Billing Services Group Limited – Audited results

BSG, a leading provider of telecommunications clearing and financial settlement products, Wi-Fi data solutions and verification services, today announces its audited results for the year ended December 31, 2018.

Financial Highlights  

(All amounts in US$)

	Year Ended December 31
	2018	2017
Revenues	$  16.1 million	$  21.1 million
Gross margin	60.4%	56.6%
Cash operating expenses	$   9.0 million	$  11.0 million
EBITDA (1)	$   0.8 million	$   0.9 million
Net loss	$  (7.8) million	$  (6.7) million
Net loss per basic share	$  (0.05) per share	$  (0.02) per share
Cash balance at end
of period	$   9.2 million	$  11.5 million

⁽¹⁾      EBITDA is computed as earnings before interest, income taxes, depreciation, amortization and other non-cash and nonrecurring income or expense items.  EBITDA is not a recognized measure under generally accepted accounting principles (GAAP). 

• Experienced $5.0 million decline in revenue ($16.1 million vs. $21.1 million in 2017) due largely to discontinuation of third-party billing by Verizon, a large local exchange carrier (LEC)
• Improved gross margin by 3.8 percentage points (60.4% vs. 56.6% in 2017)
• Reduced operating expenses by $2.0 million ($9.0 million vs. $11.0 million in 2017)
• Generated $0.8 million of EBITDA (2017:  $0.9 million)
• Recognized $10.0 million of non-cash impairment charges against goodwill (2017:  $15.3 million)
• Distributed $1.2 million in cash dividends
• Ended year with $9.2 million of cash (2017:  $11.5 million)
• Ended year with $6.6 million of working capital (2017:  $5.9 million)

BSG Wireless and Third Party Verification (“TPV”) Operational Highlights

• Renewed our hub and WLDS contract with AT&T with new terms that increase monthly revenue potential
• Renegotiated our hub and mobile applications contracts with Comcast to increase the revenue opportunity
• Signed a new hub contract with Spectrum (Charter)
• Reduced expenses at BSG Wireless by $1.7 million on an annualized basis
• Reduced costs and improved stability by replacing the legacy UK data center with new cloud infrastructure
• Renewed our contract with a national cable company, including additional TPV volume in new markets
• Launched new TPV markets with Constellation Energy
• Increased both TPV volumes and revenues with Direct Energy

Current Trading and Strategy

• In 2016, the Company initiated a strategic review to assist the Board in determining the future composition of the group, including capital structure and business lines. There have been four material actions taken as a result of the review:
• Completed a $5.0 million cash tender offer in December 2017
• Engaged investment banks and initiated discussions to sell BSG Wireless in 2017
• Paid a $1.2 million cash dividend in July 2018
• Renewed discussions with possible buyers for all or parts of the business in 2018
• Following a sale of any portion of the group’s businesses, the Board will consider further cash distributions and other actions with respect to any remaining assets or business lines.
• Trading for the year ended December 31, 2018 was in line with the Board’s expectations and consistent with the recent trading conditions experienced by the Company.
• During the second half of 2018, the Company recognized $10.0 million of non-cash impairment charges relating to goodwill recorded in its wireline billing and clearing business and its third-party verification business.  Goodwill impairment charges during 2018 eliminated all goodwill recorded on the Company’s balance sheet.
• The Company will not provide guidance on projected future financial performance at this time.

Commenting on the results, Denham H.N. Eke and Jason R. Wolff, Non-Executive Co-Chairmen, said: 

“The 2018 results demonstrate both the Company’s disciplined response to challenging circumstances and the resiliency of its business model.  The $0.8 million of EBITDA generated during the year enabled the Company to pay $1.2 million of cash dividends and maintain a strong balance sheet.”