Bango Regulatory News (BGO)

20 Oct 2005 07:01

Bango PLC20 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 moneyfrom the sale of content and services to customers accessing the internetthrough their mobile phones. These are Bango's first results since itssuccessful 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 beingvalidated by the quantity and calibre of companies that are selecting Bango'stechnology, by the unique relationships Bango has established with industryleaders and by Bango's increasingly strong trading performance. Industrydevelopments, combined with Bango's own initiatives, have enhanced further theCompany's competitive position. The Company is judiciously applying theproceeds of its successful AIM IPO, including on international expansion intothe USA and Germany. We believe the outlook for the sector remains attractiveand 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 leadingmobile operators allow us to play a key role in accelerating the transitiontowards brands and services being promoted direct to consumer via internetenabled mobile devices. Recent announcements by major content brands, televisionchannels and internet companies about the importance of mobile consumers intheir future plans give us great confidence in the rapid growth of this excitingopportunity." Contact Details: Bango plc ICIS Limited - Financial PR Panmure Gordon (Broking) LimitedTel. +44 1223 472777 Tel. +44 20 7651 8688 Tel. +44 20 7459 3600Ray Anderson, CEO Tom Moriarty Aubrey PowellPeter Saxton, CFO Archie Berens Stuart Gledhill A conference call will be held this morning at 08.00 BST. Anyone wishing toparticipate 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 replayof 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 thatenables content providers to market, sell and deliver their products andservices directly to mobile phone users on all mobile networks using the mobileInternet. This direct-to-consumer approach operates alongside the mobileoperator's mobile content portals. Leading mobile operators including Vodafone,Orange, Telefonica and O2 work with Bango to accelerate the growth of theirdirect-to-consumer business. The Bango platform has given mobile phone subscribers in Europe and around theworld greater access to third-party content. Leading content brands are nowadopting the Bango Service to engage with all of their existing and potentialmobile customers directly - irrespective of mobile operator. For furtherinformation, 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 rewardingperiod in the development of the business. Our business proposition is that weenable content providers to "set up shop" on the mobile internet and to generaterevenues world-wide from their marketing activities. Content providers thatsigned up to the Bango Service before this period are continuing to prosper andgrow their business using Bango, resulting in a significant growth in theircontent 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 £mTurnover 3.22 Up 158% 1.25 3.41Gross profit 0.95 Up 158% 0.37 0.97Margin % 29.4% Constant 29.4% 28.6%Operating loss 0.51 Reduced 9% 0.56 0.93Loss before tax 0.43 Reduced 21% 0.55 0.92Cash outflow from 0.64 Increased 52% 0.42 0.58operationsCash position 6.0 0.5 0.3Basic and fully diluted 1.8 p Reduced 31% 2.6 p 4.4 ploss per share Turnover increased by 158% to £3.22M. The major contributors to this increasecame from the growth in content access fees which increased by 173%, and fromgrowth 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 increasedinvestment in people and associated costs incurred to support the internationalroll-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 forthe period, reflecting the small change in working capital requirement despitethe substantial increase in turnover Our successful admission to AIM on June 30 raised £6.24 million net of expensesand, with a cash balance of almost £6 million at the half year stage, Bango iswell funded to exploit the commercial opportunities available both in the UK andinternationally. 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 companyhas continued to invest in product development, particularly in supportinglarger businesses that want to reach a global market. The visible success by the early adopters of the Bango technology and our ownmarketing activity have resulted in a higher than expected number of contentproviders signing up to use the Bango Service during the last six months. Thisincluded winning 37 new customers for the high end Bango Pro service - which isdesigned for businesses wanting to do significant business on the mobileinternet. 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 wherethere is clear scope for the direct to consumer mobile content market to openup. By establishing a sales, marketing and technical support presence in acountry, Bango is seeking to win quickly a portfolio of successful referencecustomers and establish relationships with local business partners to accelerateroll-out into that country. The increased profile and credibility from being a listed company are provinguseful in cementing and growing existing relationships, attracting new customersand partners, and in recruiting, retaining and incentivizing key staff, both inthe UK and abroad. Product development Bango continues to invest in development of its innovative technology platformand service offerings. The Company's unique technology, which currently enableshundreds of content providers and brands to reach mobile consumers directly,gives the Company significant competitive advantages and enables Bango to offera powerful product at a low cost. In June, Bango was able to leverage its relationships with billing companiesworld-wide to reduce the cost of payment collection seen by content providers by7.5%. With standard billing costs reduced to 37%, a typical content providernow receives 63% of end user revenue through Bango. Our recent integration withPayPal will be a key factor in enabling us to deliver more revenues to ourcontent 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. Thisproduct has been in development during 2005 and enables content providers to setspecific price points in different currencies, vary the price by country or bymobile operator, track where customers originate from on the mobile internet,choose where their content is sold - for example to meet rights obligations, topresent different product offers in different countries and to track revenues bycountry or by mobile operator. Management believes that these are uniqueenhancements to an already unique service, and expect to see greatersatisfaction and usage by content providers. Also in September, Bango was granted its second European patent relating tointellectual property used in Bango products. Bango will continue to invest incompetitive advantage through protecting its key intellectual property. Throughout the period, Bango continued to work with mobile operators such asOrange, Vodafone and O2 to help them grow their off-portal business. In advanceof the launch of an i-mode service in the UK by O2, Bango assisted O2 inupgrading the age verification system to handle the new i-mode handsets. Thisproject also gave Bango early access to the i-mode technology to ensure it waswell integrated into the Bango platform. Geographic expansion The Bango Service is used by content providers from all over the world to reachcustomers world-wide through their internet enabled mobile phones. By makingthe processes of marketing, access and payment as efficient as possible in anycountry, the Bango Service increases the likelihood of more revenue flowing tocontent providers targeting that country. A key driver of the consumption of mobile internet content is whether mobileoperators in a particular country encourage direct to consumer promotion ofcontent or discourage it. The UK based mobile operators have been world leadersin encouraging this process by opening up their billing systems and bypartnering with Bango to streamline the process for content providers. This hasgiven Bango a successful and profitable base from which to illustrate andexpand, as operators in other countries follow the same path. Bango has identified Germany, Spain and the USA as key countries where theleading mobile operators are following the UK model. Bango believes that a localpresence in these countries will generate a base of local reference contentproviders that derive tangible benefits from Bango's unique service both intheir own country and potentially world-wide. Management further believe thatthis will accelerate direct sales via the Bango web site and indirectly throughbusiness partners. Over the last 6 months, Bango has recruited and deployed a sales, marketing andtechnical support team that is focused on the German market. German collateral,web site and other materials have been developed and selling activity hasstarted. The activity has been underpinned by agreements with Vodafone Germanyand O2 Germany, which allow direct access to those operators' billing systems byBango, which in turn makes the buying experience for the user more efficientwhen compared to traditional Premium SMS messaging alone. Management believesthat Bango is well positioned within the German market which appears to befollowing the UK model of development, and the sales pipeline is looking healthyat this stage in the market's development. The US market is attractive to Bango not only because the world's largestcontent providers are based there, and also because it presents a potentiallymassive market for mobile content. Many of Bango's most successful customersare US content providers who are using Bango to reach outside the USA. The US mobile operators followed the UK model of developing their own portalsand are now starting to open up their systems to enable content providers tomarket direct to consumer and generate additional traffic revenue. A differentregulatory regime and a more conservative attitude by the US mobile operators toopening up their networks to third parties makes the US market different fromthe UK market, but content providers of all sizes want to benefit from the reachof the internet into the next generation of handsets. Bango partners withmobile operators to open up their systems in a controlled way. In July the company was able to announce that Cingular (the largest US mobileoperator with over 51 million subscribers) has selected Bango as its partner toopen up Cingular's WAP billing capability to third party content providers andbrands, using the Bango Service. The system went live just before the periodend, and is already enabling a significant increase in spending by US end userswith content providers from all over the world. The other US operators have been slower to open up their systems to thirdparties to collect payments. As an alternative payment method, for customers ofall mobile operators world-wide, Bango announced in September an agreement withPayPal (the payment processing arm of eBay Inc.). This enables micro-payments tobe collected by Bango on behalf of content providers from any of PayPal's 50million account holders. Bango believes this will accelerate the opening up ofthe market, particularly in the USA. In addition, the costs of using PayPal forcollection of money are low compared with most current operator billing routes,which gives Bango the opportunity to further enhance the appeal of its serviceby increasing out-payments to content providers. Bango has a unique position as a trusted partner of Cingular and PayPal and istaking extra care to ensure that services introduced using those payment methodare "safe". In particular, the age verification and content control systemsthat are available in Europe are not yet active in the USA so Bango is takingappropriate steps to ensure that only content suitable for minors can be paidfor using the operator or PayPal billing systems. Credit card payment isavailable for other types of content. Bango has established a sales presence in New York and California, backed up bytechnical support, marketing communications and a US Public Relations company.We are actively selling in the USA and have a good sales pipeline that includesseveral major brands. We have also had success during the period inestablishing partnerships to take the Bango Service to market - including arelationship with Crisp Wireless, a provider of next generation mobile contentmanagement and wireless delivery software applications to media andentertainment companies. To support and develop its customers based in Spain, Bango has established asatellite office in Madrid, signed up a Spanish business partner, and recruitedSpanish technical support expertise. Work is underway to directly integrate withthe Spanish mobile operators billing systems. Market landscape The market for content and services for mobile phone users continues to growrapidly, driven by increasing numbers of internet connected mobile phones andthe increasing proportion of these phones which have colour screens, game andmusic playing capability. Network operators appear to be actively endorsingthe accessing of third party content by mobile users, as can be evidenced by anumber 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 searchengine listings through the WAP services of both Orange and Vodafone. Havinganticipated the development of the market, Bango is well positioned to enablemobile internet content to users on any network. Cingular and PayPal's partnering with Bango in North America indicates theirbelief in the potential for the mobile content market. They have recognisedthat they can leverage the marketing power of brands and content providers inorder to benefit from the revenue streams that are increasingly flowing frommobile users to content providers. The mobile industry is recognizing that customer confidence and trust are key tothe growth of a mass market for mobile content. Bango is a champion of thetransparent 'browse and buy' approach to mobile content, by which customers onlypay for what they want and are able to browse the available content beforemaking their choice. Accordingly Bango is supportive of the steps that arebeing taken within the industry to clamp down on inappropriate subscriptionschemes and other damaging practices. In line with this, Bango managementbelieves that regulatory and industry pressure will slow or stall the growth ofservices using inappropriate subscription user interactions and drive servicesto the more reputable "browse and buy" model where Bango is focused. Simpay, a four year old project by four European mobile operators to develop acommon payment platform, was terminated in June. Bango believes that thisremoves uncertainty around what Simpay would or would not deliver to the marketand which was delaying decision making by content providers as to how to addressthe mobile channel. In addition, mobile operators that were having projectsdelayed by Simpay are now able to move forward quickly using the standardisedBango model which has already been proven in the marketplace. Bango believes that the range of content accessible by mobile phone willincrease dramatically. The increasing deployment of lower cost and higher speed3G/UMTS infrastructure and newer devices helps broaden the accessibility ofmobile content. Alongside the increasing sale of music directly to mobiledevices, a number of TV channels are positioning themselves to enable consumersto watch live or recorded TV footage directly on their mobile devices. Bangoexpects to play a key role in enabling the sale of content into this growingmarket opportunity. Strategy At the time of our flotation, our intention was to apply the funds towardsincreasing our presence in the key markets of Europe and North America. Our aimwas to link up with industry partners, recruit suitable sales representativesand significantly increase awareness of our service through a range of marketingactivities. We are pleased that we have made good progress with all of theseinitiatives, which we intend to continue. Bango believes that by eliminating the barriers and mitigating the risks thatprevent content providers from wanting to engage with mobile consumers, theCompany can enable and participate in a large and growing market. By making iteasier for consumers to locate and purchase content and services via the mobileinternet, Bango is facilitating the growth of revenue for its content providercustomers. Bango will continue to invest in product development to furtherstreamline the processes of marketing, providing access and billing for contentproviders. The Company is also paying attention to the millions of users who havediscovered Bango as a channel to the best available content. Bango's tools forusers to 'virally market' interesting content to their peers and for helpingusers to return quickly to their favorite sites have been well received. TheBango 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 hascontinued to transition its mobile operator customers from using non-standard orcustomized products to a business model that uses the standard Bango Service.This transition is now largely complete, with non-standard services nowgenerating a negligible proportion of total revenue. This confirms the appealof the rapidly deployable, cost effective solution that Bango has created toenable 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 forcontent 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 willstart marketing to their consumers and will see success from their new projectsin the period ahead, while solid growth from the Company's wide base of existingcustomers will continue. Bango believes that that their success will convincelarger brands, to the extent they need convincing, that the ability to transmitcontent to mobile phone users represents an increasingly important source ofrevenue. Bango's pipeline of potential new customers remains encouragingly strong. Thismomentum is expected to continue during the remainder of the current financialyear and beyond. The Directors therefore remain confident not only of afavourable outcome for this year but also of Bango's longer term prospects. Lindsay Bury Ray AndersonNon-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 beforetaxation (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 outabove. 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 AssetsTangible assets 105,263 66,382 88,533 Current AssetsDebtors 1,475,739 633,265 1,048,050Cash 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 reservesCalled-up equity share capital 5,246,229 10,467 10,467Share premium account 5,230,898 5,412,658 5,412,658Merger 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 offinance 73,926 9,228 15,315 Capital expenditurePayments to acquire tangible fixed assets (43,628) (15,639) (62,297) Net cash outflow from capital expenditure (43,628) (15,639) (62,297) FinancingIssue of equity share capital 1,059,329 947 947Share premium on issue of equity share capital 5,955,224 810,173 810,173Share 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 947Net 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 withapplicable accounting standards and under the historical cost convention and inaccordance with the accounting policies set out in the financial statements ofBango.net Limited for the year ended 31 March 2005. The consolidated financial statements for the six months ended 30 September 2005have been prepared using merger accounting principles on the basis that theformation of Bango PLC as the parent company of Bango.net Limited on 9 June 2005qualifies as a group reconstruction and the interim financial statements shouldbe prepared as if the companies have always been one entity. The financialinformation for the year ended 31 March 2005 and the six months ended 30September 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 2,902,059Content provider fees 392,085 83,176 311,797Non-standard Services 42,350 144,540 200,650for 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 3,218,675EU 48,826 17,120 51,590US and Canada 153,594 36,023 104,676Rest 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 £917,922Weighted average number of sharesin 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 benon-dilutive. The weighted average number of shares for the 6 months ended 30th September 2004and for year ended 31st March 2005 have been re-calculated based on the sharesplit 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 constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 March 2005 have been extracted from the StatutoryFinancial Statements of Bango.net Limited, which have been filed with theRegistrar of Companies. The auditor's report on those financial statements isunqualified. The financial information for the six months to 30 September 2005and the six months to 30 September 2004 is unaudited. The financial informationfor the six months to 30 September 2004 represents the results of Bango.netLimited. The interim report will be distributed to all shareholders shortly and copieswill 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