BILL.L Regulatory News (BILL)

10 Apr 2006 07:02

Billing Services Group Limited10 April 2006 For immediate release 10 April 2006 Billing Services Group Limited ("BSG", the "Group" or the "Company") Update on Move to the Official List and Calculation of Cash Tax Adjusted Net Income for the year ended 31 December 2005 Update on Move to the Official List Following discussions with the UKLA, the Company is postponing its planned moveto the Official List in view of the requirement for the Group to provide threeyears of audited financial results for the German company acquired in 2005. Theacquired company did not exist as a stand-alone entity until 2004, whichprecludes the Company from providing an audit report for 2003. The Companynonetheless remains committed to moving to the Official List at the firstavailable opportunity. Calculation of Cash Tax Adjusted Net Income After the announcement of BSG's preliminary earnings on 6 March 2006, theCompany, with the concurrence of its auditors, made a limited number ofadjustments and account reclassifications within its financial statements. Noneof such adjustments or reclassifications had any effect on the Group's revenue,EBITDA, net income, total assets, total liabilities or shareholders' equity.The final financial statements and related footnotes have now been issued withan unqualified opinion of Ernst & Young. The final financial statements, whichare included as an appendix to this announcement, are, in all material respects,identical to the preliminary figures issued on 6 March 2006. The principal reclassification related to software acquired with the purchase ofEDS IOS, amounting to $12.9 million, net of accumulated depreciation, fromintangible assets into property and equipment, in order to be consistent withthe treatment of capitalised software development costs across the Group and therelated reclassification of $1.4 million of software amortisation expense todepreciation expense. Calculation of Adjusted Net Income and Cash Tax Adjusted Net Income per Share In conjunction with the changes noted above, the Company has updated itscalculations of Adjusted Net Income and Cash Net Income (now referred to as CashTax Adjusted Net Income) and these figures are set out below. The effect of the change in methodology for calculating cash tax adjusted netincome, together with the reclassifications discussed above, results in cash taxadjusted net income per share of $0.106 for 2005 compared to a cash net incomeper share figure of $0.098 previously reported, as set forth below: 2005 2005 2004 2004 New Old New Old Net income ($'000) 5,138 5,138 5,748 5,748 Adjusted net income ($'000) 16,536 18,334 11,396 13,408Adjusted net income per share $0.079 $0.088 $0.063 $0.075 Cash tax adjusted net income ($'000) 22,138 20,440(1) 13,711 14,262(1)Cash tax adjusted net income per share $0.106 $0.098(2) $0.076 $0.079(2) Weighted average shares outstanding ('000) 208,219 208,219 179,579 179,579 (1) Previously referred to as cash net income(2) Previously referred to as cash net income per share Adjusted net income is determined by calculating an adjusted pre-tax incomefigure from which a notional income tax expense is then subtracted. Adjustedpre-tax income is calculated by adding the following to reported net income:provision for income taxes, amortisation of intangible assets, depreciation ofcapitalised software and pre-payment penalties and the write-off of deferredfinancing costs upon the repayment of the senior and subordinated debtoutstanding on 27 April 2005. A notional income tax expense, based on anassumed marginal tax rate of 35 per cent., is subtracted from the amount socomputed to derive the adjusted net income figure. Cash tax adjusted net income (formerly cash net income) takes account of thefact goodwill amortisation and capitalised software development costs aredeductible for tax purposes. This results in a reduction in the Company's cashtax liabilities. Cash tax adjusted net income is calculated by adding the cashbenefit arising from the tax deductible amortisation of goodwill (assuming amarginal tax rate of 35 per cent.) and tax deductible software development costscapitalised in the year to the Company's adjusted net income figure ascalculated above. The calculation of the clarified Adjusted Net Income and Cash Tax Adjusted NetIncome figures is set out in full below: ($'000, except per share) 2005 2004 Net income 5,138 5,748 Income tax expense 3,833 3,489 Pre-tax income 8,971 9,237 Pre-tax adjustments Amortisation of intangible assets 11,815 8,295 Depreciation of capitalised software 1,352 - Pre-payment penalties and write-off of deferred finance costs 3,302 - Adjusted pre-tax income 25,440 17,532 Notional income tax expense(3) (8,904) (6,136) Adjusted net income 16,536 11,396 Cash net income adjustments Cash benefit of tax deductible goodwill(3) 1,432 854 Cash benefit of tax deductible software development costs 4,170 1,461 Cash tax adjusted net income 22,138 13,711 Weighted average shares outstanding ('000) 208,219 179,579 Adjusted net income per share $0.079 $0.063Cash tax adjusted net income per share $0.106 $0.076 (3) Assuming marginal tax rate of 35.0% For the avoidance of doubt, the changes to cash tax adjusted net income pershare outlined in this announcement do not impact the Company's auditedfinancials under US GAAP as presented in BSG's preliminary results for the yearended 31 December 2005. Enquiries Billing Services Group Limited Tel: +1 847 832 0077Norman M. Phipps, Chief Financial Officer Buchanan Communications Tel: +44 20 7466 5000Jeremy Garcia / James Strong Appendix Billing Services Group Limited Consolidated Balance Sheets (In thousands, except shares) December 31 2005 2004 Assets Current assets: Cash and cash equivalents $ 50,347 $ 76,313 Accounts receivable 28,541 24,757 Purchased receivables 22,994 26,647 Deferred taxes - current 913 1,255 Income tax receivable 2,400 537 Prepaid expenses and other current assets 2,198 516 Total current assets 107,393 130,025 Property, equipment, and software 43,541 15,602 Less accumulated depreciation and amortization 6,690 3,011 Net property, equipment, and software 36,851 12,591 Investment at equity 1,435 - Deferred finance costs, net of accumulated 11,463 2,970 amortization of $2,116 and $912 at December 31, 2005 and 2004, respectively Intangible assets, net of accumulated amortization of 97,544 77,325 $20,430 and $8,675 at December 31, 2005 and 2004, respectively Goodwill 172,862 36,619 Other assets 1,481 457 Total assets $ 429,029 $ 259,987 Billing Services Group Limited Consolidated Balance Sheets (continued) (In thousands, except shares) December 31 2005 2004 Liabilities and shareholders' equity Current liabilities: Trade accounts payable $ 17,337 $ 14,536 Third-party payables 78,125 108,265 Accrued liabilities 15,322 17,782 Current portion of long-term debt 10,400 15,250 Note payable 38 90 Total current liabilities 121,222 155,923 Long-term debt, net of current portion 211,588 52,356 Pension liabilities 4,284 - Deferred taxes - noncurrent 14,111 2,556 Other liabilities 11,293 9,680 Total liabilities 362,498 220,515 Commitments and contingencies Shareholders' equity: Common stock, $1 par value, 350,000,000 shares 254,604 - authorized, 254,604,483 shares issued and outstanding Members' capital - 34,085 Additional paid-in capital (deficit) (187,733) - Retained earnings 3,411 5,387 Accumulated other comprehensive loss (3,751) - Total shareholders' equity 66,531 39,472 Total liabilities and shareholders' equity $ 429,029 $ 259,987 Billing Services Group Limited Consolidated Statements of Operations (In thousands, except per share amounts) Years Ended December 31 2005 2004 Operating revenues $ 157,313 $ 141,332 Cost of services 88,665 79,785 Gross profit 68,648 61,547 Selling, general, and administrative expenses 27,316 31,252 Depreciation and amortization expense 15,627 12,300 Operating income 25,705 17,995 Other income (expense): Interest expense, net of $1,157 and $900 (15,228) (9,978) capitalized in 2005 and 2004, respectively Write-off of deferred finance costs (2,722) - Interest income 2,468 1,596 Equity in loss from investment (65) - Other expense, net (1,187) (376) Total other expense, net (16,734) (8,758) Income before income tax expense 8,971 9,237 Income tax expense 3,833 3,489 Net income $ 5,138 $ 5,748 Net income per share: Basic and diluted $ 0.025 $ 0.032 Weighted average shares outstanding 208,219 179,579 Billing Services Group Limited Consolidated Statements of Cash Flows (In thousands) Years Ended December 31 2005 2004 Operating activities Net income $ 5,138 $ 5,748 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 3,702 4,004 Amortization of intangibles 11,815 8,295 Amortization of deferred finance costs 4,174 912 Amortization of discount on debt 803 232 Paid-in-kind interest on debt 387 1,159 Equity in loss from investment 65 - Changes in operating assets and liabilities: Decrease (increase) in receivables 4,078 (3,139) Increase in income taxes receivable (1,863) (537) Increase in prepaid expenses and other assets (1,753) (213) Increase in trade accounts payable 1,021 516 (Decrease) increase in third-party payables (30,140) 20,850 (Decrease) increase in accrued liabilities (5,806) 2,109 Provision for deferred taxes 3,260 756 Increase in other liabilities 1,828 3,002 Net cash (used in) provided by operating (3,291) 43,694activities Investing activities Purchase of BSG Germany (155,557) - Adjustments of purchase price of BC Holding I 103 3,543 Corporation, net of cash acquired Contribution of ACI and HBS, net of cash - (1,042) received Purchases of property, equipment, and software, (13,041) (4,489) including $1,157 and $900 of capitalized interest in 2005 and 2004, respectively Purchase of investment (1,500) - Net receipts (advances) on purchased receivables 3,653 (5,050) Net cash used in investing activities (166,342) (7,038) Financing activities Proceeds from the sales of common stock 96,972 - Borrowings of long-term debt 219,512 2,500 Payments on long-term debt (88,590) (10,250) Payments on note payable (90) (89) Distributions paid (71,300) - Financing costs (12,757) (614) Net cash provided by (used in) financing 143,747 (8,453) activities Effect of exchange rate changes on cash (80) - Net (decrease) increase in cash and cash equivalents (25,966) 28,203 Cash and cash equivalents at beginning of year 76,313 48,110 Cash and cash equivalents at end of year $ 50,347 $ 76,313 Billing Services Group Limited Consolidated Statements of Cash Flows (continued) (In thousands) Years Ended December 31 2005 2004 Supplemental cash information Cash paid during the year for: Interest $ 12,030 $ 8,896 Taxes 2,700 3,417 Noncash activities Increase to goodwill - 1,365 Derivative gain, net of taxes of $278 518 - END This information is provided by RNS The company news service from the London Stock Exchange