Placing and Notice of General Meeting
11 November 2015
BANGO PLC
("Bango")
Placing and Notice of General Meeting
Bango plc (AIM:BGO), the mobile payments company, announces a placing of 12,222,222 new ordinary shares at 90 pence per share to raise approximately £11 million (the "Placing").
The Placing comprises an initial placing of 944,000 new ordinary shares of 20 pence each ("Ordinary Shares") (the "First Tranche Placing") and a placing of a further 11,278,222 new Ordinary Shares (the "Second Tranche Placing"). The new Ordinary Shares proposed to be issued pursuant to the First Tranche Placing are expected to be admitted to trading on AIM on 16 November 2015 and the new Ordinary Shares proposed to be issued pursuant to the Second Tranche Placing are expected to be admitted to trading on AIM on 1 December 2015.
The Second Tranche Placing is conditional, amongst other things, on the passing of the certain shareholder resolutions (the "Resolutions") by Bango shareholders ("Shareholders") at a general meeting to be held at 11.00 a.m. on 30 November 2015 and notice of which is set out in a circular to be posted to Shareholders today. If the Resolutions are passed, the new Ordinary Shares for the Second Tranche Placing will be allotted after the general meeting.
Reasons for the Placing
The net proceeds of the Placing will enable Bango to:
(i) Maintain a strong balance sheet through to and beyond profitability;
(ii) Sustain sales & marketing to grow its market share in key markets chosen by the leading app stores; and
(iii) Invest in Research & Development to extend the methods of payment available to app stores.
Bango's partners, and potential partners, are predominantly large multi-national companies who value balance sheet strength. The Directors believe that Bango's attractiveness and negotiating position with such companies will be enhanced if it demonstrates that it is well capitalized throughout its period of growth and is able to maintain the independence of its platform.
The net proceeds of the Placing (which are expected to be approximately £10.4 million) will be sufficient to fund Bango through to profitability. The Bango Payment Platform is highly scalable and there is no expectation of a material increase in Bango's cost base ahead of achieving profitability. Nevertheless, the net proceeds of the Placing give Bango further flexibility to support the new initiatives and opportunities that it is developing. Bango is already achieving fast growth. The net proceeds of the Placing will enable further growth in key markets chosen by the leading app stores. Global leaders already plugging into Bango include Amazon, BlackBerry, Google, Samsung, Microsoft and Mozilla. As they identify new geographic markets to enter, Bango aims to remain the de facto industry standard by activating these new billing routes.
Developments during 2015
Bango has made significant progress during 2015, reporting strong growth of End User Spend in the first half of 2015 and then announcing on 15 October 2015 that End User Spend had reached an annualized rate exceeding £60 million (USD $92 million), 97 percent higher than the equivalent rate 12 months earlier. With over 140 direct activations between Mobile Network Operators ("MNOs") and the world's leading app stores and over 30 new activations launched so far this year, Bango is the leading provider of carrier billing for global app stores. According to a report published in September 2015, over 40 percent of worldwide app store carrier billing routes operate through the Bango Platform.
During the first half of 2015, Bango introduced new technology in the Bango Payment Platform to enable MNOs and app stores to further accelerate End User Spend. The main new capabilities are:
· Bango Boost - detailed post-launch analysis of transactions and aborted transactions that provides a clear understanding of subscriber spending behavior. Bango Boost identifies revenue opportunities and recommends ways for an operator to drive revenue and improve customer experience.
· Bango Grid - Used by app store partners to research, plan, launch and manage new billing routes. Longer-term benefits including opening-up the Bango Payment Platform at low cost to global content and service providers beyond the major app stores and secondly enabling other payment methods to be rapidly made available alongside Direct Carrier Billing (DCB) to any or all Bango customers.
The strategic value of the Bango Payment Platform increases as more app stores and MNOs integrate with it. The platform provides a common point of integration between the wide range of MNO billing systems, alternative payment instruments (including credit cards, mobile wallets and tomorrow's emergent technologies) and the giant digital content merchants, mainly app stores. For each app store or MNO, Bango offers a highly efficient single route to reach multiple partners, without needing to build out integrations one-by-one.
Growth in Bango's business
Bango is experiencing considerable growth as its existing activations mature. As an illustration of the growth potential in these existing activations, the Directors continue to forecast that End User Spend from Bango's activations that were live in December 2014 will grow by 100 percent during the course of 2015.
In addition to those activations, Bango has several other sources of growth in End User Spend:
(i) It has launched over 30 new activations so far this year
(ii) At the beginning of October this year, Bango had in excess of 40 scheduled activations in progress
(iii) At the beginning of October this year, Bango had in excess of 100 further opportunities for new activations
Importantly, the Bango cost base remains stable at approximately £5 million per annum. Bango has seen a slight increase in sales & marketing and research & development expenditure this year to support projects due in 2016, which have been off-set by continuous improvement and automation of operations, which lowers the cost of delivering services. Furthermore, Bango's infrastructure has been tested as being capable of supporting total transactions of at least £650 million per annum ($1 billion). This represents some 15 times the current level of Bango's transaction volume and, in the opinion of the Directors, clearly demonstrates not only the scalability of the business but also the stability of its cost base.
Margin on End User Spend
At the time of interim results for the six month trading period to 30 June 2015, which were announced on 15 September 2015, Bango reported that margin on End User Spend was 2.1 percent. As Bango's portfolio of app stores diversifies and matures, the Directors expect that its margin will remain around 2 percent.
Margin on End User Spend is higher in markets where volumes are lower, or where Bango is used as a payment collection partner or to convert currencies. Margin is lower on routes where the volume grows - with a tiered transaction fee being offered in some cases. Margin is increased when the Bango Payment Platform delivers additional services such as cross border transactions or where expected End User Spend volume is lower.
Outlook
Bango has made excellent progress during 2015 and is on track to achieve its forecast growth of a minimum of 100 percent increase in End User Spend through the platform by the end of the year, based on live activations at the end of 2014.
In addition to this growth, Bango has launched 30 new Direct Carrier Billing routes in the current financial year and has established a strong pipeline of further activation opportunities. It has added multiple new Google Play routes across all regions, including breaking into the Latin American and African markets this year, the first time Google Play has offered carrier billing in these regions. Bango has invested in establishing new relationships with Microsoft, Samsung and Amazon; and as billing activity increases with those and other potential new partners, Bango stands to benefit greatly.
These partnerships are expected to make a more noticeable contribution to both End User Spend and margin in 2016, diversifying Bango's business beyond Google Play. All major global app stores are now offering carrier billing to some extent. During 2015 Apple has begun to offer carrier billed payment for iTunes gift cards in some markets. Its Apple Music consumer offering - a music streaming service paid for on a monthly subscription basis - can also be funded in some markets by carrier billed payments. Most recently, it has offered some customers in Germany an option to charge payments in the iTunes store to their phone bills. As app stores expand from initial trials to fuller market coverage, Bango is well positioned to capitalize on this growth, through its position as the number one provider of carrier billing integrations to global app stores.
With a stable cost-base and increasing End User Spend, Bango firmly believes that it can become profitable and cash flow positive comfortably within the current capacity of its payment platform.
Admission and dealings
Application has been made to the London Stock Exchange for the Placing Shares for the First Tranche Placing to be admitted to trading on AIM. It is expected that Admission to AIM for the Placing Shares for the First Tranche Placing will become effective and that dealings will commence on 16 November 2015.
Application will be made to the London Stock Exchange for the Placing Shares for the Second Tranche Placing to be admitted to trading on AIM. It is expected that Admission to AIM for the Placing Shares for the Second Tranche Placing will become effective and that dealings will commence on 1 December 2015. Admission of the Placing Shares for the Second Tranche Placing is subject to the passing of the Resolutions at the General Meeting and to the placing agreement, which has been entered into between Bango and Cenkos Securities plc, becoming unconditional in all respects (save only for Admission) and not being terminated in accordance with its terms.
The new Ordinary Shares will, when issued, be credited as fully paid and rank pari passu with the existing Ordinary Shares in the capital of Bango.
General Meeting
A notice convening the General Meeting to be held at 5 Westbrook Centre, Cambridge, CB4 1YG at 11.00 a.m. on 30 November 2015 will be set out at the end of the Circular.
Recommendation and intentions of the Directors
The Directors, acting in good faith, believe that the Placing and the passing of the Resolutions are most likely to promote the success of Bango for the benefit of its members as a whole. The Directors
unanimously recommend the Shareholders to vote in favour of the Resolutions as they intend to do in respect of their aggregate beneficial holdings of 10,656,851 Ordinary Shares representing approximately 20.5 per cent. of the Existing Ordinary Shares.
Total voting rights
Bango's total issued share capital after the issue of 944,000 new Ordinary Shares pursuant to the First Tranche Placing is 53,153,529 Ordinary Shares each with voting rights.
Bango does not currently hold any shares in treasury. This figure of 53,153,529 Ordinary Shares may be used by shareholders in Bango as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.
Following completion of the Second Tranche Placing, the Company's enlarged issued share capital will consist of 64,431751 Ordinary Shares each with voting rights. A further announcement will be made at that time.
Commenting on the conditional placing, CEO Ray Anderson said:
"I am delighted that Bango has the support of top-tier investors to pursue further growth alongside our leading app store partners. Bango has worked hard over the past years to remove barriers to growth. The industry is now seeing the benefits of Direct Carrier Billing, and greater demand for this method of payment comes at a time when Bango is the definitive market leader. The conditional placing announced today will see great returns as Bango activates further End User Spend in valuable markets around the world."
The circular will be posted today to Shareholders and sets out in more detail the background to and reasons for the Fundraising and its terms. All capitalized terms in this announcement are as defined in the Circular which will be available free of charge on the Company's website: www.bangoinvestor.com.
END
For further information please contact:
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Bango plc |
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Ray Anderson, CEO |
+44 1223 472 777 |
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Gerry Tucker, CFO |
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Cenkos Securities plc |
+44 131 220 6939 |
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Nick Tulloch / Beth McKiernan |
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FTI Consulting |
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Matt Dixon / Chris Lane / Rob Mindell |
+44 203 727 1000 |
About Bango
Bango's mobile payment platform is vital to the global growth in digital content sales. The giants of mobile choose the Bango Payment Platform to provide a delightful and immediate payment experience that maximizes sales of digital content.
With over 140 markets activated by Bango partners, the Bango Payment Platform is established as the global standard for app stores to offer carrier billing. As the next billion consumers pick up their first smartphone, Bango technology will be there to unlock the universe of apps, video, games and other content that bring those smartphones to life. Global leaders plugging into Bango include Amazon (NASDAQ: AMZN), BlackBerry (NASDAQ: BBRY), Google (NASDAQ: GOOG), Samsung (005930: Korea SE), Microsoft (NASDAQ: MSFT) and Mozilla. Visit: bango.com
This information is provided by RNS
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