The Bango mobile payment platform is vital to the
global growth in digital content sales. The giants of
mobile choose the Bango Payment Platform to
provide a delightful and immediate payment
experience that maximizes sales of digital content.
With over 140 markets activated by our partners,
the Bango Payment Platform is established as the
global standard for app stores to offer carrier
billing. As the next billion consumers pick up their
first smartphone, Bango technology will be there to
unlock the universe of apps, video, games and
other content that bring those smartphones to life.
Global leaders plugging into Bango include
Amazon, BlackBerry, Facebook, Google, Microsoft
and Mozilla.
January to December 2014 saw Bango exceed 140
Mobile Network Operator activations, with new
integrations in strategically vital, fast-growing
markets, including Indonesia, Mexico, South Africa
and across the Middle East.
Bango was proud to launch two entirely new app
store integrations during 2014, with Amazon, who
are acknowledged as the masters of connected
commerce, and with Samsung, the world’s largest
smartphone manufacturer. Six of the world’s
largest app stores have chosen the Bango Payment
Platform, demonstrating that Bango has emerged
as the de facto global standard for carrier billing in
app stores.
Contents 01
Contents
Highlights……………….……………………….....…………..….………...…02
Strategic report
Chairman statement…….......................………………….……......……03
CEO statement……………………........................….…….……...……..04
CFO statement…………………….........................……….…...………..07
Strategic report……………….…........................………....……......…..09
Business review
Progress report.…………………….………….………….…………....……11
Products…………………………………………………………….…...……13
Business model………………………………………………………....…...13
Key market developments……..……………….………………………...…14
Report of Directors
Directors……….......................………………………………….…...…...15
Company information…………….…….………….....................…….....17
Directors’ report…………………………….…………............................18
Corporate governance statement…......................….………...…………20
Remuneration Committee report….….…….……........................……..21
Financial statements
Independent auditor’s report to the members of Bango PLC…...….…...22
Consolidated balance sheet……….…................................…...…...…23
Consolidated statement of comprehensive income..............................24
Consolidated cash flow statement…….….........................…......….....25
Consolidated statement of changes in equity……...............................26
Notes to the financial statements…….…….….…...............................27
Independent auditor’s report to the members of Bango PLC…...….......45
Company balance sheet…………….……......................…….....……...46
Notes to the financial statements…….………..…...............................47
Shareholder notices
Notice of General Meeting………………….……..............................…50
Form of proxy….……………………….....................……….....…....…..52
Explanatory notes….........................................….….…....................54
Highlights 02
Highlights
Live stores
Google Play
Firefox Marketplace
BlackBerry Messenger
22
BlackBerry World
Windows Phone Store
Amazon Appstore
Samsung GALAXY Apps
2011
2012
2013
2014
Cost
Stable operational cost base of £5.0m (FY2013: £5.1m)
Capacity
Bango Platform tested at £650m ($1bn) annualized spend levels
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2013 2014
FY2013
FY2014
Bango PLC Annual Report 2014
03 Chairman’s statement
Chairman’s statement
Over the past two years, Bango has made
significant investment into its platform,
both in terms of capacity and robustness.
This has enabled the team to secure
partnerships with many of the world’s
leading app stores. 2014 was the year
that these investments and customer
wins started to show a return, as
evidenced by the increased transaction
volumes and end user spend through the
Bango Platform. Crucially, end user
spend is now rising without the need to
increase the cost base of the business.
The Bango Payment Platform has been
tested with loads in excess of £650m
($1bn) per year of end user spend. Bango
announced and launched two new app
store partnerships, with Amazon and
Samsung, during the final few months of
2014. With additional potential volumes
of end user spend coming from these in
addition to the existing relationships with
Google, Microsoft, BlackBerry and
Mozilla, and with the Bango Payment
Platform able to process this growth
within current cost base, Bango is now
well positioned to benefit financially from
its strategic position in the market.
After achieving success in providing
payment services for independent content
providers in the UK and USA – resulting
in a maiden profit in 2010, Bango made
the strategic decision to invest in product
development for the app stores which are
at the heart of digital content sales in a
market increasingly dominated by
smartphones.
App stores have adopted carrier billing at
varying rates, beginning with BlackBerry
in 2011 and with Samsung, the world’s
largest smartphone vendor, the most
recent to embrace the technology. These
stores have all chosen to integrate with
the Bango Payment Platform.
Key partnerships with many of the giants
of mobile are in place. End user spend is
starting to rise rapidly and the platform is
demonstrating its ability to scale while
the Bango cost base remains stable.
The global market for paid content is
growing and it is now clear that carrier
billing will take a meaningful share of
that market. Bango fulfils a vital industry
role, delivering carrier billing for app
stores. I look forward to Bango’s next
stage of growth.
I would like to thank the Bango team for
their impressive work in securing 140 live
activations, across 60 countries for six of
the world’s largest app stores. Thanks
also to shareholders in Bango for their
continued support as we see the
investments Bango has made in
technology and partnerships starting to
bear fruit in its financial outlook.
David Sear
Chairman
Bango PLC Annual Report 2014
CEO’s statement 04
CEO’s statement
Bango has now emerged as the de facto standard for carrier billing
in app stores
2014 was a year of strong progress for
Bango. App stores continue to fuel the
rapid growth in digital content sales, with
the Bango Payment Platform enabling
app store purchases to be charged to a
user's phone bill. Bango has now
emerged as the de facto standard for
carrier billing in app stores, uniting the
industry behind a common platform that
drives up revenues, while providing the
best consumer purchasing experience.
All major app stores that have chosen to
deploy Direct Carrier Billing (DCB) have
chosen to partner with Bango, and Bango
is now the natural partner for Mobile
Network Operators (MNOs) seeking to
harness revenue from the digital content
sales passing over their networks.
The Bango model and opportunity
Bango's objective is to enable one-click
mobile payment at massive scale,
maximizing conversion rates and driving
revenues for app stores, mobile operators
and content developers. Bango's proven
platform acts as a single point of
integration for app stores and MNOs
around the world, enabling them to
effectively use Direct Carrier Billing to
monetize digital content. Partnerships are
in place with many of the world's largest
app stores and Bango is now focused on
activating Direct Carrier Billing for app
stores across the wide range of integrated
mobile operators through the Bango
Platform.
Bango generates revenue from payment
transactions in two ways: Firstly, in a
mode where Bango collects the payment
from the user, and passes it on to the app
store while retaining a portion – this is
called “acting as principal”. Secondly
where the app store receives the payment
enabled by Bango technology directly
from the user, and pays a fee to Bango –
this is called the “agency model”.
manufacturer, announced a global carrier
billing partnership with Bango, with plans
to roll out immediately across a wide
range of MNOs. These relationships will
drive additional growth in 2015.
The Bango Payment Platform enables
app stores to increase their sales by
making payment easier and faster. Bango
data shows that if consumers are only
presented with a credit/debit card
payment option, conversion rates can be
as low as 0.5% in developing markets,
and rarely exceed 40% even in markets
where card penetration is high. Data from
the first 8 months of 2014 showed an
average conversion rate for carrier billing
for five app stores using the Bango
Payment Platform of 82% (excluding
transactions limited by monthly spend
caps for specific users). This powerful
advantage was one of the key factors
motivating new app store and MNO sign
ups during FY2014.
Continued momentum with app
stores and ongoing activations with
Mobile Network Operators
Bango made significant progress in
FY2014, completing new activations for a
number of app stores. These included
new Google activations, the first Amazon
activation and the first Samsung
activations. There also more activations
across BlackBerry, Microsoft, Mozilla and
others.
Bango was delighted to announce two
entirely new app store integrations during
the year. Amazon and Bango launched
carrier billing for Amazon Appstore in
September 2014 and, in October 2014,
Samsung, the world’s largest smartphone
Almost 100 MNOs have now integrated
with the Bango Payment Platform and are
using it to provide their billing services to
one or more app stores. During FY2014,
Bango was pleased to secure a number of
mobile operator group deals - including
with Etisalat and Deutsche - which
expand the pipeline of future activations
faster than one-by-one agreements, and
speed up the activation of app stores
across multinational mobile operators.
Google
As expected, the majority of end user
spend growth in FY2014 came from the
initial ramp up of Google Play
transactions which are expected to
continue and accelerate into 2015.
Google Play is the content store available
on Android, which powers the most
smartphones worldwide. Many early
Google Play carrier billing deployments
were completed directly between MNOs
and Google, but Bango has been able to
win an increasing share of new MNO
deployments. Bango offers several key
commercial and technical advantages to
MNOs, compared with a direct integration
with Google, including speed to market,
compatibility with other app stores,
uniquely valuable analytics, and centrally
managed operational support.
Mozilla
Bango provides carrier billing, collection
and settlement for Firefox Marketplace,
Bango PLC Annual Report 2014
05 CEO’s statement
which is part of a completely new
hardware, software and content
ecosystem from Mozilla, targeted at
emerging markets and based around
HTML5 open web technology. The service
was initially launched during summer
2013 in several Latin American
countries, as well as in Spain and Poland
and during FY2014 the service was
launched in additional markets in
Germany, Mexico and Hungary.
Microsoft
After launching the first integration with
Microsoft’s Windows Phone Store in
summer 2013, Bango continued to
develop its partnership with Microsoft
during FY2014. New launches during the
year included both MNOs in the UAE,
Etisalat and du. Bango is confident that
it will secure an increasing share of
Microsoft’s future DCB business.
Microsoft has high hopes that the arrival
of Windows 10 in FY2015 will help
Microsoft gain momentum in mobile.
BlackBerry
Bango powers carrier billing for users of
BlackBerry World with more than 75
MNOs. BlackBerry remains a major player
in many populous, developing world
markets, including in Indonesia and
Saudi Arabia. BlackBerry recently started
deploying BlackBerry Messenger (BBM)
across Android, Windows and iPhone and
has recently started using Bango
technology to collect payments for
valuable BBM based services driving
incremental revenues and giving Bango
useful exposure and experience in
markets that may become attractive to
other larger customers.
Amazon
The first Bango activation with Amazon
Appstore was in September 2014, with
O2 in Germany. While as expected this
initial integration did not generate
significant revenue during FY2014,
Bango anticipates a broader rollout
during FY2015 as Amazon seeks to
mirror its success in physical goods in
the digital goods space.
Samsung
Samsung GALAXY Apps is the Samsung
global content store. It was initially
established using Premium SMS (PSMS)
technology for payment in a number of
markets. PSMS is an outdated technology
associated with consumer harm which is
being regulated out of existence in many
major markets. Samsung’s global
partnership with Bango supports its move
towards more modern and consumer
friendly Direct Carrier Billing technology.
Bango and Samsung were able to launch
several markets very quickly after
agreement. Bango launched 4 carrier
billing activations for Samsung in 3
markets in late 2014, in Canada, South
Africa and the UAE, and there is a busy
program of integrations and activations
underway for FY2015.
Prepared for high growth in
transaction volumes
The current Bango Platform and systems
have been designed and tested to
transaction volumes equivalent to end
user spend of approximately £650m per
year - with no increase in cost.
Administrative expenses for the period
were £5.0m (FY2013: £5.1m) showing
that, although end user spend has grown
rapidly, the cost base is stable as
planned.
Product development and the
platform effect
In FY2014 Bango focused its highly
experienced development team on
innovations in the Bango Payment
Platform, to capitalize on the unique and
considerable opportunities presented as
the platform has emerged as a global hub
for mobile commerce. Bango’s analytics
capabilities were deployed to MNOs as
the Bango Dashboard, offering partners a
unique view of the digital content
purchase process - including successes
and failures - enabling MNOs and app
stores to increase their digital content
sales.
In addition, technology is being
developed to speed up the path from the
early stages of discussion between MNOs
and app stores to the first live
transactions by using relationships and
capabilities that are unique to Bango.
The first fruits of this development were
made available to app stores as Bango
Grid which was launched on 2 March
2015.
The strategic value of the Bango Payment
Platform increases as more app stores
and MNOs integrate with it. The platform
provides a common point of integration
between the wide range of MNO billing
systems, alternative payment instruments
(including credit cards, mobile wallets
and tomorrow’s emergent technologies)
and the giant digital content merchants,
mainly app stores. For each app store or
MNO, Bango offers a highly efficient
Bango PLC Annual Report 2014
CEO’s statement 06
All major app stores that have chosen to deploy Direct Carrier
Billing (DCB) have chosen to partner with Bango
forecast growth in end user spend
generating from current activations alone
in the current financial year.
With a stable cost-base and rapidly
increasing end user spend, Bango
continues to believe that it can become
cash flow positive comfortably within the
current capacity of the Bango Payment
Platform.
Ray Anderson
CEO
single route to reach multiple partners,
without needing to build out integrations
one-by-one.
In addition, the Bango Payment Platform
enables app stores and MNOs to sell
more digital content, alongside the use of
credit cards. Bango’s BillRank and cloud-
based identification and authentication
technology BangoID ensure unrivalled
precision across mobile platforms,
authenticating users on a massive scale
for frictionless, one-click payment. Bango
has the ability to authenticate users even
when they’re connected via Wi-Fi, outside
the operator network. This is another
unique element of the Bango Platform
that works to maximize sales.
Current trading
We are pleased to announce that since
the financial year end, Bango has
activated payment routes with a number
of MNOs, including O2 and Etisalat.
These activations started delivering end
user spend in 2015.
Outlook
Bango has made good progress this year
in integrating app stores and
subsequently activating them with
multiple mobile operators. Data gathered
by Bango over the last two years across
multiple countries and app stores,
indicates that revenue in the market for
digital content that is purchased via app
stores is growing at a steady and
sustainable pace.
Bango finished FY2014 with annualized
end user spend generated from existing
activations of £32.9m. Based on the data
that Bango holds regarding the increase
in end user spend from activations that
were live as at 31 December 2014,
Bango expects end user spend to
increase by at least 100% to over £65m
($101m) for FY2015. With February
2015 annualized end user spend at
£36.1m, Bango is confident in meeting
this guidance.
In addition to this growth from existing
activations, Bango has more than 30
activations already scheduled for launch
in 2015 and a strong pipeline of over
100 further activation opportunities for
the remainder of 2015. Taking account
of the possible end user spend from
these potential activations gives
management a high level of confidence in
the Groups’ ability to exceed the 100%
Visit Bango Investor online:
bangoinvestor.com
Bango PLC Annual Report 2014
07 CFO’s statement
CFO’s statement
End user spend for the year was £25.2m, up 62% from prior
2013 spend of £15.6m
End user spend
End user spend is the most significant
Key Performance Indicator (KPI) for
Bango as it shows how much business is
being transacted through the Bango
Platform for the app stores. End user
spend for the year was £25.2m, up 62%
from prior 2013 spend of £15.6m.
Furthermore, annualized end user spend
at the end of 2014 was £32.9m
demonstrating the rapid growth of the
business. Bango has invested in a
platform to process end user spend at
scale. The growth in end user spend is an
indicator that our strategy of connecting
major app stores to MNOs, whilst in its
infancy, is working.
Bango now has sufficient data points to
estimate end user spend once Bango has
activated an app store with a MNO. From
this data, Bango management is in a
position to predict that the annualized
rate of end user spend from the app store
/ mobile operator activations that were
live in December 2014 will double to
approximately £65m by the end of
December 2015.
This estimate excludes end user spend
generated from our new app store
relationships with Samsung and Amazon
as these have only been live for an initial
few months and spending data is
insufficient to provide reliable and
verifiable predictions, and does not
include end user spend arising from
Bango’s pipeline of more than 30
activations already scheduled for launch
in 2015, nor from the pipeline of more
than 100 further activations which are
likely to be activated in 2015. (In 2014
there were more than 30 activations).
Turnover
Bango generates turnover either as
principal or agent. The turnover for the
year ended 31 December 2014 was
£5.1m. End user spend generated under
the agency model, where Bango only
recognizes the agency fee charged, was
84% of all end user spend. 16% of end
user spend was transacted with Bango as
principal in the transaction - where the
whole of the end user spend is
recognized. This was a significant shift
from the year ended 31 December 2013
when 55% of end user spend was
generated as agency, and 45% as
principal. This accounts for the reduction
in turnover from £8.8m in the previous
year. The proportion of agency end user
spend will vary with the volumes
transacted by each app store.
Turnover also includes £0.7m of platform
fees (FY2013: £1.7m) which have
decreased with the planned migration
from one-off integration fees to recurring
monthly fees to remove barriers to
activations with the MNOs. Going
forward, Bango expects platform fees to
remain at a level that is broadly
consistent with FY2014, further
demonstrating that end user spend is the
most significant KPI for the company.
Overall margin on end user spend
Gross margin on end user activity for the
period was 2.4%, an improvement
compared with FY2013 (FY2013: 2.3%
see note 4 in the accounts). This is
within Bango’s longer term target range
of between 2% and 5% based on a mix
of agency and principal models.
Trading results from operations
With the growth in end user spend and
the small increase in margin generated
from end user spend, the margin on end
user spend increased 71% to £0.60m
(FY2013: £0.35m).
There was a 59% decrease in platform
fees to £0.7m (FY2013: £1.7m). This
reflects the change in the business model
and corresponding revenue recognition
away from up front activation fees to
monthly transaction or support fees as
previously announced.
As a result, gross profit was £1.3m for
the year compared to £2.1m for the
FY2013.
Administrative expenses
Administrative expenses were stable at
£5.0m (FY2013: £5.1m) confirming that
the Bango cost base should not need to
increase as end user spend grows. The
operating loss for the year was £5.4m
(FY2013: £4.9m). Amortization of
intangible assets in the year was £0.8m
(FY2013: £1.0m) as more of the
previously capitalized R&D came into use
during the period. FY2013 included an
accelerated amortization charge of
£0.3m not needed in FY2014.
Depreciation for the year totalled £0.5m
(FY2013: £0.4m).
Share based payments costs of £0.4m in
2014 (FY2013: £0.5m) are part of the
Bango PLC Annual Report 2014
CFO’s statement 08
•
Reduction in payables of £0.6m also
caused by a shift to the agency
business model
Net capital expenditure outflows totalled
£0.1m in the year (FY2013: £0.1m) and
were largely attributable to acquisition of
computing equipment. The addition of
intangible assets totalled £0.9m
(FY2013: £1.1m) and was attributable to
the capitalization of internal development
costs. These were part of a major
hardware and software platform
deployment in a new primary data center
to upscale capacity, resilience and
security.
Bango’s cash balances included balances
denominated in foreign currencies
(primarily US Dollars and Euros).
At 31 December 2014 Bango had cash
balances of £6.3m (at 31 December
2013: £5.1m) and total finance lease
liabilities £0.6m (at 31 December 2013:
£0.4m).
Gerry Tucker
CFO
compensation package Bango uses to
attract and retain key employees.
£2.0m) reflecting the rapid growth in
agency based end user spend.
Bango reported a net loss before tax for
the year of £5.4m (FY2013: £4.9m). The
loss after tax totalled £5.1m for the year
compared with £4.7m for the previous
year.
Taxation
The tax credit for the year was £0.2m
(FY2013: £0.2m) and relates to R&D tax
credits receivable.
At the year-end Bango had not recognized
a deferred tax asset in the balance sheet
of £4.8m (FY2013: £3.1m), due to the
unpredictability of future taxable trading
profits against which the losses may be
utilized.
Loss per share
Basic and diluted loss per share was
10.96 pence (FY2013: 10.53 pence).
Balance sheet
Net assets of the Group were £9.8m at
31 December 2014 (at 31 December
2013: £8.9m).
Cash balances increased to £6.3m at 31
December 2014 (at 31 December 2013:
£5.1m).
Intangible assets increased to £3.5m (at
31 December 2013: £3.4m) as a result
of on-going internal development work
being capitalized.
Trade receivables are significantly down
to £1.1m (at 31 December 2013:
Current liabilities as at 31 December
2014 were £1.8m (at 31 December
2013: £2.2m). Total borrowings are
£0.6m (at 31 December 2013: £0.4m),
and consist only of finance lease
liabilities. Of the total borrowings, £0.3m
is classed as current (at 31 December
2013: £0.1m) and £0.3m is classed as
non-current (at 31 December 2013:
£0.3m).
Raising of additional capital
In October 2014, Bango raised £6.0m
before expenses in an oversubscribed
placing and open offer of 6,250,000 new
ordinary shares at a price of 96p, with
both new and existing institutional
investors. The funding has provided
support for Bango’s strategy of being
positioned to take advantage of
developing opportunities in emerging
markets and further business
development with major MNOs. It also
provided valuable comfort to customers
like Samsung of Bango's long term
support from shareholders.
Cash flow
Cash used by operating activities was
£3.2m (FY2013: £2.6m).
Bango managed significant working
capital improvements during 2015
including:
•
Reductions in receivables of £0.9m,
driven by the shift to the agency
business model
Bango PLC Annual Report 2014
09 Strategic report
Strategic report
Principal activities, business review
and future developments
The principal activity of Bango during the
year was the development, marketing and
sale of technology to enable mobile phone
users to easily make payments for digital
content and media on smartphones and
tablets.
The principal activity of Bango PLC during
the year was as investment holding
company for Bango.net Limited and other
subsidiaries. The Bango Group includes
Bango.net Limited, Bango Inc, Bango
Movil, Bango do Brasil Cessão de Licenças
de Programas de Computador Ltda, Bango
SP Limited and Bango Employee Benefits
Limited.
A review of the Group’s performance for
the year ended 31 December 2014 and
future developments is contained in the
Chairman’s statement, CEO’s statement
and the CFO’s statement on pages 4 to 8.
Shown on the Statement of consolidated
income is end user spend, a Key
Performance measure. End user spend
does not take into account the contractual
arrangements in place but reports the total
transaction value processed. More detail
on end user spend is given on page 31.
Strategy and business model
The Bango strategy is to power the market
leaders, delivering growth through
supporting mobile billing transactions to a
global market of leading app stores and
independent digital merchants. Bango
delivers this strategy through integrating
into app stores and mobile operators
around the world.
Our budgets and going concern reviews
are based on a revenue model that looks at
end user spend through the Bango
Payment Platform and Bango Platform
service fees. The Bango Platform service
fees come from integration and
development work, which then result in
further growth to the end user spend
margin. Details of the margin from the two
revenue streams are shown in note 4. We
have invested in the platform to make it
highly scalable, as proven by the capacity
which can handle 20 times current loads,
to facilitate the growth from end user
spend expected in the year.
Key Performance Indicators (KPI’s)
KPI’s are used to control and measure
financial and operational performance.
They are reviewed to ensure that plans are
achieved and corrective action taken
where necessary.
The financial KPI’s are end user spends,
end user spends margin, gross profit, net
profit and cash balances.
The non-financial KPI’s are relationships
with mobile operators and leading app
stores.
A review of product development, financial
performance, strategy and outlook is
contained in the CEO’s statement on pages
4, 5 and 6, which includes further
commentary on the above KPI’s.
Principal risks and uncertainties
The key business risks affecting the Group
are set out below.
Financial risk management
objectives and policies
Bango monitors the financial risks to which
it is exposed through its business activities.
Bango does not consider it necessary to
use derivative financial instruments to
hedge these risks. See notes 6, 18, 19, 20
and 21 for further information.
Liquidity risk
Bango ensures sufficient liquidity is
available to meet foreseeable needs and
invests in cash assets safely and profitably.
See note 20 for further information.
Credit risk
Credit risk arises from exposure to
outstanding receivables. Potential new
customers are assessed for credit risk
before credit is given. See note 19 for
further information.
Currency risk
Overseas currency sales are largely offset
by costs in the same currency, therefore
exposure to currency risk and impact on
margin is considered relatively small. See
note 21 for further information. The Group
manages its foreign exchange exposure on
a net basis. No forward exchange or other
such financial instruments have been used
in the year.
Technology risk
The Group’s revenue is dependent on its
technology keeping pace with
developments in mobile phone technology,
including volumes of data and growth in
applications. The Group manages this risk
by a commitment to research and
development, combined with ongoing
dialogue with trading partners and sector
specialists to ensure that market
developments are understood.
Payment providers
The current business model is dependent
on payment providers. These are therefore
key trading relationships to the Group, and
Bango PLC Annual Report 2014
Strategic report 10
identify as male and 6 key senior
managers of which 3 identify as female
and none as transgender.
The strategic report was approved by the
Board of Directors, and signed on its
behalf by:
Ray Anderson
CEO
Bango’s turnover from the end user is
subject to influence by the payment
providers. The Group manages risk
through regular dialogue and investment in
relationships with, payment providers and
digital merchants. The Group manages
payment risk by undertaking regular credit
risk analysis using third parties, combined
with other sources of market intelligence
and monitoring of payment performance.
Employee retention
Bango depends on its ability to recruit and
retain people with the right experience and
skills. Bango puts significant effort into
providing an excellent working
environment and benefits, including a
share option scheme (notes 7 & 12).
Geographical risk
As the Group continues to expand, the
Group has supported payment platforms in
a large number of countries. Some of these
include territories that may carry money
laundering risks, other legal risks and/or
sanctions. The Group monitors the
situation in these territories at the project
launch stage and after activation to ensure
that these risks are appropriately mitigated.
Personal data risk
The Group processes personal data (some
of which may be sensitive) as part of its
business. There is a risk that such data
could become public if there were a
security breach in respect of such data.
The Group could face liability under data
protection laws and lose the goodwill of its
customers. The extensive testing of the
Bango system by Bango and its major
customers as part of ongoing customer
audits, and the unique way Bango
technology is used gives assurance that
this risk is appropriately mitigated.
Gender of Directors and senior
managers
Bango has 3 Non-exec Directors who
identify as male, 3 exec Directors who
11 Progress report
Progress report
The Bango Payment Platform is vital to the global growth in digital content sales. The giants of mobile choose the Bango Payment
Platform to provide a delightful and immediate payment experience that maximizes sales of digital content.
The period January 2014 to December 2014 saw Bango streamline the product offering to focus on payment, while cementing its
leadership position across its key industry sectors. Two new app stores integrations, with technology giants Amazon and Samsung, were
launched, while Bango completed more than 30 new carrier billing activations taking the total number of activations to more than 140.
The Bango Payment Platform is now the natural choice for app stores and mobile operators offering carrier billing, and Bango’s primary
focus is on building end user spend by increasing the number and rate of mobile operator activations.
Mobile Network Operators
Bango made excellent progress
integrating new Mobile Network
Operators (MNOs) into the Bango
Payment Platform and increasing the
number of app store activations with
existing MNOs.
Bango was particularly pleased with the
progress made in launching new Google
Play integrations, where MNOs
increasingly prefer Bango to integrate
into the world’s fastest growing app
store. Notable new markets included
Bell and Telus in Canada, Etisalat in the
UAE, Indosat in Indonesia and Telkom
in South Africa, which became the first
market in the African continent to offer
carrier billing for Samsung.
developing and developed world
markets.
A further trend is that some MNOs and
larger MNO groups are now
standardizing on the Bango Payment
Platform, taking advantage of Bango’s
single point of integration to the broad
range of app stores. This has been the
case with Deutsche Telekom and both
Etisalat and du in the UAE. This trend
enables Bango to launch several
markets quickly and efficiently.
Bango launched new integrations and
activations across a wide range of
There were many launches in
strategically important growth markets
including; Chile (Telefónica); Egypt
(Mobinil); Indonesia (Indosat,
Smartfren, Telkomsel, XL); Mexico
(Iusacell, Telefónica); UAE (du) and;
Saudi Arabia (Mobily, STC).
Bango also made good progress in
existing high smartphone penetration
markets including; Canada (Bell, Telus);
Germany (Telefónica) and USA (AT&T).
Larger MNO groups are now standardizing
on the Bango Payment Platform
Bango PLC Annual Report 2014
Progress report 12
“This is a big win for Bango and one that has the potential to be
quite impactful for both parties involved.”
Jordan McKee, Yankee Group
App stores
2014 saw Bango expand the payment
service provided to existing app store
partners, notably to Google Play,
Windows Phone Store, BlackBerry World
and Firefox Marketplace.
Bango began 2014 with two Google Play
activations and completed the year with
seven, including launches in large, fast-
growing markets such as Indonesia and
UAE, and established markets such as
Canada, where Bango completed a
“clean sweep”, by launching carrier
billing for every Canadian mobile
operator.
Bango was proud to launch two entirely
new app store integrations during 2014,
with Amazon and Samsung, taking the
total number of app stores powered by
the Bango Payment Platform from four
to six.
In September 2014 Amazon and
Telefónica Deutschland announced
Amazon’s first integration into the
Bango Payment Platform, launching
carrier billing services for Telefónica
subscribers in Germany. This was the
first launch in a broader planned rollout
and represented the first time that
Amazon, widely acknowledged to be
masters of online commerce, had
launched a new payment mechanism in
more than a decade.
In late October 2014 Bango announced
a global agreement with Samsung, one
of the world’s largest technology
companies and the world’s leading
smartphone manufacturer. Under the
agreement Bango provide carrier billing,
collection and settlement for digital
content purchased through the Samsung
GALAXY Apps app store. The agreement
confirms Samsung’s desire to put
frictionless one-click payment at the
heart of their consumer experience, as
they leverage their massive reach to
grow digital content sales.
Analyst firm Yankee Group
acknowledged the significance of the
Samsung partnership announcement.
Senior Analyst Jordan McKee
commented at the time:
“This is a big win for Bango and one
that has the potential to be quite
impactful for both parties involved.
Bango’s direct operator billing (DOB)
solution streamlines bumps in the
checkout process, enabling frictionless
transactions and, inevitably, increased
conversions. Moreover, DOB will play an
instrumental role in helping Samsung
expand its addressable market (by
reaching those without payment cards,
particularly in emerging markets) and in
some instances, lead to larger basket
sizes. 451 Research’s 2014 US
Consumer Survey, September, shows
that of those consumers that paid for a
tablet or smartphone app in the last
month, 1 in 10 chose to charge it
directly to their phone bills”.
This increased app store activity reflects
the recognition amongst the world’s
largest stores that carrier billing has
become an essential component of
today’s smartphone experience, as well
as reflecting Bango’s expertise and
leadership in the space.
Wider applications for the Bango
Payment Platform
Bango continues to find innovative
applications for the Bango Payment
Platform, taking advantage of its
massive reach and ability to power
flexible and emerging billing models.
Examples include the following:
2014 saw Bango and MMIT release M-
Iflọ, a safe payment solution that
enables online transactions for digital
content. M-Iflọ navigates the complex
mobile payment environment in Sub-
Saharan Africa and is tailored to the
needs of the industry leaders in mobile
content. The solution was launched
with Mobipay in Kenya and Stanbic in
Nigeria.
In December 2014 Bango announced
a strategic partnership with
CardMobili, the leading provider of
digital wallet technologies. Bango and
CardMobili will develop a series of
innovative mobile commerce solutions
that enable MNOs to leverage their
large subscriber base and existing
billing relationships to open up new
revenue streams. This includes
bringing carrier billing to the retail
environment for the first time, and a
unique new proposition that unites the
digital app world with physical
shopping.
Finally, Bango is excited to have
deepened its established partnership
with BlackBerry, as they build on the
success of BlackBerry Messenger
(BBM), launching it across the major
mobile platforms and introducing a
variety of monetization models.
Bango’s carrier billing technology is
being deployed across a range of
innovations being rolled out to BBM
users, including sales of stickers,
music, games and other virtual goods
and an entirely new product area
named BBM Money. This is a mobile
wallet service that allows people to
send money to their BBM Contacts,
top up mobile airtime accounts, and
pay bills.
Bango PLC Annual Report 2014
13 Products | Business model | Key market developments
Products
Bango Payment is the industry
standard billing platform chosen by
leading app stores. It enables billions
of consumers around the world to pay
for apps, digital media, content and
services, both from within the app store
and in-app, simply with a single click.
The charge is directly added to the
customer’s mobile phone bill, credit
card or other chosen payment
instrument.
Bango integrates once with a mobile
operator, immediately making each pre-
integrated app store available to
activate – quickly and more cost
effectively than going direct.
Bango Payment is the only platform
directly integrated and able to offer
stores including Samsung; Google;
Amazon; BlackBerry; Mozilla and
Microsoft.
Bango is the sole supplier for Amazon,
Samsung, Mozilla and BlackBerry,
delivering consistent carrier billing to
the top three Android app stores.
Bango has more than 140 carrier billing
activations, across 6 major app stores,
in over 60 countries. These all use high
quality direct integrations. Legacy
Premium SMS technology and third
party intermediaries are not used.
Bango architecture delivers significant
benefits over individual, direct
integrations between app stores and
mobile operators. Using shared
integrations means each app store and
mobile operator plugs into a live, pre-
tested platform already proven with
millions of transactions. This
dramatically reduces risk, lowers costs
and improves time to market.
Advanced caching optimizes
performance by minimizing network
round-trip times and ensuring
consumers get the best payment
experience.
Bango Payment optionally manages tax,
money flow, merchant of record and
settlement complexities, large-scale
developer on-boarding and mass out
payment of earnings as required by each
app store partner. These capabilities are
managed programmatically by the
platform to ensure delivery at the scale
demanded by global app stores.
Bango Payment Flow technology gives
app stores the option of Bango hosting
their customer payment experiences
using state of the art HTML5 web
standards, developed in partnership
with Mozilla. This renders device
specific payment experiences using the
correct language and currency,
automatically accounting for local
financial regulations.
Bango Grid is a definitive resource for
carrier billed payments, giving app
stores a methodology for researching,
planning and launching carrier billing
worldwide, with instant online access to
mobile operator capabilities and market
data.
It enables delivery of the next 200
mobile operators without adding 200
times the effort, time or cost.
Bango Dashboard gives mobile
operators and app stores a unique view
of all payments, products sold and
people purchasing them.
It enables operators to: manage their
billing systems; accurately measure the
comparative success of each app store;
understand app trends and popularity
for growing marketing, advertising or
developer relationship opportunities
and; build engagements with
subscribers through precise
understanding of purchase behavior.
App stores can: measure and optimize
their end user spend across each mobile
operator and country and; understand
app and in-app purchase trends.
Bango uniquely raises payment
standards across the industry by alerting
mobile operators and app stores if sales
fall below standard, or when failures or
errors rise above the industry baseline.
This anonymized market guidance is
only possible through billing
performance analysis across multiple
mobile operators and app stores.
Bango Platform Operations work with
each app store and mobile operator to
monitor, analyze and optimize all
transactions across the complete end-
to-end systems and network connections
– 24x7x365. Bango helps eliminate the
risk of downtime, payment failure and
customer care overheads, improving
performance and ultimately increasing
sales success and volume.
Business model
The Bango Payment Platform and
Bango Payment Flow enable major app
stores to sell digital goods and services
to end users using mobile carrier billing
and other payment mechanisms.
Bango earns a margin for processing
each payment, usually between 2% and
5% based on transaction volumes and
complexity. Currency conversion fees
and out-payment bank charges may
apply. Bango pays the remaining money
to the app store or merchant according
to an agreed schedule.
Optionally, an app store may ask Bango
to manage and pay earnings to their
individual developers, as undertaken for
BlackBerry World and Mozilla Firefox
Marketplace. In this model a developer
typically receives 70% of the price paid
and the remaining percentage is paid to
the app store once Bango processing
fees have been deducted.
Standard Bango Dashboard products
and Bango Platform Operations
services are included as part of the
Bango offer to mobile operators and app
stores. This grows the market,
maximizes payment conversions and
ensures ongoing visibility for the
success gained across Bango products.
Bango PLC Annual Report 2014
Products | Business model | Key market developments 14
Key market developments
Smartphone shipments reached 1.2
billion units in 2014, compared to 927
million in 2012, an increase of over
26%. IDC forecasts that 1.4 billion
smartphones will ship during 2015,
reaching 1.9 billion worldwide in 2018.
2014 developments include:
• Android continued to outpace all
other mobile platforms, with over
one billion devices shipped,
accounting for 84.4% of
smartphones during Q3 (81.2% in
2013).
In comparison iOS accounted for
11.7% (12.8% in 2013), with
Microsoft Windows Phone shipping
2.9% (3.6% in Q3 2013).
• Samsung remained the top
smartphone manufacturer with a
28% market share, shipping
326.4 million units an 8.4%
annual growth (32.5% with 311.4
million units in 2013).
Apple followed with 16.4%
(16.6% in 2013) with 191.3
million units. With highest sales in
Q4 following the launch of a larger
screen iPhone 6 and 6 Plus,
allowing them to compete in the
previously Android dominated big
screen segment.
Lenovo acquired Motorola to
become the largest Chinese
smartphone vendor and third
largest vendor worldwide with
7.9% (4.7% in 2013) and 90
million units.
LG was fourth with 6% (4.8% in
2013) and 70 million units.
Huawei at 5.9% (5.3% in 2013)
shipped 70 million units.
Xiaomi was new at sixth place with
5.2% market share and an annual
shipment growth exceeding 200%
with 60 million units.
Coolpad, Sony, ZTE and TCL
made up the rest of the 2014 top
10.
• The top ten countries, ranked by
smartphone use were, China, USA,
India, Japan, Russia, Brazil,
Indonesia, Germany, UK and
South Korea.
• Chinese manufacturers shipped
453.4 million units worldwide.
• Mozilla continued to innovate with
Firefox OS and an increasing
number of affordable smartphones
were launched worldwide.
• Startup mobile ecosystems Jolla
Sailfish, Ubuntu Phone, Cyanogen
and Tizen failed to do anything
notable during 2014
• Tablet sales slowed, with 4.4%
growth in 2014 and a total of
229.6 million units shipped. An
8% growth is forecast for 2015,
with sales reaching 233 million
units.
• The decline in PC sales slowed in
2014. According to IDC, laptop,
desktop and hybrid PC sales
dipped by an estimated 2.1%
globally, to 309 million units,
compared to a 10.0% decline in
2013.
• 2014 saw growth in the smart
watch market, with new Android
products launching from Motorola
(Moto360), LG (G Watch R), Sony
and Samsung. Apple announced a
watch would launch in 2015.
• Microsoft finalized the acquisition
of the Nokia mobile phone
business and launched new Lumia
phones. They now seek to unify
desktop, tablet, gaming and
smartphone platforms during
2015 with the launch of Windows
10.
• Apple launched their mobile wallet
– Apple Pay, using standard NFC
terminal technology to bring
secure card-less payment to the
US market.
•
In app payments continued to
dominate across all app stores,
with in-app currencies, such as
Clash of Clans Gems, selling well
at $4.99, $9.99 and $19.99
prices.
• Worldwide downloads from Google
Play were 60% higher than
Apple’s App Store.
• Three mobile games grossed more
than $1bn in 2014: Candy Crush
Saga at $1bn, Puzzle & Dragons at
$1.5bn and Clash of Clans at a
startling $1.8bn
• Operators continued to invest in
data to support higher resolution
media generated by the latest
iPhone and GALAXY phones,
combined with growth in streaming
media services. Ericsson reported
a 60% increase in mobile data
between Q3 2013 and Q3 2014.
•
In many markets, including
Indonesia, Taiwan and the USA,
Premium SMS was regulated out
of contention for mobile payments.
Sources include TrendForce, IDC, Gartner, GfK
Target Setter, WSJ, Guardian and eMarketer.
15 Directors
Directors
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Ray Anderson, CEO
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Ray has over 30 years experience in starting, growing and selling businesses. He was
named ‘Business Person of the Year’ in 2012. Ray co-founded Bango in 1999 after
realizing that the convergence of the internet with the ubiquity of mobile phones could
open up huge opportunities for content and service providers. Prior to Bango Ray
established IXI which created the industry standard network GUI - X.desktop. IXI was an
early leader in the creation of the web. It sponsored the first ever WWW conference at
CERN and shipped the world’s first commercial web browser.
Anil Malhotra, CMO
Install
Anil is responsible for Bango’s marketing activities and strategic alliances with major
partners, including device makers, app store providers and global network operators. Anil
has extensive experience of creating successful partnerships between technology
innovators and major market players in online technologies and OEMs. Before co-founding
Bango, Anil developed the major partnerships for Cyberlife Technology, one of Europe’s
leading computer games technology developers, which resulted in the licensing of the
company’s ‘artificial life’ technology by the world’s leading games publishers including
Warner and Hasbro. Before that he worked with Bango CEO Ray Anderson to establish a
technology called X.desktop, which became the global standard for the user interface
software on networked computers.
Gerry Tucker, CFO
Install
Gerry is an experienced finance leader and Chartered Accountant, with an extensive
computer games industry background and public company experience. He has
considerable experience in mergers and acquisitions, finance regulation, financial
modelling and growth businesses, having taken a firm from start-up to £300 million in
5 years. Gerry was shortlisted for ‘Financial Director of the Year’ at the Grant Thornton
Quoted Company Awards 2014. He has worked with several trading, software and
games companies. Previous senior financial and operational positions include CFO of
PLUS Markets Group and other high-level positions at Kuju Entertainment, Activision,
Vodafone Ireland and Deloitte.
Bango PLC Annual Report 2014
Directors 16
David Sear, Chairman, Non-executive Director
Install
David Sear is Group Chief Executive at Skrill, having joined the company in August
2014. David came to Skrill from Weve, the joint venture between EE, Telefonica UK
(O2) and Vodafone UK, where he was Chief Executive. David has extensive experience
in the payments industry, and previously spent six years at Travelex, the world’s largest
non-bank payments provider, as Divisional Managing Director of Global Business
Payments – and prior to that as Divisional Managing Director of Outsourcing. Before
joining Travelex, he spent three years as Commercial and Scheme Managing Director at
Voca, and was a founding member of WorldPay.
Martin Rigby, Non-executive Director
Install
Martin Rigby is co-founder and CEO of Psonar, the internet music service. He is also
founder and a managing director of ET Capital, an early investor in Bango. He has been
investing in innovative technology businesses for over 25 years, principally in network
services, software and hardware. He is Non-executive Chairman of FSE Fund Managers
and an advisory board member of the Bettany Centre for Entrepreneurship at Cranfield
University.
Rudy Burger, Non-executive Director
Install
Rudy has founded five companies in the digital media technologies sector and is currently
the Managing Partner of Woodside Capital, an investment bank for emerging growth
companies. Rudy serves on the boards of several US and European companies. He has a
BSc and MSc from Yale University and a PhD from Cambridge University.
Bango PLC Annual Report 2014
17 Company information
Company information
Company registration number
05386079
Registered office
5 Westbrook Centre
Cambridge
CB4 1YG
Tel: +44 1223 472 777
Directors
D Sear - Non-executive Chairman
R Anderson - CEO
A Malhotra - CMO
G Tucker – CFO
M Rigby – Non-executive Director
R Burger – Non-executive Director
Company Secretary
H Goldstein
HSBC Bank PLC
Vitrum
St Johns' Innovation Park
Cambridge
CB4 0DS
Mills & Reeve LLP
Botanic House, 100 Hills Road
Cambridge
CB2 1PH
Grant Thornton UK LLP
Chartered Accountants and Statutory Auditors
101 Cambridge Science Park
Milton Road
Cambridge
CB4 0FY
Cenkos Securities Ltd
6.7.8 Tokenhouse Yard
London
EC2R 7AS
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
330 Madison Avenue
6th Floor
New York, NY 10017
Tel: +1 866 528 6897
www.bango.com
investors@bango.com
Bankers
Solicitors
Independent auditor
Nominated adviser and broker
Public relations advisor
US office
Bango PLC Annual Report 2014
Directors’ report 18
Directors’ report
The Directors present the Annual report and audited financial
statements of Bango PLC for the year ended 31 December 2014.
The Directors and their interests
The Directors who served Bango during the year, together with their
beneficial interests in the shares of Bango were as follows:
D Sear
R Anderson
A Malhotra
M Rigby
G Tucker
R Burger
Ordinary shares
of 20p each
31 Dec 2014
-
6,624,036
4,006,815
14,067
11,933
-
=====================
Ordinary shares
of 20p each
31 Dec 2013
-
6,624,036
4,022,000
14,067
8,231
-
=====================
The Directors’ interests in share options of Bango were as follows:
Options to buy ordinary shares of 20p each
Date of grant
G Tucker
22 October 2014
01 April 2014
4 October 2013
26 March 2013
Total
D Sear
7 February 2011
Option
price
31 Dec
2014
31 Dec
2013
£1.010
£1.360
£1.260
£2.325
32,500
32,500
32,500
132,500
230,000
-
-
32,500
132,500
165,000
£1.530
100,000
100,000
The share options were granted at market price and vest over a three
year period in twelve equal quarterly instalments. Vested options will
lapse unless exercised within ten years of the date of grant.
Share capital
Details of changes in the share capital of the Group during the year
are given in note 7 to the financial statements.
Health and safety policies
The Group is committed to conducting its business in a manner
which ensures high standards of health and safety for its employees,
visitors and the general public. It complies with all regulatory and
other applicable requirements.
Going concern
The Group had cash of £6.3m at 31 December 2014 (31 December
2013: £5.1m) and financing debt of £0.6m (31 December 2013:
£0.4m). Significant investment in technology development continues
to be made. Bango raised £5.6m net of expenses during 2014.
Based on the new monies raised the Group has sufficient cash
funding in place to be able to support its investment for future
growth. The cash flow forecasts of Bango anticipate increased cash
generation from trading operations as a result of our new deals with
app stores in the year and our strong pipeline of integrations in
progress. Therefore the Directors have a reasonable expectation that
there are adequate resources to continue its operational existence
for the foreseeable future. For this reason they continue to adopt the
going concern basis in preparing the financial statements.
Substantial shareholdings
At 6 March 2015 Bango PLC had been informed of the following
interests in addition to the interests of R Anderson and A Malhotra,
amounting to 3% or more in the issued ordinary share capital of the
company:
Liontrust Asset Management
Herald Investment Management
Schroders Investment Management
Inflection Point Investments LLP
Wellington Management Company
Hargreave Hale
Number
8,785,198
7,525,712
3,428,001
3,074,639
2,242,785
2,127,489
%
16.90
14.47
6.59
5.91
4.31
4.09
Directors’ responsibility
The following statement, which should be read in conjunction with
both reports of the auditor set out on pages 22 and 45, is made in
order to distinguish for shareholders the respective responsibilities of
the Directors and of the auditor in relation to the financial
statements.
Dividends
The Directors have not recommended a dividend (31 December
2013: £nil).
The Directors are responsible for preparing the strategic report,
annual report and the financial statements in accordance with
applicable law and regulations.
Post balance sheet events
There are no post balance sheet events to disclose.
Directors’ indemnity arrangements
The Group has purchased and maintained throughout the year
Directors’ and Officers’ liability insurance in respect of itself and its
Directors.
Employment policies
The Group is committed to following the applicable employment laws
in each territory in which it operates. The Group is committed to fair
employment practices including the prohibition of all forms of
discrimination and attempts as far as possible to give equal access
and fair treatment to all employees on the basis of merit. Wherever
possible we provide the same opportunities for disabled people as for
others. If employees become disabled we would make reasonable
effort to keep them in our employment, with appropriate training
where necessary.
The Group supports the training needs of its staff and actively works
to provide on the job and external training to continue the
development of all staff. It is important to the Group to maintain an
exciting and interesting working environment to fully engage its staff.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have to prepare
the Group financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRSs) and have elected to prepare separate parent company
financial statements under United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable laws). Under Company Law the Directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs and profit or loss of the
Company and the Group for that period. In preparing these financial
statements, the Directors are required to:
•
Select suitable accounting policies and then apply them
consistently.
• Make judgements and accounting estimates that are
reasonable and prudent.
•
State whether applicable IFRSs and UK Accounting
Standards have been followed subject to any material
departures disclosed and explained in the financial
statements.
Bango PLC Annual Report 2014
19 Directors’ report
Directors’ report
•
Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Group and enable them to ensure that
the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that:
•
•
In so far as each Director is aware there is no relevant
audit information of which the Company’s auditors are
unaware.
The Directors have taken all steps that they ought to
have taken as Directors in order to make themselves
aware of any relevant audit information and to establish
that the auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Group's
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Auditor
A resolution to re-appoint Grant Thornton UK LLP as auditor for
the ensuing year will be proposed at the Annual General Meeting
in accordance with section 489 of the Companies Act 2006.
BY ORDER OF THE BOARD
Company Secretary
H Goldstein
Bango PLC Annual Report 2014
Corporate governance statement 20
Corporate governance statement
The Board
The Board is responsible for the overall management of the Group,
its strategy and long-term objectives. The Board provides leadership
to the Group, based on the best interests of shareholders.
UK Corporate Governance Code
We do not comply with the UK Corporate Governance Code. Instead
we have reported on our Corporate Governance arrangements,
including those aspects of the UK Corporate Governance Code we
consider to be relevant to the Group and best practice.
Board composition
The Board of Bango PLC is made up of the independent Non-
Executive Chairman, CEO, CFO, CMO and two other Non-executive
Directors. Details of the board’s experience and interests are shown
on pages 15-16 which demonstrate the range of skills and insight
that they bring to the Board. The Non-executive Directors are all
deemed to be independent. All Directors are subject to election by
the shareholders at the first Annual General Meeting following their
appointment, and to re-election thereafter every three years.
Board meetings
The Board meets formally 11 times per year to discuss the strategy,
direction and financial performance of the company. The board
reviews a detailed management pack each month which enables
them to fulfil all of their duties of stewardship. The Non-executive
Directors attend all of the meetings.
Audit committee
The Audit Committee comprises the Chairman and all other Non-
executive Directors.
The Committee’s main role and responsibilities are to:
• Monitor the integrity of the financial statements of Bango.
•
Review Bango’s internal financial controls and risk
management systems.
• Make recommendations to the Board, for it to put to the
shareholders for their approval in relation to the
appointment of the external auditor and to approve the
remuneration and terms of reference of the external
auditor.
Discussion of the nature, extent and timing of the external
auditor’s procedures and discussion of the external
auditor’s findings.
Review and monitor the external auditor’s independence
and objectivity and the effectiveness of the audit process.
Develop and implement policy on the engagement of the
external auditor to supply non-audit services.
Report to the Board, identifying any matters in respect of
which it considers that action or improvement is required.
Ensure a formal channel is available for employees and
other stakeholders to express any complaints in respect of
financial accounting and reporting.
•
•
•
•
•
Bango does not currently have an internal audit function, which the
Board considers appropriate for a Group of Bango’s size. The
Committee is scheduled to meet twice each year and at other times if
necessary. The Audit Committee will review risk assessments and
the need for an internal audit function on a periodic basis.
Internal control procedures
The Board is responsible for the Group’s system of internal controls
and risk management, and for reviewing the effectiveness of these
systems. These systems are designed to manage, rather than
eliminate, the risk of failure to achieve business objectives.
The key features of Bango’s internal controls are described below:
•
•
•
•
•
•
•
A clearly defined organizational structure with appropriate
delegation of authority.
The approval by the Board of a one year budget, including
monthly income statements, balance sheets and cash flow
statements. The budget is prepared in conjunction with
senior managers to ensure targets are feasible.
The business plan is updated on a periodic basis to take
into account the most recent forecasts. On a monthly
basis, actual results are compared to the latest forecast
and market expectations, and presented to the Board on a
timely basis.
Regular reviews by the Board and by the senior
management team of key performance indicators.
A limited number of senior management are able to sign
checks and authorize payments. Payments are not
permitted without an approved invoice.
Reconciliations of key balance sheet accounts are
performed and independently reviewed by the finance
team.
A disaster recovery plan and back-up system is
documented and in place.
The Board in conjunction with the Audit Committee keeps under
review Bango’s internal control system on a periodic basis.
Communications with shareholders
The Board recognizes the importance of regular and effective
communication with shareholders. The primary forms of
communication are:
•
•
•
The annual and interim statutory financial reports and
associated investor and analyst presentations and reports.
Announcements relating to trading or business updates
released to the London Stock Exchange.
The Annual General Meeting provides shareholders with
an opportunity to meet the Board of Directors and to ask
questions relating to the business.
Going concern
After making enquiries, at the time of approving the financial
statements, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. The Directors expect
the current level of investing activities to continue which are
supported by the funding secured by the placement in October
2014. Due to new customers signed in the year Bango expects to
see a reduction in the net cash used by operating activities. Gross
profit is expected to increase as a result of this activity with major
new customers. For these reasons, the Directors continue to adopt
the going concern basis in preparing the financial statements and to
provide reasonable, but not absolute assurance against material
misstatement or loss.
Bango PLC Annual Report 2014
21 Remuneration Committee report
Remuneration Committee report
The Remuneration Committee comprises the Chairman and all other
Non-executive Directors.
The agreements can be terminated on twelve months’ notice in
writing by either the Company or by the Executive Director.
Non–executive Directors
The remuneration of the Non-executive Directors is determined by
the Executive Directors. Their appointments can be terminated on
six months’ notice in writing by the Company.
Directors’ emoluments
Details of remuneration in respect of the Directors is provided in note
13.
The Committee’s main role and responsibilities are as follows:
•
•
•
To review, and determine on behalf of the Board, the
specific remuneration and incentive packages for each of
the Group’s Executive Directors.
To review, and make recommendations to the Board in
respect of, the design of remuneration structures and
levels of pay and other incentives for employees of the
Group, including share option awards and any
adjustments to the terms of share ownership and share
option schemes.
To be responsible for reporting to the Group’s shareholders
in relation to remuneration policies applicable to the
Group’s Executive Directors.
The Committee may invite the CEO and CFO to attend meetings of
the Remuneration Committee. The CEO is consulted on proposals
relating to the remuneration of the CFO and of other senior
executives of the Group. The CEO is not involved in setting his own
remuneration.
The Committee may use remuneration consultants to advise it in
setting remuneration structures and policies. The Committee is
exclusively responsible for appointing such consultants and for
setting their terms of reference.
The Committee’s terms of reference are reviewed and approved by
the Board. These are available for inspection at the Group’s
registered office.
Remuneration policy
Bango’s policy on remuneration is to provide a package of benefits,
including salary, performance-related bonuses and share options,
which reward success and individual contributions to Bango’s overall
performance appropriately, while avoiding paying more than is
necessary for this purpose. In addition, the Remuneration Committee
takes into account remuneration packages of comparable companies
when making recommendations to the Board.
Performance-related elements of remuneration are designed to align
the interests of Executive Directors with those of shareholders and
accordingly are set as a significant proportion of total remuneration.
Share options
Bango considers that active participation in a share option plan is an
effective means of incentivizing and retaining high quality people.
Directors and employees are eligible to participate in the scheme.
Further details of the option plan and outstanding options as at 31
December 2014 are given in note 7 to the financial statements.
Service agreements
The Executive Directors have service agreements with Bango.net Ltd.
The agreements include restrictive covenants which apply during
employment and for a period of twelve months after termination.
Bango PLC Annual Report 2014
Independent auditor’s report to the members of Bango PLC 22
Independent auditor’s report to the
members of Bango PLC
Other matter
We have reported separately on the parent company financial
statements of Bango PLC for the year ended 31 December 2014.
Paul Naylor, Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
9 March 2015
We have audited the group financial statements of Bango PLC for the
year ended 31 December 2014 which comprise the consolidated
balance sheet, the consolidated statement of comprehensive
income, the consolidated cash flow statement, the consolidated
statement of changes in equity and the related notes. The financial
reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and auditors
As explained more fully in the Directors’ responsibilities statement
set out on pages 18 and 19, the Directors are responsible for the
preparation of the group financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit and
express an opinion on the group financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the group financial statements:
give a true and fair view of the state of the group's affairs as at
31 December 2014 and of its loss for the year then ended;
have been properly prepared in accordance with IFRSs as
adopted by the European Union;
have been prepared in accordance with the requirements of
the Companies Act 2006
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and
Directors' report for the financial year for which the group financial
statements are prepared is consistent with the group financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following under the
Companies Act 2006 we are required to report to you if, in our
opinion:
certain disclosures of Directors’ remuneration specified by law
are not made; or
we have not received all the information and explanations we
require for our audit.
Bango PLC Annual Report 2014
23 Consolidated balance sheet
Consolidated balance sheet
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Current assets
Trade and other receivables
Research and Development tax credits
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves attributable to equity holders of the parent company
Share capital
Share premium account
Merger reserve
Other reserve
Accumulated losses
Total equity
LIABILITIES
Current liabilities
Trade and other payables
Finance lease liabilities
Non-current liabilities
Finance lease liabilities
Total liabilities
Total equity and liabilities
31 Dec 2014
Note
£
31 Dec 2013
£
5
5
6
6
7
8
9
9
777,254
3,491,252
709,632
3,377,872
--------------------------------- ----------------------------------
4,268,506
4,087,504
1,109,816
236,028
6,253,487
---------------------------------
7,599,331
---------------------------------
11,867,837
====================== ======================
1,988,687
189,904
5,110,366
---------------------------------
7,288,957
---------------------------------
11,376,461
10,399,463
22,098,603
1,236,225
1,526,650
(25,461,538)
9,122,069
17,684,376
1,236,225
1,968,834
(21,149,056)
---------------------------------
9,799,403
----------------------------------
8,862,448
====================== =======================
1,478,293
296,817
2,086,485
147,246
---------------------------------
1,775,110
----------------------------------
2,233,731
293,324
280,282
---------------------------------
----------------------------------
293,324
280,282
2,068,434
2,514,013
---------------------------------
11,867,837
====================== =======================
----------------------------------
11,376,461
These financial statements were approved by the Directors on 9 March 2015 and are signed on their behalf by:
R Anderson
Director
G Tucker
Director
Company registration number 05386079
The notes on pages 27 to 44 are an integral part of these consolidated financial statements.
Bango PLC Annual Report 2014
Consolidated statement of comprehensive income 24
Consolidated statement of
comprehensive income
Note
31 Dec 2014
£
31 Dec 2013
£
Alternative performance measure (Non-IFRS)
End user spend
Turnover
Attributable to digital merchants
Cost of sales – payment providers
Gross profit
Other administrative expenses
Share based payments
Depreciation
Amortization
Total administrative expenses
Operating loss
Interest payable
Investment income
Loss before taxation
Income tax
Loss and total comprehensive loss for the financial year
Attributable to equity holders of the parent
Loss per share attributable to the equity holders of the parent
Basic loss per share
Diluted loss per share
All of the activities of the Group are classed as continuing.
4
4
4
4
10
10
5
5
11
14
11
15
16
16
25,167,767
15,551,220
5,093,952
(2,703,363)
--------------------------------
2,390,589
(1,051,928)
--------------------------------
1,338,661
(5,017,665)
(395,110)
(542,882)
(801,484)
--------------------------------
(6,757,141)
--------------------------------
(5,418,480)
8,788,454
(5,082,905)
--------------------------------
3,705,549
(1,637,202)
--------------------------------
2,068,347
(5,086,996)
(474,958)
(408,030)
(1,032,341)
--------------------------------
(7,002,325)
--------------------------------
(4,933,978)
(24,116)
26,610
--------------------------------
(5,415,986)
(31,304)
35,906
--------------------------------
(4,929,376)
266,210
--------------------------------
(5,149,776)
189,904
--------------------------------
(4,739,472)
====================== ======================
(4,739,472)
====================== ======================
(5,149,776)
(10.96)p
(10.53)p
(10.96)p
(10.53)p
The notes on pages 27 to 44 are an integral part of these consolidated financial statements
Bango PLC Annual Report 2014
25 Consolidated cash flow statement
Consolidated cash flow statement
Note
31 Dec 2014
£
31 Dec 2013
£
Net cash used by operating activities
17
(3,177,167)
(2,526,074)
Cash flows used by investing activities
Purchases of property, plant and equipment
Addition to intangible assets
Interest received
Net cash used by investing activities
Cash flows generated from financing activities
Proceeds from issuance of ordinary shares
Costs associated with issuance of ordinary shares
Interest payable
Capital payable on finance lease obligations
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange differences on cash and cash equivalents
Cash and cash equivalents at end of year
(108,980)
(914,864)
26,610
--------------------------------
(997,234)
(109,238)
(1,132,266)
35,906
--------------------------------
(1,205,598)
6,086,582
(394,961)
(24,116)
(338,911)
--------------------------------
5,328,594
6,977,478
(359,713)
(31,304)
(81,189)
--------------------------------
6,505,272
--------------------------------
1,154,193
--------------------------------
2,773,600
5,110,366
(11,072)
-----------------------------
5,099,294
-----------------------------
6,253,487
2,327,444
9,322
-----------------------------
2,336,766
-----------------------------
5,110,366
====================== ======================
The notes on pages 27 to 44 are an integral part of these consolidated financial statements
Bango PLC Annual Report 2014
Consolidated statement of changes in equity 26
Consolidated statement of changes
in equity
Group
Share
capital
£
Share
premium
account
£
Merger
reserve
Other
reserve
Retained
earnings
Total
£
£
£
£
Balance at 1 January 2013
Share based payments
Exercise of share options
Issue of shares
Transactions with owners
8,346,604
-
125,465
650,000
775,465
11,842,076
-
352,012
5,490,288
5,842,300
1,236,225
-
-
-
-
1,493,876
474,958
-
-
474,958
(16,409,584)
-
-
-
-
6,509,197
474,958
477,477
6,140,288
7,092,723
Loss for the year
Total comprehensive income
for the year
Balance at 31 December 2013
Balance at 1 January 2014
Share based payments
Share based payments transfer
for exercised share options
Exercise of share options
Issue of shares
Transactions with owners
Loss for the year
Total comprehensive income
for the year
Balance at 31 December 2014
-
-
-
-
(4,739,472)
(4,739,472)
-
9,122,069
-
17,684,376
-
1,236,225
-
1,968,834
(4,739,472)
(21,149,056)
(4,739,472)
8,862,448
9,122,069
-
17,684,376
-
1,236,225
-
1,968,834
395,110
(21,149,056)
-
8,862,448
395,110
-
27,394
1,250,000
1,277,394
-
59,188
4,355,039
4,414,227
-
-
-
-
-
-
-
(837,294)
-
-
(442,184)
837,294
-
-
837,294
-
86,582
5,605,039
6,086,731
-
(5,149,776)
(5,149,776)
-
10,399,463
-
22,098,603
-
1,236,225
-
1,526,650
(5,149,776)
(25,461,538)
(5,149,776)
9,799,403
The notes on pages 27 to 44 are an integral part of these consolidated financial statements.
Bango PLC Annual Report 2014
27 Notes to the financial statements
Notes to the financial statements
1 General information
Bango PLC (“the Company”) was incorporated on 8 March 2005 in
the United Kingdom. The Company is domiciled in the United
Kingdom. The address of the registered office of the Company,
which is also its principal place of business, is given on page 17. The
Company’s shares are listed on the Alternative Investment Market of
the London Stock Exchange ("AIM").
share for share exchange qualifies as a common control transaction
and falls outside of the scope of IFRS 3, Business Combinations.
No goodwill has been recorded and the difference between the
parent company's cost of investment and Bango.net Limited's share
capital and share premium is presented as a merger reserve within
equity on consolidation.
The financial statements for the year ended 31 December 2014
(including the comparatives for the year ended 31 December 2013)
were approved by the Board of Directors on 9 March 2015.
2 Basis of preparation
The consolidated financial statements have been prepared under the
historical cost convention and under the basis of going concern.
The consolidated financial statements incorporate the financial
statements of the Company and all entities controlled by it after
eliminating internal transactions. Control is achieved where the
Group has the power to govern the financial and operating policies of
a Group undertaking so as to obtain economic benefits from its
activities. Subsidiary undertakings’ results are adjusted, where
appropriate, to conform to group accounting policies.
Bango has prepared its Report and accounts for the year ended 31
December 2014, in accordance with International Financial
Reporting Standards (“IFRS”) as adopted in the European Union
and as applied in accordance with the provisions of the Companies
Act 2006. IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in
the process of applying the Group’s accounting policies. The areas
involving a high degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 3.19.
These financial statements are presented in pounds sterling (GBP)
because that is the presentation currency of Bango. Every entity
within the group has its own functional currency. The US subsidiary
performs a sales and support function for services provided by
Bango.net Limited. Due to the nature and set up of the US operation
as a support center for the UK, the functional currency of Bango Inc
has to date been considered to be sterling. Foreign operations are
included in accordance with the policies set out in notes 3.15.
For the purpose of the preparation of these consolidated financial
statements, the Group has applied all standards and interpretations
that are effective for accounting periods beginning on or after 1
January 2014. There was no impact on the presentation of financial
statements of Bango Plc other than in disclosure. No new standards,
amendments or interpretations to existing standards that have been
published and that are mandatory for the Group’s accounting
periods beginning on or after 1 January 2015, or later periods, have
been adopted early. The Directors do not believe that the adoption of
these standards and interpretations would have a material impact on
the Group’s financial statements.
The Group had cash of £6.3m at 31 December 2014 (31 December
2013: £5.1m) and financing debt of £0.6m (31 December 2013:
£0.4m). The cash flow forecasts of Bango anticipate increased cash
generation from trading operations as a result of our new deals with
app stores in the future. For this reason the going concern basis has
continued to be adopted in the preparation of the financial
statements.
3 Principal accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. As with the
application of other accounting policies the presentation of revenue
has remained consistent and aims to provide a detailed analysis of
the income and expenditure flows associated with end user activity
due to the significant judgement as to the role of Bango as principal
or agent in providing content to end users.
3.2 Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation. Residual values and useful economic
lives are assessed annually. Depreciation is provided to write off the
cost of all property, plant and equipment to its residual value on a
straight-line basis over its expected useful economic lives, which are
as follows:
Leasehold improvements 20% straight-line
Office equipment 20% straight-line
Computer equipment 10% - 33.3% straight-line
Property plant and equipment also include computer equipment
held under finance leases.
3.3 Intangible assets
Intangible assets are measured initially at historical cost and are
amortized on a straight-line basis over the expected useful economic
lives:
Domain names 33.3% straight-line
Internal development 20% straight-line
3.4 Research and development
Expenditure on research activities is recognized as an expense in the
period in which it is incurred. An internally-generated intangible
asset arising from Bango's development activities is recognized only
if all of the following conditions are met:
•
•
•
•
•
•
Completion of the intangible asset is technically feasible so
that it will be available for use or sale.
Bango intends to complete the intangible asset and use or
sell it.
Bango has the ability to use or sell the intangible asset.
The intangible asset will generate probable future
economic benefits. Among other things, this requires that
there is a market for the output from the intangible asset or
for the intangible asset itself, or, if it is to be used
internally, the asset will be used in generating such
benefits.
There are adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset.
The expenditure attributable to the intangible asset during
its development can be measured reliably.
3.1 Basis of consolidation
On 9 June 2005 Bango PLC acquired the entire issued share capital
of Bango.net Limited by way of a share for share exchange. As the
shareholders were the same before and after this transaction, the
Internally-generated intangible assets are amortized on a straight-line
basis over their useful economic lives. Where no internally-generated
intangible asset can be recognized, development expenditure is
recognized as an expense in the period in which it is incurred.
Bango PLC Annual Report 2014
Notes to the financial statements 28
Notes to the financial statements
The cost of an internally generated intangible asset comprises all
directly attributable costs necessary to create, produce and prepare
the intangible asset to be capable of operating in the manner
intended by management. Directly attributable costs comprise
employee salary and other employment costs incurred, on a time
apportioned basis, as well as a proportion of attributable overhead
costs. These costs are recognized as intangible assets. Development
costs previously recognized as an expense are not included in the
amount recognized as an asset. Until completion of the project,
these assets are subject to impairment testing only. Amortization
commences upon completion of the asset, and is shown within
administrative expenses in the statement of comprehensive income.
available to be carried forward as well as other income tax credits to
the Group are assessed for recognition as deferred tax assets.
However, deferred tax is not provided on the initial recognition of
goodwill, nor on the initial recognition of an asset or liability unless
the related transaction is a business combination or affects tax or
accounting profit. Deferred tax on temporary differences associated
with shares in subsidiaries and joint ventures is not provided if reversal
of these temporary differences can be controlled by the Group and it
is probable that reversal will not occur in the foreseeable future. In
addition, tax losses available to be carried forward as well as other
income tax credits to the Group are assessed for recognition as
deferred tax assets.
3.5 Impairment of property, plant and equipment and intangible
assets
At each balance sheet date, the Group reviews the carrying amounts
of its property, plant and equipment and individual intangible assets
for any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment
loss, if any. The recoverable amount is the higher of the fair value
less costs to sell and value in use. Until completion of the
development project, when amortization can be charged on the
intangible asset, the assets are subject to an annual impairment test.
3.6 Loans and receivables
a) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank
deposits available on demand, together with other short term highly
liquid investments.
b) Trade and other receivables
Trade and other receivables are recognized initially at fair value and
are measured subsequent to initial recognition at amortized cost
using the effective interest method, less provision for impairment.
Any change in their value through impairment or reversal of
impairment is recognized in profit or loss.
Provision against trade receivables is made when there is objective
evidence that the Group will not be able to collect all amounts due to
it in accordance with the original terms of those receivables. The
amount of the write-down is determined as the difference between
the asset's carrying amount and the present value of estimated
future cash flows discounted at the original effective interest rate.
3.7 Trade and other payables
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortized cost, using the effective
interest rate method.
3.8 Income taxes
Current income tax liabilities comprise those obligations to fiscal
authorities relating to the current or prior reporting period, that are
unpaid at the balance sheet date. They are calculated according to
the tax rates and tax laws applicable to the fiscal periods to which
they relate, based on the taxable profit for the year. All changes to
current tax assets or liabilities are recognized as a component of tax
expense in the income statement, except where it relates to items
recognized outside profit or loss. Tax relating to items recognized in
other comprehensive income is recognized in other comprehensive
income, and tax relating to items recognized directly in equity is
recognized directly in equity.
Deferred income taxes are calculated using the liability method on
temporary differences. This involves the comparison of the carrying
amounts of assets and liabilities in the consolidated financial
statements with their respective tax bases. In addition, tax losses
Deferred tax liabilities are always provided for in full. Deferred tax
assets are recognized to the extent that it is probable that the
underlying deductible temporary differences will be able to be offset
against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply
to their respective period of realization, provided they are enacted or
substantively enacted at the balance sheet date.
Deferred tax is recognized as a component of tax expense in the
income statement, except where it relates to items charged or credited
directly to other comprehensive income, when it is recognized in other
comprehensive income. Deferred tax relating to items recognized
directly in equity is recognized directly in equity.
3.9 Operating lease agreements
Rentals applicable to operating leases where the risks and rewards of
ownership are not transferred are charged to profit or loss net of any
incentives received from the lessor on a straight-line basis over the
period of the lease.
3.10 Finance lease agreements
Assets held by the group under leases which transfer to the Group
substantially all of the risks and rewards of ownership are classified as
finance leases. On initial recognition, the leased asset is measured at
an amount equal to the lower of its fair value and the present value of
minimum lease payments.
Minimum lease payments made under finance leases are apportioned
between the financial expense and the reduction of the outstanding
liability. The finance expense is allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
3.11 Revenue recognition
Revenue is measured by reference to the fair value of consideration
receivable by Bango for services provided, excluding VAT.
3.11.1 End user activity
End user activity arises from the provision of mobile internet content to
end users facilitated through mobile network operators and other
payment providers. Some end users make a prepayment to Bango
prior to accessing chargeable mobile internet content.
Revenue is recognized as turnover at the time at which end users
access chargeable mobile internet content.
Where there has been no activity on an end user account for a period
of 60 days, the balance remaining is released as turnover, in
accordance with the end user terms and conditions.
3.11.2 Judgements on end user activity
When applying the revenue recognition policy consideration is given to
whether Bango acts as principal or agent in providing content to the
end user.
Bango PLC Annual Report 2014
29 Notes to the financial statements
Notes to the financial statements
The nature of Bango's business is that it facilitates a large volume
of transactions in which content developed by a range of digital
merchants is delivered to end users, payment for which is made
via a number of potential payment routes.
The assessment as to whether Bango is principal or agent in the
supply of content to an end user is highly judgemental and in most
cases, gives rise to mixed indicators under IAS 18. This is because
the terms and conditions between the numerous transacting
parties vary significantly, giving rise to many dissimilar
configurations of risk and rewards attributable to Bango.
Risks and rewards typically include, to varying degrees, digital
merchant rate card price variance; payment provider refund risk;
end user credit risk; foreign currency exposure and dormant
balance returns.
In view of the volume and variety of transactions in question,
management disclose in the turnover figure a blend of end user
activity as both agent and principal, depending on the substance
of the underlying contracts. Where Bango is principal the gross
value of the transaction is shown, with the associated amounts
due to digital merchants and payment providers separately
detailed. Under the agency relationships only the margin is
reported in the turnover figure, therefore there are no associated
costs displayed.
Management do not consider accounting as either principal or
agent for all transactions faithfully presents Bango's role in these
transactions. Presentation simply as agent would not adequately
communicate the exposure to the risks and rewards associated
with all transactions. Conversely, if Bango presented itself as
principal, this may overstate the risks and rewards to which Bango
is exposed. If Bango were entirely principal, revenue would be
turnover, if Bango were entirely agent, revenue would be the net
amount.
3.11.3 Platform fees
Platform fees includes revenue from services provided to mobile
phone operators and digital merchants and is recognized in the
financial statements over the period of the contract in proportion to
the element of the services provided at the balance sheet date.
3.14 Share-based payment transactions
Bango issues equity settled share-based compensation to certain
employees (including Directors). Equity settled share based
payments are measured at fair value at the date of grant. The fair
value determined at the grant date of the equity-settled share-
based payment is expensed on a straight-line basis over the
vesting period, together with a corresponding increase in equity,
based upon the Bango’s estimate of the shares that will eventually
vest. These estimates are subsequently revised if there is any
indication that the number of options expected to vest differs from
previous estimates. Any cumulative adjustment prior to vesting is
recognized in the current period. No adjustment is made to any
expense recognized in prior periods.
Fair value is measured by an external valuer using the Black-
Scholes option pricing model. The expected life used in the model
has been adjusted, based on management’s best estimate, for the
effects of non-transferability, exercise restrictions and behavioral
considerations. No adjustment is made for performance conditions
as these do not form a condition of the option agreement.
If the terms of an equity-settled transaction were to be modified,
as a minimum an expense is recognized as if the terms had not
been modified. In addition, an expense would be recognized for
any increase in the value of the transaction as a result of the
modification, as measured by the date of modification, over the
remaining vesting period.
Where an equity-settled transaction is cancelled, it is treated as if
it had vested on the due date of the cancellation, and any expense
not yet recognized for the transaction is recognized immediately.
However, if a new transaction is substituted for the cancelled
transaction, and designated as a replacement transaction on the
date that it is granted, the cancelled and new transactions are
treated as if they were a modification of the original transaction, as
described in the previous paragraph. Once exercised, the share
based payment expense previously recognised is transferred from
Other reserves to Retained earnings.
Share-based payment transactions are shown separately in the
statement of comprehensive income. Additional information is
provided in note 7.
Platform fees include revenue from service contracts and are
recognized in the financial statements over the contract period.
Platform fees also include revenue from the sale of access
licences to digital merchants and are recognized evenly over the
period of the contract since the services are provided evenly over
this period.
3.15 Foreign currencies
Monetary assets and liabilities in foreign currencies are translated
into sterling at the rates of exchange prevailing at the balance
sheet date. Transactions in foreign currencies are translated into
sterling at the rate of exchange prevailing at the date of the
transaction. Exchange gains and losses are included in the profit
or loss for the period.
3.12 End user spend
In order to assist users of the financial statements, end user spend
in the year is being reported. This is reported in the consolidated
statement of comprehensive income, because end user spend is
the key performance indicator that management use to monitor
transactions. The end user spend represents the gross end user
activity through the Bango system, excluding VAT and is the key
measurement for transactions processed by Bango in a year.
3.13 Employee benefits
All accumulating employee-compensated absences that are
unused at the balance sheet date are recognized as a liability.
Payments to defined contribution retirement benefit schemes are
charged as an expense in the period to which they relate.
3.16 Segment reporting
In identifying Bango operating segments the chief operating
decision maker reviews two service lines. These are the provision
of a mobile payment platform allowing end users to purchase
content, and the provision of services to digital merchants and
other organisations. The turnover and margin generated from each
of these segments is separately reported but where costs and
assets are managed and utilized on a group basis, these are not
allocated to a segment.
3.17 Financial instruments
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest
in the assets of the entity after deducting all of its financial
liabilities.
Bango PLC Annual Report 2014
Notes to the financial statements
Notes to the financial statements 30
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the balance
sheet. Finance costs and gains or losses relating to financial
liabilities are included in profit or loss. Finance costs are
calculated so as to produce a constant rate of return on the
outstanding liability.
Where the contractual terms of share capital do not have any
terms meeting the definition of a financial liability then this is
classed as an equity instrument.
Dividends and distributions relating to equity instruments are
debited direct to equity. Interest income and expenses are
reported on an accrual basis using the effective interest method.
3.18 Share capital and reserves
Share capital
Ordinary shares are classified as equity. Equity instruments issued
by Bango Plc are recorded at the proceeds received, net of direct
issue costs.
Share premium
Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue.
Merger reserve
The merger reserve represents the difference between the parent
company's cost of investment and a subsidiary’s share capital and
share premium where a group reorganisation qualifies as a
common control transaction.
Other reserve
The other reserve represents equity-settled share-based employee
remuneration recognized over the vesting period.
Retained earnings
Retained earnings include all current and prior period retained
profits.
3.19 Significant accounting estimates and judgements
Revenue recognition
As discussed in policy note 3.11 there are a number of key
judgements taken by management in determining the most
appropriate presentation of revenues generated from services to
end users. Income has been reported gross with the separate
disclosure of amounts attributable to digital merchants. As set out
in 3.11.2, due to the variety and complexity of transactions,
presentation of revenue as simply principal or agent does not
adequately communicate the role of Bango in the transactions.
Deferred tax
A deferred tax asset is recognized where Bango considers it
probable that a tax credit will be received in the future. This
specifically applies to tax losses and to outstanding vested share
options at the balance sheet date. No deferred tax asset is
currently being recognized due to the unpredictability of future
taxable trading profits from which these differences may be
deducted (note 15).
Finance leases
Judgement is applied when considering the substance of a lease
agreement and whether it should be recognised as either a
finance lease or an operating lease. Management use the following
criteria in reviewing the contract to determine the classification;
rights to the asset at the end of the lease term, the present value
of the minimum lease payments in relation to the asset’s fair value,
length of the lease term in relation to the useful economic life of
the asset and the obligations to insure and maintain the asset.
During the year the group entered into a computer equipment
lease that it has deemed to be a finance lease based on the
assessment of the key criteria. The carrying value of finance leases
is £590,141 (2013: £427,528).
Development costs
Judgement is applied when deciding whether the recognition
requirements for development costs have been met. Judgements
are based on the information available at each balance sheet date.
Economic success of any product development is uncertain at the
time of recognition as it may be subject to future technical
problems and therefore impairment reviews are completed by
project each balance sheet date. The carrying value of capitalized
development costs is £3,491,252 (2013: £3,377,872).
No impairment is recognized based on current estimates of future
revenue streams expected to be derived from the development
work that has been capitalized. Development costs had been
derecognized in the prior year relating to a specific project
because no future economic benefits were expected from its use
beyond 2014.
3.20 Standards and interpretations not yet applied by the
Group
The following new Standards and Interpretations, which are yet to
become mandatory, have not been applied in the Bango’s
financial statements.
IFRS 9 Financial Instruments (IASB effective date 1 January
2018).
IFRS 15 Revenue from Contracts with Customers (effective 1
January 2017).
Clarification of Acceptable Methods of Depreciation and
Amortisation – amendments to IAS 16 and IAS 38 (IASV effective
date 1 January 2016).
Amendments to IAS 27 Equity Method in Separate Financial
Statements (effective 1 January 2016).
All standards and interpretations are not expected to have any
significant impact on the financial statements when applied,
except for additional disclosures when the relevant standard
comes into effect.
3.21 Related party transactions
Bango’s related parties include its Directors and key management
personnel. Unless otherwise stated, none of the transactions
incorporate special terms and conditions and no guarantees were
given or received. Outstanding balances are usually settled in
cash.
The only transactions with Directors are noted in the Directors
remuneration note in the accounts, see note 13. There was
minimal trading in the year with Psonar Ltd whose board includes
some of the Directors of Bango PLC.
Bango PLC Annual Report 2014
31 Notes to the financial statements
Notes to the financial statements
4 Segment reporting
(a) End user spend
Bango has identified end user spend as a non IFRS alternative performance measure as its key performance indicator on which all
management decisions surrounding investment in the platform and development of intangible assets are based. Due to the complex contracts
in place the turnover figure in the accounts is a mixture of gross transaction value where Bango is principal and margin only where Bango is
the agent. This is to comply with relevant accounting rules, however, the key business decisions are based on the total value and volume of
transactions that Bango has processed in each month through its payment platform. Therefore, to give additional information to key
stakeholders of our accounts, we have included this additional reporting in order to assist users of our financial statements.
End user spend
Analyzed as agency
Analyzed as principal
Analyzed as agency
Analyzed as principal
31 Dec 2014
31 Dec 2013
£
£
25,167,767
15,551,220
=====================
=====================
21,127,273
4,040,494
8,553,171
6,998,049
84%
16%
55%
45%
(b) Turnover and gross profit
Bango, based on the information reviewed by the chief operating decision maker, identifies two operating segments. Management reporting is
based principally on the type of customer and strategic decisions are made on the basis of the gross profit generated from each segment. The
segments are not separately managed and therefore Bango’s headquarters and its research and development activity are considered group
operations and are not allocated to any operating segment. Segment information can be analyzed as follows for the reporting periods under
review.
End user
activity
Platform
fees
Group
Total
£
£
£
£
4,358,107
(2,703,363)
(1,051,928)
-------------------------------
602,816
-------------------------------
-
-
-
-
-
-
-------------------------------
602,816
5,093,952
(2,703,363)
(1,051,928)
-------------------------------
1,338,661
-------------------------------
(5,017,665)
(395,110)
(542,882)
(801,484)
(24,116)
26,610
-------------------------------
(5,415,986)
======================= ======================= ======================= =======================
735,845
-
-
-------------------------------
735,845
-------------------------------
-
-
-
-
-
-
-------------------------------
735,845
-
-
-
-------------------------------
-
-------------------------------
(5,017,665)
(395,110)
(542,882)
(801,484)
(24,116)
26,610
-------------------------------
(6,754,647)
598,344
156,756
11,112,737
11,867,837
(1,166,615)
---------------------------------
(568,271)
(2,068,434)
----------------------------------
9,799,403
======================= ======================= ======================= =======================
(901,819)
---------------------------------- -----------------------------------
10,210,918
156,756
-
12 months to 31 December 2014
Segment turnover
Attributable to digital merchants
Cost of sales – payment providers
Segment gross profit
Administrative expenses
Share based payments charge
Depreciation
Amortization
Interest payable
Interest income
Segment net profit/ (loss)
Segment assets
Segment liabilities
Net assets
Bango PLC Annual Report 2014
Notes to the financial statements 32
Notes to the financial statements
12 months to 31 December 2013
End user
activity
Platform
fees
Group
Total
£
£
£
£
Segment turnover
Attributable to digital merchants
Cost of sales – payment providers
Segment gross profit
Administrative expenses
Share based payments charge
Depreciation
Amortization
Interest payable
Interest income
Segment net profit/ (loss)
Segment assets
Segment liabilities
Net assets
7,074,780
(5,082,905)
(1,637,202)
-------------------------------
354,673
-------------------------------
-
-
-
-
-
-
-------------------------------
354,673
8,788,454
(5,082,905)
(1,637,202)
-------------------------------
2,068,347
-------------------------------
(5,086,996)
(474,958)
(408,030)
(1,032,341)
(31,304)
35,906
-------------------------------
(4,929,376)
======================= ======================= ======================= =======================
-
-
-
-------------------------------
-
-------------------------------
(5,086,996)
(474,958)
(408,030)
(1,032,341)
(31,304)
35,906
-------------------------------
(6,997,723)
1,713,674
-
-
-------------------------------
1,713,674
-------------------------------
-
-
-
-
-
-
-------------------------------
1,713,674
1,385,711
44,922
9,945,828
11,376,461
(1,086,442)
---------------------------------
299,269
(2,514,013)
----------------------------------
8,862,448
======================= ======================= ======================= =======================
(1,427,571)
---------------------------------- -----------------------------------
8,518,257
44,922
-
Included within the end user segment turnover is £3.94m (31 December 2013 £6.33m) relating to a major strategic partner, and included
within platform fees there was £0.34m (31 December 2013 £0.81m) relating to one strategic partner.
End user activity is the content access fees paid by end users for accessing chargeable content provided by digital merchants, adjusted to
take account of whether Bango is agent or principal in the transactions. Gross profit for this segment is after both digital merchant and
payment provider charges. Assets for this segment are amounts due from payment providers. Liabilities for this segment are mainly fees
payable to payment providers for provision of services and fees payable to digital merchants for provision of content sold by Bango to end
users.
Platform fees are the amounts paid to Bango by digital merchants and others for package fees and other services including analytics and
operator connections. Assets for this segment are amounts due for package fees and other services. Liabilities for this segment represent
deferred income for package fees. Group assets include non-current assets and cash and cash equivalents. Group liabilities relate to
administrative expenses.
Non-current assets are based in the UK, except for £0.05m of property, plant and equipment held at the New York office and data centre.
(c) Geographical analysis
Bango’s turnover from external customers is divided into the following geographical areas.
United Kingdom (country of domicile)
EU
USA and Canada
Rest of World
31 Dec 2014
31 Dec 2013
£
£
501,050
335,025
1,873,752
2,384,125
1,459,475
528,314
3,867,595
2,933,070
-------------------------------------------------------------
5,093,952
=====================
-------------------------------------------------------------
8,788,454
=====================
Segment turnover is based on the location of the customers, of which in platform fees £0.34m (31 December 2013 £0.81m) came from a
strategic partner based in the USA and Canada. All turnover from end users is spread over many territories.
Bango PLC Annual Report 2014
33 Notes to the financial statements
Notes to the financial statements
5 Non-current assets
5.1 Property, plant and equipment
Cost
At 1 January 2013
Additions
At 31 December 2013
Depreciation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 31 December 2013
Cost
At 1 January 2014
Additions
Disposals in the year
At 31 December 2014
Depreciation
At 1 January 2014
Charge for the year
Disposals in the year
At 31 December 2014
Net book value
At 31 December 2014
Leasehold
improvements
£
Office
equipment
£
Computer
equipment
£
Total
£
190,922
6,733
-------------------------------
197,655
=========================
182,851
3,185
------------------------------
186,036
==========================
114,657
24,227
-----------------------------
138,884
=========================
85,519
11,369
-----------------------------
96,888
=========================
1,666,022
448,040
----------------------------------
2,114,062
=============================
1,064,569
393,476
----------------------------------
1,458,045
==============================
1,971,601
479,000
-----------------------------------------
2,450,601
===================================
1,332,939
408,030
---------------------------------
1,740,969
=============================
11,619
======================
41,996
========================
656,017
=============================
709,632
=============================
Leasehold
improvements
£
Office
equipment
£
Computer
equipment
£
Total
£
197,655
39,333
-
-------------------------------
236,988
=========================
186,036
9,908
------------------------------
195,944
==========================
138,884
9,198
-
-----------------------------
148,082
=========================
96,888
13,589
-----------------------------
110,477
=========================
2,114,062
561,973
(1,012,208)
----------------------------------
1,663,827
=============================
1,458,045
519,385
(1,012,208)
----------------------------------
965,222
==============================
2,450,601
610,504
(1,012,208)
-----------------------------------------
2,048,897
===================================
1,740,969
542,882
(1,012,208)
---------------------------------
1,271,643
=============================
41,044
======================
37,605
========================
698,605
=============================
777,254
=============================
Included in property, plant and equipment at year end were £483,934 of assets held under finance leases (31 December 2013: £305,226).
Depreciation is shown within administrative expenses in the income statement. Financial lease liabilities are secured on the assets to which
they relate.
Bango PLC Annual Report 2014
Notes to the financial statements
Notes to the financial statements 34
5.2 Intangible assets
Cost
At 1 January 2013
Additions
Derecognition of intangible assets
At 31 December 2013
Amortization
At 1 January 2013
Charge for the year
Derecognition of intangible assets
At 31 December 2013
Net book value
At 31 December 2013
Cost
At 1 January 2014
Additions
At 31 December 2014
Amortization
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 31 December 2014
Domain Names
£
32,887
-
-
---------------------------
32,887
========================
32,887
-
-
----------------------------
32,887
=========================
Internal
Development
£
Total
£
4,270,791
1,132,266
(994,985)
----------------------------------------
4,408,072
=====================================
992,844
1,032,341
(994,985)
---------------------------------
1,030,200
==============================
4,303,678
1,132,266
(994,985)
-----------------------------------------
4,440,959
=====================================
1,025,731
1,032,341
(994,985)
---------------------------------
1,063,087
==============================
-
=========================
3,377,872
======================================
3,377,872
=====================================
Domain Names
£
32,887
-
---------------------------
32,887
========================
32,887
-
----------------------------
32,887
=========================
Internal
Development
£
Total
£
4,408,072
914,864
----------------------------------------
5,322,936
=====================================
1,030,200
801,484
---------------------------------
1,831,684
==============================
4,440,959
914,864
-----------------------------------------
5,355,823
=====================================
1,063,087
801,484
---------------------------------
1,864,571
==============================
-
=========================
3,491,252
======================================
3,491,252
=====================================
Amortization is shown within administrative expenses in the income statement. The company regularly reviews its intangible assets to ensure
that they are not impaired through periodic impairment testing in line with IAS 36. Assets are reviewed in relation to the revenue that will be
generated from them as a discreet product. They are therefore separately assessed for signs of impairment.
In the prior year Bango accelerated amortization and derecognized some older intangible assets that related to specific developments to the
Bango payment platform for customers that were not expected to contribute to revenue significantly beyond 2014.
Bango PLC Annual Report 2014
35 Notes to the financial statements
Notes to the financial statements
6 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
Impairment of trade receivables
Research and development tax credits
Total
31 Dec 2014
£
31 Dec 2013
£
1,135,949
(26,133)
545,796
85,482
504,671
767,170
180,250
1,054,287
------------------------------------ ------------------------------------
2,001,707
(13,020)
------------------------------------ ------------------------------------
1,988,687
189,904
------------------------------------ ------------------------------------
2,178,591
======================== ========================
1,109,816
236,028
1,345,844
At 31 December 2014, some of the unimpaired trade receivables are past their due date. The age of financial assets past due but not
impaired is as follows:
Not more than one month
One to two months
Three to twelve months
More than twelve months
31 Dec 2014
£
31 Dec 2013
£
54,481
20,058
25,106
-
------------------
99,645
=============
46,963
88,794
25,389
-
------------------
161,146
=============
Trade and other receivables are usually due within 30-60 days and do not bear any effective interest rate. All trade receivables are subject to
credit risk exposure.
Trade receivables from digital merchants consist of numerous accounts with no significant individual balances. Provision for impairment has
been made where the debt is not considered likely to be recoverable.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair
value. There is no material difference between fair value and book value.
A reconciliation of bad debt provision for trade receivables is provided below:
31 Dec 2014
31 Dec 2013
£
£
13,020
(7,887)
21,000
------------------
26,133
============
53,440
(82,420)
42,000
------------------
13,020
============
Brought forward provision
Debts written off in the year
Increase in provision
Carry forward provision
Bango PLC Annual Report 2014
Notes to the financial statements
Notes to the financial statements 36
7 Share capital and employee share options
Allotted, called up and fully paid:
Ordinary shares of 20p each in Bango PLC
As at 31 December 2012
Issue of new shares
Exercise of share options
As at 31 December 2013
Issue of new shares
Exercise of share options
As at 31 December 2014
No
£
41,733,017
8,346,604
3,250,000
627,326
-------------------------
45,610,343
-------------------------
6,250,000
136,973
-------------------------
51,997,316
=================
650,000
125,465
-----------------------
9,122,069
-----------------------
1,250,000
27,394
-----------------------
10,399,463
================
During the year 136,973 share options were exercised at exercise prices between 23 pence and 167.0 pence and a par value of 20 pence
per share. The total proceeds were £86,582 of which £27,394 was recognized as share capital and £59,188 as share premium.
In October 2014 Bango PLC issued 6,250,000 ordinary shares of 20 pence each at market price of 96 pence per share with existing investors
raising £6.0m gross and £5.6m net of expenses of £0.4m.
The Group issues share options to Directors and to employees under either an HM Revenue and Customs approved Enterprise Management
Incentive (EMI) scheme or an unapproved scheme. Employees resident overseas are eligible to participate in the scheme but their options do
not qualify as HM Revenue and Customs approved.
The grant price for share options is equal to the average quoted market price of the company shares on the date of grant. Options vest evenly
over a period of one to three years following grant date. The options lapse if share options remain unexercised after a period of ten years from
the date of grant or if the employee leaves the Group.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
Outstanding at 1 January 2014
Granted
Lapsed
Exercised
Outstanding at 31 December 2014
Exercisable at 31 December 2014
Average
exercise price
per share
p
132
118
161
63
-----------------------------------
130
=======================
124
=======================
31 Dec 2014
Options
No
2,844,996
893,000
(162,239)
(136,973)
-----------------------------------
3,438,784
=======================
2,085,701
=======================
Average
exercise price
per share
p
82
184
145
76
-----------------------------------
132
=======================
105
=======================
31 Dec 2013
Options
No
2,745,361
930,875
(203,914)
(627,326)
-----------------------------------
2,844,996
=======================
1,630,154
=======================
The weighted average share price at date of exercise of options exercised during the year was 148.14 pence (2013: 181.14 pence).
The fair value of options granted during the year, determined using the Black-Scholes valuation model, were between 44 – 63 pence.
Significant inputs into the model include a weighted average share price of 120.6 pence (31 December 2013: 186.05 pence) at the grant
date, the exercise prices, volatility of 48.5% (31 December 2013: 52.46-54.87%), dividend yield of nil (31 December 2013: nil), an expected
option life of five years (31 December 2013: five years) and an annual risk-free interest rate of 1.51-1.87% (31 December 2013: 0.75-
1.60%).
For the most recent share awards there was sufficient share price data for Bango PLC to calculate the company's volatility, which is based on
five years historical, compounded daily share price variances.
Bango PLC Annual Report 2014
37 Notes to the financial statements
Notes to the financial statements
At 31 December 2014, Bango PLC had the following outstanding options and exercise prices:
Average
exercise
price per share
Options
31 Dec 2014
Remaining
Contractual
Life
Average
exercise
price per share
Options
31 Dec 2013
Remaining
Contractual
Life
Pence
Number
Months
Pence
Number
Months
50.00
28.75
50.00
202.00
177.50
140.00
106.50
50.50
41.00
23.00
53.50
44.00
44.50
59.50
167.00
153.00
82.50
82.00
76.50
68.50
142.50
187.50
166.50
218.00
232.50
218.50
180.00
126.00
136.00
101.00
76,000
35,000
14,000
58,000
27,000
158,250
24,250
104,250
108,500
56,417
55,250
58,000
57,145
79,547
84,060
100,000
55,135
96,960
20,000
20,000
120,322
7,000
194,823
100,000
417,500
10,000
50,000
374,875
426,500
450,000
------------------------------
3,438,784
====================
2
2
8
9
14
17
21
27
33
39
46
50
58
63
79
74
75
81
81
84
87
92
93
95
99
100
102
106
112
118
82
=====
50.00
28.75
50.00
202.00
177.50
140.00
106.50
50.50
41.00
23.00
53.50
44.00
44.50
59.50
167.00
153.00
82.50
82.00
76.50
68.50
142.50
187.50
166.50
218.00
232.50
218.50
180.00
126.00
-
-
76,000
67,500
14,000
74,000
30,000
158,250
26,000
107,000
110,250
59,917
58,750
62,500
67,029
84,212
106,100
100,000
106,945
132,705
20,000
20,000
132,650
7,000
214,313
100,000
448,000
10,000
50,000
401,875
-
-
------------------------------
2,844,996
====================
14
14
20
21
26
29
33
39
45
51
58
62
70
75
81
86
87
93
93
96
99
104
105
107
111
112
114
118
-
-
82
=====
Expiry date
18 February
27 February
28 August
21 September
1 March
25 May
9 October
23 March
19 September
31 January
15 October
19 February
1 October
17 March
24 September
7 February
17 March
9 September
27 September
8 December
23 March
13 August
20 September
06 November
26 March
02 April
27 June
04 October
01 April
22 October
2015
2015
2015
2015
2016
2016
2016
2017
2017
2018
2018
2019
2019
2020
2020
2021
2021
2021
2021
2021
2022
2022
2022
2022
2023
2023
2023
2023
2024
2024
At 31 December
Bango PLC Annual Report 2014
Notes to the financial statements
Notes to the financial statements 38
8 Trade and other payables
Trade payables
Social security and other taxes
Accruals and deferred income
31 Dec 2014
£
31 Dec 2013
£
1,199,114
104,311
174,868
------------------------------
1,478,293
1,799,148
129,539
157,798
------------------------------
2,086,485
===================== =====================
Trade and other payables are due within one year and are non-interest bearing. There is no material difference between book value and fair
value.
9 Commitments
Bango leases two offices and some small office equipment under non-cancellable operating leases for which the future aggregate minimum
lease payments are as follows:
No later than 1 year
Later than 1 but no later than 5 years
More than 5 years
31 Dec 2014
£
31 Dec 2013
£
204,015
469,485
-
------------------
673,500
=============
69,700
128,624
-
------------------
198,324
=============
The UK lease has been renewed in the year and expires on 17 November 2023 and the US office lease expires on 30 September 2016.
During the year Bango entered into an additional finance lease to buy certain technical computer equipment as part of the on-going upgrades
to the Bango technology to cope with growth in the group, the lease will terminate in February 2017. The lease agreement includes fixed non-
cancellable lease payments, and does not contain any further restrictions. Finance lease liabilities are secured by the related assets held
under finance lease.
Gross lease liabilities
Within one year
Between two and five years
Future interest
The present value of finance lease liabilities is repayable as follows:
Within one year
Between two and five years
31 Dec 2014
£
31 Dec 2013
£
312,500
301,455
------------------
613,955
------------------
(23,814)
------------------
590,141
=============
167,609
300,025
------------------
467,634
------------------
(40,106)
------------------
427,528
=============
31 Dec 2014
£
31 Dec 2013
£
296,817
293,324
------------------
590,141
=============
147,246
280,282
------------------
427,528
=============
Bango PLC Annual Report 2014
39 Notes to the financial statements
Notes to the financial statements
10 Expenses by nature
Employee benefit expense
Depreciation & amortization
Other expenses
Analyzed as:
Administrative expenses
Share based payments
Depreciation
Amortization
11 Profit or loss before taxation
Profit or loss before taxation is stated after charging:
Auditor's remuneration:
Fees payable to the Company’s auditor for the audit of the financial statements
Fees payable to the Group’s auditors for other services: audit of Group’s subsidiaries
Other services relating to taxation compliance services
Other services relating to taxation advisory services
Operating lease expenses:
Land and buildings
Finance lease charges in year
Exchange rate variances
Depreciation on property, plant and equipment – lease assets
Depreciation on property, plant and equipment – owned assets
Amortization of intangible assets
Research and development costs
31 Dec 2014
£
31 Dec 2013
£
3,394,158
1,344,366
2,018,617
----------------------
6,757,141
===============
5,017,665
395,110
542,882
801,484
----------------------
6,757,141
===============
3,233,380
1,440,371
2,328,574
----------------------
7,002,325
===============
5,086,996
474,958
408,030
1,032,341
----------------------
7,002,325
===============
31 Dec 2014
£
31 Dec 2013
£
3,000
37,000
6,335
5,390
3,000
36,000
12,810
15,205
264,494
261,690
24,116
31,304
(129,750)
123,150
322,816
220,066
801,484
153,110
181,554
226,476
1,032,341
154,018
====================== ========================
Bango PLC Annual Report 2014
Notes to the financial statements 40
Notes to the financial statements
12 Employee benefit expense
The average number of staff employed by Bango during the financial year amounted to:
Administrative staff
Marketing staff
Sales staff
Technical staff
Executive Directors
Support staff
The aggregate payroll costs of the above were:
Wages and salaries
Social security costs
Other pension costs
Share based remuneration
31 Dec 2014
No
31 Dec 2013
No
7
6
3
23
3
24
--------
66
======
6
5
3
22
3
22
--------
61
======
31 Dec 2014
£
31 Dec 2013
£
3,200,242
401,834
66,028
395,110
-----------------------
4,063,214
================
3,063,109
410,673
68,363
474,958
-----------------------
4,017,103
================
Included in the above payroll costs is £669,056 (31 December 2013: £783,723) capitalized within internal development (note 5.2).
The Directors have identified 9 (31 December 2013: ten) key management personnel, including Directors. Compensation to key management
is set out below:
Short term employee benefits
Employers national insurance
Post employment benefits
Share based compensation
13 Directors
Remuneration in respect of Directors was as follows:
Emoluments
31 December 2014
R Anderson
A Malhotra
G Tucker
M Rigby
R Burger
D Sear
31 Dec 2014
£
1,005,654
127,984
18,987
162,734
------------------
1,315,359
=============
31 Dec 2013
£
1,067,996
137,078
19,905
194,568
------------------
1,419,547
============
31 Dec 2014
£
31 Dec 2013
£
493,420
============
Wages and
salaries
Pension and other
benefits
£
150,000
138,800
129,800
15,750
15,750
42,000
-----------------
492,100
========
£
-
1,320
-
-
-
-
------------
1,320
======
540,798
============
Total
£
150,000
140,120
129,800
15,750
15,750
42,000
-----------------
493,420
========
Bango PLC Annual Report 2014
41 Notes to the financial statements
Notes to the financial statements
31 December 2013
R Anderson
A Malhotra
G Tucker
M Rigby
R Burger
D Sear
Wages and
salaries
Pension and other
benefits
£
175,000
161,178
129,800
15,750
15,750
42,000
-----------------
539,478
========
£
-
1,320
-
-
-
-
------------
1,320
======
Total
£
175,000
162,498
129,800
15,750
15,750
42,000
-----------------
540,798
========
The highest paid Director received total salary of £150,000 (31 December 2013: £175,000), pension contributions of £nil (31 December
2013: £nil), and share based compensation of £nil (31 December 2013: £nil).
The number of Directors who accrued benefits under pension schemes was one (31 December 2013: one).
The total share based compensation for Directors was £41,803 (31 December 2013: £98,079).
For details of Directors options please see the Directors and their interest section of the Directors’ report.
14 Investment income
Bank interest receivable
15 Taxation
Income tax
R&D tax credits receivable
Under provision of prior year credit
Income tax expense for the year differs from the standard rate of taxation as follows:
Loss on ordinary activities before taxation
Loss on ordinary activities multiplied by standard rate of tax of 21.49% (31 December 2013:
23.25%)
Effect of:
Expenses not deductible for tax purposes
Differences between capital allowances and depreciation
Unutilized tax losses
Additional deductions for R&D expenditure
Surrender of tax losses for R&D
Short term timing differences
Adjustments in relation to prior years
Total tax
31 Dec 2014
£
(26,610)
31 Dec 2013
£
(35,906)
======================= =======================
31 Dec 2014
£
(236,028)
(30,182)
------------------------------
(266,210)
31 Dec 2013
£
(189,904)
-
------------------------------
(189,904)
============== ===============
(5,415,986)
(4,929,376)
======================= =======================
(1,163,895)
(1,146,080)
100,092
(17,835)
911,162
(208,858)
127,149
16,157
(30,182)
------------------------------
(266,210)
144,837
(49,809)
871,352
(222,960)
211,425
1,331
-
------------------------------
(189,904)
======================= =======================
At 31 December 2014 the unutilized tax losses carried forward amounted to £23.6 million (at 31 December 2013: £19.4 million).
Bango PLC Annual Report 2014
Notes to the financial statements
Notes to the financial statements 42
Deferred tax assets/ (liabilities):
Share option deduction
Tax losses
Other temporary differences
Accelerated capital allowances and capitalised
development costs
Provided
Provided
31 Dec 2014 31 Dec 2013
£
£
Unprovided
31 Dec 2014
£
Unprovided
31 Dec 2013
£
-
475,778
-
-
920,828
-
105,920
4,713,804
-
177,106
2,949,325
800
(475,778)
------------------------------
-
-
------------------------------ ------------------------------
3,127,231
============== =============== ============== ===============
(920,828)
------------------------------
-
4,819,724
-
All unrecognized deferred tax balances relate to the UK and are expected to offset. No deferred tax asset has been recognized in respect of
the above temporary differences due to the unpredictability of future taxable trading profits from which these differences may be deducted.
16 Loss per share
(a) Basic
Basic earnings per share are calculated by dividing the loss attributable to equity holders of Bango PLC by the weighted average number of
ordinary shares in issue during the year.
Loss attributable to equity holders of Bango PLC
Weighted average number of ordinary shares in issue
Earnings (basic) per share
31 Dec 2014
£
31 Dec 2013
£
(5,149,776)
(4,739,472)
46,985,640
45,017,722
(10.96) p
(10.53) p
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive
potential ordinary share options.
Loss attributable to equity holders of Bango PLC
Weighted average number of ordinary shares
Earnings (diluted) per share
31 Dec 2014
£
31 Dec 2013
£
(5,149,776)
(4,739,472)
46,985,640
45,017,722
(10.96) p
(10.53) p
At 31 December 2014 options over 3,438,784 (31 December 2013: 2,844,996) ordinary shares were outstanding. Given the loss for the year,
these options are considered to be anti-dilutive. Such options could potentially dilute basic loss per share in the future.
17 Cash used by operations
Loss for the financial year
Depreciation and amortization
Taxation in income statement
Investment income
Interest payable
Foreign exchange movement on cash balances
Share-based payment expense
Decrease in receivables
Decrease in payables
Corporation tax rebate
Net cash used by operations
31 Dec 2014
£
(5,149,776)
1,344,366
(266,210)
(26,610)
24,116
11,072
395,110
878,872
(608,192)
31 Dec 2013
£
(4,739,472)
1,440,371
(189,904)
(35,906)
31,304
(9,322)
474,958
202,662
(59,878)
---------------------------------- ----------------------------------
(2,885,187)
359,113
---------------------------------- ----------------------------------
(2,526,074)
======================= =======================
(3,397,252)
220,085
(3,177,167)
Bango PLC Annual Report 2014
43 Notes to the financial statements
Notes to the financial statements
18 Financial assets and liabilities
Financial assets included in the balance sheet relate to the following IAS 39 categories:
Loans and receivables
Total financial assets
These financial assets are included in the balance sheet within the following headings:
Current assets
Trade and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities included in the balance sheet relate to the following IAS 39 categories:
Financial liabilities measured at amortized cost
Total financial liabilities
These financial liabilities are included in the balance sheet within the following headings:
Current liabilities
Trade payables
Accruals
Total financial liabilities
31 Dec 2014
£
31 Dec 2013
£
7,047,512
----------------------
7,047,512
==========
6,682,069
------------------------
6,682,069
===========
31 Dec 2014
£
31 Dec 2013
£
794,025
6,253,487
----------------------
7,047,512
==========
1,558,683
5,110,366
----------------------
6,669,049
===========
31 Dec 2014
£
31 Dec 2013
£
1,373,982
----------------------
1,373,982
==========
1,956,946
----------------------
1,956,946
==========
31 Dec 2014
£
31 Dec 2013
£
1,199,114
174,868
---------------------
1,373,982
==========
1,799,148
157,798
---------------------
1,956,946
==========
19 Credit risk analysis
Bango’s exposure to credit risk is limited to the carrying amount of financial assets and cash and cash equivalents recognized at the balance
sheet date, as summarized in note 18.
Bango continuously monitors defaults of customers and other counterparties, identified individually or by group, and incorporates this
information into its credit risk controls. Where available at reasonable cost, external credit ratings and / or reports on customers and other
counterparties are obtained and used. Bango’s policy is to deal only with creditworthy counterparties.
Bango’s management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good
credit quality including those that are past due. See note 6 for further information on trade receivables that are past due. The only other
financial asset that is not cash are tax credits due from HMRC.
None of Bango’s financial assets are secured by collateral or other credit enhancements.
In respect of trade and other receivables, Bango is not exposed to any significant credit risk exposure to any single counterparty or any group
of counterparties having similar characteristics. Bango completes regular credit checks on those payment providers accounting for significant
individual balances. In addition, the terms and conditions of trade with some digital merchants allow the group to withhold payment of the
relevant part of the digital merchant earnings until payment is received from the payment provider.
The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks
with high quality external credit ratings.
Bango PLC Annual Report 2014
Notes to the financial statements 44
Notes to the financial statements
20 Liquidity risk analysis and capital management
Bango manages its liquidity needs by carefully monitoring cash outflows due in day-to-day business. Liquidity needs are monitored in various
time bands, on a day-to-day and week-to-week basis, as well as on a monthly basis. Long-term liquidity needs are identified on a quarterly
basis, taking account of operating activities and investing activities.
At 31 December 2014 Bango’s financial liabilities had contractual maturities which are summarized below:
Trade and other payables within 6 months
Finance lease obligations within 6 months
Finance lease obligations 6 to 12 months
Finance lease obligations 1 year to 5 years
Financial liabilities
31 Dec 2014
£
31 Dec 2013
£
1,373,982
147,258
149,559
293,324
---------------------
1,964,123
================
1,957,995
72,681
74,565
280,282
---------------------
2,385,523
================
Bango’s capital management objectives are to ensure Bango’s ability to continue as a going concern and to provide an adequate return to
shareholders, via sufficient cash resources, through profitable trading and equity issues to mitigate liquidity risk.
During the year ended 31 December 2014 Bango PLC issued £6.0m new shares on the AIM market in October (31 December 2013: £6.5m).
The Directors consider that the capital management objectives have been satisfied through the adequate management of liquidity, as
sufficient cash is available to meet all liabilities falling due in the next year.
At 31 December 2014 Bango only had hire purchase borrowings.
Capital for the reporting year under review is summarized as follows:
Total equity
Less cash and cash equivalents
Plus borrowings
The capital to overall financing ratio is 34.1% (2013: 40.4%).
21 Market risk analysis
Overall financing
31 Dec 2014
£
31 Dec 2013
£
Capital
31 Dec 2014 31 Dec 2013
£
£
9,799,403
-
590,141
----------------------------------------------------------------------------------
10,389,544
=================
8,862,448
-
427,528
----------------------------------------------------------------------------------
9,289,976
=================
9,799,403
(6,253,487)
-
----------------------------------------------------------------------------------
3,545,916
=================
8,862,448
(5,110,366)
-
----------------------------------------------------------------------------------
3,752,082
=================
21.1 Interest risk sensitivity
Bango has no borrowings on which it is subject to interest rate risk. The risk associated with interest earned on cash balances is low, given the
low level of interest currently being earned.
21.2 Foreign currency sensitivity
Exposure to currency exchange rates arise from the Bango’s overseas sales and purchases, which are primarily denominated in US Dollars and
Euros.
The amounts to be paid and received in a specific currency are expected to largely offset one another, so no hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities, translated into sterling at the closing rate, are as follows.
Nominal amounts
US $ USD
Euro EUR
Australian $ AUD
Canadian $ CAD
New Zealand $ NZD
Indonesia Rp IDR
Qatari Riyal QAR
South African Rand ZAR
Saudi Arabian Riyal SAR
Other
Short term exposure
£
Financial
assets
631,922
88,133
30,835
164,430
18
152,419
7,172
26,413
76,382
31,523
------------------------
1,209,247
===========
31 Dec 2014
£
Financial
liabilities
952,021
11,272
-
1,493
-
-
-
72
-
802
------------------------
965,660
===========
£
Net assets/
(liabilities)
(320,099)
76,861
30,835
162,937
18
152,419
7,172
26,341
76,382
30,721
--------------------
243,587
=========
£
Financial
assets
1,090,054
224,790
26,243
297,646
10,247
352,680
24,156
51,970
-
34,105
------------------------
2,111,891
===========
31 Dec 2013
£
Financial
liabilities
1,545,923
39,323
485
-
-
-
-
-
-
-
------------------------
1,585,731
===========
£
Net assets/
(liabilities)
(455,869)
185,467
25,758
297,646
10,247
352,680
24,156
51,970
-
34,105
--------------------
526,160
=========
Sensitivity analysis has been performed on the financial assets and liabilities to assess the exposure of the group to foreign exchange
movements. If exchange rates moved so that the sterling weakened by 5% then the effect on the balance sheet would be a loss of £11,600
and if it moved by 10% then there would be a total loss of £22,144.
Bango PLC Annual Report 2014
45 Independent auditor’s report to the members of Bango PLC
Independent auditor’s report to the
members of Bango PLC
Other matter
We have reported separately on the Group financial statements of
Bango PLC for the year ended 31 December 2014.
Paul Naylor
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
9 March 2015
We have audited the parent company financial statements of
Bango PLC for the year ended 31 December 2014 which
comprise the Company balance sheet, and the related notes. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the Directors’ responsibilities statement
set out on pages 18 and 19, the Directors are responsible for the
preparation of the parent company financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the parent
company financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate
Opinion on financial statements
In our opinion the parent company financial statements:
give a true and fair view of the state of the company's
affairs as at 31 December 2014;
have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements
of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report and
Directors' report for the financial year for which the financial
statements are prepared is consistent with the parent company
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement
with the accounting records and returns; or
•
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Bango PLC Annual Report 2014
Company balance sheet 46
Company balance sheet
Fixed assets
Investment in subsidiary
Current assets
Debtors due within one year
Debtors due after one year
Creditors falling due within one year
Net current assets / (liabilities)
Total assets less current liabilities
Capital and reserves
Share capital
Share premium account
Other reserve
Retained earnings
Shareholders’ funds
Note
31 Dec 2014
£
31 Dec 2013
£
4
5
5
6
7
8
8
8
28,164,431
---------------------
27,769,236
---------------------
2,860
5,538,530
------------------------
5,541,390
(17,836)
------------------------
5,523,554
==================
2,715
-
------------------------
2,715
(9,610)
------------------------
(6,895)
==================
33,687,985
==================
27,762,341
==================
10,399,463
22,098,603
1,526,650
(336,731)
-----------------------
33,687,985
=================
9,122,069
17,684,376
1,968,834
(1,012,938)
-----------------------
27,762,341
=================
These financial statements were approved by the Directors on 9 March 2015 and are signed on their behalf by:
R Anderson
Director
G Tucker
Director
Company registration number 05386079
The notes on pages 47 to 49 are an integral part of these consolidated financial statements
Bango PLC Annual Report 2014
47 Notes to the financial statements
Notes to the financial statements
2 Loss for the year
Bango PLC has made full use of the exemptions as permitted by
Section 408(1) of the Companies Act 2006 and accordingly the
profit and loss account of the entity is not presented as part of the
accounts. The Bango PLC loss for the year ended 31 December
2014 of £161,087 (31 December 2013: £191,803) is included in
the Group result for the financial period.
The auditor’s remuneration for audit and non-audit services to the
Company was borne entirely by Bango.net Limited, a wholly
owned subsidiary.
3 Directors and employees
Details of Directors’ interests in the shares and options of Bango
PLC are provided in the Directors’ report on page 18.
There are no employees employed directly by Bango PLC.
Details of Directors’ remuneration are disclosed in note 13 of the
Group accounts. A charge of £47,791 (31 December 2013:
£54,423) has been recognized within the parent company’s own
figures relating to wages and salaries.
1 Accounting policies
Basis of accounting
The separate financial statements of Bango PLC are presented as
required by the Companies Act 2006. They have been prepared
under the historical cost convention and in accordance with
applicable United Kingdom accounting standards and law.
The principal accounting policies are summarized below. They
have all been applied consistently throughout the year.
Investments
Fixed asset investments are shown at cost less provision for
impairment.
Share based payments
Bango PLC issues equity settled share-based compensation to
certain employees (including Directors) of its trading subsidiaries.
Equity settled share-based payments are measured at fair value
at the date of grant. The fair value determined at the grant date of
the equity-settled share-based payment is credited to reserves on
a straight-line basis over the vesting period, together with a
corresponding increase in the book value of Bango PLC’s
investment in subsidiaries, based upon the estimate of the shares
that will eventually vest. These estimates are subsequently revised
if there is any indication that the number of options expected to
vest differs from previous estimates. Any cumulative adjustment
prior to vesting is recognized in the current period. No adjustment
is made to any expense recognized in prior periods.
Fair value is measured by an external valuer using the Black-
Scholes option pricing model. The expected life used in the
model has been adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions and
behavioral considerations.
Where the terms of an equity-settled transaction are modified, as
a minimum an expense is recognized as if the terms had not
been modified. In addition, an expense is recognized for any
increase in the value of the transaction as a result of the
modification, as measured by the date of modification, over the
remaining vesting period.
Where an equity-settled transaction is cancelled, it is treated as if
it had vested on the due date of the cancellation, and any
expense not yet recognized for the transaction is recognized
immediately. However, if a new transaction is substituted for the
cancelled transaction, and designated as a replacement
transaction on the date that it is granted, the cancelled and new
transactions are treated as if they were a modification of the
original transaction, as described in the previous paragraph.
Related party transactions
In accordance with Financial Reporting Standard Number 8:
Related Party Disclosures, the company is exempt from disclosing
transactions with wholly owned entities that are part of the Group
headed by Bango PLC as it is a parent company publishing
consolidated financial statements.
Bango PLC Annual Report 2014
Notes to the financial statements
Notes to the financial statements 48
4 Investments
Cost
Shares in subsidiary undertakings at 31 December 2013
Share based payments
Investment in Bango do Brasil
Shares in subsidiary undertakings at 31 December 2014
Net book amount
At 31 December 2014
At 31 December 2013
£
27,769,236
395,110
85
----------------------------------
28,164,431
=======================
28,164,431
=======================
27,769,236
=======================
Details of subsidiary undertakings at 31 December 2014 are as follows:
Country of
incorporation
Class of share
capital held
Held by the
company
Nature of business
Bango.net Limited
England & Wales
Ordinary
Bango Inc
Delaware, USA
Common
100% Development, marketing and sale
of technology for mobile phone
users to purchase services for
their mobile phones
100%
Sales and support office for
Bango.net Limited services in USA
Spain
Ordinary
100%
Support for Bango.net Limited
Bango Movil
Bango SP Ltd
England & Wales
Bango Employee Benefits Ltd
England & Wales
Bango do Brasil Cessão de
Licenças de Programas de
Computador Ltda *
*99% owned via Bango Movil and 1% owned by Bango Plc
Brazil
5 Debtors
Amounts due from Group undertakings (due after one year)
Other debtors (due within one year)
6 Creditors
Trade creditors
Ordinary
Ordinary
Ordinary
100%
100%
100%
Non-trading
Non-trading
Non-trading
31 Dec 2014
£
31 Dec 2013
£
5,538,530
2,860
------------------------
5,541,390
==================
-
2,715
------------------------
2,715
================
31 Dec 2014
£
31 Dec 2013
£
17,836
===========
9,610
===========
Bango PLC Annual Report 2014
49 Notes to the financial statements
Notes to the financial statements
7 Share capital
Allotted, called up and fully paid:
Ordinary shares of 20p each in Bango PLC
No
£
As at 31 December 2012
Issue of new shares
Exercise of share options
As at 31 December 2013
Issue of new shares
Exercise of share options
As at 31 December 2014
41,733,017
8,346,604
3,250,000
627,326
-------------------------
45,610,343
-------------------------
6,250,000
136,973
-------------------------
51,997,316
=================
650,000
125,465
-----------------------
9,122,069
-----------------------
1,250,000
27,394
-----------------------
10,399,463
================
During the year 136,973 share options were exercised at exercise prices between 23 pence and 167.0 pence and a par value of 20 pence
per share. The total proceeds were £86,582 of which £27,394 was recognized as share capital and £59,188 as share premium.
In October 2014 Bango PLC issued 6,250,000 ordinary shares of 20 pence each at market price of 96 pence per share with existing investors
raising £6.0m gross and £5.6m net of expenses of £0.4m.
During the year 893,000 options were granted to employees, including 65,000 to Gerry Tucker, a Director during the year.
At the year end 3,438,784 options were outstanding. Further details relating to employee share options are provided in note 7 in the Bango
financial statements.
8 Reserves
Share
Premium
Account
£
Other
reserve
£
Retained
earnings
£
At 1 January 2014
17,684,376
1,968,834
(1,012,938)
Issue of new shares
Exercise of share options
Share based payments
Share based payments transfer for exercised share options
Loss for the year
At 31 December 2014
9 Reconciliation of movements in shareholder’s funds
Period opening balance
Exercise of share options
Share based payments
Issue of new shares
Loss for the period
Bango PLC Annual Report 2014
4,355,039
59,188
-
-
-
--------------------------------------
22,098,603
-
-
-
-
-
395,110
837,294
(837,294)
(161,087)
-
-------------------------------- -------------------------------
(336,731)
========================= ===================== =====================
1,526,650
31 Dec 2014
£
31 Dec 2013
£
27,762,341
86,582
395,110
5,605,039
(161,087)
------------------------
33,687,985
=================
20,861,421
477,477
474,958
6,140,288
(191,803)
------------------------
27,762,341
==================
Notice of Annual General Meeting 50
Notice of Annual General Meeting
THE COMPANIES ACTS 1985 TO 2006
NOTICE OF THE ANNUAL GENERAL MEETING OF BANGO PLC
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Bango PLC (the "Company") will be held the offices of The Company, 5
Westbrook Centre, Cambridge, CB4 1YG on Wednesday 27th May 2015 at 2 pm for the following purposes.
ORDINARY BUSINESS
As ordinary business to consider and, if thought fit, pass resolutions 1 to 4 as ordinary resolutions.
1. To receive and adopt the financial statements of Bango for the year ended 31 December 2014 and the reports of the Directors and
auditors on those financial statements.
2. To re-elect Mr Anil Malhotra who retires by rotation and offers himself for re-appointment by general meeting, as a Director of Bango.
3. To re-elect Mr Rudy Burger, who retires by rotation and offers himself for re-appointment by general meeting, as a Director of Bango.
4. To re-elect Grant Thornton UK LLP as auditors until the next Annual General Meeting of Bango at which accounts are laid before the
members and to authorize the Directors to determine the auditors’ remuneration.
SPECIAL BUSINESS
As special business to consider and, if thought fit, pass resolution 5 as an ordinary resolution and resolution 6 as a special resolution.
5. That the Directors be and are hereby generally and unconditionally authorized and empowered pursuant to and in accordance with
Section 551 of the Companies Act 2006 (the ”Act”) to exercise all the powers of Bango to allot shares and/or grant rights to subscribe
for or to convert any security into shares (“Rights”) up to an aggregate nominal value of £3,469,821 (being the nominal value of
approximately one third of Bango’s issued share capital) such authority to expire on the conclusion of the next Annual General Meeting
of Bango following the passing of this resolution or, if earlier, the date 15 months after the date of passing this resolution, save that
Bango may at any time before such expiry make any offer(s) or enter into any agreement(s) which would or might require shares to be
allotted or Rights to be granted after such expiry and the Directors may allot shares or grant Rights in pursuance of any such offer(s) or
agreement(s) as if the power and authority conferred by this resolution had not expired. This resolution revokes and replaces all
unexercised authorities previously granted to the Directors to allot shares or grant Rights but without prejudice to any allotment of
shares or grant of Rights already made, offered or agreed to be made pursuant to such authorities.
6. That subject to and conditional upon the passing of resolution 5 above, the directors be and are hereby generally authorised in
accordance with section 570 of the Act to allot equity securities (as defined in section 560 of the Act) of the Company for cash as if
section 561(1) of the Act did not apply to any such allotment, provided that this authority shall be limited to:
a)
the allotment of equity securities in connection with an offer by way of rights in favour of the holders of equity securities in
proportion (as nearly as may be possible) to the respective number of ordinary shares of £0.20 each held by them, but subject to
such exclusions or other arrangements as the directors may deem necessary or expedient to deal with fractional entitlements or
legal or practical problems in respect of overseas holders or otherwise;
b)
the allotment of equity securities (otherwise than pursuant to sub-paragraph (a) above) up to a maximum aggregate nominal value
of £520,473 (being the nominal value of approximately 5 percent. of the issued share capital of Bango),
and this authority shall expire on the conclusion of the next Annual General Meeting of the Company following the date on which this
resolution becomes unconditional or, if earlier, the date 15 months after the date of passing this resolution save that the Company may at
any time before such expiry make any offer(s) or enter into any agreement(s) which would or might require equity securities to be allotted
after such expiry and the Directors may allot equity securities pursuant to any such offer(s) or agreement(s) as if the power and authority
conferred by this resolution had not expired. This resolution revokes and replaces all unexercised authorities previously granted to the
Directors to allot equity securities but without prejudice to any allotment of equity securities already made, offered or agreed to be made
pursuant to such authorities.
By order of the Board,
Company Secretary, Henry Goldstein
Bango PLC Annual Report 2014
51 Notice of Annual General Meeting
Notes:
1. At the date of this notice, 52,047,316 ordinary shares of £0.20 each and the total number of voting rights was
52,047,316.
2. Only holders of Ordinary Shares are entitled to attend and vote at this meeting. A member entitled to attend and vote at
the meeting is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and to speak and
vote at the meeting and at any adjournment of it. Such a member may appoint more than one proxy in relation to the
meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that
member. A member may only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
A proxy need not be a member. Completion and return of a form of proxy will not preclude a member from attending and
voting in person at the meeting or any adjournment of the meeting.
3. A form of proxy is provided with this notice and instructions for use are shown on the form. To be effective, the completed
form of proxy must be deposited at the registered office of Bango, 5 Westbrook Centre, Cambridge, CB4 1YG, by not later
than 2:00 pm on Monday, 25 May 2015 (or not later than forty-eight hours before the start of any adjournment of the
meeting) together with, if appropriate, the original power of attorney or other authority (if any) under which it is signed or a
notarially certified or office copy of such power of authority.
4. A vote withheld option is provided on the form of proxy to enable you to instruct your proxy not to vote on any particular
resolution, however, it should be noted that a vote withheld in this way is not a ‘vote’ in law and will not be counted in the
calculation of the proportion of the votes ‘For’ and ‘Against’ a resolution.
5.
In order to revoke a proxy appointment you will need to inform Bango by sending a signed hard copy notice clearly stating
your intention to revoke your proxy appointment to the registered office of Bango, 5 Westbrook Centre, Cambridge, CB4
1YG, by not later than 2:00 pm on Monday, 25 May 2015 (or not later than 48 hours before the start of any adjournment
of the meeting) together with, if appropriate, the original power of attorney or other authority (if any) under which it is
signed or a notarially certified or office copy of such power of authority. If you attempt to revoke your proxy appointment
but the revocation is received after the time specified then, unless you attend the meeting in person, your proxy
appointment will remain valid.
6. Bango, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those shareholders
registered in the register of members of Bango at 2:00 pm on Monday, 25 May 2015 shall be entitled to attend and vote at
this Annual General Meeting in respect of such number of shares registered in their name at that time. Changes to entries
on the register of members after 2:00 pm on Monday, 25 May 2015 shall be disregarded in determining the rights of any
person to attend or vote at the meeting.
7. Copies of the service agreements of the Executive Directors and the letters of appointment of the Non-Executive Directors
will be available for inspection during normal business hours from the date of dispatch of this notice until the date of the
meeting (Saturdays, Sundays and public holidays excepted) at the registered office of Bango and will also be made
available for inspection at the place of the Annual General Meeting for a period of 15 minutes prior to and during the
continuance of the meeting. Copies of this notice will be available at the place of the Annual General Meeting at the same
times, and from the date the notice is posted, on Bango's website
http://bangoinvestor.wordpress.com/announcements/.
8. Except as provided above, members who wish to communicate with Bango in relation to the meeting should do so by
calling our Company Secretary on +44 20 8678 7273 or +44 77 8577 1717. No other methods of communication will be
accepted.
Bango PLC Annual Report 2014
Form of Proxy 52
Form of proxy
For use at the Annual General Meeting to be held at the offices of Bango, 5 Westbrook Centre, Cambridge, CB4 1YG on
Wednesday, 27 May 2015 at 2:00 p.m.
Before completing this form, please read the explanatory notes at the end of this form
Name of shareholder _______________________________________________________________________________________________
Address __________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
Number of shares held _____________________________________________________________________________________________
I/We, being [a] member[s] of Bango PLC (the "Company"), hereby appoint the chairman of the meeting or (see note 3)
__________________________________________________________________________________________________________________
as my/our proxy (see note 4) to attend, speak and vote for me/us on my/our behalf at Bango's Annual General Meeting to be held at 2:00
p.m. on Wednesday, 27 May 2015 and at any adjournment of the meeting.
I/We have indicated with an 'X' in the appropriate spaces how I/we wish my/our votes to be cast and direct the proxy to vote as indicated.
If this form is signed and returned without any indication as to how my/our proxy shall vote, my/our proxy may exercise his or her discretion
as to both how he or she votes (including as to any amendments to the resolutions) and whether or not he or she abstains from voting and
I/we authorise my/our proxy to vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the
meeting.
FOR
AGAINST
WITHHELD
DISCRETIONARY
RESOLUTION
(Place X in appropriate box)
Ordinary business
1. To receive and adopt the accounts for the
year ended 31 December 2014
2. To re-elect Mr Anil Malhotra as a
Director
3. To re-elect Mr Rudy Burger as a
Director
4. To re-appoint Grant Thornton UK LLP
as auditors and authorise the Directors
to fix the auditors’ remuneration
Special business
5. To authorise the Directors to allot
shares pursuant to section 551 of the
Companies Act 2006 (the "Act"),
subject to the provisions as set out in
the notice
6. In accordance with section 571 of the
Act, to authorise the Directors to allot
shares as if section 561(1) of the Act
did not apply, subject to the provisions
as set out in the notice
Signature
…………………………………
Date
……………………………….
Signature
…………………………………
Date
……………………………….
Bango PLC Annual Report 2014
53 Form of Proxy
Notes for completion of the proxy form
1. As a member of the Company you are entitled to appoint another person as your proxy to exercise all or any of your rights to
attend, speak and vote at a general meeting of the Company. You must follow the appointment procedures set out in these
notes.
2. Completion and return of this proxy form will not preclude you from attending the meeting and voting in person. If you have
appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.
3. A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your
proxy a person other than the chairman of the meeting, insert their full name in the box. If you sign and return this proxy form
with no name inserted in the box above on page 1, the chairman of the meeting will be deemed to be your proxy. Where you
appoint as your proxy someone other than the chairman, you are responsible for ensuring that they attend the meeting and are
aware of your voting intentions. If you wish your proxy to make any comments on your behalf at the meeting, you will need to
appoint someone other than the chairman and give them the relevant instructions directly.
4.
If you appoint a proxy to vote on your behalf at this Annual General Meeting, your voting rights will revert to you at the
conclusion of the Annual General Meeting or any adjournment of the Annual General Meeting.
5. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. To
appoint more than one proxy, please insert the name of each proxy to be appointed in the box above on page 1 and insert in
brackets after each name the number of shares in respect of which each respective proxy is appointed.
6. To direct your proxy how to vote on the resolutions, please indicate how you wish your votes to be cast by placing ‘X’ in the
appropriate column. To abstain from voting on a resolution, select the relevant "Vote withheld" box. Please note that a vote
withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the
resolution. If you either select the "Discretionary" option or if no specific direction as to how you wish your vote to be cast is
given, your proxy may vote or abstain, at his or her discretion. On any other business which is put before the meeting
(including a motion to adjourn the meeting or to amend a resolution) the proxy will vote (or abstain from voting) at his or her
discretion.
7. To be valid, this proxy form must be:
a)
b)
c)
completed and signed;
sent or delivered to the Company Secretary at Bango, 5 Westbrook Centre, Cambridge, CB4 1YG; and
received by the Company Secretary no later than 2:00 p.m. on Monday, 25 May, 2015.
8.
If a member is a company, this proxy form must be executed under its common seal (or such form of execution as has the
same effect) or executed on its behalf by a duly authorised officer of the company or an attorney for the company. A copy of
the authorisation of such officer or attorney must be lodged with this proxy form.
9.
If this proxy form is executed under a power of attorney or any other authority the original power or authority (or a duly certified
copy of such power or authority) must be lodged together with this proxy form.
10. In the case of joint holders, any one holder may sign the form of proxy but all the names of the joint holders should be stated
on this proxy form. If more than one of the joint holders purports to appoint a proxy, the appointment submitted by the most
senior holder will be accepted to the exclusion of the appointment(s) of the other joint holder(s), seniority being determined by
the order in which the names of the joint holders stand in the register of members of the Company in respect of the joint
holding (the first-named being the most senior).
11. If you submit more than one valid proxy appointment in respect of the same shares, the appointment received last before the
latest time for the receipt of proxies will take precedence.
12. Any alterations made to this form should be initialled.
13. You may not use any fax number or email address or other electronic address provided in this proxy form or the documents
accompanying this proxy form to communicate with the Company for any purposes other than those expressly stated.
If you have any queries completing this form please contact the Company Secretary on telephone number +44 20 8678 7273 or +44 77
8577 1717.
Bango PLC Annual Report 2014
Explanatory notes 54
Explanatory notes
Report and Accounts (Resolution 1)
The Directors of Bango must present the accounts to the meeting.
Re-election of Directors (Resolutions 2 and 3)
The Company’s articles of association require that approximately one third of the Board, and any Director newly appointed since the
last AGM, retire and seek re-election at each annual general meeting. Furthermore in line with the Combined Code on Corporate
Governance, it is the Company’s practice that any non-executive Director having been in post for nine years or more is subject to
annual re-election.
At this meeting, Mr Anil Malhotra and Mr Rudy Burger will retire and stand for re-election as Directors. Having considered the
performance of and contribution made Mr Anil Malhotra and Mr Rudy Burger, the Board remains satisfied that their performance
continues to be effective and to demonstrate commitment to the role and, as such, recommends their re-election.
Reappointment and remuneration of auditors (Resolution 4)
Resolution 4 proposes the reappointment of Grant Thornton UK LLP as auditors of the Company and authorises the Directors to set
the auditors’ remuneration.
Directors’ authority to allot shares (Resolution 5)
Directors may only allot shares or grant rights to subscribe for or to convert any security into shares (“Rights”) if authorized to do so by
shareholders. Such authorization is not required for the grant of options (or the issue of shares on exercise of such options) under an
employee share scheme. The authority granted at the last Annual General Meeting is due to expire at the conclusion of this year’s
Annual General Meeting. Accordingly, this resolution seeks to grant a new authority to the Directors to allot shares and/or grant Rights
and will expire at the conclusion of the next Annual General Meeting of Bango (normally in 2016) or, if earlier, on 27 August 2016
(the date which is 15 months after the date of passing of the resolution). There is no present intention of exercising this authority,
which would give Directors authority to allot shares and/or grant Rights up to an aggregate nominal value of £3,469,821 which is
approximately one-third of Bango’s issued ordinary share capital as at 1 March, 2015.
Disapplication of pre-emption rights (Resolution 6)
Under section 561(1) of the Act, if the Directors wish to allot equity securities (as defined in section 560 of the Act) (other than
following an exercise of options granted under an employee share scheme) they must in the first instance offer them to existing
shareholders in proportion to their holdings. There may be occasions, however, when the Directors will need the flexibility to finance
business opportunities by the issue of shares without a pre-emptive offer to existing shareholders. This cannot be done under the Act
unless the shareholders have first waived their pre-emption rights.
Resolution 6 asks the shareholders to do this and, apart from rights issues or any other pre-emptive offer concerning equity securities
and the grant of share options, the authority will be limited to the issue of equity securities for cash up to a maximum nominal value of
£520,473 (being 2,602,366 ordinary shares of £0.20 each), which is equivalent to approximately 5 per cent of Bango’s issued
ordinary share capital as at 1 March, 2015.
Resolution 6 also seeks a disapplication of the pre-emption rights on a rights issue so as to allow the Directors to make exclusions or
such other arrangements as may be appropriate to resolve legal or practical problems which, for example, might arise with overseas
shareholders.
If resolution 6 is passed, the authority will expire at the conclusion of the next Annual General Meeting of Bango (normally in 2015 or,
if earlier, 27 August, 2016 (the date which is 15 months after the date of passing of the resolution). Shareholders will note that this
resolution will be proposed as a special resolution.
Bango PLC Annual Report 2014