Annual Report 2015
Contents
Strategic report
Highlights...........................................................................................................01
Bango at a glance................................................................................................02
Chairman’s statement..........................................................................................03
CEO’s statement..................................................................................................05
CFO’s statement..................................................................................................08
Strategy for growth.............................................................................................12
Principal risks and uncertainties..... ......................................................................13
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 (Bango)......................22
Consolidated statement of financial position ..........................................................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
Statement of financial position of Bango PLC…………………......................................46
Statement of changes in equity of Bango PLC.........................................................47
Cash flow statement of Bango PLC ………………………………………………………………………48
Notes to the financial statements…........................................................................49
2
Bango PLC | Annual Report 2015 Highlights
Highlights
Operational costs and annualized end user spend
£3.5m
£3m
£2.5m
£2m
£1.5m
£1m
£0.5m
£0m
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O
1h2013
2h2013
1h2014
2h2014
1h2015
2h2015
Cash and cash equivalents
£12M
£10M
£8M
£6M
£4M
£2M
£0m
FY2013
FY2014
FY2015
• FY2015 End User Spend (EUS) exit
run rate over 100% higher than
FY2014 EUS exit run rate at £67m pa
• EUS for the whole year increased 78%
to £44.7m (FY2014: £25.2m)
• Stable cost base of £4.4m (FY2014:
£5.0m) demonstrating the technology
and systems can deliver growing
volumes at fixed cost on the route to
profitability
£70m
£60m
£50m
£40m
£30m
£20m
£10m
£0m
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S
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A
• Cash balance of £12.1m (including
£11m fundraise in November 2015)
(FY2014: £6.3m (including fundraising
of £6.0m))
Year end highlights
Market development
Partner development
Product development
for
in
Activated Direct Carrier Billing
emerging markets
Google,
BlackBerry, Microsoft and Samsung,
including the first Google Play carrier
billing launched in Latin America and
Africa
Expanded collaboration with Microsoft
(announced January 2016) to enable
Direct Carrier Billing on Windows 10
devices including tablets and PCs
Started second phase roll-out of Bango
Boost technology to six additional Mobile
Network Operators (MNOs) following
success in first phase with 20-70% uplift
in End User Spend
1
Bango PLC | Annual Report 2015
Bango at a glance
Bango at a glance
Bango’s 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.
Bango sees a world where anyone connected to the internet can easily pay for any product or service, from any online store on any
device. Where payments simply work, quickly and reliably every time, without complex registration processes.
Most people in this connected world remain excluded and unable to pay. The elegance of a simple cash system has been lost to
the complexities of registration, authentication and risk management. Bango is revolutionizing payment technology for our smart,
connected, social world to reintroduce simplicity and inclusion globally.
The Bango Payment Platform
powers more app store carrier
billing routes than anyone
else.
“Bango dominates the third party carrier
billing marketplace with over 40% of
the total app store direct carrier billing
connections.” This is the conclusive
finding of a
report published by
Progressive Equity Research, September
2015.
The report found that app stores are
driving the requirement for a unified
Direct Carrier Billing (DCB) platform, one
that provides a global payment method,
which can deliver the user experience,
reporting and analytical demands of
these internet giants.
#1 for app store carrier billing
Partner development
Why partners choose Bango
The Bango Payment Platform has significant advantages which have led to its position as the number one app store carrier billing
provider, including:
Higher conversion rate
Improved performance
Delivering scale
Bango technology produces a higher
conversion rate from Direct Carrier
Billing than any other method
Bango’s multiple integrations reduce
risk and increase performance through
the shared experience of a common
platform
Partners deliver carrier billing at scale
by integrating once with the Bango
Payment Platform
2
Bango PLC | Annual Report 2015 Chairman’s statement
Chairman’s statement
During FY2015 Bango achieved a
number of key milestones, and above
all I am particularly pleased with the
accelerating growth rate in EUS. Bango
has continually emphasized that growing
EUS is the key priority for the business in
order to maintain its market leadership
position and create value add for its
customers. The high growth in EUS,
together with the increasing number of
carrier billing routes that were activated
around the world in FY2015, show that
Bango is delivering against its strategy
to become the industry platform that
enables every smartphone user
to
quickly and easily pay for digital content.
enables
technology
Bango
very
high volumes of transactions to be
processed through a fixed cost system.
Consequently, every transaction through
the platform contributes to gross profit
and increased transaction volume drives
Bango towards profitability. This enables
Bango to establish sustainable pricing
models that have longevity as business
scales up. As reporting or computations
required by complex markets, currency
conversion or additional technology,
such as Bango Boost, are deployed
through the Bango Payment Platform,
additional margin can be generated
without increasing the cost of delivery.
continued
to develop
Bango
its
relationships with the world’s major app
stores, opening up new markets, enabling
more people to purchase app store
content, and using Bango technology
to deliver increased transaction success
rates. The power and flexibility of the
Bango Payment Platform to quickly and
easily integrate carrier billing routes in
new, and sometimes financially complex
“The high growth in EUS,
together with the increasing
number of carrier billing
routes that were activated
around the world in FY2015,
show that Bango is delivering
against its strategy”
3
markets was demonstrated repeatedly.
Bango took Google into new markets,
and launched their first DCB activations
in Africa and South America. Bango will
continue to activate DCB routes in the
markets that are important to Microsoft,
Amazon, Google and other
leading
app stores. Each payment route that
is activated can be used across all app
store partners, building a strong network
effect and contributing to the powerful
analytical data that can be used to
increase spending growth through the
Bango Payment Platform.
I have been impressed by the Bango
team’s relentless effort to deliver even
greater value for their partners through
innovations such as Bango Boost, which,
in initial implementations has delivered
between a 20 and 70% increase to EUS
in established routes. These initiatives
will further support Bango’s market
leadership position, at a time when the
mobile payments industry moves in
the direction pioneered by Bango. We
will continue to invest in developing
technology to further similar initiatives.
In November 2015 Bango completed a
fundraise of £11m to support growth and
market expansion as an independent
company with its app store partners,
while maintaining a healthy balance
sheet. I look ahead to FY2016 with the
confidence that Bango will continue
to capitalize on greater opportunities
opened up through market growth, new
payment routes and an increasing range
of content and services promoted by the
different app store partners.
David Sear
Chairman
Bango PLC | Annual Report 2015 Partner development
Bango take Google Play to Africa
Bango and Telkom South Africa
partnered to launch carrier billing in
Google Play, a first for Africa.
customers
using Android
Telkom
smartphones and tablets have been
quick to purchase their favorite apps,
games, music and other content using
one-click carrier billing. This gives
customers with limited or no access to
other payment methods the ability to
buy from the huge range of content in
the Google Play store. Google’s Android
platform currently represents 89% of
the smartphone market in Africa (IDC
2015).
Product development
Bango Grid - Growing the market
There are thousands of carrier billing
routes yet
to be activated across
the major app stores. Bango, the
market
leader has activated over
160, highlighting the massive growth
potential.
Bango Grid is a unique resource for Bango
app store partners to plan their payments
strategy. Bango Grid enables partners
to quickly find the key vital statistics
of every mobile operator globally, and
a range of other relevant payment
methods. It helps them rapidly assess
technical and operational compatibility
and manage the full activation process
with minimal risk. Once live, Bango Grid
consolidates all reports and live data
through a single, integrated system. For
operators wanting to deliver alternative
payments at scale, Bango Grid is a
unique capability that gets them live
rapidly and securely, reducing launch
costs and getting to customers and
revenue faster.
Market development
Bango CEO joins UK Prime Minister on Asia trade mission
Bango were among financial technology
companies who travelled to Asia with
UK Prime Minister David Cameron.
trade mission
The government-led
highlighted
leading
financial technology sector, notable for
the global success of small and medium
sized financial tech companies.
the UK’s world
The mission opened many doors for
Bango, enabling a number of deals to be
agreed with Asian mobile operators.
4
Bango PLC | Annual Report 2015 CEO’s statement
CEO’s statement
for
Bango
strong
FY2015 has been a year
commercial
of
Bango.
progress
The
Payment
Platform demonstrated its
capability to make more
sales for Bango partners
by delivering accelerating
growth in EUS.
its
Bango demonstrated
increasing
importance to its partners by growing
its levels of activations, new routes and
increasing the pipeline of activations
to in excess of 200 new opportunities.
I would like to thank my colleagues
for their dedication in building Bango’s
powerful, reliable and secure payments
platform and making it the number one
choice in the fast growing market for
app store payments.
Key developments in emerging
markets
As a leading UK headquartered Fin-Tech
business, I was invited to represent
Bango alongside the UK Prime Minister on
a financial technology trade delegation
to South-East Asia. During the trip I
was able to announce new payment
routes in Taiwan and Indonesia, and the
completion of seven mobile payment
agreements with Mobile Network
Operators across Asia. Smartphone
adoption is rising fast in these markets,
as are household incomes. Consumers
are starting to demand content and
personalization via their smartphones -
normally their only route to the internet.
Bango is opening up access to high
quality paid content and services for
these people from Google, Samsung,
Microsoft and BlackBerry, and helping
local developers prosper in their local
market and potentially outside their
home country.
Bango is committed to developing its
business in Asia. Sales presence in the
market was strengthened to include
new offices in Singapore and Japan.
I am delighted that we were able to
hire Andy Suzuki to head Bango Japan,
which was established earlier this year.
Andy has held senior positions in global
corporations and brings great experience
developing technology partnerships with
Japanese customers. While
focused
on Japan, he will provide senior
management support for the Bango
team across the Asia-Pacific region.
Many Bango investors are surprised to
learn that payment options beyond credit
cards also provide substantial uplifts
in sales in developed markets where
consumers have greater disposable
income, and where credit cards are
often more popular. In FY2015, Bango
activated new DCB routes in Germany,
Spain and United Kingdom for major
app store partners who understand
the importance of DCB alongside credit
cards.
Of the more than 200 opportunities that
are being progressed in the activations
pipeline, there is a good balance between
emerging and developed markets across
the major app stores.
Technology focus and R&D
expansion
The power of a platform based internet
service is that the innovations and
technology that Bango develop initially
for one customer, becomes available to
others through the common platform,
without significant further cost.
5
Bango PLC | Annual Report 2015 In many markets, mobile operators
and other providers are developing
innovative mobile payment systems that
work alongside traditional DCB. The
Bango Payment Platform can quickly
and easily integrate with almost any
payment system, and present these
options through the standard Bango
API to existing or new stores. Trials are
already underway in selected markets.
These non-DCB payment options can
often enable app stores to collect
payment where DCB is not commercially
viable or is blocked by regulation. Bango
views this as an opportunity to provide
additional value to its global partners
and
increase Bango’s addressable
market, adding more growth to the EUS
processed through the Bango Payment
Platform and earning additional margin.
To accelerate and streamline the process
of launching new activations, Bango
launched Bango Grid in 2015. Bango
Grid also allows non-DCB payment
methods to be rapidly made available
alongside DCB to Bango’s partners.
Bango systems are regularly tested to
verify that they can comfortably process
well in excess of $1Bn/£650m EUS per
year using the current datacenters,
hardware and software that deliver the
Bango Payment Platform technology
and services. During 2h2016 Bango will
confirm that the current architecture
can
securely
the
process
currently verified levels, with little or no
incremental operating cost.
substantially
safely and
reliably,
beyond
CEO’s statement
Outlook
The wider payments market continues
to evolve. Mobile payments are taking a
growing proportion of the overall global
payments market, and within that DCB
is becoming an increasingly popular
and widely available method for mobile
payment.
Bango has pioneered DCB for 15 years
and continues to maintain its pace of
innovation and leadership. Building on
its strong progress during FY2015 in
EUS, new activations, pipeline growth
and renewed app store contracts, Bango
is confident that this momentum will
continue into FY2016.
in
Bango’s primary focus for the year is
concentrated on impressing its app
store partners and mobile operators
by increasing EUS through the Bango
Payment Platform. Most EUS growth
comes
from established activations,
but new activations continually become
established, and make
significant
contributions
their second and
third years. FY2016 will see a greater
contribution from newer markets, where
DCB has only recently been launched;
this will lead to more EUS from prior
year activations growing the FY2016
and FY2017 EUS. As with most early
stage businesses with high potential,
the speed that new markets contribute
significant EUS has to date been difficult
to predict, but as we continue to grow
the Bango footprint we are better able
to determine which new markets will
be significant for Bango’s EUS and
6
its strong
“Building on
progress during FY2015 in
EUS, new activations, pipeline
growth and renewed app store
contracts, Bango is confident
that this momentum will
continue into FY2016”
Bango PLC | Annual Report 2015 CEO’s statement
ultimately margin. The Bango Payment
Platform can deliver a more than ten-fold
increase in transaction volumes without
additional cost. This enables Bango to
provide its platform and services with
flexible pricing to suit the needs of major
partners.
involvement
The investments in technology and
automation during the last few years
have enabled Bango to reduce the
integrations,
human
activations and the round the clock
operation of datacenters and other
operational processes. As a result,
Bango has been able to move people
from operational roles to roles that
in
more directly drive customer success
and grow EUS. For example, 24/7 staff
that need to be available in case of
problems are now able to spend more
time training mobile operators in the
use of Bango Boost tools, and in helping
operators improve the performance of
their DCB systems. We expect this trend
to continue in the coming year, enabling
Bango to spend more time providing app
stores and mobile operators with tools
to grow their EUS, without increasing
Bango costs.
Ray Anderson
Chief Executive Officer
Product development
Bango Boost - generating
more revenue from carrier
billing
Bango Boost allows our partners to
maximize billing revenues by analyzing
how payment conversion rates can
be increased. The analysis focuses on
information including spend limits, price
points, user spending profiles, payment
velocity, user identification errors and
ranks individual payment routes against
Bango’s industrywide benchmarks. The
analysis is made possible by harnessing
the unique insights captured through
the Bango Payment Platform. In trials,
partners experienced 20%
- 40%
revenue gains, and in the best case over
70% extra revenue from carrier billing.
7
More revenue
Bango Boost
#1
Bango Boost
#2
Pre-Bango Boost
plateau
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Over 70% growth in revenue from
Bango Boost technology
bango.com
Bango PLC | Annual Report 2015 CFO’s statement
CFO’s statement
End User Spend
Bango has achieved significant growth in
EUS, up 78% to £44.7m from £25.2m.
Bango also saw over 100% growth in
the December 2015 annualized EUS
figure compared to December 2014,
resulting in an exit run rate of £67m.
This growth
is particularly
in EUS
impressive considering the substantial
adverse impact of foreign exchange
movements in the currencies of Bango’s
largest markets. Bango is positive that
the rapid growth in EUS will continue in
FY2016 and this growth will be achieved
from existing and new activations. As
Bango continues to progress its strategy
of activating the major app stores to a
growing number of mobile operators,
the growth in EUS will continue.
App stores or mobile operators pay
Bango a share of their EUS. The Bango
Payment Platform that delivers this
service can handle substantially higher
volumes at a fixed cost and is treated
as a fixed operational expense. With
no cost for processing transactions, the
increasing EUS leads to increasing fees
which all contribute towards gross profit.
Turnover
Turnover is a blended figure made
up from 100% of the value of EUS
transactions where Bango
the
principal and the gross profit only where
Bango is an agent, combined with the
total value of platform fees. Turnover in
FY2015 was £3.2m compared to £5.1m
is
in FY2014 due to the growth of agency
sales through the platform; if the agency
revenue continues to grow faster than
the principal business then the total
gross margin would still grow even if
turnover decreases.
as
a
expressed
Margin
percentage of End User Spend
Gross margin on end user activity for the
period was £0.8m, showing an increase
from £0.6m in FY2014. Margin has not
kept pace with EUS, because a significant
part of growth in EUS came from larger,
developed markets. Fees charged for
incremental volumes in these markets
are generally lower as a proportion of
EUS than in early stage markets which
are at lower volumes and which may
have higher per transaction fees.
Blended margin for the year was 1.8%.
The key factors driving this blended
margin are:
•
route growth: There
Large
is
considerable focus on deploying
Bango Boost technology to grow
the largest routes as quickly as
possible. These have the biggest
impact on the success of Bango
partners. Due to the volume based
pricing on some of these routes, the
faster the growth, the more impact
there will be on driving down the
percentage margin, although the
absolute margin always increases
with volume
8
“As Bango continues to
progress its strategy of
activating the major app
stores to a growing number of
mobile operators, the growth
in EUS will continue.”
Bango PLC | Annual Report 2015 CFO’s statement
• New route deployment: There are
dozens of smaller routes across
a range of app stores, more than
30 are currently scheduled for
deployment and a pipeline of
over 200 routes opportunities for
activation. Many of these routes
have contracted fees considerably
in excess of the long term 2%
blended outlook
At this stage in 2016 it is difficult to
predict the growth pace of new routes,
in the year to date, the larger routes are
continuing to grow very well, following
the pattern of FY2015. If Bango’s larger
to significantly
routes do continue
outperform less developed markets, the
blended margin may reduce further –
even though the absolute gross profit
will rise.
There was a decrease in platform fees
to £0.5m (FY2014: £0.7m) as a result of
Bango’s strategy announced in 2014 to
remove potential barriers to entry that
may impact growth in EUS.
The total gross profit for the year was
£1.3m, compared to £1.3m for the
FY2014, with the reduction in platform
fees balanced by growth in EUS margin.
Administrative expenses
Administrative expenses were lower in
FY2015 at £4.4m compared to £5.0m
in FY2014. This reflects operational
processing efficiencies resulting from
previous investment and development
Visit Bango Investor online:
bangoinvestor.com
9
of the platform, as well as transfer
of duties from operational tasks to
customer education around Bango
Boost technology. This decrease in
administrative expenses resulted in a
reduction in the operating loss to £5.0m
(FY2014: £5.4m).
Amortization of intangible assets in the
year was £1.0m (FY2014: £0.8m) as
further R&D projects capitalized in prior
years were deployed. Depreciation for
the year totaled £0.5m (FY2014: £0.5m).
Share based payment costs of £0.4m in
FY2015 (FY2014: £0.4m), are part of the
compensation package that Bango uses
to attract and retain key employees in
such a competitive market.
Raising of additional capital
In December 2015, Bango
raised
£11.0m before expenses in a placing
of 12,222,222 new ordinary shares,
with both new and existing institutional
investors. The funding is expected to
take Bango comfortably through to
profitability and ensure sufficient cash
reserves to give comfort to current and
future Bango partners.
Balance sheet
Net assets of Bango were £15.9m at 31
December 2015 (at 31 December 2014:
£9.8m).
Cash balances increased to £12.1m at 31
December 2015 (at 31 December 2014:
Bango PLC | Annual Report 2015 CFO’s statement
£6.3m), this was driven by the increase
in cash from the fundraise which raised
£10.4m (net of fees) at the end of the
year. With a stable cost base, and a
future of growing margin Bango should
move closer to cash generation.
Intangible assets remained consistent at
£3.4m (at 31 December 2014: £3.5m) as
a result of on-going internal development
work being capitalized, compensating
for the amortization charges in the year.
Total borrowings are £0.4m (at 31
December 2014: £0.6m), and consist
only of finance lease liabilities. Of the
total borrowings, £0.3m is classed as
current (at 31 December 2014: £0.3m)
and £0.1m is classed as non-current (at
31 December 2014: £0.3m).
in
Investment in new markets
During FY2015 and
the first
quarter of FY2016, Bango invested in
developing the appropriate corporate
and contractual structures to support
new
territories. Structures may be
established to support a market by
deployment of technology but without a
Bango entity - as in India for example,
or by the creation of new group entities
being set up, as in Nigeria and Japan.
These structures support the high levels
of EUS expected by Bango partners in
these markets. There was an increase
in spending on sales and marketing
activities to train partners in the use
of Bango technology to grow EUS, and
to develop new markets and expand
opportunities
for EUS growth. This
spending has been offset by substantial
efficiency gains in operational areas due
to deployment of Bango technology,
and insourcing of previously outsourced
services to reduce costs going forward
and improve quality and reliability.
Gerry Tucker
CFO
10
P
B
G
m
£
d
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p
S
r
e
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40
35
30
25
20
15
10
5
0
1h2013
2h2013
1h2014
2h2014
1h2015
2h2015
March exit
run rate
(on half yearly
basis)
Bango PLC | Annual Report 2015
Financial
Key Performance Indicators (KPIs)
End User Spend (EUS)
Cash balances
Gross profit
The
total value of all payment
transactions through the Bango Payment
Platform net of VAT or other sales taxes.
By monitoring the EUS we can see the
growth in transactions through the
platform and monitor both the increasing
sales and the capacity in the system to
handle more transactions.
The Bango board reviews a 2 year cash
forecast on a monthly basis to ensure
that the company has the appropriate
resources. As Bango is not currently
cash generating it is important for our
major stakeholders, particularly our
customers, to have comfort that Bango
has sufficient resources to keep trading.
Bango makes a small profit from every
single transaction through the platform,
growing EUS will lead to increasing gross
profit. This is important because with
a fixed cost basis, Bango will need to
increase its gross profit to become cash
generating.
Net profit
With a consistent cost base that has
capacity to scale to handle increased
transaction volumes, growing EUS will
lead to breakeven faster. It is important
to know that increasing EUS will not
require increasing costs to process.
The non-financial KPIs are relationships
with mobile operators and leading app
stores. Growing and developing these
relationships will ensure that Bango has
the contracts in place to grow its market
share and EUS.
Partner development
Expanded Windows 10
agreement
Bango expanded
collaboration
with Microsoft to enable carrier billed
payments across all Windows 10 devices.
its
The successful relationship scaled-up to
include PC, tablet and smartphones.
As a result, charging payments to the
users’ phone bills will become available
to more than 110 million devices running
Windows 10.
“Bango offers our operator partners
for
a sophisticated platform
launching, managing and growing
carrier billing business in the
Windows Store.”
Todd Brix
Windows Store general manager
Market development
Japanese expansion
Japan’s dynamic and valuable mobile
economy is a major focus for our app
store partners.
Bango strengthened its global footprint
by expanding its Japanese presence. The
newly opened office for Bango Japan
will be headed up by a senior Japanese
executive, as part of Bango’s continued
commitment to support its partners in
major mobile markets.
Our new Japanese office will enhance
Bango’s core presence and enable us to
be closer to our partners in Japan.
11
Bango PLC | Annual Report 2015 Strategy for growth
Increasing End User Spend (EUS)
through the Bango Payment Platform is
the measure of growth.
Three factors drive EUS: App store EUS
growth through activated routes; More
activated routes; More app stores using
the Bango Payment Platform.
consumers
1. App stores focus on growing their
EUS wherever a payment route is
available. They increase the range
and quality of content in their store
and enable increased marketing
to
developers
selling through the store. Bango
Boost technology and the Bango
Dashboard provide the technology
that gives an app store and the
mobile operator the information and
insights that enable higher success
in payment, thereby increasing EUS.
by
2. When Bango has integrated with a
mobile operator, all the app stores
using Bango can activate that route,
and in doing so they increase their
to make
technology
conversion rates and increase EUS.
Bango has developed its platform
and
the
technical process of integration a
fast and low cost exercise – which
supports this key growth driver.
Bango Grid was launched during
2015 to further accelerate this
process.
The commercial and regulatory
challenges necessary to activate an
app store can also be challenging –
with the demands of an app store
for global consistency frequently
not matching
the way carrier
billing and sales of digital goods
are regulated within a country.
Bango has delivered
innovative
structures to enable app stores to
launch into markets that would be
almost impenetrable for an app
store operating direct. There is an
opportunity for Bango to grow the
number of routes faster by increasing
the level of commercial innovation,
Strategy for growth
especially into new markets, while
maintaining a very low level of
risk. This opportunity could not
increase EUS by opening
only
up new routes, but will be a new
source of value which can generate
additional transactional margin. The
opportunity is increasing as new
payment methods such as wallets
and peer to peer value transfer start
to deploy alongside Direct Carrier
Billing.
3. New app stores can be integrated
with the Bango Payment Platform.
Once integrated technically with
the Bango API, they can use the
innovative Bango Grid to activate
existing and new Bango payment
routes and then use the new Bango
Boost technology to grow them
faster. Bango is focussed on helping
the few remaining app stores that
have not deployed carrier billing at
scale understand the benefits of
Bango as their platform provider.
Partner development
Bango take Google Play to Latin America
Bango
launched Google Play and
Microsoft’s Windows Phone Store with
multiple mobile operators in Mexico.
For Google these launches were their
first in Latin America, a region where
smartphone growth has been dramatic
in the last 2 years.
Now is the ideal time to be expanding
in the Latin America region – a year
on year increase of smartphone units
sold reaching 59% make it the highest
growth mobile market in the world
(CNBC, 2015).
12
Bango PLC | Annual Report 2015 Principal risk and uncertainties
Principal risks and uncertainties
Financial risk management objectives and policies
Bango monitors the financial risks to which it is exposed through its business activities. The board and key management personnel
regularly review these risks and assess the controls that have been put in place to mitigate them. 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 on the
financial risks.
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. Due to the nature of the
business there is not a significant credit
risk from our payment partners and this
does not impact our liquidity risk.
Currency risk
Overseas currency sales are largely
offset by costs in the same currency,
therefore exposure to currency risk is
considered to be relatively small. See
note 21 for further information. No
forward exchange or other such financial
instruments have been used in the year.
its
technology
Technology risk
is dependent
The Group’s revenue
on
keeping pace
with developments in mobile phone
technology. 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.
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
including
environment and benefits,
a share option scheme available to all
employees (notes 7 and 12).
business model
Payment providers
The
is
current
dependent on payment providers. These
are therefore key trading relationships
to the Group. The Group manages risk
through regular dialogue and investment
in relationships with payment providers.
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 extensive testing of Bango by
its major customers as part of ongoing
the unique
customer audits, and
way Bango technology is used, gives
assurance that this risk is appropriately
mitigated.
Gender of Directors and senior managers
Bango has seven Directors, four identify as male, two as non-binary and one as female. There are eight other key management
personnel of which four identify as male and four as female.
The strategic report which incorporates pages 3 to 13 was approved by the Board of Directors, and signed on its behalf by:
Ray Anderson
CEO
Financial
Bango business models
Bango operates two business models,
with no preference. To support our
partners’ needs, Bango can operate
different models, in different countries
for the same app store.
13
Principal model
Agent model
Bango are the merchant of record
buying and reselling the content to end
users. Bango manage the payments to
developers and app stores.
All EUS is in the turnover and all of the
associated costs of sale are recognized.
Bango earn a percentage fee from
the operator or app store for each
transaction. Bango do not buy or sell
content, or have reporting and payment
responsibilities to developers.
Only profit from each transaction is
recognized.
Bango PLC | Annual Report 2015 Product development
Don’t DIY
In 2015 Bango ran a global campaign targeting operators considering integrating
directly into app stores. The campaign highlighted the risks of “DIY” carrier billing,
concluding that the vastly greater expertise and specialist “tools for the job” provided
by Bango guarantee quality and an injury-free experience!
Before operators seriously consider a DIY integration into an app store, they need to
understand the five most common dangers of a Do It Yourself (DIY) approach to carrier
billing integration:
It went over budget
It worked ok…for a while
resources
and
Underestimating
requirements are classic DIY errors
leading to many projects going over
budget.
A hidden danger of DIY is that you are
on your own. You don’t know what is
and isn’t working until after you have
finished the project.
It’s late
I didn’t plan for that
It’s ok to learn as you go if you have
plenty of time and no revenue risk. But
remember if you DIY - the revenue
you lose for each delayed month is lost
forever.
It is easy to underestimate project
complexity leading to even more lost
time and money. With DIY projects
you can damage yourself and your
reputation!
It doesn’t work
supposed to
like
it’s
If you don’t have
the specialist
knowledge, previous experience and
technical architecture
the finished
product may not be what you hoped for.
“We wanted to work with a partner that has
experience across all app stores, a partner that has
done this before, and that would allow us to go to
market quickly. Bango was the logical conclusion to
our search”
Prince Thomas
Digital services development lead, du
Partner development
Success story
du, one of the largest operators in the
UAE launched carrier billing in five app
stores within nine months of integrating
into
the Bango Payment Platform.
Successfully realizing the one-to-many
effect of the Bango Payment Platform.
14
Bango PLC | Annual Report 2015 Directors
Directors
REPUBL IC OF BANGO
Su rname
SEAR
G iven name
DAVID
T i t le
CHAIRMAN
Na t iona l i ty
BRITISH CITIZEN
S ta r t da te
2010
S ex
MALE
Expe r ien ce
H i s to ry
industry
• Group Chief Executive at Skrill
• extensive experience in the payments
• Chief Executive at Weve, the joint
venture between EE, Telefonica UK (O2)
• six years at Travelex, the world’s largest
and Vodafone UK
non-bank payments provider
• three years as Commercial and Scheme
Managing Director at Voca
• founding member of WorldPay
REPUBLIC OF BANGO
Surname
Anderson
Given name
Ray
Title
CEO
Nationality
BRITISH CITIZEN
Start date
1999
Sex
NON-BINARY
Experience
• over 30 years experience in starting,
• named ‘Business Person of the Year’ in
growing and selling businesses
2012
History
• co-founded Bango in 1999
• established IXI which created the industry
• IXI was an early leader in the creation
standard network GUI - X.desktop
of the web
REPUBLIC OF BANGO
Surname
MALHOTRA
Given name
ANIL
Title
CMO
Nationality
BRITISH CITIZEN
Start date
1999
Sex
NON-BINARY
Experience
• responsible
for
Bango’s
marketing
activities and app store partnerships
experience
successful partnerships
• extensive
of
creating
History
• co-founded Bango in 1999
• developed major partnerships for Cyberlife
Technology, one of Europe’s leading
computer games technology developers
• worked with Bango CEO Ray Anderson to
establish X.desktop as the global
user interface standard for networked
computers
15
Bango PLC | Annual Report 2015 REPUBLIC OF BANGO
Surname
TUCKER
Given name
GERRY
Title
STRATEGIC PARTNERSHIPS DIRECTOR
Nationality
BRITISH CITIZEN
Start date
2012
Sex
MALE
in
experience
management
Experience
computer games industry and large telco
• senior
experience
• vast experience in corporate mergers
and acquisitions, finance regulation,
financial modelling and fast growth
businesses
History
• telco, software and games companies
• senior financial and operational positions
include Kuju Entertainment, Activision,
Vodafone Ireland and Deloitte
REPUBLIC OF BANGO
Surname
BURGER
Given name
RUDY
Title
NON-EXECUTIVE DIRECTOR
Nationality
UNITED STATES OF AMERICA
Start date
2010
Sex
MALE
Experience
• managing Partner at Woodside Capital,
a Silicon Valley investment bank for
emerging growth companies
• serves on the boards of several US and
European companies
History
media technologies sector
• founded five companies in the digital
• BSc and MSc from Yale University and a PhD
from Cambridge University
Directors
REPUBLIC OF BANGO
Surname
ELIAS-JONES
Given name
RACHEL
Title
CFO
Nationality
BRITISH CITIZEN
Start date
2016
Sex
FEMALE
Experience
for
Accountant
• experienced finance leader and Chartered
• provides strategic guidance to Bango app
• responsible
store and operator partners
overall
financial
management of the Bango Payment Platform
• Bango Financial Controller, ensuring
innovation of critical finance functions
and commercial flexibility
• five years in practice at ‘top 5’ audit
firms, specializing in the technology and
listed sectors
History
R E P U B L I C O F B A N G O
S u r n a m e
R I G B Y
G i v e n n a m e
M A R T I N
N O N - E X E C U T I V E D I R E C T O R
B R I T I S H C I T I Z E N
N a t i o n a l i t y
T i t l e
S t a r t d a t e
2 0 0 7
S e x
M A L E
E x p e r i e n c e
• c o - f o u n d e r a n d C E O o f P s o n a r , t h e i n t e r n e t
• f o u n d e r a n d a m a n a g i n g d i r e c t o r o f E T
m u s i c s e r v i c e
C a p i t a l , a n e a r l y i n v e s t o r i n B a n g o
i n n o v a t i v e
b u s i n e s s e s f o r o v e r 2 5 y e a r s
• N o n - e x e c u t i v e C h a i r m a n o f F S E F u n d
• i n v e s t i n g
• a d v i s o r y b o a r d m e m b e r o f t h e B e t t a n y
C e n t r e f o r E n t r e p r e n e u r s h i p a t C r a n fi e l d
t e c h n o l o g y
M a n a g e r s
i n
H i s t o r y
U n i v e r s i t y
16
Bango PLC | Annual Report 2015 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
R Elias-Jones – CFO (appointed 14 March 2016)
G Tucker – Strategic Partnerships Director (CFO until 14 March 2016)
M Rigby – Non-executive Director
R Burger – Non-executive Director
Company Secretary
H Goldstein
Bankers
Solicitors
Independent auditor
Nominated adviser and broker
Public relations advisor
US office
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
The Graybar Building
420 Lexington Avenue
Suite 300
New York, NY 10170
www.bango.com
investors@bango.com
17
Bango PLC | Annual Report 2015
Directors’ report
The Directors present the Annual Report and audited financial
statements of Bango PLC for the year ended 31 December 2015.
Japan, called Bango Kabushiki Kaisha, a 100% owned
subsidiary of Bango PLC.
Directors’ report
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
R Elias-Jones
Ordinary shares
of 20p each
31 Dec 2015
-
6,624,036
4,006,815
14,067
11,933
-
-
====================
Ordinary shares
of 20p each
31 Dec 2014
-
6,624,036
4,006,815
14,067
11,933
-
-
=====================
The Directors’ interests in share options of Bango were as
follows:
Options to buy ordinary shares of 20p each
Date of grant
G Tucker
18 September 2015
16 March 2015
22 October 2014
01 April 2014
4 October 2013
26 March 2013
Total
D Sear
7 February 2011
R Anderson
18 September 2015
A Malhotra
18 September 2015
R Elias-Jones
18 September 2015
16 March 2015
22 October 2014
01 April 2014
4 October 2013
26 March 2013
20 September 2012
Option
price
31 Dec
2015
31 Dec
2014
£0.885
£1.060
£1.010
£1.360
£1.260
£2.325
32,500
32,500
32,500
32,500
32,500
132,500
295,000
-
-
32,500
32,500
32,500
132,500
230,000
£1.530
100,000
100,000
£0.885
32,500
£0.885
32,500
£0.885
£1.060
£1.010
£1.360
£1.260
£2.325
£1.665
20,000
20,000
20,000
20,000
12,000
8,000
7,500
107,500
-
-
-
-
20,000
20,000
12,000
8,000
7,500
67,500
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.
Dividends
The Directors have not recommended a dividend (31 December
2014: £nil).
Post balance sheet events
After the year end the group has set up a new trading entity in
Bango PLC | Annual Report 2015
Directors’ indemnity arrangements
The Group has purchased and maintained throughout the year
Directors’ and Officers’ liability insurance in respect of itself and
its Directors.
to
Employment policies
The Group is committed to following the applicable employment
laws in each territory in which it operates. The Group is
committed
the
fair employment practices
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.
including
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.
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 £12.1m at 31 December 2015 (31
December 2014: £6.3m) and financing debt of £0.4m (31
December 2014: £0.6m). Significant investment in technology
development continues to be made. Bango raised £10.4m net
of expenses during 2015. 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 activations 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 10 March 2016 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
Odey Asset Management LLP
Inflection Point Investments LLP
Schroders Investment Management
Hargreave Hale
Wellington Management Company
%
Number
11,107,924 17.24
9,281,267 14.40
7,088,000 11.00
3,135,139 4.87
2,880,525 4.47
2,501,266 3.88
2,162,314 3.36
Directors’ responsibility
The following statement, which should be read in conjunction
with both reports of the auditor set out on page 22, is made in
respective
order
to distinguish
shareholders
the
for
18
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
Directors’ report
Directors’ report
responsibilities of the Directors and of the auditor in relation to
the financial statements.
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
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 the
parent company financial statements in accordance with IFRS.
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 have been followed
subject to any material departures disclosed and
explained in the financial statements.
Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that Bango
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
Bango 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 Bango’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.
19
Bango PLC | Annual Report 2015
Corporate governance statement
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.
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.
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, Strategic Partnership
Director 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.
The key features of Bango’s internal controls are described below:
structure with
clearly defined organizational
A
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.
Audit committee
The Audit Committee comprises the Chairman and all other Non-
executive Directors.
The Board in conjunction with the Audit Committee keeps under
review Bango’s internal control system on a periodic basis.
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.
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
November 2015. Due to new partners 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 partners. 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 2015
20
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 Bango or by the Executive Director.
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
shareholders
relation
applicable to the Group’s Executive Directors.
for reporting to the Group’s
remuneration policies
to
in
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 Bango.
Directors’ emoluments
Details of remuneration in respect of the Directors is provided in
note 13.
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
into account remuneration packages of
comparable companies when making recommendations to the
Board.
takes
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 2015 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.
21
Bango PLC | Annual Report 2015
Independent auditor’s report to the members of Bango PLC
Independent auditor’s report to the
members of Bango PLC
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 require 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.
certain disclosures of Directors’ remuneration specified
by law are not made;
we have not
received all
the
information and
explanations we require for our audit.
Paul Naylor, Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
14 March 2016
We have audited the financial statements of Bango PLC for the
year ended 31 December 2015 which comprise the consolidated
statement of financial position, the consolidated statement of
comprehensive income, the consolidated cash flow statement, the
consolidated statement of changes in equity, the statement of
financial position of Bango PLC, the statement of changes in equity
of Bango PLC, the cash flow statement of Bango PLC 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 and as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act
2006.
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 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 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 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 financial statements:
give a true and fair view of the state of the group's and
parent company’s affairs as at 31 December 2015 and of
its loss for the year then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance with
the provision of the Companies Act 2006.;
the
in
financial statements have been prepared
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
financial
statements are prepared
statements.
is consistent with
the
Bango PLC | Annual Report 2015
22
Consolidated statement of financial position
Consolidated statement of financial
position
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 2015
Note
£
31 Dec 2014
£
5
5
6
6
7
507,295
3,446,612
777,254
3,491,252
------------------------------------------------------------------
3,953,907
4,268,506
1,128,897
225,974
12,135,326
1,109,816
236,028
6,253,487
------------------------------------------------------------------
13,490,197
7,599,331
------------------------------------------------------------------
17,444,104
11,867,837
====================================
12,886,350
30,101,510
1,236,225
1,896,842
(30,211,087)
10,399,463
22,098,603
1,236,225
1,526,650
(25,461,538)
-------------------------------------------------------------------
15,909,840
9,799,403
====================================
8
9
9
1,170,244
268,476
1,478,293
296,817
-------------------------------------------------------------------
1,438,720
1,775,110
95,544
293,324
-------------------------------------------------------------------
95,544
293,324
1,534,264
2,068,434
-------------------------------------------------------------------
17,444,104
11,867,837
====================================
These financial statements were approved by the Directors on 14 March 2016 and are signed on their behalf by:
R Anderson
Director
G Tucker
Director
Company registration number 05386079
The notes on pages 27 to 51 are an integral part of these consolidated financial statements.
23
Bango PLC | Annual Report 2015
Consolidated statement of comprehensive income
Consolidated statement of
comprehensive income
Note
31 Dec 2015
£
31 Dec 2014
£
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
44,684,300
25,167,767
3,199,566
(1,024,793)
5,093,952
(2,703,363)
------------------------------ -------------------------------
2,390,589
(1,051,928)
------------------------------ -------------------------------
1,338,661
2,174,773
(907,697)
1,267,076
(4,411,328)
(433,434)
(484,871)
(969,013)
(5,017,665)
(395,110)
(542,882)
(801,484)
------------------------------ -------------------------------
(6,757,141)
------------------------------ -------------------------------
(5,418,480)
(5,031,570)
(6,298,646)
(20,865)
24,327
(24,116)
26,610
------------------------------ -------------------------------
(5,415,986)
(5,028,108)
15
215,317
(4,812,791)
266,210
------------------------------ -------------------------------
(5,149,776)
================ =================
(5,149,776)
================ =================
(4,812,791)
16
16
(9.05)p
(10.96)p
(9.05)p
(10.96)p
The notes on pages 27 to 51 are an integral part of these consolidated financial statements
Bango PLC | Annual Report 2015
24
Consolidated cash flow statement
Consolidated cash flow statement
Net cash used by operating activities
17
(3,234,118)
(3,177,167)
31 Dec 2015
£
31 Dec 2014
£
Note
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
(129,705)
(924,373)
24,327
(108,980)
(914,864)
26,610
------------------------------ ------------------------------
(997,234)
(1,029,751)
11,107,518
(617,723)
(20,865)
(311,329)
6,086,582
(394,961)
(24,116)
(338,911)
------------------------------ ------------------------------
5,328,594
10,157,601
------------------------------ ------------------------------
1,154,193
5,893,732
6,253,487
(11,893)
-----------------------------
6,241,594
5,110,366
(11,072)
-----------------------------
5,099,294
----------------------------- -----------------------------
6,253,487
================ ================
12,135,326
The notes on pages 27 to 51 are an integral part of these consolidated financial statements
25
Bango PLC | Annual Report 2015
Consolidated statement of changes in equity
Consolidated statement of changes in
equity
Group
Balance at 1 January 2014
Share based payments
Share based payments
transfer for exercised share
options
Exercise of share options
Issue of shares
Expenses of share issue
Transactions with owners
Loss for the year
Total comprehensive income
for the year
Balance at 31 December
2014
Balance at 1 January 2015
Share based payments
Share based payments transfer
for exercised share options
Exercise of share options
Issue of shares
Expenses of share issue
Transactions with owners
Loss for the year
Total comprehensive income
for the year
Balance at 31 December
2015
Share
capital
£
Share
premium
account
£
Merger
reserve
Other
reserve
Retained
earnings
Total
£
£
£
£
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
4,750,000
(394,961)
4,414,227
-
-
-
-
-
-
-
-
-
-
-
(837,294)
837,294
-
-
-
-
(442,184)
-
-
-
837,294
86,582
6,000,000
(394,961)
6,086,731
-
-
(5,149,776)
(5,149,776)
(5,149,776)
(5,149,776)
10,399,463
22,098,603
1,236,225
1,526,650
(25,461,538)
9,799,403
10,399,463
-
22,098,603
-
1,236,225
-
1,526,650
433,434
(25,461,538)
-
9,799,403
433,434
-
-
42,443
2,444,444
-
2,486,887
65,075
8,555,556
(617,724)
8,002,907
-
-
-
-
-
-
-
-
-
-
-
(63,242)
-
-
-
370,192
-
-
63,242
-
-
-
63,242
-
107,518
11,000,000
(617,724)
10,923,228
(4,812,791)
(4,812,791)
(4,812,791)
(4,812,791)
12,886,350
30,101,510
1,236,225
1,896,842
(30,211,087) 15,909,840
The notes on pages 27 to 51 are an integral part of these consolidated financial statements.
Bango PLC | Annual Report 2015
26
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. Bango PLC 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.
Bango PLC’s shares are listed on the Alternative Investment
Market of the London Stock Exchange ("AIM").
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 financial statements for the year ended 31 December 2015
(including the comparatives for the year ended 31 December
2014) were approved by the Board of Directors on 14 March
2016.
2 Basis of preparation
The Group financial statements, which consolidate those of
Bango PLC and all of its subsidiaries, have been prepared under
the historical cost convention and under the basis of going
concern.
Bango has prepared its Report and accounts for the year ended
31 December 2015, 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 and
Company’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.
The only change this year is the transition of the entity accounts
to IFRS in the year. There were no translation adjustments on
conversion to IFRS. This is therefore the parent company’s first
financial statements prepared in accordance with IFRS. The
Company’s IFRS accounting policies included here have been
applied in preparing the financial statements for the year ended
31 December 2015, the comparative information and the
opening statement of financial position at the date of transition,
1 January 2014. The Company has applied IFRS 1 First-time
Adoption of International Financial Reporting Standards in
preparing these first IFRS parent financial statements. There
were no transition adjustments and no effect on the transition
to IFRS on equity and total comprehensive income. The
components of cash and cash equivalents under previous GAAP
are consistent to those presented under IFRS.
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 2015. 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 2016, or later periods, have
been adopted early. During the year IFRS 7 amendments
relating to offsetting financial assets and liabilities come into
effect. The Directors do not believe that the adoption of this or
other standards and interpretations would have a material
impact on the Group’s financial statements.
The Group had cash of £12.1m at 31 December 2015 (31
December 2014: £6.3m) and financing debt of £0.4m (31
December 2014: £0.6m). 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
the
the application of other accounting policies
with
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.
3.1 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 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 consolidated financial statements incorporate the financial
statements of Bango PLC 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.
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
27
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
amortized on a straight-line basis over the expected useful
economic lives:
highly liquid investments.
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.
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.
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.
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
Bango PLC | Annual Report 2015
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 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.
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
28
Notes to the financial statements
Notes to the financial statements
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.
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 judgmental 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.
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
licenses to digital merchants and are recognized evenly over the
period of the contract since the services are provided evenly
over this 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.
3.14 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.
29
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
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
recognized is transferred from Other reserves to Retained
earnings. Share-based payment transactions are shown
separately
income.
Additional information is provided in note 7.
in the statement of comprehensive
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.
3.16 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 organizations. 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.
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.
Share capital and reserves
3.18
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 Bango
PLC’s cost of investment and a subsidiary’s share capital and
share premium where a group reorganization 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 recognized 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 £364,020 (2014: £590,141).
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
Bango PLC | Annual Report 2015
30
Notes to the financial statements
Notes to the financial statements
carrying value of capitalized development costs is £3,446,612 (2014: £3,491,252).
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 2015.
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 2018).
Clarification of Acceptable Methods of Depreciation and Amortization – amendments to IAS 16 and IAS 38 (IASV effective date 1 January
2016).
Annual improvements to IFRSs 2012-2014 cycle (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.
4 Segment reporting
(a) End User Spend
As a non IFRS alternative performance measure, Bango has identified EUS 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 Report and accounts is a mixture of gross transaction value where Bango is principal and margin only where
Bango is 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 and to assist users of our financial statements, we include this additional reporting.
End User Spend
Analyzed as agency
Analyzed as principal
Analyzed as agency
Analyzed as principal
31 Dec 2015
31 Dec 2014
£
£
44,684,300
25,167,767
================= =================
42,538,240
2,146,060
21,127,273
4,040,494
95%
5%
84%
16%
(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.
31
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
12 months to 31 December 2015
End user
activity
Platform
fees
Group
Total
£
£
£
£
Segment turnover
Attributable to digital merchants
Cost of sales – payment providers
2,741,385
(1,024,793)
(907,697)
458,181
-
-
------------------------------- ------------------------------- ------------------------------- -------------------------------
3,199,566
(1,024,793)
(907,697)
-
-
-
Segment gross profit
808,895
458,181
-
1,267,076
------------------------------- ------------------------------- ------------------------------- -------------------------------
Administrative expenses
Share based payments charge
Depreciation
Amortization
Interest payable
Interest income
Segment net profit/ (loss)
Segment assets
Segment liabilities
Net assets
-
-
-
-
-
-
-
-
-
-
-
-
(4,411,328)
(433,434)
(484,871)
(969,013)
(20,865)
24,327
(4,411,328)
(433,434)
(484,871)
(969,013)
(20,865)
24,327
------------------------------- ------------------------------- ------------------------------- -------------------------------
(5,028,108)
================== ================ ================ ================
(6,295,184)
808,895
458,181
500,789
192,524
16,750,791
17,444,104
(379,890)
(1,534,264)
--------------------------------- ------------------------------ ------------------------------- ------------------------------
15,909,840
================== ================ ================ ================
15,603,652
(1,147,139)
120,899
185,289
(7,235)
12 months to 31 December 2014
Segment turnover
Attributable to digital merchants
Cost of sales – payment providers
End user
Activity
Platform
fees
Group
Total
£
£
£
£
4,358,107
(2,703,363)
(1,051,928)
735,845
-
-
------------------------------- ------------------------------- ------------------------------- -------------------------------
5,093,952
(2,703,363)
(1,051,928)
-
-
-
Segment gross profit
602,816
735,845
-
1,338,661
------------------------------- ------------------------------- ------------------------------- -------------------------------
Administrative expenses
Share based payments charge
Depreciation
Amortization
Interest payable
Interest income
Segment net profit/ (loss)
Segment assets
Segment liabilities
Net assets
-
-
-
-
-
-
-
-
-
-
-
-
(5,017,665)
(395,110)
(542,882)
(801,484)
(24,116)
26,610
(5,017,665)
(395,110)
(542,882)
(801,484)
(24,116)
26,610
------------------------------- ------------------------------- ------------------------------- -------------------------------
(5,415,986)
================== ================ ================ ================
(6,754,647)
602,816
735,845
598,344
156,756
11,112,737
11,867,837
(1,166,615)
(2,068,434)
-
--------------------------------- ------------------------------ ------------------------------- ------------------------------
9,799,403
================== ================ ================ ================
10,210,918
(568,271)
(901,819)
156,756
Bango PLC | Annual Report 2015
32
Notes to the financial statements
Notes to the financial statements
Included within the end user segment turnover is £2.15m (31 December 2014: £3.94m) relating to a major strategic partner, and included
within platform fees there was £0.22m (31 December 2014: £0.34m) 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 all based in the UK.
(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
Indonesia
Rest of World
31 Dec 2015
31 Dec 2014
£
£
129,265
171,631
983,089
978,529
937,052
501,050
335,025
1,873,752
1,258,342
1,125,783
----------------------------------------------------
3,199,566
----------------------------------------------------
5,093,952
================= =================
Segment turnover is based on the location of the partners, of which in platform fees £0.22m (31 December 2014: £0.34m) came from a
strategic partner based in the USA and Canada. All turnover from end users is spread over many territories.
33
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
5 Non-current assets
5.1 Property, plant and equipment
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
Cost
At 1 January 2015
Additions
Disposals in the year
At 31 December 2015
Depreciation
At 1 January 2015
Charge for the year
Disposals in the year
At 31 December 2015
Net book value
At 31 December 2015
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
=======================
2,450,601
610,504
(1,012,208)
-----------------------------------------
2,048,897
========================
1,458,045
519,385
(1,012,208)
----------------------------------------
965,222
========================
1,740,969
542,882
(1,012,208)
---------------------------------------
1,271,643
=======================
41,044
================
37,605
================
698,605
===================
777,254
==================
Leasehold
improvements
£
Office
equipment
£
Computer
equipment
£
Total
£
236,988
117,798
-
---------------------------------
354,786
====================
195,944
23,605
-
--------------------------------
219,549
===================
148,082
6,999
-
--------------------------------
155,081
===================
110,477
14,059
-
--------------------------------
124,536
===================
1,663,827
90,115
-
----------------------------------
1,753,942
====================
2,048,897
214,912
-
-----------------------------------------
2,263,809
========================
965,222
447,207
-
----------------------------------
1,412,429
=====================
1,271,643
484,871
-
----------------------------------
1,756,514
=====================
135,237
===============
30,545
===============
341,513
================
507,295
=================
Included at year end within leasehold improvements were assets with net book value of £76,686 and computer equipment with net book
value of £197,034 held under finance leases (31 December 2014: computer equipment £483,934). Depreciation is shown within
administrative expenses in the income statement. Financial lease liabilities are secured on the assets to which they relate.
Bango PLC has no property, plant and equipment.
Bango PLC | Annual Report 2015
34
Notes to the financial statements
Notes to the financial statements
5.2 Intangible assets
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
Cost
At 1 January 2015
Additions
At 31 December 2015
Amortization
At 1 January 2015
Charge for the year
At 31 December 2015
Net book value
At 31 December 2015
Domain Names
£
Internal
Development
£
Total
£
32,887
-
-------------------------------
32,887
==================
32,887
-
-----------------------------
32,887
=================
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
====================
Domain Names
£
32,887
-
---------------------------
32,887
================
32,887
-
----------------------------
32,887
================
Internal
Development
£
Total
£
5,322,936
924,373
----------------------------------------
6,247,309
========================
1,831,684
969,013
----------------------------------------
2,800,697
=========================
5,355,823
924,373
-----------------------------------------
6,280,196
========================
1,864,571
969,013
--------------------------------------
2,833,584
=======================
-
================
3,446,612
=====================
3,446,612
====================
Amortization is shown within administrative expenses in the income statement. Bango 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.
Bango PLC has no intangible assets.
35
Bango PLC | Annual Report 2015
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 2015
£
31 Dec 2014
£
1,133,897
(5,000)
485,294
109,853
538,750
545,796
85,482
504,671
------------------------------- -------------------------------
1,135,946
(26,133)
------------------------------- -------------------------------
1,109,816
236,028
------------------------------- -------------------------------
1,345,844
================= =================
1,128,897
225,974
1,354,871
At 31 December 2015, 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 2015
£
31 Dec 2014
£
79,381
20,193
44,668
-
-----------------------
144,242
=============
54,481
20,058
25,106
-
------------------------
99,645
=============
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:
Brought forward provision
Debts written off in the year
Increase in provision
Carry forward provision
31 Dec 2015
31 Dec 2014
£
£
26,133
(21,883)
750
------------------
5,000
==========
13,020
(7,887)
21,000
------------------
26,133
==========
Bango PLC | Annual Report 2015
36
Notes to the financial statements
Notes to the financial statements
7 Share capital and employee share options
Allotted, called up and fully paid:
Ordinary shares of 20p each in Bango PLC
No
£
As at 31 December 2013
Issue of new shares
Exercise of share options
As at 31 December 2014
Issue of new shares
Exercise of share options
As at 31 December 2015
45,610,343
9,122,069
6,250,000
136,973
-------------------------
51,997,316
-------------------------
12,222,222
212,213
-------------------------
64,431,751
1,250,000
27,394
-----------------------
10,399,463
-----------------------
2,444,444
42,443
-----------------------
12,886,350
================ ================
During the year 212,213 share options were exercised at exercise prices between 23 pence and 82.5 pence and a par value of 20 pence
per share. The total proceeds were £0.11m of which £0.04m was recognized as share capital and £0.07m as share premium.
In November 2015 Bango PLC issued 12,222,222 ordinary shares of 20 pence each at market price of 90 pence per share with existing
investors raising £11.0m gross and £10.4m net of expenses of £0.6m.
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:
31 Dec 2015
Options
31 Dec 2014
Options
Average
exercise price
per share
p
130
95
149
54
-----------------------------------
122
Average
exercise price
per share
p
132
118
161
63
-----------------------------------
130
No
2,844,996
893,000
(162,239)
(136,973)
-----------------------------------
3,438,784
===================== ===================== ===================== =====================
2,085,701
===================== ===================== ===================== =====================
No
3,438,784
1,014,500
(511,875)
(212,213)
-----------------------------------
3,729,196
2,340,707
132
124
Outstanding at 1 January 2015
Granted
Lapsed
Exercised
Outstanding at 31 December 2015
Exercisable at 31 December 2015
The weighted average share price at date of exercise of options exercised during the year was 97.52 pence (2014: 148.14 pence).
The fair value of options granted during the year, determined using the Black-Scholes valuation model, were between 37 – 48 pence.
Significant inputs into the model include a weighted average share price of 98.7 pence (31 December 2014: 120.6 pence) at the grant
date, the exercise prices, volatility of 47.2-48.4% (31 December 2014: 48.5%), dividend yield of nil (31 December 2014: nil), an expected
option life of five years (31 December 2014: five years) and an annual risk-free interest rate of 1.17-1.24% (31 December 2014: 1.51-
1.87%).
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.
37
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
At 31 December 2015, Bango PLC had the following outstanding options and exercise prices:
Average
exercise
price per share
31 Dec 2015
Options Remaining
Contractual
Average
exercise
Life price per share
Options
31 Dec 2014
Remaining
Contractual
Life
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
16 March
18 September
At 31
December
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
2025
2025
8 Trade and other payables
Trade payables
Social security and other taxes
Accruals and deferred income
Pence
Number
Months
Pence
Number
Months
-
-
-
-
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
106.00
0.885
-
-
-
-
27,000
158,250
24,250
96,000
100,500
48,417
46,375
46,375
46,520
73,297
72,560
100,000
47,740
66,767
20,000
20,000
95,322
-
140,323
100,000
355,000
10,000
50,000
300,000
339,000
374,500
362,000
609,000
-
-
-
-
2
5
9
15
21
27
34
38
46
51
57
62
63
69
69
72
75
80
81
83
87
88
90
94
100
106
111
117
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
-
-
2
2
8
9
14
17
21
27
33
39
46
50
58
63
69
74
75
81
81
84
87
92
93
95
99
100
102
106
112
118
-
-
--------------------------
---------------------------
3,729,196
==============
82
=====
3,438,784
==============
82
=====
31 Dec 2015
£
31 Dec 2014
£
851,901
95,429
222,914
1,199,114
104,311
174,868
----------------------- ------------------------------
1,478,293
============= ================
1,170,244
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.
Bango PLC | Annual Report 2015
38
Notes to the financial statements
Notes to the financial statements
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 2015
£
31 Dec 2014
£
198,649
270,836
-
------------------
469,485
=============
204,015
469,485
-
------------------
673,500
=============
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 prior year Bango entered into an additional finance lease to buy certain technical computer equipment and leasehold
equipment as part of the on-going upgrades to the Bango technology to cope with growth in the Group, the leases will terminate between
June 2016 and May 2018. 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
The company has no lease agreements.
10 Expenses by nature
Employee benefit expense
Depreciation & amortization
Other expenses
Analyzed as:
Administrative expenses
Share based payments
Depreciation
Amortization
31 Dec 2015
£
31 Dec 2014
£
281,042
99,926
------------------
380,968
------------------
(16,948)
------------------
364,020
=============
312,500
301,455
------------------
613,955
------------------
(23,814)
------------------
590,141
=============
31 Dec 2015
£
31 Dec 2014
£
268,476
95,544
------------------
364,020
296,817
293,324
------------------
590,141
============= =============
31 Dec 2015
£
31 Dec 2014
£
3,050,974
1,453,884
1,793,788
------------------------
6,298,646
=============
4,411,328
433,434
484,871
969,013
----------------------
6,298,646
============
3,394,158
1,344,366
2,018,617
----------------------
6,757,141
============
5,017,665
395,110
542,882
801,484
----------------------
6,757,141
============
39
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
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 other assurance services
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
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 2015
£
31 Dec 2014
£
3,800
37,000
9,000
6,220
6,300
3,000
37,000
8,750
6,335
5,390
160,811
264,494
20,865
24,116
(52,885)
(129,750)
295,002
189,869
969,013
68,864
322,816
220,066
801,484
153,110
================= =================
31 Dec 2015
No
31 Dec 2014
No
8
6
3
19
3
25
--------
64
======
7
6
3
23
3
24
--------
66
======
31 Dec 2015
£
31 Dec 2014
£
2,958,122
351,146
99,622
433,434
-----------------------
3,842,324
3,200,242
401,834
66,028
395,110
-----------------------
4,063,214
================ ================
Included in the above payroll costs is £791,350 (31 December 2014: £669,056) capitalized within internal development (note 5.2).
The Directors have identified eleven (31 December 2014: nine) 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
31 Dec 2015
£
1,006,256
127,523
40,747
163,840
------------------
1,338,366
=============
31 Dec 2014
£
1,005,654
127,984
18,987
162,734
------------------
1,315,359
============
Bango PLC | Annual Report 2015
40
Notes to the financial statements
Notes to the financial statements
13 Directors
Remuneration in respect of Directors was as follows:
Emoluments
31 December 2015
R Anderson
A Malhotra
G Tucker
M Rigby
R Burger
D Sear
31 December 2014
R Anderson
A Malhotra
G Tucker
M Rigby
R Burger
D Sear
31 Dec 2015
£
31 Dec 2014
£
550,433
============
493,420
============
Wages and
salaries
Pension and
other benefits
£
179,700
163,520
127,440
15,750
15,750
42,000
-----------------
544,160
==========
£
713
1,985
3,575
-
-
-
------------------
6,273
==========
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
==========
Total
£
180,413
165,505
131,015
15,750
15,750
42,000
-----------------
550,433
==========
Total
£
150,000
140,120
129,800
15,750
15,750
42,000
-----------------
493,420
==========
The highest paid Director received total salary of £179,700 (31 December 2014: £150,000), pension contributions of £713 (31 December
2014: £nil), and share based compensation of £3,259 (31 December 2014: £nil).
The number of Directors who accrued benefits under pension schemes was three (31 December 2014: one).
The total share based compensation for Directors was £37,573 (31 December 2014: £41,803).
For details of Directors options please see the Directors and their interest section of the Directors’ report.
14 Investment income
Bank interest receivable
31 Dec
2014
£
(26,610)
================ ================
31 Dec 2015
£
(24,327)
41
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
15 Taxation
Income tax
R&D tax credits receivable
Over/(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 20.25% (31 December
2014: 21.49%)
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
Other permanent differences
Adjustments in relation to prior years
Total tax
31 Dec 2015
£
(225,371)
10,054
31 Dec 2014
£
(236,028)
(30,182)
----------------------- ------------------------------
(266,210)
================ ================
(215,317)
(5,028,108)
(5,415,986)
================ ================
(1,018,192)
(1,163,895)
101,288
-
800,246
(177,705)
89,557
(20,565)
10,054
100,092
(17,835)
911,162
(208,858)
127,149
16,157
(30,182)
------------------------------ ------------------------------
(266,210)
================ ================
(215,317)
At 31 December 2015 the unutilized tax losses carried forward amounted to £27.9 million (at 31 December 2014: £23.6 million).
Deferred tax assets/ (liabilities):
Share option deduction
Tax losses
Other temporary differences
Accelerated capital allowances and capitalized
development costs
Provided
Provided
Unprovided
Unprovided
31 Dec 2015
31 Dec
2014
31 Dec 2015
31 Dec 2014
£
£
£
£
-
395,452
1,620
-
475,778
-
59,940
4,958,906
-
105,920
4,713,804
-
(475,778)
(397,072)
-
----------------------- ------------------------------ ----------------------- -----------------------
4,819,724
================ ================ ================ ================
5,018,846
-
-
-
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
31 Dec 2015
£
31 Dec 2014
£
(4,812,791)
(5,149,776)
Weighted average number of ordinary shares in issue
53,185,680
46,985,640
Earnings (basic) per share
(9.05) p
(10.96) p
Bango PLC | Annual Report 2015
42
Notes to the financial statements
Notes to the financial statements
(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 2015
£
31 Dec 2014
£
(4,812,791)
(5,149,776)
53,185,680
46,985,640
(9.05) p
(10.96) p
At 31 December 2015 options over 3,729,196 (31 December 2014: 3,438,784) 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
(Increase)/decrease in receivables
Decrease in payables
Corporation tax rebate
Net cash used by operations
31 Dec 2015
£
(4,812,791)
1,453,884
(215,317)
(24,327)
20,865
11,893
433,434
(19,082)
(308,048)
31 Dec 2014
£
(5,149,776)
1,344,366
(266,210)
(26,610)
24,116
11,072
395,110
878,872
(608,192)
------------------------------ ------------------------------
(3,397,252)
220,085
------------------------------ ------------------------------
(3,177,167)
================ ================
(3,459,489)
225,371
(3,234,118)
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
31 Dec 2015
£
31 Dec 2014
£
12,615,620
----------------------
12,615,620
================
7,047,512
------------------------
7,047,512
==============
31 Dec 2015
£
31 Dec 2014
£
480,294
12,135,326
----------------------
12,615,620
794,025
6,253,487
----------------------
7,047,512
=============== ===============
43
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
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 2015
£
31 Dec 2014
£
1,074,815
--------------------
1,074,815
==============
1,373,982
-----------------------
1,373,982
=============
31 Dec 2015
£
31 Dec 2014
£
851,901
222,914
--------------------
1,074,815
==============
1,199,114
174,868
------------------------
1,373,982
=============
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 partners 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.
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 2015 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 2015
£
31 Dec 2014
£
1,074,815
165,088
103,388
95,544
---------------------
1,438,835
1,373,982
147,258
149,559
293,324
---------------------
1,964,123
============= =============
The company had trade and other payables due within 6 months of £69,427 (2014: £17,836).
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 2015 Bango PLC issued £11.0m new shares on the AIM market in November (31 December 2014:
£6.0m). 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 2015 Bango only had hire purchase borrowings.
Bango PLC | Annual Report 2015
44
Notes to the financial statements
Notes to the financial statements
Capital for the reporting year under review is summarized as follows:
Overall financing
31 Dec 2015 31 Dec 2014
£
£
Capital
31 Dec 2015 31 Dec 2014
£
£
Total equity
Less cash and cash equivalents
Plus borrowings
9,799,403
-
590,141
15,909,840
-
364,020
9,799,403
(6,253,487)
-
--------------------------------------------- --------------------------------------------------------------------------------------- --------------------------------------------- ---------------------------------------------------------------------------------------
3,545,916
============ ============== ============ ==============
15,909,840
(12,135,326)
16,273,860
3,774,514
10,389,544
-
The capital to overall financing ratio is 23.2% (2014: 34.1%).
21 Market risk analysis
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
Indonesia Rp
IDR
Qatari Riyal
QAR
South African Rand ZAR
Saudi Arabian Riyal SAR
Other
Short term exposure
£
Financial
assets
31 Dec 2015
£
Financial
liabilities
427,780
342,652
£
Net
assets/
(liabilities)
85,128
£
Financial
assets
31 Dec 2014
£
Financial
liabilities
£
Net assets/
(liabilities)
631,922
952,021
(320,099)
84,096
5,455
78,641
88,133
11,272
39,168
83,817
164,977
-
-
-
39,168
30,835
-
83,817
164,430
1,493
162,937
164,977
152,419
-
152,419
76,861
30,835
2,876
11,595
46,310
51,203
------------------------------------
911,824
==== =====
-
-
-
2,498
-----------------------
350,605
==== =====
2,876
11,595
46,310
48,705
--------------------
561,219
==== =====
7,172
26,413
76,382
31,541
---------------------
1,209,247
==== =====
-
72
-
802
--------------------
965,660
==== =====
7,172
26,341
76,382
30,739
--------------------
243,587
==== =====
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
£26,725 and if it moved by 10% then there would be a total loss of £51,020.
22 Post balance sheet event
In February 2016 Bango Kabushiki Kaisha, a sales and support office, was established in Japan a new and strategically important market
for Bango. It is a 100% owned subsidiary of Bango PLC and currently has one senior employee.
45
Bango PLC | Annual Report 2015
Statement of financial position of Bango PLC
Statement of financial position of
Bango PLC
ASSETS
Non-current assets
Investment in subsidiary
Current assets
Trade and other receivables due within one year
Trade and other receivables due after one year
Total assets
EQUITY
Capital and reserves
Share capital
Share premium account
Other reserve
Retained earnings
Total equity
LIABILITIES
Trade and other falling due within one year
Total liabilities
Total equity and liabilities
Note
31 Dec 2015 31 Dec 2014
£
£
3
4
4
5
28,617,365
--------------------------
28,164,431
-------------------------
27,798
15,876,320
------------------------
15,904,118
------------------------
44,521,483
=============
2,860
5,538,530
------------------------
5,541,390
------------------------
33,705,821
=============
12,886,350
30,101,510
1,896,842
(432,646)
10,399,463
22,098,603
1,526,650
(336,731)
-----------------------
-----------------------
33,687,985
44,452,056
============== ================
69,427
------------------------
69,427
------------------------
44,521,483
=============
17,836
------------------------
17,836
------------------------
33,705,821
=============
These financial statements were approved by the Directors on 14 March 2016 and are signed on their behalf by:
R Anderson
Director
G Tucker
Director
Company registration number 05386079
The notes on pages 27 to 51 are an integral part of these consolidated financial statements
Bango PLC | Annual Report 2015
46
Statement of changes in equity Bango PLC
Statement of changes in equity of
Bango PLC
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
Balance at 1 January 2015
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
2015
Share
capital
Share
premium
Other
reserve
Retained
earnings
Total
9,122,069
17,684,376
1,968,834
(1,012,938)
8,862,448
-
-
-
-
395,110
-
395,110
(837,294)
837,294
-
27,394
1,250,000
1,277,394
59,188
4,355,039
4,414,227
-
-
(442,184)
-
-
837,294
86,582
5,605,039
6,086,731
-
-
-
-
-
-
(161,087)
(161,087)
(161,087)
(161,087)
10,399,463
22,098,603
1,526,650
(336,731) 33,687,985
10,399,463
-
22,098,603
-
1,526,650
433,434
(336,731) 33,687,985
433,434
-
-
-
(63,242)
42,443
2,444,444
2,486,887
65,075
7,937,832
8,002,907
-
-
370,192
63,242
-
-
63,242
-
107,518
10,382,276
10,923,228
-
-
-
-
-
-
(159,157)
(159,157)
(159,157)
(159,157)
12,886,350
30,101,510
1,896,842
(432,646) 44,452,056
The notes on pages 27 to 51 are an integral part of these consolidated financial statements.
47
Bango PLC | Annual Report 2015
Cash flow statement of Bango PLC
Cash flow statement of Bango PLC
Loss for year
(159,157)
(161,087)
31 Dec 2015
£
31 Dec 2014
£
Cash flows from operating activities
Interest received
Increase in receivables
Increase in payables
Net cash used by operating activities
Cash flows generated from investing activities
Loan to group undertaking
Investment in subsidiaries
Net cash used by investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Costs associated with issuance of ordinary shares
Interest receivable
Net cash generated from financing activities
Net increase in cash and cash equivalents
(60,150)
(24,938)
51,590
-
(145)
8,226
------------------------------ ------------------------------
(153,006)
(192,655)
(10,337,790)
(19,500)
(5,538,530)
(85)
------------------------------ ------------------------------
(5,538,615)
(10,357,290)
------------------------------ ------------------------------
11,107,518
(617,723)
60,150
6,086,582
(394,961)
-
------------------------------ ------------------------------
5,691,621
------------------------------ ------------------------------
-
10,549,945
-
Cash and cash equivalents at beginning of year
-
-
Cash and cash equivalents at end of year
----------------------------- -----------------------------
-
================ ================
-
The notes on pages 27 to 51 are an integral part of these consolidated financial statements.
Bango PLC | Annual Report 2015
48
Notes to the financial statements
Notes to the financial statements
1 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 2015 of
£159,157 (31 December 2014: £161,087) is included in the Group result for the financial period.
The auditor’s remuneration for audit and non-audit services to Bango PLC was borne entirely by Bango.net Limited, a wholly owned
subsidiary.
2 Directors, employees and key management personnel
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 and key management personnel are disclosed in notes 12 and 13 of the Group accounts. A charge of
£73,230 (31 December 2014: £47,791) has been recognized within the parent company’s own figures relating to wages and salaries.
3 Investments
Cost
Shares in subsidiary undertakings at 31 December 2014
Share based payments
Investment in Bango Mobile limited
Shares in subsidiary undertakings at 31 December 2015
Net book amount
At 31 December 2015
At 31 December 2014
Fixed asset investments are shown at cost less provision for impairment.
Details of subsidiary undertakings at 31 December 2015 are as follows:
£
28,164,431
433,434
19,500
------------------------------
28,617,365
================
28,617,365
================
28,164,431
================
Country of
incorporation
Class of
share capital
held
Held by the
company
Nature of business
Bango.net Limited
England & Wales
Ordinary
100%
Bango Inc
Delaware, USA
Common
100%
Development, marketing and
sale of technology for mobile
phone users to purchase services
for their mobile phones
Sales and support office for
Bango.net Limited services in
USA
Bango Movil
Spain
Ordinary
100%
Support for Bango.net Limited
Bango SP Ltd
England & Wales
Ordinary
Bango Employee Benefits Ltd
England & Wales
Ordinary
Brazil
Ordinary
100%
100%
100%
Non-trading
Non-trading
Non-trading
Bango do Brasil Cessão de
Licenças de Programas de
Computador Ltda *
Bango Mobile Limited **
Nigeria
Ordinary
99%
Trading entity in Nigeria
*99% owned via Bango Movil and 1% owned by Bango Plc
**49% owned via Bango PLC, 50% owned by Bango.net Ltd (100% owned subsidiary of Bango PLC) and 1% by local representative in
Nigeria.
After the year end the company has set up a new trading entity in Japan, called Bango Kabushiki Kaisha, a 100% owned subsidiary of
Bango PLC.
49
Bango PLC | Annual Report 2015
Notes to the financial statements
Notes to the financial statements
4 Receivables
Amounts due from Group undertakings (due after one year)
Other receivables (due within one year)
31 Dec 2015
£
31 Dec 2014
15,876,320
27,798
-----------------------
15,904,118
================
5,538,530
2,860
------------------------
5,541,390
================
Bango PLC raised £10.4m net of fees in 2015 from the issue of new share capital to existing and new institutional shareholders. The cash
raised is loaned to the main trading entity of the group on an arm’s length basis. Interest on intercompany loans from the parent
company to the subsidiary undertakings are charged at a reasonable market rate of interest, calculated monthly on the balance
outstanding.
5 Payables
Trade payables
Accruals and deferred income
6 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
Amounts due from Group undertakings
Other receivables
Total financial assets
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 2015
£
31 Dec 2014
63,177
6,250
-----------------------
69,427
================
11,136
6,700
-----------------------
17,836
================
31 Dec 2015
£
31 Dec 2014
£
15,904,118
----------------------
15,904,118
================
5,541,390
------------------------
5,541,390
================
31 Dec 2015
£
31 Dec 2014
£
15,876,320
27,798
----------------------
15,904,118
================
5,538,530
2,860
-------------------
5,541,390
================
31 Dec 2015
£
31 Dec 2014
£
69,427
---------------------
69,427
===============
17,836
----------------------
17,836
=============
31 Dec 2015
£
31 Dec 2014
£
63,177
6,250
---------------------
69,427
11,136
6,700
---------------------
17,836
=============== ===============
Bango PLC | Annual Report 2015
50
Notes to the financial statements
Notes to the financial statements
7 First-time adoption exemptions applied
Upon transition, IFRS 1 permits certain exemptions from full retrospective application. Bango PLC has applied the mandatory exemptions
as set out below:
Financial assets and liabilities that had been de-recognised before 1 June 2009 under previous GAAP have not been recognised
under IFRS;
Bango PLC has used estimates under IFRS that are consistent with those applied under previous GAAP (with adjustment for
accounting policy differences).
51
Bango PLC | Annual Report 2015