TIDMBOKU
RNS Number : 3121G
Boku Inc
29 March 2022
29 March 2022
Boku Inc.
("Boku", the "Company" or the "Group")
Results for the year ended 31 December 2021
Boku (AIM: BOKU), a leading provider of mobile payment
solutions, is pleased to announce its audited results for the year
ended 31 December 2021.
Group Financial Highlights
-- Group revenues increased by 23% to $69.2 million (2020: $56.4 million**)
-- Group Adjusted EBITDA* up 31% to $20.0 million (2020: $15.3 million)
-- Net Profit before tax of $4.4 million (2020: $17.3 million loss)
-- Closing cash balances were $62.4 million at 31 December 2021 (including
restricted cash balances of $5.8 million) up from $48.6 million
on 30 June 2021
-- Monthly average cash balances, which smooth the impact of intra-month
flows of both carrier and merchant payments, were $50.8 million
in December 2021 up from $38.0 million in June 2021
-- Cash generated from Operations before working capital changes during
the year was $19.5 million (2020: $11.5 million)
Payments division highlight
-- Payments division revenues up 21% to $62.1 million (2020: $51.2
million**)
-- Payments division Adjusted EBITDA* of $22.9 million (2020: $19.2
million)
-- Monthly Active Users grew by 3.5 million to 32.3 million in December
2021 (December 2020: 28.8 million)
-- Total Payment Volume*** ("TPV") up 18% to $8.2 billion in 2021
compared to $6.9 billion in 2020
-- Continued progress in building out Boku's mobile first payments
network 'M1ST' which now reaches over seven billion end user accounts.
Four billion of those are Direct Carrier Billing connections, three
billion are from other payment methods like eWallets and Real Time
Payments.
Identity division highlight
-- Identity business sold to Twilio after year end for up to $32.3
million on 28 February 2022. Cash receipts of $26.2 million received
with balance due in 2023, contingent on the delivery of certain
performance terms. Group term loan paid down in full from proceeds
-- Identity revenues up 37% to $7.1 million and reduced EBITDA loss
of $2.9 million (2020: $3.9 million EBITDA loss).
*Adjusted EBITDA: Earnings before interest, tax, depreciation
and amortisation, impairment of goodwill , non-recurring other
income, stock option expenses, Forex gains/losses and Exceptional
items
** 2020 comparatives include six months of revenues and costs
from Fortumo acquired 1 July 2020
*** TPV is the $ value of transactions processed by the Boku and
Fortumo platforms
Jon Prideaux, Chief Executive of Boku Inc, commented, "We are
pleased with our performance in 2021. Going forward, 2022 will see
the emergence of Boku as a pureplay payments company, with the
leading position in Direct Carrier Billing and rapid growth in
other local payment methods, such as eWallets and Real Time
Payments. We will invest further in building out our network and
systems. This year we will broaden our M1ST network, grow existing
merchants, recruit more new merchants who do not use us for DCB and
expand into new territories. Non DCB payments will, for the first
time, be a material part of our growth.
"Trading so far this year has started well, with growth in
eWallets and Real Time Payments to the fore. MAUs on these methods
exceeded 1.4m in February - ten times the figure a year before. Our
cash balances are strong and I look forward to the remainder of
2022 and beyond with considerable confidence."
Investor Presentation
The Company will provide a live investor presentation relating
to the results via Zoom at 5.30 pm today. The presentation is open
to all existing and potential shareholders. Those wishing to attend
should register via the following link:
https://us02web.zoom.us/webinar/register/WN_na06mT37Rfi4-Z0fEJQVnQ
There will be the opportunity for participants to ask questions
at the end of the presentation. Questions can also be emailed to
boku@investor-focus.co.uk ahead of the presentation.
Enquiries:
Boku, Inc.
Jon Prideaux, Chief Executive Officer +44 (0)20 3934
Keith Butcher, Chief Financial Officer 6630
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0)20 7418
Edward Knight / Paul Gillam/ James Smith 8900
IFC Advisory Limited (Financial PR & IR)
Tim Metcalfe / Graham Herring / Florence +44 (0)20 3934
Chandler 6630
Notes to Editors
Boku Inc. (AIM: BOKU) is a leading global provider of mobile
payment solutions. Its Mobile First Payments Network 'M1ST'
features 340+ mobile payment methods, including mobile wallets,
direct carrier billing, and real-time payments schemes, reaching
over 7 billion mobile payment accounts in 91 countries - all
through a single integration.
Customers that trust Boku to simplify sign-up, acquire new
paying users and prevent fraud include global leaders such as
Amazon, Apple, Facebook, Google, Microsoft, Netflix, PayPal, Sony,
Spotify and Tencent.
Boku Inc. was incorporated in 2008 and is headquartered in
London, UK, with offices in the US, India, Brazil, China, Estonia,
France, Germany, Indonesia, Japan, Singapore, Spain, Taiwan and
Vietnam.
To learn more about Boku Inc., please visit:
https://www.boku.com .
CEO Statement
The second year of the pandemic
Despite being in the second year of the pandemic, it was another
year of significant progress for Boku as we navigated choppy waters
to continue our record of growth, in spite of continuing
distortions to normal life and trading patterns.
Our Group revenues grew by 23% to exceed $69 million.
Profitability, measured through the Adjusted EBITDA measure,
increased by 31% to $20 million. We battled some currency headwinds
in the year - the Japanese Yen and Korean Won were both down by
more than 10% against the US Dollar - had exchange rates stayed
constant our results would have been better yet.
Boku Payments
The Payments division performed well in 2021. In December 2021,
32.3 million users made one or more transactions on our platform,
up from 28.8 million a year earlier. Taking the year as a whole, on
average, every day more than 2 million users were making purchases
on Boku's platform.
The spending of these users translated into revenues up 21% to
$62.1 million as we saw total processed value ('TPV') increase 18%
to over $8.2 billion (2020: $6.9 billion) and Payments EBITDA grow
to $22.9 million (37% EBITDA margin) in 2021.
Merchant Focus
It's quite deliberate that I started the review of Boku's
Payments division by reference to the number of new users that we'd
helped our merchants to acquire. Any chief executive will tell you
that the key to their success comes from focusing on their
customers' needs. It's become a platitude. Key to Boku's success is
a focus not just on the nuts and bolts of payments - although that
is important - it is that we try to look through the 'what' to the
'why'. Why would a merchant want to give their users more ways to
pay?
When you boil it down, there is one overriding reason why
merchants are driven to support a new payment method. It's not
because it's more secure, or even because it's cheaper than the
alternative - price can be negotiated. The real reason why a new
method gets established is due to its ability to help the merchant
sell more.
How can a new payment method help a merchant make more
sales?
-- It can unlock access to new users who simply can't pay with traditional
payment methods like credit and debit cards (particularly relevant
given the dominant payment method in much of Asia is now eWallets
and not cards).
-- It has a better user experience, enabling greater conversion on
microtransactions (whereas higher friction methods will lead to
higher rates of abandonment).
-- It increases purchase values by offering credit, or buy now, pay
later functionality.
-- It increases purchase frequency due to a loyalty scheme.
In all of these cases, it is the prospect of extra sales that
impels the merchant to make the effort of deploying a new payment
method.
In the case of Boku, we enable our merchants to sell more by
helping them to more easily and cost effectively acquire new users.
Our Direct Carrier Billing ('DCB') service acquires new users
through reach - more people have phones than bank accounts, and
also through simplicity - it's easier to make a purchase with a
single tap, than having to laboriously type in your card
details.
Our local payment method business provides the same benefits. It
allows users to pay with their preferred method. Many of the
emergent middle classes of Asia, the Middle East, Africa and Latin
America don't have payment cards (even though, in the main, they do
have bank accounts). Having previously made their purchases in
cash, as they acquired mobile devices, they use mobile native
payment methods, like eWallets, to buy things online. If you want
to sell to these people, you have to support the payment methods
that they actually use.
It is for this reason that the New User metric that stands front
and centre for Boku. As far as I know, we are the only payment
company that focuses on this metric. Others brag about the value
that they process or the number of transactions that flow through
their systems. Our focus is on the things that matter to our
customers.
Subscriptions driving change in Payments
What do the following have in common? Toothbrushes, music,
toilet roll, snacks, cosmetics, random vegetables and video? You
can buy them on subscription services. One-off purchases are being
superseded by subscriptions because of the benefits to both buyers
and sellers. Buyers get the latest products conveniently; sellers
get predictable revenue streams. To meet this changing pattern of
commerce, payment methods also have to adapt: new features need to
help in customer acquisition, simplify repeat purchases, and boost
customer retention.
This is one of the things that differentiates Boku. Our products
are optimised for the age of subscriptions. Our bundling products
support co-marketing between brands, our customer onboarding
technology allows consumers to sign up with a single tap, and our
messaging capabilities can prompt users whose renewals have
failed.
Direct Carrier Billing
Boku has established itself as the leading Direct Carrier
Billing company in the world. Our solutions are proven with world's
largest digital companies: Amazon, Apple, Google, Sony, Microsoft,
Meta Platforms (Facebook), Netflix, Spotify, Tencent, Activision,
Epic Games and DAZN all use our carrier billing or bundling
services, many on an exclusive basis. Growth in the DCB business
can be driven by the expansion of Boku's network of mobile network
operators and, more importantly by the expansion of the merchants'
usage of that network. With the average merchant connected to 10%
of the carriers in the network, there is 90% still to go for.
Plenty of room to grow.
Larger Market with Local Payment Methods
The Company will carry on benefiting from growth in DCB, but the
Total Addressable Market ('TAM') from deploying local payment
methods such as eWallets and Real Time Payments could be fifty
times larger. Direct Carrier Billing helps grow digital
entertainment, but is ill-suited to other types of merchants, such
as consumer durables, transportation or foodstuffs. It's also a
supplementary method, with an effective ceiling: In practice no
more than around 15% of even a digital merchant's sales will be
charged to the phone bill. The larger TAM comes from supporting the
payment methods that consumers and businesses use for all of their
daily purchases. In the West, that daily payment method is
generally a credit or debit card, but in most of the rest of the
world, consumers instead rely on eWallets and Real-Time Payments to
buy things online.
Launch of M1ST
2021 was the year in which Boku's efforts to expand beyond DCB
into these mainstream methods of payments - eWallets and Real-Time
Payments -- started to bear fruit. We launched M1ST, our
mobile-first payment network, and recently expanded its reach to
over seven billion accounts in more than 90 countries. Four billion
are connections to mobile phone accounts, and, impressively, three
billion are for other mainstream local payment methods. These
mainstream payment methods are regulated: we have also put
significant effort into expanding our ability to process regulated
payments, ending the year with a network spanning 50 countries.
Boku is now regulated as a payment provider in Hong Kong, allowing
us to process in China; in Singapore, where we have a Major Payment
Institution Licence; we have a specific authorisation from the
Reserve Bank of India allowing us to provide services to foreign
merchants and a network of other authorisations and partners allows
us to undertake regulated payments in 50 countries. These are
capabilities which will help fuel our growth in future years.
By the end of the year, the number of monthly active users on
these mainstream methods was more than 1.1 million. In absolute
terms, this is a significant milestone, but when set against the
group's total of more than 32 million, it was still relatively
small. Looking only at new users, non-DCB was more significant with
2.7 million new users making their first-ever transaction with Boku
at some stage during the year, compared to the annual new user
total of 28 million (9.6%). Non-DCB users (eWallets and Real Time
Payments) grew nine-fold during the year and it is this rate of
growth that is encouraging.
We have been able to win significant new deals against much
larger companies. Boku has been selected to provide local payment
services to the world's leading digital advertising platforms,
console games providers, video and music streaming services, as
well as several gaming companies. We're winning those deals because
we typically have wider coverage of relevant payment methods and a
wider list of features that matter to our merchants, including
support for subscriptions.
Sale of Boku Identity
Boku acquired Danal Inc., a US-based provider, in 2019 for total
consideration of $25.1 million and renamed it Boku Identity. As
mobile commerce grew, there was increasing demand for a service
that could easily identify phone numbers and phone owners. With our
network of mobile operators, we felt we were well placed to build a
global business.
The division posted improved results in 2021 as the strategy of
building a global network started to pay off. Revenues were up 31%
to exceed $7 million and losses fell to below $3 million. However
this success also posed a dilemma: further growth would require
further investment, at precisely the moment when our Local Payment
Methods were gaining traction and required investment.
Ultimately we resolved the dilemma by selling Boku identity to
Twilio for a transaction value of $32.3 million in February 2022. I
want to place on record my thanks for the work of the Boku Identity
team and management. Twilio will be a good owner of the business,
one that can provide it with the investment and support that it
needs to grow faster. At the same time, it allows Boku to
concentrate on its Payments offering.
Board Changes
At this year's Annual General Meeting, our Chairman, Mark
Britto, who founded the Company and served as its first CEO, has
decided to relinquish the Chair, though he will remain on the Board
as a Non-Executive Director. I want to place on the record my
thanks for his wise counsel and leadership. Under his stewardship,
the Company has grown considerably, and I am very grateful to have
continued access to his experience and input.
I am also indeed fortunate that the Company has a worthy
successor in Richard Hargreaves. Richard has served on the Board
since 2016 and knows the Company well, having also served on the
Audit Committee and as Chairman of the Remuneration Committee. I am
delighted to welcome him to his new position.
Ukraine situation
Russia's attack on Ukraine is a tragedy for the people of that
country. Although we have no employees or operations in Ukraine, we
have a number of Ukrainian employees. Their families are uppermost
in my thoughts. Boku has made a donation to support relief efforts;
employees have also responded generously. Boku will further match
their donations.
Commercially, we have no Russian merchants, nor assets in
Russia. Nor do we have Belarussian or Ukrainian ones. We do have
connections to Russian carriers - as we have connections in 90
other countries - and, before the war, used them to process
transactions for 24 merchants. Almost all of them have stopped
processing. Revenues from Russia, Belarus and Ukraine are not
material. Given the fluid situation, the precise impact is
difficult to estimate with certainty, but the worst case is
approximately 2% of revenues in 2022.
Summary and Outlook
We are pleased with our performance in 2021. Going forward, 2022
will see the emergence of Boku as a pureplay payments company, with
the leading position in Direct Carrier Billing and rapid growth in
other local payment methods, such as eWallets and Real Time
Payments. We will invest further in building out our network and
systems. This year we will broaden our M1ST network, grow existing
merchants, recruit more new merchants who do not use us for DCB and
expand into new territories. Non DCB payments will, for the first
time, be a material part of our growth.
Trading so far this year has started well, with growth in
eWallets and Real Time Payments to the fore. MAUs on these methods
exceeded 1.4m in February - ten times the figure a year before. Our
cash balances are strong and I look forward to the remainder of
2022 and beyond with considerable confidence.
Jon Prideaux
Chief Executive Officer
28 March 2022
Chief Financial Officer's Report
Strong Revenue and Adjusted EBITDA growth
Group results
2021 was another year of significant progress and achievement
for Boku, despite continued challenging circumstances given the
coronavirus pandemic and significant currency headwinds affecting
the Payments division. Good revenue growth in both Payments and
Identity saw Group revenues increase 23% to $69.2 million which in
turn drove an increase of 31% in group Adjusted EBITDA* to $20.0
million (2020: $15.3 million***) and a net Profit before tax of
$4.4 million (2020: $17.3 million loss).
After the year end an agreement was reached with Twilio, Inc.
("Twilio"), the leading cloud communications platform, to acquire
Boku's Identity division comprising its wholly-owned subsidiary
Boku Identity, Inc., as announced on 19 January 2022, for a maximum
consideration of $32.3 million payable in cash and the transaction
was closed on 28 February 2022. This enables Boku to focus on its
core Payments business and building out the M1ST payments
network.
Group Revenue and Gross Margins
Group revenues for the year increased by 23% to $69.2 million
(2020: $56.4 million) as the Company saw good growth in both its
Payments and Identity businesses, while blended gross margins for
the group increased slightly to 91.7% (2020: 91.3%)
Group Operating Expenditure
Adjusted Operating Expenditure (Operating Expenditure adjusted
for depreciation, amortisation, foreign exchange, stock option
expense, exceptional items, goodwill impairment and restructuring
costs) increased to $43.3 million (2020: $36.2 million), partly
driven by the full year effect of the Group's acquisition of
Fortumo in July 2020 but also due to investment into building out
Boku's mobile first Payments network ('M1ST') adding capabilities
in eWallets and Real Time Payments in the second half as flagged
previously.
The Payments division's adjusted operating expenditure increased
to $37.6 million (2020: $27.6 million) due to a number of factors
including the full year effect of the acquisition of Estonian based
Fortumo in July 2020, payroll increases, and some costs incurred in
completing the migration of Boku's Payments platform into a cloud
based environment (AWS). Identity adjusted operating expenditure
remained stable at $5.8 million (2020: $5.8 million).
Both divisions benefited from continued material savings in
travel and entertainment due to the impact of COVID-19 which
reduced operating expenditure and increased Adjusted EBITDA, but it
is expected that this expenditure will return to previous levels as
it becomes possible to travel freely again.
Payments division
Boku Payments and Fortumo Payments (acquired 1 July 2020)
together form the Payments division and in 2021 the businesses were
combined for both reporting and operational purposes.
Boku's Payments business was founded on Direct Carrier Billing
("DCB") which enables end user customers of Boku's merchants to
charge payments to their phone bills, but its product suite has now
expanded to offer connections to eWallets and Real Time Payments
('RTP') through its mobile first 'M1ST' payments platform. These
services are provided to the world's largest digital merchants
including Apple, Netflix, Facebook, Google, Amazon, Spotify and
Sony, mainly on an exclusive basis.
In 2021 the Payments division again performed strongly, with
revenues increasing 21% to $62.1 million (2020: $51.2 million**)
which in turn delivered increased Adjusted EBITDA* of $22.9 million
(2020: $19.2 million) demonstrating the powerful operational
leverage of our payments platform as additional incremental
transaction revenues largely drop through to Adjusted EBITDA. This
growth was despite considerable exchange rate headwinds without
which revenues and EBITDA would have been higher. We also saw
typical seasonal patterns distorted by covid lockdowns particularly
in Q1 as gaming merchants saw increased sales which were later
offset by slower second half performance. We expect more normal
seasonal patterns to resume in 2022. Growth comes from both from
the existing merchant base and also from adding new carrier and
eWallet connections to new and existing merchants.
Total Payments Volume ("TPV") for the Payments division
increased by 18% to $8.2 billion (2020: $6.8 billion) while Monthly
Active Users grew by 3.5 million to 32.3 million (2020: 28.8
million).
The blended average take rate was broadly stable at 0.75% as we
saw good growth from higher take rate settlement merchants. Gross
margins for the Payments division remained stable at 97% in the
year
Adjusted operating expenditure for the Payments division
increased to $37.6 million (2020: $27.6 million) due to a number of
factors including the full year effect of the acquisition of
Estonian based Fortumo in July 2020, payroll increases, some costs
incurred in completing the migration of Boku's Payments platform
into a cloud based environment but also due to investment in the
second half, mainly in headcount, into building out Boku's mobile
first 'M1ST' payments network, adding capabilities in eWallets and
Real Time Payments as well as building out our sales and marketing
engine as we seek to sign new merchants outside of our traditional
DCB base. As flagged in our interim statement, this will increase
adjusted opex in 2022, however this is a one time investment to
exploit the opportunity in eWallets and RTP and we expect the drop
through of additional revenues to EBITDA to increase again in FY23
and beyond.
We continued to invest in the Boku Payments platform and in 2021
completed the migration of our payments platform into a cloud-based
infrastructure (AWS) from two physical colocation facilities in the
U.S. which were then decommissioned. Although the total running
costs are similar in the cloud, the 'pay as you go' nature of the
cloud services means that we are able to capitalise less of the
cost and so adjusted operating expense increased as a result. The
Boku Payments Platform has the capacity to process volumes
considerably in excess of today's peak message rates.
Fortumo earnout
Boku acquired Estonia based carrier billing payments company
Fortumo Holdings Inc ('Fortumo') on 1 July 2020, consolidating
Boku's leading position in the global DCB payments market. An
initial payment of $39.6 million was made in 2020 with a further
$5.4 million put into an escrow account, subject to Fortumo meeting
challenging earnout targets.
The final earnout payment, based on Fortumo Adjusted EBITDA**
performance for the 12 month earnout period ended 30 June 2021, was
$2.16 million, which was paid to Fortumo's former shareholders in
October 2021, with the balance of $3.24 million returned to Boku.
The excess amount repayable to Boku over the fair value on the
Balance Sheet at 31 December 2020 of $1.08 million has been shown
as 'Other Income' in the Income Statement. It has been excluded
from Adjusted EBITDA* as a non-trading, non-recurring item. The
total consideration for Fortumo was therefore $41.76 million which
included $4.0m of working capital resulting in an enterprise value
of $37.76 million for the acquisition.
Identity division
Boku's Identity division was formed in 2019 following the
acquisition of Danal Inc on 1 January 2019 for $25.1 million.
Identity revenues recovered strongly in 2021 growing 37% to $7.1
million (2020: $5.2 million) as we saw strong growth from key
existing customers complemented by a ramp up in transaction volumes
from new mobile wallet customers in new geographies such as
Indonesia. We continued to build out Identity supply with new
connections added in Germany, Spain, Italy and Indonesia.
Adjusted operating expenditure for Identity remained low in 2021
due to continued low travel and marketing spend as a result of the
COVID 19 pandemic. The strong revenue growth and low-cost base
resulted in a further reduced Adjusted EBITDA* loss of $2.9 million
(2020: $3.9 million Adjusted EBITDA loss).
Although at year end no decision had been taken to sell, an
agreement was reached, after year end, with Twilio Inc. ("Twilio"),
the leading cloud communications platform, to acquire Boku's
Identity division comprising its wholly-owned subsidiary Boku
Identity, Inc., for a maximum consideration of $32.3 million
payable in cash and the transaction was completed on 28 February
2022. This enables Boku to focus on its Payments business and in
building out the M1ST payments network.
Group Adjusted EBITDA* and Operating Profit
Group Adjusted EBITDA* increased by more than 30% to $20.0
million (2020: $15.3 million) illustrating the powerful operational
gearing in the payments business. Adjusted EBITDA is earnings
before interest, tax, depreciation and amortisation, adjusted for
stock option expenses, forex gains/losses and exceptional
items.
Reported Operating Profit for 2021 of $5.1 million was an
increase of $21.8 million (2020: $16.7 million loss, primarily due
to the goodwill impairment of the Identity division of $20.8
million).
The Operating Profit can be broken down as follows:
-- Other income of $1.08 million relates to the excess receipts from
the Fortumo earnout escrow over fair value
-- Gross margin increased to $63.4 million (2020: $51.5 million)
-- Depreciation and Amortisation charges increased to $7.5 million
(2020: $5.9 million) which included a full year of Fortumo charges
in 2021 (acquired 1 July 2020)
-- Foreign Exchange movements resulted in a small loss of $0.1 million
(2020: $1.0 million gain)
-- Stock Option Expenses increased to $7.4 million (2020: $4.9 million)
as we included awards to Fortumo staff following the acquisition
in 2020 and added headcount in the year. Boku has a policy of issuing
RSUs to all staff annually. RSU charges are spread over three years
from date of grant based on the Black Scholes method. Of the $7.4
million booked in 2021, $0.7 million was paid out cash (via employer's
NI), the remainder was non-cash and expensed.
-- Impairment of goodwill - there was no impairment in 2021 (2020
impairment of $20.8 million which related to the write down of
the carrying value of the Identity division).
-- Exceptional Items of $1.0 million mainly related to the 2021 costs
of the disposal of Boku Identity (2020: $1.4 million mainly costs
relating to the acquisition of Fortumo on 1 July 2020).
-- Net financing expenses were $0.7 million in 2021 (2020: $0.6 million).
These costs relate to Interest on leases and bank loans/overdraft.
-- Tax credit of $1.9m (2020: $1.5m charge) relates primarily to recognition
of an additional defered tax asset of $2.4 million in the year
(see Balance sheet section below and note 8) which was partly offset
by a tax charge of $0.5 million.
Net Profit after Tax
The Company reported a net profit before tax of $4.4 million
(2020: $17.3 million loss primarily due to the goodwill impairment
for Identity division of $20.8 million) and a net profit after tax
for the year of $6.3 million (2020: $18.8 million loss).
Balance Sheet and Cashflow
-- Closing cash balances were $62.4 million at the end of 2021 (including
restricted cash balances of $5.8 million) (December 2020: $62.7
million) up from $48.6 million on 30 June 2021 (unaudited).
-- Monthly average cash balances, which smooth the impact of intra-month
flows of both carrier and merchant payments, were $50.8 million
in December 2021 (December 2020: $46.7 million) up from $38.0 million
in June 2021 (unaudited).
-- Cash generated from Operations before working capital changes during
the year was $19.5 million (2020: $11.5 million).
-- To part finance the acquisition of Fortumo in July 2020, the Group
took on $20 million of debt with Citibank, comprising a 3 year
term loan of $10.0 million and a Revolving Credit Facility ("RCF")
of GBP10.0 million. At year end the RCF had been paid down in full
and the term loan had been paid down by $1.9 million to $8.1 million.
After year end the balance of the term loan was repaid in full
in February 2022 from the sale proceeds of Boku Identity.
-- Deferred tax assets of $3.1 million were recognised at 31(st) December
2021 (compared to $0.5 million at 31 December 2020). This reflects
a re-appraisal of the usability of certain tax losses and future
transaction volumes through its US and UK incorporated entities.
-- From a working capital perspective, Current Assets exceeded Current
Liabilities at 31 December 2021 by $22.8 million compared with
$15.6 million at the 2020 year end.
-- Intangible Assets were $63.1 million as at 31 December 2021, compared
to $65.6 million at 31 December 2020 due to amortization of certain
intangibles. Following the disposal of Boku's Identity business
which was completed on 28 February 2022 and as noted in PBSE (note
26) we have assessed the Identity CGU intangibles and determined
that as the fair value less cost of disposal is greater than the
value of the intangibles in the group's balance sheet and therefore
these intangibles are not impaired. The Payments CGU was assessed
using discount cashflows and again no impairment was needed.
-- We assessed our other intangibles and goodwill for impairment and
deemed that no impairment exists at 31 December 2021.
Going concern (including consideration of COVID-19)
In carrying out the going concern assessment, the Directors
considered a number of scenarios, taking account of the possible
continued impact of the COVID-19 pandemic in relation to revenue
forecasts for the next 12 months from March 2022. Given current
pandemic and macro-economic uncertainties, it is not yet fully
clear when the global economic activity will fully return to pre
pandemic levels, therefore, we continue to prepare the business for
varying levels of performance. To that end, we have continued to
model the effects of differing levels of sales performance along
with the measures we can take to ensure that the Group remains
within its available working capital.
In reaching their going concern assessment, the Directors have
considered the foreseeable future, a period extending at least 12
months from the date of approval of this interim financial report.
This assessment has included the year end cash balances in excess
of $62 million at year end and the net proceeds from the disposal
of Boku Identity in February 2022, consideration of the forecast
performance of the business and the financing facilities available
to the Group. Considering this analysis, the Directors are
satisfied that the Group has sufficient working capital resources
over the period of at least 12 months from the date of approval of
the consolidated financial statements. As such, the consolidated
financial statements have been prepared on a going concern
basis.
Impact of Russia/Ukraine conflict
Boku is an international company providing payments services to
global digital merchants such as Apple, Sony, Spotify, Google,
Netflix and Amazon in over 90 countries.In 2021, total revenues
from Russia/Ukraine/ Belarus were approximately 1% of Payments
revenues.
Boku helps its merchants accept payments from consumers for
their services in Russia and Ukraine, however:
-- Boku does not have any relationships with merchants domiciled in
Russia, Belarus or the Ukraine.
-- Boku does not send any money to Russia nor has any active bank
accounts domiciled in Russia
-- Boku does not have any employees or infrastructure in in Russia,
Belarus or the Ukraine and has not seen any disruptions to its
operations as a result of the conflict
-- Boku does have connections to Russian carriers almost all of which
have stopped processing and are unlikely to resume in 2022. Assuming
that is the case the revenue impact for the remainder of 2022 is
not expected to be more than $1.5 million.
Looking Ahead
The divestment of our Identity business will enable Boku to
focus on its core Payments business and to invest to fully exploit
the Big Pond opportunity by continuing to build out the Boku
'mobile first' (M1ST) payments network. As flagged in our interim
report, we expect Adjusted operational expenditure in the Payments
division to increase more quickly in 2022 as we invest in sales and
marketing as well as technology and operational headcount but we
also expect this to flatten again in FY23 and beyond after this
one-time investment.
We are pleased with the 2021 financial results and believe the
company is well positioned for 2022 as a pure play payments company
to exploit the substantial opportunities it has.
Keith Butcher
Chief Financial Officer
28 March 2022
Strategic Report - In the Beginning...
Steve Jobs famously understood the value of making complex
things simple. He is quoted as saying: "That's been one of my
mantras-focus and simplicity. Simple can be harder than complex:
You have to work hard to get your thinking clean to make it simple.
But it's worth it in the end because once you get there, you can
move mountains."
He charged his designers to study Picasso's picture of The Bull
to see how the complex can be stripped down to its essentials. For
him, everything had to be reduced to its essence. We can see that
influence in the design of Apple's consumer products. It is also a
philosophy - focus and simplicity - that informs Boku's
approach.
Simplicity
In 2017 when Boku listed its shares on AIM, we referred to
ourselves as a direct carrier billing ('DCB') company, expanding
more broadly into carrier commerce. We understood that the value in
our company was not so much in the code on our platform, but rather
in the network that we assembled.
Harnessing the collective capabilities of the world's mobile
network operators is hard. Each uses its own non-standardised
technology and connecting for a merchant one-by-one would be
complex, time-consuming and, for all practical purposes,
commercially unsustainable. Imposing a single standard across this
global network of non-standardised carrier billing payments
connections was simply too complex and never going to happen. Our
mission therefore was to simplify; to provide a solution in which
merchants would integrate once and gain access to many mobile
operators.
We developed and refined our ability to engage with mobile
network operators and make them seem like regular payment methods
to our large merchants. We simplified.
But, more than that, we took things down to their essence. We
became successful because we focused on the merchant's
requirements. We didn't simply take the capabilities that the
mobile network operators offered. Instead, we worked closely with
our merchants, developing the standards they required from payment
methods. We worked tirelessly with our mobile operator partners to
ensure that they met the needs of merchants, not the other way
around.
Simplifying is not simple.
The flywheel, the scale player
The 'light bulb' moment was the realisation that the unique
benefit of DCB was not primarily about moving money, rather it was
the ability to acquire new users with a single tap on a mobile
phone - which then charged purchases to the phone bill. Since
mobile operator partners already knew the phone numbers of billions
of their subscribers, we could uniquely streamline customer
onboarding. To merchants, the value of DCB is as a highly effective
customer acquisition tool.
Once Boku had proven the unique value and capabilities of
carrier billing, a flywheel started to spin. Our payments network
grew as operators wanted to accept payments on behalf of our
merchants, and our growing payments network began to attract more
and larger global merchants.
And so the flywheel turned.
The more it turned, the network effects we had created made it
more difficult for others to compete with Boku, and within a few
years, we had become the scale player in carrier billing as most of
the world's largest digital merchants used Boku for DCB, largely on
an exclusive basis. In platform businesses, the scale player has
considerable advantages. With the incremental cost of processing a
transaction essentially zero, the platform with the largest
transaction volumes can simultaneously be the lowest-cost player,
whilst carrying the expense base that allows them to develop
features that their competitors are not able to replicate.
Boku has established itself as the world's leading DCB company.
We process, mostly on an exclusive basis, mobile payments for all
of the world's largest digital entertainment companies: Amazon,
Apple, Epic Games, Meta Platforms (Facebook), Microsoft, Google,
Sony, Spotify, Netflix, Tencent, Activision Blizzard.
However, we haven't stopped there.
"Growth is the only evidence of life" - Cardinal Newman
We had a good runway of growth in front of us. Due to the
complexity of deploying sophisticated carrier billing connections,
it had not proved possible to immediately switch on all networks
for all merchants. Rather, this must be scheduled with both the
carrier and merchant. A steady roll out has delivered double digit
revenue growth rates and much faster EBITDA growth for the past
five years and, with the average merchant using only 10% of the
network, there is plenty of growth still to come.
But on the horizon, there was a cloud no bigger than a man's
hand. It's an unavoidable reality that direct carrier billing is a
niche payment instrument.
An unparalleled user acquisition tool DCB may be, but the
majority of people who buy digital entertainment products and
services are not going to charge it to their phone bill. Saturation
for carrier billing as a payment method comes, it seems, at about
15%: the other 85% is paid for by other means.
Moreover while, DCB works well in the digital entertainment
industry, it is ill suited to other sectors. Consumers don't really
want to charge types of product or service to their phone bill.
Digital entertainment is a big and growing market, but it only
accounts for about 5% of online spending. Our Total Addressable
Market was limited.
If we wanted to grow faster, we needed to find new markets. It
was not enough for us to be the big fish in a small pond. We wanted
to swim in the Big Pond.
Which pond?
We contemplated two approaches. We could either utilise our
carrier network and find new uses for our carrier connections, or
we could find new payment products to grab a larger share of our
existing merchants' sales.
So double down on our suppliers or our customers? That was the
choice. In fact, as we drew up our plans, we realised that we
didn't have to choose; we could do both.
Carrier Commerce
Boku Identity resulted from a desire to address a large and
growing market - the verification of mobile transactions, using
mobile network operator capabilities. Very often when undertaking a
mobile transaction, the provider will want to know the phone number
of the device with which they are interacting or its registered
owner. Who better to ask than mobile network operators
themselves?
In 2019, Boku bought Danal for $25.1 million to kick start our
entry into this industry, renaming it 'Boku Identity'. Despite
setbacks in 2020 when we suffered an interruption to our carrier
connectivity in the critical US market, we stuck to our guns, built
out new connections in Europe and Asia, and added new customers.
The business bounced back in 2021, posting revenue growth of 37%.
We had found a formula, but to develop things further needed
significantly more investment.
New Payment Methods for our Merchants
The second strand of our growth plan was to integrate new
payment methods into our network, selling them to our existing
merchants. One route for growth was from expansion in the direct
carrier billing segment. In 2020, we acquired Fortumo, cementing
our position as the DCB market leader. But there's only so much
consolidation that can be done in DCB.
Boku's core competence has been in simplifying the complex. In
taking the disparate set of different mobile network operator
platforms and integrating them in such a way that a merchant can
connect to us once and get access to the whole suite of them,
without having to worry about the underlying differences.
In the world of payment cards, standardisation has been around
for years, driven by the card schemes. There is in fact an
international standard - ISO 8583 -- which defines how card
payments are processed. Switching costs are low, leading to the
emergence of super high-volume commoditised processors, competing
on price. We ran a mile from this part of the payment processing
business. Therefore, in order to grow faster, we sought out other
payment types that were similarly unstandardised, yet which were
popular - and in eWallets we found them.
Payments are in a period of significant change. Whilst in the
West, credit and debit cards have long been the dominant means of
payment, in the newly developed markets of Asia, the Middle East,
Africa and Latin America, the card habit tended to be confined to
old money. In those places, spending with cards was not the reflex
for most merchants or consumers. For sure, as they got richer,
people got bank accounts, but when it came to buying online,
entrepreneurial companies sprang up to provide them with modern
tools based around the mobile phone.
This mobile device knows where you are, can see, can
authenticate you, and provide simple ways of displaying and
analysing your spending. It was a no-brainer. Freed from the
constraints of a rectangular piece of plastic, eWallets provide
better ways of paying and have become enormously popular,
particularly in Asia, to the extent that most of the world's
eCommerce now takes place using them (albeit with a significant
skew to China).
Boku started integrating eWallets in Indonesia and started to
sell them to our customers. We found that the uptake was good,
which encouraged us to invest further. Merchants who had previously
just used us as a specialist Direct Carrier Billing company were
prepared to see us as a Local Payment Method company ('LPM').
Boku has continued to invest in growing its network, now styled
as our Mobile-First Payment Network, or 'M1ST', to such an extent,
that it now reaches seven billion end-user accounts in 91
countries. Approximately 3 billion of these end-user accounts are
from the new payment methods. eWallets and Real-Time Payments are
no longer a minor part of Boku's business -- more than 1.1 million
monthly active users paid with eWallets or Real-Time Payments in
December 2021 - a figure that grew nine-fold during the year. The
Big Pond is a lot bigger: According to eMarketer, global eCommerce
in 2021 totaled $4.89 trillion. This compares with estimates of the
digital entertainment industry, for which DCB is best suited, of
approximately $300 billion.
Boku's competitive strengths
Given its size, it's not surprising that the Big Pond is full of
big fish. Generalist payment processors like Worldpay and Adyen
along with specialist players like dLocal and Rapyd. Companies with
valuations many times Boku's. Companies with larger headcounts. So
how does Boku compete?
It's the same formula. Build a good product, focus on the
customer, help them to improve their business and you can grow.
It's not the big that beat the small, it's the fast that beat the
slow.
Boku focuses on building out wider coverage and stronger product
features to compete, and this takes investment. We also
continuously improve our platform: with an immediate focus on
settlement capabilities, resellers, and improving the onboarding
experience. We need to expand and support our network of licences -
Boku has already extended its capabilities to process regulated
payments into 50 countries, with licences in the UK, Ireland
(passported across the EEA), Singapore, Hong Kong, and with
applications and partnerships in several other countries.
Sale of Identity and focus on Payments
During 2021 it became clear that both of our new business lines
needed investment. We had a winning formula in Identity, but we
needed more coverage to help us grow. We had a winning formula in
Payments, but that part of the business too needed investment.
Back in 2019 we didn't have to choose. Now we do.
We chose to focus all our efforts on the Payments business,
where we have a proven track record and are aiming at a larger
total addressable market.
While there was no committed plan to sell in 2021, we sold our
Identity business to Twilio after the period close in February 2022
- details of this transaction are described elsewhere in the
report. Twilio will be able to give Boku Identity the investment
and attention that it needs.
Boku, therefore, enters 2022 as a pure-play payments business.
We will focus on Boku and Fortumo as one integrated, cohesive,
payments unit ready to grow its business in mainstream payment
methods. The main planks of our strategy are as follows.
-- We will expand the M1ST network to encompass the leading Local
Payment Methods like eWallets in the countries where the new middle
class resides.
-- We will build the highest quality connections enabling merchants
to sell more stuff. Our products will be expanded beyond the requirements
of the digital entertainment industry, also to embrace other merchant
sectors, including digital advertising, software, travel, and general
ecommerce.
-- We will enhance our regulated payment and settlement capability
to allow us to help our merchants not only to process transactions,
but also get settled in the currency of their choice with the frequency
and speed they wish.
Our competitive advantage stems from three areas
1. We will maintain our reputation amongst the world's largest
merchants for flawless execution and merchant-centric solutions.
There are practically no other companies on earth who have been
able to simultaneously support Amazon, Apple, Google, Microsoft,
Netflix, Spotify, Facebook, and Tencent amongst others. This
reputation is hard-won and will be defended. Looking after our
customers helps us get more of their business and helps us win more
customers too.
2. As well as supporting the biggest Local Payment Methods, we
will also ensure that we have unique capabilities. This might be
licenses that none of our competitors have, or connectors giving us
more coverage, but we will ensure that there are some things that
you can get from Boku that you won't be able to get from anyone
else.
3. We will differentiate our product by producing features that
help our merchant sell more. Most payment companies are interested
in processing more and more volume, we obsess about helping our
customers to acquire and retain users. This leads us to develop
features that are more to do with marketing - optimisation of the
enrolment process, prompts to users to renew if a payment fails,
integrations directly into our merchants and suppliers marketing,
and point of sale systems to allow bundled offers between the two
to drive growth. Other payment companies don't do this. Our
bundling product drives new user adoption for digital subscription
services, from music and video streaming to dating apps and
beyond.
The future for Boku is exciting. A future where we continue the
transition from being the leading player of a niche payment method,
DCB, to providing mainstream payments to mainstream merchants. A
future where we swim in the Big Pond.
FINANCIAL STATEMENTS
BOKU, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 31 December
2021 2020
Note $'000 $'000
------------------------------------------------------------------------------- ----- ------------- -------------
Revenue 4 69,165 56,402
Cost of sales (5,733) (4,925)
------------- -------------
Gross profit 63,432 51,477
Other Income (non-recurring)* 1,080 -
Administrative expenses 5 (59,377) (68,200)
------------------------------------------------------------------------------- ----- ------------- -------------
Operating profit/(loss) analysed as:
Adjusted EBITDA** 20,028 15,268
Other Income (non-recurring) 4 1,080 -
Depreciation and amortisation (7,487) (5,917)
Stock Option expense 20 (7,391) (4,925)
Foreign exchange (losses)/gains (134) 1,048
Impairment of goodwill 11 - (20,775)
Exceptional items (included in
administrative expenses) 5 (961) (1,422)
------------------------------------------------------------------------------- ----- ------------- -------------
Operating profit/(loss) 5,135 (16,723)
Finance income 7 22 70
Finance expense 7 (770) (662)
Profit/(loss) before tax 4,387 (17,315)
Tax credit/(expense) 8 1,882 (1,470)
------------------------------------------------------------------------------- ----- ------------- -------------
Net profit/(loss) for the period attributable to equity holders of the parent
company 6,269 (18,785)
------------------------------------------------------------------------------- ----- ------------- -------------
Other comprehensive income/(losses) net of tax
Items that will or may be reclassified to profit or loss
Foreign currency translation (loss)/profit (2,407) 1,720
------------------------------------------------------------------------------- ----- ------------- -------------
Total comprehensive (loss)/profit for the period (2,407) 1,720
------------------------------------------------------------------------------- ----- ------------- -------------
Total comprehensive profit/(loss) for the period attributable to equity
holders of the parent
company 3,862 (17,065)
------------------------------------------------------------------------------- ----- ------------- -------------
Profit/(loss) per share attributable to the owners of the parent during the
year
Basic EPS and 9 0.0213 (0.069)
Fully diluted EPS ($) 0.0206 (0.069)
------------------------------------------------------------------------------- ----- ------------- -------------
* Other Income in 2021 relates to the acquisition of Fortumo and
is the difference between the expected fair value of the Fortumo
earnout escrow amount as at 31(st) December 2020 and the actual
amount paid to Fortumo shareholders in September 2021; to better
reflect underlying performance, this non-recurring income is
excluded from Adjusted EBITDA. Further information on this
non-recurring Payment Income is detailed in Note 4.
**Earnings before interest, tax, depreciation, amortisation,
non-recurring other income, stock option expense, foreign exchange
gains/(losses), impairment of goodwill and exceptional items.
Management has assessed this performance measure as relevant for
the user of the accounts.
BOKU, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
2021 2020
Note $'000 $'000
------------------------------------------ ----- ------------ ------------
Non-current assets
Property, plant and equipment 10 5,670 3,771
Intangible assets 11 63,117 65,559
Deferred tax assets 8 3,105 483
------------------------------------------ ----- ------------ ------------
Total non-current assets 71,892 69,813
------------------------------------------ ----- ------------ ------------
Current assets
Trade and other receivables 13 82,557 92,535
Cash and cash equivalents - unrestricted 14 56,651 61,290
Cash and cash equivalents - Restricted
cash 14 5,789 1,414
------------------------------------------ ----- ------------ ------------
Total current assets 144,997 155,239
------------------------------------------ ----- ------------ ------------
Total assets 216,889 225,052
------------------------------------------ ----- ------------ ------------
Current liabilities
Trade and other payables 16 119,641 136,779
Bank loans and overdrafts 17 1,125 1,438
Lease liabilities 15 1,335 1,436
Total current liabilities 122,101 139,653
------------------------------------------ ----- ------------ ------------
Non-current liabilities
Other payables 16 1,700 862
Deferred tax liabilities 8 456 228
Loans and borrowings 17 6,688 10,813
Lease liabilities 15 3,498 1,742
------------------------------------------ ----- ------------ ------------
Total non-current liabilities 12,342 13,645
------------------------------------------ ----- ------------ ------------
Total liabilities 134,443 153,298
------------------------------------------ ----- ------------ ------------
Net assets 82,446 71,754
------------------------------------------ ----- ------------ ------------
Equity attributable to equity
holders of the company
Share capital 18 29 29
Share premium 246,883 240,053
Foreign exchange reserve (2,714) (307)
Retained losses (161,752) (168,021)
------------------------------- --- ---------- ----------
Total equity 82,446 71,754
------------------------------- --- ---------- ----------
BOKU, INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Foreign exchange reserve Retained losses Total
$'000 $'000 $'000 $'000 $'000
------------------------------ -------------- -------------- ------------------------- ---------------- ---------
Equity as at 1 January 2020 25 208,196 (2,027) (149,236) 56,958
------------------------------ -------------- -------------- ------------------------- ---------------- ---------
Loss for the year - - - (18,785) (18,785)
Other comprehensive income - - 1,720 - 1,720
Issue of share capital upon
exercise of 8,906,542 stock
options and RSUs - 1,700 (32) - 1,668
Share-based payment(1) - 4,313 - 4,313
Shares issued 3 25,159 32 - 25,194
Issue of RSU's related to
Fortumo acquisition - 1,340 - - 1,340
Share issue costs - (654) (654)
Other reserves - (2,447) (2,447)
Share issued for warrant 1 2,446 2,447
------------------------------ -------------- -------------- ------------------------- ---------------- ---------
Equity as at 31 December 2020 29 240,053 (307) (168,021) 71,754
------------------------------ -------------- -------------- ------------------------- ---------------- ---------
Profit for the year - - - 6,269 6,269
Other comprehensive
income/(loss) - - (2,407) - (2,407)
Issue of share capital upon
exercise of 6,751,318 stock
options and RSUs - 1,146 (37) - 1,109
Share-based payment1 - 5,434 - - 5,434
Issue of RSU's related to
Fortumo acquisition - 250 37 - 287
Equity as at 31 December 2021 29 246,883 (2,714) (161,752) 82,446
------------------------------ -------------- -------------- ------------------------- ---------------- ---------
(1) Share based expense has been credited against share premium
in accordance with the local company law and practice in US.
BOKU, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended
Year ended 31 December
31 December restated
2021 2020
Note $'000 $'000
------------------------------------------------ ----- ------------- -------------
Cash generated from operations 22 12,362 31,529
Income taxes paid (443) (269)
------------------------------------------------ ----- ------------- -------------
Net cash from operating activities 11,919 31,260
------------------------------------------------ ----- ------------- -------------
Investing activities
Purchase of property, plant and equipment (812) (489)
Purchase of internally developed software (5,022) (2,920)
Purchased financial asset - (2,160)
Investment in subsidiary, net of cash acquired - (34,435)
Interest received 22 70
Net cash used in investing activities (5,812) (39,934)
------------------------------------------------ ----- ------------- -------------
Financing activities
Payment of principal to lease creditors (1,694) (2,045)
Payment of interest to lease creditors (235) (292)
Issue of common stock to employees 1,109 1,700
Issue of new ordinary shares - 25,129
Share issue costs - (654)
Settlement of loan by shareholder - 793
Interest paid on borrowings (409) (307)
Proceeds from bank loan - 20,000
Repayment of bank loan (4,563) (7,313)
Borrowing costs - (500)
Repayment of bank facility - (2,092)
Net cash (used in)/from financing activities (5,792) 34,419
------------------------------------------------ ----- ------------- -------------
Net increase in cash and cash equivalents 315 25,745
Effect of foreign currency translation on cash and cash equivalent (579) 1,336
Cash and cash equivalents at beginning of period 62,704 35,623
-------------------------------------------------------------------- --- ------- -------
Cash and cash equivalents at end of period 14 62,440 62,704
-------------------------------------------------------------------- --- ------- -------
BOKU, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information
The consolidated financial information represents the results of
Boku Inc. ("the Company") and its subsidiaries (together referred
to as "the Group").
Boku Inc. is a company incorporated and domiciled in the United
States of America. The registered office of the Company is located
at 735 Battery St., 2nd Floor, and San Francisco, CA 94111, United
States.
The principal business of the Group is the provision of mobile
billing and payment solutions for mobile network operators and
merchants. These solutions enable consumers to make online payments
using their mobile devices.
The financial information set out in this document does not
constitute the Group's full annual Report and financial statements
for the year ended 31 December 2021 or 31 December 2020. The annual
report and financial statements for the year ended 31 December 2021
were approved by the Board of Directors on 28 March 2022, along
with this preliminary announcement. The financial statements for
the year ended 31 December 2020 have been reported on by the
Independent Auditor. The Independent Auditor's report on the
financial statements for the year ended 2020 was unqualified and
did not draw attention to any matters by way of emphasis. The
Annual Report for the year ended 31 December 2021 will be made
available in due course on the Company's website:
https://www.boku.com/investor-relations/
2. Accounting policies
The financial information has been prepared using the historical
cost convention, as stated in the accounting policies below. These
policies have been consistently applied to all periods presented,
unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (IASB)
("IFRS") and IFRIC Interpretations issued by the International
Accounting Standards Board (IASB).
The preparation of financial statements in conformity with 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. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed below in II, "Critical
accounting estimates, assumptions and judgements". The accounting
policies adopted in these results have been consistently applied to
all the years presented and are consistent with the policies used
in the preparation of the financial statements for the year ended
31 December 2020, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2020. There are deemed to be no new
standards, amendments and interpretations to existing standards,
which have been adopted by the Group, that have had a material
impact on the financial statements
The principal accounting policies adopted by the Group in the
preparation of the Consolidated financial statements are set out
below.
The presentation currency of the consolidated financial
statements is US Dollars, rounded to the nearest thousands ($'000)
unless otherwise indicated. The main functional currencies for the
Company's subsidiaries are the United States Dollar, Euro and Great
Britain Pound
Going concern
The consolidated financial statements have been prepared on a
going concern basis. The ability of the Group to continue as a
going concern is contingent on the ongoing viability of the Group.
The Group meets its day-to-day working capital requirements through
its cash balances and also has a bank facility that it can use. The
current economic conditions continue to create uncertainty,
particularly over (a) the level of consumer engagement; and (b) the
level of new sales to new customers. The Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, show that the Group expects to be able to
operate within the level of its current cash resources and bank
facilities. Further information on the Group's borrowings and
available facilities is given in Note 17 to these consolidated
financial statements.
The directors have prepared cash-flow forecasts covering a
period of at least 12 months from the date of approval of the
financial statements which foresee that the Group will be able to
operate within its existing facilities.
The Covid-19 pandemic continued to have limited impact on Boku's
business in 2021, indeed the Payments business saw increased
processed volumes in covid impacted countries and regions, and
therefore the Board believes that the business is able to navigate
through the continued impact of Covid-19 due to the strength of its
customer proposition and business partnerships, statement of
financial position and the strong net cash position of the Group
(cash balances of $61.4 million at year end with further cash
receipts from the disposal of the identity business on 28 February
2022).
The ongoing Russia/Ukraine conflict is not expected to have a
material impact on Group revenues in 2022 as detailed in the CEO
and CFO reports.
Having assessed the principal risks and the other matters
discussed in connection with the going concern statement, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. For these reasons, they continue to adopt the going concern
basis of accounting and deem there to be no emphasis over going
concern, in preparing the financial information.
Basis of consolidation
Where the Company has control over an investee, it is classified
as a subsidiary. The Company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial information presents the results of
the Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial information incorporates the results
of business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases. The excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired is
recorded as goodwill.
A list of the subsidiary undertakings is given in Note 12 of the
financial information.
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
The accounting policies adopted in these consolidated financial
statements are consistent with those of the annual financial
statements for the 12 months ended 31 December 2020. The IABS
issued the following new and updated standards for annual reporting
periods beginning on or after 1st January 2021. The Group adopted
the amendments to the following existing standards during 2021:
Amendments to Existing Standards IASB effective date
1 Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS39, IFRS,&, IFRS 4and 01-Jan-21
IFRS
16)
-------------------------------------------------------------------------------------------- --------------------
2 Amendments to IFRS 4 Insurance Contracts 01-Jan-21
-------------------------------------------------------------------------------------------- --------------------
3 Covid-19 Related Rent concessions beyond 30 June 2021 01-Apr-21
-------------------------------------------------------------------------------------------- --------------------
1) Interest rate benchmark reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The Phase 2 amendments address issues that might affect
financial reporting during the reform of an interest rate
benchmark, including the effects of changes to contractual cash
flows or hedging relationships arising from the replacement of an
interest rate benchmark with an alternative benchmark rate.
Major changes:
(i) Added a practical expedient that enables a company to
account for a change in the contractual cash flows that are
required by the reform by updating the effective interest rate to
reflect, for example, the change in an interest rate benchmark from
LIBOR to an alternative benchmark rate, i.e., apply IFRS 9:B5.4.5
rather than IFRS 9:B5.4.6, and
(ii) Provide relief from specific hedge accounting
requirements.
There is no impact on the Group Financial Statements for the 12
months ending 31(st) December 2021 as a result of this
standard.
2) Amendments to IFRS 4 - Insurance Contracts (deferral of IFRS 9)
The Amendments made to IFRS 4 related to companies providing
insurance. The Group does not provide insurance services so this
standard has no current or future impact on the Group financial
statements.
The amendment is effective for periods beginning on or after 1
January 2021.
3) Covid-19 Related rent concessions beyond 30 June 2021 (Amendments to IFRS 16)
In March 2021, IASB issued an amendment to IFRS 16 which
extended the COVID-19 related rent concessions beyond 30 June 2021.
This amendment is required to be mandatorily adopted by a lessee
who had elected to apply the original practical expedient. The
Group did not benefit from any rent concessions during the twelve
months ending 31 December 2021.
The amendment is effective for periods beginning on or after
1(st) April 2021.
(b) New and amended standards published, but not yet applicable
for the annual period beginning on 1(st) January 2021, not yet
adopted by the Group :
1) Amendments to IAS 16 Property, Plant and Equipment: Proceeds before
Intended Use (applicable for annual periods beginning on or after
1 January 2022)
2) Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent
Assets: Onerous Contracts - Cost of Fulfilling a Contract (applicable
for annual periods beginning on or after 1 January 2022)
3) Amendments to IFRS 3 Business Combinations: Reference to the Conceptual
Framework (applicable for annual periods beginning on or after
1 January 2022)
4) Annual Improvements to IFRS Standards 2018-2020 (applicable for
annual periods beginning on or after 1 January 2022)
5) IFRS 17 Insurance Contracts (applicable for annual periods beginning
on or after 1 January 2023). This standard will have no impact
on the future Group financial statements as the group does not
issue Insurance contracts.
6) Amendments to IAS 1 Presentation of Financial Statements: Classification
of Liabilities as Current or Non-current (applicable for annual
periods beginning on or after 1 January 2023, but not yet endorsed
in the EU)
7) Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2: Disclosure of Accounting Policies (applicable
for annual periods beginning on or after 1 January 2023, but not
yet endorsed in the EU )
8) Amendments to IAS12 Income taxes: require companies to recognise
deferred tax on transactions that, on initial recognition, give
rise to equal amounts of taxable and deductible temporary differences.
The amendments are effective for annual reporting periods beginning
on or after 1 January 2023.
Management continues to monitor the issuance of new standards
and any further amendments to the existing standards and considers
that the application of the new amendments in the table above will
not materially affect the Group after adoption.
Foreign currency translation
The presentation and functional currency for the group is US
dollars. Items included in the financial statement of each of the
Group's entities are measured in the functional currency of each
entity.
Foreign currency transactions and balances
i) Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions.
ii) Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at the reporting
period end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement within
administrative expenses.
iii) Non-monetary items that are measured in terms of historical costs
in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Any goodwill arising
on the acquisition of a foreign operation and any fair value adjustments
(including purchased intangible assets) to the carrying amounts
of assets and liabilities arising on the acquisition are treated
as assets and liabilities of the foreign operation and translated
at the closing rate.
Consolidation of foreign entities
On consolidation, the results and financial position of all the
Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency
as follows:
i) Assets and liabilities for each Consolidated statement of financial
position presented are translated at the closing rate at the date
of that Consolidated statement of financial position.
ii) Income and expenses for each Consolidated statement of comprehensive
income item are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions);
and
iii) All resulting exchange differences are recognised as a separate
component of equity.
Exchange differences are recycled to profit or loss as a
reclassification adjustment upon disposal of the foreign
operation.
Revenue
Boku recognises revenue in accordance with IFRS 15 Revenue from
Contracts with Customers by applying the required five steps:
identify the contract(s) with a customer, identify the performance
obligations in the contract, determine the transaction price,
allocate the transaction price to the performance obligations in
the contract and recognise revenue when (or as) the entity
satisfies a performance obligation. Revenue is allocated to the
various performance obligations on a relative stand-alone selling
price ("SSP") basis.
An analysis of the key considerations that IFRS 15 has on the
Group's revenue streams is summarised below.
1. Payments Segment revenue
Boku's technology for the Payments segment delivers a low
friction way for mobile phone users to buy things and charge them
to their phone bill or pre-paid phone or wallet balance. The
Group's revenue is principally its service fees which are earned
from its merchants.
(i) Settlement Model: when it acts as an agent between a
merchant and mobile network operators (MNOs), or an aggregator (a
middleman between the Group and the MNO) or an eWallet provider.
Management has determined that it is acting as an agent under IFRS
15 because it does not have the primary responsibility for
providing the services to the customer. Therefore, there has been
no change in the classification as an agent from the previous
assessment. Fees are calculated as a percentage of the value of
transaction. An additional fee is also earned when a merchant
requires settlement in a different currency than the currency
received, at contractual agreed rates, in line with IFRS 15.
(ii) Transactional Model: from larger virtual and digital
merchants who receive the sale collections directly and pay a
service fee to the Group.
Under both the transactional and settlement model (see point (i)
and (ii) above), the Group's contracts with customers include one
performance obligation only. This relates to an obligation to
facilitate the payment for the transaction between the merchant and
their end users. Under IFRS 15 revenues for this service is
recognised under this contract at a point in time as the obligation
is fulfilled at time when transaction happens, as the point of
delivery of the performance obligation is the same as when the
risks and rewards have been transferred. Payments are due once the
Group receives the statement of information from the Aggregator or
the MNO or wallet provider.
(iii)) Other revenue: from special merchant integrations,
subscription services and early settlement of funds.
In 2020, Special merchant integrations were recognised in full
once the integrations were successfully tested and approved by the
customer. Maintenance arrangements were negotiated separately and
fees were paid monthly and were recognised in full at each month
end, in line with IFRS 15. In 2021 the pricing model was changed
from this fixed fee plus monthly maintenance fees model, to
charging a percentage of the a value of the transaction volumes
processed for that merchant.
Contract assets and contract liabilities are included within
'trade and other receivables' and 'trade and other payables'
respectively on the face of the statement of financial position.
The group recognises all revenue initally as accrued
income/contract asset, until the reports from carriers are received
at which points these contract assets are recognised as
debtors/receivables.
The Group's revenue is principally its service fees earned from
its merchants. There are slight differences to contracts depending
on the services provided. All revenue from the Payment segment is
recognised at one point in time. Therefore, for the Payments
segment, at 31 December 2020 and 31 December 2021, the Group does
not have deferred revenue on the balance sheet.
2. Identity Segment Revenue
Boku's technology for the Identity segment provides identity
services to customers by silently validating a mobile device using
automatic mobile number verification, streamlining the Know Your
Client ('KYC') processes by validating the name and address entered
by a user against the MNOs data, and reduce fraud on marketing
promotions by linking marketing promotions to secure SIM based user
identities instead of email or unverified mobile numbers etc.
Identity merchants are charged either on a per user basis - for
monitoring - or a per transaction basis, typically with monthly
minimums.
For the Identity segment, deferred revenue consists of billings
processed in advance of revenue recognition generated by Boku
Identity's Mobile Identification/TCPA services. For these services,
Boku bills its customers at the beginning of the contract term as a
pre-payment for services which are billed at a set price per
transaction. The revenue is recognised monthly, at a point in time,
based on the amount of transactional volume processed during the
month and services will continue to be performed until the full
value of the contract is realised. For the period ended 31 December
2021, deferred revenue on the balance sheet for the Identity
Segment was $303,853 (2020: $443,585 ).
Cost of sales
Cost of sales is primarily related to the monthly fees and
service charges from MNOs and other providers, customer services
fees, some marketing expenses and bad debt.
Operating Segments
In accordance with IFRS 8, "Operating Segments", the Group has
derived the information for its segmental reporting using the
information used by the Chief Operating Decision Maker ("CODM"),
defined as the General Management Committee (GMC). The segmental
reporting is consistent with those used in internal management
reporting and the measure used by the GMC is Adjusted EBITDA.
The Board considers that the Group's provision of a payment
platform for the payment processing of virtual goods and digital
goods purchases constitutes one operating and one reporting segment
(Payments segment), and the provision of identity services another
operating and reporting segment (Identity segment) as defined under
IFRS 8. Management reviews the performance of the Group by
reference to total results against budget as well as for each of
the two operating segments.
Exceptional Items
Exceptional items are those significant items, which are
separately disclosed by virtue of their size, nature or incidence
to enable a full understanding of the Group's financial
performance. In setting the policy for exceptional items, judgement
is required to determine what the Group defines as "exceptional".
The Group considers an item to be exceptional in nature if it is
non-recurring or does not reflect the underlying performance of the
business. Exceptional items are recorded separately below Adjusted
EBITDA.
Management of the Group evaluates Group strategic projects such
as acquisitions, divestitures and integration activities, Group
restructuring and other one-off events such as restructuring
programmes. In determining whether an event or transaction is
exceptional, management of the Group considers quantitative and
qualitative factors such as its expected size, precedent for
similar items and the commercial context for the particular
transaction, while ensuring consistent treatment between favourable
and unfavourable transactions impacting revenue, income and
expense. Examples of transactions which may be considered of an
exceptional nature include major restructuring programmes, cost of
acquisitions, the cost of integrating acquired businesses or gains
or losses on the disposal of discontinued operations.
Retirement Benefits: Defined contribution schemes
The Group operates various pension schemes in various
jurisdictions, all being defined contribution schemes (pension
plans). A defined contribution plan is a pension plan under which
the Group pays fixed contributions into a separate entity. The
Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay
all employees the benefits relating to employee service in the
current and prior periods.
For defined contribution plans, the Group pays contributions to
publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The
contributions are recognised as an employee benefit expense when
they are due.
In the U.S. the group has a 401(k) plan, a type of defined
contribution scheme in the United States in which all employees can
participate after meeting eligibility requirements. Participants
may elect to have a portion of their salary deferred and
contributed to the scheme up to the limit allowed by applicable
income tax regulations. The Company has made a matching
contribution to the scheme for the years ended 31 December 2021 and
31 December 2020.
Contributions to defined contribution schemes are charged to the
consolidated statement of comprehensive income in the year to which
they relate.
Share-based payments
Where equity settled share options and Restricted Stock Units
('RSUs') are awarded to employees, the fair value of the options or
RSUs at the date of grant is charged to the consolidated statement
of comprehensive income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each reporting date so that,
ultimately, the cumulative amount recognised over the vesting
period is based on the number of options or RSUs that eventually
vest.
Where the terms and conditions of options or RSUs are modified
before they vest, the increase in the fair value of the options,
measured immediately before and after the modification, is also
charged to the consolidated statement of comprehensive income over
the remaining vesting period.
Where equity instruments are granted to persons other than
employees, the consolidated statement of comprehensive income is
charged with the fair value of goods and services received.
Where options are cancelled within the vesting period, the
remaining cost of the options is accelerated and charged to the
income statement in the year. The value of share-based payment is
taken directly to reserves and the charge for the period is
recorded in the income statement.
The Group's scheme, which awards shares in the parent entity,
includes recipients who are employees in subsidiaries. In the
consolidated Financial Statements, the transaction is treated as an
equity-settled share-based payment, as the subsidiary has received
services in consideration for Boku Inc's equity instruments. An
expense is recognised in the consolidated Group income statement
for the fair value of share-based payment over the vesting year,
with a credit recognised in equity. In the subsidiaries' financial
statements, the awards, in proportion to the recipients who are
employees in said subsidiary, are treated as an equity-settled
share-based payment, as the subsidiaries do not have an obligation
to settle the award. An expense for the grant date fair value of
the award is recognised over the vesting period, with a credit
recognised in equity. The credit is treated as a capital
contribution, as the parent company is compensating the
subsidiaries' employees with no cost to the subsidiaries as there
is no expectation to recharge the cost. In the parent company's
financial statements, there is no share-based payment charge where
the recipients are employed by a subsidiary, with the parent
company recognising an increase in the investment in the
subsidiaries as a capital contribution from the parent and a credit
to equity. There are no cash settled share-based payments allowed
under the scheme, but if they were they will be recognised as an
expense in the income statement with a corresponding credit to
liabilities.
RSU's issued in connection with business combinations as
replacements for instruments held by employees are treated as part
of the consideration transferred to the extent that the Company is
obliged to issue the replacement awards and that they compensate
for service that has been provided pre-combination. To the extent
awards are voluntary or that they relate to the provision of future
services they are treated as a post-combination expense.
Share options and RSUs which will incur future employer payroll
taxes on exercise, are accrued for the future cost of Employer's
National Insurance from the point the options are granted over
their vesting period. This liability is then amended at each
subsequent balance sheet date under IFRS 2.
Intangible assets
(i) Goodwill
The Group uses the acquisition method of accounting for the
acquisition of a subsidiary. The consideration transferred is
measured at the fair value of the assets given, equity instruments
issued, and liabilities incurred or assumed at the date of
exchange. Costs directly attributable to the acquisition are
expensed in the period. Identifiable assets acquired, liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date.
In respect of business combinations that have occurred since
January 2014, goodwill represents the excess of the cost of the
acquisition and the Group's interest fair value of net identifiable
assets and liabilities acquired. In respect of business
combinations prior to this date, goodwill is included on the basis
of its deemed cost, which represents the amount recorded under US
GAAP. As permitted by IFRS 1, Goodwill arising on acquisitions
prior to 1 January 2014 is stated in accordance with US GAAP and
has not been remeasured on transition to IFRS. Goodwill is
recognised and measured at the acquisition date.
Goodwill is capitalised as an intangible asset at cost less any
accumulated impairment losses. Any impairment in carrying value is
being charged to the consolidated statement of comprehensive
income. An impairment loss recognised for goodwill is not
reversed.
Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to the consolidated statement of
comprehensive income on the acquisition date.
Goodwill is allocated to appropriate cash generating units
(CGUs). Goodwill is not amortised but is tested annually for
impairment or whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. The recoverable
amount is determined based on value in use calculations. The use of
this method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows. The major assumptions are disclosed in
note 11.
(ii) Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset. All intangible
assets acquired through business combinations, are amortised over
their useful lives.
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses. The carrying values
are tested for impairment when there is an indication that the
value of the assets might be impaired.
(iii) Research and development
Expenditure on research activities as defined in IFRS is
recognised in the income statement as an expense as incurred.
Expenditure on internally developed software products and
substantial enhancements to existing software product is recognised
as intangible assets only when the following criteria are met:
1. it is technically feasible to develop the product to be used or
sold;
2. there is an intention to complete and use or sell the product;
3. the Group is able to use or sell the product;
4. use or sale of the product will generate future economic benefits;
5. adequate resources are available to complete the development; and
6. expenditure on the development of the product can be measured reliably
The capitalised expenditure represents costs directly
attributable to the development of the asset from the point at
which the above criteria are met up to the point at which the
product is ready to use. The costs include external direct costs of
materials and services consumed in developing and obtaining
internal-use computer software, and payroll and payroll-related
costs for employees who are directly associated with and who devote
time to developing the internal-use software. If the qualifying
conditions are not met, such development expenditure is recognised
as an expense in the period in which it is incurred. Product
development costs previously recognised as an expense are not
recognised as an asset in a subsequent period.
(iv) Amortisation rates
The significant intangibles recognised by the Group and their
useful economic lives are as follows:
Intangible asset Useful economic life
Tradenames Indefinite life - not amortised
Acquired intangibles (Fortumo 10 years
acquisition) 5 -10 years
Merchant relationships 5 years
Developed technologies 10 years
Domain names 3 years
Internally developed software
The amortisation expense is recognised within administrative
expenses in the consolidated statement of comprehensive income.
Property, plant and equipment
Property, plant and equipment are held under the cost model and
are stated at historical cost less accumulated depreciation and any
accumulated impairment losses. Historical cost includes expenditure
that is directly attributable to bringing the asset to the location
and condition necessary for it to be capable of operating in the
manner intended by management.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance expenditures are
charged to the Consolidated statement of comprehensive income
during the financial year in which they are incurred. Depreciation
is calculated using the straight-line method to write off the cost
of each asset to its residual value over its estimated useful life
as follows:
Office equipment and furniture 3-5 years on cost
Computer equipment and software 3 years on cost
Leasehold improvement 3-5 years on cost
Right-of-use assets Shorter of useful life of the asset or
lease term
Gains and losses on disposals are determined by comparing the
disposal proceeds with the carrying amount and are included in the
Consolidated statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, Restricted Cash (see note 14) and other short term
highly liquid investments with original maturities of three months
or less.
Financial assets
The Group's financial assets mainly comprise cash, trade and
other receivables.
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost less provisions for
impairment based upon an expected credit loss methodology. The
Group applies the IFRS 9 simplified approach to measuring expected
credit losses which uses a lifetime expected loss allowance matrix
for all trade receivables (including accrued receivables). A
provision of the lifetime expected credit loss is established upon
initial recognition of the underlying asset and are calculated
using historical account payment profiles along with historical
credit losses experienced. The loss allowance is adjusted for
forward looking factors specific to the debtor and the economic
environment. The amount of the provision is recognised in the
Consolidated statement of comprehensive income.
Financial liabilities
Financial liabilities are recognised when the Group becomes a
party to the contractual agreements of the instrument. The Group's
financial liabilities are categorised as loans and Trade and other
payables.
At initial recognition,
-- Financial liabilities (trade and other payables, excluding other
taxes and social security costs and deferred income), are measured
at their fair value plus, if appropriate, any transaction costs
that are directly attributable to the issue of the financial liability.
These financial liabilities are subsequently carried at amortised
cost.
-- Bank borrowings are initially recognised at fair value net any
of transaction costs directly attributable to the issue of the
instrument. Such interest-bearing liabilities are subsequently
measured at amortised cost ensuring the interest element of the
borrowing is expensed over the repayment period at a constant rate.
Leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made on or before the
commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognised right-of-use assets
are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are
subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. In calculating the present value of
lease payments, the Group uses the incremental borrowing rate at
the lease commencement date if the interest rate implicit in the
lease is not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases (i.e., those leases that have a lease term of
12 months or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are
considered of low value (i.e., below GBP5,000). Lease payments on
short-term leases and leases of low-value assets are recognised as
an expense on a straight-line basis over the lease term.
Incremental borrowing rate
IFRS 16 Leases requires that all the components of the lease
liability are required to be discounted to reflect the present
value of the payments. The discount rate to use is the rate
implicit in the lease, unless this cannot readily be determined, in
which case the lessee's incremental borrowing rate is used
instead.
The definition of the lessee's incremental borrowing rate states
that the rate should represent what the lessee 'would have to pay
to borrow over a similar term and with similar security, the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment.' In applying the concept
of 'similar security', a lessee uses the right-of-use asset granted
by the lease and not the fair value of the underlying asset. This
is because the rate should represent the amount that would be
charged to acquire an asset of similar value for a similar
period.
In practice, judgement may be needed to estimate an incremental
borrowing rate in the context of a right-of-use asset, especially
when the value of the underlying asset differs significantly from
the value of the right-of-use asset.
The analysis showed that the incremental borrowing rate as at 1
January 2019 was 8.5% which was used as discount rate for all
leases in all subsidiaries, which were acquired before 1 July 2020.
The Group borrowed funds from its bankers in June 2020 and reviewed
the incremental borrowing rate to be 4.285% and applied this rate
to all leases acquired after 1 July 2020.
The discount rate will be revised, in line with IFRS 16, and the
lease liability remeasured only when:
- there is a change in the lease term,
- a change in the assessment of whether the lessee is reasonably
certain to exercise an option to purchase the underlying asset
or
- -a change in floating interest rates, resulting in a change in
the future lease payments (this approach is consistent with IFRS
9's requirement for the measurement of a floating rate financial
liabilities subsequently measured at amortised cost)
A lessee is not required to reassess the discount rate when
there is a change in future lease payments due to a change in an
index. - e.g. the consumer price index.
Share Capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's ordinary share capital and share
premium are classified as equity instruments.
Taxation
Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted at the balance sheet
date.
Deferred tax
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the transaction
affects neither accounting or taxable profit; and
-- investments in subsidiaries where the Group is able to control
the timing of the reversal of the difference and it is probable
that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the deferred tax
liabilities or assets are settled or recovered. Deferred tax
balances are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different company entities which intend either to settle current
tax assets and liabilities on a net basis, or to realise the assets
and settle the liabilities simultaneously, in each future period
in which significant amounts of deferred tax assets and liabilities
are expected to be settled or recovered.
Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Costs
related to acquisitions, other than those directly attributable to
the issue of debt or equity, are expensed as incurred.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities exceeds the cost of
the business combination, the excess is recognised immediately in
the profit or loss.
Critical accounting estimates and judgements
In preparing these Consolidated financial statements, the Group
has made its best estimates and judgements of certain amounts
included in the financial statements, giving due consideration to
materiality. The Group regularly reviews these estimates and
updates them as required. Actual results could differ from these
estimates. Unless otherwise indicated, the Group does not believe
that there is a significant risk of a material change to the
carrying value of assets and liabilities within the next financial
year related to the accounting estimates and assumptions described
below. The Group considers the following to be a description of the
most significant estimates and judgements, which require the Group
to make subjective and complex judgements and matters that are
inherently uncertain.
(a) Goodwill, Intangible assets acquired in a business combination
As set out in the accounting policies above, intangible assets
acquired in a business combination are capitalised and amortised
over their useful lives. Both initial valuations and valuations for
subsequent impairment tests are based on risk adjusted future cash
flows discounted using appropriate discount rates. These future
cash flows are based on forecasts which are inherently judgemental.
Future events could cause the assumptions to change which could
have an adverse effect on the future results of the Group. Refer to
note 11 for a description of the specific estimates and judgements
used including the critical accounting estimates and judgments used
in the calculation of the goodwill impairment.
(b) Held for sale
Non-current assets and disposal groups are classified as held
for sale if it is probable their carrying amount will be recovered
principally through a sale transaction rather than through
continuing use. This condition is regarded as met only when the
sale is highly probable and the asset (or disposal group) is
available for immediate sale in its present condition. For a sale
to be highly probable, management should be committed to a plan to
sell the asset (or disposal group), an active program to locate a
buyer and plan initiated, the asset (or disposal group) should be
actively marketed at a price which is reasonable in relation to its
current fair value, the sale should be expected to be completed
within one year from the date of classification, and actions
required to complete the plan should indicate that it is unlikely
that significant changes to the plan will be made or that the plan
will be withdrawn. In respect to the group's Identity business and
as of year end, while management were considering strategic
options, they were not committed to a plan nor was there knowledge
or belief that a sale would be definitively complete; taking
account of this the Identity business was not deemed held for
sale.
(c) Share-based payments
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. Estimating fair value for
share-based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and
conditions of the grant. This estimate also requires determining
the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield
and making assumptions about them. Where such a model is required,
the group is using the Black Scholes model to calculate its
share-based compensation expenses. (Please refer to note 20 for
full details).
(d) Taxation
In recognising income tax assets and liabilities, management
makes estimates of the likely outcome of decisions by tax
authorities on transactions and events whose treatment for tax
purposes is uncertain. Where the final outcome of such matters is
different, or expected to be different, from previous assessments
made by management, a change to the carrying value of income tax
assets and liabilities will be recorded in the period in which such
a determination is made. In recognising deferred tax assets and
liabilities management also makes judgements about likely future
taxable profits. The carrying values of current tax and deferred
tax assets and liabilities are disclosed separately in the
consolidated statement of financial position.
(e) Impairment of goodwill and other intangible assets
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment. Goodwill
impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment.
The carrying value of goodwill is compared to the recoverable
amount of the cash generating unit to which the goodwill has been
allocated, which is the higher of value in use and the fair value
less costs of disposal. Any impairment is recognised immediately as
an expense and is not subsequently reversed.
Other intangible assets include acquired merchant relationships,
an IT Platform and Domain names as well as internally developed
intangibles (capitalized development costs). Acquired intangible
assets are recognised at fair value at the acquisition date and are
amortized on a straight-line basis over their estimated useful
lives.
Impairment reviews are undertaken if events or changes in
circumstances reveal any indicators of impairment. If indicators of
impairment are present, the carrying value of the asset is compared
to the recoverable amount of the cash generating unit to which the
asset is allocated, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense.
It is possible that changes in economic conditions or deviations
in actual performance from forecast could result in a material
adjustment to the carrying value of the CGU within the next
financial year. The key estimates made by management are set out in
note 11.
3. Financial instruments - Risk Management
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies. The overall
objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's
competitiveness and flexibility. The Group reports in US$. All
funding requirements and financial risks are managed based on
policies and procedures adopted by the Board of Directors. The
Group does not issue or use financial instruments of a speculative
nature.
The Group is exposed to the following financial risks:
-- Market risk
-- Credit risk
-- Liquidity risk
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. The
principal financial instruments used by the Group, from which
financial instrument risk arises, are as follows:
-- Trade and other receivables
-- Cash and cash equivalents and restricted cash
-- Trade and other payables
-- Bank loans
To the extent financial instruments are not carried at fair
value in the consolidated statement of financial position, book
value approximates to fair value at 31 December 2021 and 31
December 2020
Trade and other receivables are measured at book value and
amortised cost. Book values and expected cash flows are reviewed by
the Board and any impairment charged to the consolidated statement
of comprehensive income in the relevant period.
Trade and other payables are measured at book value and
amortised cost.
Financial instruments by category
31 December 31 December
Financial assets 2021 2020
$'000 $'000
----------------------------------------- --------------------------- -----------------------
Cash and cash equivalents 56,651 61,290
Restricted cash 5,789 1,414
------------------------------------------ --------------------------- -----------------------
Total Cash 62,440 62,704
------------------------------------------ --------------------------- -----------------------
Accounts receivable (net) 78,606 86,360
Other receivables (including contingent
asset) 484 3,100
------------------------------------------ --------------------------- -----------------------
Total other financial assets 79,090 89,460
------------------------------------------ --------------------------- -----------------------
Cash, and other financial assets 141,530 152,164
------------------------------------------ --------------------------- -----------------------
Financial liabilities
31 December 31 December
2021 2020
$'000 $'000
------------------------------------ ------------ ------------
Trade payables 94,152 105,376
Accruals 23,375 28,135
Total other financial liabilities 117,527 133,511
------------------------------------- ------------ ------------
Bank loans (secured) 7,813 12,250
Lease liabilities 4,833 3,178
Loans and borrowings 12,646 15,428
Financial liabilities at amortised
cost 130,173 148,939
------------------------------------- ------------ ------------
The management of risk is a fundamental concern of the Group's
management. This note summarises the key financial risks to the
Group and the policies and procedures put in place by management to
manage them.
a) Market risk
Market risk arises from the Group's use of interest bearing and
foreign currency financial instruments. There is a risk that the
fair value or future cash flows of a financial instrument will
fluctuate because of changes in interest rates (interest rate risk)
or foreign exchange rates (currency risk).
Interest rate risk
The Group is exposed to cash flow interest rate risk from bank
borrowings at variable rates but with a lower floor. The Group's
bank borrowings and other borrowings are disclosed in note 17.
Interest rates for the current Boku bank loan were based on LIBOR,
however the decision was made to phase out LIBOR by the end of 2021
. Current contracts have been agreed at similar or equivalent rates
after transition and did not have a material effect on the Group
finances. The Group manages the interest rate risk centrally. After
year end, the term loan was repaid in full on 28 February 2022
following the disposal of the Identity division to Twilio.
The following table demonstrates the sensitivity to a 1 percent
change (higher only due to the fixed lower floor) to the interest
rates of the following borrowings at 31 December 2021 to the profit
before tax and net assets for the period:
31 December 2021 31 December 2020
Increase/(decrease) of loss before tax and net Increase/(decrease) of loss before tax and net
assets assets
$'000 $'000
------------ ------------------------------------------------- --------------------------------------------------
Bank loans +81 +124
------------- ------------------------------------------------- --------------------------------------------------
Foreign exchange risk
Foreign exchange risk is the risk that movements in exchange
rates affect the profitability of the business.
The effect of fluctuations in exchange rates on the Euro and GBP
denominated trade receivables is partially offset through the use
of foreign exchange contracts to the extent that any remaining
impact on profit after tax is not material.
The Group aims to fund expenses and investments in the
respective currency and to manage foreign exchange risk at a local
level by matching the currency in which revenue is generated and
expenses are incurred. The Group manages all treasury activities
centrally, with the exception of the acquired Fortumo entities
where treasury processes are in the process of being aligned with
group treasury policies and procedures.
As of 31 December, the Group's gross exposure to foreign
exchange risk was as follows:
GBP Euro Other Total
31 December 2021 $'000 $'000 $'000 $'000
Trade and other receivables 12,399 28,352 34,500 72,521
Cash and cash equivalents
and restricted cash 9,849 14,268 23,511 47,628
Trade and other payables (18,934) (47,757) (45,006) (111,697)
-------------------------------- --------- --------- --------- ----------
Financial assets/(liabilities) 3,314 (5,137) 13,005 11,182
-------------------------------- --------- --------- --------- ----------
10% impact - +/- 368 (571) 1,445 1,242
GBP Euro Other Total
31 December 2020 $'000 $'000 $'000 $'000
-------------------------------- --------- --------- --------- ----------
Trade and other receivables 11,630 25,375 46,476 83,481
Cash and cash equivalents
and restricted cash 10,083 15,912 21,053 47,048
Trade and other payables (21,138) (60,967) (41,542) (123,647)
Financial assets/(liabilities) 575 (19,680) 25,987 6,882
-------------------------------- --------- --------- --------- ----------
10% impact - +/- 64 (2,187) 2,887 765
The group operates in 37 currencies. We have separated GBP and
Euro as the two primary currencies. The other 35 currencies are
include in the 'Other' column. The impact of 10% movement in
foreign exchange rate of US$ will result in an increase/decrease of
total comprehensive profit/loss after tax and financial
assets/(liabilities) of $1,242 thousands for December 2021 (2020:
$765 thousands).
b) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. The Group's net trade receivables for the
three reported periods are disclosed in the financial assets table
above.
The Group is exposed to credit risk in respect of these balances
such that, if one or more the aggregators or MNOs encounters
financial difficulties, this could affect the Group's financial
results. The Group attempts to mitigate credit risk by assessing
the credit rating of new customers and MNOs prior to entering into
contracts, by entering contracts with customers with agreed credit
terms and also by limiting its liability to its customers in the
event of non-payment from MNOs and aggregators.
To minimise this credit risk, the Group endeavours only to deal
with companies which are demonstrably creditworthy and this,
together with the aggregate financial exposure, is continuously
monitored. The maximum exposure to credit risk is the value of the
outstanding receivables amount from carriers/aggregators less the
value of corresponding outstanding amount payable to merchants,
which equals to the loss of revenue recorded in the financial
statements in respect of the uncollected funds.
At the reporting date, the exposure was represented by the
carrying value of trade and other receivables, against which $149
thousands was provided at 31 December 2021 (2020: $1,323
thousands). The provision amounts represent an estimate of
potential bad debt in respect of the year-end Group trade
receivables. The Group's customers are spread across a broad range
of sectors and consequently it is not otherwise exposed to
significant concentrations of credit risk on its trade
receivables.
A debt is considered to be bad when it is deemed irrecoverable,
for example when the debtor goes into liquidation, or when a credit
or partial credit is issued to the customer for goodwill or
commercial reasons. The Group has applied the Simplified Approach
applying a provision matrix based on number of days past due being
greater than 150 days to measure expected credit losses and after
taking into account customer sectors with different credit risk
profiles,history of collections and current and forecast trading
conditions.
The Group's provision matrix is as follows:
31-Dec-21 < 60 days 61-120 121-150 > 150 Total
days days days
--------------------------- -------------- -------------- -------------- --------- -------
Expected credit loss %
range 0% 0% 0% 95%-100%
Gross carrier receipts
($'000) 77,775 491 340 756 79,362
Expected credit loss rate
($'000) - - - (149) (149)
--------------------------- -------------- -------------- -------------- --------- -------
At 31 December 2021 the Group had a provision for $149 thousands
(31 December 2020: $1.323 million) of which $36 thousands was
utilised and $1,137 thousands was fully reversed in the year - see
Note 13 for full details of the movement in the year. As the
company revenue is recorded as the net between the amounts received
from carriers and aggregators less the amounts payable to
merchants, the provision of $149 thousands has been created in the
year against receivables. This represents the management best
estimate of the potential revenue loss for the Group if the $756
thousands old receivables were not received from carriers. The
acquisition of Fortumo and the alignment of our Payment divisions
policies and procedures has resulted in an enhanced contractual
position in the event of carrier non-payment, which has increased
protection from the possible downside risk and related credit loss
and as a result the expected credit risk loss in 2021 is lower than
in prior years.
31-Dec-20 < 60 days 61-120 121-150 > 150 days Total
days days
--------------------------- -------------- -------------- -------------- ----------- --------
Expected credit loss %
range 0% 0% 0% 95%-100%
Gross carrier receipts
($'000) 82,597 1,880 1,883 1,323 87,683
Expected credit loss rate
($'000) - - - (1,323) (1,323)
--------------------------- -------------- -------------- -------------- ----------- --------
86,360
Other receivables are considered to be low risk. Management do
not consider that there is any concentration of risk within other
receivables. No other receivables have been impaired.
Credit risk on cash and cash equivalents is considered to be
small as the counterparties are all substantial banks with high
credit ratings. The maximum exposure is however the amount of the
deposit. To date, the Group has not experienced any losses on its
cash and cash equivalent deposits.
c) Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group's
policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. The table
below analyses the Group's financial liabilities by contractual
maturities (all amounts disclosed in the table are the undiscounted
contractual cash flows):
31 December 2021 Within 1 year 2-5 years More than 5 years
$'000 $'000 $'000
-------------------------------------- --------------- ---------- ------------------
Trade and other payables 119,641 1,700 -
Bank loans and overdrafts (secured)* 1,250 6,875 -
Leases liabilities 1,477 3,868 -
-------------------------------------- --------------- ---------- ------------------
Total 122,369 12,4436 -
-------------------------------------- --------------- ---------- ------------------
*No material difference between discounted and undiscounted fair
value.
31 December 2020 Within 1 year 2-5 years More than 5 years
$'000 $'000 $'000
-------------------------------------- --------------- ---------- ------------------
Trade and other payables 136,779 862 -
Bank loans and overdrafts (secured)* 1,438 10,813 -
Leases liabilities 1,625 1,937 -
-------------------------------------- --------------- ---------- ------------------
Total 139,842 13,612 -
-------------------------------------- --------------- ---------- ------------------
*No material difference between discounted and undiscounted fair
value.
Capital Management
The Group's capital is made up of share capital, foreign
exchange reserve and retained losses.
The Group's objectives when maintaining capital are:
-- To safeguard the entity's ability to continue as a going concern,
so that it can continue to provide returns for shareholders and
benefits for other stakeholders; and
-- To provide an adequate return to shareholders by pricing products
and services commensurately with the level of risk
The capital structure of the Group consists of shareholders'
equity as set out in the consolidated statement of changes in
equity. All working capital requirements are financed from existing
cash resources and borrowings.
4. Segmental analysis
(a) Operating Segments - primary basis
Prior to 1 Jan 2019, the Group considered that for executive
management purposes, the Group had one reportable segment -
provision of a payment platform for processing payments for virtual
goods and digital goods purchases. Following the acquisition of
Danal Inc on 1 January 2019, the Group revised its activities into
two operating segments, Payments and Identity, as disclosed below.
The segments are based on the Group's main revenue generating
activities. On 1 July 2020, the Group completed the acquisition of
payments company Fortumo Holdings Inc and its subsidiaries. Fortumo
was a competitor to Boku and operated in the same carrier billing
space as the existing Boku payments business. Therefore, the
results of Fortumo O (the trading subsidiary of Fortumo Holdings
Inc) and its subsidiaries together with the existing Boku Payments
business are viewed by the management as one Payments segment.
The Group CEO and CFO review the management reports for both
segments monthly before sending the results to the Board.
The following summary describes the operations in each of the
Group's reportable segments:
Payments Segment - provision of payment platform which enables
mobile phone users to buy goods and services and charge them to
their mobile phone or prepaid balance.
In 2021 there were two customers, within the Payments Segment
with revenue amounting to more than 10% (each) of the payments
segment revenue (2020: 1 customer).
Identity Segment - provision of Identity services which are used
to simplify transactions or combat fraud.
Operating segment information under the primary reporting format
is disclosed below:
2021
Boku Income Statement by segment Total Total
for 12 months to 31 December 2021 Total Payments Identity Group
------------------- ----------
$'000 $'000 $'000
Fee Revenue 62,082 7,083 69,165
Cost of sales (1,571) (4,162) (5,733)
------------------- ---------- ---------
Gross Profit 60,511 2,921 63,432
Other Income (non-recurring) 1,080 - 1,080
------------------- ---------- ---------
Administrative Expenses (50,951) (8,426) (59,377)
------------------- ---------- ---------
Operating gain/(loss) analysed
as:
Adjusted EBITDA* 22,922 (2,894) 20,028
Other Income (non-recurring) 1,080 - 1,080
Depreciation and amortisation (6,251) (1,236) (7,487)
Stock Option expense (6,414) (977) (7,391)
Foreign exchange gains / (losses) 115 (249) (134)
Exceptional items (included in
administrative expenses) (812) (149) (961)
------------------- ---------- ---------
Operating gain/(loss) 10,640 (5,505) 5,135
Finance income 22 - 22
Finance expense (770) - (770)
------------------- ---------- ---------
Profit/(Loss) before tax 9,892 (5,505) 4,387
Tax credit 1,882 - 1,882
------------------------------------ ------------------- ---------- ---------
Net profit/(loss) for the period
attributable to equity holders
of the parent company 11,774 (5,505) 6,269
------------------- ---------- ---------
*Earnings before interest, tax, depreciation, amortisation,
non-recurring other income, stock option expense, foreign exchange
gains/(losses) and exceptional items. Management has assessed this
performance measure as relevant for the user of the accounts.
The consideration for the Fortumo acquisition included $5.4m,
representing 12% of the total maximum consideration, held in escrow
in cash, subject to certain Adjusted EBITDA* earnout, working
capital and indemnity conditions being satisfied in the period
1(st) July 2020 to 30 June 2021.
The final earnout payment, based on Fortumo Adjusted EBITDA*
performance for the 12 months period ended 30 June 2021, was
$2.16m, with the balance of $3.24 million returned to Boku.
The difference of $1.08 million between the expected fair value
of the Fortumo earnout escrow amount as at 31 December 2020 of
$3.24 million and the actual amount paid to Fortumo shareholders in
September 2021, of $2.16 million has been shown as "Other Income"
in the Income Statement. This amount has been excluded from the
adjusted EBITDA* as a non-trading, non-recurring item.
2020
Boku Income Statement by segment
for 12 months to 31 December 2020 Total Payments Total Identity Total
--------------- ---------------
$'000 $'000 $'000
Fee Revenue 51,231 5,171 56,402
Cost of sales (1,669) (3,256) (4,925)
--------------- --------------- ---------
Gross Profit 49,562 1,915 51,477
Administrative Expenses (39,737) (28,463) (68,200)
--------------- --------------- ---------
Operating gain/(loss) analysed
as:
Adjusted EBITDA* 19,176 (3,908) 15,268
Payments Revenue Adjustment (non-recurring)
Depreciation and amortisation (4,726) (1,191) (5,917)
Stock Option expense (4,010) (915) (4,925)
Goodwill impairment - (20,775) (20,775)
Foreign exchange gains 807 241 1,048
Exceptional items (included in
administrative expenses) (1,422) - (1,422)
--------------- --------------- ---------
Operating gain/(loss) 9,825 (26,548) (16,723)
Finance income 70 - 70
Finance expense (649) (13) (662)
--------------- --------------- ---------
Profit/(Loss) before tax 9,246 (26,561) (17,315)
Tax expense (1,469) (1) (1,470)
--------------------------------------------- --------------- --------------- ---------
Net gain/(loss) for the period
attributable to equity holders
of the parent company 7,777 (26,562) (18,785)
--------------- --------------- ---------
The net assets for each segment are disclosed below:
Net Assets by segment 2021
-----------------------------------------------
Payments Identity Consolidated
Non-current assets $'000 $'000 $'000
Property, plant, and equipment 5,668 2 5,670
Intangible assets 58,777 4,340 63,117
Deferred tax assets 3,105 - 3,105
Total non-current assets 67,550 4,342 71,892
Current Assets
Trade and other receivables 81,102 1,455 82,557
Cash and cash equivalents 55,565 1,086 56,651
Restricted cash 5,789 - 5,789
--------- -------------------- --------------
Total current assets 142,456 2,541 144,997
Total assets 210,006 6,883 216,889
Current liabilities
Trade and other payables 118,201 1,440 119,641
Loans and borrowings 2,455 5 2,460
--------- -------------------- --------------
Total current liabilities 120,656 1,445 122,101
Non-current liabilities
Trade and other payables 2,156 - 2,156
Loans and borrowings 10,191 (5) 10,186
--------- -------------------- --------------
Total non- current liabilities 12,347 (5) 12,342
Total liabilities 133,003 1,440 134,443
Net assets 77,003 5,443 82,446
Net Assets by segment 2020
-----------------------------------------------
Payments Identity Consolidated
Non-current assets $'000 $'000 $'000
Property, plant, and equipment 3,749 22 3,771
Intangible assets 60,252 5,307 65,559
Deferred tax assets 483 - 483
Total non-current assets 64,484 5,329 69,813
Current Assets
Trade and other receivables 91,122 1,413 92,535
Cash and cash equivalents 61,038 252 61,290
Restricted cash 1,414 - 1,414
--------- -------------------- --------------
Total current assets 153,574 1,665 155,239
Total assets 218,058 6,994 225,052
Current liabilities
Trade and other payables 135,203 1,576 136,779
Loans and borrowings 2,863 11 2,874
--------- -------------------- --------------
Total current liabilities 138,066 1,587 139,653
Non-current liabilities
Trade and other payables 1,090 - 1,090
Loans and borrowings 12,560 (5) 12,555
--------- -------------------- --------------
Total non- current liabilities 13,650 (5) 13,645
Total liabilities 151,716 1,582 153,298
Net assets 66,342 5,412 71,754
(b) Geographic segment - secondary basis
The geographical analysis of the revenue by location of the
users and segment is presented below:
Group Revenue Payments Identity Total
by Region
and Segment
----------------
Dec-21 % Dec-21 % Dec-21 %
' 000 USD YTD YTD YTD
------- ------- -------
Americas 3,018 4.9% 5,621 79.4% 8,639 12.5%
------- ------- ------- -------
APAC 33,444 53.9% 1,065 15.0% 34,509 49.9%
------- ------- ------- -------
EMEA 25,620 41.3% 397 5.6% 26,018 37.6%
------- ------- ------- -------
Grand Total 62,082 100.0% 7,083 100.0% 69,165 100.0%
------- ------- ------- -------
Group Revenue Payments Identity Total
by Region
and Segment
----------------
Dec-20 % Dec-20 % Dec-20 %
' 000 USD YTD YTD YTD
------- ------- -------
Americas 1,556 3.0% 4,847 93.7% 6,403 11.4%
------- ------- ------- -------
APAC 28,398 55.4% 90 1.7% 28,488 50.3%
------- ------- ------- -------
EMEA 21,277 41.5% 234 4.5% 21,511 38.1%
------- ------- ------- -------
Grand Total 51,231 100.0% 5,171 100.0% 56,402 100.0%
------- ------- ------- -------
An analysis of non-current assets by geographical market is
given below:
2021 2020
$'000 $'000
-------------------------- ------- -------
United States of America 51,662 47,613
Europe 16,551 20,996
Rest of the World 575 721
--------------------------- ------- -------
Total 68,788 69,330
--------------------------- ------- -------
5. Administrative expenses (including exceptional items)
2021 2020
$'000 $'000
-------------------------------------------- ---------- ----------
Audit fees - BDO LLP & all subsidiaries
audits 524 361
Third party audit fees specific to
FY 2020 - EY fees - 45
Taxation services (not performed by
auditor) 749 289
Professional services not performed
by auditor 113 122
Consultancy and compliance services 835 1,005
Staff costs (excluding stock option
expense - note 6) 33,598 29,032
Travel & entertainment 408 343
Property occupancy costs 1,203 935
Total IT, development and hosting 3,453 2,721
Total banking costs 506 52
Legal fees 879 718
Other costs including marketing, support
& testing and other administration
expenses 1,136 586
--------------------------------------------- ---------- ----------
Operating Expenses, excluding items
in Adjusted EBITDA 43,404 36,209
--------------------------------------------- ---------- ----------
Depreciation of property, plant and
equipment 2,255 2,446
Amortisation of intangible assets 5,232 3,471
Impairment of goodwill (Identity Business) - 20,775
Foreign exchange loss/(gain) 134 (1,048)
Exceptional items - restructuring
costs* 961 184
Exceptional items - acquisition costs - 1,238
Share - based expenses (note 20) 7,391 4,925
--------------------------------------------- ---------- ----------
Total administrative expenses 59,377 68,200
--------------------------------------------- ---------- ----------
*Exceptional items of $961 thousands represent professional fees
related to contracted costs exploring opportunities for the
Identity business.
6. Key management personnel costs
Key management personnel compensation was made up as
follows:
2021 2020
$'000 $'000
------------------------------------- ---- ------------------------ -----------------------
Salaries 3,455 2,431
Short-term benefits 35 41
Social security costs 1,298 240
Stock option expense 2,126 1,464
Pension costs 8 7
Total 6,922 4,183
-------------------------------------------- ------------------------ -----------------------
Directors' remuneration included in
staff costs: 2021 2020
$'000 $'000
--------------------------------------- --- ------------------------ -----------------------
Salaries including bonuses 1,424 1,077
Short-term benefits 3 3
Total 1,427 1,080
--------------------------------------- --- ------------------------ -----------------------
7. Finance income and expenses
2021 2020
$'000 $'000
-------------------------------------------- ------ ------
Finance income
Interest income from bank deposits 22 70
---------------------------------------------
Total 22 70
--------------------------------------------- ------ ------
Finance expenses
Interest on bank loans & overdrafts 385 277
Other interest payable (including interest
paid for factoring) 25 31
Interest on lease liabilities 235 292
Amortisation of debt costs 125 62
Total 770 662
--------------------------------------------- ------ ------
Net finance expenses 748 592
--------------------------------------------- ------ ------
8. Income tax
2021 2020
$'000 $'000
------------------------------- -------- -------
Current tax
US tax - 2
Foreign tax 513 374
Total current tax 513 376
-------------------------------- -------- -------
Deferred tax (credit)/expense (2,395) 1,094
Total tax (credit) / expense (1,882) 1,470
-------------------------------- -------- -------
The reasons for the difference between the actual tax charge for
the period and the applicable rate of income tax of the US
reporting entity applied to the result for the period are as
follows:
2021 2020
$'000 $'000
------------------------------------------------ -------- ---------
Profit before tax 4,387 (17,315)
Tax rate 21% 21%
Profit/(loss) before tax multiplied by
the applicable rate of tax: 921 (3,636)
Expenses not deductible for tax purposes 2 4,628
Withholding taxes 78 68
Recognition of tax losses (2,646) -
Other- difference in tax rates and adjustments
in respect of prior years (237) 410
-------------------------------------------------- -------- ---------
Total tax (credit)/expense (1,882) 1,470
-------------------------------------------------- -------- ---------
Deferred Tax
2021 2020
$'000 $'000
---------------------------------------------- ---- ---------- --------
Net opening position 253 1,377
Arising from business combinations - -
Net recognition (de-recognition) / in
the year 2,359 (1,094)
Foreign exchange revaluation 37 (30)
Net closing position 2,649 253
---------------------------------------------- ---- ---------- --------
The net closing position is made up of:
o A deferred tax liability of $456,097 (2020: $227,956): This constitutes
tax positions connected with the Boku Inc UK fixed temporary differences.
The 2020 balance is connected with a deferred tax liability associated
with intangible assets acquired as part of the legacy business
combination with the group's now German business: this was released
in the year.
o The deferred asset of $3,105,382 (2020: $482,573). This increase
relates primarily to the recognition in the USA and UK of available
losses.. Each year the management assess the usability of the
deferred assets.
---------------------------------------------------------------------------
A deferred tax asset (liability) has not been recognised
for the following:
2021 '000 2020 '000
--------------- ---------------
Non- deductible Reserves 39 100
Accrued Compensation 84 161
Stock Based Compensation 1,819 1,857
Other temporary and deductible differences 527 648
Accelerated Capital Allowances (1,510) (1,000)
Losses recognised (2,623) -
Acquired Intangibles (169) (245)
Unused tax credits 189 189
Unused tax losses 32,254 30,816
Total deferred tax assets 30,610 32,526
=============== ===============
The Group has carried forward losses and accelerated timing
differences at the reporting date as shown below. In respect of its
UK subsidiary, these can be carried forward and offset against UK
taxable income indefinitely. In respect of its US entities, net
operating loss carry forwards can be carried forward and offset
against taxable income for 20 years for losses incurred up to and
including 31 December 2017. All net operating loss carry forwards
incurred after 31 December 2017 can be carried forward and offset
against US taxable income indefinitely. Utilisation of net
operating loss or tax credit carry forwards may be subject to
annual limitations if an ownership change had occurred pursuant to
the section 382 Internal Revenue Code and similar state
provisions.
2021 2020
$'000 $'000
----------------------------------------------- -------- --------
US losses and tax credit - federal and
states 183,226 181,516
Non-US losses (includes US entities
deemed to be under non-US tax jurisdictions) 7,525 5,021
Total 190,751 186,537
------------------------------------------------ -------- --------
The unused tax losses must be utilised by various dates. German
tax losses as at 31 December 2021 are now reduced to zero, as all
losses were to be used before 2022. U.S. federal tax losses of
$175,283,600 expire in various dates through 2027. Other unused
losses of $15,467,430 do not expire
9. Profit / (Loss) per share
2021 2020
-------------------------------------------- ------------ ------------
Profit/(loss) attributable to shareholders
of the Company ($'000) 6,269 (18,785)
Weighted average number of common shares 293,975,346 273,836,772
--------------------------------------------- ------------ ------------
Basic profit/(loss) per share 0.0213 (0.069)
--------------------------------------------- ------------ ------------
Diluted profit/(loss) per share 0.0206 (0.069)
--------------------------------------------- ------------ ------------
Profit or Loss per share is calculated based on the share
capital of Boku, Inc. and the earnings of the Group. Diluted
earnings per share was calculated using the treasury method. In
2020, due to the loss, in the reporting period diluted loss per
share is the same as basic loss per share.
10. Property, plant and equipment
Right of Computer Office equipment
use assets equipment and fixtures Leasehold
& software and fittings improvement Total
$'000 $'000 $'000 $'000
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
COST
At 1 January
2020 4,992 1,213 1,525 184 7,914
Additions 1,526 215 109 171 2,021
Acquisitions 542 2 22 - 566
Disposals (30) (2) (37) - (69)
Exchange
adjustment 192 8 26 8 234
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
As at 31
December
2020 7,222 1,436 1,645 363 10,666
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
Additions 3,973 337 19 - 4,329
Disposals (4,307) (545) (1,372) (105) (6,329)
Exchange
adjustment (99) (14) (16) (3) (132)
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
At 31
December
2021 6,789 1,214 276 255 8,534
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
DEPRECIATION
At 1 January
2020 2,009 800 1,473 120 4,402
Acquisitions - - 9 - 9
Charge for
the
year 2,121 227 50 48 2,446
Disposals (30) (2) (37) - (69)
Exchange
adjustment 54 3 48 2 107
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
At 31
December
2020 4,154 1,028 1,543 170 6,895
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
Charge for
the
year 1,879 270 53 53 2,255
Disposals (4,187) (545) (1,370) (105) (6,207)
Exchange
adjustment (58) (9) (10) (2) (79)
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
At 31
December
2021 1,788 744 216 116 2,864
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
NET BOOK
VALUE
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
At 1 January
2020 2,983 413 52 64 3,512
At 31
December
2020 3,068 408 102 193 3,771
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
At 31
December
2021 5,001 470 60 139 5,670
-------------- ---------------------- ----------------------- -------------------------- ----------------------- ----------------------
The Group leases many assets including buildings and IT
equipment. The information about leases for which the group is a
lessee is presented below:
Type of right-of-use assets - $'000(USD) Property IT Equipment Total
Balance as at 1st January 2020 2,303 680 2,983
--------- ------------- --------
Additions 2,182 53 2,235
--------- ------------- --------
Disposals (30) - (30)
--------- ------------- --------
Depreciation charge for the year (1,677) (443) (2,120)
--------- ------------- --------
NBV balance as at 31 December 2020 2,778 290 3,068
--------- ------------- --------
Additions 3,543 430 3,973
--------- ------------- --------
Disposals (120) - (120)
--------- ------------- --------
Exchange adjustment (41) - (41)
--------- ------------- --------
Depreciation charge for the year (1,499) (380) (1,879)
--------- ------------- --------
NBV balance as at 31 December 2021 4,661 340 5,001
--------- ------------- --------
11. Intangible assets
Internally
Domain Developed Merchant Trade developed
name technology relationships marks Goodwill software Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
COST
At 1 January
2020 140 3,774 9,010 110 41,085 6,939 61,058
Additions - - - - - 2,920 2,920
Additions
from
acquisitions 1,834 4,343 7,172 - 25,068 - 38,417
Goodwill
Impairment - - - - (20,775) - (20,775)
Disposal - - - - - (257) (257)
Exchange
Adjustment 280 794 1,242 92 2,408
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
At 31
December
2020 1,974 8,397 16,976 110 46,620 9,694 83,771
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
Additions - - - - - 5,022 5,022
Exchange
adjustment (138) (396) (1,226) - (1,242) (95) (3,096)
At 31
December
2021 1,836 8,001 15,750 110 45,379 14,621 85,697
AMORTISATION
At 1 January
2020 140 2,240 6,743 - - 5,116 14,239
Charge for
the
period 91 556 1,572 - - 1,252 3,471
Disposal - - - - - (257) (257)
Exchange
adjustment 1 22 672 - - 64 759
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
At 31
December
2020 232 2,818 8,987 - - 6,175 18,212
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
Charge for
the
period 177 873 1,832 - - 2,350 5,232
Exchange
adjustment (14) (91) (708) - - (51) (864)
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
At 31
December
2021 395 3,600 10,111 - - 8,474 22,580
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
NET BOOK
VALUE
At 1 January
2020 - 1,534 2,267 110 41,085 1,823 46,819
At 31
December
2020 1,742 5,579 7,989 110 46,620 3,519 65,559
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
At 31
December
2021 1,441 4,401 5,639 110 45,378 6,147 63,117
-------------- ------------ ----------------- --------------- ------------ ------------ ------------- ----------
Management has reviewed goodwill and intangible assets on the
balance sheet which mainly consist of the assets from the
acquisition of Fortumo Holdings Inc. on 1 July 2020, Danal Inc
(renamed Boku Identity Inc) on 1 January 2019 and Mopay AG
("Mopay") in October 2014.
Fortumo Holdings Inc. was acquired by Boku on 1st July 2020 for
cash and restricted stock units (RSUs) for a total maximum
consideration of $45.0 million with a fair value of $42.3 million.
The fair value measurement of Fortumo Holdings' Inc. intangible
assets and goodwill arose from the purchase price allocation work
which was undertaken in July 2020. As a result, several assets have
been identified and their fair value has been determined in
accordance with IFRS 3. The carrying value of the goodwill and
other intangibles from the Fortumo acquisition are therefore
assessed in total as part of the Boku Payments Segment (Payments
CGU).
Boku Inc. acquired payments company Mopay in October 2014 for a
total value of $24.2 million in cash and shares. After the merger
in 2014, the Mopay business was reorganised and incorporated into
the Boku Payments business The carrying value of goodwill from the
Mopay acquisition and other intangibles are therefore assessed in
total as part of the Boku Payments Segment (Payments CGU).
Danal Inc (renamed 'Boku Identity Inc') was acquired on 1
January 2019) for a total value of $25.1 million. The fair value
measurement of Danal's intangible assets and goodwill arose from
the purchase price allocation which was undertaken in January 2019.
As a result, the Identity platform and contracts were determined to
be one asset and have a fair value of $1.9m USD as at 1 January
2019. The two platforms (Identity and Payments platforms) are
operated independently and have independent cashflows. The carrying
value of goodwill and the Identity platform were allocated to the
Identity segment.
Impairment of Goodwill
At the year-end date an impairment test has been undertaken by
comparing the carrying values with the recoverable amount of the
Group's two cash generating units (CGUs). The recoverable amount of
the cash generating unit is based on value-in-use calculations.
These calculations use cash flow projections covering future
periods based on financial budgets and a calculation of the
terminal value, for the period following these formal
projections.
The key assumptions used for value-in-use calculations are those
regarding projected cash flows, growth rates, increases in costs
and discount rates. The discount rate used was the Weighted Average
Cost of Capital. The discount rate is reviewed annually to take
into account the current market assessment of the time value of
money and the risks specific to the cash generating units and rates
used by comparable companies. The pre-tax discount rate used for
both CGU's to calculate value-in-use is the weighted average cost
of capital (WACC) of 14.6% (2020:13.8%). Growth rates for forecasts
take into account historic experience and current market trends.
Costs are reviewed and increased for various cost pressures. The
terminal value calculation for 2021 was based on growth rate of
post-tax free cashflow of 2% (2020:2%) for each CGU.
The 2022 budget was prepared at the consolidated level and by
division (Payments division and Identity division). Revenue and
Adjusted EBITDA were also projected from fiscal year 2022 through
to 2024. In 2021 Group revenue growth was 23% (2020: 12.5%) while
Adj. EBITDA increased by 31% (2020: 107% increase).
Payments CGU
The goodwill assessment includes the following Payments CPU's
revenue growth assumptions for years following the 2021 financial
year: revenues will grow by 11.9% in 2022, 18.6% in 2023 and 9.8%
in 2024 and remain fairly constant after that, showing a
conservative increase, but still in double digits, but with
revenues growing at a slower pace than previously. The payments
business is a mature, established business in multinational
markets.
From a sensitivity perspective, the impairment analysis shows
that the net present value of cashflows would have to be reduced by
a factor of five in order for the carrying amount of goodwill to
equal the value in use of the CGU on the balance sheet at the end
of 2024 and by a factor of four in order for the carrying amount of
all intangibles to equal the value in use of the CGU on the balance
sheet at the end of 2021 which the group considers to be highly
unlikely.
Identity CGU
In 2020 Identity business revenues were impacted by Covid, this
together with a lower pipeline conversion resulted in lower
expected revenue. As a result, the Group reassessed the
recoverability of goodwill and based on this recorded an impairment
of Goodwill in 2020 of $20.8 million reducing it from $23.6 million
to $2.8 million.
In 2021 the Identity CGU performance improved with revenues up
31% to $7.1m and a reduced adjusted EBITDA loss. After the year end
an agreement was reached with Twilio, Inc. ("Twilio"), the leading
cloud communications platform, to acquire Boku's Identity division
comprising its wholly-owned subsidiary Boku Identity, Inc., as
announced on 19 January 2022, for a maximum consideration of $32.3
million payable in cash and the transaction was closed on 28
February 2022. As the recoverable amount is much higher than the
value in use, no impairment was deemed necessary for this CGU at 31
December 2021.
Climate change
We considered climate change when reviewing cashflows and
impairment however as stated in the ESG section of this report,
Boku is an online payments company and as such its climate change
impact is low as its business is all online and its merchants'
business is the sale of digital goods such as streaming services.
Therefore any potential impact was not considered material when
looking at cashflows and intangibles.
12. Subsidiaries
The principal subsidiaries of the Company, all of which have
been included in the consolidated financial information, are as
follows:
Name (% owned by Parent) Parent Principal activity Location
Boku Payments Inc. (100%) Boku Inc. Holding Company USA
------------------------------------ ------------------------- ----------------
Boku Network Services Inc. (100%) Boku Inc. Holding Company Delaware, USA
------------------------------------ ------------------------- ----------------
Boku Account Services Inc. (100%) Boku Inc. Holding Company Virginia, USA
------------------------------------ ------------------------- ----------------
Boku Account Services UK, Ltd. Boku Account Services Inc.
(100%) (Virginia) Mobile payment solutions UK
------------------------------------ ------------------------- ----------------
Paymo Brazil Servicios de Boku Network Services Inc.
Pagamentos Ltd (99.9%) (Delaware) Mobile payment solutions Brazil
------------------------------------ ------------------------- ----------------
Boku Network Services AG (100%) Boku Inc. Holding Company Germany
------------------------------------ ------------------------- ----------------
Boku Network Services UK, Ltd Boku Network Services Inc.
(100%) (Delaware) Mobile payment solutions UK
------------------------------------ ------------------------- ----------------
Boku Network Services AU Pty Ltd Boku Network Services Inc.
(100%) (Delaware) Mobile payment solutions Australia
------------------------------------ ------------------------- ----------------
Boku Network Services IN Privates Boku Network Services Inc.
Limited (100%) (Delaware) Mobile payment solutions India
------------------------------------ ------------------------- ----------------
Boku Network Services SG PTE. LTD Boku Network Services Inc.
(100%) (Delaware) Mobile payment solutions Singapore
------------------------------------ ------------------------- ----------------
Boku Network Services HK LTD Boku Network Services Inc.
(100) (Delaware) Mobile payment solutions Hong Kong
------------------------------------ ------------------------- ----------------
Boku Network Services Taiwan Boku Network Services Inc.
Branch Office (100%) (Delaware) Mobile payment solutions Taiwan
------------------------------------ ------------------------- ----------------
Boku Network Services Japan Branch Boku Network Services Inc.
Office (100%) (Delaware) Mobile payment solutions Japan
------------------------------------ ------------------------- ----------------
Mopay AG Beijing Representative
Branch (100%) Boku Network Services AG (Germany) Mobile payment solutions China
------------------------------------ ------------------------- ----------------
Boku Identity Inc.(100%) Boku Inc. Identity solutions California, USA
------------------------------------ ------------------------- ----------------
Boku Mobile Solutions Ireland
(100%) Boku Identity Inc. Identity solutions California, USA
------------------------------------ ------------------------- ----------------
Boku Network Services SG PTE. Boku Network Services Inc. Mobile payment solutions Singapore
LTD.(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services HK LTD Boku Network Services Inc. Mobile payment solutions Hong Kong
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services IE Limited Boku Network Services Inc. Mobile payment solutions Ireland
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services Malaysia Boku Network Services Inc. Mobile payment solutions Malaysia
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Fortumo Holdings Inc (100%) Boku Network Services Inc. Holding Company USA
(Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services TH Co Ltd. Boku Network Services Inc. Mobile payment solutions Thailand
.(49.9%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services PH, Inc. Boku Network Services Inc. Mobile payment solutions Philippines
.(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services MX S. DE Boku Network Services Inc. Dormant Mexico
R.L. DE C.V .(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Fortumo OU (100%) Fortumo Holdings Inc Mobile payment solutions Estonia
------------------------------------ ------------------------- ----------------
Fortumo Mobile Payments S.L (100%) Fortumo OU Mobile payment solutions Spain
------------------------------------ ------------------------- ----------------
Fortumo Mobile Services (100%) Fortumo OU Mobile payment solutions India
------------------------------------ ------------------------- ----------------
Fortumo Singapore Pte. Ltd (100%) Fortumo OU Mobile payment solutions Singapore
------------------------------------ ------------------------- ----------------
Boku Network Services PE S.A.C. Boku Network Services Inc. Dormant Peru
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services CO S.A.S. Boku Network Services Inc. Dormant Columbia
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services CL S.P.A. Boku Network Services Inc. Dormant Chile
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services ZA (Pty) Ltd Boku Network Services Inc. Dormant South Africa
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
Boku Network Services KE Limited Boku Network Services Inc. Dormant Kenya
(100%) (Delaware)
------------------------------------ ------------------------- ----------------
13. Trade and other receivables
31 December 31 December
2021 2020
$'000 $'000
----------------------------------- ------------ ------------
Trade receivables - gross 28,072 28,087
Accrued income 51,290 59,596
------------------------------------ ------------ ------------
Accounts receivable - gross 79,362 87,683
Less: provision for impairment (756) (1,322)
------------------------------------ ------------ ------------
Accounts receivable - net 78,606 86,361
Other receivables 30 190
Deposits held 454 749
Sales taxes receivable 1,268 1,339
Financial asset - 2,160
Deferred cost of sales - 256
Prepayments 2,199 1,480
------------------------------------ ------------ ------------
Total trade and other receivables 82,557 92,535
------------------------------------ ------------ ------------
Provision for receivables impairment
31 December 31 December
2021 2020
$'000 $'000
---------------------------- ------------ ------------
Opening balance 1,322 2,001
Utilised during the period (36) (25)
Decrease during the period (1,137) (705)
Foreign exchange movement - 51
------------------------------ ------------ ------------
Closing balance 149 1,322
------------------------------ ------------ ------------
In accordance with IFRS9, the Group reviews the amount of credit
loss associated with its trade receivables based on forward looking
estimates that take into account and forecast credit conditions as
opposed to relaying on past default rates. The Group has applied
the Simplified Approach, applying a provision matrix based on the
number of days past due to measure lifetime expected credit losses
and after taking into account customer sectors with different
credit risk profiles and current and forecast trading
conditions.
14. Cash and cash equivalents and restricted cash
31 December
31 December 2020
2021 restated
$'000 $'000
------------------------------------------ ------------ ------------
Cash and cash equivalents - unrestricted
cash 56,651 61,290
Cash and cash equivalents - restricted
cash 5,789 1,414
------------------------------------------- ------------ ------------
62,440 62,704
The restricted cash primarily includes e-money and other client
money received but not yet paid to merchants (in transit).
In the prior year restricted cash was excluded from cash and
cash equivalents in presenting the cashflow statement. Having
considered the nature of this asset, the company determined that
despite the restrictions it should be presented as part of cash and
cash equivalents, and the prior year casflow has been restated
accordingly.
15. Lease liabilities
Details of lease liabilities as at 31 December 2021, which
includes the addition of two new leases in the year, for the
Group's new offices in San Francisco, U.S. and Tallin, Estonia:
Lease liabilities Property IT Equipment Total
1st Jan 2020 2,377 704 3,081
Additions 2,142 - 2,142
Interest expense 229 63 292
Payments to lease creditors (1,834) (503) (2,337)
------------------------ ----------------------------------- ------------------------
Lease liabilities as at 31
Dec 2020 2,914 264 3,178
------------------------ ----------------------------------- ------------------------
Additions 3,114 - 3,114
Interest expense 227 8 235
Payments to lease creditors (1,422) (272) (1,694)
------------------------ ----------------------------------- ------------------------
Lease liabilities as at 31
Dec 2021 4,833 - 4,833
------------------------ ----------------------------------- ------------------------
The maturity analysis for lease liabilities is presented
below:
Lease liabilities - Maturity analysis
(contractual undiscounted cash flows) - $'000
(USD) 2021 2020
Less than one year 1,477 1,625
------------------------------------------------ --------
One to five years 3,868 1,937
------------------------------------------------ --------
More than five years - -
------------------------------------------------ --------
Total undiscounted lease liabilities as at
31 December 5,345 3,562
------------------------------------------------ --------
There are no leases with a term of more than 5 years
Lease
liabilities
included in
the
statement of
financial
position
at 31
December -
$'000 (USD) 2021 2020
--------------- ------------------------------------------------ ------------------------------------------------
Current 1,335 1,436
--------------- ------------------------------------------------ ------------------------------------------------
Non-current 3,498 1,742
--------------- ------------------------------------------------ ------------------------------------------------
Amounts
recognised in
profit or
loss- $'000
(USD) 2021 2020
Interest on 235 292
lease
liabilities
--------------- ------------------------------------------------
Variable lease - -
payment not
included in
the
measurement
of lease
payments
--------------- ------------------------------------------------
Expenses
related to
short term
leases 26 22
--------------- ------------------------------------------------
Expenses
related to
leases of
low-value
assets,
excluding
short-term
leases of
low-value
assets 14 21
--------------- ------------------------------------------------
Depreciation
of
right-of-use
assets (Note
10) 1,879 2,121
--------------- ------------------------------------------------
The amounts recognised in the Consolidated Statement of
Cashflows are presented below:
Amounts
recognised
in the
statement of
cashflows-
$'000 (USD) 2021 2020
Payment of 1,694 2,045
principal
-------------- --------------------------------------------------
Payment of
interest 235 292
-------------- --------------------------------------------------
Total cash
outflows 1,929 2,337
-------------- --------------------------------------------------
16. Trade and other payables
31 December 31 December
2021 2020
Current $'000 $'000
---------------------------------------- ------------ ------------
Trade payables 94,152 105,376
Accruals 23,375 28,135
----------------------------------------- ------------ ------------
Total financial liabilities classified
as financial liabilities
measured at amortised cost 117,527 133,511
Other taxes and social security costs 788 1,353
Accrued tax on issued stock options 1,022 1,466
Other payables - 5
Deferred revenue 304 444
----------------------------------------- ------------ ------------
Total 119,641 136,779
----------------------------------------- ------------ ------------
Non-current
Accrued taxes on issued stock options 1,700 862
----------------------------------------- ------------ ------------
Total 1,700 862
----------------------------------------- ------------ ------------
The carrying values of trade and other payables approximate to
fair values.
17. Loans and borrowings
31 December 31 December
2021 2020
$'000 $'000
------------------------------------- ------------ ------------
Current
Bank loans and overdrafts (secured) 1,125 1,438
Lease liabilities 1,335 1,436
-------------------------------------- ------------ ------------
Total 2,460 2,874
-------------------------------------- ------------ ------------
Non-current
Bank loans 6,688 10,813
Lease liabilities 3,498 1,742
Total 10,186 12,555
-------------------------------------- ------------ ------------
Principal terms and the debt repayment schedule of the Group's
loan and borrowings are as follows:
On 26 June 2020 the Group entered into a loan agreement with its
bankers for $20.0 million to finance the acquisition of Fortumo
Holdings Inc, and its subsidiaries on 1(st) July 2020. The loan was
structured as a $10.0 million term loan repayable in 4 years and
$10.0 million revolving facility. The revolving facility was paid
down in full by 31 December 2021. Borrowing costs of $500,000 were
incurred and are amortised over the life of the loan.
After year end the Identity division was sold to Twilio. The
outstanding term loan with Citibank of $8.125 million was repaid in
full from the deal consideration, as part of the closing
conditions, on 28th February 2022.
Reconciliation of liabilities arising
from financing activities
2020 Cash flows Non-cash changes ($'000) 2021
---------------------------------------------------------
Borrowing Lease
costs expensed Foreign Liabilities
in the Exchange (IFRS
$'000 $'000 year Movement 16) $'000
------- ----------- ---------------- ------------------------ ------------- -------
Short-term borrowings 1,438 (313) - 1,125
Long-term borrowings 10,813 (4,250) 125 6,688
Short-term lease
liabilities 1,436 (1,929) - (10) 1,838 1,335
Long-term lease
liabilities 1,742 - - (40) 1,796 3,498
------- ----------- ---------------- ------------------------ ------------- -------
Total liabilities
from financial activities 15,429 (6,492) 125 (50) 3,634 12,646
2019 Cash flows Non-cash changes ($'000) 2020
---------------------------------------------------------
Lease
Foreign Liabilities
Converted Exchange (IFRS
$'000 $'000 to shares Movement 16) $'000
------- ----------- ---------------- ------------------------ ------------- -------
Short-term borrowings 2,098 (563) - (97) - 1,438
Long-term borrowings - 10,813 - - 10,813
Short-term lease
liabilities 1,723 (2,337) - (18) 2,068 1,436
Long-term lease
liabilities 1,358 - - - 384 1,742
------- ----------- ---------------- ------------------------ ------------- -------
Total liabilities
from financial activities 5,179 7,913 (115) 2,452 15,429
18. Share capital
The Company's issued share capital is summarised in the table
below:
31 December 31 December
2021 2020
Number
Number of of shares
shares issued issued
and fully and fully
paid paid
'000 $'000 '000 $'000
--------------------------------------- ------------------- ------ ----------- ------
Common stock of $0.0001 each
Opening balance 287,566 29 252,335 25
----------------------------------------- ------------------- ------ ----------- ------
Exercise of options and RSUs 6,751 - 23,600 3
Shares issued to Danal Shareholders - - 2,724 1
Shares issued to Fortumo Shareholders 1,559 - 8,907 -
Closing balance 295,876 29 287,566 29
----------------------------------------- ------------------- ------ ----------- ------
Common Stock
At December 31, 2021, the Company had 295,876,395 (2020:
287,566,248) common shares issued and outstanding.
19. Reserves
The share premium disclosed in the consolidated statement of
financial position represents the difference between the issue
price and nominal value of the shares issued by the Company. It
includes all stock options expenses reserves.
Retained losses are the cumulative net profits / (losses) in the
consolidated income statement.
Foreign exchange reserve stores the foreign exchange translation
gains and losses on the translation of the financial statements
from the functional to the presentation currency.
Movements on these reserves are set out in the consolidated
statement of changes in equity.
20. Share-based payment
The Group operates the following equity-settled share-based
remuneration schemes for employees, directors and
non-employees:
1. 2009 equity incentive plan (2009 Plan) for the granting of stock
options (incentive or non-qualified), restricted stock awards
(RSA) and restricted stock units (RSU). No options were available
to be issued under this plan as at 31 December 2021 or 2020.
2. 2017 Equity Incentive Plan (new plan started on the 7th November
2017) for the granting of stock options and restricted stock units
(RSUs). The Group reserved an initial ten million shares of common
stock for issue under the plan. The activity under this plan is
presented separately from the rest of the plans. There are 969
options (2020: 1,112) and 10,454 (2020: 8,962) RSUs outstanding
as at 31 December 2021.
Options under the 2009 Plan
Options under the 2009 Plan and UK plan may be outstanding for
periods of up to ten years following the grant date. Outstanding
options generally vest over four years and may contain a one-year
cliff, where 25% of the options vest. Stock options with graded
vesting is based on the graded vesting attribution approach,
whereby, each instalment of vesting is treated as a separate stock
option grant, because each instalment has a different vesting
period.
RSUs under the 2017 Plan
RSUs under the 2017 Plan may be outstanding for periods of up to
five years following the grant date. Outstanding RSU grants
generally vest over three years in three equal portions or one
third after two years and two thirds in the third year anniversary
from the grant date.
Performance-based restricted stock units (RSU)
Performance-based RSUs vest upon the earlier of the completion
of a specified service period and the achievement of certain
performance targets, which may include individual and Company
measures, and are converted into common stock upon vesting.
Share-based expense for RSUs is based on the fair value of the
shares underlying the awards on the grant date and reflects the
estimated probability that the performance and service conditions
will be met; specifically, where the r estricted stock units are
nil-cost awards with a non-market performance condition, so they
are valued at the share price as at the day of grant. The
share-based expense is adjusted in future periods for subsequent
changes in the expected outcome of the performance related
conditions until the vesting date. Performance-based RSUs vest
after three years of issue, in one event, if the performance
conditions are met, however these may also vest at the discretion
of the board in the event that underlying performance conditions
are not met.
Options under the 2009 Plan and 2009 UK plan
Options under the 2009 Plan and UK plan may be outstanding for
periods of up to ten years following the grant date. Outstanding
options generally vest over four years and may contain a one-year
cliff, where 25% of the options vest.
Stock options with graded vesting is based on the graded vesting
attribution approach, whereby, each instalment of vesting is
treated as a separate stock option grant, because each instalment
has a different vesting period.
The options activity under the 2009 Plan (including RSUs) are as
follows:
2009 Plan
Available 2009 Plan 2009 Plan (Options) RSUs) Total
Number of options Number of options WAEP(1) Number of RSUs Number of options
'000 '000 '000 '000
--------------------- -------------------- -------- --------------- ------------------
At 1 January 2020 15,693 $0.268 157 15,850
Exercised - (5,224) $0.346 (157) (5,381)
Cancelled - (2,163) $0.281 - (2,163)
--------------------- -------------------- -------- --------------- ------------------
At 31 December 2020 - 8,306 $0.327 - 8,306
Exercised - (3,509) $0.341 - (3,509)
--------------------- -------------------- -------- --------------- ------------------
Cancelled - (44) $0.283 - (44)
--------------------- --------------------- -------------------- -------- --------------- ------------------
At 31 December 2021 - 4,846 $0.340 - 4,753
-------------------- -------- ---------------
(1) WAEP - weighted average exercise price
*RSUs are always granted at zero exercise price
2009 Plan December December
2021 2020
--------------------------------------------------------------------------------------------- --------- ---------
Outstanding options at reporting end date:
- total number of options (including RSU) 4,846 8,399
- weighted average remaining contractual life (all except 2017 Plan, and excluding RSUs)
(years) 3.75 4.43
- weighted average remaining contractual life - RSU (years) - -
Vested and exercisable ('000): 4,846 8,275
- weighted average exercise price $0.416 $0.384
- weighted average remaining contractual life - all plans
(excluding RSU ) 3.75 4.4
Weighted average share price exercised during the period (excluding RSUs) $0.34 $0.35
Weighted average fair value of each option granted during the period (excluding RSUs) - -
Vested and exercisable - RSUs - -
Share-based expense for the period ('000) $2 $24
---------------------------------------------------------------------------------------------- --------- ---------
The following information is relevant in the determination of
the fair value of options (excluding RSUs) granted during the
period under the equity- settled share-based remuneration schemes
operated by the Group.
2009 Plan December 2017
Option pricing model used Black-Scholes
---------------------------------------------- ---------------
Weighted average share price at grant
date (dollar) $0.370
----------------------------------------------- ---------------
Exercise price (options only) $0.370
----------------------------------------------- ---------------
Weighted average contractual life (years)(1) 5.82(E*+ NE*)
Weighted expected volatility (2) 45% (E*+ NE*)
Expected dividend growth rate 0%
Weighted average Risk-free interest 1.9% (E*+ NE*)
rate(3)
(1) Weighted average contractual life represents the period of
time options are expected to be outstanding and is estimated
considering vesting terms and employees' historical exercise and
post-vesting employment termination behavior.
(2) Expected volatility is based on historical volatilities of
public companies operating in the Company's industry.
(3) The risk-free rate is based on the U.S. Treasury yield curve
in effect at the time of grant.
*E - employees NE - non-employees
The fair value of each option (excluding RSUs) has been
estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions: expected terms
ranging from 4.99 to 6.89 years; risk-free interest rates ranging
from 0.73% to 3.05%; expected volatility of 58%; and no dividends
during the expected term (2017: expected terms ranging from 5.04 to
6.01 years; risk-free interest rates ranging from 1.87% to 1.92%;
volatility of 45%; and no dividends during the expected term).
The options activity under the 2017 Plan (including options and
RSU) are as follows:
Options available Options WAEP(1) RSUs WAEP(1) Total
'000 '000 '000 '000
At 1 January
2020 19,545 1,281 $1.205 7,888 - 9,169
Authorised 11,163 - - - -
Granted (6,393) - - 6,393 - 6,393
Exercised - (39) $1.205 (1,918) - (1,957)
Cancelled 3,402 (130) $1.205 (3,402) - (3,531)
At 31 December
2020 27,717 1,112 $1.205 8,961 - 10,073
Authorised 12,312 - - - - -
Granted (5,739) - - 5,739 - 5,739
Exercised - (107) $1.205 (3,135) - (3,242)
Cancelled 1,111 (36) $1.205 (1,111) - (1,147)
At 31 December
2021 35,401 969 $1.205 10,454 - 11,423
2017 Plan December December
2021 2020
Outstanding options at reporting end date:
- total number of options (excluding RSUs) ('000) 969 1,112
- weighted average remaining contractual life
(excluding RSUs) (years) 6.02 6.91
- weighted average remaining contractual life - RSUs (years) 5.85 6.85
Vested and exercisable ('000):
- weighted average exercise price $1.205 $1.205
- weighted average remaining contractual life
(excluding RSU) (years) 6.02 6.91
Weighted average fair value of options granted during the period (excluding RSU) $0.44 $0.44
Vested and exercisable - RSUs 924 793
Share-based expense for the period ('000) $5,682 $4,920
The following information is relevant in the determination of
the fair value of options (excluding RSU's) granted during the
period under the equity- settled share-based remuneration schemes
operated by the Group. Only RSUs were granted in 2021 and 2020.
2017 Plan December
2018
Option pricing model used Black-Scholes
Weighted average share price at grant
date (dollar) $1.205
Exercise price (options only) $1.205
Weighted average contractual life (years)(1) 9.05 years
Weighted expected volatility (2) 32.66%
Expected dividend growth rate 0%
Weighted average Risk-free interest
rate(3) 2.49%
(1) Weighted average contractual life represents the period of
time options are expected to be outstanding and is estimated
considering vesting terms and employees' historical exercise and
post-vesting employment termination behavior.
(2) Expected volatility is based on historical volatilities of
public companies operating in the Company's industry.
(3) The risk-free rate is based on the U.S. Treasury yield curve
in effect at the time of grant.
Warrants for ordinary shares
A five year warrant to purchase 1,634,699 Boku shares at an
exercise price of $1.8352 USD per share, exercisable at any time
during the 5-year term was issued as part of the Danal acquisition,
on 1(st) January 2019. This warrant was valued using the Binomial
Lattice Model using the following inputs:
a) Term: 5 years
b) Starting share price: $0.8982 USD
c) Expected Annual Volatility: Used 5-year comparable companies equity
volatilities from Capital IQ (26.6%)
d) Risk Free Rate: Five-year US risk-free rate (2.51%)
e) Strike Price: $1.8352 USD
Using the inputs above the warrant was valued at $94,606 USD and
accounted as part of the purchase consideration as an equity
instrument and credited to other reserves until such time when it
is exercised when it will be reclassified to the share premium
account.
Reconciliation of share-based payment expense
December 2021 December
2020
$000's $000's
2009 Plan
Options 2 23
RSU's - -
2017 Plan
Options 25 154
RSU's 5,657 4,136
Total share-based expense (excluding
national insurance) 5,684 4,313
National insurance accrued 423 159
National insurance paid in the year
(see Note 4) 1,284 453
Total share-based payment charge 7,391 4,925
In the current year, a board resolution was passed to amend the
2018, 2018 and 2020 GMC LTIP RSU Grants. The EPS target has changed
to be measured as an average EBITDA per share over 3 years
(previously a performance target of an EBITDA amount).
The change has resulted in the increase in the probability of
the targets being met from 80% to 100% likelihood and this had
resulted in a cumulative adjustment recognised as an expense in the
current year of $582k for the 2018, 2019 and 2020 LTIP plan
21. Dividends
No dividends were declared or paid in any of the periods.
22. Cash generated from operations
Year ended Year ended
31 December 31 December
2021 2020
$'000 $'000
Profit/(loss) after tax 6,269 (18,785)
Add back:
Tax (credit)/expense (1,882) 1,470
Amortisation of intangible assets 5,232 3,471
Depreciation of property, plant and equipment 2,255 2,446
Restructuring write-offs - 158
Loss/(profit)on disposal of property, plant and equipment 5 -
Finance income (22) (70)
Finance expense (includes interest on lease liabilities) 770 662
Exchange loss/(gain) 743 (3,130)
Employer taxes on stock option (accrual) 423 159
Impairment of goodwill - 20,775
Share based payment expense 5,684 4,313
Cash from operations before working capital changes 19,477 11,469
Decrease/(Increase) in trade and other receivables 8,748 (9,545)
(Decrease)/Increase in trade and other payables (15,863) 29,605
Cash generated from operations 12,362 31,529
23. Related party transactions
In 2021, the Group was remitted $123,776,087 in net payments
from five suppliers who are shareholders of the Company (2020:
$100,206,645 - from five suppliers). At 31 December 2021, the
Company had receivables of $15,767,393 (2020: $12,404,487) due from
these companies.
24. Ultimate controlling party
There is no ultimate controlling party of the Company.
25. Contingent liabilities
In the normal course of business, the Group may receive
inquiries or become involved in legal disputes regarding possible
patent infringements. In the opinion of management, any potential
liabilities resulting from such claims, if any, would not have a
material adverse effect on the Group's consolidated statement of
financial position or results of operations.
From time to time, in its normal course of business, the Group
may indemnify other parties, with whom it enters into contractual
relationships, including customers, Aggregators, MNOs, lessors and
parties to other transactions with the Group. The Company has also
indemnified its directors and executive officers, to the extent
legally permissible, against all liabilities reasonably incurred in
connection with any action in which such individual may be involved
by reason of such individual being or having been a director or
executive officer. The Group believes the estimated fair value of
any obligation from these indemnification agreements is minimal;
therefore, this consolidated financial information do not include a
liability for any potential obligations at 31 December 2021 and
2020.
26. Post balance sheet events
After the year end an agreement was reached with Twilio, Inc.
("Twilio"), the leading cloud communications platform, to acquire
Boku's Identity division comprising its wholly-owned subsidiary
Boku Identity, Inc., as announced on 19 January 2022, for a maximum
consideration of $32.3 million payable in cash and the transaction
was closed on 28 February 2022.
The Russia/Ukraine conflict that started in early 2022 impacted
Boku's connections to Russian carriers in its network as detailed
in the CFO report. However Boku operates in 91 countries and the
impact on 2022 revenues is not expected to exceed 2% of 2022
revenues.
27. Cautionary Statement
This document contains certain forward-looking statements
relating to Boku Inc (the "Group"). The Group considers any
statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Company to differ materially from
those contained in any forward-looking statement. These statements
are made by the Directors in good faith based on information
available to them and such statements should be treated with
caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking
information.
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END
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