Interim Results
Bango PLC
20 October 2005
20 October 2005
BANGO PLC
('Bango' or the 'Company')
Maiden Interim Results for 6 months ending 30th September 2005
Bango provides unique technology and services enabling businesses to make money
from the sale of content and services to customers accessing the internet
through their mobile phones. These are Bango's first results since its
successful admission to trading on AIM in June 2005.
Highlights
• Strong trading performance
Revenues grew 158% to £3.22M (£1.25M to 30 Sep 04)
Gross profit grew 158% to £0.95M (£0.37M to 30 Sep 04)
Operating expenses increased by 57%
Pre-tax losses reduced to £0.43M (£0.55M to 30 Sep 04)
Trading profitably in UK, the longest established market
Cash balance of £6m as at 30 September 2005
37 new Bango Pro package customers won during period
Healthy pipeline and momentum entering second half of financial year
• Successful IPO in June 2005
Raised £6.24M (net of expenses) to support growth plans
Improved profile among customers, partners and prospects
Beneficial impact on staff recruitment and retention
• Significant product and technology enhancements
Release of new high-end Bango Target product
Release of new Bango Identifier functionality
Reduced billing costs for our content providers by 7.5%
Granted second European Patent for Bango technology
• Geographic expansion
Team deployed in USA, supported by Cingular and PayPal deals
Team deployed in Germany, supported by Vodafone and O2 deals
• Industry developments
Cingular and PayPal partnering with Bango in the US, offering more flexible
billing
Clamp-down on inappropriate subscription scams supports legitimacy of
Bango's transparent approach
Termination of Simpay initiative strengthens Bango's competitive position
Wider introduction of music playing phones broadens market for content
Commenting on the interim results Lindsay Bury, Chairman of Bango, said:
'Bango's leadership in enabling direct to consumer mobile content is being
validated by the quantity and calibre of companies that are selecting Bango's
technology, by the unique relationships Bango has established with industry
leaders and by Bango's increasingly strong trading performance. Industry
developments, combined with Bango's own initiatives, have enhanced further the
Company's competitive position. The Company is judiciously applying the
proceeds of its successful AIM IPO, including on international expansion into
the USA and Germany. We believe the outlook for the sector remains attractive
and we look forward to the future with confidence.'
Ray Anderson, Chief Executive Officer of Bango, added:
'Bango's unique technology, global reach and special relationships with leading
mobile operators allow us to play a key role in accelerating the transition
towards brands and services being promoted direct to consumer via internet
enabled mobile devices. Recent announcements by major content brands, television
channels and internet companies about the importance of mobile consumers in
their future plans give us great confidence in the rapid growth of this exciting
opportunity.'
Contact Details:
Bango plc ICIS Limited - Financial PR Panmure Gordon (Broking) Limited
Tel. +44 1223 472777 Tel. +44 20 7651 8688 Tel. +44 20 7459 3600
Ray Anderson, CEO Tom Moriarty Aubrey Powell
Peter Saxton, CFO Archie Berens Stuart Gledhill
A conference call will be held this morning at 08.00 BST. Anyone wishing to
participate in the conference call may do so by dialing +44 (0)20 7162 0125.
The presentation itself is available on Bango's website, www.bango.com A replay
of the conference call will be available from 12.00 BST today, by dialing +44(0)
20 7031 4064, pass code 680359.
About Bango
Bango has developed and deployed an open, global, infrastructure platform that
enables content providers to market, sell and deliver their products and
services directly to mobile phone users on all mobile networks using the mobile
Internet. This direct-to-consumer approach operates alongside the mobile
operator's mobile content portals. Leading mobile operators including Vodafone,
Orange, Telefonica and O2 work with Bango to accelerate the growth of their
direct-to-consumer business.
The Bango platform has given mobile phone subscribers in Europe and around the
world greater access to third-party content. Leading content brands are now
adopting the Bango Service to engage with all of their existing and potential
mobile customers directly - irrespective of mobile operator. For further
information, go to www.bango.com
BANGO PLC
Maiden Interim Results for 6 months ending 30th September 2005
Introduction
The first six months of the financial year have been a busy but very rewarding
period in the development of the business. Our business proposition is that we
enable content providers to 'set up shop' on the mobile internet and to generate
revenues world-wide from their marketing activities. Content providers that
signed up to the Bango Service before this period are continuing to prosper and
grow their business using Bango, resulting in a significant growth in their
content sales.
Summary financial review
Six months ended Change on Six months ended Year ended
30 September 2005 H1 2005 30 September 2004 31 March 2005
Unaudited Unaudited Audited
£m £m £m
Turnover 3.22 Up 158% 1.25 3.41
Gross profit 0.95 Up 158% 0.37 0.97
Margin % 29.4% Constant 29.4% 28.6%
Operating loss 0.51 Reduced 9% 0.56 0.93
Loss before tax 0.43 Reduced 21% 0.55 0.92
Cash outflow from 0.64 Increased 52% 0.42 0.58
operations
Cash position 6.0 0.5 0.3
Basic and fully diluted 1.8 p Reduced 31% 2.6 p 4.4 p
loss per share
Turnover increased by 158% to £3.22M. The major contributors to this increase
came from the growth in content access fees which increased by 173%, and from
growth in content provider fees which increased by 371%.
Gross profit has grown to £0.95M in line with the growth in turnover.
Operating expenses increased by 57%, primarily reflecting the increased
investment in people and associated costs incurred to support the international
roll-out of the Bango service.
Interest receivable has grown considerably as a result of interest earned on
£6.24M (net of expenses) raised in the IPO.
The cash outflow from operations was broadly in line with trading results for
the period, reflecting the small change in working capital requirement despite
the substantial increase in turnover
Our successful admission to AIM on June 30 raised £6.24 million net of expenses
and, with a cash balance of almost £6 million at the half year stage, Bango is
well funded to exploit the commercial opportunities available both in the UK and
internationally.
Review of operations
Bango's unique technology is enabling the Company to grow its business rapidly,
while containing growth in operating costs to a much lower level. The company
has continued to invest in product development, particularly in supporting
larger businesses that want to reach a global market.
The visible success by the early adopters of the Bango technology and our own
marketing activity have resulted in a higher than expected number of content
providers signing up to use the Bango Service during the last six months. This
included winning 37 new customers for the high end Bango Pro service - which is
designed for businesses wanting to do significant business on the mobile
internet.
During the period, Bango successfully completed its AIM IPO and is using the
£6.24 million net proceeds to invest in geographic expansion in markets where
there is clear scope for the direct to consumer mobile content market to open
up. By establishing a sales, marketing and technical support presence in a
country, Bango is seeking to win quickly a portfolio of successful reference
customers and establish relationships with local business partners to accelerate
roll-out into that country.
The increased profile and credibility from being a listed company are proving
useful in cementing and growing existing relationships, attracting new customers
and partners, and in recruiting, retaining and incentivizing key staff, both in
the UK and abroad.
Product development
Bango continues to invest in development of its innovative technology platform
and service offerings. The Company's unique technology, which currently enables
hundreds of content providers and brands to reach mobile consumers directly,
gives the Company significant competitive advantages and enables Bango to offer
a powerful product at a low cost.
In June, Bango was able to leverage its relationships with billing companies
world-wide to reduce the cost of payment collection seen by content providers by
7.5%. With standard billing costs reduced to 37%, a typical content provider
now receives 63% of end user revenue through Bango. Our recent integration with
PayPal will be a key factor in enabling us to deliver more revenues to our
content provider customers in the future.
September saw the launch and first sales of a new high-end 'Bango Target'
product, positioned above the Pro Service both in capability and price. This
product has been in development during 2005 and enables content providers to set
specific price points in different currencies, vary the price by country or by
mobile operator, track where customers originate from on the mobile internet,
choose where their content is sold - for example to meet rights obligations, to
present different product offers in different countries and to track revenues by
country or by mobile operator. Management believes that these are unique
enhancements to an already unique service, and expect to see greater
satisfaction and usage by content providers.
Also in September, Bango was granted its second European patent relating to
intellectual property used in Bango products. Bango will continue to invest in
competitive advantage through protecting its key intellectual property.
Throughout the period, Bango continued to work with mobile operators such as
Orange, Vodafone and O2 to help them grow their off-portal business. In advance
of the launch of an i-mode service in the UK by O2, Bango assisted O2 in
upgrading the age verification system to handle the new i-mode handsets. This
project also gave Bango early access to the i-mode technology to ensure it was
well integrated into the Bango platform.
Geographic expansion
The Bango Service is used by content providers from all over the world to reach
customers world-wide through their internet enabled mobile phones. By making
the processes of marketing, access and payment as efficient as possible in any
country, the Bango Service increases the likelihood of more revenue flowing to
content providers targeting that country.
A key driver of the consumption of mobile internet content is whether mobile
operators in a particular country encourage direct to consumer promotion of
content or discourage it. The UK based mobile operators have been world leaders
in encouraging this process by opening up their billing systems and by
partnering with Bango to streamline the process for content providers. This has
given Bango a successful and profitable base from which to illustrate and
expand, as operators in other countries follow the same path.
Bango has identified Germany, Spain and the USA as key countries where the
leading mobile operators are following the UK model. Bango believes that a local
presence in these countries will generate a base of local reference content
providers that derive tangible benefits from Bango's unique service both in
their own country and potentially world-wide. Management further believe that
this will accelerate direct sales via the Bango web site and indirectly through
business partners.
Over the last 6 months, Bango has recruited and deployed a sales, marketing and
technical support team that is focused on the German market. German collateral,
web site and other materials have been developed and selling activity has
started. The activity has been underpinned by agreements with Vodafone Germany
and O2 Germany, which allow direct access to those operators' billing systems by
Bango, which in turn makes the buying experience for the user more efficient
when compared to traditional Premium SMS messaging alone. Management believes
that Bango is well positioned within the German market which appears to be
following the UK model of development, and the sales pipeline is looking healthy
at this stage in the market's development.
The US market is attractive to Bango not only because the world's largest
content providers are based there, and also because it presents a potentially
massive market for mobile content. Many of Bango's most successful customers
are US content providers who are using Bango to reach outside the USA.
The US mobile operators followed the UK model of developing their own portals
and are now starting to open up their systems to enable content providers to
market direct to consumer and generate additional traffic revenue. A different
regulatory regime and a more conservative attitude by the US mobile operators to
opening up their networks to third parties makes the US market different from
the UK market, but content providers of all sizes want to benefit from the reach
of the internet into the next generation of handsets. Bango partners with
mobile operators to open up their systems in a controlled way.
In July the company was able to announce that Cingular (the largest US mobile
operator with over 51 million subscribers) has selected Bango as its partner to
open up Cingular's WAP billing capability to third party content providers and
brands, using the Bango Service. The system went live just before the period
end, and is already enabling a significant increase in spending by US end users
with content providers from all over the world.
The other US operators have been slower to open up their systems to third
parties to collect payments. As an alternative payment method, for customers of
all mobile operators world-wide, Bango announced in September an agreement with
PayPal (the payment processing arm of eBay Inc.). This enables micro-payments to
be collected by Bango on behalf of content providers from any of PayPal's 50
million account holders. Bango believes this will accelerate the opening up of
the market, particularly in the USA. In addition, the costs of using PayPal for
collection of money are low compared with most current operator billing routes,
which gives Bango the opportunity to further enhance the appeal of its service
by increasing out-payments to content providers.
Bango has a unique position as a trusted partner of Cingular and PayPal and is
taking extra care to ensure that services introduced using those payment method
are 'safe'. In particular, the age verification and content control systems
that are available in Europe are not yet active in the USA so Bango is taking
appropriate steps to ensure that only content suitable for minors can be paid
for using the operator or PayPal billing systems. Credit card payment is
available for other types of content.
Bango has established a sales presence in New York and California, backed up by
technical support, marketing communications and a US Public Relations company.
We are actively selling in the USA and have a good sales pipeline that includes
several major brands. We have also had success during the period in
establishing partnerships to take the Bango Service to market - including a
relationship with Crisp Wireless, a provider of next generation mobile content
management and wireless delivery software applications to media and
entertainment companies.
To support and develop its customers based in Spain, Bango has established a
satellite office in Madrid, signed up a Spanish business partner, and recruited
Spanish technical support expertise. Work is underway to directly integrate with
the Spanish mobile operators billing systems.
Market landscape
The market for content and services for mobile phone users continues to grow
rapidly, driven by increasing numbers of internet connected mobile phones and
the increasing proportion of these phones which have colour screens, game and
music playing capability. Network operators appear to be actively endorsing
the accessing of third party content by mobile users, as can be evidenced by a
number of developments in recent months, including T-Mobile's launch of Web 'n'
Walk in the UK, with Google pre-set as the homepage on the phones; and Overture,
which is owned by Yahoo!, announcing that it will be displaying its paid search
engine listings through the WAP services of both Orange and Vodafone. Having
anticipated the development of the market, Bango is well positioned to enable
mobile internet content to users on any network.
Cingular and PayPal's partnering with Bango in North America indicates their
belief in the potential for the mobile content market. They have recognised
that they can leverage the marketing power of brands and content providers in
order to benefit from the revenue streams that are increasingly flowing from
mobile users to content providers.
The mobile industry is recognizing that customer confidence and trust are key to
the growth of a mass market for mobile content. Bango is a champion of the
transparent 'browse and buy' approach to mobile content, by which customers only
pay for what they want and are able to browse the available content before
making their choice. Accordingly Bango is supportive of the steps that are
being taken within the industry to clamp down on inappropriate subscription
schemes and other damaging practices. In line with this, Bango management
believes that regulatory and industry pressure will slow or stall the growth of
services using inappropriate subscription user interactions and drive services
to the more reputable 'browse and buy' model where Bango is focused.
Simpay, a four year old project by four European mobile operators to develop a
common payment platform, was terminated in June. Bango believes that this
removes uncertainty around what Simpay would or would not deliver to the market
and which was delaying decision making by content providers as to how to address
the mobile channel. In addition, mobile operators that were having projects
delayed by Simpay are now able to move forward quickly using the standardised
Bango model which has already been proven in the marketplace.
Bango believes that the range of content accessible by mobile phone will
increase dramatically. The increasing deployment of lower cost and higher speed
3G/UMTS infrastructure and newer devices helps broaden the accessibility of
mobile content. Alongside the increasing sale of music directly to mobile
devices, a number of TV channels are positioning themselves to enable consumers
to watch live or recorded TV footage directly on their mobile devices. Bango
expects to play a key role in enabling the sale of content into this growing
market opportunity.
Strategy
At the time of our flotation, our intention was to apply the funds towards
increasing our presence in the key markets of Europe and North America. Our aim
was to link up with industry partners, recruit suitable sales representatives
and significantly increase awareness of our service through a range of marketing
activities. We are pleased that we have made good progress with all of these
initiatives, which we intend to continue.
Bango believes that by eliminating the barriers and mitigating the risks that
prevent content providers from wanting to engage with mobile consumers, the
Company can enable and participate in a large and growing market. By making it
easier for consumers to locate and purchase content and services via the mobile
internet, Bango is facilitating the growth of revenue for its content provider
customers. Bango will continue to invest in product development to further
streamline the processes of marketing, providing access and billing for content
providers.
The Company is also paying attention to the millions of users who have
discovered Bango as a channel to the best available content. Bango's tools for
users to 'virally market' interesting content to their peers and for helping
users to return quickly to their favorite sites have been well received. The
Bango Service will be developed to accelerate the growth of the 'Bango aware'
user community to benefit both users and content providers.
As part of a continuing drive to leverage its core technology, Bango has
continued to transition its mobile operator customers from using non-standard or
customized products to a business model that uses the standard Bango Service.
This transition is now largely complete, with non-standard services now
generating a negligible proportion of total revenue. This confirms the appeal
of the rapidly deployable, cost effective solution that Bango has created to
enable the delivery of content via the mobile internet.
Bango will from time to time engage on special projects with mobile operators,
but only where these bring added advantage to the core Bango offerings for
content providers and Bango's other partners.
Current trading and prospects
Current trading conditions remain favourable across all parts of our business.
The Directors anticipate that many of the content providers using Bango will
start marketing to their consumers and will see success from their new projects
in the period ahead, while solid growth from the Company's wide base of existing
customers will continue. Bango believes that that their success will convince
larger brands, to the extent they need convincing, that the ability to transmit
content to mobile phone users represents an increasingly important source of
revenue.
Bango's pipeline of potential new customers remains encouragingly strong. This
momentum is expected to continue during the remainder of the current financial
year and beyond. The Directors therefore remain confident not only of a
favourable outcome for this year but also of Bango's longer term prospects.
Lindsay Bury Ray Anderson
Non-Executive Chairman Chief Executive
BANGO PLC
Interim Results for 6 months ending 30th September 2005
Consolidated summarised Profit and Loss account
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
Note £ £ £
Turnover 2 3,218,334 1,246,478 3,414,506
Cost of Sales 2,272,846 880,042 2,439,628
Gross Profit 945,488 366,436 974,878
Other Operating charges 1,453,760 924,355 1,933,647
Other Operating Income - - (25,532)
Operating Loss (508,272) (557,919) (933,237)
Interest Receivable 73,926 9,228 15,315
Loss on ordinary activities before
taxation (434,346) (548,691) (917,922)
Tax on loss on ordinary activities - - -
Loss for the period (434,346) (548,691) (917,922)
Basic and diluted loss per share (pence) 3 1.8 pence 2.6 pence 4.4 pence
All of the activities of the group are classed as continuing.
The group has no recognised gains or losses other than the results set out
above.
BANGO PLC
Interim Results for 6 months ending 30th September 2005
Consolidated summarised Balance Sheet
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
£ £ £
Fixed Assets
Tangible assets 105,263 66,382 88,533
Current Assets
Debtors 1,475,739 633,265 1,048,050
Cash at bank 5,956,558 520,439 320,220
7,432,297 1,153,704 1,368,270
Creditors: amounts falling due within one year 1,436,447 605,623 1,211,571
Net current assets 5,995,850 548,081 156,699
Total assets less current liabilities 6,101,113 614,463 245,232
Capital and reserves
Called-up equity share capital 5,246,229 10,467 10,467
Share premium account 5,230,898 5,412,658 5,412,658
Merger Reserve 1,236,225 - -
Profit and Loss account (5,612,239) (4,808,662) (5,177,893)
Shareholders' funds 6,101,113 614,463 245,232
BANGO PLC
Interim Results for 6 months ending 30th September 2005
Consolidated summarised cash flow statement
Six months ended Six months ended Year ended
30 September 30 September 31 March
2005 2004 2005
(unaudited) (unaudited) (audited)
Note £ £ £
Net cash outflow from operating activities 4 (642,687) (423,417) (583,065)
Returns on investments and servicing of finance
Interest received 73,926 9,228 15,315
Net cash inflow from returns on investments and servicing of
finance 73,926 9,228 15,315
Capital expenditure
Payments to acquire tangible fixed assets (43,628) (15,639) (62,297)
Net cash outflow from capital expenditure (43,628) (15,639) (62,297)
Financing
Issue of equity share capital 1,059,329 947 947
Share premium on issue of equity share capital 5,955,224 810,173 810,173
Share issue expenses (765,826) (5,507) (5,507)
Net cash inflow from financing 6,248,727 805,613 805,613
Increase in cash 5,636,338 375,785 175,566
BANGO PLC
Interim Results for 6 months ending 30th September 2005
Reconciliation of movements in shareholders' funds
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
£ £ £
Loss for the period (434,346) (548,691) (917,922)
New equity share capital subscribed 1,059,329 947 947
Net premium on new share capital subscribed 5,230,898 940,566 940,566
Net addition to shareholders' equity funds 5,855,881 392,822 23,591
Opening shareholders' equity funds 245,232 221,641 221,641
Closing shareholders' equity funds 6,101,113 614,463 245,232
BANGO PLC
Interim Results for 6 months ending 30th September 2005
Notes
1. Accounting policies and basis of preparation
The interim financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost convention and in
accordance with the accounting policies set out in the financial statements of
Bango.net Limited for the year ended 31 March 2005.
The consolidated financial statements for the six months ended 30 September 2005
have been prepared using merger accounting principles on the basis that the
formation of Bango PLC as the parent company of Bango.net Limited on 9 June 2005
qualifies as a group reconstruction and the interim financial statements should
be prepared as if the companies have always been one entity. The financial
information for the year ended 31 March 2005 and the six months ended 30
September 2004 therefore represents Bango.net Limited.
2. Turnover
Turnover is split between the following activities:
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
£ £ £
Content access fees 2,783,899 1,018,762 2,902,059
Content provider fees 392,085 83,176 311,797
Non-standard Services 42,350 144,540 200,650
for Mobile Network Operators
3,218,334 1,246,478 3,414,506
A geographical analysis of the turnover in the period is given below:
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
£ £ £
United Kingdom 2,963,781 1,176,999 3,218,675
EU 48,826 17,120 51,590
US and Canada 153,594 36,023 104,676
Rest of World 52,133 16,336 39,565
3,218,334 1,246,478 3,414,506
3. Loss per share
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
Loss for the period £434,346 £548,691 £917,922
Weighted average number of shares
in issue 24,223,073
20,903,277 20,918,940
Basic and diluted loss per share 1.8 pence 2.6 pence 4.4 pence
Share options outstanding on 30th September 2005 are considered to be
non-dilutive.
The weighted average number of shares for the 6 months ended 30th September 2004
and for year ended 31st March 2005 have been re-calculated based on the share
split on 9th June 2005 when each share in the group was sub-divided by 20.
4. Notes to the statement of cash flows
Reconciliation of operating loss to net cash outflow from operating activities
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
(unaudited) (unaudited) (audited)
£ £ £
Operating Loss (508,272) (557,919) (933,237)
Non cash expenses 41,500 - -
Depreciation 26,898 18,367 42,874
(Increase)/decrease in debtors (427,689) 226,444 (188,341)
Increase/(decrease) in creditors 224,876 (110,309) 495,639
Net cash outflow from operating (642,687) (423,417) (583,065)
activities
5. Publication of non-statutory accounts
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
figures for the year ended 31 March 2005 have been extracted from the Statutory
Financial Statements of Bango.net Limited, which have been filed with the
Registrar of Companies. The auditor's report on those financial statements is
unqualified. The financial information for the six months to 30 September 2005
and the six months to 30 September 2004 is unaudited. The financial information
for the six months to 30 September 2004 represents the results of Bango.net
Limited.
The interim report will be distributed to all shareholders shortly and copies
will be available from the Company's website at www.bango.com
This information is provided by RNS
The company news service from the London Stock Exchange
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