People Corporation Announces Record Year-End Financial Results for
Fiscal 2013 and Reports Significant Progress on Execution of
Strategic Plan
TORONTO, ONTARIO--(Marketwired - Dec 9, 2013) - People
Corporation (the "Company") (TSX-VENTURE:PEO) today announced
record financial results for the fiscal year ended August 31, 2013,
and provided an update on the achievements during the fiscal year
that contributed to the ongoing successful execution of it
strategic plan.
"Fiscal 2013 was another banner year for People Corporation -
along with accomplishing many strategic and operational milestones
we exceeded our financial goals. We welcomed four new partner firms
to the People Corporation group of companies as part of our
acquisition-related growth plan. We continued to focus on
delivering growth from organic initiatives, reaching both
acquisitive and organic growth, which are key components of our
overall strategic plan," said Laurie Goldberg, Chairman and CEO of
the Company. "In addition, we continued to make significant
progress on a variety of operational initiatives to strengthen the
business. Finally, we continued to deliver strong financial
results, with an increase of revenue over 21% and increase in
Adjusted EBITDA over 60%. These results are even more significant
if you are to consider the full impact of recent acquisitions,
which are not yet fully reflected in our published financial
figures," continued Mr. Goldberg.
Highlights of Financial
Results for the Fiscal Year ended August 31, 2013
Financial Results from Operations
People Corporation's financial results for the fiscal year-ended
August 31, 2013 reflect the strong execution of its strategic and
operational plans, which include organic growth initiatives, growth
from acquisitions, and an ongoing focus on operational excellence
to position the Company for ongoing success. For the 2013 fiscal
year, revenues increased 21.1% to $32.9 million, and Adjusted
EBITDA grew by 60.3% to $4.3 million. While significant, as noted
below, these results are not fully reflective of the impact of
recent acquisitions, as the financial results for those entities
are included only from the date of closing of the respective
acquisitions. As a result, 'run-rate' Revenue and Adjusted EBITDA
on an annualized basis would be much higher than the published
fiscal 2013 results for the Company.
|
12 months ended Aug 31, 2013 |
12 months ended Aug 31, 2012 |
Increase |
Revenue |
$ |
32,892,159 |
$ |
27,157,385 |
21.1% |
|
|
|
|
|
|
EBITDA before corporate costs |
$ |
7,839,707 |
$ |
6,140,743 |
27.7% |
EBITDA before corporate costs margin |
|
23.8% |
|
22.6% |
1.2% |
|
|
|
|
|
|
Adjusted EBITDA |
$ |
4,344,309 |
$ |
2,710,378 |
60.3% |
Adjusted EBITDA margin |
|
13.2% |
|
10.0% |
3.2% |
|
|
|
|
|
|
Net income |
$ |
260,109 |
$ |
726,153 |
- 64.2% |
Revenue for the 2013 fiscal year was $32.9 million, which
represents an increase of $5.7 million, or 21.1%, over fiscal 2012.
Approximately one-third, ($2.1 million or 7.7%) of this represents
annual organic growth in the business, attributable to the
activities discussed below such, as the expansion of the Company's
team of benefits consultants and the additions to the Shared
Services product/service offering, which has resulted in additional
revenue from existing clients as well as the addition of new
clients. The balance of the revenue growth, $3.6 million or 13.5%
over 2012, was attributable to the acquisitions completed during
the fiscal year discussed below. However, the above figure reflects
revenues of these entities only from the date of the closing of the
respective acquisitions, and therefore has not yet included a full
year of the acquisitions' revenue and financial impact. In its
financial statements for the year ended August 31, 2013, the
Company has disclosed pro-forma revenue of $10.0 million, which
represents management's estimates of total annual revenue derived
from the acquisitions had they been completed on September 1,
2012.
In executing its strategy to build a national provider of group
benefits, group retirement and human resource consulting products
and services that offers a differentiated value proposition to its
clients, People Corporation has made, and continues to make,
significant investments in revenue generating and operational
initiatives that are necessary to build the scale associated with
best-in-class national servicing capabilities. Furthermore,
providing the Company's benefits consultants access to the
resources of the Shared Services division is a key component to
creating the unique value proposition and competitive edge to
attract and retain clients. The Company monitors EBITDA before
corporate costs in order to assess the results of operations before
consideration of the ongoing corporate investments required to
position the Company for future growth. For the fiscal year ended
August 31, 2013, EBITDA before corporate costs was $7.8 million,
which represents an increase of $1.7 million, or 27.7%, over the
prior fiscal year. The Company also strengthened the EBITDA before
corporate costs margin from 22.6% in fiscal 2012 to 23.8% in fiscal
2013.
Adjusted EBITDA for the fiscal year ended August 31, 2013 was
$4.3 million, representing an increase of 60.3%, or $1.6 million,
as compared to the same period in 2012. Adjusted EBITDA margin
increased from 10.0% in fiscal 2012 to 13.2% in fiscal 2013. The
growth in Adjusted EBITDA and margin improvements are a result of
the operating leverage in the business, as the revenue associated
with past investments in operations effectively increases operating
earnings with limited additional incremental investment or expense
of corporate costs. Similar to revenue, Adjusted EBITDA discussed
above only reflects the financial results of the companies with
which People Corporation completed acquisitions from the closing
date of the relevant acquisitions, and therefore published
financial results are not indicative of the current earnings
potential of the business.
For the fiscal year ended August 31, 2013, the Company reported
net income of $260 thousand. Despite the significant growth in
revenue and the various measures of operating profitability, this
represents a decrease of $466 thousand from fiscal 2012. The
decrease in net income is due to incremental finance expense
attributable to debt incurred in connection with acquisitions
completed during the year and non-recurring costs related to those
acquisitions, and also to various non-cash expenses related to the
accounting entries for items such as amortization of intangible
assets. As with the other income statement items discussed above,
net income includes the financial results of companies with which
acquisitions were completed only from the date of closing of the
associated acquisitions. In its financial statements, the Company
has disclosed incremental pro-forma net income of $2.1 million,
which represents management's estimates of additional net income as
if the acquisitions had been completed on September 1, 2012.
Summary Financial Position
The Company's financial position remains strong, and it is
well-positioned to continue to execute on its growth strategy based
on contributions from both organic and transaction-based
initiatives. In addition, the financial position of the Company
will accommodate the ongoing operational investments required to
ensure the Company is delivering upon its value proposition to its
clients, and achieving operational excellence and enhanced
profitability.
The Company had cash balances of $2.4 million as at August 31,
2013. In addition to its cash resources, the Company has a credit
facility of $24.5 million with a senior lender, against which $14.6
million was outstanding as of August 31, 2013. The agreement
underlying the credit facility contains certain financial
covenants, including debt servicing ratios and other standard
business operating and performance covenants. As of August 31,
2013, the Company is compliant with all such covenants.
Furthermore, the Company anticipates that cash produced by
operations will be sufficient to cover the scheduled repayments on
the credit facility.
In addition to the credit facility with its senior lender, as of
August 31, 2013, the Company has $4.6 million owing to vendors from
previous acquisitions, of which $1.8 million is due in the next
twelve months. The Company anticipates the cash flows required to
service the incremental debt will be generated through incremental
earnings from the entities with which the acquisitions were
completed.
The complete Financial Statements and Management's Discussion
and Analysis for the fiscal year ended August 31, 2013, along with
additional information about the Company and all of its public
filings are available at www.sedar.com.
Progress on Execution
of Strategic Plan
People Corporation's vision is to build the leading provider of
innovative group benefits, group retirement and human resource
consulting products and services in Canada. The group benefits,
group retirement and human resource consulting sectors are large
and growing markets, with favourable underlying characteristics,
positive trends, and current dynamics creating an opportunity for
companies with scale. In pursuit of its vision, People Corporation
has developed a strategic plan that includes organic growth
initiatives as well as transaction-based growth, where it seeks to
become the 'partner-of-choice' with a unique transaction model for
local and regional firms.
Organic Growth Initiatives
From an organic growth perspective, during the fiscal year the
Company significantly added to its team of consultants delivering
best-in-class service to clients across the country, with the
addition of benefits consultants. All of these new consultants
attended the first annual People Corporation Academy, a
best-practices training and development program that brings
together new consultants from across the country. In addition to
these client-facing professionals, during the fiscal year the
Company expanded its management bench strength including the
addition of Dave Young as Vice Chair Corporate Initiatives, Debra
Jonasson-Young as President of People First HR Services and Yacine
Bara as National Director of Underwriting. In addition, the company
augments its corporate development resources with the addition of
Paul Asmundson as Vice-President of Corporate Development.
Organic growth continues to be a cornerstone of the firm's
strategy, and as such, significant activity also occurred in the
Shared Services division. This division was created to provide
internal resources to the benefit consultants in the various
subsidiaries and divisions of People Corporation so that they would
have a competitive advantage by way of a unique value proposition
to attract and retain new clients. For example, the Company
continued to focus on expanding its suite of proprietary products
and services through the launch of a new Wellness Solutions
division, led by Dana Hurst, designed to provide wellness
initiatives to clients to help with absenteeism, presenteeism and
increase overall employee morale and productivity.
Strategic Transactions
During the fiscal year, four new partner firms joined People
Corporation as part of the transaction-based component to its
growth strategy. In total, these acquisitions represented $26.1
million in transaction value, and will add significantly to the
Company's revenue, profitability and cash flow on a future basis.
As previously noted, the financial results for the entities with
which acquisitions were completed are only included from the date
of the closing of the acquisitions, and therefore the published
financial results of the Company do not reflect the full financial
impact of these acquisitions.
"The acquisitions we completed during the fiscal year are
indicative of the momentum we have in our transaction-based growth
strategy. The owners of these companies recognized the unique value
proposition in our transaction model, whereby they are able to
continue to run their businesses, but are able to leverage the
resources and capabilities of a large, national organization like
People Corporation," commented Mr. Goldberg. "We are particularly
pleased that these transactions expanded our national client reach
with additional locations in Toronto, Kitchener, Waterloo and our
first major presence in the Calgary marketplace.
In July 2013, the Company completed a $19.6 million transaction
with Hamilton + Partners based in Calgary, thereby adding one of
the preeminent group benefits and disability insurance consulting
firms in the Alberta market to the People Corporation group of
companies. This was a significant milestone in the Company's quest
to build the leading national provider of group benefits, group
retirement and human resource consulting services, as it
represented the Company's first transaction with a firm based in
Western Canada, as well as the largest transaction to date. Given
that the transaction closed in July 2013, only 1.7 months of
financial results from Hamilton + Partners are included in People
Corporation's financial results, representing approximately $525
thousand in revenue. For additional context on the size of Hamilton
+ Partners, as disclosed in the Business Acquisition Report filed
by People Corporation on September 23, 2013, the companies that
constitute the Hamilton + Partners business generated $5.7 million
of revenue for the fiscal year-ended August 31, 2012, their last
full fiscal year prior to the transaction with People
Corporation.
In December 2012, the Company completed its third transaction
valued at approximately $5 million with Bencom Financial Services,
based in Kitchener. Bencom is one of the leading benefits and
pension firms in Southwestern Ontario, delivering a full-suite of
benefits and retirement products and services to over 200
mid-market corporate clients. Concurrent with the transaction, Mr.
Dave Young, Senior Partner of Bencom, joined People Corporation as
Vice-Chair, Corporate Initiatives. In addition to being Senior
Partner at Bencom, Mr. Young was previously a founding member and
Chairman and CEO of the Benefits Alliance Group from 1998 to 2012.
Bencom's financial results are included in People Corporation's
financial results from the date of closing in December 2012,
including $1.8 million of revenue for the period consisting of 9
months.
People Corporation began the earlier part of the fiscal year,
with two successive acquisitions with group benefits and group
retirement firms. In September 2012, JSL Inc. joined the People
Corporation group of companies, followed by the Prosure Group of
companies in November 2012. Together, these firms added $1.4
million to People Corporation's revenue for fiscal 2013, which
includes 12 months of financial results of JSL and 10 months of
financial result of Prosure.
Ongoing
Momentum
In recognition of its outstanding growth, in June 2013, People
Corporation was included in the PROFIT 500, a ranking of Canada's
fastest growing companies compiled by PROFIT Magazine, and based on
five-year revenue growth. In addition, with its client-focused
value proposition delivered by best-in-class consultants, the
Company added over 230 new corporate clients in 2013 alone.
"We are very pleased with our progress to date, but also believe
we are only just beginning, and that the solid foundation that we
have built will allow us to continue the momentum and to
aggressively grow our business in the future," concluded Mr.
Goldberg.
About People
Corporation
People Corporation is a national provider of group benefits,
group retirement and human resource services. We have offices
across Canada, each led by a team of experts and backed by the
resources of a national company that is traded on the TSX-V. Our
industry experts provide uniquely valuable insight while
customizing our innovative suite of services to the specific needs
of our clients. Whatever your sector, whatever your scale, putting
our expertise and proven track record to work will make a
difference to your people and your bottom line. Further information
is available at www.peoplecorporation.com.
Forward-Looking
Information
This news release contains "forward-looking information" within
the meaning of applicable securities laws, such as information
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts. Use of
words such as "may", "will", "expect", "believe", or other words of
similar effect may indicate forward-looking information including
the completion of the transaction, the impact of that transaction
on our earnings and cash flow, and the anticipated benefits of the
transaction. This information is not a guarantee of future
performance and is subject to numerous risks and uncertainties,
including those described in our publicly filed documents (which
are available on SEDAR at www.sedar.com). Those risks and
uncertainties include: our ability to maintain profitability and
manage growth; strong competition from other consultants and
changes in the current legislation could result in significant
competition from the banking industry; failure of information
systems and technology; dependence on key clients; seasonality of
revenues and the resulting possible impairment on working capital;
reliance on key professionals; additional financing may be required
and may not be available under terms favourable to us; there can be
no assurance that any suitable future acquisition will be available
to us or that, if available, the terms of the acquisition will be
favourable to us; and a change in general economic conditions. Many
of these risks and uncertainties can affect our actual results and
could cause our actual results to differ materially from those
expressed or implied in any forward-looking information made by us
or on our behalf. Given these risks and uncertainties, investors
should not place undue reliance on forward looking information as a
prediction of actual results. All forward-looking information in
this news release is qualified by these cautionary statements. This
information is made as of the date of this news release and, except
as required by applicable law, we undertake no obligation to
publicly update or revise any forward looking information, whether
as a result of new information, future events or otherwise.
Additionally, we undertake no obligation to comment on analyses,
expectations or statements made by third parties in respect of the
Company, its financial or operating results or its securities.
Non-IFRS Financial
Measures
EBITDA and Adjusted EBITDA are not recognized measures under
International Financial Reporting Standards ("IFRS"). Management
believes that in addition to revenue, net income and cash flows,
the supplemental measures of EBITDA and Adjusted EBITDA are useful
as they provide investors with an indication of earnings from
operations before debt management and non-recurring and other
adjustments. Investors should be cautioned, however, that EBITDA
and Adjusted EBITDA should not be construed as an alternative to
net income determined in accordance with IFRS as an indicator of
the Company's performance. The Company's method of calculating
these measures may differ from other public issuers and,
accordingly, may not be comparable to similar measures used by
other issuers. For a detailed explanation of how the Company's
non-IFRS measures are calculated, please refer to the Company's
MD&A filing for the six months ended February 28, 2013, which
can be accessed via the SEDAR Web site (www.sedar.com).
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this press release.
Investor Relations Inquiries:People CorporationBrevan
Canning(204)
295-8860brevan.canning@peoplecorporation.comwww.peoplecorporation.com
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