BILL.L Regulatory News (BILL)

24 Jul 2006 07:30

Billing Services Group Limited24 July 2006 FOR RELEASE AT 0730 HRS, MONDAY, 24 JULY 2006 BSG Provides Guidance for Full Year 2006 BERMUDA - 24 July 2006 - Billing Services Group Limited ("BSG" or the"Company") (AIM: BILL), one of the telecommunications industry's leadingclearing and settlement, payment and financial risk management solutions groups,today provides full year 2006 guidance. In addition, the Company announces ithas ended its discussions regarding a possible MBO process and has made certainmanagement changes. MBO Process Ceased As previously announced on 31 May 2006, the Company was in receipt of apreliminary approach for a potential management buy-out, coupled with apotential strategic combination with another entity. Accordingly, the Boardcreated an independent committee of non-executive directors to manage theprocess. After completion of due diligence on the target, the partiesdetermined not to proceed with the combination. Moreover, whilst a preliminaryprice indication for the Company alone was discussed at that time, the priceindication was at a modest premium to the current share price and the Board,including independent committee members, did not believe it represented a fairand reasonable value capable of recommendation to shareholders. The Board hasnow terminated the independent committee. Management Changes Patrick J. Haynes, III, Executive Chairman, has resigned with immediate effectto pursue other interests. Mr. Haynes will no longer serve as a director orofficer of the Company. Patrick D. Heneghan has been appointed as Non-ExecutiveChairman. Mr. Heneghan said, "We are indebted to Pat Haynes for the vision andenergy he has brought to BSG. He founded the Company and established it as aglobal player in the settlements industry through a series of accretiveacquisitions. His legacy is a company with great cash-generation abilities andsolid growth prospects run by a highly talented group of managers. We thankhim." Roland J. Bopp was appointed CEO April 2006 and Executive Director shortlythereafter. He is now responsible for BSG's activities and performanceworldwide and will lead the Company's global expansion. He is based in Londonto drive global growth and to be available to the Company's Europeanshareholders. "We look forward to Roland's leadership of the Company's affairs,especially at this juncture, and are confident of his success," Mr. Heneghansaid. Randall Wade Brouckman, the Company's Chief Operating Officer, has replacedMichael J. Labedz, the Company's Executive Vice President Strategic Planning, asan Executive Director. Mr. Labedz has resigned with immediate effect and willno longer serve as a director or officer of the Company. Noting Mr. Labedz'saccomplishments, Mr. Heneghan added, "Mike's industry knowledge and his abilityto identify opportunities for the Company were second to none. Hiscontributions to the Company are greatly appreciated, and we wish him everysuccess in the future." The Board is considering appointing an additional European non-executive director. Current Trading and Future Prospects In its release of 12 July 2006, the Company announced that the tradingperformance of the business for the five months ended 31 May 2006 was in linewith the Directors' expectations and that a further announcement regardingtrading for the six months ended 30 June 2006 would be made in due course. TheCompany can now confirm that the trading performance in the 6 months ended 30June 2006 was broadly in line with management's expectations. The Company has also concluded a review of its prospects for the second half ofthe year and now expects to deliver full year EBITDA between $44.5 million and$47.5 million, such figures estimated on an "as reported" basis, not includingthe results of acquired entities until the date of acquisition. The factors set out below are expected to affect the performance of the Company in the second half: • Lagging revenue, as the result of longer than anticipated sales cycles for new customers; • Slower than expected growth in credit card processing; • Increased corporate and operating expenses relating to new service portfolio offerings; and • Previously capitalized costs that are now being expensed. A brief description of each of these items follows: Consistent with recent industry conditions, the Company is experiencing longerthan expected sales cycles and customer migration in its core services. TheCompany is also experiencing slower than anticipated adoption of some of itsrecently launched services. Whilst the Company remains confident with respectto both increased adoption in new services like credit card processing and majorcustomer wins, at this point in the year it now appears that both of theseevents are more likely to occur in future periods. The Company now forecasts higher than expected corporate and operating expensesfor the second half of the year due to recent increases in personnel andfacilities-related costs associated with new service offerings -- in particular,the expansion of the wireless clearing services in North America, South America,Eastern Europe and Asia --and costs associated with M&A activity, including theMBO process. The Company now expects that certain software development programs will becompleted in the second half, resulting in the recognition of expense from theon-going costs of employees whose compensation costs were previouslycapitalized. Accordingly, the Company provides the following estimates for the year ending 31December 2006, such figures estimated on an "as reported" basis, not includingthe results of United Clearing Plc ("UCL") and VoiceLog until the dates oftheir respective acquisitions: Turnover: $176 million to $180 millionEBITDA: (1) $44.5 million to $47.5 millionCapital expenditures: (2) $10 million to $12 millionInterest income: $2 million to $3 millionInterest expense: (3) $20 million to $21 million (1) Excludes compensation expense required under FAS 123(R), payments to UCLemployees related to option exercise and severance payments associated withchanges in management personnel. (2) Excludes capitalized interest expense. (3) Excludes non-recurring one-time charges (e.g., prepayment penaltiesassociated with debt refinancing, write-offs of deferred financing costs, etc.)and amortization of deferred financing costs. The estimates provided above assume the ownership of UCL for the ten-monthperiod from 01 March 2006 to 31 December 2006 and the ownership of the businessacquired from VoiceLog from the period commencing 01 July 2006 to 31 December2006. On a pro forma basis (as if the Company owned both UCL and the businessacquired from VoiceLog effective 01 January 2006), the Company estimates 2006pro forma turnover between $180 million and $184 million and 2006 pro formaEBITDA between $47 million and $49 million. 2006 Half Year Highlights The Company remains confident about its future prospects. Positive year-to-datedevelopments that underpin its optimism include the following: • Refinanced the Company's debt with a new $330 million multicurrency credit facility. At 30 June 2006, outstanding borrowings were $ 266.4 million. The interest rate under the new facility is approximately 400 basis points lower than the previous facility. Moody's Investors Service raised the Company's corporate family rating to B1 from B2 and S&P reaffirmed its B+ corporate credit rating; • Strengthened the wireline pipeline and added 43 new clearing and settlement customers in North America; • Added 17 wireless clearing and settlement contracts; • Acquired UCL, a strategic complement to the Company's wireless processing business, and derived the inherent benefit of UCL's existing base of more than 60 contracts; • Acquired the third party verification business of VoiceLog, a leading provider of third party verification services, a strategic complement to the Company's North American wireline business, and derived the inherent benefit of VoiceLog's existing base of 250 customers; • Substantial assimilation of the two European entities (EDS Germany and UCL) acquired during the past year, with a corresponding reduction in integration costs; • Staffed core operational management teams for North America, South America, Eastern Europe and Asia wireless; and • Expanded sales and marketing capabilities, particularly in our wireless clearing segment in North America. BSG continues to execute its strategic plan to expand operations, explore newmarkets geographically and implement a global strategy to drive shareholdervalue. Moving towards the second half of 2006, the items below provide anindication of BSG's ability to deliver its leading edge clearing and settlementservices to a growing global customer base. Enhanced Business Strategy Management Focus and Realignment Appointment of new CEO - Roland J. Bopp, a former Deutsche Telecom executive,was appointed Chief Executive Officer in April 2006 to implement BSG's strategicplan reflecting dynamic growth and increased global expansion. Mr. Bopp bringsmore than 25 years of executive leadership in telecom service organizations inboth North America and Europe. Over the course of his career he has ledsuccessful expansions on an international level, both organically and throughacquisition. Mr. Bopp's engagement has relocated him to London where the Company hasestablished a central executive function. He will ensure a visible presence tothe Company's European investor base and oversee the Company's furtherinternational development, focusing particularly on Europe, the Middle East andAsia. Randall Wade Brouckman, COO, who has been in charge of day-to-day operationssince 01 January 2006, has been named to the Board of Directors. Mr. Brouckman(42 years of age) will continue to serve as the Group's Chief Operating Officer. His previous directorships include Telispark and Wireless Solutions Inc. Mr.Brouckman is also the entrepreneur in residence of the Telecommunications Fund. No further information is required to be disclosed under paragraph (g) ofSchedule 2 of the AIM Rules in respect of Mr. Brouckman's appointment to theBoard. Operational efficiency - The Company has outlined a strategic roadmap withoperational programs to align the operating cost structure with future revenueexpectations, complete integration of the recently acquired businesses andincrease the Company's management reporting capabilities and operationaloversight. Continue Expansion of Core Wireless Business Leverage wireless settlement capabilities - With the acquisition of UCL, BSG hasdeployed the proven operational management team of UCL to deliver GSM clearingand settlement services across its targeted growth and emerging markets. Hiring of key sales leadership positions - The Company has improved sales andmarketing capabilities with the hiring of key individuals from the NorthAmerican wireless data clearing industry and the Asian billing and supportsystems industry, respectively. Geographic expansion - In order to supplement its strong presence in WesternEurope, BSG has instituted a program of geographic expansion. The Company hasadded an office in Hong Kong, strengthened the U.S. wireless team withadditional sales and operational management and expanded its focus on the SouthAmerica and Eastern Europe markets with the hiring of regional General Managers. Expanded value added services - The Company has introduced Interconnect, RIS,fraud, conversion, rating services and SMS interworking services. Additionally,BSG has partnered with industry leaders to deliver next-generation servicesincluding real time data exchange, open connectivity and signaling and messagingservices. Continue Expansion of Wireline Offering Key staff changes and expanded wireline team - BSG continues to recruit new sales and major account leadership teams. Expansion of services - BSG has developed value added service offerings tocomplement its core clearing and settlement business. Year to date, BSG hassuccessfully launched payment services and risk management solutions includingsecure credit card processing to all major credit card associations, analyticfraud services for transaction risk management, third party verification andE911 alert. Expansion of potential customer base - With the continued development and roll-out of new services, BSG is targeting a larger, more diverse customer base. TheCompany is currently focusing on content providers. "We are now focused on increasing our operational efficiency and workingaggressively to expand the scope and geographic breadth of our service offeringto meet customer requirements and enhance shareholder value," said new CEORoland J. Bopp. Conference Call A conference call with analysts and investors will take place at 14:00 BST. Thedial-in details are +44 (0) 207 162 0025. Enquiries Billing Services Group Limited +44 (0)20 7071 4300 (Monday, 24 July 2006 only)Roland Bopp, Chief Executive OfficerNorman Phipps, Chief Financial Officer Evolution Securities +44 (0)20 7071 4300Stephen RobertsFergus Marcroft Gainsborough Communications +44 (0)20 7190 1705Julian Walker ABOUT BSG Billing Services Group Limited is one of the leading global providers ofclearing, settlement, payment and financial risk management solutions forcommunications service providers. BSG manages diverse financial transactions for the world's largest voice, dataand IP communications companies with an extensive portfolio of clearinghouseservices. The Company is able to reach hundreds of millions of end users,providing efficient and effective transaction processing solutions thatauthorize, collect and settle communications related charges on behalf of itscustomers. A publicly traded, global enterprise, BSG has is a trusted and reliable partnerin the clearing and settlement industry, serving clients throughout NorthAmerica, Europe, South America, Africa, Asia and the Caribbean. The Companyprocesses over 20 billion transactions annually for over 750 customers. BSG's financial strength is reflected in the ratings received from internationalcredit rating agencies. Future security is assured through economies of scale,business tenure and a diverse and balanced client base. Positioned at the center of network commerce, the Company has the ability toprocess and manage billions of financial transactions with the highest standardsof security, reliability and trust, all in real time. A ubiquitous, scalableand efficient platform allows the Company to meet the needs of today's complexnetwork interconnections and anticipates the needs of converging technologiesfor tomorrow with the same ease and ability. BSG monetizes financial network transactions by facilitating the financialexchange of customers' services. Comprehensive and flexible products coupledwith alternative payment services allow for rapid deployment into new markets,integration across networks, and quick fulfillment of customer requirements,exceeding expectations. Cautions About Forward-Looking Statements This press release contains forward-looking statements, including statementsabout business outlook and strategy, and statements about historical resultsthat may suggest trends for the business. These statements are based onestimates and information available at the time of this press release and arenot guarantees of future performance. Actual results could differ materiallyfrom current expectations as a result of many factors, including: unpredictablefluctuations in our business; the effects of competition; changes in customermix; changes in interest rates or foreign exchange rates; any adverse changes inagreements with vendors; and the impact of international expansion efforts onthe business. This information is provided by RNS The company news service from the London Stock Exchange