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OptimizeRxAnnual Report 2017 Contents Strategic report Highlights...........................................................................................................01 Bango at a glance................................................................................................02 Chairman’s statement..........................................................................................03 CEO’s statement..................................................................................................05 CFO’s statement.................................................................................................07 Strategy for growth.............................................................................................10 Principal risks and uncertainties............................................................................11 Report of Directors Directors............................................................................................................13 Company information...........................................................................................15 Directors’ report...................................................................................................16 Corporate governance report................................................................................18 Audit comittee report...........................................................................................19 Remuneration committee report...........................................................................20 Financial statements Independent auditor’s report to the members of Bango PLC (Bango)......................22 (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:21)(cid:27) Consolidated statement of comprehensive income...................................................29 (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:192)(cid:82)(cid:90)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:22)(cid:19) Consolidated statement of changes in equity...........................................................31 (cid:49)(cid:82)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:22)(cid:21) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:51)(cid:47)(cid:38)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:24)(cid:21) Statement of changes in equity of Bango PLC.........................................................53 (cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:192)(cid:82)(cid:90)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:51)(cid:47)(cid:38)(cid:3)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:171)(cid:24)(cid:23) (cid:49)(cid:82)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:171)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:24)(cid:24) 2 Bango PLC | Annual Report 2017 Highlights Highlights • End User Spend (EUS) increased (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:21)(cid:26)(cid:20)(cid:17)(cid:23)(cid:80)(cid:3) (cid:20)(cid:19)(cid:24)(cid:8)(cid:3) £132.3m) (cid:87)(cid:82)(cid:3) • (cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:25)(cid:19)(cid:8)(cid:3) (cid:87)(cid:82)(cid:3) (cid:133)(cid:23)(cid:17)(cid:21)(cid:80)(cid:3) (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:21)(cid:17)(cid:25)(cid:80)(cid:12) • Bango operational costs were (cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:68)(cid:87)(cid:3) (cid:133)(cid:21)(cid:17)(cid:22)(cid:80)(cid:3) (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:21)(cid:17)(cid:23)(cid:80)(cid:12)(cid:15)(cid:3) demonstrating the high scalability of the platform 6 5 (cid:23) 3 2 m £ / s t s o C d n a e u n e v e R S U 1E 0 EUS, revenue and opex costs 300 M £ / S U E 250 200 150 100 50 0 (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:23) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:24) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:26) EUS revenue Operating costs End User Spend (EUS) DCB for Amazon retail in Japan Bango enabled a new payment method for Amazon customers in Japan. Amazon customers with a KDDI (au) or NTT DOCOMO mobile phone account can now pay for physical goods from Amazon.co.jp, by charging the cost to their mobile phone bill. Mobile wallets in Google Play Continuing its history of launching disruptive payment technologies on a large scale (cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:51)(cid:79)(cid:68)(cid:87)(cid:73)(cid:82)(cid:85)(cid:80)(cid:3)(cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:191)(cid:85)(cid:86)(cid:87)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:3)(cid:82)(cid:90)(cid:81)(cid:72)(cid:71)(cid:3)(cid:80)(cid:82)(cid:69)(cid:76)(cid:79)(cid:72)(cid:3)(cid:90)(cid:68)(cid:79)(cid:79)(cid:72)(cid:87)(cid:86)(cid:3) as a payment method for customers buying from Google Play in Africa. Upgraded Google Play routes Three Google Play routes upgraded to the Bango Platform. By applying Bango Boost technology they experience an immediate uplift in sales and move back into growth. “ 1 We are constantly on the lookout for new ways to optimize our mobile services and ensure they’re paced with our customers’ growing online needs. We are excited to adopt Bango technology which will allow us to build on the success of our existing app store carrier billing and provide our customers a frictionless payment experience. “ Karim Tabbouche, Chief Commercial Officer of VIVA Bahrain Bango PLC | Annual Report 2017 Bango at a glance In 2017, Bango added new customers using the Bango Platform, expanded global reach with new payment routes and increased development in technology to support new products and services from our customers. Each of these growth factors, provides a strong base for more success in 2018 and beyond for Bango and its customers. Connected commerce Bango is the payment platform the world’s most chosen by (cid:76)(cid:81)(cid:192)(cid:88)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3) sales faster in the age of connected commerce. people make Working with global stores including Google, Amazon, and Microsoft, Bango has become the industry standard, helping payments quickly and conveniently. Through its (cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:85)(cid:72)(cid:68)(cid:70)(cid:75)(cid:15)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:82)(cid:3812)(cid:72)(cid:85)(cid:86)(cid:3) unique insights derived from pooled data and shared knowledge. Bango gives businesses unrivalled visibility into their markets and customers, increasing sales and customer acquisition. Built to scale, the Bango Platform supports the exponential growth ambitions of its global partners. Bango at a glance Carrier billing on Xbox One (cid:47)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3)(cid:191)(cid:85)(cid:86)(cid:87)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:76)(cid:72)(cid:85)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:59)(cid:69)(cid:82)(cid:91)(cid:3) content then expanded the availability (cid:73)(cid:82)(cid:85)(cid:3)(cid:58)(cid:76)(cid:81)(cid:71)(cid:82)(cid:90)(cid:86)(cid:3)(cid:54)(cid:87)(cid:82)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:59)(cid:69)(cid:82)(cid:91)(cid:3)(cid:50)(cid:81)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3) over 200 million subscribers across Europe and the USA. Operator wallets in Google Play Launched new app store payments services including African operator wallets in Google Play, enabling our partners (cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) methods with no risk. Amazon Prime resale in India Launched resale and bundling technology in India, enabling Bharti Airtel customers to sign-up to Amazon Prime in India as part of a bundled (cid:83)(cid:68)(cid:70)(cid:78)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:3812)(cid:72)(cid:85)(cid:17) Carrier billing in Amazon Japan Japanese customers are in the enviable position of being able to use this convenient payment method at checkout for physical goods as well as digital content. ‘Most Innovative DCB Technology’ award Bango won the award for the ‘Most Innovative DCB Technology’ at the Global Direct Carrier Billing Awards 2017. Bango PLC | Annual Report 2017 2 Chairman’s statement Chairman’s statement I am delighted to report that the vision and plan the Bango management team set out at its January 2017 strategy day has been delivered. 2017 was a year in which the remarkable breadth of the Bango Platform was thoroughly and successfully demonstrated. In a year of many achievements, enabling a new payment method for the world’s biggest online retailer in its third largest global market, was a highlight. The Amazon business in Japan covers retail, digital products and services such as Amazon Prime and Prime Student. The technical requirements to support this kind of retail payments are far greater than for digital purchases, which validates investment Bango has made in the sophisticated capabilities of the Bango Platform. This investment has proven to be a shrewd decision by management and signposts the longevity of Bango technology as the market develops in new ways. long-term the At the heart of the Bango strategy is the idea that a platform accumulates a vast amount of information from multiple sources, and delivers value to customers and partners that they cannot obtain through direct, bilateral relationships. The Bango Platform is truly global, collecting data from end user activity across Europe, Asia, Africa, Oceania and the Americas. The business today powers digital and retail sales, using direct billing, wallets and reseller business models, for the world’s biggest internet companies which can grow their sales faster by partnering with Bango. This places Bango in a unique position, and with a unique opportunity, in the commerce market. (cid:40)(cid:81)(cid:87)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:192)(cid:72)(cid:91)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) of the Bango Platform was again demonstrated when Bharti Airtel, India’s biggest Mobile Network Operator, (cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3) (cid:68)(cid:3) (cid:81)(cid:72)(cid:90)(cid:3) (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3) (cid:82)(cid:3812)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) Amazon. Mobile users can now enjoy Amazon Prime video, bundled as part of their Airtel mobile or broadband service. (cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3)(cid:82)(cid:3812)(cid:72)(cid:85)(cid:3)(cid:88)(cid:86)(cid:72)(cid:86)(cid:3) the Bango Platform to resell, maintain and manage subscriber entitlement, and provide valuable information to both parties, leading to increased sales and (cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:72)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:17)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:15)(cid:3) (cid:76)(cid:81)(cid:3) (cid:68)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:83)(cid:82)(cid:86)(cid:87)(cid:16)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3) (cid:72)(cid:81)(cid:71)(cid:3) event, Bango announced the rapid acceleration of further monetize the Bango Platform. The acquisition of Audiens, the value of its plan to a technology provider with a Customer Data Platform, is an opportunity for Bango to seize the strategic value that is increasingly being placed by the commerce market on online payments and the associated data. Audiens enables a much wider market beyond (cid:80)(cid:72)(cid:85)(cid:70)(cid:75)(cid:68)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3) the value of payments data and from the broader data attributes that merchants (cid:68)(cid:81)(cid:71)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3) (cid:70)(cid:68)(cid:81)(cid:3) (cid:82)(cid:3812)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3) relationships with Bango. The management skill in achieving (cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3) (cid:21)(cid:19)(cid:20)(cid:26)(cid:3) (cid:80)(cid:76)(cid:79)(cid:72)(cid:86)(cid:87)(cid:82)(cid:81)(cid:72)(cid:86)(cid:3) (cid:76)(cid:86)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:17)(cid:3) Management again shows itself to be highly capable of leading the business to new heights, equipped to achieve continued progress through organic growth and the application of the Bango technology to new markets. I am now looking forward to reporting on the data opportunities provided by the Audiens acquisition. I am looking forward to the year ahead, during which I believe Bango can deliver sizeable End User Spend growth and deepen its importance in the business of the internet. David Sear Chairman 3 Bango PLC | Annual Report 2017 (cid:57)(cid:76)(cid:86)(cid:76)(cid:87)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:29) bangoinvestor.com DCB for Amazon retail in Japan Bango has enabled a new payment method for Amazon customers in Japan. Amazon customers with a KDDI (au) or NTT DOCOMO mobile phone account can now pay for physical goods from Amazon. co.jp, by charging the cost to their mobile phone bill. Bango expanded Direct Carrier Billing (DCB) availability to include Amazon Prime and Prime Student membership programs a few months later. Expanded the availability of Direct Carrier Billing for Windows Store Bango expanded the availability of Direct Carrier Billing for (cid:58)(cid:76)(cid:81)(cid:71)(cid:82)(cid:90)(cid:86)(cid:3)(cid:54)(cid:87)(cid:82)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:59)(cid:69)(cid:82)(cid:91)(cid:3)(cid:50)(cid:81)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:70)(cid:85)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:3) across Europe and the USA. European launches for Windows 10 carrier billing through the Bango Platform include EE in the UK, Base in Belgium and 3 in Italy. In the USA, subscribers on the Verizon network can purchase their favorite apps, games, movies, music and more from Windows Store, across all devices running Windows 10, (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:59)(cid:69)(cid:82)(cid:91)(cid:3)(cid:50)(cid:81)(cid:72)(cid:15)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:17) Bango PLC | Annual Report 2017 4 CEO’s statement CEO’s statement Bango is the platform chosen by the (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:192)(cid:88)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3) to grow their sales faster in the age of connected commerce. Google, Amazon, Microsoft and other leaders are using Bango technology to enable billions of users to make payments quickly and conveniently. Through its partnerships and technology, Bango delivers unique commerce insights derived from pooled data and shared knowledge. Bango gives businesses unrivalled visibility into their markets and customers, increasing sales and customer acquisition. Built to scale, the Bango Platform supports the exponential growth ambitions of its global partners. Driving customer success with the Bango Platform Amazon physical goods In June 2017, Bango broke new ground (cid:69)(cid:92)(cid:3)(cid:72)(cid:81)(cid:68)(cid:69)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:80)(cid:68)(cid:93)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:3812)(cid:72)(cid:85)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:45)(cid:68)(cid:83)(cid:68)(cid:81)(cid:72)(cid:86)(cid:72)(cid:3) customers the convenience of payment for physical goods on their mobile phone bill. Launching initially across all Android and iPhone users on the Docomo and KDDI networks in Japan, this reaches over 110 million consumers. Japan is a mobile- centric internet culture with billions of dollars of online purchases transacting on mobile phones each year. The Bango Platform can now support the more complex technology and processes demanded by online retailers. This (cid:90)(cid:68)(cid:86)(cid:3) (cid:72)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) investment in the Bango API and associated software over more than 3 years. Online retailers anywhere in the world are now able to follow Amazon’s lead and (cid:82)(cid:3812)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:81)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3) payment to their mobile phone bill. Amazon Prime Video In parallel with opening-up payments for physical goods using the Bango Platform, the expansion of digital services continues via the Bango resale product. At the end of 2017, Bharti Airtel, the largest mobile operator in India began to launch Amazon Prime Video as part of a bundled package (cid:82)(cid:3812)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3) (cid:44)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) with Amazon was made possible by using the Bango Platform. As new mobile operators integrate to the Bango (cid:51)(cid:79)(cid:68)(cid:87)(cid:73)(cid:82)(cid:85)(cid:80)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:81)(cid:75)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:82)(cid:3812)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3) physical and digital goods, the reach for all merchant partners is increased. Google Play upgrades Mobile operators switching from an existing connection to the Bango Platform provide proof that Bango provides more value than a payment processor. In the (cid:191)(cid:85)(cid:86)(cid:87)(cid:3) (cid:75)(cid:68)(cid:79)(cid:73)(cid:3) (cid:82)(cid:73)(cid:3) (cid:21)(cid:19)(cid:20)(cid:26)(cid:15)(cid:3) (cid:87)(cid:90)(cid:82)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) Middle East moved their Google Play routes from third party providers to the Bango Platform, to stimulate growth. (cid:55)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:36)(cid:81)(cid:71)(cid:85)(cid:82)(cid:76)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:81)(cid:82)(cid:90)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) from the tools and data that Bango uniquely provides. An immediate uplift in end user spend of 35% was gained, with more than 25% increase in unique users. Bango Boost will enable app developers to strengthen their business with these operators by using the benchmarking and data insights that only Bango can provide. to A key focus of Bango sales and marketing teams in 2018 is accelerating the growth of Google Play EUS by upgrading mobile operators the Bango Platform. More than 30 mobile operators are in discussion with Bango about the upgrade opportunity, representing in excess of US$3Bn of End User Spend that can be moved to the Bango Platform and grown (cid:73)(cid:68)(cid:86)(cid:87)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:68)(cid:69)(cid:79)(cid:92)(cid:17)(cid:3) Success with mobile wallets The Bango Platform was designed to (cid:69)(cid:72)(cid:3) (cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:73)(cid:88)(cid:79)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:192)(cid:72)(cid:91)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:71)(cid:72)(cid:68)(cid:79)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) emerging payment methods as they are deployed by operators and other payment providers. During 2017, work continued on integrating new wallets and payment systems to meet the needs of merchants wanting to go beyond (cid:70)(cid:68)(cid:85)(cid:85)(cid:76)(cid:72)(cid:85)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:45)(cid:88)(cid:81)(cid:72)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:191)(cid:85)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3) launched in Japan with AU’s wallet, followed in November by 9mobile’s 9pay wallet in Nigeria, which launched in Google Play. (cid:57)(cid:76)(cid:86)(cid:76)(cid:87)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:29) bangoinvestor.com 5 Bango PLC | Annual Report 2017 CEO’s statement zero and, therefore, additional revenue (cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:74)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:17)(cid:3) Acquisition of Audiens The increasing capabilities of the Bango Platform result in more transactions being processed. Additional transactions provide not only immediate commercial value to Bango and its partners, but also contribute to the pool of anonymized data stored in the Bango Platform. Data has great value to publishers, operators, developers and other advertisers. To market this data more quickly and to allow partners integrated to the Bango Platform to monetize their data securely and at low cost, Bango acquired Audiens. Audiens brings contracts to sell data with the leading global Data Management Platform’s (DMPs) and a team with extensive experience in data monetization. Outlook Bango has continued to execute on its successful strategy of powering the industry leaders. In 2017 the power and versatility of the Bango Platform was emphasized by the successful launch of DCB for Amazon physical goods in Japan, of Amazon Prime Video resale in India, and continued growth for Google Play merchants worldwide. In 2017, for the third consecutive year, the EUS processed through the Bango Platform more than doubled, increasing the power of the platform for merchants, and attracting new business which will power spending growth and contribute to an increasingly valuable pool of data in the years to come. (cid:53)(cid:68)(cid:83)(cid:76)(cid:71)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:26)(cid:3)(cid:80)(cid:68)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:86)(cid:3) of the Bango Platform even more compelling. The more transactions through the Bango Platform, the better it can increase sales for customers in the future – due to the unique “platform (cid:72)(cid:3812)(cid:72)(cid:70)(cid:87)(cid:180)(cid:17)(cid:3)(cid:39)(cid:72)(cid:80)(cid:82)(cid:81)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:76)(cid:74)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:86)(cid:3) mobile operators see from moving to the Bango Platform is expected to drive many legacy direct routes to move to Bango in the coming year. Bango will continue to invest in 2018 in developing the commercial relationships that can bring billions of EUS in the future. The future of Bango as a key commerce technology provider for the world’s most (cid:76)(cid:81)(cid:192)(cid:88)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3) (cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:3) from both further growth in payment processing volumes and, excitingly, new revenue streams from the recently expanded data monetization business. Ray Anderson CEO platform capabilities Product development New added during 2015 and 2016 to handle the sophistication of physical goods delivery were extensively tested and proven during 2017, and the Bango API was extended to support these powerful capabilities. its sales conversion Bango released an update to Bango Boost, rate improvement product, to provide Google Play developers with valuable data that can improve their marketing activity and enable better collaboration with mobile operators. Previously Bango Boost was focused on mobile operators and people within Google or other stores. Bango Boost unleashes new revenue streams for mobile operators from the developers exploiting Google Play who could not otherwise easily engage with the MNOs. A team is already engaging with 20 of the top Google Play developers to increase their sales success. Software engineering work continues to speed up transaction processing and improve reliability and resilience through innovations in the use of database and API technology. Bango datacenters have been tested at a sustained transaction rate of over £5Bn/yr. The 10x headroom means that the incremental cost to process transactions remains close to Bango PLC | Annual Report 2017 6 CFO’s statement CFO’s statement growing EUS demonstrates the strength of the Bango Platform to handle rapidly increasing EUS at low operational costs. the fees revenue Revenue Bango that is customers or partners pay Bango to collect transactions through the (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:51)(cid:79)(cid:68)(cid:87)(cid:73)(cid:82)(cid:85)(cid:80)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3) (cid:76)(cid:86)(cid:3) (cid:81)(cid:82)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) incremental cost of sales and therefore (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:76)(cid:86)(cid:3) (cid:68)(cid:79)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3) (cid:72)(cid:91)(cid:68)(cid:70)(cid:87)(cid:79)(cid:92)(cid:3) (cid:85)(cid:72)(cid:192)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3) (cid:68)(cid:86)(cid:3) (cid:74)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:17)(cid:3) Bango has two revenue streams which are reported on separately. from from EUS Revenue generated is accounted for consistently with the method the prior year, and (cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:25)(cid:28)(cid:8)(cid:3)(cid:87)(cid:82)(cid:3)(cid:133)(cid:23)(cid:17)(cid:19)(cid:27)(cid:80)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:133)(cid:21)(cid:17)(cid:23)(cid:20)(cid:80)(cid:3) (cid:76)(cid:81)(cid:3)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:40)(cid:56)(cid:54)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:79)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3) an increase in EUS revenue. The Bango business model is for the EUS revenue to grow to cover all expenses and R&D investment in the platform. Other fees, comprising all revenue not generated from EUS such as integration fees, are recognized on completion of the contracted milestones. This revenue relates to payments by merchants or mobile operators for upgrades to the Bango Platform. Bango has considered the potential impact that IFRS 15 may have on its revenue. Following a review, the only impact is that the fees related to subscription services lasting more than one month are now spread over the life of the subscription, in-line with the criteria under IFRS 15. Other revenues from digital and physical goods sales will (cid:81)(cid:82)(cid:87)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:3812)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:44)(cid:41)(cid:53)(cid:54)(cid:3)(cid:20)(cid:24)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:17)(cid:3) Bango became EBITDA positive on a run rate basis in November 2017. Revenue expressed as a percentage of EUS Revenue expressed as a percentage of (cid:40)(cid:56)(cid:54)(cid:3) (cid:90)(cid:68)(cid:86)(cid:3) (cid:20)(cid:17)(cid:24)(cid:8)(cid:3) (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:20)(cid:17)(cid:27)(cid:8)(cid:12)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:86)(cid:3) consistent with management’s short- term expectations for this metric. Bango has a range of contractual models and pricing that link to total EUS (cid:76)(cid:81)(cid:3) (cid:71)(cid:76)(cid:3812)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3) (cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:71)(cid:76)(cid:3812)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3) content. Accordingly, revenues can reduce with higher EUS due to a tiered pricing model or potential market size. (cid:41)(cid:85)(cid:82)(cid:80)(cid:3) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:27)(cid:3) (cid:82)(cid:81)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:15)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:81)(cid:82)(cid:3) longer report on revenue expressed as a percentage of EUS, as revenue from the data business will make an increasing contribution to the total revenue. Acquisition of Audiens S.R.L. On 23 January 2018, Bango purchased (cid:28)(cid:27)(cid:17)(cid:23)(cid:24)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:72)(cid:81)(cid:86)(cid:3)(cid:54)(cid:17)(cid:53)(cid:17)(cid:47)(cid:17)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:39)(cid:76)(cid:74)(cid:76)(cid:87)(cid:82)(cid:88)(cid:70)(cid:75)(cid:3) End User Spend (cid:44)(cid:81)(cid:3) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:26)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:71)(cid:82)(cid:88)(cid:69)(cid:79)(cid:72)(cid:71)(cid:3) (cid:40)(cid:81)(cid:71)(cid:3) (cid:56)(cid:86)(cid:72)(cid:85)(cid:3) Spend (EUS) for the third consecutive (cid:92)(cid:72)(cid:68)(cid:85)(cid:15)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:133)(cid:21)(cid:26)(cid:20)(cid:17)(cid:23)(cid:80)(cid:15)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:133)(cid:20)(cid:22)(cid:21)(cid:17)(cid:22)(cid:80)(cid:3) (cid:76)(cid:81)(cid:3) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:133)(cid:23)(cid:23)(cid:17)(cid:26)(cid:80)(cid:3) (cid:76)(cid:81)(cid:3) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:24)(cid:17)(cid:3) (cid:40)(cid:56)(cid:54)(cid:3) growth came from existing and new routes activated through the Bango Platform. (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:191)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:80)(cid:82)(cid:80)(cid:72)(cid:81)(cid:87)(cid:88)(cid:80)(cid:3) can continue to drive future EUS growth from existing routes, new payment routes being activated and existing Google Play routes upgrading to the Bango Platform. Two new migrations in the Middle East were completed in (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:26)(cid:15)(cid:3) (cid:71)(cid:72)(cid:80)(cid:82)(cid:81)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) Bango to successfully migrate Google Play routes to the Bango Platform. Partners are choosing the Bango Platform because the technologies that Bango has developed, including Bango Boost and Bango Dashboard allow greater business understanding which (cid:70)(cid:68)(cid:81)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:40)(cid:56)(cid:54)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3) to direct connections. (cid:40)(cid:56)(cid:54)(cid:3) (cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:86)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:80)(cid:82)(cid:86)(cid:87)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:46)(cid:72)(cid:92)(cid:3) Performance Indicator that management uses to measure the development of the business and the success of Bango partners. The delivery of additional EUS through upgrades will be a key focus of Bango in 2018. EUS is calculated as the total sales processed through the Bango taxes. Bango’s Platform, excluding End User Spend (EUS) 300 250 200 150 100 50 0 s n o i l l i M 7 (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:23) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:24) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25) (cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:26) Bango PLC | Annual Report 2017 CFO’s statement platform and growing EUS leading to increased revenue, Bango will begin (cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3) the operational costs of the business and continued investment in product development. As part of the post year end acquisition of Audiens, Bango raised (cid:133)(cid:24)(cid:80)(cid:3)(cid:11)(cid:133)(cid:23)(cid:17)(cid:25)(cid:80)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:72)(cid:72)(cid:86)(cid:12)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:3) and integrate Audiens and to invest in the development of Bango’s data monetization technology and business. include acquired Intangible assets goodwill as well as internally developed capitalized R&D. Intangible assets relating to capitalized R&D increased to (cid:133)(cid:23)(cid:17)(cid:19)(cid:80)(cid:15)(cid:3) (cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3) (cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) (cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) in the Bango Platform (31 December (cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:22)(cid:17)(cid:25)(cid:80)(cid:12)(cid:17)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:53)(cid:9)(cid:39)(cid:3) is amortized over 5 years with projects assessed in relation to their individual cash generation ability. As at 31 December 2017, there was £0.9m trade and assets relating to BilltoMobile Inc (cid:11)(cid:22)(cid:20)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:20)(cid:17)(cid:21)(cid:80)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:133)(cid:20)(cid:17)(cid:21)(cid:80)(cid:3) (cid:82)(cid:73)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:11)(cid:22)(cid:20)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:20)(cid:17)(cid:21)(cid:80)(cid:12)(cid:17)(cid:3) Total borrowings at 31 December 2017 (cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:133)(cid:19)(cid:17)(cid:22)(cid:80)(cid:3)(cid:11)(cid:22)(cid:20)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:19)(cid:17)(cid:20)(cid:80)(cid:12)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:86)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3) (cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) used to purchase computer equipment and software. Going concern As Bango continues to grow its EUS and revenue in 2018 in line with prior year trends, cash consumption will reduce on a stable cost basis. With cash at the (cid:92)(cid:72)(cid:68)(cid:85)(cid:16)(cid:72)(cid:81)(cid:71)(cid:3) (cid:82)(cid:73)(cid:3) (cid:133)(cid:23)(cid:17)(cid:27)(cid:80)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3) (cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:86)(cid:3) (cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:72)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) business through to cash breakeven and (cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:73)(cid:88)(cid:81)(cid:71)(cid:85)(cid:68)(cid:76)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:82)(cid:3) (cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:3) and support Audiens in January 2018, ensures that the Bango cash balance (cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:3)(cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3) year to ensure customers continued (cid:70)(cid:82)(cid:81)(cid:191)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:88)(cid:83)(cid:74)(cid:85)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) Platform. Rachel Elias-Jones CFO Bango recognizes that the Google Play market continues to be a growing and early stage market. Most of Google (cid:51)(cid:79)(cid:68)(cid:92)(cid:182)(cid:86)(cid:3)(cid:40)(cid:56)(cid:54)(cid:15)(cid:3)(cid:7)(cid:25)(cid:37)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:23)(cid:52)(cid:21)(cid:19)(cid:20)(cid:26)(cid:3)(cid:11)(cid:36)(cid:83)(cid:83)(cid:3)(cid:36)(cid:81)(cid:81)(cid:76)(cid:72)(cid:15)(cid:3) 2018) is from older, legacy routes that are connected directly with Google or limited to credit card users. Bango has increased its sales and marketing team to target this market as the potential (cid:40)(cid:56)(cid:54)(cid:3) (cid:82)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:88)(cid:81)(cid:76)(cid:87)(cid:92)(cid:3) (cid:76)(cid:86)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:40)(cid:56)(cid:54)(cid:3) on legacy routes ranges from millions to hundreds of millions of dollars a year per route. The largest markets are Asia (particularly Japan and Korea) and North America. To address these key markets, Bango has increased its local presence. and impairment Amortization of intangible assets in the year was £1.1m (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:20)(cid:17)(cid:20)(cid:80)(cid:12)(cid:3) (cid:68)(cid:86)(cid:3) (cid:53)(cid:9)(cid:39)(cid:3) (cid:83)(cid:85)(cid:82)(cid:77)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3) capitalized in prior years were deployed. Amortization of the BilltoMobile Inc (cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:133)(cid:19)(cid:17)(cid:22)(cid:80)(cid:3)(cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:19)(cid:17)(cid:21)(cid:80)(cid:12)(cid:17)(cid:3) Depreciation for the year totaled £0.2m (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:19)(cid:17)(cid:22)(cid:80)(cid:12)(cid:3) (cid:85)(cid:72)(cid:192)(cid:72)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:80)(cid:68)(cid:79)(cid:79)(cid:3) (cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3) (cid:82)(cid:73)(cid:3) (cid:191)(cid:91)(cid:72)(cid:71)(cid:3) (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3) (cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) year, and that much on the equipment is now fully depreciated. Share based payment costs of £0.7m (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:19)(cid:17)(cid:23)(cid:80)(cid:12)(cid:15)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:68)(cid:3) (cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:82)(cid:3812)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3) (cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:17)(cid:3) The increased charge resulted from an increase in the share volatility input into the Black Scholes model used to calculate the charge, which is a (cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) Bango share price over the year. Share options remain one of the most valuable components of the Bango remuneration policy used to attract, motivate and retain employees in a highly competitive market. All employees, other than Non- Executive Directors are eligible to take part in the Bango share option scheme. Balance sheet Net assets at 31 December 2017 were (cid:133)(cid:20)(cid:19)(cid:17)(cid:26)(cid:80)(cid:3)(cid:11)(cid:22)(cid:20)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:20)(cid:21)(cid:17)(cid:22)(cid:80)(cid:12)(cid:17) Cash balances at 31 December 2017 (cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:133)(cid:19)(cid:17)(cid:28)(cid:80)(cid:3) (cid:87)(cid:82)(cid:3) (cid:133)(cid:23)(cid:17)(cid:27)(cid:80)(cid:3) (cid:11)(cid:68)(cid:87)(cid:3) (cid:22)(cid:20)(cid:3) (cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3) (cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:24)(cid:17)(cid:26)(cid:80)(cid:12)(cid:15)(cid:3) (cid:68)(cid:86)(cid:3) (cid:68)(cid:3) (cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) continued investment in new products. scalable operating With a highly S.p.A, for an initial consideration of (cid:188)(cid:20)(cid:17)(cid:23)(cid:27)(cid:80)(cid:3) (cid:76)(cid:81)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:188)(cid:19)(cid:17)(cid:25)(cid:22)(cid:80)(cid:3) (cid:83)(cid:68)(cid:92)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) in cash during 2018. Bango also issued 521,803 new Bango shares to the vendors of Audiens and 738,399 warrants over new Bango shares, exercisable at a price of £1.80 each, which will lapse after 10 years. Further deferred consideration, based on the growth of the business in the two years post acquisition is potentially payable to the CEO of Audiens, based upon an option agreement for the remaining 1.55% of Audiens. Bango currently expect this payment to be up to €0.95m. As Bango EUS grows in 2018, the volume of data in the Bango Platform will increase and therefore, the revenue from the Bango data opportunity is expected to increase. Administrative expenses Administrative expenses of £5.7m (cid:76)(cid:81)(cid:16)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:24)(cid:17)(cid:20)(cid:80)(cid:12)(cid:3) (cid:90)(cid:72)(cid:85)(cid:72)(cid:3) cost of processing budget. The transactions Bango the through Platform remained static at £2.3m (cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3) (cid:133)(cid:21)(cid:17)(cid:23)(cid:80)(cid:12)(cid:15)(cid:3) (cid:69)(cid:88)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) of transactions more than doubled, highlighting the huge scale and cost (cid:72)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:51)(cid:79)(cid:68)(cid:87)(cid:73)(cid:82)(cid:85)(cid:80)(cid:17)(cid:3) In increase The administrative in (cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3) (cid:70)(cid:68)(cid:80)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:90)(cid:82)(cid:3) (cid:68)(cid:85)(cid:72)(cid:68)(cid:86)(cid:29)(cid:3) (cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3) and development. the second half of 2017 Bango invested in new to make processing of technology entitlement to subscription services that are bundled with other services more easily available to customers. The (cid:191)(cid:85)(cid:86)(cid:87)(cid:3) (cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3) (cid:90)(cid:68)(cid:86)(cid:3) (cid:69)(cid:92)(cid:3) India’s largest mobile operator, Bharti Airtel, who made Amazon Prime Video available as part of a bundled package (cid:82)(cid:3812)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:83)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3) EUS opportunity for this technology (cid:76)(cid:86)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) continue to invest in enhancement of this technology and its marketing in 2018. Bango continues to invest in other Research and Development (R&D) (cid:83)(cid:85)(cid:82)(cid:77)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:83)(cid:72)(cid:81)(cid:87)(cid:3)(cid:133)(cid:22)(cid:80)(cid:3)(cid:11)(cid:41)(cid:60)(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:133)(cid:21)(cid:17)(cid:25)(cid:80)(cid:12)(cid:3) to ensure that the Bango Platform remains agile to customer needs. Bango PLC | Annual Report 2017 8 Revenue Bango revenue is the sum of all the fees charged across merchants. Bango receives a fee from every transaction through the platform which varies by market and volume of transactions. Key Performance Indicators (KPIs) End User Spend (EUS) This remains the key metric to measure the growth and success of the Bango Platform. It is the total value of all sales through the Bango Platform net of VAT or sales taxes. Bango closely monitors EUS growth and forecasts, to ensure (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3) (cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:86)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:70)(cid:68)(cid:83)(cid:68)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3) in the platform to handle massive future volumes and temporary spikes in volume to ensure there are no barriers to future growth. Cash balances 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 generating (cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:87)(cid:82)(cid:3) (cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3) (cid:68)(cid:79)(cid:79)(cid:3) (cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:15)(cid:3) (cid:76)(cid:87)(cid:3) is important to major stakeholders, particularly key customers, that they (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:75)(cid:68)(cid:86)(cid:3) (cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3) (cid:70)(cid:82)(cid:80)(cid:73)(cid:82)(cid:85)(cid:87)(cid:3) resources to keep trading and investing in joint research and development projects. (cid:49)(cid:82)(cid:81)(cid:16)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:46)(cid:51)(cid:44)(cid:86) These are monitored monthly by the board and key management, and include relationships with mobile operators and leading merchants. Growing and developing relationships will ensure that Bango has the contracts in place to grow its market share and EUS. these (cid:49)(cid:72)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:191)(cid:87) Bango is a highly scalable platform that can handle huge additional volumes of EUS without increasing processing costs. With other operating costs decreasing, and despite additional investment in in sales and development, growth revenue on a highly leveraged platform (cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3) Google Play upgrades Viva Bahrain and Viva Kuwait are the most recent mobile operators to migrate their app store business to the Bango Platform. As a result, they are able to move back into growth by applying Bango Boost technology to improve the payment experience for their customers. Developers selling through the Google Play store in Kuwait and Bahrain will see increased sales from Viva customers through the Bango Boost program. 9 Bango PLC | Annual Report 2017 Strategy for growth Strategy for growth More sales to consumers Bango delivers unique insights derived from pooled data and shared knowledge across the Bango Platform. Bango gives businesses unrivalled visibility into their markets and customers, which increase sales and boost customer acquisition. Built to scale, the Bango Platform supports growth exponential ambitions of its global partners. the Dive more actions with unique data Major stores and merchants can model campaign performance to focus their advertising spend to gain the highest ROI. The acquisition of Audiens in 2018 is a key part of the Bango strategy to build a unique, industrywide commerce platform for global stores and merchants. through Win leading merchants Major stores and merchants maximize platform’s coverage universal payment capability - any device, any content type, with any alternative payment method to reach the biggest possible market. the Proven at scale for leading online merchants, Bango continues to onboard and expand partnerships with leading online merchants that want to grow their sales faster. As more merchants standardize on the Bango Platform for online commerce, the value of the for online commerce, the platform increases for all. platform increases for all. Collect more data The Bango Platform improves through continual use by Bango partners, creating and sharing value with every transaction it processes. Shared across more major stores than any other provider, the Bango Platform has information that is not available to other solution providers, and cannot be captured through direct integrations between payment providers and merchants. Add payment partne Add payment partners Payment providers gain insi Payment providers gain insights into user behavior to increase transaction success and drive user engagement. The Bango Platform is designed to support multiple payment methods, and recent additions of mobile wallets demonstrates the (cid:192)(cid:72)(cid:91)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:79)(cid:68)(cid:87)(cid:73)(cid:82)(cid:85)(cid:80)(cid:17)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:37)(cid:82)(cid:82)(cid:86)(cid:87)(cid:3) adds unique insights that enable the payment providers to increase payment route performance and boost their revenues. Reach more consumers As more customers and partners adopt the Bango Platform more transactions are processed and analyzed by Bango technology. Consequently the platform powerful, increasingly becomes providing unique insights that drive revenue growth. This in turn attracts more customers to use the Bango Platform, which feeds a virtuous circle of success for the Bango Platform and the industry. Bango PLC | Annual Report 2017 10 Principal risk and uncertainties Principal risks and uncertainties Financial risk management objectives and policies (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:80)(cid:82)(cid:81)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3) and key management personnel regularly review these risks and assess the processes and controls that have been put in place to mitigate them. risk and going Liquidity concern (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3) (cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3) (cid:79)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3) (cid:76)(cid:86)(cid:3) available to meet foreseeable needs and invests in cash assets safely and (cid:83)(cid:85)(cid:82)(cid:191)(cid:87)(cid:68)(cid:69)(cid:79)(cid:92)(cid:17)(cid:3) (cid:54)(cid:72)(cid:72)(cid:3) (cid:81)(cid:82)(cid:87)(cid:72)(cid:3) (cid:21)(cid:19)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:73)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) information. Due to the nature of the business with long term relationships with operators and merchants, Bango (cid:71)(cid:82)(cid:72)(cid:86)(cid:3) (cid:81)(cid:82)(cid:87)(cid:3) (cid:75)(cid:68)(cid:89)(cid:72)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) bad debt and therefore the impact on Bango’s liquidity is low. The Board (cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:3) (cid:68)(cid:3) (cid:71)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:192)(cid:82)(cid:90)(cid:3) (cid:73)(cid:82)(cid:85)(cid:72)(cid:70)(cid:68)(cid:86)(cid:87)(cid:3) (cid:87)(cid:82)(cid:3) (cid:72)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3) (cid:76)(cid:86)(cid:3) (cid:86)(cid:88)(cid:3813)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:87)(cid:82)(cid:3) continue to invest in the platform and future development to meet the needs of current and future Bango customers. Employee retention Bango depends on its ability to recruit and retain people with the right experience (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:78)(cid:76)(cid:79)(cid:79)(cid:86)(cid:17)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:83)(cid:88)(cid:87)(cid:86)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:72)(cid:3812)(cid:82)(cid:85)(cid:87)(cid:3) into providing an excellent working (cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:69)(cid:72)(cid:81)(cid:72)(cid:191)(cid:87)(cid:86)(cid:15)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) a share option scheme available to all employees (notes 7 and 12). Currency risk The Bango revenue streams and the assets of some of the Groups subsidiaries are transacted or held in currencies other than sterling. This results in an inherent currency risk, partly mitigated by sales and costs in the same country (cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3) (cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:79)(cid:92)(cid:3) (cid:82)(cid:3812)(cid:86)(cid:72)(cid:87)(cid:17)(cid:3) (cid:54)(cid:72)(cid:72)(cid:3) (cid:81)(cid:82)(cid:87)(cid:72)(cid:3) (cid:21)(cid:20)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) further information. Regular reviews of the impact of dramatic currency swings are undertaken to plan against any (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:76)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3) (cid:90)(cid:72)(cid:85)(cid:72)(cid:3) to happen. No forward exchange or (cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) (cid:86)(cid:88)(cid:70)(cid:75)(cid:3) (cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:76)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:75)(cid:68)(cid:89)(cid:72)(cid:3) been used in the year. Personal data risk Bango processes data belonging to customers and individuals (some of which may be very sensitive) as part of its business. There is a risk that such data could become public if there were a failure of security. The extensive testing of Bango by its major partners as part of ongoing supplier audits, minimization of such data, and the unique way Bango technology is used, gives assurance that this risk is appropriately mitigated. pace Technology risk its is dependent on Bango EUS technology with keeping developments in internet, mobile and payment technology. Bango manages this risk with a continued investment in Research and Development (R&D), combined with technology trading partners and reviews with that to ensure sector specialists regular market developments are understood and managed. Products are reviewed regularly for signs of impairment, based on single cash generating units and their ability to grow revenues. Platform risk The Bango Platform processes huge volumes of data, and is designed to ensure it has capacity to process ever growing volumes of EUS as well as short term spikes of data. The availability and stability of the platform is managed by closely reviewing the performance of the platform and stress testing the platform to ensure that there is huge capacity to scale. Diversity of customers The Bango strategy is based on a diversity of customers which use the Bango Platform because it can do things that no one customer can do themselves – because Bango serves multiple customers. Extreme dominance of the market by one merchant of mobile operator could reduce the value of Bango. Bango has secured deals with leading stores and expects diversity of customers and operators to continue. Even the largest internet companies do not monopolize the global commerce market. Gender of Directors and senior managers Bango has six Directors, three identify as male, two as non-binary and one as female. There are ten other key management personnel of which seven identify as male, two as female and one as other. (cid:55)(cid:75)(cid:72)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:70)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:86)(cid:3)(cid:22)(cid:3)(cid:87)(cid:82)(cid:3)(cid:20)(cid:20)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:72)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:69)(cid:92)(cid:29) Ray Anderson CEO 11 Bango PLC | Annual Report 2017 Bango Platform wins ‘Most Innovative DCB Technology’ award Bango won the award for the ‘Most Innovative DCB Technology’ at the Global Direct Carrier Billing Awards 2017. award recognizes The the new technology and capabilities added to the Bango Platform to support the many complexities involved in the launch of carrier billing by Amazon Japan. (cid:55)(cid:75)(cid:76)(cid:86)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3) (cid:85)(cid:72)(cid:192)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3) leadership role of the Bango Platform in opening-up the market for carrier billing at scale, increasing payments inclusivity for the billions of smartphone users around the world. Bango Boost version 2 released Bango Boost v2 is an evolution of Bango Boost v1, which achieved significant success for operators by focusing on the causes of friction in Expanding on this, Bango Boost v2 provides stores and merchants with unique payment routes. and comprehensive data analysis, including performance benchmarking, to enable stores and merchants to invest in revenue growth and to continuously improve the customer experience. Bango Strategy day The Bango Strategy seminar at the end of January 2017, highlighted the potential for applying the Bango Platform to retail, resale and IoT market opportunities. The size of the overall market – 5 billion mobile phones, more than half smartphones – is vast, but with the possibility of transactions between connected devices, the sources of commerce will be counted in tens of billions. Latam and Asia expansion activity development its presence and Bango expanded business in South Korea to support the growth ambitions of key partners. Through this expansion, Bango will increase payment opportunities for digital, physical and Internet of Things (IoT) services across the region. Further investment was made across Latin America with key hires to its São (cid:51)(cid:68)(cid:88)(cid:79)(cid:82)(cid:3)(cid:82)(cid:3813)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:3813)(cid:70)(cid:72)(cid:3) in Bogota, Colombia. the Bango presence Expanding in these regions will support Bango store (cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:82)(cid:81)(cid:72)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:191)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:3) which is relatively undeveloped for the global store providers. Bango PLC | Annual Report 2017 12 Directors Directors Directors Directors Rachel is responsible for the overall (cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:73)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) relationships with partners. The global reach of Bango requires a wide range (cid:82)(cid:73)(cid:3)(cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:68)(cid:91)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:80)(cid:82)(cid:71)(cid:72)(cid:79)(cid:86)(cid:15)(cid:3)(cid:53)(cid:68)(cid:70)(cid:75)(cid:72)(cid:79)(cid:3) ensures the smooth delivery of this (cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:192)(cid:72)(cid:91)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3)(cid:53)(cid:68)(cid:70)(cid:75)(cid:72)(cid:79)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3) Bango’s development team and key partners on the design and implementation of new technologies, including the capabilities of the Bango Platform to enable payment to be collected for any (cid:87)(cid:92)(cid:83)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:74)(cid:82)(cid:82)(cid:71)(cid:86)(cid:17)(cid:3) (cid:36)(cid:81)(cid:3) (cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3) (cid:191)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) leader and Chartered Accountant, Rachel spent 5 years in practice at PwC and Grant Thornton, specializing in the audit of the technology and listed sectors. Rachel Elias-Jones CFO Bango Ray has over 30 years experience in starting, growing and selling businesses. He was named ‘Business Person of the (cid:60)(cid:72)(cid:68)(cid:85)(cid:182)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:21)(cid:17)(cid:3)(cid:53)(cid:68)(cid:92)(cid:3)(cid:70)(cid:82)(cid:16)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3)(cid:76)(cid:81)(cid:3) 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 (cid:87)(cid:82)(cid:3) (cid:37)(cid:68)(cid:81)(cid:74)(cid:82)(cid:3) (cid:53)(cid:68)(cid:92)(cid:3) (cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3) (cid:44)(cid:59)(cid:44)(cid:3) (cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3) created the industry standard network (cid:42)(cid:56)(cid:44)(cid:3)(cid:16)(cid:3)(cid:59)(cid:17)(cid:71)(cid:72)(cid:86)(cid:78)(cid:87)(cid:82)(cid:83)(cid:17)(cid:3)(cid:44)(cid:59)(cid:44)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:3) in the creation of the web. It sponsored (cid:87)(cid:75)(cid:72)(cid:3)(cid:191)(cid:85)(cid:86)(cid:87)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:3)(cid:58)(cid:58)(cid:58)(cid:3)(cid:70)(cid:82)(cid:81)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:38)(cid:40)(cid:53)(cid:49)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:75)(cid:76)(cid:83)(cid:83)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:191)(cid:85)(cid:86)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) web browser. Ray Anderson CEO Bango between 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 partnerships technology innovators and major market successful players in online technologies and OEMs. Before co-founding Bango, Anil developed the major partnerships for Cyberlife Technology, one of Europe’s leading computer games technology developers, which resulted in the licensing of the (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:181)(cid:68)(cid:85)(cid:87)(cid:76)(cid:191)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:79)(cid:76)(cid:73)(cid:72)(cid:182)(cid:3) (cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3) (cid:69)(cid:92)(cid:3) the world’s leading games publishers including Warner and Hasbro. Before that he worked with Bango CEO Ray Anderson (cid:87)(cid:82)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:3)(cid:68)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:70)(cid:68)(cid:79)(cid:79)(cid:72)(cid:71)(cid:3)(cid:59)(cid:17)(cid:71)(cid:72)(cid:86)(cid:78)(cid:87)(cid:82)(cid:83)(cid:15)(cid:3) which became the global standard for the user interface software on networked computers. Anil Malhotra CMO Bango 13 Bango PLC | Annual Report 2017 Directors Directors Directors Directors Gianluca is an Angel investor and pioneer in the mobile industry. He has over 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 (cid:48)(cid:82)(cid:80)(cid:72)(cid:81)(cid:87)(cid:88)(cid:80)(cid:3)(cid:48)(cid:68)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:182)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:20)(cid:20)(cid:17) Gianluca D’Agostino Non-Executive Director Bango David Sear David has been an entrepreneur and investor in FinTech companies for the last two decades. He is currently Chairman (cid:82)(cid:73)(cid:3) (cid:44)(cid:59)(cid:36)(cid:53)(cid:44)(cid:54)(cid:3) (cid:11)(cid:68)(cid:3) (cid:89)(cid:76)(cid:85)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3) (cid:70)(cid:68)(cid:85)(cid:71)(cid:3) (cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:85)(cid:12)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) Semafone, a payments technology business which protects consumer privacy. He is also a non-executive Director of Fintrax Group, a tax-free shopping and cross-border payments business. 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. 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. In 1999 he was a founder of WorldPay at the genesis of today’s FTSE 100 global payments powerhouse. Chairman, Non-executive Director Bango 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 (cid:38)(cid:72)(cid:81)(cid:87)(cid:85)(cid:72)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:40)(cid:81)(cid:87)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:81)(cid:72)(cid:88)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3) (cid:68)(cid:87)(cid:3) (cid:38)(cid:85)(cid:68)(cid:81)(cid:191)(cid:72)(cid:79)(cid:71)(cid:3) University. Martin Rigby Non-executive Director Bango Bango PLC | Annual Report 2017 14 Company information Company information Company registration number 05386079 Registered office 5 Westbrook Centre Cambridge CB4 1YG 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 R Greenhalgh 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 15 Bango PLC | Annual Report 2017 Directors’ report Directors’ report The Directors present the Annual Report and audited financial statements of Bango PLC for the year ended 31 December 2017. 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: R Anderson A Malhotra M Rigby R Elias-Jones G D’Agostino D Sear Ordinary shares of 20p each 31 Dec 2017 6,567,260 3,976,815 176,630 4,100 37,500 - ==================== Ordinary shares of 20p each 31 Dec 2016 6,628,949 3,986,815 176,630 4,100 37,500 - ===================== The Directors’ biographies and experiences are shown on pages 13-14. The Directors’ interests in share options of Bango were as follows: Options to buy ordinary shares of 20p each chairman of the Bango board. This was following reviews of the accounts by the Institutional Shareholder Service (ISS) which suggested that non-executive Directors should not have share options as best practice. While the Bango board does not agree that non-executive Directors holding share options results in Directors acting against the interests of shareholders, David Sear agreed to relinquish his share options as an act of good faith to shareholders. 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 instalments. 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, lapse immediately. in which case they 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 non-executive directors. Share capital Details of changes in the share capital of Bango during the year are given in note 7 to the financial statements. Option price 31 Dec 2017 31 Dec 2016 Dividends The Directors have not recommended a dividend (31 December 2016: £nil). Date of grant D Sear 7 February 2011 R Anderson 22 September 2017 21 March 2017 21 September 2016 16 March 2016 18 September 2015 Total A Malhotra 22 September 2017 21 March 2017 21 September 2016 16 March 2016 18 September 2015 Total R Elias-Jones 22 September 2017 21 March 2017 21 September 2016 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 £1.530 - 100,000 £2.55 £1.145 £0.89 £0.43 £0.885 £2.55 £1.145 £0.89 £0.43 £0.885 £2.55 £1.145 £0.89 £0.43 £0.885 £1.060 £1.010 £1.360 £1.260 £2.325 £1.665 50,000 50,000 50,000 50,000 32,500 232,500 50,000 50,000 50,000 50,000 32,500 232,500 50,000 50,000 50,000 100,000 20,000 20,000 20,000 20,000 12,000 8,000 7,500 357,500 - - 50,000 50,000 32,500 132,500 - - 50,000 50,000 32,500 132,500 - - 50,000 100,000 20,000 20,000 20,000 20,000 12,000 8,000 7,500 257,500 Post balance sheet events On 23 January 2018 Bango purchased 98.45% of Audiens SRL, a subsidiary of Digitouch SRL, for a mixture of shares and warrants in Bango PLC, cash of €1.48m and a one off fee of €620,000 in exchange for twelve months of services to support the transition of the business from Digitouch to Bango. Further details of the transaction can be found in Note 22. Research and development Bango has continued to invest in research and development in the year. As a high growth technology company, the focus is to develop unique technology that takes Bango forward as the ubiquitous payment platform for not just direct carrier billing but all other forms of alternative payments that allow merchants to sell more goods to consumers. Bango has increased its focus on R&D in 2017 taking the platform forward by enabling both the complexities of physical goods and resale to be enabled on the Bango Platform. Further development has begun at the end of 2017 for new products that will be launched in 2018 and details of the internal development work that has been capitalized in the year is in Note 5.2. Directors’ indemnity arrangements Bango has purchased and maintained throughout the year Directors’ and Officers’ liability insurance in respect of itself and its Directors. Employment policies Bango is committed to following the applicable employment laws in each territory in which it operates. Bango is committed to fair employment practices including the prohibition of all forms of discrimination and attempts as far as possible to give equal access and fair treatment to all employees on the basis of merit. Wherever possible Bango provides same opportunities for disabled people as for others. If employees the On March 08 2017 David Sear relinquished for nil consideration, his 100,000 share options granted in 2011 on his acceptance of Bango PLC | Annual Report 2017 16 Directors’ report Directors’ report become disabled Bango would make reasonable effort to keep them training where necessary. in employment, with appropriate Bango supports the training needs of its staff and actively works to provide on the job and external training to continue the development of all staff. It is important to maintain an exciting and interesting working environment to fully engage its staff. Bango operates 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. Following the Bango SPIRIT values serves both employees and customers’ needs. Health and safety policies Bango 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. Bango complies with all regulatory and other applicable requirements. Going concern After making enquiries, at the time of approving the financial statements, the Directors retain a reasonable expectation that Bango has adequate resources to continue in operational existence for the foreseeable future. The Directors expect the current level of investing activities to continue which is supported by the additional funding secured by the FY2018 placement to support the development of Bango Deep and Audiens in FY2018. At 31 December 2017 Bango had cash reserves of £4.8m (£4.5m net of debt) and based on detailed cash flows provided to the Board within the FY2018/19 budget, there is sufficient cash to see Bango through to profitability based on the standard Bango operating model. Revenue is expected to increase again in FY2018 as it did in FY2017 as a result of expansion of the existing Bango activity and known new business activity launched at the end of FY2018 included in the FY2018/19 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 2017 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 Cavendish Asset Management Killik & Co % Number 10,625,363 16.00 8,876,267 13.36 6,690,000 10.07 2,948,100 4.44 2,850,139 4.29 2,616,840 3.94 2,444,307 3.68 Directors’ responsibility The following statement, which should be read in conjunction with both reports of the auditor set out on page 22, is made to distinguish for shareholders the respective responsibilities of the Directors and of the auditor in relation to the financial statements. The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements each financial year. Under that law the Directors have to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs) and have elected to prepare the parent company financial statements in accordance with IFRS. Under Company Law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and the Group for that period. In preparing these financial statements, the Directors are required to: (cid:120) Select suitable accounting policies and then apply them consistently. (cid:120) Make judgements and accounting estimates that are reasonable and prudent. (cid:120) (cid:120) 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 Bango’s transactions and disclose with reasonable accuracy at any time the financial position of Bango 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: (cid:120) (cid:120) 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 The Audit Committee have decided to put the audit of Bango out to tender in 2018, in line with best practice. The process will be completed by the AGM in May 2018 and a resolution passed to appoint auditors at that time. BY ORDER OF THE BOARD Company Secretary R Greenhalgh 17 Bango PLC | Annual Report 2017 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: (cid:120) (cid:120) (cid:120) 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. financial reports, as well as accompanying All statutory 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 may seek advice and guidance from external parties as required. Bango does not currently have a nominations committee, instead this role is filled by the Non-Executive Directors, supported by the CEO. This is in line with the QCA Code, which acknowledges that some small and mid-size quoted companies will use the whole Board to consider matters of nomination. David Sear Non-executive Chairman The Board The Board is responsible for the overall management of Bango, its strategy and long-term objectives. The Board provides leadership to Bango, 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 Bango does not comply with the UK Corporate Governance Code. Instead, the Directors have reported on Bango’s 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 independent Non-Executive Directors. Details of the Board’s experience and interests are shown on pages 13-14 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 interests are represented. that shareholders’ to ensure 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. Board 13 (15) 15 (15) 15 (15) 13 (15) 12 (15) 13 (15) Audit Committee 2 (2) 2 (2)* 2 (2)* 2 (2)* 2 (2) 2 (2) Remuneration Committee 2 (2) 2 (2)* 2 (2)* 2 (2)* 2 (2) 2 (2) David Sear Ray Anderson Rachel Elias-Jones Anil Malhotra Martin Rigby Gianluca D’Agostino *By invitation of the committee. (x) Number of meetings held. Bango PLC | Annual Report 2017 18 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: (cid:120) Monitor the integrity of the financial statements of (cid:120) (cid:120) (cid:120) 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: (cid:120) (cid:120) 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. (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Regular reviews by the Board and by the senior management team of key performance indicators. Dual authority is required 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 Bango’s assets (fixed and intangible).. 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 Bango. Martin Rigby Audit Committee Chairman It has been agreed by the Audit Committee that the audit will be put out to tender in 2018 in line with best practice, following the continued appointment of Grant Thornton for 13 years. Internal Audit Bango does not currently have an internal audit function, which the Board considers appropriate for a Group of Bango’s size, however this is currently under review and an internal audit function may be added during 2018. 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: (cid:120) (cid:120) (cid:120) 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. 19 Bango PLC | Annual Report 2017 Remuneration committee report Remuneration committee report Composition The Remuneration Committee comprises all of the Non-Executive Directors and is chaired by Gianluca D’Agostino. 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: (cid:120) (cid:120) (cid:120) (cid:120) To review, and determine on behalf of the Board, the specific remuneration and incentive packages for each of Bango’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 Bango, including share option awards and any adjustments to the terms of share ownership and share option schemes. To be responsible for reporting to Bango’s shareholders in relation to remuneration policies applicable to Bango’s Executive Directors. To monitor and approve the grants of all share option schemes to employees. 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 and CFO are 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 2017 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 Bango’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 into account remuneration packages of comparable takes companies when making recommendations to the Board. Bango only offers a base salary, performance related bonuses, share options and a workplace pension to Directors. 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. A review of salaries to market rates is conducted in assessing the rates for the Executive Directors. 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 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 success factors include company financial goals (such as EUS targets and reducing LBITDA) shared by all Directors and individual targets for each Director based on their roles and responsibility. 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 employee 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. The options do not fully vest for three years, if an employee or Director does not perform in their role then their contract of employment is terminated and their share options lapse immediately. Further details of the option plan and outstanding options as at 31 December 2017 are given in note 7 to the financial statements. Details of share options and shares held by Directors in Bango are shown in the Directors’ report on page 16. 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 and following a mandatory legal increase, the pension contribution percentage increased in the year from 1% to 2% 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. Non–executive Directors The remuneration of the Non-executive Directors is determined by the Executive Directors. Their appointments can be terminated on three months’ notice in writing by Bango. Bango PLC | Annual Report 2017 20 Remuneration committee report Remuneration committee report Directors’ emoluments Details of remuneration in respect of the Directors is as follows: 31 December 2017 R Anderson A Malhotra R Elias-Jones M Rigby G D’Agostino D Sear Wages and salaries £ 150,000 140,000 126,667 22,500 22,500 55,333 ----------------- 517,000 ========== Variable pay £ 56,250 48,750 - - - - ----------------- 105,000 ========== Pension and other benefits £ 2,255 3,412 2,866 - - - ------------------ 8,533 ========== Total £ 208,505 192,162 129,533 22,500 22,500 55,333 ----------------- 630,533 ========== During the year Bango was invoiced £42,000 by Fusion Mobile Value Limited, a company of which Gianluca D’Agostino is sole director. The amount invoiced relates to consultancy work carried out by Gianluca D’Agostino in the year. 31 December 2016 R Anderson A Malhotra R Elias-Jones (appointed 14 March 2016) M Rigby G D’Agostino (appointed 18 November 2016) D Sear G Tucker (resigned 18 November 2016) R Burger (resigned 18 November 2016) Wages and salaries £ 150,000 140,000 90,526 19,125 3,750 42,000 118,983 17,250 ----------------- 581,634 ========== Variable pay £ 48,000 40,000 - - - - - - ----------------- 88,000 ========== Pension and other benefits £ 1,650 1,860 1,567 - - - 5,725 - ------------------ 10,802 ========== Total £ 199,650 181,860 92,093 19,125 3,750 42,000 124,708 17,250 ----------------- 680,436 ========== Gianluca D’Agostino Remuneration Committee Chairman 21 Bango PLC | Annual Report 2017 Independent auditor’s report to the members of Bango PLC Independent auditor’s report to the members of Bango PLC Opinion Our opinion on the financial statements is unmodified We have audited the financial statements of Bango plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2017, which comprise the Consolidated statement of financial position, the Consolidated statement of comprehensive income, the Consolidated cash flow statement, the Consolidated statement of changes in equity, the parent company Statement of financial position, the parent company Statement of changes in equity, the parent company Cash flow statement and notes to th e financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements 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. In our opinion: (cid:120) 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 2017 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. (cid:120) (cid:120) (cid:120) Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Who we are reporting to 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. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or (cid:120) the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about (cid:120) the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Bango PLC | Annual Report 2017 22 Independent auditor’s report to the members of Bango PLC Independent auditor’s report to the members of Bango PLC Overview of our audit approach (cid:120) Overall materiality: £177,000, which represents 5% of the group's loss before taxation; Key audit matters were identified as the carrying value of intangible assets and the (cid:120) presumed risk of improper revenue recognition; (cid:120) We audited the financial statements of Bango plc and the financial information of Bango.net Limited and Bango Payments Limited, which accounted for 82% of the group’s loss before taxation. For the remaining nine components, we performed targeted and analytical audit procedures to respond to the risk of material misstatement. Key audit matters The graph below depicts the audit risks identified and their relative significance based on the extent of the financial statement impact and the extent of management judgement. High Potential financial statement impact Low Carrying value of intangibles Revenue recognition Capitalized intangibles Going concern Business combinations Employee remuneration/ share options Trade payables Trade receivables Low Extent of management judgement High Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 23 Bango PLC | Annual Report 2017 Independent auditor’s report to the members of Bango PLC Independent auditor’s report to the members of Bango PLC Key Audit Matter – Group Carrying value of intangible assets The group has development costs (£4.0m), acquired intangible assets (£0.9m) and goodwill (£1.2m). There is the risk that the carrying value of intangible assets exceeds the recoverable value. Indicators of impairment are assessed on an annual basis, and management use significant judgements, such as the discount rate and timing of future cash flows, when performing impairment reviews. The Directors and management consider that there are two cash generating units (CGUs), BilltoMobile Inc (B2M) and the Bango.net payment platform. Revenues from contracts acquired on the purchase of B2M are allocated to the B2M CGU when assessing impairment, and all intangible assets in relation to capitalised development costs are allocated to the payment platform when assessing this for impairment. We identified a risk that development costs are wrongly capitalised in the year, and do not meet the criteria set out in International Accounting Standard (IAS) 38 ‘Intangible assets’. Due to the inherent uncertainty involved in forecasting and discounting future cash flows, we therefore identified the carrying value of intangible assets as a significant risk, which was one of the most significant assessed risks of material misstatement. How the matter was addressed in the audit – Group Our audit work included, but was not restricted to: (cid:120) Assessing whether the accounting policy for amortisation was compliant with IFRS as adopted by the European Union and whether the group had accounted for amortisation in accordance with that policy, including whether it was consistent with the prior year; (cid:120) Recalculation of the amortisation for the year; (cid:120) Checking the assumptions used and mathematical accuracy of the impairment models; (cid:120) Assessing the appropriateness of the discount rate used in the calculations by using an auditor’s expert; (cid:120) Testing the accuracy of management’s assumptions and inputs to their impairment models by comparing the 2017 budgeted sales and gross profit to the results achieved for the year; (cid:120) Discussing and corroborating the ongoing viability of projects with relevant Group personnel; and (cid:120) Assessing management’s review of possible impairment of intangible assets and challenging the basis of key assumptions used; and (cid:120) To agree the correct capitalisation (in accordance with IAS 38), we tested a sample of amounts capitalised as development costs during the year, split between staff costs, consultancy costs, software and overheads. The group's accounting policy on the capitalisation and impairment of intangible assets is shown in notes 3.4 and 3.5 to the financial statements and related disclosures are included in note 5. Key observations Our testing did not identify any material misstatements in the carrying value of the development costs, acquired intangible assets and goodwill. We found no reason for impairment of intangible assets or any additional factors to be considered that would affect the carrying value of intangible assets recognised within the financial statements and we found no material errors in calculations. We also did not find any issues with the capitalisation of development costs in the year. Presumed risk of improper revenue recognition Under International Standard on Auditing (UK) 240 “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements”, there is a rebuttable Our audit work included, but was not restricted to: (cid:120) End user spend (EUS) has been tested by obtaining and reconciling monthly operator analysis reports to the financial statements. We rationalised the resultant margin by multiplying EUS by the average margin for each operator, Bango PLC | Annual Report 2017 24 Independent auditor’s report to the members of Bango PLC Independent auditor’s report to the members of Bango PLC Key Audit Matter – Group presumed risk that revenue may be misstated due to the improper recognition of revenue. Revenue is split into two streams, end user activity (EUS) and other fees. An area of management judgement is around the whether the transactions should be accounted for on an agency or principal basis. This is assessed by management on a contract by contract basis. As a result of these judgements we identified improper revenue recognition as a significant risk, which was one of the most significant assessed risks of material misstatement. How the matter was addressed in the audit – Group each month. The margin percentages were confirmed by tracing a sample of operators back to underlying contracts; (cid:120) The split between agent and principal contracts was calculated, more than 99% of the revenue is based on an agency agreements; (cid:120) Assessing whether the accounting policy in respect of revenue recognition was compliant with IFRS and whether the group had accounted for revenue in accordance with that policy; and (cid:120) We have supplemented our testing with analytical review of revenue recognised in the year including testing of variances and ratio analysis. The group's accounting policy on revenue recognition is shown in note 3.12 to the financial statements and related disclosures are included in note 4. Key observations Our audit work did not identify any material errors in the occurrence of revenue recognised in the year or any material instances of revenue not being recognised in accordance with the stated accounting policy. The proportion of revenue generated from principal agreements is now wholly immaterial, so as a result the financial statements only disclose the margin made on each end-user transaction. Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work. Materiality was determined as follows: Materiality measure Financial statements as a whole Performance materiality used to drive the extent of our testing Specific materiality Group £177,000, which is 5% of the Group’s loss before taxation. This benchmark is considered the most appropriate because the net trading result is a key measure used by management and shareholders in assessing the performance of the business, and is a generally accepted audit benchmark. Materiality for the current year is lower than the level that we determined for the year ended 31 December 2016 to reflect the fact that the group has reduced its loss for the year. 75% of financial statement materiality. We also determine a specific level of materiality for certain areas such as Directors’ remuneration, related party transactions and End User Spend (EUS). Parent £159,000, which is 1% of total assets, capped at 90% of group materiality. This benchmark is considered the most appropriate because the parent entity holds investments in subsidiaries and does not actively trade. A revenue or profit based benchmark is not appropriate because the parent company is not revenue generative and incurs minimal costs. Materiality for the current year is lower than the level that we determined for the year ended 31 December 2016 to reflect the fact that, despite an increase in total assets, parent company materiality is capped at 90% of group materiality and Group materiality on which it is based has fallen. 75% of financial statement materiality. We also determine a specific level of materiality for certain areas such as Directors’ remuneration, related party transactions and End User Spend (EUS). 25 Bango PLC | Annual Report 2017 Independent auditor’s report to the members of Bango PLC Independent auditor’s report to the members of Bango PLC Communication of misstatements to the audit committee £8,850 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. £7,950 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. Overall materiality - group Overall materiality - parent 25% 75% Tolerance for potential uncorrected mistatements Performance materiality 25% 75% An overview of the scope of our audit Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk profile and in particular included: (cid:120) evaluation by the group audit team of identified components to assess the significance of that component and to determine the planned audit response based on a measure of materiality. Significance was determined as a percentage of the Group’s total assets, revenues and profit before taxation; (cid:120) we undertook an interim visit, and assessed the group’s internal processes and control environment before starting any of our year- end procedures; all of the UK entities, being Bango plc, Bango.net Limited and Bango Payments Limited had a full scope audit (covering 82% of the group’s loss before taxation and 91% of the group’s revenue); BilltoMobile, the main trading entity in the US, had a targeted review over its revenue and intangible assets to give us assu rance over the group opinion; all eight other overseas components were reviewed analytically to give us assurance over the group opinion; all audit work was undertaken by the group audit team, no component auditors were involved; and there have been no significant scope changes compared to the prior year. (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Other information The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing s o, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Bango PLC | Annual Report 2017 26 Independent auditor’s report to the members of Bango PLC Independent auditor’s report to the members of Bango PLC Our opinion on other matters prescribed by the Companies Act 2006 is unmodified In our opinion, based on the work undertaken in the course of the audit: (cid:120) the information given in the strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. (cid:120) Matters on which we are required to report under the Companies Act 2006 In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: (cid:120) 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 (cid:120) certain disclosures of Directors’ remuneration specified by law are not made; or (cid:120) (cid:120) we have not received all the information and explanations we require for our audit. Responsibilities of Directors for the financial statements As explained more fully in the Directors’ responsibilities statement set out on page 17, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Paul Naylor Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Cambridge 12 March 2018 27 Bango PLC | Annual Report 2017 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 2017 31 Dec 2016 Note 5 5 6 6 7 8 9 9 556,863 6,130,190 --------------------------- 6,687,053 294,565 6,017,061 ---------------------------- 6,311,626 2,013,088 421,215 4,847,203 --------------------------- 7,281,506 --------------------------- 13,968,559 1,821,796 318,857 5,696,517 ---------------------------- 7,837,170 ---------------------------- 14,148,796 ================ ================ 13,284,561 31,248,453 1,236,225 2,350,701 78,318 (37,474,820) 13,029,124 30,323,341 1,236,225 2,211,136 135,187 (34,579,125) --------------------------- 10,723,438 ----------------------------- 12,355,888 ================ ================ 2,967,538 99,889 --------------------------- 3,067,427 1,697,354 82,149 ----------------------------- 1,779,503 177,694 --------------------------- 177,694 13,405 ----------------------------- 13,405 3,245,121 1,792,908 --------------------------- 13,968,559 ---------------------------- 14,148,796 =============== =============== These financial statements were approved by the Directors on 12 March 2018 and are signed on their behalf by: R Anderson R Elias-Jones Director Director Company registration number 05386079 The notes on pages 32 to 58 are an integral part of these consolidated financial statements. Bango PLC | Annual Report 2017 28 Consolidated statement of comprehensive income Consolidated statement of comprehensive income Alternative performance measure (Non-IFRS) End User Spend Note 31 Dec 2017 £ 31 Dec 2016 £ 4 271,356,080 132,290,981 Revenue Cost of sales Gross profit Other administrative expenses Non-recurring items Share based payments Depreciation Amortization and impairment 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 10 11 10 5 5 11 14 15 4,151,939 (2,439) 2,624,187 (7,054) ------------------------------ ------------------------------ 2,617,133 4,149,500 (5,717,516) (59,463) (679,023) (188,496) (1,396,541) (5,039,873) (376,013) (359,373) (319,284) (1,150,822) ------------------------------ ------------------------------ (7,245,365) ------------------------------ ------------------------------ (8,041,039) (3,891,539) (4,628,232) (51,458) 20,858 (53,661) 30,363 ------------------------------ ------------------------------ (4,651,530) (3,922,139) 486,986 238,413 ------------------------------ ------------------------------ (4,413,117) (3,435,153) (56,869) 135,187 ================ ================ (4,277,930) ================ ================ (3,492,022) Loss per share attributable to the equity holders of the parent Basic loss per share Diluted loss per share 16 16 (5.22) (5.22) (6.81) (6.81) All of the activities of the Group are classed as continuing. The notes on pages 32 to 58 are an integral part of these consolidated financial statements 29 Bango PLC | Annual Report 2017 Consolidated cashflow statement Consolidated cash flow statement Note 31 Dec 2017 £ 31 Dec 2016 £ Net cash used by operating activities 17 (253,675) (2,646,857) 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 Capital received 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 (450,794) (1,509,670) 20,858 ----------------------------- (1,939,606) (106,554) (3,425,134) 30,363 ----------------------------- (3,501,325) 1,180,549 - (51,458) (89,571) 271,600 ---------------------------- 1,311,120 85,948 (2,668) (53,661) (268,466) - ---------------------------- (238,847) ----------------------------- (882,161) ----------------------------- (6,387,029) 5,696,517 32,847 ----------------------------- 5,729,364 ---------------------------- 4,847,203 12,135,326 (51,780) ----------------------------- 12,083,546 ---------------------------- 5,696,517 ================ ================ The notes on pages 32 to 58 are an integral part of these consolidated financial statements Bango PLC | Annual Report 2017 30 Consolidated statement of changes in equity Consolidated statement of changes in equity Share Capital £ Share Premium account £ Merger reserve Other reserve FER reserve Retained Earning Total £ £ £ £ £ 12,886,350 30,101,510 1,236,225 1,896,842 - (30,211,087) 15,909,840 - - - - 25,555 60,393 117,219 - 142,774 164,106 (2,668) 221,831 - - - - - - 359,373 (45,079) - - - 314,294 - - - - - - - 45,079 359,373 - - 85,948 - - 45,079 281,325 (2,668) 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 =================================================================================================================================================================================================================================== Share Capital £ Share Premium account £ Merger reserve Other reserve FER reserve Retained Earning Total £ £ £ £ £ 13,029,124 30,323,341 1,236,225 2,211,136 135,187 (34,579,125) 12,355,888 - - - - 255,437 925,112 255,437 925,112 - - - - 679,023 (539,458) - 139,565 - - - - - 539,458 679,023 - - 1,180,549 539,458 1,859,572 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (3,435,153) (3,435,153) - - - - - - - - - - - - - (56,869) - (56,869) (56,869) (3,435,153) (3,492,022) =================================================================================================================================================================================================================================== 10,723,438 2,350,701 13,284,561 (37,474,820) 31,248,453 1,236,225 78,318 =================================================================================================================================================================================================================================== 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 Loss for the year Other comprehensive income Foreign exchange on consolidation Total comprehensive income for the year Balance at 31 December 16 Balance at 1 January 2017 Share based payments Share based payments transfer for exercised share options Exercise of share options Transactions with owners Loss for the year Other comprehensive income Foreign exchange on consolidation Total comprehensive income for the year Balance at 31 December 17 The notes on pages 32 to 58 are an integral part of these consolidated financial statements. 31 Bango PLC | Annual Report 2017 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 15. 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 goods and services on connected devices. The financial statements for the year ended 31 December 2017 (including the comparatives for the year ended 31 December 2016) were approved by the Board of Directors on 12 March 2018. 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 2017, 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 3.20. 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 Bango had cash of £4.8m at 31 December 2017 (31 December 2016: £5.7m) and financing debt of £0.3m (31 December 2016: £0.1m). The cash flow forecasts of Bango anticipate increased cash generation in the future, from current trading operations as a result of our deals with merchants. For this reason, the going concern basis has continued to be adopted in the preparation of the financial statements. A fundraise was carried out in January 2018, generating cash for further development (see Directors Report for detailed disclosure). 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. Bango PLC | Annual Report 2017 32 Notes to the financial statements Notes to the financial statements 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: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Completion of the intangible asset is technically feasible so that it will be available for use or sale. Bango intends to complete the intangible asset and use or sell it. Bango has the ability to use or sell the intangible asset. The intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits. There are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. The expenditure attributable to the intangible asset during its development can be measured reliably. Internally-generated intangible assets are amortized on a straight-line basis over their useful economic lives. Where no internally-generated intangible asset can be recognized, development expenditure is recognized as an expense in the period in which it is incurred. The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce and prepare the intangible asset to be capable of operating in the manner intended by management. Directly attributable costs comprise employee salary and other employment costs incurred, on a time apportioned basis, as well as a proportion of attributable overhead costs. These costs are recognized as intangible assets. Development costs previously recognized as an expense are not included in the amount recognized as an asset. Until completion of the project, these assets are subject to impairment testing only. Amortization commences upon completion of the asset, and is shown within administrative expenses in the statement of comprehensive income. 3.5 Impairment of property, plant and equipment and intangible assets At each balance sheet date, Bango 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 Bango 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. 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 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 Bango 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 Bango 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 9, will become recognized on the statement of financial position. 33 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements 3.10 Finance lease agreements 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 value of sales processed through the Bango Platform net of taxes. EUS shows the growth of business through the Bango 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 taxes. There are two separable revenue streams in Bango. 3.12.1 Revenue linked to End user activity Bango revenue is a mixture of agency and principal models: (cid:120) (cid:120) Agency model – where Bango is not the merchant of record Principal model – where Bango is the merchant of record, buying and reselling the content to end users The proportion of business that is principal model is now immaterial in comparison to the agency model business, therefore Bango only reports its margin from every transaction through the Platform, regardless of commercial model, as revenue. Bango revenue is the fee from each transaction through the Bango Platform. It does not reflect the different commercial models. Bango receives a fee for every transaction through the Bango Platform, so growing EUS leads to increased revenue. 3.12.2 Other fees Revenue from other fees relates to all revenue not generated from EUS, such as one off connection or support fees: • Connection fees – where Bango charges the payment provider or the merchant 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. (cid:120) services which are recognised at point of invoice. Support fees – where Bango provides monthly 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 Assets held under leases which transfer to Bango substantially 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 purchase goods and services, and the provision of services to digital merchants and other organizations. The revenue 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. Bango PLC | Annual Report 2017 34 Notes to the financial statements Notes to the financial statements 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 statements which are held into the consolidated Bango accounts which is reported in GBP. This reserve only arises at consolidation. local currency in Retained earnings Retained earnings include all current and prior period retained profits. 3.19 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). 3.20 Significant accounting estimates and judgements Revenue recognition As discussed in policy note 3.12 there are a number of key judgements taken by management in determining the most appropriate presentation of revenues generated from services to end users. The Directors consider the principal model element to be immaterial for the current and prior year. 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 2017 is £277,583 (2016: £95,544). Development costs Judgement is applied when deciding whether the recognition requirements for development costs have been met, based on the information available at each balance sheet date. The 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 for each project on the balance sheet date. The carrying value of (2016: costs capitalized development £3,638,080). is £4,031,919 At the end of 2017 one project was partially impaired, due to R&D work superseding previous work done. No other impairments have been recognized based on expected future revenues. 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. 3.21 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 interpretations that are effective for accounting periods beginning on or after 1 January 2017. 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 35 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements and that are mandatory for the Group’s accounting periods beginning on or after 1 January 2017, 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 15 has not yet been implemented, however Bango has considered the potential impact of implementing the new standard on future accounting of revenue. Criteria considered have included the contract, the nature of the service, the timescales for delivery and the length of the service. The two revenue streams – EUS and other fees – have been considered separately. It is considered suitable that Bango continue to recognize EUS revenue at the point in time that the transaction is completed. For digital goods this is at either the point of purchase or enablement. For retail goods the revenue is recognized when the goods are dispatched to the consumer. For most transactions Bango is not the seller of record, has not produced the goods and is not responsible for the customer support. Bango has the performance obligation to make sure that the Bango Platform, that enables payment processing or subscription to take place and be accounted for, is available. Other fees relate to merchants remaining connected to the Bango Platform. The fees are charged monthly to connect to the Bango Platform. There are no direct costs associated to the revenue, therefore it is deemed appropriate to recognize the monthly fee each month in line with invoicing. For the contracts that Bango currently has, IFRS 15 is expected to have no quantitative impact, however a more detailed assessment will be conducted before adoption at 30 June 2018. 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 bring the lease of Bango’s Cambridge office on to the statement of financial position, but it is not expected to have a material impact on the income statement. IFRS 9 Financial Instruments (effective date 1 January 2018) will not have a material impact on the financial statements. 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 Fusion Mobile Value Ltd whose Board includes some of the Directors of Bango PLC. Bango PLC | Annual Report 2017 36 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 Bango and to assist users of these financial statements, Bango includes this additional reporting. 31 December 2017 £ 31 December 2016 £ End User Spend 271,356,080 132,290,981 (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 operations and its research and development activity are considered group operations and are not allocated to any operating segment. Segment information can be analyzed as fo llows for the reporting periods under review. 12 months to 31 December 2017 End user activity £ Segment revenue Cost of sales – payment providers 4,080,987 (2,439) Other fees £ 70,952 - Group Total £ - - £ 4,151,939 (2,439) Segment gross profit 4,078,548 70,952 - 4,149,500 ------------------------------- ------------------------------- ------------------------------- ------------------------------- Administrative expenses Non-recurring items Share based payments charge Depreciation Amortization and impairment Interest payable Interest income Segment net profit/ (loss) - - - - - - - ------------------------------- ------------------------------- ------------------------------- ------------------------------- (5,717,516) (59,463) (679,023) (188,496) (1,396,541) (51,458) 20,858 ------------------------------- ------------------------------- ------------------------------- ------------------------------ (3,922,139) ================== ================ ================ ================ (5,717,516) (59,463) (679,023) (188,496) (1,396,541) (51,458) 20,858 (8,071,639) - - - - - - - 4,078,548 70,952 Segment assets 1,451,542 - 12,517,017 13,968,559 Segment liabilities Net assets (2,479,707) (3,245,121) - --------------------------------- ------------------------------ ------------------------------- ------------------------------ 10,723,438 - ================== ================ ================ ================ (1,028,165) 11,751,603 (765,414) Bango has two revenue streams, which it reports separately. Firstly, revenue from transaction fees due to EUS, secondly, revenue from other fees paid by merchants to connect to Bango and other 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. 37 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements 12 months to 31 December 2016 End user activity £ Other fees £ Group Total £ £ Segment revenue Cost of sales – payment providers 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 (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 2017 31 Dec 2016 £ £ 12,264 58,719 2,050,162 249,295 1,781,499 12,653 47,857 1,745,150 563,585 254,942 --------------------------------------------------- 4,151,939 ======= ======== --------------------------------------------------- 2,624,187 =============== Segment revenue is based on the location of the partners. All turnover from end users is spread over many territories, of which £1.8m comes from a partner in the USA and Canada, £0.4m from a partner in Rest of World and £0.6m from another partner in Rest of World (2016: £1m USA and Canada and £0.3m Rest of World). Bango PLC | Annual Report 2017 38 Notes to the financial statements Notes to the financial statements 5 Non-current assets 5.1 Property, plant and equipment Cost At 1 January 2016 Additions At 31 December 2016 Depreciation At 1 January 2016 Charge for the year At 31 December 2016 Net book value At 31 December 2016 Cost At 1 January 2017 Additions At 31 December 2017 Depreciation At 1 January 2017 Charge for the year At 31 December 2017 Net book value At 31 December 2017 Leasehold improvements £ Office equipment £ Computer equipment £ Total £ 354,786 1,390 -------------------------------------- 356,176 ====================== 155,081 2,299 -------------------------------------- 157,380 ====================== 1,753,942 102,865 -------------------------------------- 1,856,807 ====================== 2,263,809 106,554 -------------------------------------- 2,370,363 ====================== 219,549 33,051 -------------------------------------- 252,600 ====================== 124,536 14,408 -------------------------------------- 138,944 ====================== 1,412,429 271,825 -------------------------------------- 1,684,254 ====================== 1,756,514 319,284 -------------------------------------- 2,075,798 ====================== 103,576 ====================== 18,436 ====================== 172,553 ====================== 294,565 ====================== Leasehold improvements £ Office equipment £ Computer equipment £ Total £ 356,176 3,445 -------------------------------------- 359,621 ====================== 157,380 26,005 -------------------------------------- 183,385 ====================== 1,856,807 421,344 -------------------------------------- 2,278,151 ====================== 2,370,363 450,794 -------------------------------------- 2,821,157 ====================== 252,600 33,281 -------------------------------------- 138,944 11,054 -------------------------------------- 1,684,254 144,161 -------------------------------------- 285,881 ====================== 149,998 ====================== 1,828,415 ====================== 2,075,798 188,496 -------------------------------------- 2,264,294 ====================== 73,740 ====================== 33,387 ====================== 449,736 ====================== 556,863 ====================== Included at year end within leasehold improvements were assets with net book value of £42,603, computer equipment with net book value of £124,444 and software with net book value of £131,633 held under finance leases (31 December 2016: leasehold improvements £59,645 and computer equipment £27,862). 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. 39 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements 5.2 Intangible assets Cost At 1 January 2016 Additions Foreign exchange revaluation Domain Names £ Internal Development £ Trade and Assets £ 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 At 31 December 2016 32,887 7,406,361 1,347,407 1,200,000 9,986,655 Amortization At 1 January 2016 Charge for period 32,887 - 2,800,697 967,584 - 168,426 At 31 December 2016 32,887 3,768,281 168,426 - - - 2,833,584 1,136,010 3,969,594 Net book value at 31 December 2016 - 3,638,080 1,178,981 1,200,000 6,017,061 Cost At 1 January 2017 Additions Domain Names £ Internal Development £ 32,887 - 7,406,361 1,509,670 Trade and Assets £ 1,347,407 - Goodwill £ Total £ 1,200,000 - 9,986,655 1,509,670 At 31 December 2017 32,887 8,916,031 1,347,407 1,200,000 11,496,325 Amortization At 1 January 2017 Charge for period Impairment 32,887 - - 3,768,281 807,409 308,422 168,426 280,710 - At 31 December 2017 32,887 4,884,112 449,136 - - - - 3,969,594 1,088,119 308,422 5,366,135 Net book value at 31 December 2017 - 4,031,919 898,271 1,200,000 6,130,190 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 one project was partially impaired as recent R&D work has superseded the original work done. No other projects had any indication of impairment. 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 Other 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 2017 40 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 2017 £ 31 Dec 2016 £ 2,018,088 (5,000) 1,123,889 130,497 763,702 404,839 111,406 1,310,551 ------------------------------- ------------------------------- 1,826,796 (5,000) ------------------------------- ------------------------------- 1,821,796 318,857 ------------------------------- ------------------------------- 2,140,653 ================= ================= 2,013,088 421,215 2,434,303 At 31 December 2017, 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 2017 £ 31 Dec 2016 £ 364,873 9,972 20,733 - ----------------------- 395,578 ============= 78,110 23,036 13,225 - ----------------------- 114,371 ============= 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 2017 £ 31 Dec 2016 £ 5,000 - - ------------------ 5,000 ========== 5,000 (3,755) 3,755 ------------------ 5,000 ========== 41 Bango PLC | Annual Report 2017 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 As at 31 December 2015 Issue of new shares Exercise of share options As at 31 December 2016 Exercise of share options As at 31 December 2017 No £ 64,431,751 12,886,350 117,219 586,095 25,555 127,772 ----------------------- ------------------------- 13,029,124 65,145,618 ----------------------- ------------------------- 255,437 1,277,185 ------------------------- ------------------------- 66,422,803 13,284,561 ============== ============== During the year 1,277,185 share options were exercised at exercise prices between 23 pence and 232.5 pence and a par value of 20 pence per share. The total proceeds were £1.18m of which £0.26m was recognized as share capital and £0.92m as share premium. 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 do not fully vest for three years. 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 2017 Options 31 Dec 2016 Options Average exercise price per share p 103 185 120 92 ----------------------------------- 129 Average exercise price per share p 122 66 145 67 ----------------------------------- 103 No 3,729,196 1,448,000 (554,375) (127,772) ----------------------------------- 4,495,049 ===================== ===================== ===================== ===================== 3,596,875 ===================== ===================== ===================== ===================== No 4,495,049 1,226,000 (364,248) (1,277,185) ----------------------------------- 4,079,616 2,341,691 123 109 Outstanding at 1 January 2017 Granted Lapsed Exercised Outstanding at 31 December 2017 Exercisable at 31 December 2017 The weighted average share price at date of exercise of options exercised during the year was 138.32 pence (2016: 89.72 pence). The fair value of options granted during the year, determined using the Black-Scholes valuation model, were between 60 - 144 pence. Significant inputs into the model include a weighted average share price of 185 pence (31 December 2016: 65.66 pence) at the grant date, the exercise prices, volatility of 59.4-60.4% (31 December 2016: 49.3-60.0%), dividend yield of nil (31 December 2016: nil), an expected option life of five years (31 December 2016: five years) and an annual risk-free interest rate of 0.51-0.78% (31 December 2016: 0.28-0.90%). 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 share prices. Bango PLC | Annual Report 2017 42 Notes to the financial statements Notes to the financial statements At 31 December 2017, Bango PLC had the following outstanding options and exercise prices: Average exercise price per share 31 Dec 2017 Options Remaining Contractual Average exercise Life price per share Options 31 Dec 2016 Remaining Contractual Life Expiry date Pence Number Months Pence Number Months 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2021 2021 2022 2022 2022 2023 2023 2023 2023 2024 2024 2025 2025 2026 2026 2026 2027 2027 23 March 19 September 31 January 15 October 19 February 1 October 17 March 24 September 7 February 17 March 9 September 27 September 23 March 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 21 March 22 September At 31 December 8 Trade and other payables Trade payables Social security and other taxes Accruals and deferred income - - - 53.50 44.00 44.50 59.50 167.00 - 82.50 82.00 - 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 70.50 114.50 255.00 - - - 8,875 8,875 8,875 8,875 8,875 - 10,875 10,620 - 20,322 46,323 100,000 243,500 10,000 50,000 126,166 165,500 196,535 226,240 408,509 605,442 577,201 29,154 597,354 611,500 ------------------------ - - - 10 14 21 27 33 - 39 45 - 51 57 59 63 63 66 70 76 82 87 93 99 105 108 111 117 ------------------------ 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 - - - - ------------------------ --------------------------- 4,079,616 95 ============= ============= 4,495,049 89 ============= ============= 31 Dec 2017 £ 31 Dec 2016 £ 1,659,053 153,569 1,154,916 ---------------------- 2,967,538 846,212 109,416 741,726 ---------------------- 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. The increase in trade payables at the 31 December 2017 is consistent with the increase in trade receivables and the growth in revenue in the business. 43 Bango PLC | Annual Report 2017 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: 31 Dec 2017 £ 31 Dec 2016 £ No later than 1 year Later than 1 but no later than 5 years More than 5 years The UK lease expires on 17 November 2023. 157,906 631,624 136,515 153,869 588,832 267,094 ----------------------------- ----------------------------- 1,009,795 ============= 926,045 ============= Bango has finance leases for technical computer equipment, software and leasehold equipment. The leases will terminate between May 2018 and December 2020. 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 31 Dec 2017 £ 31 Dec 2016 £ 299,214 112,202 187,012 86,227 13,709 ----------------------------- ----------------------------- 99,936 ----------------------------- ----------------------------- (4,382) ----------------------------- ----------------------------- 95,554 ============= 277,583 ================ (21,631) The present value of finance lease liabilities is repayable as follows: 31 Dec 2017 £ 31 Dec 2016 £ Within one year Between two and five years 10 Expenses by nature Employee benefit expense Depreciation, amortization and impairment Other expenses Analyzed as: Administrative expenses Share based payments Depreciation Amortization and impairment 99,889 177,694 82,149 13,405 ----------------------------- ----------------------------- 95,554 ============= 277,583 ================ 31 Dec 2017 £ 31 Dec 2016 £ 4,588,608 1,585,037 1,867,394 ------------------------ 8,041,039 ============= 5,776,979 679,023 188,496 1,396,541 ---------------------- 8,041,039 ============= 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 ============ Bango PLC | Annual Report 2017 44 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 Other services relating to international taxation advisory and compliance 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 Impairment of intangible assets Research and development costs 31 Dec 2017 £ 31 Dec 2016 £ 5,000 57,000 10,000 10,200 5,400 62,300 4,000 42,500 13,700 9,900 3,300 50,000 226,716 211,149 51,458 53,661 (52,086) (70,916) 60,427 128,069 1,088,119 308,422 96,330 186,213 133,071 1,150,822 - 93,798 ================ ================ 11b Non-recurring items These costs relate to the acquisition of Audiens SRL and associated fundraise that took place on 23 January 2018 (2016: related to the acquisition of BilltoMobile Inc). 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 2017 No 31 Dec 2016 No 8 6 11 22 3 28 ------------- 78 ====== 6 5 7 22 4 28 ----------- 72 ====== 31 Dec 2017 £ 31 Dec 2016 £ 3,703,149 410,141 206,436 679,023 3,456,747 386,483 148,958 359,373 ----------------------------- ----------------------------- 4,351,561 ================ ================ 4,998,749 Included in the above payroll costs is £1,340,684 (31 December 2016: £995,493) capitalized within internal development (note 5.2). 45 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements The Directors have identified sixteen (31 December 2016: 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 31 Dec 2017 £ 1,299,167 152,147 22,531 306,788 31 Dec 2016 £ 1,086,653 138,861 46,725 116,281 ----------------------------- ----------------------------- 1,388,520 ================ ================ 1,780,633 13 Directors Remuneration in respect of Directors was as follows: Emoluments 31 Dec 2017 £ 31 Dec 2016 £ 630,533 ============ 680,435 ============ Further details can be found in the Remuneration Committee Report). The highest paid Director received total salary of £206,250 (31 December 2016: £198,000), pension contributions of £2,255 (31 December 2016: £1,650), and share based compensation of £50,908 (31 December 2016: £11,122). The number of Directors who accrued benefits under pension schemes was three (31 December 2016: four). The total share based compensation for Directors was £155,816 (31 December 2016: £58,236). For details of Directors options please see the Directors and their interest section of the Directors’ report. During the year Bango was invoiced £42,000 by Fusion Mobile Value Limited, a company of which Gianluca D’Agostino is sole director. The amount invoiced relates to consultancy work carried out by Gianluca D’Agostino in the year. 14 Investment income Bank interest receivable 31 Dec 2017 £ 20,858 31 Dec 2016 £ 30,363 ================ ================ Bango PLC | Annual Report 2017 46 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 (Over)/under provision of prior year overseas tax 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 19.25% (31 December 2016: 20.00%) 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 2017 £ (421,215) (8,126) 18,953 (76,598) 31 Dec 2016 £ (318,857) (9,806) 90,250 - ------------------------------ ------------------------------ (238,413) ================ ================ (486,986) (3,435,153) (4,777,915) ================ ================ (661,171) (955,583) 146,477 2,290 259,689 (382,944) 167,089 47,356 18,953 (84,727) 89,264 1,946 779,826 (248,584) 120,946 (106,672) 90,250 (9,806) ------------------------------ ------------------------------ (238,413) ================ ================ (486,986) At 31 December 2017, the unutilized tax losses carried forward amounted to £33.2 million (at 31 December 2016: £32.1 million). Deferred tax assets/ (liabilities): Share option deduction Tax losses Other temporary differences Accelerated capital allowances and capitalized development costs Provided 31 Dec 2017 Provided Unprovided 31 Dec 2016 31 Dec 2017 Unprovided 31 Dec 2016 £ £ £ £ - 546,870 (5,016) - 418,102 (1,230) 757,736 4,558,279 - 133,820 3,794,139 - (541,854) ----------------------- - - - ----------------------- ------------------------------ ---------------------- 3,927,959 5,316,015 - ================ ================ ============== ================ (416,872) 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 2017 £ (3,435,153) 31 Dec 2016 £ (4,413,117) Weighted average number of ordinary shares in issue 65,768,111 65,026,008 Earnings (basic) per share (5.22)p (6.81) p 47 Bango PLC | Annual Report 2017 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 2017 £ (3,435,153) 31 Dec 2016 £ (4,413,117) 65,768,111 65,026,008 (5.22)p (6.81) p At 31 December 2017 options over 4,079,616 (31 December 2016: 4,495,049) 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. amortization and impairment Taxation in income statement Investment income Interest payable Foreign exchange movement on cash balances Share-based payment expense (Increase)/decrease in receivables Increase/(decrease) in payables Realized currency translation Corporation tax rebate Net cash used by operations 31 Dec 2017 £ (3,435,153) 1,585,037 (486,986) (20,858) 51,458 (32,847) 679,023 (1,393,322) 2,431,490 (118,503) 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 ---------------------- ---------------------- (2,885,270) 238,413 ---------------------- ---------------------- (2,646,857) ================ =============== (740,661) 486,986 (253,675) 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 2017 £ 31 Dec 2016 £ 5,966,092 ---------------------- 5,966,092 ================ 6,096,356 ------------------------- 6,096,356 ============== 31 Dec 2017 £ 31 Dec 2016 £ 1,118,889 4,847,203 ---------------------- 5,966,092 ================ 399,839 5,696,517 ------------------------- 6,096,356 ============== Bango PLC | Annual Report 2017 48 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 2017 £ 31 Dec 2016 £ 2,813,968 ---------------------- 2,813,968 ================ 1,587,938 ------------------------- 1,587,938 ============== 31 Dec 2017 £ 31 Dec 2016 £ 1,659,053 1,154,916 ---------------------- 2,813,969 ================ 846,212 741,726 ------------------------- 1,587,938 ============== 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 the default of partners and other counterparties 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 2017 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 2017 £ 31 Dec 2016 £ 2,813,968 56,096 43,793 177,694 --------------------- 3,091,551 1,587,938 57,170 24,969 13,405 -------------------------- 1,683,482 ============= ============= 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 liquidit y, as sufficient cash is available to meet all liabilities falling due in the next year. At 31 December 2017 Bango only had hire purchase borrowings. 49 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements Capital for the reporting year under review is summarized as follows: Overall financing Capital 31 Dec 2017 £ 31 Dec 2016 31 Dec 2017 £ £ 31 Dec 2016 £ Total equity Less cash and cash equivalents Plus borrowings 10,723,438 - 277,583 -------------------------------------------- 11,001,021 12,355,888 (5,696,517) - -------------------------------------------- 6,659,371 ============ ============ ============ ============ 12,355,888 - 95,554 -------------------------------------------- 12,451,432 - -------------------------------------------- 5,876,235 10,723,438 (4,847,203) The capital to overall financing ratio is 53.4% (2016: 53.5%). 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 2017 £ Financial liabilities £ Net assets/ (liabilities) £ Financial assets 31 Dec 2016 £ Financial liabilities £ Net assets/ (liabilities) 1,943,192 709,589 1,233,603 2,168,532 815,309 1,353,223 65,488 18,881 46,607 73,957 15,182 42,995 72,635 35,094 - - - - 4,991 40,752 1,329,942 68,112 ----------------------------------- 3,603,200 ==== ===== - 782 - 723,079 22,829 ----------------------------------- 1,475,160 ==== ===== 42,995 63,159 72,635 106,093 35,094 41,896 - 4,209 40,752 606,863 45,283 ----------------------------------- 2,124,808 ==== ===== 1,296 12,812 31,887 119,186 39,130 ----------------------------------- 2,657,948 ==== ===== - - - - 782 - 5,156 485 ----------------------------------- 836,914 ==== ===== 58,775 63,159 106,093 41,896 1,296 12,030 31,887 114,030 38,645 ----------------------------------- 1,821,035 ==== ===== 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 sterling strengthened by 5% then the effect on the balance sheet would be a loss of £101,181 and if it moved by 10% then there would be a total loss of £193,164. 22 Post balance sheet events Fundraise On 24 January 2018 Bango announced a placing of 2,777,778 new ordinary share at a price of 180 pence per share, to raise £5 .02m (£4.76m net of fees). This is split as: Share capital Share premium Total £ 555,555 4,208,945 4,764,500 Bango PLC | Annual Report 2017 50 Notes to the financial statements Notes to the financial statements Acquisition of Audiens S.R.L On 23 January 2018 Bango acquired 98.45 per cent of Audiens S.R.L. (Audiens), a data management company incorporated in Italy. The acquisition is intended to enable Bango to capitalize on demand for the valuable data it generates through its existing operations and to enable the Bango Platform to provide additional value to the rapidly growing mobile advertising market. At the time the financial statements were authorized for issue, Bango had not yet completed a full review of the accounting f or the acquisition of Audiens. In particular, the fair values of the assets and liabilities acquired and the allocation of contingent payments between consideration and remuneration under IFRS3 have not been determined, and an independent valuation has not been finalized. The provisional estimate of consideration is £4.96m comprising: Cash consideration Shares issued (1) Warrants issued (2) Option agreement (3) Cash for provision of shared services for 12 months Total £ 1,301,971 939,245 1,329,118 835,725 554,217 4,960,276 (1) Bango issued 521,803 ordinary shares of 20 pence each at an issue price 180 pence per share. (2) Bango issued 738,399 warrants over Bango ordinary shares of 20 pence exercisable over 10 years at 180 pence. (3) The remaining 1.55 per cent of Audiens is retained by Marko Maras, a co-founder of Audiens (the “Maras Shares”). Bango has entered into an agreement with Mr Maras relating to the Maras Shares. Under the terms of the Option Agreement Bango can call upon Mr Maras to sell these shares to Bango in certain circumstances and Mr Maras can call upon Bango to purchase these shares in certain circumstances. The final date by which either option must be exercised it 28 February 2020. On exercise of either option, Mr Maras may be entitled to payment for the Maras Shares calculated at £0.84m, based on the placing price, payable by Bango subject to certain conditions, including the achievement of specific revenue targets by Audiens. The amount payable to Mr Maras will reduce as the Bango share price rises, but could increase, on a sliding scale, to a maximum of £1.21m, should the revenue objectives be met but the Bango share price falls below the placing price at that point. Incorporation of Bango Deep Limited Bango Deep Limited, a company incorporated under the Companies Act 2006, was incorporated on 2 January 2018. It is a 100% owned subsidiary of Bango PLC. 51 Bango PLC | Annual Report 2017 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 2017 £ 31 Dec 2016 £ 4 5 5 8 9 9 6 29,684,765 17,209,241 ---------------------------- 46,894,006 ---------------------------- 29,005,642 16,144,791 ---------------------------- 45,150,433 ---------------------------- 27,721 ---------------------------- 27,721 ---------------------------- 9,510 ---------------------------- 9,510 ---------------------------- 46,921,727 45,159,943 =============== =============== 13,284,561 31,248,453 2,372,006 ---------------------------- 46,905,020 13,029,124 30,323,341 1,787,896 ---------------------------- 45,140,361 =============== =============== 16,707 ---------------------------- 16,707 ---------------------------- 46,921,727 19,582 ---------------------------- 19,582 ---------------------------- 45,159,943 =============== =============== These financial statements were approved by the Directors on 13 March 2018 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 not to present a full income statement, but the loss for the year for the company was £94,913 (2016: £35,673). The notes on pages 55 to 58 are an integral part of these consolidated financial statements Bango PLC | Annual Report 2017 52 Statement of changes in equity of Bango PLC Statement of changes in equity of Bango PLC 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 Balance at 1 January 2017 Share based payments Exercise of share options Transactions with owners Loss for the year Total comprehensive income for the year Balance at 31 December 2017 Share capital £ Share premium £ Retained earnings £ Total £ 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 13,029,124 - 255,437 255,437 30,323,341 - 925,112 925,112 1,787,896 679,023 - 679,023 45,140,361 679,023 1,180,549 1,859,572 - - (94,913) (94,913) - 13,284,561 - 31,248,453 (94,913) 2,372,006 (94,913) 46,905,020 The notes on pages 55 to 58 are an integral part of these consolidated financial statements 53 Bango PLC | Annual Report 2017 Cashflow statement of Bango PLC Cashflow statement of Bango PLC Loss for year (94,913) (35,673) 31 Dec 2017 £ 31 Dec 2016 £ 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 (228,181) (31,700) (9,666) (202,286) 18,288 (49,845) ---------------------------- ----------------------------- (233,843) (269,547) (1,044,170) (100) (268,471) (28,904) ---------------------------- ----------------------------- (297,375) ---------------------------- ----------------------------- (1,044,270) 1,180,549 - 228,181 - 85,948 (2,668) 202,286 281,325 ---------------------------- ----------------------------- 566,891 ---------------------------- ----------------------------- - 1,408,730 - Cash and cash equivalents at beginning of year - - Cash and cash equivalents at end of year ---------------------------- ----------------------------- - ================ ================ - The notes on pages 55 to 58 are an integral part of these consolidated financial statement Bango PLC | Annual Report 2017 54 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 2017, 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. 55 Bango PLC | Annual Report 2017 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 £105,797 (31 December 2016: £82,485) 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. 4 Investments Cost Shares in subsidiary undertakings at 31 December 2016 Share based payments Investment in Bango Payments Ltd Shares in subsidiary undertakings at 31 December 2017 Net book amount At 31 December 2017 At 31 December 2016 £ 29,005,642 679,023 100 ------------------------------ 29,684,765 ================ 29,684,765 ================ 29,005,642 ================ Fixed asset investments are shown at cost less provision for impairment. Details of subsidiary undertakings at 31 December 2017 are as follows: Class of share capital held Country of incorporation 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 Limited England & Wales Ordinary England & Wales Ordinary 100% 100% Non-trading Non-trading Bango Employee Benefits Limited Bango do Brasil Cessão de Licenças de Programas de Computador Ltda * Bango Mobile Limited ** Bango Kabushiki Kaisha Bango Holdings Inc BilltoMobile Inc Bango Inc Brazil Ordinary 100% Non-trading Nigeria Japan USA USA USA Ordinary Ordinary Common Common Common 100% 100% 100% 100% 100% Trading entity in Nigeria Sales and support office for Bango.net Limited Holding company Trading entity in USA Sales and support office for Bango.net Limited Non-trading Bango Payments Limited *99% owned via Bango Movil and 1% owned by Bango Plc **49% owned via Bango PLC, 51% owned by Bango.net Ltd (100% owned subsidiary of Bango PLC) England & Wales Ordinary 100% Bango PLC | Annual Report 2017 56 Notes to the financial statements Notes to the financial statements 5 Receivables Amounts due from Group undertakings (due after one year) Other receivables (due within one year) 31 Dec 2017 £ 31 Dec 2016 £ 17,209,241 27,721 ----------------------------- 17,236,962 ================ 16,144,791 9,510 ----------------------------- 16,154,301 ================ 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. 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 31 Dec 2017 £ 31 Dec 2016 £ 8,148 8,559 ----------------------------- 16,707 9,884 9,698 ----------------------------- 19,582 ================ ================ 31 Dec 2017 £ 31 Dec 2016 £ 17,209,241 ----------------------------- 17,209,241 16,144,791 ----------------------------- 16,144,791 ================ ================ 31 Dec 2017 £ 31 Dec 2016 £ - - 17,209,241 ----------------------------- 17,209,241 16,144,791 ----------------------------- 16,144,791 ================ ================ 31 Dec 2017 £ 31 Dec 2016 £ 16,707 ----------------------------- 16,707 19,582 ----------------------------- 19,582 ================ ================ 31 Dec 2017 £ 31 Dec 2016 £ 8,148 8,559 ----------------------------- 16,707 9,884 9,698 ----------------------------- 19,582 ================ ================ 57 Bango PLC | Annual Report 2017 Notes to the financial statements Notes to the financial statements 8 Share capital Allotted, called up and fully paid: Ordinary shares of 20p each in Bango PLC No £ As at 31 December 2015 Issue of new shares Exercise of share options As at 31 December 2016 Exercise of share options As at 31 December 2017 64,431,751 ----------------------------- 586,095 127,772 ----------------------------- 65,145,618 ----------------------------- 1,277,185 ------------------------- 66,422,803 12,886,350 ----------------------------- 117,219 25,555 ----------------------------- 13,029,124 ----------------------------- 255,437 ------------------------- 13,284,561 ================ ================ During the year 1,277,185 share options were exercised at exercise prices between 23 pence and 232.5 pence and a par value of 20 pence per share. The total proceeds were £1.18m of which £0.26m was recognized as share capital and £0.92m as share premium. During the year 1,226,000 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 4,079,616 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 2017 Exercise of share options Share based payments Loss for the year At 31 December 2017 Share Premium Account £ Retained earnings £ 30,323,341 1,787,896 925,112 - 679,023 (94,913) - ------------------------------ --------------------------- 2,372,006 ================ ============== 31,248,453 An adjustment has been made out of the share based payment reserve for share options exercised in the year. 10 Reconciliation of movements in shareholder’s funds 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 31 Dec 2017 £ 31 Dec 2016 £ 45,140,361 1,180,549 679,023 - - (94,913) ----------------------- 46,905,020 44,452,056 85,948 359,373 281,325 (2,668) (35,673) ----------------------- 45,140,361 ================ ================ The distributable reserves as at 31 December 2017 from Bango PLC are £747,368 (2016: £842,281). Bango PLC | Annual Report 2017 58
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