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.
-- 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.