreign exchange rate reduced
expenses overall.
-- In July, 2011, Microsoft again recognized Serenic for its commitment to
its customers and outstanding level of sales by naming Serenic to
Microsoft's "Inner Circle" and "President's Club". President's Club
membership represents the highest achievement of sales and addition of
new customers amongst partners, and Inner Circle membership, which is
awarded to companies distinguished by Microsoft as one of the top 1% of
their 10,000 Dynamics partners world-wide, has been granted to Serenic
four out of the last five years and six times in the past nine years.
-- The Company continued its development of new products and enhancements
to its current products. Several key hires were completed in the
quarter, including the addition of a new Germany-based staff member to
augment our international sales team. Management continues to pursue its
"Year of the Customer" initiative through pro-active measurement of
customer support activities as well as a newly enhanced company website
which, together, enable improved client interactions, communications and
responsiveness.
-- The Company's U.S. subsidiary, Serenic Software Inc., was relocated to
new premises in Lakewood, Colorado. The move was completed without
disruption, and provides better office facilities at similar to historic
costs.
Please refer to the latest financial statements and MD&A
filed on www.sedar.com for full financial analysis and details.
FISCAL 2012 SIX MONTH FINANCIAL HIGHLIGHTS
-- Revenue decreased this fiscal period over last by $463,974 or 7.7%.
While revenue from client services is essentially the same as last year,
software maintenance revenue has increased and software license sales
declined in the first quarter but resumed their more normal pace in Q2.
The average foreign exchange rate fell from 1.0334 to 0.9703 and this
unfavourable change caused revenue to decline by approximately $309,000
when expressed in Canadian dollars. Commensurate with the revenue
decline in software license sales, gross profit declined by $174,921 or
4.4% year over year.
-- Expenses are approximately the same as last year, having declined by
$72,324 or 1.8%. The Company has more employees than at this time last
year and has increased its marketing activities and related expenses;
however, lower employee benefits, payroll burden and general and
administrative costs offset those increases. The lower Canadian to U.S.
dollar foreign exchange rate also served to decrease expenses overall.
-- The Company's year to date net loss of $120,360 versus net income of
$1,690 in the comparative period was caused by the lower sales revenue
which reduced gross profit. EBITDA remained positive.
Outlook
Serenic continues to execute its business plan which is focused
on two main objectives. Firstly, from an operational perspective,
we continue to pursue organic revenue growth by advancing our
products, expertise, credibility and market share within the niche
markets in which we have historically excelled. Additionally, we
plan to augment revenue growth through sales of our Navigator
Online "cloud computing" offering ("NOL"). While still early in its
roll-out stage we anticipate greater progress in the coming
quarters, by addressing larger market segments than were possible
in the past. NOL's capabilities can accommodate a broad market
segment whose users require varied functionality, which may be
different than Serenic has historically delivered with its
on-premise licensed applications.
Secondly, from a corporate development perspective, we continue
to investigate and pursue potential alternatives to increase
business value and subsequently accelerate the potential
realization of higher shareholder value. This remains a key
objective of the Company.
Serenic continues to serve niche markets that are vibrant and
growing both within North America and internationally. However,
many of our customers and prospects remain financially conservative
and very cautious about committing to investments for new software
infrastructure as a result of the enduring global economic
uncertainties, a factor which continues to prolong sales cycles. We
continue to carefully monitor expenses and prudently manage cash
and other resources. Notwithstanding, we will continue to recruit
for new personnel and otherwise expand operations where warranted
and continue our new product development and current offering
enhancement activities to retain our position of leadership within
our niche markets.
Serenic continues to be well capitalized with more than $4
million cash on hand and no long term debt at quarter-end which
allows it to fund initiatives required to carry out its business
plan. Relationships with clients and vendors remain strong and we
remain optimistic about the future prospects for all stakeholders
of the Company.
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 (Lakewood), Colorado and
staff located throughout the USA, and in Europe and Africa.
ON BEHALF OF THE BOARD OF DIRECTORS
Dwayne Kushniruk, Chairman
SERENIC CORPORATION
Forward Looking Statements
Certain statements contained in this press release, including
statements which may contain words such as "could", "should",
"expect", "anticipate", "believe", "will", and similar expressions
and statements relating to matters that are not historical facts,
are forward looking statements. Such forward looking statements
involve known and unknown risks and uncertainties which may cause
the actual results, performances or achievements of Serenic
Corporation to be materially different from any future results,
performances or achievements expressed or implied by such forward
looking statements. Such factors include, but are not limited to,
software industry risks, general business risks, foreign currency
risks, economic dependence risks, and credit risks.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Contacts: Serenic Corporation Dwayne Kushniruk Chairman
1-877-426-5385 x 509dkushniruk@serenic.com Serenic Corporation Paul
Johnston CFO 1-877-426-5385 x 509pjohnston@serenic.com Cantech
Communications Nick Waddell Investor Relations Toll free: (877)
737-3642 x144ir@serenic.com
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