Bango Regulatory News (BGO)

18 Oct 2006 07:10

Bango PLC18 October 2006 18th October 2006 BANGO PLC ("Bango" or "the Company") Interim Results for 6 months ending 30th September 2006 Bango (AIM:BGO) announces today results for the 6 months ending 30th September2006 showing rapid growth in revenues and customer acquisition, continued growthin global partners including a worldwide partnership with Yahoo! and thedeployment of the latest generation of its unique mobile internet platform. Highlights • Revenues up 43% to £4.60m (H1 FY05: £3.22m) • Content provider revenues up 78% to £0.7m • End user spend up 40% to £3.9m • Gross profit up 40% to £1.32m (H1 FY05: £0.95m) • New customer wins including MTV, Daily Telegraph and FT.com • Global partnership agreement with Yahoo! • Global expansion and launch into new markets such as Germany, Spain and the US • Bango set to benefit from market growth being driven by global brands Commenting on the interim results Lindsay Bury, Chairman of Bango, said: "During this stage of the Company's development it is critical that Bangoestablishes a strong market presence on an international basis and develops abroad and loyal customer base of content providers. It is the provision ofcompelling content by these companies via Bango that will drive the market andthe Company's future growth. The quantity and calibre of companies selecting Bango's technology during theperiod to launch services on the mobile internet is evidence that Bango hasachieved this goal, and resulted in an impressive 78% increase in contentprovider revenues. This is extremely encouraging. Although expectations of breakeven for the year are now unlikely to be met, dueto slower end user spend, we are still expecting monthly breakeven by the end ofthe second half. Based on growth in the year to date and our visibility ofactivities by our customers, coupled with the company's partnerships and centralposition in a high growth market, we look forward to the future with confidence." Contact Details: Bango plc ICIS Limited 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 Introduction I am pleased to report that we are successfully deploying our unique technologyand relationships in the market to increase the size and value of the Bangocustomer base. The strength of our position is attracting industry giants suchas Yahoo! to work with Bango. This in turn is attracting more content providersto the Bango platform. A wide range of major content brands, television channels and internet companieshave endorsed our view of the mobile market by signing up for Bango products.This gives us great confidence in the rapid growth of this exciting opportunity.We believe that we have the right level of resources in place to generate andsupport the major growth in customer sign ups and transaction volumes that weanticipate in the coming months. We are therefore confident that we are able toincrease our profitability in the UK market and move to overall profitability. Financial highlights Six months ended Change on Six months ended Year ended 30 September 2006 H1 2006 30 September 2005 31 March 2006 Unaudited Unaudited Audited £m (restated) £m (restated) £m Turnover 4.60 Up 43% 3.22 7.53Gross profit 1.32 Up 40% 0.95 2.19Margin % 28.7% Stable 29.4% 29.1%Operating loss before share (1.50) (0.51) (1.53)option costsLoss before tax (1.62) (0.47) (1.46)Cash outflow from 1.56 0.64 1.65operationsCash position 3.2 6.0 4.9Basic and fully diluted 6.1 p 1.9 p 5.8 ploss per share As a result of continued growth and take up of our service turnover increased by43% to £4.60M compared with the same period last year. The major contributorsto this increase came from the growth in the monthly content provider fees whichincreased by 78% and content access fees which increased by 40%, which is anencouraging trend. Accordingly, gross profit has grown 40% to £1.32M in linewith the growth in turnover. We have expanded operations on an international basis where we see significantopportunity for the Company. Operating expenses therefore increased by £1.37mprimarily reflecting the increased investment in people and associated costsincurred to support the Bango sales and marketing organization in the USA,Germany and Spain. The cash outflow from operations was broadly in line with trading results forthe period, reflecting the small change in working capital requirement despitethe substantial increase in turnover. With a cash balance of £3.2 million at thehalf year stage, and a declining demand on cash going forward as the businessmoves towards profitability, Bango is well funded to ensure it exploits thecommercial opportunities available. Sales and marketing Bango has achieved a significant growth in customer acquisition in the period,due to improved sales productivity in the UK and through its newly establishedUS, Spanish and German operations. More than 100 internet businesses havesigned up for Bango's Pro or Target services in the last 6 months, about thesame number that signed up in the whole of last year. New customers include MTV,Capcom, Daily Telegraph, FT.Com, Agent Provocateur, Jamba, Flycell, Betfred,Yamaha Music, EA mobile, Rascal Flatts, Mediaplazza, Cellcity, Hands-on mobile(Mforma), Carmunity and Activefone(MOMO). Customer attrition rates remain low at around 5% per year. In addition, whilsttransaction levels over the summer were slower than expected, these acceleratedin September and given the visibility of the marketing plans of our pre-existingand more recently acquired major customers, we are increasingly confident oftransaction growth in the coming months. Bango has established a sales, marketing and customer service presence in NewYork and a sales office in California. The US team is now approximately the samesize as the European teams combined. We have been pleased by our early salesperformance in the US which is excellent considering that the direct to consumerproposition is still very new and our sales team has only been established sinceearly 2006. The Bango satellite offices in Koln and Madrid are building a pipeline ofprospects and winning early customers. Bango has integrated with the German andSpanish mobile operators billing systems. Yahoo! Agreement In September we announced our agreement with Yahoo! to enable Yahoo! advertisersto benefit from Bango technology and Bango customers to benefit from Yahoo!search marketing and advertising. We believe this is an important developmentfor both Bango and in growing the market. Product development There were three main development activities during the period, all of whichwere aimed at providing new functionality and a base for more rapid futuredevelopments. • A new generation of the Bango platform was deployed during the summerwhich simplifies the use of Bango products and services, and makes our salesprocesses more efficient. • We opened up "web services" access to the Bango platform for partnerswho want to leverage the power of Bango but provide their own content providerinterfaces. • Additional equipment and software was added at our data centres tohandle increased traffic levels which are being forecast by certain of ourlarger customers in the coming months. Market positioning Bango's business is targeted at providing services and technology to content andservice providers that engage with users through the mobile internet. Bangoservices generate user traffic, provide information about visiting users andcollect payment world-wide. The market is at an early stage but growing fast.Over the past six months, the marketplace has evolved broadly as envisaged byBango in our annual report. In particular Google and Yahoo! and Microsoft havestarted to put effort into mobile search and in encouraging their advertisers tomove to the mobile internet alongside the PC internet and major brands such asthe BBC, ITV, CNN, Google and USA Today have started to promote their mobilecontent - educating users to the potential of the mobile internet. Given our central position as a payment mechanism on the mobile internet, we arewell positioned to benefit from the various initiatives designed to drive thegrowth of the market. In the US we are building on our unique relationship withCingular - the US's biggest operator, and we are forming similar relationshipswith the other US operators. We intend to continue to implement our strategy, but to shift our focus toconsolidating our position in our existing markets and providing the tools andsupport to our larger content providers to help them achieve their ambitions forthe use of Bango to grow their own sales. Current trading and prospects In the period, Bango achieved significant growth in customer acquisition,including many leading brands in the US and Europe, has deployed the nextgeneration of its unique technology and has announced its partnership withYahoo! that the management believe will bring significant benefits to thecompany and its customers. As discussed above, the summer months saw lower than anticipated levels ofactivity from our customers and lower levels of end user spend. While thistrend has since been reversed, profitability will not now be reached for thefinancial year as a whole. However, with the cost base and headcount contained,our recurring revenue model, fast growth in customer acquisition and strongindications of end user activity from larger customers, the scene is set forrapid growth and a move to monthly profitability of the whole business by theend of the second half. BANGO PLC Interim Results for 6 months ending 30th September 2006 Consolidated Summarised Profit and Loss account Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Restated Restated (unaudited) (unaudited) (audited) Note £ £ £ Turnover 2 4,602,826 3,218,334 7,532,877 Cost of Sales 3,280,871 2,272,846 5,341,577 Gross Profit 1,321,955 945,488 2,191,300 Other Operating charges 2,823,402 1,453,760 3,719,266 Operating loss before share option cost (1,501,447) (508,272) (1,527,966) Share option costs 212,575 38,281 127,029 Operating loss (1,714,022) (546,553) (1,654,995) Interest Receivable 89,372 73,926 195,069 Loss on ordinary activities before taxation (1,624,650) (472,627) (1,459,926) Tax on loss on ordinary activities - - - Loss for the period (1,624,650) (472,627) (1,459,926) Basic and diluted loss per share 3 6.1 pence 1.95 pence 5.84 pence(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 outabove. Consolidated Summarised Balance Sheet Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Restated Restated (unaudited) (unaudited) (audited) £ £ £ Fixed AssetsTangible assets 579,680 105,263 343,096 Current AssetsDebtors 2,388,969 1,475,739 2,267,458Cash at bank 3,200,583 5,956,558 4,863,004 5,589,552 7,432,297 7,130,462 Creditors: amounts falling due within one year 2,175,440 1,436,447 2,186,123 Net current assets 3,414,112 5,995,850 4,944,339 Total assets less current liabilities 3,993,792 6,101,113 5,287,435 Capital and reservesCalled-up equity share capital 5,360,472 5,246,229 5,306,864Share premium account 5,319,960 5,230,898 5,255,136Merger Reserve 1,236,225 1,236,225 1,236,225Profit and Loss account (8,328,509) (5,678,279) (6,703,859)Share option reserve 405,644 66,040 193,069 Shareholders' funds 3,993,792 6,101,113 5,287,435 Consolidated Summarised cash flow statement Six months ended Six months ended Year ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) Note £ £ £ Net cash outflow from operating activities 4 (1,559,508) (642,687) (1,652,206) Returns on investments and servicing of financeInterest received 89,372 73,926 195,069 Net cash inflow from returns on investments and servicing offinance 89,372 73,926 195,069 Capital expenditureReceipt from disposal of fixed assets 766 - -Payments to acquire tangible fixed assets (311,483) (43,628) (333,679) Net cash outflow from capital expenditure (310,717) (43,628) (333,679) FinancingIssue of equity share capital 53,608 1,059,329 1,119,963 Share premium on issue of equity share capital 64,824 5,955,224 5,999,758Share issue expenses - (765,826) (786,121) Net cash inflow from financing 118,432 6,248,727 6,333,600 Increase/(decrease) in cash (1,662,421) 5,636,338 4,542,784 Reconciliation of movements in shareholders' funds Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Restated Restated (unaudited) (unaudited) (audited) £ £ £ Loss for the period (1,624,650) (472,627) (1,459,926) Share option expenses credited to other reserves 212,575 38,281 127,029New equity share capital subscribed 53,608 1,059,329 1,119,964 Net premium on new share capital subscribed 64,824 5,230,898 5,255,136 Net addition to shareholders' equity funds (1,293,643) 5,855,881 5,042,203 Opening shareholders' equity funds 5,287,435 245,232 245,232 Closing shareholders' equity funds 3,993,792 6,101,113 5,287,435 Notes 1. Accounting policies and basis of preparation The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention and inaccordance with the accounting policies set out in the financial statements ofBango plc for the year ended 31 March 2006. The exception to this is FRS 20 Share based payments, which has been adopted inthe period under review and the comparatives have been restated to reflect this.The fair value of the share options granted is recognised as an employeeexpense over the vesting period of the relevant options, with a correspondingincrease in equity. The charge recognised reflects the number of options thathad not vested at 31 March 2006 and the options granted after that date. Fairvalue has been determined by an independent external valuer. 2. Turnover The turnover is attributable to one principal activity of the company. Turnoveris split between the following activities: Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 (unaudited) (unaudited) (audited) £ £ £ Content access fees 3,891,702 2,783,899 6,470,383Content provider fees 699,124 392,085 1,002,619Non-standard Servicesfor Mobile Network Operators 12,000 42,350 59,875 4,602,826 3,218,334 7,532,877 A geographical analysis of the turnover in the period is given below: Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 (unaudited) (unaudited) (audited) £ £ £ United Kingdom 3,916,661 2,963,781 6,833,613EU 246,750 48,826 254,363US and Canada 316,936 153,594 344,180Rest of World 122,479 52,133 100,721 4,602,826 3,218,334 7,532,877 3. Loss per share Six months ended Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Restated Restated (unaudited) (unaudited) (audited) £ £ £ Loss for the period 1,624,650 472,647 1,459,926Weighted average number of sharesin issue 26,615,553 24,223,073 24,983,944 Basic and diluted earnings per 6.1 pence 1.95 pence 5.84 penceshare Share options outstanding on 30th September 2006 are considered to benon-dilutive. 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 2006 30 September 2005 31 March 2006 Restated Restated (unaudited) (unaudited) (audited) £ £ £ Operating Loss (1,714,022) (546,553) (1,654,995)Shares issued in lieu of services - 41,500 41,500Share option expense 212,575 38,281 127,029Depreciation 73,892 26,898 76,427Loss on disposal of fixed assets 241 - -(Increase)/decrease in debtors (121,511) (427,689) (1,219,408)Increase/(decrease) in creditors (10,683) 224,876 974,552Disposal of fixed assets - - 2,689 Net cash outflow from operating (1,559,508) (642,687) (1,652,206)activities 5. Publication of non-statutory accounts The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 March 2006 have been extracted from the StatutoryFinancial Statements of Bango plc, which have been filed with the Registrar ofCompanies. The auditor's report on those financial statements is unqualified.The financial information for the six months to 30 September 2006 and the sixmonths to 30 September 2005 is unaudited. The interim report together with an analysts briefing presentation will bedistributed to all shareholders shortly and copies will be available from theCompany's website at www.bango.com This information is provided by RNS The company news service from the London Stock Exchange