Half-year Report

RNS Number : 0446B

Bango PLC

18 September 2018

 

 18 September 2018

BANGO PLC

("Bango")

Interim Results

Bango (AIM: BGO), the mobile commerce company, today announces its unaudited interim results for the six months ended 30 June 2018.

1h2018 Financial highlights

·      End User Spend (EUS) increased 138% YoY to £220m (1h2017: £92m)

·      Total revenues increased 54% YoY to £2.63m (1h2017: £1.72m)

·      Payments business EBITDA positive

·      Group Adjusted LBITDA* -£0.90m including Audiens
(1h2017: -£1.01m ex Audiens)

·      Operating costs £3.30m in-line with forecast (1h2017: £2.72m) including increased product development and targeted investment in data business

·      Cash £5.88m at 30 June 2018 (30 June 2017: £5.56m; 31 Dec 2017: £4.85m) Expected to fund the Group through to profitability and cash generation. Cash sufficient to support both planned investment to grow sales and develop new products

* Adjusted LBITDA is Operating Loss before depreciation, amortization and share based payments.

1h2018 Operational highlights

·      Expanded the use of billing integration technology, enabling customers to sign-up for Amazon Prime Video in the USA, UK and India

·      Pandora, a leading music streaming service, chose the Bango Platform for mobile operator launch in USA.

·      Additional Google Play routes in Africa and South America. The deal pipeline with mobile operators to upgrade to the Bango platform now covers EUS well in excess of $4Bn/yr and proposals are progressing well

·      Expanded team in Japan and Korea. Support for Google Play developers using the Bango Platform to increase marketing activity with mobile operators.  

·      Acquired Audiens SRL in January 2018, backed by £5.02m placing with existing Bango shareholders. Acquisition adds IP, expertise, commercial agreements to accelerate Bango data monetization capability by 12 months, and adds new revenue streams.

Delivering the Bango Platform strategy

Bango has created a unique and powerful platform that enables merchants and payment providers to collaborate and thrive. Leading merchants including Amazon, Microsoft, Google and Samsung use the Bango Platform to collect payments from tens of millions of customers and gain increased marketing effectiveness and reach from data that only Bango can provide.

The Payments business is operating profitably, has high operating margins and a stable cost base as transaction volumes grow rapidly, driving success for Bango and its customers. New merchants, new carrier billing and wallet routes, enhanced through Bango Boost technology, continue to drive EUS growth at a rapid pace.

By using the Bango Platform merchants benefit from the extensive consumer data provided by mobile operators together with payment data from hundreds of millions of transactions. Mobile operators can now partner with the leading developers in ways that were impossible before Bango, to open up new revenue sources and grow their carrier billing activities faster. The addition of new Bango Audiens technology will accelerate the growth of this new revenue stream.

The investment in enabling data monetization for Bango customers opens up new revenue streams that are expected to be substantial in the coming years and drive additional profitable EUS growth through the Bango Platform.

Ray Anderson, Chief Executive Officer at Bango, commented:  

"The Bango Payments business reached positive EBITDA at the end of 2017, and new customers and routes launched in the first half of 2018 are driving profitability further.

I was delighted with the support Bango received in acquiring Audiens in January 2018. The technical and commercial integration is proceeding rapidly, with clear synergies opening up a new data-derived revenue stream at a faster pace than originally planned.

Mobile operators around the world are seeing the substantial additional profit they can make by working with Bango. An increasing number are expected to upgrade to Bango in the coming months."   

Contact Details:

Bango PLC	FTI Consulting	Cenkos Securities PLC
Tel. [phone]	Tel. [phone]	Tel. [phone]
Ray Anderson, CEO	Matt Dixon	Beth McKiernan
Rachel Elias-Jones, CFO Anil Malhotra, CMO	Rob Mindell	Neil McDonald Peter Lynch

About Bango

Merchants, app store and payment providers cross the threshold into the Bango ecosystem to converge, grow and thrive.

By bringing businesses together and powering e-commence with unique data-driven insights, Bango delivers new business opportunities and new dimensions of growth for customers around the world. Being inside the Bango circle means global merchants including Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT) can work together with payment partners from Africa to the Americas, accelerating the performance of everyone on the inside.

Bango. Think inside the circle. For more information, visit www.bango.com.

 

CEO's statement

Worldwide there are 4 billion smartphone users. They can play music, movies, games, order and pay for transportation and access a vast array of other services.

Merchants and services providers, and the stores through which they sell their products, are focused on acquiring new customers and collecting payments from them for valuable services.

The Bango platform was created to enable merchants and payment providers to work together to collect payments and to benefit from the valuable data resulting from these transactions and available from the payment providers.

Major global businesses are now relying on Bango to achieve their goals. They add more paying customers, generate better results from their marketing campaigns, and partner with each other through the unique market nexus that Bango provides. 

The Bango Platform - powering synergistic payment and data business - continues to gain momentum. It uniquely enables merchants and payment providers to cluster, collaborate and thrive.

Payments business and EUS growth

The payments business is growing rapidly and expected to continue to grow rapidly. More merchants are using the platform to collect payments and more payment providers are integrating with the Bango platform to provide payment services.

End User Spend (EUS) continued its four-year growth trend of at least doubling every twelve months and this growth momentum is expected to continue.  In 1h2018 a range of new content and services were launched using the Bango Platform with many new payment routes added to reach hundreds of millions of new users for Bango merchants.

Bango expanded the use of its billing integration technology, enabling customers to sign-up for Amazon Prime Video in the USA, UK and India through leading mobile operators. Using Bango's billing integration technology, qualifying customers have the opportunity to subscribe to Prime Video as part of the customer's mobile plan.

Launches in the USA and the UK follows Bango's initial launch with Amazon in India for Bharti Airtel, India's largest mobile network operator. Bango technology ensures that entitled mobile customers receive uninterrupted access to Amazon Prime Video from the moment they become active, for as long as they continue to subscribe and pay their mobile bills.

Pandora, a top three US music streaming service chose the Bango Platform for a major mobile operator launch in the United States.

Significant new launches in Latin America and Africa with Google Play will also drive EUS and revenue growth going forward.

Bango Boost continues to provide valuable insights to mobile operators and App Stores that use the Bango Platform.

With a stable cost base, meaning no additional cost for additional payment processing, the increasing EUS through the Bango Platform and increasing revenues are driving the move towards profitability for Bango.

Current systems have been tested to transaction volumes equivalent to EUS in excess of £5Bn/year. With EUS levels in the sales pipeline for upgrades from direct connections equivalent to more than $4Bn/year, software development is underway to ensure substantial additional capacity is available in 2019 and 2020 without additional operating costs.

Data business

The data gathered from processing payments and attempted payments across hundreds of millions of transactions combined with the unique consumer data available to mobile operators that provide direct carrier billing services have huge potential value, provided they can be used in a safe, secure and acceptable way by market participants.

The acquisition of Audiens SRL in January 2018 brought forward the launch of this business by around 12 months, and it is now broken out as a separate line of business within Bango.

The data gathered by the Bango Platform can provide improved user experiences, more effective marketing and more profitable business for merchants and mobile operators.

A simple example is where Bango provides merchants with the ability to focus marketing on users that have a proven ability to pay. Merchants avoid marketing to users unable to pay, saving expenditure and avoiding user disappointment. More sophisticated marketing strategies might benefit from information about user demographics, location, device history or historic spending behavior,

Bango ensures that data can only be used in ways that protect personal data from misuse. When data is used for marketing, rigorous controls are essential to ensure only general "audiences" are presented - not data on individual users. The capability to avoid merchant visibility of mobile operator identity information and to avoid merchant identity passing to payment providers has been a core part of the Bango Platform since its inception.

The investment in the integration of Audiens technology into the Bango Platform has enabled rapid acceleration in the monetization of data.  Data can now be segmented and organized to create valuable audience segments that can be used for marketing. Audiens technology is already integrated with the leading trading platforms that present these audiences to merchants in the way they normally buy data.

During 1h2018 Bango ran initial marketing trials with leading developers using pre-release versions of the new data monetization technology. Results were encouraging. Three case studies, targeting audiences in the USA, Indonesia and Italy are now available to mobile operators to show how they can drive new revenue streams from data monetization using the Bango Platform. In one case, investing marketing spend with a mobile operator using Bango data for a leading Karaoke app increased premium customer acquisition rates by a factor of 9 compared with conventional methods.

Mobile operators can generate profits from acting as payment processors by offering direct carrier billing. App Stores and large merchants see the value from expanding their reach to new consumers, there is always pressure on payment providers to reduce cost of payment collection. The additional revenues available from providing data to enable more efficient marketing by merchants through using the Bango Platform are significant. Bango has developed a business tool to enable mobile operators to model additional profit that can be gained by upgrading to Bango and monetizing their valuable data.

Now that Bango and mobile operators can share both new data revenues and traditional payment revenues from delivering value to merchants, there is increasing competitive advantage and flexibility in negotiating commercial contracts. Payment processing incentives can be offered in return for data monetization revenues.

To deliver on the opportunity presented by this technology innovation, Bango has expanded its sales and marketing team based in Japan and Korea to support Mobile Network Operator (MNO) upgrades and merchants in Asia where carrier billing is widespread and essential.

To capitalize on the huge opportunity from bringing payment and data together, a new member of the leadership team, Kaushik Sthankiya, will be joining Bango as SVP Business Development in October. He brings extensive experience in leading global sales and business development teams at Docomo Digital, Mastercard and Visa,

To date, more than 200 Google Play developers have already registered with Bango to invest in audience targeting using data from mobile operators. Many of these are eager to invest in expanding their presence in markets where Bango has built a strong mobile operator footprint.

Audiens CDP

Bango acquired Audiens to gain access to its technology and programmatic advertising integrations for the Bango Platform. Alongside the Bango Platform, the Audiens Customer Data Platform (CDP) business continues to grow and has huge potential beyond Bango merchants.

As part of Bango, Audiens now benefits from expanded technology infrastructure and capability and access to new global opportunities. The sales team has been expanded to operate outside Italy, and to exploit new opportunities opened though Bango relationships. Recent customer wins for the Audiens CDP include LeoVegas, Morelatto and Unieuro and these are expected to be followed by many more as business expands outside Italy.

Outlook

Growth from industry leaders: The last six months have been successful for Bango as it continues to win important contracts and expand its business through its unique offering. As well as the increasing momentum with Android users, representing around 85% of the market, Bango is seeing increasing adoption on iOS devices popular among Amazon and Pandora users.

Data monetization opportunity: Data monetization is becoming increasingly important to Bango and is opening new avenues for revenue growth and customer acquisition. The high additional profits available to mobile operators by using the Bango Platform are a persuasive reason for them to upgrade to the Bango Platform for Direct Carrier Billing (DCB).

Capacity for Innovation: The cash raised to support the Audiens acquisition has ensured that Bango retains  strong cash balances, enabling growth to profitability and continued investment in capitalizing on the huge opportunity from bringing payment and marketing together.

Ray Anderson

Chief Executive Officer

 

CFO's statement 

Bango business model

To provide clarity to investors, following the acquisition of Audiens SRL in January 2018, Bango now provides financial reporting of two synergistic business units. The Payments business processes payment transactions through the Bango platform for the world's leading digital and physical merchants. The Bango data business facilitates the monetization of valuable data collected by payment providers and mobile operators to enable more efficient marketing. The data business includes data monetization within the Bango business - using data from mobile operators and other payment providers - and also the Audiens CDP business which serves a wide range of marketeers and advertisers.

End User Spend (EUS)

EUS is the total sales processed through the Bango Platform excluding taxes. EUS shows the growth of commerce through the Bango Platform. It is the most significant Key Performance Indicator that management uses to measure the development of the business and the continued success of Bango customers and partners.

EUS for 1h2018 was £220m, up 138% from 1h2017 (£92.31m) due to growth from existing activations and additional EUS from new activations in 1h2018. In 2018 Bango has seen growth across all major partners connected to Bango, including Google Play, Amazon, Microsoft and other streaming video and audio merchants. Bango continues to drive increasing transaction volumes at low fixed cost to drive revenue and profit to Bango in 2018 and beyond.

Revenue

Bango earns payment revenue from every transaction processed through the Bango Platform. Revenue is either a fee based on the value of the transaction or a fixed fee per transaction. Each additional sale by a merchant using the Bango platform adds to EUS and increased revenue.

Bango earns data revenue either as a percentage of the fee that a data owner earns by selling their data through Bango to merchants or other advertisers or as a monthly fee for using the Bango Audiens CDP to create data segments they directly exploit.

Payment revenue increased to £2.22m from £1.72m in 1h2017, an increase of 29%.  

Bango is focused on partnering with its MNO customers to drive substantial revenue from data monetization and encourage huge growth in total EUS. At the beginning of 2018 Bango renegotiated its contract with a large MNO to reduce the payment processing fee but increase the opportunity for data monetization revenues. The short-term impact of this change was a £0.5m payment revenue reduction in 1h2018 and an anticipated revenue reduction of approximately £0.2m in 2h2018. Payment revenues are expected to be higher in 2019, and in addition there will be a significant contribution from the data revenues that are enabled by this contract change.  

Where payments are collected for a service lasting 12 months or more, for example a streaming service, revenues and EUS are recognized evenly over the life of the subscription in line with accounting standard IFRS 15.

Most of the Bango data revenue in 1h2018 was from the Audiens CDP on a monthly fee basis with no cost of sales. Revenue was also generated by third parties monetizing their data by using the Bango Platform or the Audiens CDP to segment their data and sell it through the trading desk integrations. The revenue recognized is the value of the data as sold through the trade desks and the costs of sales relates to the fees that is paid to the data owners and trading desks.

Costs

The total group cost base of £3.30m for the first half of 2018 (1h2017: £2.72m) was in-line with forecasts.

The cost of operating the Bango Payment business was £2.15m including all business costs such as administrative expenses, sales and development. Group costs are those not necessary for the day to day processing of transactions and relate solely to costs related to Bango remaining a UK PLC, including advisors, bankers and audit fees. Costs related to Bango data business include the existing Audiens cost base and some centrally recharged costs necessary to support the business unit including accounting, IT and legal fees. Bango expects the costs for 2h2018 to be in line with 1h2018. Operational cost efficiencies were redeployed into increased sales and marketing activity.

The core Bango Payment business was EBITDA positive for 1h2018. The Bango Platform can process EUS at many times current levels with no additional operational cost. The capacity of the platform is regularly tested to rates in excess of £5bn of EUS a year, and to hundreds of transactions per second to ensure there is always substantial headroom in the platform to handle sudden surges in volume. Bango partners require substantial headroom to ensure their growth ambitions can be supported by Bango. Bango continues to invest in new developments by the R&D team to ensure that existing direct Google Play routes, can be upgraded faster to the Bango platform to bring hundreds of millions of EUS to the Payment platform.

The Bango data business is not EBITDA positive, but it is expected to become EBITDA positive in the next 12 months based on the roadmap of future sales and expected synergies between the Bango and Audiens businesses which will generate additional revenues. Bango has also invested in legal and security reviews to support the growth of this business in relation to national regulations such as GDPR and personal information security. Bango R&D has securely integrated the Audiens technology into the Bango platform.

The share-based payment charge for 1h2018 was £0.45m (1h2018: £0.33m) calculated using the Black-Scholes model. It relates to the Bango share option program that enables all Bango employees to share in the growth in value of Bango. It is a vital recruitment and retention tool in a highly competitive employment market.

Depreciation was consistent with the prior year at £0.13m compared to £0.09m in 1h2017. Amortization relating to capitalized development costs and acquired intangibles was £0.71m compared to £0.60m in 1h2017.

Loss and Loss per share

The loss after tax was -£1.92m (1h2017: -£1.75m) as Bango invested in acquiring and integrating the Audiens business in the first half of 2018 to drive future growth from new Bango revenue streams.

Loss per share was 2.78p (1h2017: 2.67p).

Cash

Cash balance on 30 June 2018 was £5.88m (£5.56m on 30 June 2017). Cash was raised in January 2018 to fund the acquisition of Audiens SRL, and subsequently in the integration and development of Audiens and the Bango data business. Based on the growth of the business and controlled cash, the cash burn in Bango in the last year has been decreasing, and with further growth in revenue expected in 2h0218 and beyond Bango will have sufficient cash resources to support both planned investment to grow sales and develop new products to ensure Bango has a strong pipeline of upgrades and can process hundreds of millions more EUS in the near future.

Rachel Elias-Jones

Chief Financial Officer

 

Consolidated statement of comprehensive income

for the six months ended 30 June 2018

	Six months ended 30 June 2018 Unaudited	Six months ended 30 June 2017 Unaudited	Year ended 31 December 2017 Audited
	£	£	£
Alternative performance measure (Non-IFRS)
End User Spend	219,956,688	92,311,982	271,356,080
Revenue	2,634,411	1,715,153	4,151,939
Cost of sales - payment providers	(252,018)	(4,046)	(2,439)
Gross profit	2,382,393	1,711,107	4,149,500
Other administrative expenses	(3,297,948)	(2,716,744)	(5,717,516)
Share based payments	(448,439)	(325,000)	(679,023)
Depreciation	(128,209)	(93,600)	(188,496)
Amortization	(711,404)	(601,773)	(1,396,541)
Non-recurring items	-	-	(59,463)
Total administrative expenses	(4,586,000)	(3,737,117)	(8,041,039)
Operating Loss	(2,203,607)	(2,026,010)	(3,891,539)
Interest payable	(38,478)	(22,320)	(51,458)
Investment income	5,781	15,204	20,858
Loss before taxation	(2,236,304)	(2,033,126)	(3,922,139)
Income tax	313,097	285,670	486,986
Loss for the financial year	(1,923,207)	(1,747,456)	(3,435,153)
Other comprehensive income Foreign exchange on consolidation	58,511	(27,491)	(56,869)
Loss and total comprehensive loss for the
period attributable to equity holders of Bango PLC	(1,864,696)	(1,774,947)	(3,492,022)
Loss per share attributable to the equity holders of Bango PLC
Basic loss per share	(2.78)p	(2.67)p	(5.22)p
Diluted loss per share	(2.78)p	(2.67)p	(5.22)p

All of the activities of the group are classified as continuing.

Notes 1 to 11 are an integral part of the consolidated financial statements.

 

Consolidated statement of financial position

for the six months ended 30 June 2018

As at:	30 June 2018 Unaudited	30 June 2017 Unaudited	31 December 2017 Audited
	£	£	£
ASSETS
Non-current assets
Property, plant and equipment	517,085	294,076	556,863
Intangible assets	11,187,850	6,232,602	6,130,190
	11,704,935	6,526,678	6,687,053
Current assets
Trade and other receivables	2,355,169	2,218,262	2,013,088
Research and development tax credits	297,672	213,883	421,215
Cash and cash equivalents	5,881,213	5,555,575	4,847,203
	8,534,054	7,987,720	7,281,506
Total assets	20,238,989	14,514,398	13,968,559
EQUITY
Capital and reserves attributable to equity holders of Bango PLC
Share capital	14,010,036	13,154,125	13,284,561
Share premium account	35,640,386	30,692,789	31,248,453
Merger reserve	2,175,470	1,236,225	1,236,225
Other reserve	3,532,789	2,536,136	2,350,701
Foreign exchange revaluation reserve	136,829	107,696	78,318
Accumulated losses	(39,398,027)	(36,326,581)	(37,474,820)
Total equity	16,097,483	11,400,390	10,723,438

LIABILITIES
Current liabilities
Trade and other payables	3,775,030	3,075,620	2,967,538
Finance lease liabilities	88,706	38,388	99,889
	3,863,736	3,114,008	3,067,427
Non-current liabilities
Finance lease liabilities	132,790	-	177,694
Deferred tax liability	144,980	-	-
	277,770	-	177,694
Total liabilities	4,141,506	3,114,008	3,245,121
TOTAL EQUITY AND LIABILITIES	20,238,989	14,514,398	13,968,559

Notes 1 to 11 are an integral part of the consolidated financial statements.
 

Consolidated cash flow Statement

for the six months ended 30 June 2018

	Six months ended 30 June 2018 Unaudited	Six months ended 30 June 2017 Unaudited	Year ended 31 December 2017 Audited
	£	£	£
Net cash used by operating activities	(1,181,489)	196,943	(253,675)
Cash flows used by investing activities
Purchases of property, plant and equipment	(86,605)	(93,111)	(450,794)
Addition to intangible assets	(1,205,627)	(739,530)	(1,509,670)
Purchase of subsidiary	(1,464,280)	-	-
Interest received	5,781	15,204	20,858
Net cash used by investing activities	(2,750,731)	(817,437)	(1,939,606)
Cash flows generated from financing activities
Proceeds from issuance of ordinary shares	5,345,838	494,449	1,180,549
Costs associated with issuance of ordinary shares	(332,793)	-	-
Interest payable	(38,478)	(22,320)	(51,458)
Capital payable on finance lease obligations	(56,087)	(57,167)	(89,571)
Capital received on finance lease obligations	-		271,600
Net cash (used)/generated from financing activities	4,918,480	414,962	1,311,120
Net (decrease)/increase in cash and cash equivalents	986,260	(205,532)	(882,161)
Cash and cash equivalents at beginning of period	4,847,203	5,696,517	5,696,517
Exchange differences on cash and cash equivalents	47,750	64,590	32,847
	4,894,953	5,761,107	5,729,364
Cash and cash equivalents at end of period	5,881,213	5,555,575	4,847,203

Notes 1 to 11 are an integral part of the consolidated financial statements.

Consolidated statement of changes in equity

for the six months ended 30 June 2018

	Share capital	Share premium account	Merger reserve	Other reserve	Foreign exchange reserve	Retained earnings	Total
	£	£	£	£	£	£	£
Balance at 1 January 2017	13,029,124	30,323,341	1,236,225	2,211,136	135,187	(34,579,125)	12,355,888
Share based payments	-	-	-	325,000	-	-	325,000
Issue of  new shares	125,001	369,448	-	-	-	-	494,449
Transactions with owners	125,001	369,448	-	325,000	-	-	819,449
Loss for the period	-	-	-	-	-	(1,747,456)	(1,747,456)
Foreign exchange on consolidation	-	-	-	-	(27,491)	-	(27,491)
Total comprehensive income for the period	-	-	-	-	(27,491)	(1,747,456)	(1,774,947)
Balance at 30 June 2017	13,154,125	30,692,789	1,236,225	2,536,136	107,696	(36,326,581)	11,400,390

Balance at 1 January 2017	13,029,124	30,323,341	1,236,225	2,211,136	135,187	(34,579,125)	12,355,888
Share based payments	-	-	-	679,023	-	-	679,023
Share based payments transfer for exercised share options	-	-	-	(539,458)	-	539,458	-
Exercise of share options	255,437	925,112	-	-	-	-	1,180,549
Transactions with owners	255,437	925,112	-	139,565	-	539,458	1,859,572
Loss for the year	-	-	-	-	-	(3,435,153)	(3,435,153)
Foreign exchange on consolidation	-	-	-	-	(56,869)	-	(56,869)
Total comprehensive income for the period	-	-	-	-	(56,869)	(3,435,153)	(3,492,022)
Balance at 31 December 2017	13,284,561	31,248,453	1,236,225	2,350,701	78,318	(37,474,820)	10,723,438

Balance at 1 January 2018	13,284,561	31,248,453	1,236,225	2,350,701	78,318	(37,474,820)	10,723,438
Share based payments	-	-	-	448,439	-	-	448,439
Issue of warrants	-	-	-	733,649	-	-	733,649
Exercise of share options	63,336	262,502	-	-	-	-	325,838
Issue of new shares	662,139	4,462,224	939,245	-	-	-	6,063,608
Expense of share issue	-	(332,793)	-	-	-	-	(332,793)
Transactions with owners	725,475	4,391,933	939,245	1,182,088	-	-	7,238,741
Loss for the period	-	-	-	-	-	(1,923,207)	(1,923,207)
Foreign exchange on consolidation	-	-	-	-	58,511	-	58,511
Total comprehensive income for the period	-	-	-	-	58,511	(1,923,207)	(1,864,696)
Balance at 30 June 2018	14,010,036	35,640,386	2,175,470	3,532,789	136,829	(39,398,027)	16,097,483

Notes 1 to 11 are an integral part of the consolidated financial statements.

 

1.	General information

Bango PLC ("Bango"), a United Kingdom resident, and its subsidiaries (together "the Group") provide services to facilitate commerce on the internet.  Bango shares are listed on the London Stock Exchange AIM. The Bango registered office and principal place of business is at 5 Westbrook Centre, Cambridge CB4 1YG  UK.

The interim financial statements have been approved for issue by the Board of Directors on 17 September 2018.

2.	Basis of preparation

The condensed interim financial information for the half year ended 30 June 2018 has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRS). They do not include all of the information required in the annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2017.

            The consolidated interim financial information has been prepared under the historical cost convention.

The cash flow forecasts of Bango anticipate increased cash generation from trading operations, therefore the Directors have a reasonable expectation that there are adequate resources to continue its operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

3.	Principal accounting policies

The principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2017, except for the adoption of new standards and interpretations effective for the first time for periods beginning on 1 January 2018 which will be adopted in the 2018 financial statements. The new standards impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2018, and which have given rise to changes in the Group's accounting policies are:

 ·   IFRS 9 Financial Instruments; and

·    IFRS 15 Revenue from Contracts with Customers

Under IFRS 15 when annual subscriptions are charged for the use of the Bango platform, revenue is recognized evenly over the life of the subscription. This is a new use of the Bango platform. Revenue from End User Spend activity is the fee from each transaction through the Bango platform. It is calculated as either a fixed fee per transaction or as a percentage of the total EUS.

The new Bango data business comprises a software as a service business with revenue spread over the life of the service contract. This is a revenue only business stream providing analysis detail from the client's own data. Where Audiens is buying data from third parties and selling this through advertising platforms, the fee from the sale is shown as revenue on performance of the service and the revenue share attributable to the owners of the data is a cost of sale.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements. 

4.	Segment reporting

(a) End User Spend

Bango has identified End User Spend a non IFRS alternative performance measure as its Key Performance Indicator on which management decisions surrounding investment in the platform and development of intangible assets are based. End User Spend is the total value in a specific time period of all sales processed using the Bango Platform excluding VAT and other sales taxes and converted using the exchange rate at the point of the sale.

	Six months ended 30 June 2018 Unaudited	Six months ended 30 June 2017 Unaudited	Year ended 31 December 2017 Audited
	£	£	£
End User Spend	219,956,688	92,311,982	271,356,080

(b) Revenue and gross profit

Bango management has identified two operating segments. The segments have changed in 2018 following the acquisition of Audiens SRL. All management reporting is based on the gross profit generated from each segment. The segments are separately managed, with one revenue stream relating to payment transactions processed by the Bango platform and the other relating to data monetization for customers.

Before 2018 Bango separated revenue into transaction fees or platform fees, all these fees related to revenue generated by people connecting to or using the Bango platform. All such Bango revenue is now shown as End user spend activity.

Costs associated with the running of the Bango group (such as Nomad costs, registrar fees, auditor remuneration) are shown separately as group costs. Where costs can be directly attributable to the running of the different revenue generating units of the business (such as depreciation relating to assets) these are allocated to the appropriate revenue generating entity.

Six months ended 30 June 2018
	Payment  activity	Data activity	Group	Total
	£	£	£	£
Segment revenue	2,216,519	417,892	-	2,634,411
Cost of sales	-	(252,018)	-	(252,018)
Segment gross profit	2,216,519	165,874	-	2,382,393
Administrative expenses	(2,150,718)	(729,164)	(418,066)	(3,297,948)
E/(L)BITDA	65,801	(563,290)	(418,066)	(915,555)
Share based payments charge	-	-	(448,439)	(448,439)
Depreciation	(128,209)	-	-	(128,209)
Amortization	(418,458)	(161,221)	(131,725)	(711,404)
Interest payable	-	-	(38,478)	(38,478)
Interest income	-	-	5,781	5,781
Segment net profit / (loss)	(480,866)	(724,511)	(1,030,927)	(2,236,304)

Segment assets	1,822,049	5,191,440	13,225,500	20,238,989
Segment liabilities	(2,134,684)	(1,785,326)	(221,496)	(4,141,506)
Net assets	(312,635)	3,406,114	13,004,004	16,097,483

Six months ended 30 June 2017
	Payment  activity	Data activity	Group	Total
	£	£	£	£
Segment revenue	1,715,153	-	-	1,715,153
Cost of sales	(4,046)	-	-	(4,046)
Segment gross profit	1,711,107	-	-	1,711,107

Administrative expenses	(2,463,236)	-	(253,508)	(2,716,744)
E/(L)BITDA	(752,129)	-	(253,508)	(1,005,637)
Share based payments charge	-	-	(325,000)	(325,000)
Depreciation	(93,600)	-	-	(93,600)
Amortization	-	-	(601,773)	(601,773)
Interest payable	-	-	(22,320)	(22,320)
Interest income	-	-	15,204	15,204
Segment net profit / (loss)	(845,729)	-	(1,187,397)	(2,033,126)
Segment assets	1,530,018	-	12,984,380	14,514,398
Segment liabilities	(485,367)	-	(2,628,641)	(3,114,008)
Net assets	1,044,651	-	10,355,739	11,400,390

Year ended 31 December 2017
	Payment  activity	Data activity	Group		Total
	£	£	£		£
Segment revenue	4,151,939	-	-		4,151,939
Cost of sales	(2,439)	-	-		(2,439)
Segment gross profit	4,149,500	-	-		4,149,500
Administrative expenses	(5,202,665)	-	(514,851)		(5,717,516)
E/(L)BITDA	(1,053,165)	-	(514,851)	(1,568,016)
Non-recurring items	-	-	(59,463)		(59,463)
Share based payments charge	-	-	(679,023)		(679,023)
Depreciation	(188,496)	-	-		(188,496)
Amortization	-	-	(1,396,541)		(1,396,541)
Interest payable	-	-	(51,458)		(51,458)
Interest income	-	-	20,858		20,858
Segment net profit / (loss)	(1,241,661)	-	(2,680,478)		(3,922,139)

Segment assets	1,451,542	-	12,517,017	13,968,559
Segment liabilities	(2,479,707)	-	(765,414)	(3,245,121)
Net assets	(1,028,165)	-	11,751,603	10,723,438

End User Spend activity revenue is the Bango revenue share for processing transactions through the Bango Platform. Bango earns revenue calculated either as a share of the net of tax figure or as a fixed value per transaction. Assets for this segment are amounts due from merchants or payment providers. Liabilities for this segment are mainly fees payable to payment providers for provision of services and fees payable to merchants for provision of content sold by Bango to end users.

Bango data activity relates to revenues for use of the Audiens CDP to segment or sell data. Revenue is either a monthly software as a service fee or a revenue share from selling the data to third parties. Assets from this segment are fees from data owners and liabilities relate to sums owed to data owners. Liabilities also relating to the deferred consideration for the Audiens are shown in this segment.

5.	Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of Bango PLC by the weighted average of ordinary shares in issue during the period.

	Six months ended 30 June 2018 Unaudited	Six months ended 30 June 2017 Unaudited	Year ended 31 December 2017 Audited
	£	£	£
Loss attributable to equity holders of Bango PLC	(1,923,207)	(1,747,456)	(3,435,153)
Weighted average number of ordinary shares in issue	69,291,691	65,343,621	65,768,111
Basic loss per share	(2.78)p	(2.67)p	(5.22)p
Diluted loss per share	(2.78)p	(2.67)p	(5.22)p

At 30 June 2018 options over 4,112,900 (30 June 2017: 4,086,922) 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.

6.	Cash used by operations

	Six months ended 30 June 2018 Unaudited	Six months ended 30 June 2017 Unaudited	Year ended 31 December 2017 Audited
	£	£	£
Loss for the financial period	(1,923,207)	(1,747,456)	(3,435,153)
Depreciation & amortization	839,613	695,373	1,585,037
Taxation in income statement	(313,097)	(285,670)	(486,986)
Investment income	(5,781)	(15,204)	(20,858)
Interest payable	38,478	22,320	51,458
Foreign exchange movement	(47,750)	(64,590)	(32,847)
Share-based payment expense	448,439	325,000	679,023
Decrease/Increase in receivables	35,972	129,132	(1,393,322)
(Decrease)/Increase in payables	(660,747)	994,530	2,431,490
Realized currency translation	(22,787)	(142,162)	(118,503)
	(1,610,867)	(88,727)	(740,661)
Corporation tax rebate	429,378	285,670	486,986
Net cash used by operations	(1,181,489)	196,943	(253,675)

7.	Share capital

Allotted, called up and fully paid:

Ordinary shares of 20p each in Bango PLC

	No	£
As at 31 December 2016	65,145,618	13,029,124
Exercise of share options	1,277,185	255,437
As at 31 December 2017	66,422,803	13,284,561
Issue of new shares	3,310,693	662,139
Exercise of share options	316,684	63,336
As at 30 June 2018	70,050,180	14,010,036

On 23 January 2018 521,803 shares were issued to the owners of Audiens SRL by Bango to acquire 98.45% of the issued share capital of Audiens SRL, see note 10 for further details of the acquisition.

On 24 January 2018 Bango issued 2,788,890 to existing and new shareholders of Bango PLC to raise £5.02m (£4.68m net of fees) to support the acquisition and future development of Audiens SRL by Bango at a price of £1.80 per share.

8.	Share options

	No.
Outstanding at 1 January 2017
Granted	4,495,049
Lapsed	1,226,000
Exercised	(364,248)
	(1,277,185)
Outstanding at 31 December 2017	4,079,616
Granted	660,500
Lapsed	(310,532)
Exercised	(316,684)
Outstanding at 30 June 2018	4,112,900

During the period share options over 316,684 ordinary shares were exercised at exercise prices ranging between 156.0p pence and 258.0 pence with a par value of 20 pence. The total proceeds were £325,838 of which £63,336 was recognized as share capital and £262,502 as share premium.

During the period 660,500 options were granted to employees, of which includes; 50,000 to Rachel Elias-Jones, 50,000 to Ray Anderson and 50,000 to Anil Malhotra, all Directors. Grants to employees who left in the period resulted in lapses of 310,532 options in the six months to June 2018.

At the end of the six-month period ended 4,112,900 (30 June 2017: 4,086,922) share options were outstanding.

9.	Intangible Assets

	Domain Names	Internal Development	Acquired intangibles (Software)	Acquired intangibles (Contracts)	Acquired intangibles (Brand)	Goodwill	Total
	£	£	£	£	£	£	£
Cost
At 1 January 2018	32,887	8,916,031	786,666	517,037	43,704	1,200,000	11,496,325
Additions	-	1,205,627	1,855,982	-	78,657	2,548,296	5,688,562
Foreign exchange revaluation	-	-	30,260	5,920	1,402	42,920	80,502
At 30 June 2018	32,887	10,121,658	2,672,908	522,957	123,763	3,791,216	17,265,389
Amortization
At 1 January 2018	32,887	4,884,112	262,295	172,468	14,373	-	5,366,135
Charge for period	-	418,460	224,770	56,836	11,338	-	711,404
At 30 June 2018	32,887	5,302,572	487,065	229,304	25,711	-	6,077,539
Net book value at 30 June 2018	-	4,819,086	2,185,843	293,653	98,052	3,791,216	11,187,850
	Domain Names	Internal Development	Acquired intangibles (Software)	Acquired intangibles (Contracts)	Acquired intangibles (Brand)	Goodwill	Total
	£	£	£	£	£	£	£
Cost
At 1 January 2017	32,887	7,406,361	786,669	517,037	43,703	1,200,000	9,986,655
Additions	-	739,530	-	-	-	-	739,530
Foreign exchange revaluation	-	-	24,026	15,787	1,335	36,636	77,784
At 30 June 2017	32,887	8,145,891	810,693	532,824	45,038	1,236,636	10,803,969
Amortization
At 1 January 2017	32,887	3,768,281	98,333	64,630	5,463	-	3,969,594
Charge for period	-	475,455	73,750	48,472	4,096	-	601,773
At 30 June 2017	32,887	4,243,736	172,083	113,102	9,559	-	4,571,367
Net book value at 30 June 2017	-	3,902,155	638,610	419,722	35,479	1,236,636	6,232,602

	Domain Names	Internal Development	Acquired intangibles (Software)	Acquired intangibles (Contracts)	Acquired intangibles (Brand)	Goodwill	Total
	£	£	£	£	£	£	£
Cost
At 1 January 2017	32,887	7,406,361	786,667	517,037	43,704	1,200,000	9,986,655
Additions	-	1,509,670	-	-	-	-	1,509,670
Foreign exchange revaluation	-	-	-	-	-	-	-
At 31 December 2017	32,887	8,916,031	786,667	517,037	43,704	1,200,000	11,496,325
Amortization
At 1 January 2017	32,887	3,768,281	98,333	64,630	5,463	-	3,969,594
Charge for period	-	807,409	163,962	107,838	8,910	-	1,088,119
Impairment	-	308,422	-	-	-	-	308,422
At 31 December 2017	-	4,884,112	262,295	172,468	14,373	-	5,366,135
Net book value at 31 Dec 2017		4,031,919	524,372	344,569	29,331	1,200,000	6,130,190

10.	Acquisition of Audiens SRL

On 23 January Bango acquired Audiens SRL for cash, shares, share warrants and a deferred consideration from Digitouch SPA and other angel investors. Audiens SRL is a customer data platform (CDP) based in Milan which has developed a means for third parties to better segment and organize their data either for their own use or to sell through trading desks.

The acquisition of 98.45% of the Audiens SRL capital was for cash (€1.48m) paid immediately, cash (€0.62m) paid over 12 months to settle a debt balance to Digitouch, 521,803 ordinary shares in Bango PLC (€1.19m), share warrants at an exercise price of £1.80 per share with a ten year life over 738,399 ordinary shares (€0.84m). The final acquisition for 1.55% of the Audiens shares owned by Marko Maras the CEO of Audiens is linked a call and put option agreement valid for 2 years from the acquisition. The call and put agreement terms are linked to the long-term revenue targets for the business and the underlying Bango PLC share price. Substantially all of the risks and rewards of the non-controlling interest in the Audiens business are considered to have transferred to Bango.

The net assets acquired were as follows:

	Fair value	Fair value
	€	£
Intangible assets - software	2,112,664	1,855,982
Intangible assets - brand	89,535	78,657
Goodwill	2,900,518	2,548,296
Net assets - working capital	(26,292)	(23,090)
Net assets - property, plant and equipment	1,171	1,028
Deferred tax	(179,818)	(158,160)
Net investment	4,897,778	4,302,713

Satisfied by:                             

	Fair value	Fair value
	€	£
Cash	1,476,799	1,297,372
Share consideration	1,187,937	1,043,606
Share warrants	835,112	733,649
Deferred consideration	623,000	547,307
Put/Call warrant	774,930	680,779
Total consideration	4,897,778	4,302,713

Following a detailed review of the fair value of the assets by an independent third party, acquired in accordance with IFRS3 Business Combinations, Bango has recognized intangible assets being software and trade names, totaling £1.93m, net liabilities of £0.02m and goodwill totaling £2.55m. Goodwill represents the excess of the purchase price over the fair value of the assets acquired. The goodwill arising on the acquisition is largely attributable to the added value associated with future monetization through new customer relationships and the value of the existing workforce.

11.	Publication of non-statutory accounts

The condensed consolidated interim financial information was approved by The Board of Directors on 17 September 2018.  They are unaudited but have been reviewed by the auditors and their report is included within this note.

The financial information set out in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.  The figures for the period ended 31 December 2017 have been extracted from the Statutory Financial Statements of Bango PLC, which have been filed with the Registrar of Companies. The auditor's report on those financial statements is unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The interim financial information for the six months to 30 June 2018 is unaudited. The interim report together with an analyst briefing presentation will be distributed to all shareholders shortly and will be available on the Bango investor site at www.bangoinvestor.com.

Independent review report to Bango PLC

Introduction

We have been engaged by Bango PLC to review the financial information in the half-yearly financial report for the six months ended 30 June 2018 which comprises the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and the related notes (1 to 11). We have read the other information contained in the half yearly financial report which comprises only the financial, operational and post period highlights, CEO and CFO reports, and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to Bango PLC in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to Bango PLC those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Bango PLC, for our review work, for this report, or for the conclusion we have formed.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union.  The financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in Note 2. 

 

Our responsibility

Our responsibility is to express to Bango PLC a conclusion on the financial information in the half-yearly financial report based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 2.

 

END

 

 

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