Annual Report 2016
Contents
Strategic report
Highlights...........................................................................................................01
Bango at a glance................................................................................................02
Chairman’s statement..........................................................................................03
CEO’s statement..................................................................................................05
CFO’s statement.................................................................................................09
Strategy for growth.............................................................................................12
Principal risks and uncertainties............................................................................13
Report of Directors
Directors............................................................................................................15
Company information...........................................................................................17
Directors’ report...................................................................................................18
Corporate governance report................................................................................20
Audit comittee report...........................................................................................21
Remuneration committee report...........................................................................22
Financial statements
Independent auditor’s report to the members of Bango PLC (Bango)......................24
Consolidated statement of financial position .........................................................25
Consolidated statement of comprehensive income...................................................26
Consolidated cash flow statement.........................................................................27
Consolidated statement of changes in equity...........................................................28
Notes to the financial statements............................................................................29
Statement of financial position of Bango PLC…………………......................................50
Statement of changes in equity of Bango PLC.........................................................51
Cash flow statement of Bango PLC ………………………………………………………………………52
Notes to the financial statements…........................................................................53
2
Bango PLC | Annual Report 2016 Highlights
Highlights
2016 was a year of strong growth in footprint, partner relationships and technological advances.
191%
196% £5.1m
Growth in exit run rate
EUS increase
Stable cost base
$2bn
annual processing
capacity of
platform
Acquired BilltoMobile
Bango is now the only processor of carrier billing transactions across all four major
US mobile network operators (MNOs), representing more than 300 million connected
devices.
Xbox carrier billing
Extended partnership with Microsoft. New activations for Windows Store across all
Windows 10 devices, including first carrier billing launch for Xbox content.
India activation
Launched the first Google Play carrier billing activation in India with Idea Cellular.
At Idea Cellular, we continually innovate to provide our customers with the best
service, and Bango impressed us with their platform architecture, simplicity of
integration and credibility as the market leader.
Sashi Shankar, Chief Marketing Officer, Idea Cellular
“
“
1
Bango PLC | Annual Report 2016 Bango at a glance
Bringing mobile payments to everyone
Bango technology opens up online
payment to the mass market.
Internet giants that want to offer
payments to everyone use the
Bango Platform to deliver the best
possible payment performance at
global scale.
and easy way for any online service
to identify, authenticate and collect
money from users. Bango achieves this
simplicity by using information captured
and analyzed by the platform to process
transactions using payment routes that
are available to the user.
Bango sees a future in which payments
are deeply embedded
into user
experiences. The Bango Platform
enables that vision by providing a smooth
Bango is the winning choice for offering
carrier billing and other alternative
payment methods to every customer,
through one, global platform.
Power of a platform
The Bango Platform improves through
continual use by Bango partners, creating
and sharing value with every interaction
it processes. Shared across more major
stores than any other provider, the
Bango Platform has information that is
not available to other solution providers.
the Bango
Everyone connected
Platform ecosystem benefits from this
platform effect,
improving payment
performance and driving market growth.
to
•
insight
Payment providers gain
into user behavior to
increase
successful transactions and drive
user engagement
• Major stores and merchants can
model campaign performance to
focus
their massive advertising
spend to gain the highest ROI,
driving higher spend
• Major
stores
and merchants
maximize coverage through the
platform’s
payment
universal
capability - any device, any content
type, with any alternative payment
method
the biggest
reach
possible market
to
As more customers and partners
adopt the Bango Platform and as more
transactions are analyzed by Bango
technology,
the platform becomes
increasingly powerful, providing unique
insights that drive revenue growth. This
in turn drives more customers to use the
Bango Platform which feeds a virtuous
circle of success for the Bango Platform
and the industry.
Bango at a glance
#1
for app store
carrier billing
1.7bn
addressable
user base
140+
routes
activated
60+
countries
activated
1st
to launch
Google Play DCB
in LATAM
1st
to launch
Google Play DCB
in Africa
1st
to launch
Google Play DCB
in India
1st
to launch
Windows Store
DCB on Xbox
2
Bango PLC | Annual Report 2016 Chairman’s statement
Chairman’s statement
2016 was an impressive year for Bango.
The technology developed and deployed
by Bango in previous years comfortably
processed a near tripling of End User
Spend (EUS) with no additional operating
costs, demonstrating the operational
scalability of the business.
Bango technology continues to deliver
organic growth, both by efficiently
adding new billing routes and using a
powerful data analysis capability, Bango
Boost, to improve the yield of live routes
on the platform. The additional jump
in EUS resulting from the acquisition of
BilltoMobile was handled seamlessly, a
testament to both the technology and
the team.
The continuing success of Android in the
market supports the Bango strategy to
power the leaders. In 2016, four out of
every five smartphones sold were Android
devices. The app stores delivered record
breaking revenue to developers, with
many of the most successful titles, such
as Pokémon Go, making news headlines
across the world. Bango benefits directly
from these global trends, and from each
wave of apps, content and services that
are marketed and delivered through the
app stores.
I was struck by two findings Bango
published last year from its analysis
of consumer behavior. First, a ground-
breaking piece of research conducted by
Bango in partnership with Proximus, the
main Mobile Network Operator (MNO)
in Belgium, proving that consumers
who select carrier billing to pay in the
Google Play store increase the amount
of money they spend overall using their
mobile phone accounts. This analysis
is necessary to assure MNOs that
consumers do not reduce spending on
network services to fund apps, games,
movies and music. They simply increase
the amounts they spend.
The second piece of analysis looked at
what happened when last year’s mobile
blockbuster, Pokémon Go, was launched.
The research showed that a new title,
and new product genre, attracted many
first time users to carrier billing, and
did not simply redirect spending from
existing titles. This was incremental
spending.
Bango builds competitive differentiation
and value through technology, focusing
its R&D effort on anticipating the needs
of the market and on preparing for the
needs of its key partners. In 2017 some
of this investment will become visible in a
number of new and exciting applications
of the Bango Platform that leverage its
power and capabilities, enabling our
partners to expand mobile payments
into new products and services. The
interest in Bango technology is growing
beyond its major app store partners
and payment providers out to the major
app developers, who are increasingly
excited about directly accessing the
information
sophisticated payments
that has successfully boosted
performance of MNOs.
the
I am impressed by the management
team’s long-term thinking, which has
enabled Bango to deliver 2016’s eye-
catching growth on a stable cost based
technology-led strategy.
through a
Rachel Elias-Jones was promoted to
Chief Financial Officer, bringing a deep
understanding of Bango
technology
gained from her four years at Bango to
ensure the Bango Platform can handle
scale and complex requirements.
Rachel replaced Gerry Tucker as CFO
and on the Bango Board. Rudy Burger
retired from the Board after nearly
7 years to be replaced by Gianluca
D’Agostino. Gianluca brings a vast
amount of industry experience gained
from his career at Telecom Italia Mobile,
KPMG and a range of mobile technology
companies including Neomobile.
Bango enters 2017 in a very strong
position, enjoying significant growth in
End User Spend, closing-in on profitability
and with a healthy cash balance. Bango
has the most important pieces in place,
powering the leaders with the unique
Bango Platform and an excellent team.
It executed exceptionally well in 2016
and this year has the opportunity to
break new ground and set new records
with the business.
David Sear
Chairman
3
Visit Bango Investor online:
bangoinvestor.com
Bango PLC | Annual Report 2016 Product development
Bango Boost v2 – generating more revenue for payment
providers, stores and merchants
Bango Boost technology was enhanced
to enable stores and merchants to
maximize their carrier billing success.
Award winning Bango Boost v1 achieved
significant success for operators by
focusing on the causes of friction in
payment routes. It
increased basic
transaction success rate by between
20% and 40%, sometimes more. Bango
Boost v2 expands on this, providing
stores and merchants with unique
comprehensive data analysis, including
benchmarking performance, to enable
them to boost revenue growth and
customer experience.
“
Bango Boost has been an invaluable tool allowing us to monitor and optimize our
carrier billing services with Bango. The data provided has helped fill gaps in the
overall service performance and allowed us to take actions to continuously grow
the service.
Noaf Ereiqat, Manager Consumer Multimedia Services, du
Market development
Subscribers using carrier billing in Google
Play spend more across all operator
services
Bango and Belgian operator Proximus partnered to analyze the
impact of launching carrier billing in Google Play on subscriber
behavior. The findings show that contrary to popular belief:
1. Adding Direct Carrier Billing (DCB) to an app store does not
cannibalize end user spending on mobile data, voice and
SMS services
2. Pre-paid subscribers that pay using their mobile phone bill
in Google Play do not have a fixed wallet size. They maintain
the same level of spending on data, voice and SMS services
and spend additional money
on app store content
Download the report to view
the analysis, findings and
conclusions, visit:
http://bango.com/resource/
bango_proximus_report
“
4
Bango PLC | Annual Report 2016 CEO’s statement
CEO’s statement
“As Bango has started
to prove, revenues grow
faster using the Bango
Platform, and as app
stores have started to
the Bango
mandate
Platform to avoid the
burden and shortcomings
of a direct connection, the
competitive position of
Bango has strengthened.”
During 2016 the Bango Platform built
substantial momentum – demonstrated
by high growth in End User Spend from
established routes, and by the increasing
adoption of the Bango Platform by the
giants of the internet industry.
As more customers and partners
adopt the Bango Platform and as more
transactions are analyzed by Bango
technology,
the platform becomes
increasingly powerful, providing unique
insights that drive revenue growth. This
in turn drives more customers to use the
Bango Platform which feeds a virtuous
circle of success for the Bango Platform
and the industry.
Alternative payment methods such as
Direct Carrier Billing (DCB) are vital to
fill the payment gap caused by the rate
of smartphone growth hugely exceeding
the availability of credit cards. The Bango
Platform approach is increasingly being
recognized by partners and customers as
providing valuable insights and analysis
that cannot be achieved without Bango.
Growth across all markets
During 2016 Bango showed growth
from both developed markets, where
card payments are well established, and
also from emerging markets where DCB
is the only widely available method of
payment. In both cases the deployment
of DCB improves sales.
Bango made key hires in Latin America,
Asia and North America to ensure
increasing
its
global partners and local customers.
The Bango presence on the US West
Coast was also strengthened by the
collaboration with
acquisition in May 2016 of leading US
carrier billing business BilltoMobile. This
brought billing relationships to Bango
representing more than 300 million
connected devices across the USA and
new partners which have been migrated
to the Bango Platform.
To support the ambitions of Bango
customers in Japan and Korea, the most
valuable DCB markets in the world,
Bango made a senior hire in Tokyo to
head up Bango KK, its subsidiary in
Japan, and also established a strategic
partnership with Danal Inc, which leads
the DCB market in South Korea.
Technology focus and R&D
expansion
The strategy of building a powerful
platform that is used by a range of
customers across multiple payment
routes, rather than simply acting as
integrator or merchant
a payment
aggregator, is starting to demonstrate
its benefits.
Platform effect
The Bango Platform extends far beyond
the reliable and secure processing of
payment transactions. The information
gathered through interactions with users
that pay, and also those that are unable
to pay, creates a unique and valuable
pool of data. The data can then be
used to improve user experience for all
merchants, it also delivers deep insights
and behavioral data that can be used to
increase revenues and drive improved
marketing yields. With the broadest view
across the market, the Bango Platform
has knowledge and data that no one
Visit Bango Investor online:
bangoinvestor.com
5
Bango PLC | Annual Report 2016 else has, and can enable this to be
used - in compliance with privacy rules –
through the tools and APIs presented by
the Bango Platform. Everyone integrated
with the Bango Platform ecosystem
benefits
the platform effect,
supporting and driving market growth.
from
•
•
•
insight
Payment providers gain
into user behavior to
increase
successful transactions and drive
user engagement
Stores and developers can model
campaign performance to focus
their massive advertising spend to
gain the highest ROI, driving higher
user spending
Stores gain an increased reach
through the platform’s universal
payment capability to reach the
biggest available market
The more payment providers who
integrate with the Bango Platform, the
greater the benefits for every partner.
Bango Boost
insights
provides
MEFFY award-winning Bango Boost
and
technology
recommendations to payment providers
to grow their revenues. This has given
payment providers
integrate
with the Bango Platform an important
competitive advantage.
that
Bango Boost v2 adds enhanced
comparative analysis, peer benchmarking,
cohort behavior predictions and other
modelling techniques deployed in v1.
This enables marketers focused on
revenue growth and customer delight
to distinguish active customers from
inactive customers, generate transaction
forecasts for customers and determine
future best customers.
Bango Boost has enabled MNOs to find
new and effective ways to encourage
users to make their first purchase with
DCB, and then to tailor their marketing
to grow spending and achieve increased
return
investment
by
the highest spending
consumers.
on marketing
targeting
Migrations to the Bango Platform
In expectation of a number of migrations
to the Bango Platform from traditional
direct integrations between app stores
and MNOs during the next year and
beyond, Bango has developed tools and
technologies to streamline the upgrade.
The post-acquisition migration of live
routes from the legacy BilltoMobile
systems to the Bango Platform has been
a proving ground for these capabilities.
Bango has also developed Jarvis -
an internal suite of tools, modules,
simulators and systems to streamline
the integration of new payment routes.
Negotiations between MNOs and app
stores are normally the key factor
influencing activation
timing. Bango
ensures that the technical work is fast,
flexible and error free by using Jarvis to
configure the Bango Platform to external
payment systems, and minimize the need
for any technical integration work. With
hundreds of potential payment providers
needing Bango Platform
integration
in the coming years, the development
teams at Bango can be focused on
expanding platform capabilities and not
on initial integrations or migrations.
CEO’s statement
Developed new API with additional
functionality
One of the most substantial technological
achievements of Bango is the creation of
a stable API which presents the power of
the Bango Platform, and all the payment
routes it is integrated with, to the app
stores and merchants. During 2015 and
2016 the API was given a major upgrade
– culminating in the release of Bango
API v5.
Bango API v5 uses a unique and
innovative approach to ensure that
payment route diversity can be handled
within the Bango Platform, and without
the merchants and app stores having to
change their code for different payment
methods or user experiences. Bango API
v5 also incorporates new capabilities
that facilitate the sale of physical goods
such as partial shipment, partial refunds,
item by item tax variation and diverse
chargeback models.
Platform capacity
Bango systems are regularly load tested
to verify that they can comfortably
process well in excess of the transaction
volumes envisaged for the coming year.
During 2016 a number of changes
were made in the underlying systems
to streamline some of the critical
processes, and to move away from SQL-
based technology in areas that could
become constraints as Bango scales to
more than 10 times current transaction
levels.
Load testing at the end of 2016 and
during February 2017 provided comfort
that these changes now support at
6
Bango PLC | Annual Report 2016 CEO’s statement
least $2Bn/£1.6Bn EUS per year using
the current datacenters, hardware
and software. During 2017, Bango is
therefore in an excellent position to
handle eight times current EUS reliably,
safely and securely with little or no
incremental operating cost.
power
computing
As EUS levels climb into the billions of
dollars, the datacenters will require
additional
and
storage, but these are provided by the
addition of commodity hardware at very
low cost, so the gross margin generated
on transactional revenues should stay
well over 90%.
and app developers, and the acceleration
in EUS that is delivered through the
effective use of Bango Boost.
Fast growth in new users
Only a small percentage of customers
have used DCB so far. Even in established
DCB markets, less than 10% of users
have made their first purchase, and in
early stage markets this may be less
than 0.1%. Promotions by local MNOs,
the app stores and the app developers
themselves encourage users to buy
something using DCB. There is huge
growth potential from the addition of
first time users.
affecting
New forms of content and services
The availability of more content is
driving increasing EUS on the Bango
Platform. Such new types of service
include YouTube Red – a newly launched
ad-free YouTube service; Pokémon GO,
an alternate reality game which quickly
became a top selling app, and the
Three
revenue growth
factors
Users increase their spending on
digital entertainment and services
Growth of revenues from the existing
user base is driven by the continued
appeal of app store content, continued
marketing and promotion by app stores
Product development
Bango is leading US Direct
Carrier Billing provider
Bango acquired the BilltoMobile carrier
billing service from Danal Inc. Bango is
now the only processor of carrier billing
transactions across all four major US
Mobile Network Operators (MNOs),
representing more than 300 million
connected devices. The acquisition
positioned Bango as the leader in carrier
billing in the US market, consolidating its
position as the world’s leading provider
of carrier billing for app stores.
7
Bango PLC | Annual Report 2016 opportunity introduced by Microsoft to
allow DCB for Xbox games and services.
(064260.KQ) aimed at strengthening
its global payments footprint and for
mutual technical and business benefit.
Partner developments
A key business success factor is the
relationship Bango has with its strategic
partners, who are mostly the world’s
leading stores. In 2016 Bango both
strengthened some of
its existing
relationships as well as developed new
exciting opportunities.
Expanded
partnerships
key
strategic
In 2016 Bango expanded its agreement
with Microsoft to allow DCB to be
used as a payment method across all
Microsoft Windows 10 devices including
smartphone, tablet, desktop and Xbox
One. New services were launched in
Sweden, Finland, Norway and Hungary.
Bango has also continued to develop its
relationships with the other major stores
that choose to use the Bango Platform,
and the first fruits of these activities will
become more apparent in 2017.
Developed new partnerships
BilltoMobile powered DCB for several
large businesses, such as PayPal in
the USA. Bango is migrating these
customers to the Bango Platform to
provide improved reach and capabilities
and expects these new relationships to
blossom during 2017.
Bango signed a memorandum of
understanding with Korean mobile
commerce company Danal Co., Ltd
Growing within the DCB market
The Bango Platform is the leader in DCB
and is used by almost all the major app
stores.
The primary competition for DCB remains
the option for payment providers to
integration
implement a
with each app store directly rather than
leveraging an independent platform.
traditional
As Bango has started to prove, revenues
grow faster using the Bango Platform,
and as app stores have started to
mandate the Bango Platform to avoid
the burden and shortcomings of a direct
connection, the competitive position of
Bango has strengthened.
Management now believes that during
2016 leadership has been established in
Bango winning over direct integrations,
and that this will further drive the power
of the platform approach going forward,
leading to more wins and many more
migrations.
Outlook
Bango remains focused on growing EUS,
both in markets where it already operates
and in new markets that it can enter
through integrating with new payment
providers, offering new forms of digital
content and by activating stores for the
first time. The activation pipeline for new
routes has 220 opportunities across all
CEO’s statement
stores connected to Bango. Bango also
expects to see migrations in 2017 of
integrations that were previously direct
between stores and MNOs to the Bango
Platform which typically adds more EUS
in the first year then a completely new
integration, as the customer base have
already adopted DCB.
Each new billing route is revenue and
gross profit enhancing for Bango due
to the high operational scalability of
the business model. Therefore, with
continued EUS growth and corresponding
growth in revenues at low and steady
costs of transaction processing, Bango is
on track for a move to profitability within
current cash resources. Revenue from
End User Spend in FY2016 at £2.4m
exceeded the costs of operating the
Bango Platform. While Bango is now at
operational break-even, we continue to
invest in sales, marketing and product
development to expand the use of Bango
technology by our leading customers and
continue to grow our market share. This
ongoing investment supports our goals
of becoming EBITDA positive in the near
future and continuing our leadership
position.
to
Bango will continue
in
developing technologies that enhance
the power and value of the Bango
Platform.
invest
Ray Anderson
CEO
8
Bango PLC | Annual Report 2016 CFO’s statement
CFO’s statement
Revenue
Bango has changed
its accounting
policy and updated its reporting model
since publishing the FY2015 accounts.
Previously Bango reported turnover,
which was calculated as a mixture of
agency and principal models:
•
•
Principal model – where Bango is
the merchant of record, buying
and reselling the content to end
users. 100% of EUS is recorded as
turnover
Agency model – where Bango is not
the merchant of record. Only the
Bango transaction fee is recorded
as turnover
is now
The proportion of business that is
immaterial
principal model
in comparison to the agency model
business. Therefore, Bango now reports
on revenue which is the fee from every
the platform,
transaction
regardless of commercial model.
through
The prior year figures are reported to
aid comparison of the current year’s
performance.
The revenue model for platform fees has
not changed. It relates to all revenue
not generated from EUS, such as one
off integration fees or monthly recurring
revenues related to additional services
such as support. Revenue related to
specific projects is recognized when
contractual milestones are
certain
reached. Most platform fee revenue
relates to payments for integration to
the Bango Platform.
The revenue from EUS grew by more
than 150% to £2.41m
in FY2016
compared to £0.84m in FY2015 due to
the significant growth of EUS between
the two periods.
Revenue expressed as a
percentage of EUS
Revenue expressed as a percentage of
EUS was 1.8% (FY2015: 1.8%) and is
consistent with management’s short-
term expectations for this metric.
Bango has a range of contractual models
and pricing that link to total EUS in
different markets and with different
stores. Fees generally reduce with higher
EUS due to a tiered pricing model, so
revenue expressed as a percent of EUS
will typically be lower. Higher fees may
result when services such as Bango
Boost or analytical support are provided.
Acquisition of BilltoMobile Inc.
On 6 May 2016 Bango purchased
End User Spend
Bango achieved 196% growth in End
User Spend (EUS) to £132.2m, up from
£44.7m. Bango also drove a 191%
growth in the December 2016 EUS exit
run rate compared to December 2015.
The December 2016 exit run rate was
£195m. This growth in EUS was driven
by organic growth across the existing
routes from prior years and new routes
added in the year, including major
activations with US MNOs following the
BilltoMobile acquisition.
Bango is confident that it will sustain
further rapid growth in EUS in FY2017
and this growth will be achieved from
existing and new activations scheduled
for launch in the year. As announced
in the FY2016 interim results, unique
Bango technology such as Bango Boost
helped generate additional growth of
EUS on activated routes by between
20%-40%.
EUS is the total of sales processed
through the Bango Platform excluding
sales taxes. EUS shows the growth of
business through the Bango Platform.
EUS
the most significant Key
Performance Indicator that management
uses to measure the development of
the business and the success of Bango
partners.
is
End User Spend (EUS)
s 140
n
o
i
l
l
i
M
120
100
80
60
40
20
0
9
FY2013
FY2014
FY2015
FY2016
Bango PLC | Annual Report 2016 CFO’s statement
in sterling. The
BilltoMobile Inc from Danal Inc for
$3m and $0.4m of Bango shares. The
cash consideration for the acquisition
in sterling was £2.15m which was
paid just before the UK voted to leave
the EU (Brexit) and the subsequent
depreciation
total
number of shares issued to Danal Inc
was 586,095, equivalent to £0.34m
shares. The acquisition has resulted in
£0.4m of non-recurring costs linked to
direct costs relating to the transaction
and subsequent fees paid to Danal Inc
for the hosting of the service until it is
fully migrated to the Bango Platform.
Administrative expenses
Administrative expenses were in line with
the budget and expectations for FY2016
at £5.1m compared to £4.4m in FY2015.
This reflects planned spending internally
to increase the Bango sales and business
development presence to capitalize on
the momentum of commercial activity
with leading customers. Bango also
continues to invest in its development
team to enhance the Bango Platform.
Amortization of intangible assets in the
year was £1.1m (FY2015: £1.0m) as
further R&D projects capitalized in prior
years were deployed. Amortization of the
BilltoMobile Inc investment was £0.2m.
Depreciation for the year totaled £0.3m
(FY2015: £0.5m) reflecting the small
number of fixed asset additions in the
year, and that much on the equipment is
now fully depreciated.
Share based payment costs of £0.4m
in FY2016 (FY2015: £0.4m), are part of
the compensation package that Bango
uses to attract, motivate and retain
employees in a competitive market, all
employees other than Non-executive
Directors are eligible to take part in the
Bango share option scheme.
Balance sheet
Net assets of Bango were £12.3m at 31
December 2016 (at 31 December 2015:
£15.9m).
Cash balance decreased to £5.7m at
31 December 2016 (at 31 December
2015: £12.1m), this was driven by the
purchase of BilltoMobile Inc in the year
for £2.2m and cash used by operating
activities £2.6m
(FY2015: £3.2m).
With a stable cost base, and a future
of growing revenues at a high gross
margin, Bango will move closer to cash
generation in FY2017. The Board believe
Bango has sufficient funds in place to
take the Group through to profitability
and cash generation.
Intangible assets which includes acquired
assets and goodwill as well as internally
developed capitalized R&D in FY2016.
Intangible assets relating to capitalized
R&D remained consistent at £3.6m (at
31 December 2015: £3.4m) as a result
of on-going internal development work
being capitalized, compensating for the
amortization charges in the year. There
was £1.2m trade and assets relating to
BilltoMobile Inc and £1.2m of goodwill at
the year end.
Total borrowings are £0.1m (at 31
December 2015: £0.4m) and consist of
finance lease liabilities, most of which
are current liabilities for the next year.
Cash consumption
As Bango continues to grow its EUS and
revenue in 2017 it expects to see cash
consumption decrease as the revenue is
expected to grow and costs are planned
to be stable. With cash at the year-
end of £5.7m there is sufficient cash
in place to see the business through to
cash breakeven in the near term and
profitability in the medium term.
Rachel Elias-Jones
CFO
EUS, revenue and opex costs
s 140
n
o
i
l
l
i
M
120
100
80
60
40
20
0
FY2013
FY2014
FY2015
FY2016
EUS revenue
Operating costs
End User Spend (EUS)
s
n
o
i
l
l
i
M
10
9
8
7
6
5
4
3
2
1
0
10
Bango PLC | Annual Report 2016 Key Performance Indicators (KPIs)
End User Spend (EUS)
Cash balances
Revenue
The
total value of all payment
transactions through the Bango Platform
net of VAT or other sales taxes. By
monitoring the EUS growth, Bango
is able to monitor the increase in the
number of transactions through the
platform, leading to increasing revenue
and the capacity of the platform to
handle additional transactions.
The Bango Board reviews a two year
cash forecast on a monthly basis to
ensure that Bango has 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
which is recognized as revenue.
Increases in EUS will lead to additional
profit being recognized on each
transaction and this results in increased
revenue.
Net profit
Non-financial KPIs
With a consistent cost base and capacity
to scale to handle increased transaction
volumes, growing EUS will lead to break-
even faster. It is important to note that
increasing EUS will not require increasing
costs to process, so increasing revenue
will lead to profit.
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 the availability of carrier
billing for the Microsoft Windows Store
to major mobile markets across Europe,
including Finland, Norway and Hungary.
Users can now make purchases from any
Windows 10 device, including their PC,
tablet, smartphone and Xbox One, using
their mobile phone account.
Bango has seen a significant uptake in
the use of carrier billing to purchase Xbox
One content, which became available
as a payment method in September
2016, enabling users to make purchases
through carrier billing directly from the
console. This highlights the success
of the exceptionally smooth purchase
experience provided by carrier billing for
increasing customer engagement.
“Bango offers our operator partners
a sophisticated platform
for
launching, managing and growing
carrier billing business in the
Windows Store.”
Todd Brix,
Windows Store general manager
11
Bango PLC | Annual Report 2016 Strategy for growth
Strategy for growth
The goal of Bango is to enable online
payments for everyone. To achieve this
goal, the strategy is based on providing
a common platform for payments, the
Bango Platform, that is used by the
leading app stores and merchants who
need to serve a global audience.
their business
These Bango customers increasingly
concentrate
through
the Bango Platform to boost their
content revenues by optimizing billing
performance and expanding customer
reach. Bango Grid makes it easy for
these global players to activate new
billing routes, sell new products through
their stores and to improve marketing
effectiveness.
All of these activities increase End User
Spend processed through the Bango
Platform. In a virtuous circle, the stores
attract new users who make payments
through the Bango Platform. More
paying customers makes the store more
appealing to merchants, who introduce
new products and services. When new
merchants activate payments through
the platform they automatically benefit
from all of the billing intelligence Bango
holds, and the additional activity they
bring increases the value of the platform.
This strategically valuable positioning
puts Bango at the center of the growth
in online payments. The key factors
driving growth are:
•
Bango technology gives stores and
merchants information to boost End
User Spend from existing payment
routes
• New payment routes and new
payment methods added to the
Bango Platform are automatically
enabled for these customers
•
Stores and merchants introduce
new products and services that
users can immediately buy using
Bango technology
• New merchants and stores adopt
the Bango Platform to further boost
End User Spend
Uniquely, Bango provides information
that merchants use to analyze their sales
by comparing with industry benchmarks.
continuously
The Bango Platform
updates these benchmarks by sampling
multiple billing routes, products and
stores across a global footprint.
it easy
The Bango Platform APIs are open,
making
to activate online
payments. This platform is used for
directly charging a customer’s phone
account or mobile wallet, and is used
to manage payments that are collected
through a reseller channel. The APIs
enable Bango customers to present
payments to their end users through any
connected device. This enables all users
to be reached on every device, including
TVs, connected homes, entertainment
consoles and every kind of smart mobile
device.
Market development
Media content drives carrier billing growth
Music and video subscription services
such as Google Play music and YouTube
Red were high revenue generating
content types for carrier billing. The
ad-free YouTube service, YouTube Red
became a regular in the highest revenue
earners within weeks of launch. Google
Play music remained a constant presence
in the top earners throughout the year.
The huge consumption demands of the
digital audience have led to subscription
based content becoming increasingly
popular. Carrier billing offers the perfect
payment method to ensure continued
access to content with a safe, frictionless
experience.
12
Bango PLC | Annual Report 2016 Principal risk and uncertainties
Principal risks and uncertainties
Financial risk management objectives and policies
Bango monitors the following financial and operational risks to which it is exposed through its business activities. The Bango Board
and key management personnel regularly review these risks and assess the controls that have been put in place to mitigate them.
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.
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 partners as part of
ongoing supplier audits, and the unique
way Bango technology is used, gives
assurance that this risk is appropriately
mitigated.
its
technology
Technology risk
The Group’s revenue
is dependent
keeping pace
on
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
environment and benefits,
including
a share option scheme available to all
employees (notes 7 and 12).
Stores
If one store dominated all of the other
stores, but Bango did not have a close
business relationship with them or they
chose a single source provider other
than Bango, then this could be a limit to
Bango’s ability to grow into a significant
market leader. To date Bango has
secured deals with leading stores and
invests time and resources in developing
products that serve our partners.
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.
Gender of Directors and senior managers
Bango has six Directors, three identify as male, two as non-binary and one as female. There are eight other key management personnel
of which five identify as male and three 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
13
Bango PLC | Annual Report 2016 Partner development
Bango launches Direct Carrier Billing in India with Google Play and Idea Cellular
Bango and Idea Cellular partnered to
launch Direct Carrier Billing in Google
Play, a first for the Indian Sub-Continent.
is
third
the world’s
India
largest
smartphone market (GSMA, 2015), and
Android devices are extremely popular.
Credit card penetration in India is less
limiting customers’
than 3%,
ability
purchase mobile
to
content and services. Alternative
payment methods provide Indian
consumers with a vital payment
method to fully enjoy the app
store experience.
Product development
Bango Alternative Payments Nexus
In October 2016, Bango gathered
the mobile
leading players
payments industry in London, UK, to
discuss enabling payments for the
next 5 billion consumers.
in
The Bango Alternative Payments
Nexus heard Microsoft, POP Recarga,
MMIT and Bango speak about the
need for a unified platform to provide
alternative
ensuring
payments,
everyone, anywhere can easily pay.
The Bango Platform allows any
to be quickly
system
payment
plugged-in and activated
through
unique modular architecture and fifth
generation payments API.
Market development
New entertainment content drives adoption of carrier billing
Pokémon GO rocketed into the mobile
ecosystem in 2016. Billed as the world’s
first “real world gaming” platform,
Pokémon GO combines smartphone
capabilities and Augmented Reality
(AR) to create a gaming platform where
players explore the game, along with the
real world.
Many first time carrier billing users
used Bango to purchase Pokémon GO
content.
Bango Dashboard revealed that spend
on Pokémon GO in-app content was
additional spend, with no sign of attrition
from other games and content.
Partner development
Bango and Danal strengthen mobile payments partnership
Bango entered into a memorandum of
understanding with South Korean mobile
commerce company Danal Korea, Inc.,
aimed at strengthening
its global
payments
footprint and developing
a mutually beneficial exchange of
in regards to technical
information
expertise and markets.
Danal payment methods
integrated
into the Bango Platform will enable
Bango’s global partners to increase their
payment reach and make more sales.
Danal merchant partners will gain access
to the payment providers integrated into
the Bango Platform.
14
Bango PLC | Annual Report 2016 Directors
Directors
Anil Malhotra, CMO
in online
Anil is responsible for Bango’s marketing
activities and app store partnerships,
including device makers, app store
providers and global network operators.
Anil has extensive experience of creating
successful
between
partnerships
technology innovators and major market
players
technologies and
OEMs. Before co-founding Bango, Anil
developed the major partnerships for
Cyberlife Technology, one of Europe’s
leading computer games technology
developers, which
the
licensing of the company’s ‘artificial life’
technology by the world’s leading games
publishers including Warner and Hasbro.
Before that he worked with Bango CEO
Ray Anderson to establish a technology
called X.desktop, which became the
global standard for the user interface
software on networked computers.
resulted
in
15
Martin Rigby, Non-executive
Director
David Sear, Chairman, Non-
executive Director
Martin Rigby is co-founder and CEO of
Psonar, the internet music service. He is
also founder and a managing director of
ET Capital, an early investor in Bango.
He has been investing in innovative
technology businesses for over 25 years,
principally in network services, software
and hardware. He is Non-executive
Chairman of FSE Fund Managers and an
advisory board member of the Bettany
Centre for Entrepreneurship at Cranfield
University.
David has been an entrepreneur and
investor in FinTech companies for the last
two decades. He is currently Chairman
of Semafone, a payments technology
business which protects consumer
privacy. Previously David was Group
Chief Executive of Skrill. He went to Skrill
from Weve, the joint venture between
EE, Telefonica UK (O2) and Vodafone
UK, where he was Chief Executive. In
1999 he was a founder of WorldPay at
the genesis of today’s FTSE 100 global
payments powerhouse. Prior to that at
Travelex, the world’s largest non-bank
payments provider, he spearheaded the
global roll out of the CASH PASSPORT
travel card business and Travelex Global
Business Payments.
Bango PLC | Annual Report 2016 Directors
Directors
Rachel Elias-Jones, CFO
Ray Anderson, CEO
Rachel is responsible for overall financial
management of Bango, for corporate
financial functions and Bango’s financial
relationships with partners. The global
reach of Bango requires a wide range
of financial and
taxation models,
Rachel ensures the smooth running
of the team delivering this commercial
responsibility
flexibility. Rachel has
for
in
innovation and management
critical finance functions, and is closely
involved in product development to
ensure the Bango Platform can scale
requirements.
and handle complex
leader and
An experienced finance
Chartered Accountant, Rachel spent 5
years in practice at ‘top 5’ audit firms,
specializing in the technology and listed
sectors, prior to joining Bango.
Ray has over 30 years experience in
starting, growing and selling businesses.
He was named ‘Business Person of the
Year’ in 2012. Ray co-founded Bango in
1999 after realizing that the convergence
of the internet with the ubiquity of mobile
phones could open up huge opportunities
for content and service providers. Prior
to Bango Ray established IXI which
created the industry standard network
GUI - X.desktop. IXI was an early leader
in the creation of the web. It sponsored
the first ever WWW conference at CERN
and shipped the world’s first commercial
web browser.
Gianluca D’Agostino, Non-
Executive Director
Gianluca is an Angel investor and
pioneer in the mobile industry. He has 25
years’ experience of founding, growing
and investing in international mobile
content and payment businesses. In
2007 he founded Neomobile SPA. As
CEO, he grew the business organically
and via M&A to become a leading mobile
monetization enabler across Europe and
Latam. Gianluca has a Non-Executive
role on the Neomobile SPA board. Before
Neomobile, he held senior management
roles at KPMG, Freever, TIM and Telecom
Italia. He was named in the ‘Top 50
Mobile Execs’ 2009, 2010 and 2011 and
‘Media Momentum Man of the Year’ in
2011.
16
Bango PLC | Annual Report 2016 Company information
Company information
Company registration number
05386079
Registered office
5 Westbrook Centre
Cambridge
CB4 1YG
Tel: +44 3330 770 247
Directors
D Sear - Non-executive Chairman
R Anderson - CEO
A Malhotra - CMO
R Elias-Jones - CFO
M Rigby - Non-executive Director
G D’Agostino - 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
C/O Danal Inc
2833 Junction Avenue #202
San Jose
California
95134 USA
www.bango.com
investors@bango.com
17
Bango PLC | Annual Report 2016
Directors’ report
The Directors present the Annual Report and audited financial
statements of Bango PLC for the year ended 31 December 2016.
The Directors’ report should also be read in conjunction with the
Bango Strategic report which sets out the principal risks,
uncertainties and growth opportunities for Bango.
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
G D’Agostino
Ordinary shares
of 20p each
31 Dec 2016
-
6,628,949
3,986,815
176,630
17,045
-
4,100
37,500
====================
Ordinary shares
of 20p each
31 Dec 2015
-
6,624,036
4,006,815
14,067
11,933
-
-
-
=====================
The Directors’ biographies and experiences are shown on page
15-16.
Rachel Elias-Jones was appointed as a Director on 14 March
2016.
On 18 November 2016 Gerry Tucker and Rudy Burger resigned
as Executive and Non-executive directors respectively. On 18
November 2016, Gianluca D’Agostino was appointed a non-
executive Director.
The Directors’ interests in share options of Bango were as
follows:
Options to buy ordinary shares of 20p each
Date of grant
G Tucker
21 September 2016
16 March 2016
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
21 September 2016
16 March 2016
18 September 2015
Total
A Malhotra
21 September 2016
16 March 2016
18 September 2015
Total
R Elias-Jones
Option
price
£0.890
£0.430
£0.885
£1.060
£1.010
£1.360
£1.260
£2.325
2016
2015
20,000
32,500
32,500
32,500
32,500
32,500
32,500
132,500
347,500
-
-
32,500
32,500
32,500
32,500
32,500
132,500
295,000
£1.530
100,000
100,000
£0.890
£0.430
£0.885
£0.890
£0.430
£0.885
50,000
50,000
32,500
132,500
50,000
50,000
32,500
132,500
-
-
32,500
32,500
-
-
32,500
32,500
21 September 2016
£0.890
50,000
-
Bango PLC | Annual Report 2016
Directors’ report
16 March 2016
18 September 2015
16 March 2015
22 October 2014
01 April 2014
4 October 2013
26 March 2013
20 September 2012
Total
£0.430
£0.885
£1.060
£1.010
£1.360
£1.260
£2.325
£1.665
100,000
20,000
20,000
20,000
20,000
12,000
8,000
7,500
257,500
-
20,000
20,000
20,000
20,000
12,000
8,000
7,500
107,500
The share options were granted to executive directors under the
Bango employee share option scheme. All share options are
granted with the same conditions. Share options are granted
only at market price on the date of the grant and vest over a
three year period in twelve equal quarterly installments. Vested
options will lapse unless exercised within ten years of the date
of grant or within 90 days of an employee leaving the business
unless they are dismissed in which case they lapse immediately.
Martin Rigby and Gianluca D’Agostino both hold Bango shares
but due to the size of their holdings, this is deemed to not affect
their independence as directors. See post balance sheet event
section below for comment about David Sear’s share options.
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
2015: £nil).
Post balance sheet events
David Sear, the Chairman of Bango PLC surrendered his share
options on 8 March 2017 that had been awarded on his
appointment as chairman in 2011. This was in order to remove
any questions of independence that reviewers of the accounts
or key stakeholders may raise.
Research and development
The Group has continued to invest in research and development
in the year, details of internal development work that has been
capitalized in the year is in Note 5.2.
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
the
fair employment practices
committed
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. In recent years this has included
the development of a large apprentice program and graduate
schemes. It is important to the Group to maintain an exciting
18
31 Dec
31 Dec
Directors’ report
Directors’ report
and interesting working environment to fully engage its staff.
We operate in a global business environment with rapidly
changing needs. The Bango values are Success, Personable,
Individual, Reliable, Innovation and Transparency. The Bango
annual goals are aligned to these values and reviewed on a
company wide basis at monthly all hands meetings. By following
the Bango SPIRIT values we expect to serve both our
employees and customers’ needs.
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
After making enquiries, at the time of approving the financial
statements, the Directors have a reasonable expectation that
Bango 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 FY2015 placement. At
31 December 2016 the group had cash reserves of £5.7m
(£5.6m net of debt) and based on detailed cash flows provided
to the Board within the FY2017 budget, there is sufficient cash
to see the group through to profitability. Gross profit is expected
to increase in FY2017 as it did in FY2016 as a result of the
existing business activity and known new business activity
included in the FY2017 forecasts. 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.
Substantial shareholdings
At 31 December 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
Hargreave Hale
Inflection Point Investments LLP
Mr Richard Sneller
Cavendish Asset Management
%
Number
11,155,924 17.12
9,281,267 14.24
7,088,000 10.88
3,519,000 5.40
3,095,139 4.75
3,025,000 4.64
2,517,033 3.86
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
order
respective
responsibilities of the Directors and of the auditor in relation to
the financial statements.
for shareholders
to distinguish
the
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.
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
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company Secretary
H Goldstein
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
19
Bango PLC | Annual Report 2016
Corporate governance report
Corporate governance report
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.
All statutory
financial reports, as well as accompanying
presentations and additional independent analysts are published
on www.bangoinvestor.com and are made available on a timely
basis.
Additional Board committees
In line with best practice Bango also has a number of sub
committees to ensure good corporate governance. Separate
Remuneration and Audit Committees have held regular meetings
and are each chaired by a different non-executive director with the
independent chairman in attendance. The members of these
committees are deemed to have the appropriate knowledge and
skills to complete their tasks. They make seek advice and guidance
from external parties as required.
David Sear
Non-executive Chairman
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. The Board
has a formal list of matters specifically reserved for its decisions and
delegates authority to its various committees as required.
UK Corporate Governance Code
We do not comply with the UK Corporate Governance Code. Instead
we have reported on our Corporate Governance arrangements,
including those aspects of the UK Corporate Governance Code we
consider to be relevant to the Group and best practice.
Board composition
The Board of Bango PLC is made up of the independent Non-
Executive Chairman, CEO, CFO, CMO, and two other Non-executive
Directors. Details of the Board’s experience and interests are shown
on pages 15-16 which demonstrate the range of skills and insight
that they bring to the Board. It is important that the Non-executive
directors bring a wide range of skills to the Bango Board in order to
provide robust challenges to the executive directors and to ensure
that shareholders’ interests are represented.
The three 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. After nine years the Non-
executive Directors are subject to election on an annual basis.
Board meetings
The Board meets formally 11 times per year to discuss the strategy,
direction and financial performance of the company. Other additional
Board meetings occur as required. The Board reviews a detailed
management pack each month which enables them to fulfill all of
their duties of stewardship. This management pack contains detailed
financial information as well as wider resources on the KPIs for
Bango. The Non-executive Directors attend all of the meetings.
David Sear
Ray Anderson
Rachel Elias-Jones
Anil Malhotra
Martin Rigby
Gianluca
D’Agostino
Gerry Tucker
Rudy Burger
Board
17 (18)
18 (18)
15 (15)
17 (18)
15 (18)
2 (2)
Audit
Committee
2 (2)
2*
2*
2*
2 (2)
0
Remuneration
Committee
2 (2)
2*
2*
2*
2 (2)
1 (1)
16 (16)
13 (16)
2
2 (2)
1*
1 (1)
*By invitation of the committee.
(x) Number of meetings held.
Bango PLC | Annual Report 2016
20
Audit committee report
Audit committee report
Composition
The Audit Committee comprises the Chairman and all other Non-
executive Directors. The Audit Committee as in prior years is
chaired by Martin Rigby.
Responsibilities
The Audit Committee meets at least twice a year to review the
independent audit report of Bango’s auditors and the wider
responsibilities set out below:
• Monitor the integrity of the financial statements of
•
•
•
Bango.
Review Bango’s internal financial controls and risk
management systems.
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.
External Audit
In relation to Bango’s external auditors the key responsibilities are:
•
• 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.
•
•
After reviewing the above factors and aware that the auditors have
been appointed since 2005 the committee have satisfied
themselves, that the auditors provide the appropriate levels of
challenge and skepticism.
Internal Audit
Bango does not currently have an internal audit function, which
the Board considers appropriate for a Group of Bango’s size. The
Audit Committee will review risk assessments and the need for an
internal audit function on a periodic basis.
Internal control procedures
The Board is responsible for the Bango’s system of internal controls
and risk management, and for reviewing the effectiveness of these
systems. These systems are designed to manage, rather than
eliminate, the risk of failure to achieve business objectives.
The key features of Bango’s internal controls are described below:
•
•
•
•
•
•
•
•
•
•
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. Dual authority is
required wherever possible for all bank payments.
Payments are not permitted without an approved invoice
signed in accordance with the Bango Delegation of
Authority document.
Reconciliations of key balance sheet accounts are
performed and independently reviewed by the finance
team. Wherever possible segregation of duties are
implemented to provide additional comfort and support
on all finance processes.
All employees must go through initial and periodic
security screening in line with requirements from Bango’s
key customers.
Appropriate physical security and virtual checks are in
place at all Bango locations to protect the assets (fixed
and intangible) of the group.
Appropriate whistleblowing and escalation points are
established and communicated to staff to provide a safe
and secure forum for employees to escalate matters.
A disaster recovery plan and back-up system is
documented and in place.
The Board in conjunction with the Audit Committee keeps under
review Bango’s internal control system on a periodic basis. An
internal cross functional Infosec team also meets periodically to
review the controls and processes in place for the group.
Martin Rigby
Audit Committee Chairman
21
Bango PLC | Annual Report 2016
Remuneration committee report
Remuneration committee report
Composition
The Remuneration Committee comprises all of the Non-executive
directors and is chaired by Gianluca D’Agostino (previously Rudy
Burger). The committee meets at least twice a year, and may meet
more frequently due to the needs of the business.
Responsibilities
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
including share option awards and any
Group,
adjustments to the terms of share ownership and share
option schemes.
To be responsible
shareholders
relation
applicable to the Group’s Executive Directors.
To monitor and approve the grants of all share option
schemes to employees.
the Group’s
remuneration policies
for reporting
to
to
in
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 their
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. In 2016 no independent
consultants were consulted, as the Committee were deemed to
have sufficient skills to determine the appropriate levels of
remuneration.
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 Committee
takes
into account remuneration packages of comparable
companies when making recommendations to the Board. Bango
only offers a base salary, performance related bonuses, share
options and a workplace pension.
remuneration. The awarding of a bonus is based upon a series of
success factors including financial and non-financial criteria. These
success factors are linked to the long term development of Bango.
The board reserves the right to enforce claw back terms related to
the bonus if it is discovered that any of the terms under which the
bonus was granted change.
Share options
Bango considers that active participation in a share option plan is
an effective means of incentivizing and retaining high quality
people. The Bango share option scheme has been successfully
operated since 2005 and is a key benefit for all staff. Executive
directors and employees are eligible to participate in the scheme
on completion of an agreed probationary period. The number of
options awarded to all staff is directly related to their contribution
to the future growth of Bango.
Share options are granted following a review of staff performance
by the wider leadership team, who then make recommendations
to the Committee. Share options may only be granted after
approval by the Committee and in line with the restrictions set out
under the companies share option plan. All options are granted at
the market rate at the date of grant and vest over a three year
period.
Further details of the option plan and outstanding options as at 31
December 2015 are given in note 7 to the financial statements.
Details of options and shares held by directors in Bango are shown
in the Directors’ report on page 18.
Pensions
Executive directors may participate in the Bango defined
contribution pension scheme or chose to pay into their own private
pension scheme. In line with requirements for all employees, 1%
of salary is added to a pension scheme if the employee also pays
in 1% under auto-enrollment rules. There have been no changes
to the Bango pension policy in the year and there are no unfunded
pension contributions in the year.
Non-executive directors are not able to participate in the Bango
pension scheme.
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.
The agreements can be terminated on twelve months’ notice in
writing by either Bango or by the Executive Director.
Annual salary
Salaries are set at a level appropriate for the role and the individual
in relation to the performance of the business and the current
market rates.
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.
Bonus scheme
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
Bango PLC | Annual Report 2016
22
Remuneration committee report
Remuneration committee report
Directors’ emoluments
Details of remuneration in respect of the Directors is as follows:
Wages and
salaries
£
150,000
140,000
90,526
118,983
19,125
17,250
3,750
42,000
-----------------
581,634
==========
Wages and
salaries
£
149,700
138,520
127,440
15,750
15,750
42,000
-----------------
489,160
==========
Variable pay
£
48,000
40,000
-
-
-
-
-
-
-----------------
88,000
==========
Variable pay
£
30,000
25,000
-
-
-
-
-----------------
55,000
==========
Pension and
other benefits
£
1,650
1,860
1,567
5,725
-
-
-
-
------------------
10,801
==========
Pension and
other benefits
£
713
1,985
3,575
-
-
-
-----------------
6,273
==========
Total
£
199,650
181,860
92,093
124,709
19,125
17,250
3,750
42,000
-----------------
680,435
==========
Total
£
180,413
165,505
131,015
15,750
15,750
42,000
-----------------
550,433
==========
31 December 2016
R Anderson
A Malhotra
R Elias-Jones (appointed 14 March 2016)
G Tucker (resigned 18 November 2016)
M Rigby
R Burger (resigned 18 November 2016)
G D’Agostino (appointed 18 November 2016)
D Sear
31 December 2015
R Anderson
A Malhotra
G Tucker
M Rigby
R Burger
D Sear
Gianluca D’Agostino
Remuneration Committee Chairman
23
Bango PLC | Annual Report 2016
Independent auditor’s report to the members of Bango PLC
Independent auditor’s report to the
members of Bango PLC
We have audited the financial statements of Bango PLC for
the year ended 31 December 2016 which comprise the group and
parent company balance sheets, the group statement of
comprehensive income, the group cash flow statement, the group
and parent company statements of changes in equity and the
related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union 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 auditor
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 of the parent company's affairs
as at 31 December 2016 and of the group's result 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 provisions of the Companies Act 2006; and
the
in
financial statements have been prepared
accordance with the requirements of the Companies Act
2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of the
audit:
•
the information given in the Strategic Report and
Directors' Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements.
the Strategic Report and Directors' Report has been
prepared
legal
in
requirements.
accordance with
applicable
•
Matter on which we are required to report under the
Companies Act 2006
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified any material misstatements in the
Strategic Report and Directors' Report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
•
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by
law are not made; or
we have not
the
explanations we require for our audit.
information and
received all
Paul Naylor
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
Date: 13 March 2017
Bango PLC | Annual Report 2016
24
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
Foreign exchange revaluation 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 2016
Note
£
31 Dec 2015
£
5
5
6
6
7
294,565
6,017,061
507,295
3,446,612
--------------------------------- ---------------------------------
6,311,626
3,953,907
1,821,796
318,857
5,696,517
1,128,897
225,974
12,135,326
--------------------------------- ---------------------------------
7,837,170
13,490,197
--------------------------------- ---------------------------------
14,148,796
17,444,104
================== ==================
13,029,124
30,323,341
1,236,225
2,211,136
135,187
(34,579,125)
12,886,350
30,101,510
1,236,225
1,896,842
-
(30,211,087)
--------------------------------- ----------------------------------
12,355,888
15,909,840
================== ==================
8
9
9
1,697,354
82,149
1,170,244
268,476
--------------------------------- ----------------------------------
1,779,503
1,438,720
13,405
95,544
--------------------------------- ----------------------------------
13,405
95,544
1,792,908
1,534,264
--------------------------------- ----------------------------------
14,148,796
17,444,104
================== ==================
These financial statements were approved by the Directors on 13 March 2017 and are signed on their behalf by:
R Anderson
Director
R Elias-Jones
Director
Company registration number 05386079
The notes on pages 29 to 49 are an integral part of these consolidated financial statements.
25
Bango PLC | Annual Report 2016
Consolidated statement of comprehensive income
Consolidated statement of
comprehensive income
Note
31 Dec 2016
£
31 Dec 2015
(restated)
£
Alternative performance measure (Non-IFRS)
End User Spend
Revenue
Cost of sales
Gross profit
Other administrative expenses
Non-recurring items
Share based payments
Depreciation
Amortization
Total administrative expenses
Operating loss
Interest payable
Investment income
Loss before taxation
Income tax
Loss for the financial year
Other comprehensive income
Foreign exchange on consolidation
Loss and total comprehensive loss for the financial year
4
4
4
10
11
10
5
5
11
14
15
132,290,981
44,684,300
2,624,187
(7,054)
1,300,130
(33,054)
------------------------------ -------------------------------
1,267,076
2,617,133
(5,039,873)
(376,013)
(359,373)
(319,284)
(1,150,822)
(4,411,328)
-
(433,434)
(484,871)
(969,013)
------------------------------ -------------------------------
(6,298,646)
------------------------------ -------------------------------
(7,245,365)
(4,628,232)
(5,031,570)
(53,661)
30,363
(20,865)
24,327
------------------------------ -------------------------------
(5,028,108)
(4,651,530)
238,413
215,317
------------------------------ -------------------------------
(4,812,791)
(4,413,117)
135,187
-
================ =================
(4,812,791)
================ =================
(4,277,930)
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.
16
16
(6.81)p
(9.05)p
(6.81)p
(9.05)p
The notes on pages 29 to 49 are an integral part of these consolidated financial statements
Bango PLC | Annual Report 2016
26
Consolidated cash flow statement
Consolidated cash flow statement
31 Dec 2016
£
31 Dec 2015
£
Note
Net cash used by operating activities
17
(2,646,857)
(3,234,118)
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 (used)/generated from financing activities
Net (decrease)/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
(106,554)
(3,425,134)
30,363
(129,705)
(924,373)
24,327
------------------------------ ------------------------------
(1,029,751)
(3,501,325)
85,948
(2,668)
(53,661)
(268,466)
11,107,518
(617,723)
(20,865)
(311,329)
------------------------------ ------------------------------
10,157,601
(238,847)
------------------------------ ------------------------------
5,893,732
(6,387,029)
12,135,326
(51,780)
-----------------------------
12,083,546
6,253,487
(11,893)
-----------------------------
6,241,594
----------------------------- -----------------------------
12,135,326
================ ================
5,696,517
The notes on pages 29 to 49 are an integral part of these consolidated financial statements
27
Bango PLC | Annual Report 2016
Consolidated statement of changes in equity
Consolidated statement of changes in
equity
Share
capital
Share
premium
account
Merger
reserve
Other
reserve
FER
reserve
Retained
earnings
Total
£
£
£
£
£
£
£
Issue of new shares
2,444,444
8,555,556
Expense of share issue
-
(617,724)
Balance at 1 January
2015
Share based payments
Share based payments
transfer for exercised
share options
Exercise of share
options
Transactions with
owners
Loss for the year
Total comprehensive
income for the year
Balance at 31
December 2015
Balance at 1 January
2016
Share based payments
Share based payments
transfer for exercised
share options
Exercise of share options
Issue of new shares
Expense of share issue
Transactions with
owners
Profit/(Loss) for the year
Other comprehensive
income
Foreign exchange on
consolidation
Total comprehensive
income for the year
Balance at 31
December 2016
10,399,463
22,098,603
1,236,225
1,526,650
-
-
-
-
42,443
65,075
2,486,887
8,002,907
-
-
-
-
-
-
-
-
-
-
-
-
433,434
(63,242)
-
-
-
370,192
-
-
-
-
-
-
-
-
-
-
-
(25,461,538)
9,799,403
-
433,434
63,242
-
-
-
-
107,518
11,000,000
(617,724)
63,242 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
Share
capital
Share
premium
account
Merger
reserve
Other
reserve
FER
reserve
Retained
earnings
Total
£
£
£
£
£
£
£
12,886,350
30,101,510 1,236,225
1,896,842
-
(30,211,087)
15,909,840
-
-
-
-
25,555
117,219
-
60,393
164,106
(2,668)
142,774
221,831
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
359,373
(45,079)
-
-
-
314,294
-
-
-
-
-
-
-
-
-
-
-
359,373
45,079
-
-
-
-
85,948
281,325
(2,668)
45,079
723,978
(4,413,117)
(4,413,117)
135,187
-
135,187
135,187
(4,413,117)
(4,277,930)
13,029,124
30,323,341 1,236,225
2,211,136
135,187
(34,579,125)
12,355,888
The notes on pages 29 to 49 are an integral part of these consolidated financial statements.
Bango PLC | Annual Report 2016
28
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 content and
media on connected devices.
The financial statements for the year ended 31 December 2016
(including the comparatives for the year ended 31 December
2015) were approved by the Board of Directors on 13 March
2017.
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 2016, 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.
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
Brazilian, Japanese, Spanish, Nigerian and US subsidiaries,
perform sales and support functions in country for services
provided by Bango.net Limited to customers. The local ledgers
and accounts are prepared in accordance with local accounting
standards. The majority of the groups costs are incurred in
sterling, and cash is mostly held in sterling. Foreign operations
are included in accordance with the policies set out in notes
3.15.
2.1 Going concern
The Group had cash of £5.7m at 31 December 2016 (31
December 2015: £12.1m) and financing debt of £0.1m (31
December 2015: £0.4m). The cash flow forecasts of Bango
anticipate increased cash generation in the future, from current
trading operations as a result of our deals with app stores. 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.
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 33.3% straight-line
Property plant and equipment also include computer equipment
held under finance leases.
3.3 Intangible assets
Intangible assets are measured initially at historical cost and are
amortized on a straight-line basis over the expected useful
economic lives:
Domain names 33.3% straight-line
Internal development 20% straight-line
3.3.1 Goodwill
Goodwill is the difference between the amount by which the fair
value of the cost of a business combination exceeds the fair
value of net assets acquired. Goodwill is not amortized and is
stated at cost less any accumulated impairment losses. The
goodwill is tested for impairment annually or when events would
indicate that it might be impaired. Impairment charges are
deducted from the carrying value and recognized immediately
in profit or loss. For the purpose of impairment testing, goodwill
is allocated to the trade and assets acquired. An impairment loss
recognized for goodwill is not reversed in a subsequent period.
3.3.2 Acquisition related intangible assets
Net assets acquired as part of a business combination includes
an assessment of the fair value of separately identifiable
acquisition related intangible assets, in addition to other assets
and contingent liabilities purchased. These are amortized over
their useful lives which are individually assessed. The estimated
useful economic life for customer contracts and relationships is
10 years.
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:
29
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
•
•
•
•
•
•
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
intangible asset can be recognized,
internally-generated
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
highly liquid investments.
b) Trade and other receivables
Trade and other receivables are recognized initially at fair value
and are measured subsequent to initial recognition net of any
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 the estimated receivable.
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
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. When IFRS 16 is
adopted the operating leases of Bango, disclosed in note 11, will
become recognized on the statement of financial position.
3.10 Finance lease agreements
Assets held by the group under leases which transfer to the
Bango PLC | Annual Report 2016
30
Notes to the financial statements
Notes to the financial statements
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 End User Spend
End User Spend (EUS) is the total of sales processed through
the Bango Payment Platform net of tax. EUS shows the growth
of business through the Bango Payment Platform, and is the
most significant Key Performance Indicator that management
uses to measure the development of the business and the
success of Bango partners.
is
reported on
This
the consolidated statement of
comprehensive income as a non IFRS KPI and in Note 4 on
revenue as EUS is directly linked to Bango’s revenue.
3.12 Revenue recognition
Revenue is measured by reference to the fair value of
consideration receivable by Bango for services provided,
excluding VAT. There are two separable revenue streams in
Bango.
3.12.1 Revenue linked to End user activity
Bango has changed its accounting policy and updated its
reporting model since publishing the FY2015 accounts.
Previously Bango reported turnover, which was calculated as a
mixture of agency and principal models:
•
Principal model – where Bango is the merchant of
record, buying and reselling the content to end users. 100% of
EUS is recorded as turnover.
•
record. Only the Bango margin is recorded as turnover.
Agent model – where Bango is not the merchant of
The proportion of business that is principal model, is now
immaterial in comparison to the agency model business.
Therefore, Bango now reports only on its margin from every
transaction through the platform, regardless of commercial
model, which is Bango’s revenue. The prior year figures are
reported to aid comparison of the current year’s performance
Bango revenue is the profit from each transaction through the
Bango platform. It does not reflect the different commercial
models. As EUS spend grows, Bango’s revenue grows as Bango
receives a fee for every transaction through the Bango platform.
3.12.2 Other fees
Revenue from other fees has not changed. It relates to all
revenue not generated from EUS, such as one off connection
fees or monthly recurring support fees:
•
Connection fees – where Bango charges the payment
provider or the stores for connecting to the Bango platform.
Revenue is recognized when certain stages of completion are
reached, including signing of commercials, delivery of technical
design and activation of routes. This can include some specialist
development services linked to integrations.
•
Support fees – where Bango provides monthly
services which are recognised at point of invoice. This can
include consumer support services, sales support or platform
monitoring.
Other fees are additive to the Bango revenue, but the internal
forecasts of the business are based on their being sufficient EUS
revenue to cover the operating costs of the business.
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 estimate of the shares that will
eventually vest. These estimates are subsequently revised if
there is any indication that the number of options expected to
vest differs from previous estimates. Any cumulative adjustment
prior to vesting is recognized in the current period. No
adjustment is made to any expense recognized in prior periods.
Fair value is measured by an external valuer using the Black-
Scholes option pricing model. The expected life used in the
model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise
restrictions and behavioral considerations. No adjustment is
made for performance conditions as these do not form a
condition of the option agreement.
If the terms of an equity-settled transaction were to be
modified, as a minimum an expense is recognized as if the terms
had not been modified. In addition, an expense would be
recognized for any increase in the value of the transaction as a
result of the modification, as measured by the date of
modification, over the remaining vesting period. To date Bango
has not modified any equity-settled transactions.
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
transactions are shown
earnings. Share-based payment
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
31
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
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.
3.18 Share capital and reserves
Share capital
Ordinary shares are classified as equity. Equity instruments
issued by Bango PLC are recorded at the proceeds received, net
of direct issue costs.
Share premium
Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue.
Merger reserve
The merger reserve represents the difference between 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.
Foreign exchange reserve
The foreign exchange reserve represents translation differences
arising from the translation of the Bango subsidiaries financial
local currency into the
statements which are held
consolidated Bango accounts which is reported in GBP. This
reserve only arises at consolidation.
in
Retained earnings
Retained earnings include all current and prior period retained
profits.
appropriate presentation of revenues generated from services
to end users.
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 previous years the group has
entered into a number of computer equipment leases that it has
deemed to be a finance lease based on the assessment of the
key criteria. The carrying value of finance leases at 31
December 2016 is £95,544 (2015: £364,020).
Development costs
Judgement is applied when deciding whether the recognition
requirements
for development costs have been met.
Judgements are based on the information available at each
balance sheet date. Economic success of any product
development is uncertain at the time of recognition as it may be
subject to future technical problems and therefore impairment
reviews are completed by project each balance sheet date. The
carrying value of capitalized development costs is £3,638,080
(2015: £3,446,612).
No impairment is recognized based on current estimates of
future revenue streams expected to be derived from the
development work that has been capitalized.
Acquisition accounting
Acquired assets are accounted for in accordance with IFRS3
Business Combinations following a detailed review of the fair
value of the assets by an independent third party. The business
separates out the underlying assets which include software,
customer relationships and trade names based on the
attributable values that can be apportioned directly to them, and
the remaining difference in the value is shown as goodwill. The
acquired assets are amortized over a five-year period, goodwill
is not amortized. All acquired assets are tested annually for
impairment.
No impairment is recognized based on current estimates of
future revenue streams expected to be derived from acquired
assets.
3.20 Non-recurring items
Non-recurring items are those significant items which are
disclosed by virtue of their size of incidence to enable a full
understanding of the financial performance (note 11b).
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
3.21 Standards and interpretations not yet applied by
the Group
For the purpose of the preparation of these consolidated
financial statements, the Group has applied all standards and
Bango PLC | Annual Report 2016
32
Notes to the financial statements
Notes to the financial statements
interpretations that are effective for accounting periods
beginning on or after 1 January 2016. 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.
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) is not currently expected to have a significant
impact on Bango’s reported revenue based on current contracts
in place. This will be reviewed however until the standard comes
into effect and comparative numbers will be produced as
applicable.
IFRS 16 Leases (IASB effective date 1 January 2019) will bring
all operating leases onto the balance sheet in line with the
accounting treatment for finance leases. This will affect Bango’s
balance sheet, though it is not expected to affect the combined
income statement.
The above 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.
3.22 Related party transactions
Bango’s related parties
its Directors and key
include
management personnel. Unless otherwise stated, none of the
transactions incorporate special terms and conditions and no
guarantees were given or received. Outstanding balances are
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 and Fusion Ltd
whose Boards includes some of the Directors of Bango PLC.
33
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
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. 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.
31 December
2016
£
31 December
2015
£
End User Spend
132,290,981
44,684,300
(b) Revenue 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.
12 months to 31 December 2016
Segment revenue
Cost of sales – payment providers
End user
activity
£
Other
fees
£
Group
Total
£
£
2,410,871
(7,054)
213,316
-
------------------------------- ------------------------------- ------------------------------- -------------------------------
2,624,187
(7,054)
-
-
Segment gross profit
2,403,817
213,316
-
2,617,133
Administrative expenses
Non-recurring items
Share based payments charge
Depreciation
Amortization
Interest payable
Interest income
Segment net profit/ (loss)
Segment assets
Segment liabilities
Net assets
------------------------------- ------------------------------- ------------------------------- -------------------------------
(5,039,873)
(376,013)
(359,373)
(319,284)
(1,150,822)
(53,661)
30,363
(5,039,873)
(376,013)
(359,373)
(319,284)
(1,150,822)
(53,661)
30,363
-
-
-
-
-
-
-
-
-
-
-
-
-
-
------------------------------- ------------------------------- ------------------------------- -------------------------------
2,403,817
(4,651,530)
================== ================ ================ ================
(7,268,663)
213,316
434,365
125,859
13,588,572
14,148,796
(357,920)
(1,792,908)
-
--------------------------------- ------------------------------ ------------------------------- ------------------------------
12,355,888
================== ================ ================ ================
12,153,584
(1,434,988)
125,859
76,445
Bango has two revenue streams, which it reports separately. Firstly, revenue from transaction fees due to EUS, secondly, revenue from
other fees paid by stores for new payment integrations and other services.
Change in accounting policy
Bango now reports on the Bango margin from transactions as revenue, instead of reporting a turnover figure which reflects the different
commercial models. Turnover used to reflect 100% of a transaction where Bango was principal, and the Bango margin only for agency
contracts. The proportion of the Bango business that is principal is now immaterial in comparison to the agency business. Reporting no
longer reflects the different commercial agreements with the stores, simplifying the relationship between EUS, revenue and gross profit.
The prior year revenue figures are reported to aid comparison of the current year’s performance. As a result, the FY2015 figures have
been restated using the new presentation. Revenue for FY2015 is now £0.89m, compared to £3.19m of turnover. The difference is the
principal business that was accounted for gross is now shown net. If this change in accounting policy had not been made, then turnover
for FY2016 would have been £3,317,354 instead of £2,624,187. The costs of sales relating to digital merchants or payment providers
would have been £700,221 but the segment gross profit would have been the same at £2,617,133.
Bango PLC | Annual Report 2016
34
Notes to the financial statements
Notes to the financial statements
12 months to 31 December 2015 (restated)
End user
Activity
Platform
fees
Group
Total
£
£
£
£
Segment revenue
Cost of sales – payment providers
841,949
(33,054)
458,181
-
------------------------------- ------------------------------- ------------------------------- -------------------------------
1,300,130
(33,054)
-
-
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 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)
Included within other fees there was £0.12m (31 December 2015: £0.22m) relating to one strategic partner.
End user activity is the fees paid by end users for purchasing content. 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.
35
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
Other fees are the amounts paid to Bango by digital merchants and others for package fees and other services including operator
connections. Assets for this segment are amounts due for service fees and other integration fees. Liabilities for this segment represent
deferred income for longer term services. 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 revenue 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 2016
31 Dec 2015
£
£
12,653
47,857
1,745,150
563,585
254,942
70,816
149,265
486,046
207,365
386,637
----------------------------------------------------
2,624,187
----------------------------------------------------
1,300,130
================= =================
Segment revenue is based on the location of the partners, of which in other fees £0.12m (31 December 2015: £0.22m USA and Canada)
came from a strategic partner based in the UAE. All turnover from end users is spread over many territories, of which £1m comes from
a partner in the USA and £0.3m from a partner in Australia (2015: £0.2m Australia).
Bango PLC | Annual Report 2016
36
Notes to the financial statements
Notes to the financial statements
5 Non-current assets
5.1 Property, plant and equipment
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
Cost
At 1 January 2016
Additions
Disposals in the year
At 31 December 2016
Depreciation
At 1 January 2016
Charge for the year
Disposals in the year
At 31 December 2016
Net book value
At 31 December 2016
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
=================
Leasehold
improvements
£
Office
equipment
£
Computer
equipment
£
Total
£
354,786
1,390
-
---------------------------------
356,176
====================
219,549
33,051
-
--------------------------------
252,600
===================
155,081
2,299
-
--------------------------------
157,380
===================
124,536
14,408
-
--------------------------------
138,944
===================
1,753,942
102,865
-
----------------------------------
1,856,807
====================
2,263,809
106,554
-
-----------------------------------------
2,370,363
========================
1,412,429
271,825
-
----------------------------------
1,684,254
=====================
1,756,514
319,284
-
----------------------------------
2,075,798
=====================
103,576
===============
18,436
===============
172,553
================
294,565
=================
Included at year end within leasehold improvements were assets with net book value of £59,645 and computer equipment with net book
value of £27,862 held under finance leases (31 December 2015: leasehold improvements £76,686 computer equipment £197,034).
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.
37
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
5.2 Intangible assets
Domain
Names
£
Internal
Development
£
Acquired
Intangibles
£
Goodwill
Total
£
£
Cost
At 1 January 2015
Additions
At 31 December
2015
Amortization
At 1 January 2015
Charge for period
At 31 December
2015
32,887
-
5,322,936
924,373
32,887
6,247,309
32,887
-
1,831,684
969,013
32,887
2,800,697
Net book value at
31 December 2015
-
3,446,612
-
-
-
-
-
-
-
-
-
-
-
-
-
5,355,823
924,373
6,280,196
1,864,571
969,013
2,833,584
-
3,446,612
Cost
At 1 January 2016
Additions
Foreign exchange
revaluation
At 31 December
2016
Amortization
At 1 January 2016
Charge for period
At 31 December
2016
Net book value at
31 December 2016
Domain
Names
£
Internal
Development
£
Acquired
Intangibles
£
Goodwill
Total
£
£
32,887
-
-
6,247,309
1,159,052
-
-
1,263,194
84,213
-
1,125,000
75,000
6,280,196
3,547,246
159,213
32,887
7,406,361
1,347,407
1,200,000
9,986,655
32,887
-
2,800,697
967,584
-
168,426
32,887
3,768,281
168,426
-
-
-
2,833,584
1,136,010
3,969,594
-
3,638,080
1,178,981
1,200,000
6,017,061
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 separately in relation to the
revenue that will be generated from them as a discreet product. They are therefore separately assessed for signs of impairment using a
discounted cash flow with a 20% discount rate (20% in prior year) and using the latest available financial forecasts. At the end of the
year there were no indications of impairment on any of the internally generated research and development projects.
Goodwill is reviewed annually for signs of impairment. Goodwill relates solely to the acquisition of BilltoMobile Inc in May 2016. The
recoverable amount of the related commercial agreements are determined from the value in use. The key assumptions are the discount
rates (20% used consistent with review of intangibles and deemed prudent to the Bango WACC), growth rates (conservative assumptions
have been used in comparison to the growth rate since acquisition) and net margin. The Directors have reviewed the acquired goodwill
and do not consider there are any indicators of impairment.
The goodwill has been allocated to the EUS activity business segment which is a separate cash generating unit to the Platform Fees
segment. Cash flows for a period of 10 years have been reviewed in assessing the goodwill and there are no indicators of impairment
following sensitivity analysis of the key assumptions.
Bango PLC | Annual Report 2016
38
Notes to the financial statements
Notes to the financial statements
5.3 Acquisition
On 6 May 2016 Bango acquired the trade and assets of BilltoMobile Inc. from Danal Inc. BilltoMobile was the trading name of Danal Inc.
which provided direct carrier billing services to the major US mobile operators. Bango acquired the trade (contracts with the mobile
operators and merchants) and assets (brand names, software and other assets), but did not acquire any staff or fixed assets. These
connections are being fully incorporated onto the Bango platform and are not managed as a separate unit and therefore all revenues are
included within the existing Bango EUS revenue stream.
The acquisition was for cash ($3.0 million) and shares ($0.4m worth of shares) in Bango PLC. This resulted in the issuing of 586,095
ordinary shares of 20 pence each in Bango PLC to Danal Inc, with £117,219 being recognised as share capital and £164,106 as share
premium. The deferred consideration of £23,536 related to a single line of business and is to be settled in full in 2017.
The net assets acquired were as follows:
Intangible assets
Goodwill
Consideration and cost of investment
Satisfied by:
Cash
Share consideration
Deferred consideration
Total consideration
Fair value
$
1,818,000
1,621,000
----------------------------------------------------
3,439,000
================
Fair value
£
1,263,194
1,125,000
----------------------------------------------------
2,388,194
================
$
£
3,000,000
406,000
33,000
---------------------------------------------------
3,439,000
================
2,083,333
281,325
23,536
---------------------------------------------------
2,388,194
================
Following a detailed review of the fair value of the assets acquired by an independent third party, in accordance with IFRS3 Business
Combinations, Bango has recognized two intangible assets totaling £2,388,194. These are acquired intangibles, which include software,
customer relationships and trade names, totaling £1,263,194 and goodwill totaling £1,125,000.
Goodwill of £1,125,000 represents the excess of the purchase price over the fair value of the assets acquired. The goodwill arising on
the acquisition is largely attributable to the value within the contracts with the mobile operators and the additional value in the
software. See note 5.2 for the note on the intangible assets and the review of the carrying value of the goodwill.
Costs relating to the acquisition of the intangible assets were expenses as non-recurring costs and have been shown separately on the
consolidated income statement.
39
Bango PLC | Annual Report 2016
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 2016
£
31 Dec 2015
£
1,826,796
(5,000)
404,839
111,406
1,310,551
485,294
109,853
538,750
------------------------------- -------------------------------
1,133,897
(5,000)
------------------------------- -------------------------------
1,128,897
225,974
------------------------------- -------------------------------
1,354,871
================= =================
1,821,796
318,857
2,140,653
At 31 December 2016, 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 2016
£
31 Dec 2015
£
78,110
23,036
13,225
-
-----------------------
114,371
=============
79,381
20,193
44,668
-
-----------------------
144,242
=============
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 2016
31 Dec 2015
£
£
5,000
(3,755)
3,755
------------------
5,000
==========
26,133
(21,883)
750
------------------
5,000
==========
Bango PLC | Annual Report 2016
40
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 2014
Issue of new shares
Exercise of share options
As at 31 December 2015
Issue of new shares
Exercise of share options
As at 31 December 2016
51,997,316
10,399,463
2,444,444
12,222,222
42,443
212,213
-----------------------
-------------------------
12,886,350
64,431,751
-----------------------
-------------------------
117,219
586,095
25,555
127,772
-------------------------
-------------------------
65,145,618
13,029,124
============== ==============
During the year 127,772 share options were exercised at exercise prices between 23 pence and 106.5 pence and a par value of 20 pence
per share. The total proceeds were £0.09m of which £0.03m was recognized as share capital and £0.06m as share premium.
On 6 May 2016, 586,095 new shares were issued to Danal Inc., forming part of the consideration for BilltoMobile.
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 2016
Options
31 Dec 2015
Options
Average
exercise price
per share
p
122
66
145
67
-----------------------------------
103
No
3,438,784
1,014,500
(511,875)
(212,213)
-----------------------------------
3,729,196
===================== ===================== ===================== =====================
2,340,707
===================== ===================== ===================== =====================
3,729,196
1,448,000
(554,375)
(127,772)
-----------------------------------
4,495,049
3,596,875
109
132
Average
exercise price
per share
p
130
95
149
54
-----------------------------------
122
Outstanding at 1 January 2016
Granted
Lapsed
Exercised
Outstanding at 31 December 2016
Exercisable at 31 December 2016
The weighted average share price at date of exercise of options exercised during the year was 89.72 pence (2015: 97.52 pence).
The fair value of options granted during the year, determined using the Black-Scholes valuation model, were between 19 - 45 pence.
Significant inputs into the model include a weighted average share price of 65.66 pence (31 December 2015: 98.7 pence) at the grant
date, the exercise prices, volatility of 49.3-60.0%% (31 December 2015: 47.2-48.4%), dividend yield of nil (31 December 2015: nil), an
expected option life of five years (31 December 2015: five years) and an annual risk-free interest rate of 0.28-0.90% (31 December
2015: 1.17-1.24%).
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.
41
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
At 31 December 2016, Bango PLC had the following outstanding options and exercise prices:
Average
exercise
price per share
31 Dec 2016
Options Remaining
Contractual
Average
exercise
Life price per share
Options
31 Dec 2015
Remaining
Contractual
Life
Expiry date
Pence
Number
Months
Pence
Number
Months
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
16 March
21 September
14 December
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
2026
2026
2026
At 31
December
8 Trade and other payables
Trade payables
Social security and other taxes
Accruals and deferred income
-
-
-
50.50
41.00
23.00
53.50
44.00
44.50
59.50
167.00
153.00
82.50
82.00
76.50
-
142.50
-
166.50
218.00
232.50
218.50
180.00
126.00
136.00
101.00
106.00
88.50
43.00
89.00
70.50
-
-
-
96,000
100,500
48,417
15,125
38,916
46,520
48,297
49,935
100,000
47,740
56,050
20,000
-
66,822
-
96,323
100,000
298,000
10,000
50,000
243,000
281,000
326,500
336,000
587,164
699,240
683,500
50,000
-
-
-
3
9
13
22
26
33
39
45
50
51
57
57
-
63
-
69
71
75
75
78
82
88
94
99
105
111
117
120
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
0.885
0.885
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
609,000
609,000
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
117
117
117
--------------------------
---------------------------
4,495,049
==============
89
======
3,729,196
==============
82
=====
31 Dec 2016
£
31 Dec 2015
£
846,212
109,416
741,726
851,901
95,429
222,914
----------------------- ------------------------------
1,170,244
============= ================
1,697,354
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 2016
42
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 2016
£
31 Dec 2015
£
153,869
588,832
267,094
-----------------------------
1,009,795
=============
153,869
600,251
421,414
-------------------------
1,175,534
=============
The UK lease on 17 November 2023, with a break clause in 2018 and the US office lease expired on 30 September 2016.
Bango has finance leases for technical computer equipment and leasehold equipment. The leases will terminate between February 2017
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 2016
£
31 Dec 2015
£
86,227
13,709
------------------
99,936
------------------
(4,382)
------------------------
95,554
=============
281,042
99,926
-----------------------
380,968
-----------------------
(16,948)
-----------------------
364,020
=============
31 Dec 2016
£
31 Dec 2015
£
82,149
13,405
-----------------------
95,554
=============
268,476
95,544
-----------------------
364,020
=============
31 Dec 2016
£
31 Dec 2015
£
3,965,077
1,470,106
1,810,182
------------------------
7,245,365
=============
5,415,886
359,373
319,284
1,150,822
----------------------
7,245,365
============
3,050,974
1,453,884
1,793,788
----------------------
6,298,646
============
4,411,328
433,434
484,871
969,013
----------------------
6,298,646
============
43
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
11a 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
11.b Non-recurring items
31 Dec 2016
£
31 Dec 2015
£
4,000
42,500
13,700
9,900
53,300
3,800
37,000
9,000
6,220
6,300
211,149
160,811
53,661
20,865
(70,916)
(52,885)
186,213
133,071
1,150,822
93,798
295,002
189,869
969,013
68,864
================= =================
These costs all relate to the acquisition of BilltoMobile as they will not be recurring in 2017, with £0.09m relating to legal and
professional fees and £0.28m relating to business transition 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 2016
No
31 Dec 2015
No
6
5
7
22
4
28
-------------
72
======
8
6
3
19
3
25
-----------
64
======
31 Dec 2016
£
31 Dec 2015
£
3,456,747
386,483
148,958
359,373
2,958,122
351,146
99,622
433,434
----------------------------- -----------------------------
3,842,324
================ ================
4,351,561
Included in the above payroll costs is £995,493 (31 December 2015: £791,350) capitalized within internal development (note 5.2).
Bango PLC | Annual Report 2016
44
Notes to the financial statements
Notes to the financial statements
The Directors have identified eleven (31 December 2015: eleven) key management personnel, including Directors. Compensation to key
management is set out below:
Short term employee benefits
Employers national insurance
Post-employment benefits
Share based compensation
13 Directors
Remuneration in respect of Directors was as follows:
Emoluments
31 Dec 2016
£
1,086,653
138,861
46,725
116,281
31 Dec 2015
£
1,006,256
127,523
40,747
163,840
----------------------------- -----------------------------
1,338,366
================ ================
1,388,520
31 Dec 2016
£
31 Dec 2015
£
680,435
============
550,433
============
Further details can be found in the Remuneration Committee Report). The highest paid Director received total salary of £198,000 (31
December 2015: £179,700), pension contributions of £1,650 (31 December 2015: £713), and share based compensation of £11,122 (31
December 2015: £3,259).
The number of Directors who accrued benefits under pension schemes was four (31 December 2015: three).
The total share based compensation for Directors was £58,236 (31 December 2015: £37,573).
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 2016
£
30,363
31 Dec 2015
£
24,327
================ ================
45
Bango PLC | Annual Report 2016
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
Tax paid overseas
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 20.00% (31 December
2015: 20.25%)
Effect of:
Expenses not deductible for tax purposes
Deferred tax not recognized
Unutilized tax losses
Additional deductions for R&D expenditure
Surrender of tax losses for R&D
Other permanent differences
Tax paid overseas
Adjustments in relation to prior years
Total tax
31 Dec 2016
£
(318,857)
(9,806)
90,250
31 Dec 2015
£
(225,371)
10,054
-
------------------------------ ------------------------------
(215,317)
================ ================
(238,413)
(4,777,915)
(5,028,108)
================ ================
(955,583)
(1,018,192)
89,264
1,946
779,826
(248,584)
120,946
(106,672)
90,250
(9,806)
101,288
-
800,246
(177,705)
89,557
(20,565)
-
10,054
------------------------------ ------------------------------
(215,317)
================ ================
(238,413)
At 31 December 2016, the unutilized tax losses carried forward amounted to £32.1 million (at 31 December 2015: £27.9 million).
Deferred tax assets/ (liabilities):
Share option deduction
Tax losses
Other temporary differences
Accelerated capital allowances and capitalized
development costs
Provided
Provided Unprovided
31 Dec 2016 31 Dec 2015 31 Dec 2016
Unprovided
31 Dec 2015
£
£
£
£
418,102
(1,230)
-
395,452
1,620
133,820
3,794,139
-
59,940
4,958,906
-
(397,072)
(416,872)
-
----------------------- ------------------------------ -----------------------
3,927,959
-
-----------------------
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 2016
£
31 Dec 2015
£
(4,413,117)
(4,812,791)
Weighted average number of ordinary shares in issue
65,026,008
53,185,680
Earnings (basic) per share
(6.81) p
(9.05) p
Bango PLC | Annual Report 2016
46
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 2016
£
31 Dec 2015
£
(4,413,117)
(4,812,791)
65,026,008
53,185,680
(6.81) p
(9.05) p
At 31 December 2016 options over 4,495,049 (31 December 2015: 3,729,196) 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
Realized currency translation
Corporation tax rebate
Net cash used by operations
31 Dec 2016
£
(4,413,117)
1,455,293
(238,413)
(30,363)
53,661
51,780
359,373
(595,427)
442,220
29,723
31 Dec 2015
£
(4,812,791)
1,453,884
(215,317)
(24,327)
20,865
11,893
433,434
(19,082)
(308,048)
-
------------------------------ ------------------------------
(3,459,489)
225,371
------------------------------ ------------------------------
(3,234,118)
================ ================
(2,885,270)
238,413
(2,646,857)
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 2016
£
31 Dec 2015
£
6,096,356
----------------------
6,096,356
================
12,615,620
----------------------
12,615,620
==============
31 Dec 2016
£
31 Dec 2015
£
399,839
5,696,517
----------------------
6,096,356
480,294
12,135,326
----------------------
12,615,620
=============== ===============
47
Bango PLC | Annual Report 2016
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 2016
£
31 Dec 2015
£
1,587,938
--------------------
1,587,938
==============
1,074,815
-----------------------
1,074,815
=============
31 Dec 2016
£
31 Dec 2015
£
846,212
741,726
--------------------
1,587,938
==============
851,901
222,914
------------------------
1,074,815
=============
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 2016 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 2016
£
31 Dec 2015
£
1,587,938
57,170
24,969
13,405
---------------------
1,683,482
1,074,815
165,088
103,388
95,544
---------------------
1,438,835
============= =============
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.
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 2016 Bango only had hire purchase borrowings.
Bango PLC | Annual Report 2016
48
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 2016 31 Dec 2015
£
£
Capital
31 Dec 2016 31 Dec 2015
£
£
Total equity
Less cash and cash equivalents
Plus borrowings
12,355,888
-
95,544
15,909,840
-
364,020
12,355,888
(5,696,517)
15,909,840
(12,135,326)
-
--------------------------------------------- --------------------------------------------------------------------------------------- --------------------------------------------- ---------------------------------------------
3,774,514
============ ============== ============ ==============
12,451,432
6,659,371
16,273,860
-
The capital to overall financing ratio is 53.5% (2015: 23.2%).
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
Japanese Yen JPY
Other
Short term exposure
£
Financial
assets
31 Dec 2016
£
Financial
liabilities
2,168,532
815,309
£
Net
assets/
(liabilities)
1,353,223
£
Financial
assets
31 Dec 2015
£
Financial
liabilities
£
Net assets/
(liabilities)
427,780
342,652
73,957
15,182
58,775
84,096
5,455
63,159
106,093
41,896
-
-
-
63,159
39,168
106,093
83,817
41,896
164,977
-
-
-
1,296
12,812
31,887
119,186
39,130
------------------------------------
2,657,948
==== =====
-
782
-
5,156
485
-----------------------
836,914
==== =====
1,296
12,030
31,887
114,030
38,645
--------------------
1,821,035
==== =====
2,876
11,595
46,310
-
51,203
------------------------------------
911,824
==== =====
-
-
-
-
2,498
-----------------------
350,605
==== =====
85,128
78,641
39,168
83,817
164,977
2,876
11,595
46,310
-
48,705
--------------------
561,219
==== =====
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
£83,886 and if it moved by 10% then there would be a total loss of £160,146.
49
Bango PLC | Annual Report 2016
Statement of financial position of Bango PLC
Statement of financial position of
Bango PLC
ASSETS
Non-current assets
Investment in subsidiary
Trade and other receivables due after one year
Current assets
Trade and other receivables due within one year
Total assets
EQUITY
Capital and reserves
Share capital
Share premium account
Retained earnings
Total equity
LIABILITIES
Trade and other falling due within one year
Total liabilities
Total equity and liabilities
Note
31 Dec 2016 31 Dec 2015
£
£
4
5
5
8
9
9
6
29,005,642
16,144,791
------------------------
45,150,433
------------------------
28,617,365
15,876,320
------------------------
44,493,685
------------------------
9,510
------------------------
9,510
------------------------
27,798
------------------------
27,798
------------------------
45,159,943
=============
44,521,483
=============
13,029,124
30,323,341
1,787,896
12,886,350
30,101,510
1,464,196
-----------------------
-----------------------
44,452,056
45,140,361
============== ================
19,582
------------------------
19,582
------------------------
45,159,943
=============
69,427
------------------------
69,427
------------------------
44,521,483
=============
These financial statements were approved by the Directors on 13 March 2017 and are signed on their behalf by:
R Anderson
Director
R Elias-Jones
Director
Company registration number 05386079
The company has taken the exemption under section 408 of the Companies Act 2006 to present a full income statement, but the loss
for the year for the company was £35,673 (2015: £159,157).
The notes on pages 53 to 57 are an integral part of these consolidated financial statements
Bango PLC | Annual Report 2016
50
Statement of changes in equity of Bango PLC
Statement of changes in equity of
Bango PLC
Balance at 1 January 2015
Share based payments
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
Balance at 1 January 2016
Share based payments
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 2016
Share
capital
£
Share
premium
£
Retained
earnings
£
Total
£
10,399,463
22,098,603
1,189,919
33,687,985
-
42,443
2,444,444
-
2,486,887
-
65,075
8,555,556
(617,724)
8,002,907
433,434
-
-
-
433,434
433,434
107,518
11,000,000
(617,724)
10,923,228
-
-
(159,157)
(159,157)
-
12,886,350
-
30,101,510
(159,157)
1,464,196
(159,157)
44,452,056
12,886,350
-
25,555
117,219
-
142,774
30,101,510
-
60,393
164,106
(2,668)
221,831
1,464,196
359,373
-
-
-
359,373
44,452,056
359,373
85,948
281,325
(2,668)
723,978
-
-
13,029,124
-
-
30,323,341
(35,673)
(35,673)
1,787,896
(35,673)
(35,673)
45,140,361
The notes on pages 53 to 57 are an integral part of these consolidated financial statements
51
Bango PLC | Annual Report 2016
Cash flow statement of Bango PLC
Cash flow statement of Bango PLC
Loss for year
(35,673)
(159,157)
31 Dec 2016
£
31 Dec 2015
£
Cash flows from operating activities
Interest received
(Increase)/decrease in receivables
Increase/(decrease) 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
Non-cash issue of shares
Net cash generated from financing activities
Net increase in cash and cash equivalents
(202,286)
18,288
(49,845)
(60,150)
(24,938)
51,590
------------------------------ ------------------------------
(192,655)
(233,843)
(268,471)
(28,904)
(10,337,790)
(19,500)
------------------------------ ------------------------------
(10,357,290)
(297,375)
------------------------------ ------------------------------
85,948
(2,668)
202,286
281,325
11,107,518
(617,723)
60,150
-
------------------------------ ------------------------------
10,549,945
------------------------------ ------------------------------
-
566,891
-
Cash and cash equivalents at beginning of year
-
-
Cash and cash equivalents at end of year
----------------------------- -----------------------------
-
================ ================
-
The notes on pages 53 to 57 are an integral part of these consolidated financial statements
Bango PLC | Annual Report 2016
52
Notes to the financial statements
Notes to the financial statements
1 Accounting policies
Basis of accounting
The separate financial statements of Bango PLC are presented as required by the Companies Act 2006. They have been prepared under
the historical cost convention and under the basis of going concern.
Bango has prepared its Report and accounts for the year ended 31 December 2016, 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 accounting policies.
The principal accounting policies are summarized below. They have all been applied consistently throughout the year.
Investments
Fixed asset investments are shown at cost less provision for impairment.
Share based payments
Bango PLC issues equity settled share-based compensation to certain employees (including Directors) of its trading subsidiaries. Equity
settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the
equity-settled share-based payment is credited to reserves on a straight-line basis over the vesting period, together with a
corresponding increase in the book value of Bango PLC’s investment in subsidiaries, based upon the estimate of the shares that will
eventually vest. These estimates are subsequently revised if there is any indication that the number of options expected to vest differs
from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any
expense recognized in prior periods.
Fair value is measured by an external valuer using the Black-Scholes option pricing model. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural
considerations.
Where the terms of an equity-settled transaction are modified, as a minimum an expense is recognized as if the terms had not been
modified. In addition, an expense is recognized for any increase in the value of the transaction as a result of the modification, as
measured by the date of modification, over the remaining vesting period.
Where an equity-settled transaction is cancelled, it is treated as if it had vested on the due date of the cancellation, and any expense
not yet recognized for the transaction is recognized immediately. However, if a new transaction is substituted for the cancelled
transaction, and designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated
as if they were a modification of the original transaction, as described in the previous paragraph.
Loans and receivables
a) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank deposits available on demand, together with other short term highly liquid
investments.
b) Trade and other receivables
Trade and other receivables are recognized initially at fair value and are measured subsequent to initial recognition net of any 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 the estimated receivable.
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.
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.
Retained earnings
Retained earnings include all current and prior period retained profits.
53
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
Related party transactions
There were no significant related party transactions in the year, see the Directors report for the Group for further details.
Intercompany loans existed between the entity and other members of the group, please see Note 5 for further details.
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 pages 18 and 19.
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
£82,485 (31 December 2015: £73,230) has been recognized within the parent company’s own figures relating to wages and salaries.
3 Auditor’s remuneration
The auditor’s remuneration for audit and non-audit services to Bango PLC was borne entirely by Bango.net Limited, a wholly owned
subsidiary.
Bango PLC | Annual Report 2016
54
Notes to the financial statements
Notes to the financial statements
4 Investments
Cost
Shares in subsidiary undertakings at 31 December 2015
Share based payments
Investment in Bango KK
Investment in Bango Holdings Inc
Shares in subsidiary undertakings at 31 December 2016
Net book amount
At 31 December 2016
At 31 December 2015
£
28,617,365
359,373
28,897
7
------------------------------
29,005,642
================
29,005,642
================
28,617,365
================
Fixed asset investments are shown at cost less provision for impairment.
Details of subsidiary undertakings at 31 December 2016 are as follows:
Country of
incorporation
Class of
share capital
held
Held by the
company
Nature of business
Bango.net Limited
England & Wales
Ordinary
100%
Development, marketing and
sale of technology for mobile
phone users to purchase services
for their mobile phones
Bango Movil
Spain
Ordinary
100%
Support for Bango.net Limited
Bango SP Ltd
England & Wales
Ordinary
Bango Employee Benefits Ltd
England & Wales
Ordinary
Bango do Brasil Cessão de
Licenças de Programas de
Computador Ltda *
Bango Mobile Limited **
Bango Kabushiki Kaisha
Bango Holdings Inc
BilltoMobile Inc
Brazil
Ordinary
Nigeria
Japan
USA
USA
Ordinary
Ordinary
Common
Common
100%
100%
100%
99%
100%
100%
100%
Non-trading
Non-trading
Non-trading
Trading entity in Nigeria
Sales and support office for
Bango.net Limited
Holding company
Trading entity in USA
*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.
5 Receivables
Amounts due from Group undertakings (due after one year)
Other receivables (due within one year)
31 Dec 2016
£
31 Dec 2015
££
16,144,791
9,510
-----------------------
16,154,301
15,876,320
27,798
------------------------
15,904,118
================
================
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.
55
Bango PLC | Annual Report 2016
Notes to the financial statements
Notes to the financial statements
6 Payables
Trade payables
Accruals and deferred income
7 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
Other receivables
Non-current assets
Amounts due from Group undertakings
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
8 Share capital
Allotted, called up and fully paid:
31 Dec 2016
£
31 Dec 2015
9,884
9,698
-----------------------
19,582
================
63,177
6,250
-----------------------
69,427
================
31 Dec 2016
£
31 Dec 2015
£
16,153,671
----------------------
16,153,671
================
15,904,118
----------------------
15,904,118
================
31 Dec 2016
£
-
31 Dec 2015
£
-
16,144,791
15,876,320
----------------------
16,144,791
================
----------------------
15,876,320
================
31 Dec 2016
£
31 Dec 2015
£
19,582
---------------------
19,582
===============
69,427
---------------------
69,427
=============
31 Dec 2016
£
31 Dec 2015
£
9,884
9,698
---------------------
19,582
63,177
6,250
---------------------
69,427
=============== ===============
Ordinary shares of 20p each in Bango PLC
No
£
As at 31 December 2014
Issue of new shares
Exercise of share options
As at 31 December 2015
51,997,316
10,399,463
12,222,222
212,213
-------------------------
64,431,751
2,444,444
42,443
-----------------------
12,886,350
Bango PLC | Annual Report 2016
56
Notes to the financial statements
Notes to the financial statements
Issue of new shares
Exercise of share options
As at 31 December 2016
-------------------------
586,095
127,772
-------------------------
65,145,618
=================
-----------------------
117,219
25,555
-------------------------
13,029,124
================
During the year 127,772 share options were exercised at exercise prices between 23 pence and 106.5 pence and a par value of 20 pence
per share. The total proceeds were £0.09m of which £0.03m was recognized as share capital and £0.06m as share premium.
On 6 May 2016, 586,095 new shares were issued to Danal Inc., forming part of the consideration for BilltoMobile.
During the year 1,448,000 options were granted to employees. Details of number of options granted to Directors is given in the
Directors report of the Group accounts.
At the year-end 4,495,049 options were outstanding. Further details relating to employee share options are provided in note 7 in the
Bango financial statements.
9 Reserves
At 1 January 2016
Issue of new shares
Expense of share issue
Exercise of share options
Share based payments
Loss for the year
At 31 December 2016
Share
Premium
Account
£
Retained
earnings
£
30,101,510
1,464,196
-
164,106
(2,668)
-
60,393
359,373
-
(35,673)
-
------------------------------ ---------------------------
1,787,896
================ ==============
30,323,341
An adjustment has been made out of the share based payment reserve for share options exercised.
10 Reconciliation of movements in shareholder’s funds
31 Dec 2016
£
31 Dec 2015
£
Period opening balance
Exercise of share options
Share based payments
Issue of new shares
Expense of share issue
Loss for the period
11 Retained earnings
44,452,056
85,948
359,373
281,325
(2,668)
(35,673)
33,687,985
107,518
433,434
11,000,000
(617,724)
(159,157)
----------------------- -----------------------
44,452,056
================
45,140,361
================
Included within the retained earnings of £1,787,896 are adjustments relating to share based payments. The distributable reserves as at
31 December 2016 from Bango PLC are £842,281.
57
Bango PLC | Annual Report 2016