Final Results

RNS Number : 0698S

Bango PLC

15 March 2016

 

15 March 2016

BANGO PLC

("Bango")

Final Results

Bango (AIM: BGO), the mobile payments company, today announces its Final Results for the year ended 31 December 2015.

FY2015 Financial performance

·     FY2015 End User Spend (EUS) exit run rate over 100% higher than FY2014 EUS exit run rate at £67m pa

·     EUS for the whole year increased 78% to £44.7m (FY2014: £25.2m)

·     Total gross profit £1.3m (FY2014: £1.3m)

·     Blended gross margin on EUS 1.8% (FY2014: 2.4%); narrowing due to faster than expected growth in high volume developed markets 

·     Stable cost base of £4.4m (FY2014: £5.0m) demonstrating the technology and systems can deliver growing volumes at fixed cost on the route to profitability

·     Adjusted LBITDA* reduced to -£3.1m (FY2014: -£3.7m)

·     Cash balance of £12.1m (including £11m fundraise in November 2015) (FY2014: £6.3m (including fundraising of £6.0m)

*Adjusted LBITDA is the loss before interest, tax, depreciation, amortization and share based payment charge.

FY2015 Operational performance

·    Market share grew to 40% of live app store carrier billing routes, confirming Bango as market leader 

·     Activated Direct Carrier Billing (DCB) in emerging markets for Google, BlackBerry, Microsoft and Samsung, including the first Google Play carrier billing launches in South America and Africa. Over 30 activations in FY2015

·     Activated new DCB routes in high spend developed markets including Germany, Spain and United Kingdom

·     Commenced second phase roll-out of Bango Boost technology to six additional Mobile Network Operators (MNOs), following success of first phase which demonstrated 20-70% uplift in EUS

Outlook

·     Bango expects to deliver at least a 100% increase in annualized EUS exit run rate for FY2016. The run rate at the beginning of March 2016 was £79.4m per year

·     The pipeline for further activation opportunities increased over the last year due to the DCB ambitions of the major app stores and their associated digital content offerings. At the start of March there were 30 activations scheduled and underway for launch, and a pipeline of over 200 opportunities being pursued

·     In the year to date, growth rates have been strong across all Bango routes, including in emerging territories, as in FY2015. Bango expects growth in its high volume routes to continue to accelerate in which case overall gross margin may remain slightly below the 2% anticipated in the longer term

Ray Anderson, Chief Executive Officer of Bango, commented: 

"I am encouraged with the significant growth in End User Spend (EUS) and particularly that we met the challenging EUS growth expectations for the year. Bango gross margin expressed as a percentage of EUS reduced to slightly below the FY2014 levels reflecting a higher proportion of growth from established markets than expected.  

Importantly during FY2015 we doubled the rate of spending through the Bango Payment Platform - despite a substantial increase in the value of sterling against the major currencies that produced EUS during FY2015. Bango is cementing its market leading position at a time when DCB is becoming an increasingly popular method of payment for the growing range of services sold to mobile users over the internet. The Bango Payment Platform can deliver a more than ten-fold increase in transaction rates without additional cost. In FY2016, Bango will continue to aggressively deploy technology to drive up transactions through high volume routes, as well as to launch and nurture the emerging territories, enabling more people to spend on content.

Bango expects these positive trends to continue in FY2016, with the rate of EUS at least doubling again, and the EUS rate entering March is in line with that expectation.

During FY2015 the growth of high volume routes was faster than that on lower volume routes, primarily as a result of success with Bango Boost. Based on growth in the year to date, Bango's large routes are continuing to grow very well, following the pattern of FY2015. If that remains true for the remainder of the year, Bango's gross margin is expected to remain slightly below the 2% expected in the longer term.

With a stable cost base and accelerating EUS growth, Bango is confident that it remains on track to become profitable and cash flow positive within the installed processing capacity of the Bango Payment Platform."

Contact Details:

Bango PLC	FTI Consulting	Cenkos Securities PLC
Tel. [phone]	Tel. [phone]	Tel. [phone]
www.bango.com	Chris Lane	Nick Tulloch
Ray Anderson, CEO	Rob Mindell	Beth McKiernan
Gerry Tucker, CFO	Karen Tang

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 payment routes 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), and Microsoft (NASDAQ: MSFT). Visit bango.com

 

Chairman's statement

During FY2015 Bango achieved a number of key milestones, and above all I am particularly pleased with the accelerating growth rate in EUS. Bango has continually emphasized that growing EUS is the key priority for the business in order to maintain its market leadership position and create value add for its customers. The high growth in EUS, together with the increasing number of carrier billing routes that were activated around the world in FY2015, show that Bango is delivering against its strategy to become the industry platform that enables every smartphone user to quickly and easily pay for digital content.

Bango technology enables very high volumes of transactions to be processed through a fixed cost system. Consequently, every transaction through the platform contributes to gross profit and increased transaction volume drives Bango towards profitability. This enables Bango to establish sustainable pricing models that have longevity as business scales up. As reporting or computations required by complex markets, currency conversion or additional technology, such as Bango Boost, are deployed through the Bango Payment Platform, additional margin can be generated without increasing the cost of delivery.

Bango continued to develop its relationships with the world's major app stores, opening up new markets, enabling more people to purchase app store content, and using Bango technology to deliver increased transaction success rates. The power and flexibility of the Bango Payment Platform to quickly and easily integrate carrier billing routes in new, and sometimes financially complex markets was demonstrated repeatedly. Bango took Google into new markets, and launched their first DCB activations in Africa and South America. Bango will continue to activate DCB routes in the markets that are important to Microsoft, Amazon, Google and other leading app stores. Each payment route that is activated can be used across all app store partners, building a strong network effect and contributing to the powerful analytical data that can be used to increase spending growth through the Bango Payment Platform.

I have been impressed by the Bango team's relentless effort to deliver even greater value for their partners through innovations such as Bango Boost, which, in initial implementations has delivered between a 20 and 70% increase to EUS in established routes. These initiatives will further support Bango's market leadership position, at a time when the mobile payments industry moves in the direction pioneered by Bango. We will continue to invest in developing technology to further similar initiatives.

In November 2015 Bango completed a fundraise of £11m to support growth and market expansion as an independent company with its app store partners, while maintaining a healthy balance sheet. I look ahead to FY2016 with the confidence that Bango will continue to capitalize on greater opportunities opened up through market growth, new payment routes and an increasing range of content and services promoted by the different app store partners.

David Sear

Chairman

 

CEO's statement

FY2015 has been a year of strong commercial progress for Bango. The Bango Payment Platform demonstrated its capability to make more sales for Bango partners by delivering accelerating growth in EUS. Bango demonstrated its increasing importance to its partners by growing its levels of activations, new routes and increasing the pipeline of activations to in excess of 200 new opportunities. I would like to thank my colleagues for their dedication in building Bango's powerful, reliable and secure payments platform and making it the number one choice in the fast growing market for app store payments.

Key developments in emerging markets

As a leading UK headquartered Fin-Tech business, I was invited to represent Bango alongside the UK Prime Minister on a financial technology trade delegation to South-East Asia. During the trip I was able to announce new payment routes in Taiwan and Indonesia, and the completion of seven mobile payment agreements with Mobile Network Operators across Asia. Smartphone adoption is rising fast in these markets, as are household incomes. Consumers are starting to demand content and personalization via their smartphones - normally their only route to the internet. Bango is opening up access to high quality paid content and services for these people from Google, Samsung, Microsoft and BlackBerry, and helping local developers prosper in their local market and potentially outside their home country.

Bango is committed to developing its business in Asia. Sales presence in the market was strengthened to include new offices in Singapore and Japan. I am delighted that we were able to hire Andy Suzuki to head Bango Japan, which was established earlier this year. Andy has held senior positions in global corporations and brings great experience developing technology partnerships with Japanese customers. While focused on Japan, he will provide senior management support for the Bango team across the Asia-Pacific region.

Many Bango investors are surprised to learn that payment options beyond credit cards also provide substantial uplifts in sales in developed markets where consumers have greater disposable income, and where credit cards are often more popular. In FY2015, Bango activated new DCB routes in Germany, Spain and United Kingdom for major app store partners who understand the importance of DCB alongside credit cards.  

Of the more than 200 opportunities that are being progressed in the activations pipeline, there is a good balance between emerging and developed markets across the major app stores.

Technology focus and R&D expansion

The power of a platform based internet service is that the innovations and technology that Bango develop initially for one customer, becomes available to others through the common platform, without significant further cost.

In many markets, mobile operators and other providers are developing innovative mobile payment systems that work alongside traditional DCB. The Bango Payment Platform can quickly and easily integrate with almost any payment system, and present these options through the standard Bango API to existing or new stores. Trials are already underway in selected markets.

These non-DCB payment options can often enable app stores to collect payment where DCB is not commercially viable or is blocked by regulation. Bango views this as an opportunity to provide additional value to its global partners and increase Bango's addressable market, adding more growth to the EUS processed through the Bango Payment Platform and earning additional margin.

To accelerate and streamline the process of launching new activations, Bango launched Bango Grid in 2015. Bango Grid also allows non-DCB payment methods to be rapidly made available alongside DCB to Bango's partners.

Bango systems are regularly tested to verify that they can comfortably process well in excess of $1Bn/£650m EUS per year using the current datacenters, hardware and software that deliver the Bango Payment Platform technology and services. During 2h2016 Bango will confirm that the current architecture can reliably, safely and securely process substantially beyond the currently verified levels, with little or no incremental operating cost.

Outlook

The wider payments market continues to evolve. Mobile payments are taking a growing proportion of the overall global payments market, and within that DCB is becoming an increasingly popular and widely available method for mobile payment.

Bango has pioneered DCB for 15 years and continues to maintain its pace of innovation and leadership. Building on its strong progress during FY2015 in EUS, new activations, pipeline growth and renewed app store contracts, Bango is confident that this momentum will continue into FY2016.

Bango's primary focus for the year is concentrated on impressing its app store partners and mobile operators by increasing EUS through the Bango Payment Platform. Most EUS growth comes from established activations, but new activations continually become established, and make significant contributions in their second and third years. FY2016 will see a greater contribution from newer markets, where DCB has only recently been launched; this will lead to more EUS from prior year activations growing the FY2016 and FY2017 EUS. As with most early stage businesses with high potential, the speed that new markets contribute significant EUS has to date been difficult to predict, but as we continue to grow the Bango footprint we are better able to determine which new markets will be significant for Bango's EUS and ultimately margin. The Bango Payment Platform can deliver a more than ten-fold increase in transaction volumes without additional cost. This enables Bango to provide its platform and services with flexible pricing to suit the needs of major partners.

The investments in technology and automation during the last few years have enabled Bango to reduce the human involvement in integrations, activations and the round the clock operation of datacenters and other operational processes. As a result, Bango has been able to move people from operational roles to roles that more directly drive customer success and grow EUS. For example, 24/7 staff that need to be available in case of problems are now able to spend more time training mobile operators in the use of Bango Boost tools, and in helping operators improve the performance of their DCB systems. We expect this trend to continue in the coming year, enabling Bango to spend more time providing app stores and mobile operators with tools to grow their EUS, without increasing Bango costs.

Ray Anderson

Chief Executive Officer

 

CFO Statement

End User Spend

Bango has achieved significant growth in EUS, up 78% to £44.7m from £25.2m. Bango also saw over 100% growth in the December 2015 annualized EUS figure compared to December 2014, resulting in an exit run rate of £67m. This growth in EUS is particularly impressive considering the substantial adverse impact of foreign exchange movements in the currencies of Bango's largest markets. Bango is positive that the rapid growth in EUS will continue in FY2016 and this growth will be achieved from existing and new activations. As Bango continues to progress its strategy of activating the major app stores to a growing number of mobile operators, the growth in EUS will continue.

App stores or mobile operators pay Bango a share of their EUS. The Bango Payment Platform that delivers this service can handle substantially higher volumes at a fixed cost and is treated as a fixed operational expense. With no cost for processing transactions, the increasing EUS leads to increasing fees which all contribute towards gross profit.

Turnover

Turnover is a blended figure made up from 100% of the value of EUS transactions where Bango is the principal and the gross profit only where Bango is an agent, combined with the total value of platform fees. Turnover in FY2015 was £3.2m compared to £5.1m in FY2014 due to the growth of agency sales through the platform; if the agency revenue continues to grow faster than the principal business then the total gross margin would still grow even if turnover decreases.

Margin expressed as a percentage of End User Spend

Gross margin on end user activity for the period was £0.8m, showing an increase from £0.6m in FY2014. Margin has not kept pace with EUS, because a significant part of growth in EUS came from larger, developed markets. Fees charged for incremental volumes in these markets are generally lower as a proportion of EUS than in early stage markets which are at lower volumes and which may have higher per transaction fees.

Blended margin for the year was 1.8%. The key factors driving this blended margin are:

-     Large route growth: There is considerable focus on deploying Bango Boost technology to grow the largest routes as quickly as possible. These have the biggest impact on the success of Bango partners. Due to the volume based pricing on some of these routes, the faster the growth, the more impact there will be on driving down the percentage margin, although the absolute margin always increases with volume

-     New route deployment: There are dozens of smaller routes across a range of app stores, more than 30 are currently scheduled for deployment and a pipeline of over 200 routes opportunities for activation. Many of these routes have contracted fees considerably in excess of the long term 2% blended outlook

At this stage in 2016 it is difficult to predict the growth pace of new routes, in the year to date, the larger routes are continuing to grow very well, following the pattern of FY2015. If Bango's larger routes do continue to significantly outperform less developed markets, the blended margin may reduce further - even though the absolute gross profit will rise.

There was a decrease in platform fees to £0.5m (FY2014: £0.7m) as a result of Bango's strategy announced in 2014 to remove potential barriers to entry that may impact growth in EUS.

The total gross profit for the year was £1.3m, compared to £1.3m for the FY2014, with the reduction in platform fees balanced by growth in EUS margin.

Administrative expenses

Administrative expenses were lower in FY2015 at £4.4m compared to £5.0m in FY2014. This reflects operational processing efficiencies resulting from previous investment and development of the platform, as well as transfer of duties from operational tasks to customer education around Bango Boost technology. This decrease in administrative expenses resulted in a reduction in the operating loss to £5.0m (FY2014: £5.4m).

Amortization of intangible assets in the year was £1.0m (FY2014: £0.8m) as further R&D projects capitalized in prior years were deployed. Depreciation for the year totaled £0.5m (FY2014: £0.5m).

Share based payment costs of £0.4m in FY2015 (FY2014: £0.4m), are part of the compensation package that Bango uses to attract and retain key employees in such a competitive market.

Raising of additional capital

In December 2015, Bango raised £11.0m before expenses in a placing of 12,222,222 new ordinary shares, with both new and existing institutional investors. The funding is expected to take Bango comfortably through to profitability and ensure sufficient cash reserves to give comfort to current and future Bango partners.

Balance sheet

Net assets of Bango were £15.9m at 31 December 2015 (at 31 December 2014: £9.8m).

Cash balances increased to £12.1m at 31 December 2015 (at 31 December 2014: £6.3m), this was driven by the increase in cash from the fundraise which raised £10.4m (net of fees) at the end of the year. With a stable cost base, and a future of growing margin Bango should move closer to cash generation.

Intangible assets remained consistent at £3.4m (at 31 December 2014: £3.5m) as a result of on-going internal development work being capitalized, compensating for the amortization charges in the year.

Total borrowings are £0.4m (at 31 December 2014: £0.6m), and consist only of finance lease liabilities. Of the total borrowings, £0.3m is classed as current (at 31 December 2014: £0.3m) and £0.1m is classed as non-current (at 31 December 2014: £0.3m).

Investment in new markets

During FY2015 and in the first quarter of FY2016, Bango invested in developing the appropriate corporate and contractual structures to support new territories. Structures may be established to support a market by deployment of technology but without a Bango entity - as in India for example, or by the creation of new group entities being set up, as in Nigeria and Japan. These structures support the high levels of EUS expected by Bango partners in these markets. There was an increase in spending on sales and marketing activities to train partners in the use of Bango technology to grow EUS, and to develop new markets and expand opportunities for EUS growth. This spending has been offset by substantial efficiency gains in operational areas due to deployment of Bango technology, and insourcing of previously outsourced services to reduce costs going forward and improve quality and reliability.

Gerry Tucker

CFO

 

Audited results for the year ending 31 December 2015

Consolidated statement of comprehensive income

	31 Dec 2015	31 Dec 2014
Note	£	£

Alternative performance measure (Non-IFRS)

End User Spend

3

44,684,300

25,167,767

Turnover	3	3,199,566	5,093,952
Attributable to digital merchants	3	(1,024,793)	(2,703,363)
		2,174,773	2,390,589
Cost of sales - payment providers	3	(907,697)	(1,051,928)
Gross profit		1,267,076	1,338,661
Other administrative expenses	3	(4,411,328)	(5,017,665)
Share based payments	3	(433,434)	(395,110)
Depreciation	3	(484,871)	(542,882)
Amortization	3	(969,013)	(801,484)
Total administrative expenses		(6,298,646)	(6,757,141)
Operating loss		(5,031,570)	(5,418,480)
Interest payable		(20,865)	(24,116)
Investment income		24,327	26,610
Loss before taxation		(5,028,108)	(5,415,986)
Income tax		215,317	266,210
Loss and total comprehensive loss for the financial year		(4,812,791)	(5,149,776)
Attributable to equity holders of the parent		(4,812,791)	(5,149,776)

Loss per share attributable to the equity holders of the parent

Basic loss per share		(9.05)p	(10.96)p
Diluted loss per share		(9.05)p	(10.96)p

All of the activities of the Group are classed as continuing.

 

Consolidated balance sheet

		31 Dec 2015	31 Dec 2014
		£	£
ASSETS
Non-current assets
Property, plant and equipment		507,295	777,254
Intangible assets		3,446,612	3,491,252
		3,953,907	4,268,506
Current assets
Trade and other receivables		1,128,897	1,109,816
Research and Development tax credits		225,974	236,028
Cash and cash equivalents		12,135,326	6,253,487
		13,490,197	7,599,331
Total assets		17,444,104	11,867,837
EQUITY
Capital and reserves attributable to equity holders of the parent company
Share capital		12,886,350	10,399,463
Share premium account		30,101,510	22,098,603
Merger reserve		1,236,225	1,236,225
Other reserve		1,896,842	1,526,650
Accumulated losses		(30,211,087)	(25,461,538)
Total equity		15,909,840	9,799,403
LIABILITIES
Current liabilities
Trade and other payables		1,170,244	1,478,293
Finance lease liabilities		268,476	296,817
		1,438,720	1,775,110
Non-current liabilities
Finance lease liabilities		95,544	293,324
		95,544	293,324
Total liabilities		1,534,264	2,068,434
Total equity and liabilities		17,444,104	11,867,837

 

Consolidated cash flow statement

		31 Dec 2015	31 Dec 2014
		£	£
Net cash used by operating activities		(3,234,118)	(3,177,167)
Cash flows used by investing activities
Purchases of property, plant and equipment		(129,705)	(108,980)
Addition to intangible assets		(924,373)	(914,864)
Interest received		24,327	26,610
Net cash used by investing activities		(1,029,751)	(997,234)
Cash flows generated from financing activities
Proceeds from issuance of ordinary shares		11,107,518	6,086,582
Costs associated with issuance of ordinary shares		(617,723)	(394,961)
Interest payable		(20,865)	(24,116)
Capital payable on finance lease obligations		(311,329)	(338,911)
Net cash generated from financing activities		10,157,601	5,328,594
Net increase in cash and cash equivalents		5,893,732	1,154,193
Cash and cash equivalents at beginning of year		6,253,487	5,110,366
Exchange differences on cash and cash equivalents		(11,893)	(11,072)
		6,241,594	5,099,294
Cash and cash equivalents at end of year		12,135,326	6,253,487

 

Consolidated statement of changes in equity

	Share	Share	Merger	Other	Retained	Total
	capital	premium	reserve	reserve	earnings
Group		account
	£	£	£	£	£	£
Balance at 1 January 2014	9,122,069	17,684,376	1,236,225	1,968,834	(21,149,056)	8,862,448
Share based payments	-	-	-	395,110	-	395,110
Share based payment transfer for exercises	-	-	-	(837,294)	837,294	-
Exercise of share options	27,394	59,188	-	-	-	86,582
Issue of shares	1,250,000	4,750,000	-	-	-	6,000,000
Expense of share issue	-	(394,961)	-	-	-	(394,961)
Transactions with owners	1,277,394	4,414,227	-	(442,184)	837,294	6,086,731
Loss for the year	-	-	-	-	(5,149,776)	(5,149,776)
Total comprehensive income
for the year	-	-	-	-	(5,149,776)	(5,149,776)
Balance at 31 December 2014	10,399,463	22,098,603	1,236,225	1,526,650	(25,461,538)	9,799,403

Balance at 1 January 2015	10,399,463	22,098,603	1,236,225	1,526,650	(25,461,538)	9,799,403
Share based payments	-	-	-	433,434	-	433,434
Share based payment transfer for exercises	-	-	-	(63,242)	63,242	-
Exercise of share options	42,443	65,075	-	-	-	107,518
Issue of shares	2,444,444	8,5555,556	-	-	-	11,000,000
Expense of share issue		(617,724)				(617,724)
Transactions with owners	2,486,887	8,002,907	-	370,912	63,242	10,923,228
Loss for the year	-	-	-	-	(4,812,791)	(4,812,791)
Total comprehensive income
for the year	-	-	-	-	(4,812,791)	(4,812,791)
Balance at 31 December 2015	12,886,350	30,101,510	1,236,225	1,896,842	(30,211,087)	15,909,840

 

Notes to the financial statements

1 General information

Bango PLC ("the Company") was incorporated on 8 March 2005 in the United Kingdom. Bango is domiciled in the United Kingdom. Bango's shares are listed on the Alternative Investment Market of the London Stock Exchange ("AIM").

The preliminary statements are for the year ended 31 December 2015 (including the comparatives for the year ended 31 December 2014).

2 Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention and under the basis of going concern.

Bango has prepared its Report and accounts for the year ended 31 December 2015, in accordance with International Financial Reporting Standards ("IFRS") as adopted in the European Union and as applied in accordance with the provisions of the Companies Act 2006. IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

These preliminary statements are presented in pounds sterling (GBP) because that is the presentation currency of Bango.

The Board of Bango PLC approved the release of this preliminary announcement on 14 March 2016.

The preliminary financial information does not constitute statutory financial statements for the year ended 31 December 2015 within the meaning of section 435 of the Companies Act 2006, but is extracted from those financial statements. Statutory accounts for Bango PLC for the year ended 31 December 2014 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 31 December 2015 will be delivered to the Registrar of Companies following Bango's Annual General Meeting.

The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.

3 Segment reporting

(a) End User Spend

As a non IFRS alternative performance measure, Bango has identified EUS as its key performance indicator on which all management decisions surrounding investment in the platform and development of intangible assets are based. Due to the complex contracts in place the turnover figure in the Report and accounts is a mixture of gross transaction value where Bango is principal and margin only where Bango is agent. This is to comply with relevant accounting rules, however, the key business decisions are based on the total value and volume of transactions that Bango has processed in each month through its payment platform. Therefore, to give additional information to key Bango stakeholders and to assist users of the Bango financial statements, we include this additional reporting.

	31 Dec 2015	31 Dec 2014
	£	£
End User Spend	44,684,300	25,167,767
Analyzed as agency	42,538,240	21,127,767
Analyzed as principal	2,146,060	4,040,494
Analyzed as agency	95%	84%
Analyzed as principal	5%	16%

(b) Turnover and gross profit

Bango, based on the information reviewed by the chief operating decision maker, identifies two operating segments. Management reporting is based principally on the type of customer and strategic decisions are made on the basis of the gross profit generated from each segment. The segments are not separately managed and therefore the Group's headquarters and its Research and Development activity, are considered Group operations and are not allocated to any operating segment. Segment information can be analyzed as follows for the reporting periods under review. 

12 months to 31 December 2015

	End user	Platform	Group	Total
	activity	fees
	£	£	£	£
Segment turnover	2,741,385	458,181	-	3,199,566
Attributable to digital merchants	(1,024,793)	-	-	(1,024,793)
Cost of sales - payment providers	(907,697)		-	(907,697)
Segment gross profit	808,895	458,181	-	1,267,076
Administrative expenses	-	-	(4,411,328)	(4,411,328)
Share based payments charge	-	-	(433,434)	(433,434)
Depreciation	-	-	(484,871)	(484,871)
Amortization	-	-	(969,397)	(969,397)
Interest payable	-	-	(20,865)	(20,865)
Interest income	-	-	24,327	24,327
Segment net profit/ (loss)	808,895	458,181	(6,295,184)	(5,028,108)
Segment assets	500,789	192,524	16,750,791	17,444,104
Segment liabilities	(379,890)	(7,235)	(1,147,139)	(1,534,264)
Net assets	120,899	185,289	15,603,652	15,909,840

12 months to 31 December 2014

	End user	Platform	Group	Total
	activity	fees
	£	£	£	£
Segment turnover	4,358,107	735,845	-	5,093,952
Attributable to digital merchants	(2,703,363)	-	-	(2,703,363)
Cost of sales - payment providers	(1,051,928)	-	-	(1,051,928)
Segment gross profit	602,816	735,845	-	1,338,661
Administrative expenses	-	-	(5,017,665)	(5,017,665)
Share based payments charge	-	-	(395,110)	(395,110)
Depreciation	-	-	(542,882)	(542,882)
Amortization	-	-	(801,484)	(801,484)
Interest payable	-	-	(24,116)	(24,116)
Interest income	-	-	26,610	26,610
Segment net profit/ (loss)	602,816	735,845	(6,754,647)	(5,415,986)
Segment assets	598,344	156,756	11,112,737	11,867,837
Segment liabilities	(1,166,615)	-	(901,819)	(2,068,434)
Net (liabilities)/ assets	(568,271)	156,756	10,210,918	9,799,403

Included within the end user segment turnover is £2.15m (31 December 2014: £3.94m) relating to a major strategic partner, and included within platform fees there was £0.22m (31 December 2014: £0.34m) relating to one strategic partner. 

End user activity is the content access fees paid by end users for accessing chargeable content provided by digital merchants, adjusted to take account of whether Bango is agent or principal in the transactions. Gross profit for this segment is after both digital merchant and payment provider charges. Assets for this segment are amounts due from payment providers. Liabilities for this segment are mainly fees payable to payment providers for provision of services and fees payable to digital merchants for provision of content sold by Bango to end users.

Platform fees are the amounts paid to Bango by digital merchants and others for package fees and other services including analytics and operator connections. Assets for this segment are amounts due for package fees and other services. Liabilities for this segment represent deferred income for package fees. Group assets include non-current assets and cash and cash equivalents. Group liabilities relate to administrative expenses.

(c) Geographical analysis

Bango's turnover from external customers is divided into the following geographical areas.

	31 Dec 2015	31 Dec 2014
	£	£
United Kingdom (country of domicile)	129,265	501,050
EU	171,631	335,025
USA and Canada	983,089	1,873,752
Indonesia	978,529	1,258,342
Rest of World	937,052	1,125,783
	3,199,566	5,093,952

Segment turnover is based on the location of the customers. Of which in platform fees £0.22m (FY2014: £0.34m) came from a strategic partner based in the USA and Canada. All turnover from end users is spread over many territories.

All of the other notes to the accounts are included in the "Annual Report 2015" which is available to download from bango.com

 

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