Bango Regulatory News (BGO)

18 May 2006 07:01

Bango PLC18 May 2006 18 May 2006 BANGO PLC ("Bango" or the "Company") Preliminary Results for year ending 31 March 2006 Bango has developed and deployed an open, global infrastructure platform thatenables content providers to market, sell and deliver their products andservices directly to mobile phone users on all mobile networks using theInternet. Financial Highlights (Comparative data for FYE 31 March '05) • Revenues grew 121% to £7.53m (£3.41m). • Gross profit grew 125% to £2.19m (£0.97m). • Operating expenses increased by 92% to £3.72m (£1.93m) due to expansion into new territories, product development and increased marketing spend. • Pre-tax losses of £1.3m (£0.9m) down to 17.7% of revenue (26.9%). • UK operation profitable and cash generative. • Successful IPO in June 2005 raising £6.21m (net of expenses) to support growth plans. Operational Highlights • Content access (end user spend) fees more than doubled to £6.47m (£2.90m) • Content provider (package) fees more than trebled to £1.00m (£0.31m) • Customer base grown significantly to include: Channel 4, Sony BMG, The Sun and EMI. • Number of content providers spending over £5,000/yr increased by 250% since March 05. • Expansion successfully begun into US, Spain and Germany. • Number of partners increased from 3 to 14 leading to increased sales productivity. • Agreements signed with four mobile network operators: Orange, O2, Proximus and Cingular Wireless. Additional agreement with Telefonica signed post year end. Ray Anderson, Chief Executive Officer of Bango, commented: "Last year was anexcellent year in the development of Bango. We have established a strong andscalable business with a unique industry position. Our growth is acceleratingand the market, although at an early stage, continues to develop in our favour. "In the UK we continue to see strong growth in both content provider sign upsand end user spend. In other territories, including the US, we are also seeingstrong growth in content provider sign ups. However, we have experienced longerthan expected lead times between a new content provider signing up and itsmarketing activity that drives end user spend. Accordingly we are lowering ourexpectations of the growth in end user spend outside the UK for the currentfinancial year. "We are in a strong financial position to capitalize on our growth opportunitiesand, working with mobile operators, content providers and brands, othercommercial partners and investors, we look forward to continuing success in thecoming years." Contact Details: Bango plc ICIS Limited - Financial PR Panmure Gordon & CoTel. +44 1223 472777 Tel. +44 20 7651 8688 Tel. +44 20 7459 3600Ray Anderson, CEO Tom Moriarty Aubrey PowellPeter Saxton, CFO Caroline Evans-Jones Stuart Gledhill About Bango Bango (AIM: BGO) has developed and deployed an open, global infrastructureplatform that enables content providers to market, sell and deliver theirproducts and services directly to mobile phone users on all mobile networksusing the mobile Internet. This "direct-to-consumer" approach operates alongsidethe mobile operator's mobile portal. Leading mobile operators including CingularWireless, Vodafone, Orange, Telefonica and O2 work with Bango to accelerate thegrowth of their direct-to-consumer business. The Bango platform has given mobile phone subscribers around the world greateraccess to third-party content. Leading content brands are now using Bango'sservices to engage with their existing and potential mobile customers directly -irrespective of mobile operator. For further information, go to www.bango.com. Chairman's Statement The board is delighted to report excellent progress in all areas of the businessresulting in significant growth, increasing numbers of Bango customers supplyingincreasing amounts of content to end users and expansion into new territories. When Bango came to market in June 2005, three months into the financial year ofthis report, we had set ourselves ambitious goals: to further invest in ourunique Bango products and technology, and to establish a local presence in threenew key markets: the USA, Spain and Germany. We now have offices and sales teamsestablished in all three territories, alongside our successful UK presence, andwe have started to see significant customer wins in these territories as aresult. Compared to the previous financial year, we are pleased to report revenue growthof 121% to £7.53 million and gross margin growth of 125% to £2.19 million,driven largely by our established UK business. Additional content providersign-ups in other territories are accelerating fast and this bodes well for thecoming year and beyond. Bango also derives revenue from end user spend on content. Having witnessedsignificant growth in content provider sign-ups over the last year, we now havea reasonable operating history from which to observe the relationship between acontent provider signing up and then starting to promote their content. The leadtime can be up to six months in some cases. We believe that greater support andassistance to content providers from our expanding partner network anddevelopments in mobile search and advertising should result in a reduction ofthis lead time in the latter half of this year. The US market is showing tremendous potential, with our US team having signed up22 content providers by year end, and having generated a growing pipeline ofprospects. US customers see Bango not only as a route to US based customers, butas a quick and easy route to consumers world-wide through the global reach ofBango's technology and services. However, the board believes that initial USgrowth in end user spending on content will be slower than that experienced inEuropean markets. The US mobile operators currently have extensive restrictionson the types of content that they can bill for, pending the introduction of bothdetailed content guidelines and processes to ensure adequate age verification ofend users. Bango is well placed to assist content providers in operating withinthese constraints. This view is endorsed by the increasing number of UScustomers investing in Bango products in preparation for marketing content tomobile end users, and to gain additional revenues outside the USA. In the year under review end user spending was below that anticipated earlier inthe year, which was counter-balanced by increased spending on access fees to usethe Bango Service. As restraints on content types are relaxed in the USA and ourpartner network builds out, we believe end user spending will accelerate,bringing that market back in line with more developed markets we operate in, inline with our original plans. We are very positive about our ability to exploit our market leading position.The product line is stronger than ever and we have several innovations coming tomarket that the board believes will add competitive strength, accelerate growthand reduce sales costs. Our direct sales team started the new financial yearthree times larger than at the end of March 2005 and we have increased thenumber of partners reselling the Bango Service internationally from 3 to 14 atthe year end. A business with strong and widely applicable technology that gains an earlyleadership position gains significant benefits for adopters of its products dueto the "eco-system" that forms round the business. The Bango team has a trackrecord of creating such powerful eco-systems that deliver long term value toshareholders as well as customers. I am therefore pleased that Bango is gainingan increasing number of partners among not only mobile internet businesses andmobile operators, but increasingly among the leading internet media companieswho in our experience are starting to recognise the mobile internet opportunityand develop strategies for addressing it. Bango is a uniquely well positioned business and there is a great deal ofopportunity ahead in this very exciting market. We look forward to providing afurther progress update at the half year. Lindsay BuryChairman CEO's Statement The past financial year was a good one for Bango. The market opportunitycontinued to expand and our year-on-year sales growth increased from 65% to121%. Our gross margin increased by 125% demonstrating the leverage of ourbusiness model and reflecting strong levels of content provider sign ups to paypackage fees to access the Bango system. We won many new global brands ascustomers and strengthened our team, product line and partner network, andcreated a new high end package for larger content providers. We therefore enterthe new financial year with confidence and enthusiasm. Successful float on AIM Early in 2005, the board decided to capitalize on Bango's strong technology andmarket position by raising funds to enable the business to accelerate its growthin the UK and selected overseas territories, to expand our customer support teamand further develop our technology. We are pleased to have completed asuccessful IPO on AIM in June 2005, which raised net proceeds of £6.21 millionfor the Company. In addition it has raised the Company's profile, increased ourability to do business with larger customers and is helping us attract andmotivate key staff. Strengthening the Business We exploit Bango's unique position in the market by staying relentlesslyfocussed in the mainstream of market growth, evolving our products, developingour strong team, efficiently leveraging our technology through partnership, andby ensuring that our proposition is clearly marketed, easy to buy and simple touse. Product developmentDuring the year our development team continued to add significant new featuresand functions to the Bango platform to enable content providers to offer abetter user experience and to reduce the costs of doing business in the mobileinternet. We also added features to the platform that increased the number ofvisitors to content providers' sites by providing better integration with mobilesearch companies such as Overture (part of Yahoo) and Motionbridge (part ofMicrosoft). We believe that promotion of content through mobile search engineswill become an important driver of end user activity in the coming years, and itis an area where we see good opportunities to leverage our industry position. The Bango platform handles a high volume of transactions with very highreliability. For example, in March 2006 the system processed in excess of 40million mobile transactions across 22,000 different WAP gateways. We saw 361,218first-time users and 1,266 different mobile phone types. With these volumesconstantly increasing, scalability is key and our development team has made goodprogress increasing the capacity of the Bango system to stay ahead of demand,while ensuring we maintain the reliability of our systems which perform a vitalrole for our customers. Expanding our partner relationshipsWe partnered with many new companies to increase our efficiency in collectingmoney from users for our content providers. PayPal chose to partner with Bangoto expand its reach into mobile content. Cingular Wireless, the largest mobileoperator in the USA selected Bango as its first move in opening up its billingsystem to enable payment for content through the internet. If a content provider wants to create a mobile internet site, they can developit themselves or use a specialist mobile company to do it for them. Manyspecialist companies have joined the Bango Accredited Partner (BAP) programme toenable them to re-sell or integrate the Bango Service These companies give ourplatform great credibility and also market to content providers outside thecountries where we are directly present. At the end of the year there were 14partners including Blue Star Mobile, Volantis, Graphico, Entriq, July Systemsand Crisp Wireless. During the year we announced unique relationships with Orange, O2, Proximus andCingular. The benefits to an MNO of opening up the mobile internet (enablingtheir end users to access off-portal content) can be gained safely and costeffectively through partnering with Bango. We expect many further relationshipsin the coming years. Expanding customer baseBango customers range from global brands such as Manchester United FootballClub, Sony BMG and News International through smaller brands such asCodemasters, The National Portrait Gallery and Funkimobiles to individualsrunning small businesses. They cover a wide range of sectors, including music,sports, print media, broadcasting, games and phone personalisation. During theyear we have significantly grown our customer base which currently includesChannel 4, Sony BMG, Hearst Publications, Discovery Mobile, The Sun, ManchesterUnited Football Club, Codemasters, EMI, Ministry of Sound and WWE. Sales and marketingDuring the year we started investing in establishing regional sales teams,modelled after our successful UK operations. We established these teams in theUSA, Germany and Spain. They are the countries where the mobile operators werestarting to follow the UK model of encouraging content providers to promotemobile content. We believe that the US mobile content market is about 18 months behind the UKmarket but growing fast. Many US companies have generated additional revenuesusing Bango to export their services to countries outside the USA where themarket for mobile internet content is currently more mature. Financial PerformanceRevenues increased 121% to £7.53million as more content providers signed up forBango products and successfully sold mobile internet content via the Bangoplatform. Gross Profit increased 125% to £2.19million (29.1% of revenue)(FYE Mar2005: £0.97m, 28.4 %). The improving margins were driven by increasing sign-upsto higher margin package fees together with modest price increases in packagefees during the year. Operating expenses increased in line with expectations by 92% to £3.72million,reflecting our establishment of sales and support operations in New York,California, Germany and Madrid, increased spending on product development andincreased marketing activity. The loss for the overall business was increased by£0.4 million to £1.33 million, as anticipated. The UK operation wassignificantly profitable and cash generative over the year, illustrating themodel we expect to become the norm in each country where we have a directpresence. The cash outflow from operations was broadly in line with the tradingresults for the period, reflecting the small change in working capitalrequirements despite the substantial increase in turnover. Following the AIM float in June 2005 through which we raised £6.21M net ofexpenses, Bango has started to use these funds to accelerate the commercialopportunities available, particularly in USA and Europe. Year ended 31 Change on Year ended 31 March 2006 previous year March 2005 £M % £M Turnover 7.53 Up 121% 3.41Gross profit 2.19 Up 125% 0.97Margin % 29.1% - 28.4%Operating loss 1.53 Up 64% 0.93Loss before 1.33 Up 44% 0.92Cash outflow from operations 1.65 Up 184% 0.58Cash position 4.86 - 0.32Basic and fully diluted loss per 5.34 pence Up 22% 4.38 penceshare Key metricsThe appetite of content providers to use our services is evident from the growthin sales of standard Bango products and these sales are relatively predictable.These are recurring monthly charges with a negligible attrition rate, so a baseof predictable high margin sales underpins our business model. We have a widerange of content providers in a range of market sectors, which provides us withsome very encouraging data on our development: •The number of content providers spending £5,000 per year or more on service fees has increased by 250% from 42 in March 2005 to 156 in March 2006. •The monthly service fees have increased by over 400% from March 2005 to March 2006. Strategy for growth for FY 2007In FY 2007 we will continue our marketing and promotional activities tocommunicate the benefits of the Bango Service to content providers. We will alsofocus on giving maximum support to our Bango Accredited Partners to enable themto use the Bango platform to attract and assist customers who want to marketdirect to consumer across any mobile operator network. We will also be workinghard to increase the number of users who visit the sites on our platform bypartnering with search companies and by encouraging community activity betweenend users and the use of the mobile internet in general. OutlookWe are encouraged by the rate of content provider sign ups in all territories.Content providers outside of the UK are taking longer than originally expectedto develop marketing activities that drive end user spend. Accordingly we arelowering our expectations of the growth in end user spend outside the UK for thecurrent financial year. We have established a strong and scalable business. Our growth is acceleratingand the performance indicators are good. We are in a strong financial positionto capitalize on our opportunities. On behalf of the Board, I would like to express my gratitude to Bango'scustomers, partners and employees for their continued support. I would also liketo thank our advisers and shareholders who enabled us to raise funds on the AIMmarket to provide both investment and credibility to underpin our ambitiousgrowth plans. Working with mobile operators, content providers and partners,other commercial partners and investors, we look forward to continuing successin the coming years. Ray AndersonChief Executive Officer BANGO PLC Audited results for the 12 months ending 31 March 2006 Consolidated summarised Profit and Loss Account 2006 2005 Note £ £Group turnover 2 7,532,877 3,414,506 Cost of sales 5,341,577 2,439,628 --------------- ---------------Gross profit 2,191,300 974,878 Other operatingcharges 3,719,266 1,933,647Other operatingincome - (25,532) --------------- ---------------Operating loss (1,527,966) (933,237) Interestreceivable - bankinterest 195,069 15,315 --------------- ---------------Loss on ordinaryactivities beforetaxation (1,332,897) (917,922) Tax on loss on ordinary activities - - --------------- ---------------Loss for thefinancial year (1,332,897) (917,922) =============== =============== Basic and dilutedloss per share(pence) 3 (5.34) (4.38) =============== =============== All of the activities of the group are classified as continuing. The group has no recognised gains or losses other than the results set outabove. BANGO PLC Audited results for the 12 months ending 31 March 2006 Consolidated summarised Balance Sheet 2006 2005 £ £Fixed assetsTangible assets 343,096 88,533 ----------- -----------Current assetsDebtors 2,267,458 1,048,050Cash at bank 4,863,004 320,220 ----------- ----------- 7,130,462 1,368,270Creditors:amounts fallingdue within oneyear 2,186,123 1,211,571 ----------- -----------Net currentassets 4,944,339 156,699 ----------- -----------Total assets lesscurrentliabilities 5,287,435 245,232 =========== =========== Capital and reservesCalled-up equityshare capital 5,306,864 4,186,900Share premiumaccount 5,255,136 -Merger reserve 1,236,225 1,236,225Profit and lossaccount (6,510,790) (5,177,893) ------------ -----------Shareholders'funds 4 5,287,435 245,232 =========== ============ BANGO PLC Audited results for the 12 months ending 31 March 2006 Consolidated summarised cash flow statement 2006 2005 £ £Net cash outflow from operating activities 5 (1,652,206) (583,065) Returns on investments and servicing of financeInterest received 195,069 15,315 --------- ---------Net cash inflow from returnson investments and servicingof finance 195,069 15,315 Taxation - - Capital expenditurePayments to acquiretangible fixed assets (333,679) (62,297) --------- ---------Net cash outflow fromcapital expenditure (333,679) (62,297) --------- ---------Cash outflow beforefinancing (1,790,816) (630,047) FinancingIssue of equity sharecapital 1,119,963 947Share premium on issue ofequity share capital 5,999,758 810,173Share issue expense (786,121) (5,507) --------- -----------Net cash inflow fromfinancing 6,333,600 805,613 ---------- -----------Increase in cash 4,542,784 175,566 ========= =========== BANGO PLC Audited results for the 12 months ending 31 March 2006 Notes 1. Accounting policies and basis of preparation The summary information presented herein was approved by the Board on 17 May2006. Bango plc was incorporated on 8 March 2005 and, on 9 June 2005, acquired theentire issued share capital of Bango.net Limited by way of a share for shareexchange. On 30 June 2005 the company raised £6.21M via the issue of shares, netof expenses, and was admitted to trading on AIM. The acquisition of Bango.net Limited qualifies as a group reconstruction withinthe meaning of FRS 6, and has been accounted for using the merger accountingmethod. Accordingly the financial information for the current period andcomparatives have been presented as if Bango.net Limited had been owned by BangoPlc throughout the current and prior periods. 2. Turnover Turnover is split between the following activities: 2006 2005 £ £Content access fees 6,470,383 2,902,059Content provider fees 1,002,619 311,797Services to MobileNetwork Operators 59,875 200,650 --------- --------- 7,532,877 3,414,506 ========== ========= A geographical split of the turnover is given below: 2006 2005 £ £ United Kingdom 6,833,613 3,218,675EU 254,363 51,590US and Canada 344,180 104,676Rest of the World 100,721 39,565 ----------- --------- 7,532,877 3,414,506 ============ ========= 3. Loss per share 2006 2005Loss for the period £1,332,897 £917,922Weighted average number of shares in issue 24,983,944 20,918,940Basic and diluted loss per share 5.34p 4.38p Share options outstanding at 31 March 2006 are considered to be non-dilutive. The weighted average number of shares for 2006 and 2005 have been recalculatedbased on the share split on 9 June 2005 when each share in the group wassubdivided by 20. 4. Reconciliation of movements in shareholders' funds Total Share Share Merger Profit and share- capital premium reserve loss account holders'funds £ £ £ £ £ At 1 April 2004 9,520 4,472,092 (4,259,971) 221,641Proceeds from issue of Shares 947 946,073 947,020Share issue costs (5,507) (5,507)Share for shareexchange 4,186,900 4,186,900Share issue costsRetained loss for the year (917,922) (917,922)Merger adjustment (10,467) (5,412,658) 1,236,225 (4,186,900) -------- ---------- --------- --------- ---------At 1 April 2005 4,186,900 - 1,236,225 (5,177,893) 245,232Proceeds from issue of Shares 1,044,776 5,955,224 7,000,000Share issue costs (786,121) (786,121)Exercise of share options 75,188 86,033 161,221Retained loss for the year (1,332,897) (1,332,897) -------- --------- --------- ---------- --------- At 31 March 2006 5,306,864 5,255,136 1,236,225 (6,510,790) 5,287,435 ======== ======== ======== ========== ========= 5. Notes to the statement of cash flows Reconciliation of operating loss to net cash outflow from operating activities 2006 2005 £ £ Operating loss (1,527,966) (933,237)Shares issued in lieuof services 41,500 -Depreciation 76,427 42,874Decrease/(increase)in debtors (1,219,408) (188,341)(Decrease)/increasein creditors 974,552 495,639Disposal of fixedassets 2,689 --------------- ---------------Net cash outflow fromoperating activities (1,652,206) (583,065) ============= =============== 6. Publication of non-statutory accounts The consolidated profit and loss account, consolidated balance sheet andconsolidated cash flow statement and associated notes for the year-ended 31March 2006 have been extracted from the group's audited financial statements.These financial statements have not yet been delivered to the Registrar. Thecomparatives have been extracted from the statutory financial instruments ofBango.net Limited, which have been filed with the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange