19 March 2024
Boku Inc.
("Boku", the "Company" or the "Group")
Results for the year ended
31 December 2023
An exceptional
year of growth, driven by the addition of more digital wallets and
account to account ("A2A") connections to our global network of
Local Payment Methods ("LPMs"), delivering revenue and EBITDA
significantly ahead of initial expectations
Boku (AIM: BOKU), a global network
of localised payment solutions, is pleased to announce its audited results for the year ended 31
December 2023 ("FY23").
Financial Highlights
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Revenues for the year up $18.9
million (30%) to $82.7 million (FY22: $63.8 million)
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33% higher than 2022 on a constant
currency basis*
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Full year revenues include $16.9
million from digital wallets and A2A connections, up 153% from $6.7
million in 2022, following increasing adoption these payment
methods by Boku's key merchants
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Adjusted EBITDA* of $25.8 million
up $5.6 million (FY22: $20.2 million restated) at almost 32%
adjusted EBITDA margin even after allowing for continued investment
in Boku's global LPM network and management's
decision to pay one-time non-contractual bonuses totalling $0.9
million to reward all staff for the Company's exceptional growth in
FY23.
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Profit before tax from continuing
operations up 178% to $11.4 million (FY22: $4.1 million)
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Net profit after tax of $10.1
million (FY22: $4.3 million, which excluded the profit after tax
from discontinued operations of $24.6m)
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Total Group cash was $150.9
million at 31 December 2023, up from $113.9 million at 30 June 2023 and
$116.5 million at 31 December 2022. The Group is debt free. In FY23
Boku spent £7.9 million repurchasing 5,512,079 of its own shares under
the share buyback scheme
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The average daily cash balance*, a
measure that smooths out the effect of carrier and merchant
payments, was $131.7 million in December 2023, up from $105.8
million in June 2023 and $98.8m in December 2022
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Cash generated from operations
before working capital movements during the year was $23.4 million
(FY22: $22.0 million)
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Interest income increased to $1.9
million (FY22: $0.2 million) as interest rates increased and more
funds were moved to longer term deposits
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Following the disposal of Boku's Identity division on 28
February 2022, the comparative results shown are for the continuing
Payments division only.
Non-Financial KPIs
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67.4 million Monthly Active Users
("MAUs") of the Boku platform in December 2023 (December 2022: 52.3
million), a 29% increase
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66.1 million new consumers made
their first payment or bundling transaction with Boku during
2023
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Total Payment Volume ("TPV") of
$10.5 billion in 2023, up 18% from $8.9 billion in 2022. On a
constant currency basis*, TPV was 23% higher than 2022
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Particularly strong growth in
digital wallets and A2A connections:
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76% increase in MAUs of digital
wallets and A2A connections, to 6.7 million in December 2023
compared to 3.8 million in December 2022
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New users of digital wallets and
A2A connections increased 64% to 13.8 million in 2023 (2022: 8.4
million)
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Take rate increased to 0.79% in
2023 (2022: 0.72%) as a result of higher take rates from digital
wallets and A2A connections, with H2 take rate of 0.81% (2022 H2:
0.74%)
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In 2023 Boku completed
approximately 125 new payment launches with existing and new
merchants including Google, Meta, Microsoft, Amazon, Disney,
Netflix, Spotify, Samsung, Sky and EA Games, through Boku's
expanded global network of localised solutions. Of these launches,
around half were for digital wallets and A2A
connections.
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*These represent alternative
performance measures ("APMs") for the Group. Refer to the Non-IFRS
financial information section of Boku's 2023 Annual Report for a
glossary of the Group's APMs, their definition, the criteria for
how adjusted EBITDA is considered, together with definitions of
abbreviations.
Stuart Neal, Chief Executive of Boku,
commented. "These results
demonstrate that Boku is in strong financial shape and poised to
fulfil its potential to grow significantly in the world of Local
Payment Methods, which now represent two thirds of all global
online payment volumes. It is testament to our focus on delivering
for our customers, combined with a clear long-term strategy, that
we are expanding the relationships with all of our key global
merchants, beyond our Direct Carrier Billing ('DCB') product, to
now incorporate Digital Wallets and Account to Account ('A2A')
schemes across the globe. 2024 has started strongly and with deals
that are already in place, we have the ability to double the
business over the mid-term, as previously stated, with additional
value to be created from expansion into new verticals. I am beyond
excited at the potential for growth in this business as we create
the global network for localised payment solutions."
Investor Presentation
The Company will provide a live
investor presentation relating to the results via Zoom at 5.30 p.m.
GMT 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_OccPOHOWQFCCVKfehEFuVQ
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.
Stuart Neal, Chief Executive
Officer
Keith Butcher, Chief Financial
Officer
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+44 (0)20 3934 6630
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Investec Bank plc (Nominated
Advisor & Joint Broker)
Edward Knight / Nick
Prowting / Cameron
MacRitchie
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+44 (0)20 7597 5970
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Peel Hunt LLP (Joint
Broker)
Paul Gillam / Tom Ballard / Adam
Telling
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+44 (0)20 7418 8900
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IFC Advisory Limited (Financial PR
& IR)
Tim Metcalfe / Graham Herring /
Florence Chandler
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+44 (0)20 3934 6630
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Note to Editors:
Boku Inc. (AIM: BOKU) is a leading
global network of localised payment solutions. Boku's mobile-first
payments network, including digital wallets, direct carrier
billing, and A2A (account to account)/real-time payments schemes,
reaching over 7.5 billion mobile payment accounts 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, Meta Platforms, Google,
Microsoft, Netflix, 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
Chair's Statement
Boku has seen significant change
since the last Annual Report setting us up well for sustainable
future growth.
Our revenue growth has accelerated
considerably thanks to broadening our range of local payment
methods. As a result of our strong operational gearing, we are thus
seeing strong adjusted EBITDA growth and increasing cash balances.
I am very proud of the team effort that has achieved
this.
We expect this growth to continue
so we have embraced important changes in our organisation and how
we present ourselves to the world. As a result, we are confident we
are in great shape to deliver the next phase of our
growth.
Now I would like to comment on
some of the changes. First, I would like to thank Jon Prideaux, who
retired as CEO at the end of 2023, for his enormous contribution to
Boku's development. He was responsible for overseeing its growth
over the past decade. Under his leadership, the Company has become
an increasingly important player in the specialised payments world
and he has built a team who perform with great skill and commitment
and which has a culture to be admired.
When Jon shared his intention to
retire it is fair to say the Board was very cognisant of the high
regard staff and shareholders have for him in shaping our future
plans. However,
we were very fortunate to persuade Stuart Neal to return as
CEO. He had been the CFO at the time of Boku's flotation in
2017 and then migrated internally to run our Identity division.
With his help, that division was sold in 2022 and Stuart went with
it. Fortunately for us, he left Twilio Inc, the new owner, early in
2023 which meant we could invite him back. Not only do the Board,
staff and many investors hold Stuart in high regard, but this meant
we avoided the risk of hiring someone unfamiliar with Boku. To make
for a smooth transition, Jon, as CEO, and Stuart, as CEO designate
worked together for the second half of 2023 and we are delighted
that we have achieved a smooth and seamless transition and pleased
that Jon is remaining on the Board as a Non-Executive
Director.
We are also about to see the
retirement of Stewart Roberts at the AGM as Senior Independent
Director and Audit Committee Chair. I would like to thank him
for his support and willingness to challenge our approach and
decisions. That and his deep financial knowledge and
experience of the payments industry will be missed, and I would
like to wish him the very best in the future.
Again, we had the good fortune to
be able to fill Stewart's roles from within our ranks. I am pleased
that Charlotta Ginman, an existing Independent Non-Executive
Director, has agreed to take on both of Stewart's roles for which
she is well qualified.
Turning to the overall Board
composition, after the AGM we shall have eight Directors in total,
two Executives and six Non-Executives, four of which (myself
included) are independent. I am proud of the wide range of
experience of our Non-Executive team which includes the payments
industry, telecoms, internet, Far East operations, accounting, HR,
customer experience, ESG and public company board exposure. This
depth of experience is complemented by a wide range of personal
backgrounds from different countries and cultures.
As well as handling changes in the
internal Boku team, we have also changed our auditors to PwC and
appointed Investec as our NOMAD with Peel Hunt staying in place as
one of our two brokers. I am pleased to welcome the new advisers to
our support team and to thank Peel Hunt for agreeing to continue
with us.
Revenue and profit growth are
crucial to Boku's existence. However, we shall continue to pay
close attention to each of the following:
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Relevance and resilience:
Boku prides itself on its ability to satisfy customers' demanding
requirements to support their growth. As our merchants include many
of the major western digital companies, with some of the largest
platforms on earth, they demand the highest standards.
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Compliance and service: As a
payments company, we are proud of our ability to comply with
regulatory requirements in the more than 50 countries where we
operate. Compliance with regulations and high standards of customer
service are central to our culture and are two of the secrets of
our success.
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Our people: We value all our
staff and treat them with the respect and consideration they
deserve. We have, and intend to retain, high levels of staff
loyalty and diversity. The Boku culture is, in my opinion, one of
the most attractive features of this business.
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We also welcome the recently
revised QCA Code with which we shall comply. In particular, the
Board has determined that all the Directors should be subject to an
annual re-election starting this year at our AGM in 2024.
To facilitate this, as a US incorporated company,
we need to modify our constitution and the resolution for this will
be put to shareholders at this year's AGM.
In conclusion, we are a company
with the highest standards of technical skills, customer service
and integrity. This underlines why we continue to supply payment
services to the world's largest digital companies. Alongside this
we have a culture which makes Boku an attractive place to work and
allows us to hire and retain the very best staff wherever they may
be based and whatever their backgrounds are.
In my opinion the outlook for Boku
is extremely exciting. We have demonstrated through our impressive
customer list that we have the skills to exploit changing
opportunities in the payments world where demanding merchants are
selling products to people in many countries with a wide range of
regulations to adhere to. I expect to see our current rapid growth
continuing, but I acknowledge the challenge of growing our staff at
the pace we shall need. That is one reason our culture is so
important to our future.
I remain extremely proud to be a member of the
Boku team and would like to thank all my colleagues, Executive and
Non-executive, for their continuing commitment to our exciting
journey.
Richard
Hargreaves
Non-Executive Chair
19
March 2024
Chief Executive Officer's
Report
I am delighted to present my first set of
financial results as CEO of Boku, in a year where the business
achieved significant momentum, as demonstrated by growth in monthly
active users, total processed volume, revenue, EBITDA and cash
balances. But the financial results are an output measure delivered
as a consequence of a clear strategy and lots of hard work by Boku
colleagues around the world.
Picking up
the baton - A smooth transition
I wish to formally recognise the significant
contribution made by Jon Prideaux, Boku's CEO from 2014 to 2023, to
these impressive results. It is true that financial results are a
lagging indicator of strategic decisions and operational execution
that happened in the past, and this is certainly the case with
regards to our 2023 financial results.
The seeds of our current growth, specifically
the ramp in Local Payment Method ("LPM") revenues, were sown way
back in 2018, when, post a solid IPO, Boku began to search for
routes to longer term strategic diversification. The ongoing themes
covered in this report began life some time ago and are now
beginning to bear fruit. When Jon took charge of Boku, the Company
had just over 100 staff, with revenues that were less than $20m
annually and falling. It is testament to Jon's belief, drive and
undying optimism that the Company posted 2023 revenues of over
$82m, which equates to growth of 30% between 2022 and
2023.
Taking up the baton from Jon was always going
to be challenging. After all, for the past ten years, Jon and
Boku have been synonymous. Fortunately, however, my previous stints
in senior leadership roles at Boku, including my time as CFO, have
given me a deep appreciation and sensitivity to what makes the
Company great, the embedded culture, the drivers
of success and the heritage in carrier billing…more on this
later.
It was with the thoughts of a
winning relay team in mind that Jon has taken great care to ensure
the Boku baton has been placed firmly in my palm so
that I can take the Company on to the next phase in our growth
story. My appointment as CEO comes after a six-month transition
period, during which time I had the pleasure of being able to spend
time with many of the 416 incredibly talented Boku colleagues from
all over the world, hear from our global merchants about what's
important to them and speak to many of our investors, including
those who have been with us since IPO.
What I hear consistently from many
of our key stakeholders is that they are excited about the future
of Boku and the opportunity in front of us to establish ourselves
as the number one global payment network for LPMs.
Global-localisation will be the driver of growth in the payments
industry over the coming years!
A
Values Based Company
At the heart of our success are
our incredibly talented people, who drive the business forward by
embracing the company values - putting merchants first (with their
end customers at front of mind), being ambitious, always
collaborating and showing flexibility in how we operate. The Boku
values are the cornerstone of how we do things, how we work with
merchants to deliver world-class solutions and how we operate
effectively as a globally distributed organisation. We are where
our merchants need us to be.
We have strong momentum and proven
product-market fit for our LPM payment network, which now
incorporates both DCB and acceptance of local digital wallets and
bank oriented A2A schemes. The challenge for Boku going forward is
to ensure that we effectively scale the operations of the business
in line with the size of the commercial opportunities that we have
created for ourselves.
The acid test
for LPMs - will DCB lead to Digital Wallets which will lead to
A2A?
The question we asked ourselves was - can we
take what we have learned from winning in the Direct Carrier
Billing (DCB) world and win in the materially bigger 'pond' of
cross-border payments? In addition to this, can we broaden our
reach beyond digital products and make our network relevant to more
merchants, more use cases, more segments?
The answer to both of the above questions has
been a resounding YES. During the course of 2023, we broadened our
partnership with ALL of our key global merchants beyond DCB and
into LPMs. We have expanded our use cases from digital and gaming
and into advertising, with broader e-commerce scheduled for
mid-2024 launch.
We also witnessed significant inbound demand
for marketing style services, that have seen Boku power consumer
acquisition (bundling) programmes for the likes of Amazon Prime and
more recently ComCast/Peacock's NFL streaming campaign for the
2023/4 SuperBowl playoffs. Supporting the biggest live streaming
event in the history of the internet, demonstrates the resilience
and scale of our platform.
We have the proof points that we need to
have every confidence in our mid-term strategy.
The Network
effect
Success for any payments company comes from
building a virtuous circle - adding more payment methods brings
more connected consumers which attracts more global merchants which
attracts more payment methods, and so on…
During 2023 we added 27 new connections to our
network, which now totals around 300 LPMs. We also enabled 125 new
payment launches for our merchants during the year.
Across our network, monthly active users
("MAUs") continued to grow strongly by 29%, reaching 67.4 million
in December, which included 6.7 million users from LPMs alone,
growth of 78%.
The culmination of all of the above increases
in activity across our network, led to Total Payment Volume ("TPV")
processed growing to $10.5 billion, an increase of 19% compared
with 2022. This includes TPV in relation to DCB which grew by 19%
and other LPMs (digital wallets and A2A) which grew by more than
250% over the period.
Our financial performance is predicated on
more people using our network, combined with our ability to
generate margin by being increasingly useful to our merchants. The
fact that we have simultaneously grown TPV and margins in 2023 is
especially pleasing as it tells me that, right now, we continue to
add value for our merchants.
Outlook -
Steady as she goes, the strategy is working
I am delighted to be taking up the reins of a
company that I truly believe in, with the incredible momentum we
are currently experiencing.
The future of Boku will be one of evolution
and not revolution. 2024 will see the Company continue along its
current path - helping our merchants to grow cross-border, bringing
them more users by adding more local payment connectivity. To
ensure that we can continue to provide best in class service to our
global merchants, with growing volumes and growing complexity
across our platform, we will be investing in back-office processing
and automation capabilities, incorporating a focus on continuous
enhancement of our banking, treasury and settlement capabilities,
making life easier for many of our merchants when it comes to doing
business globally.
We will continue to invest in those core
capabilities that will provide enablers to achieving long term
sustainable growth and ensuring success in the Big Pond of
cross-border payments, an exponentially bigger market than where we
came from.
As we expand and grow, we will continue to
respect and value the culture that got us to this point and allowed
us to win at DCB. It is those very DCB genes that have equipped us
to successfully add digital wallets and A2A to our network of LPMs.
Being creative, collaborative and ambitious enough to turn messy,
complex and dis-aggregated technologies into harmonised engines for
growth.
I would like to reaffirm my belief in the
previously stated ambitions to double the business in the mid-term.
If we get this right, Boku can be a rocket ship and to quote a
Pixar classic "to infinity and beyond!!"
Stuart
Neal
Chief
Executive Officer
19 March
2024
Chief Financial Officer's
Report
Strong revenue and EBITDA growth
driven by growth in Local Payments Methods
Group
results
2023 was a highly successful year for Boku as
we saw a 30% increase in revenues of $18.9 million to $82.7 million
(FY22: $63.8 million). The primary driver of that success was
growth of our connections to Local Payment Methods ("LPMs") for our
global merchant base but we also saw good growth from Direct
Carrier Billing ("DCB").
Adjusted EBITDA* also grew strongly to $25.8
million (FY22 restated: $20.2 million[1]), in line with revenue growth, and
this was net of one-off non-contractual bonuses to all of our staff
in recognition of the highly successful year, together with a
significant increase in contractual executive bonuses related to
overperformance against both budget and market consensus
expectations at the beginning of 2023. It's worth recalling that as
we headed into 2023, market consensus expectations were revenues of
$69.2 million and adjusted EBITDA of $22.9 million, so the actual
over performance in 2023 was substantial. Group profit
before tax from continuing operations for 2023 increased to $11.4
million (FY22: $4.1 million). Year-end cash balances
increased considerably to $150.9 million
(FY22: $116.5 million) even though we purchased £7.9 million of our
own shares as part of our continuing share buyback
programme.
Consolidated
Statement of Comprehensive Income
Payments
division (continuing operations)
Following the disposal of Boku's
Identity division on 28 February 2022 Boku now only has one
division - Payments.
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 our payments network has expanded in recent years to
offer connections to offer other Local Payment Methods ("LPMs")
such as digital wallets and real time Account to Account ("A2A")
payments through its 'mobile-first' payments platform. These
services are provided to many of the world's largest digital
entertainment merchants including Amazon, Netflix, Meta/Facebook,
Google, Spotify, Microsoft and Sony.
In 2023 the Company performed strongly with
revenues increasing to $82.7 million (FY22: $63.8 million) an
increase of 30% and 33% on a constant currency basis, which in turn
delivered increased adjusted EBITDA of $25.8 million (FY22
restated: $20.2 million[1]). Growth comes from both the existing
merchant base and from adding new carrier and LPM connections to
new and existing merchants.
Total Payments Volume ("TPV") increased to
$10.5 billion (FY22: $8.9 billion) while Monthly Active Users
("MAUs") grew by 29% to 67.4 million (FY22: 52.3 million)
and 66.1 million new users made their first payment or
bundling transaction with Boku during 2023 (FY22: 56.7
million).
We saw particularly strong growth in digital
wallets and real time A2A payments: Revenues of $16.5m
up 152% from $6.7m in 2022 following increasing adoption of these
products by our key merchants; a 154% increase in
volumes processed, compared to 2022; a 76% increase in MAUs of
LPMs, to 6.7 million in December 2023 compared to 3.8 million in
December 2022, while new users of LPMs increased 64% to 13.8
million in FY23 (FY22: 8.4 million).
[1] Right-of-use assets were restated to prepayments in the year
ended 31 December 2022, see note 2 for further details.
In 2023 Boku completed approximately 125 new
payment launches with existing and new merchants including Google,
Meta, Microsoft, Amazon, Disney, Netflix, Spotify, Samsung, Sky and
EA Games, through Boku's expanded mobile-first payments network. Of
these launches, around half were for LPMs.
Our take rate increased to 0.79% in 2023, with
H2 take rate of 0.81%, as a result of higher take rates from
digital wallets which are all settlement model where we handle the
cash and so charge higher fees. (FY22: take rate 0.72%
with H2 at 0.74%).
We continued to invest in Boku's mobile-first
payments platform in 2023 as we further expanded our LPM
capabilities and continued our investment in Boku's regulated
payment capabilities which now cover more than 60 markets where
Boku is able to process regulated payments either directly or
indirectly.
Adjusted
Operating Expenses (continuing operations)
Adjusted operating expenses* for
the continuing Payments business increased to $54.9 million (FY22:
$41.8 million).
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restated[1]
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Year
ended
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Year
ended
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31 Dec
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31 Dec
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2023
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2022
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$'000
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$'000
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Gross profit
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80,670
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61,993
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Adjusted EBITDA
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(25,799)
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(20,238)
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Adjusted
Operating Expenses
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54,871
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41,755
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[1] Right-of-use assets were restated to prepayments in the year
ended 31 December 2022, see note 2 for further details.
This was due to a number of
factors including significant payroll increases due to high wage
inflation in all locations and additional headcount as we continued
to invest in building out Boku's 'mobile-first' payments network
globally. We also added capabilities in digital wallets and real
time A2A payments globally, including a further expansion of our
regulatory footprint by adding new licences and legal
entities. These regulated payment capabilities now cover
more than 60 markets.
The Group capitalised $5.4 million of
internally generated intangible assets during the year compared
with $4.9 million in 2022.
Discontinued
operations (Identity division)
Following the disposal of Boku's Identity
division to Twilio on 28 February 2022 the prior year comparatives
included in the consolidated statement of comprehensive income
include the results relating only to the continuing Payments
business. The Identity results are shown separately under
"discontinued operations". The final payment from Twilio was
received in full on 9 September 2023. There was no gain or loss on
disposal in 2023.
[1] Right-of-use assets were restated to prepayments in the year
ended 31 December 2022, see note 2 for further details.
Adjusted
EBITDA
Adjusted EBITDA for the full year 2023 was up
28% to $25.8 million (FY22 restated: $20.2
million[1]). This
includes a one-time non-contractual bonus payment to all staff to
recognise the considerable over achievement against budget and
market expectations as well as contractual over performance bonuses
to senior executives. In total these over-performance bonuses
totalled approximately $2.0 million, which directly impacted
EBITDA.
We continued our investment into expanding
Boku's mobile-first network but still managed to achieve adjusted
EBITDA margins of almost 32%. Adjusted EBITDA is earnings before
interest, tax, depreciation and amortisation, non-recurring other
income, share-based payments expense, forex gains/losses and
exceptional items.
Profit before
tax from continuing operations
Profit before tax from continuing operations
for 2023 was $11.4 million (FY22: $4.1 million). This can be broken
down as follows:
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Gross margin increased to $80.7 million/98%
(FY22: $62.0 million/97%).
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Share Based Payments expense increased to $7.6
million from $5.2 million in 2022 as we grew our headcount. The
Share Based Payments expense comprises the IFRS 2 charge and
related National Insurance expense. Boku continued with its policy
of offering all staff share based awards annually. RSU and stock
option charges are spread over three and four years respectively,
and in line with their vesting conditions, from the date of grant.
Of the $7.6 million booked in 2023, $0.6 million was paid out cash
(FY22: $0.3 million) (relating to NI), the remainder was non-cash.
All comparatives are for the continuing Payments business
only.
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Depreciation and amortisation charges
increased to $7.6 million (FY22 restated: $5.4
million[1])
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Foreign exchange movements resulted in a loss
of $1.0 million (FY22: $0.8 million loss) mainly unrealised
differences on the currency balances we hold.
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No amounts relating to intangibles were
impaired in the year (FY22: $1.3 million related to impairment of
the Fortumo domain and 'brand' which was discontinued). See also
intangibles section below.
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Charitable donations were similar to 2022 at
$0.3 million (FY22: $0.3 million).
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Financing expenses fell to $0.3 million in
FY23 (FY22: $0.7 million). These costs relate to interest and set
up fees on leases and bank loans/overdraft facility.
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Interest income increased significantly to
$1.9 million (FY22: $0.2 million) as interest rates improved and we
were able to move more funds onto longer term deposits.
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A fair value adjustment credit of $0.1 million
(FY22: charge of $3.47 million) in relation to warrants granted in
September 2022 to a subsidiary of Amazon Inc, Amazon.com NV
Investment Holdings LLC (see note 3).
|
·
|
Other income of $0.1 million (FY22: $0.8
million) related to income from Boku providing ongoing accounting
services to Twilio following the sale of the Identity business to
enable a smooth transition (also in FY22). This amount has been
excluded from adjusted EBITDA as a non-trading, non-recurring item.
These services to Twilio have now ceased.
|
·
|
Tax charge of $1.3 million in the year (FY22:
$0.2 million credit). Please see Note 7 for details.
|
[1] Right-of-use assets were restated to prepayments in the year
ended 31 December 2022, see note 2 for further details.
Profit from
discontinued operations, net of tax (comparative)
The 2022 comparative for profit from the
discontinued Identity business of $24.6 million included a $25.2
million profit on disposal of Boku's Identity business to Twilio on
28 February 2022 net of disposal costs and offset by the Identity
trading loss for the two months to the end of February 2022
(see note 8).
Profit after
tax
The Group reported a net profit after tax of
$10.1 million for the period (FY22: $28.9 million, primarily driven
by profit from the disposal of the discontinued Identity division
of $24.6 million, excluding this profit on disposal, profit after
tax was $4.3 million).
Consolidated
Statement of Financial Position
·
|
Closing cash balances were $150.9 million at
the end of 2023 (including restricted cash balances of $33.5
million) up from $116.5 million on 31
December 2022 (including restricted cash of $17.0 million).
Boku also has a Revolving Credit Facility
("RCF") of £10.0 million with Citibank. At year end the RCF
facility remained undrawn.
|
·
|
The average daily cash balance, a measure
which smooths out the effect of carrier, digital wallet and
merchant payments, was $131.7 million in
December 2023, up from $105.8 million in June 2023 and $98.8
million in December 2022.
|
·
|
Deferred tax assets of $15.3 million were
recognised at 31st December 2023 (FY22 restated: $15.5
million[2]). This
restatement reflected an error in the usability of certain tax
losses and future transaction volumes through its US and UK
incorporated entities) and deferred tax liabilities of $182
thousand were recognised (FY22: $Nil).
|
·
|
From a working capital perspective, current
assets exceeded current liabilities at 31 December 2023 by $64.6
million compared with $55.1 million[1] at the 2022 year end.
|
·
|
Intangible assets were $56.6 million as at 31
December 2023, compared to $56.2 million at 31 December 2022 due to
year end revaluation into USD. The Payments CGU (cash generating
unit) was assessed using discounted cashflows and determined that
no impairment was required at 31 December 2023. Following the
disposal of the Identity CGU in 2022 only the Payments CGU
remains.
|
·
|
Goodwill and other
intangibles were assessed for impairment and it was determined no
impairment was required as at 31 December 2023.
|
·
|
Intangible assets are broken down
as follows
|
|
31-Dec
|
31-Dec
|
|
2023
|
2022
|
|
$'000
|
$'000
|
Goodwill
|
42,183
|
41,733
|
Other intangibles
|
14,437
|
14,497
|
Intangible
assets
|
56,620
|
56,230
|
[1] Right-of-use assets were restated to prepayments in the year
ended 31 December 2022, see note 2 for further details.
[2] Deferred tax in the year ended 31 December 2022 was restated,
see note 2 for further details
Consolidated
Statement of Cashflows
During the year there was a net increase in the cash
and cash equivalents of $33.4 million (FY22: $59.6 million),
excluding the effect of foreign currency translations.
Cash from operations before working capital changes
was $23.1 million broadly in line with prior year at $22.0 million,
however we saw large increases in trade and other payables of $70.9
million (FY22: increase of $40.3 million) due to timing of payables
to merchants as daily settlement to merchants of funds received
from digital wallets was delayed over the Christmas shut down at
the merchants' request. This was largely offset by an increase in
receivables of $53.0 million (FY22: increase of $12.3 million) for
similar reasons as receipts from carriers and wallets were delayed.
This situation largely reversed after year end when Boku paid funds
delayed over Christmas to merchants and received the delayed funds
from carriers and wallets.
We purchased £7.9 million (FY22: £1.6 million) of
our own shares in 2023 to cover employee RSU awards and Amazon
warrants, per notes 20 and 23.
Amazon contract
and warrants
On 16 September 2022, an Amazon Inc.
subsidiary, Amazon.com NV Investment Holdings LLC
("Amazon"), signed a multi-year agreement
with Boku to connect to new Local Payment Methods in multiple
geographies which validated Boku's move into offering the new Local
Payments Methods including digital wallets and real-time A2A
payments via our expanded mobile-first network. In conjunction with
the agreement, Boku entered into a stock warrant
agreement with Amazon allowing them to acquire up to 3.75%
(11,215,142 shares) of Boku common stock at 81.20p per share based
on Amazon spend with Boku over a seven-year period. 747,676 shares
of common stock vested immediately on the signing of the warrant
agreement on 16 September 2022.
The warrant valuation resulted in recognition
of a warrant contract asset of $2.0 million (FY22: $1.7 million)
and a $5.5 million (FY22: $5.2 million) contract liability as at 31
December 2023. Please refer to Note 23 for full details.
Looking
Ahead
In 2023 revenues grew $18.9 million to $82.7
million compared to growth of $1.0 million in 2022. That 2023
revenue growth was a significant achievement and we rightfully
rewarded all of our staff with a one-off bonus to reflect the
significant over-performance against our internal budget and
external market consensus expectations at the start of 2023. This
revenue success has seen similar percentage growth in EBITDA
despite Boku also continuing to invest in its mobile-first platform
in order to take advantage of the opportunities in Local Payment
Methods worldwide, in particular Account to Account, as well as
investment to allow Boku to scale to meet the significant
transaction and cash processing volumes we expect to see over the
next few years. In our Capital Markets Day in February 2023, I
outlined how we believed Boku could double its revenues in the
medium term and that in turn would result in an expansion of
adjusted EBITDA margins once the heaviest investment phase was over
- and with 30% revenue growth in 2023 we remain confident that goal
is achievable and quicker than we imagined back in
February.
We are pleased with the 2023 financial results
and the substantial progress we have made and believe the Company
is well positioned for 2024 to exploit the substantial
opportunities it has. We look forward to
the future with confidence.
Keith
Butcher
Chief
Financial Officer
19 March
2024
Strategic Report
Boku - Enabling businesses to unlock
growth by freeing their customers to pay the way they want,
wherever they are in the world
The world of payments is changing before our
eyes.
Ever since the mobile revolution of the 1990s
and the introduction of smartphones in the 2000s, across the world,
consumers are choosing increasingly to manage their lives via apps
(or 'Super Apps') on their mobile devices …and that, importantly,
also includes how they choose to pay for goods and services. After
50 years of standardisation in payments, driven by global card
networks, who offered a harmonised user experience aimed initially
at face-to-face transactions via point-of-sale devices, the modern
consumer is seeking something different: Payment choice and the
familiarity of their local brands.
Enter the
Local Payment Method ("LPM") revolution
LPM is a broad term
to capture a preferred domestic (or perhaps regional) payment type
that is popular among consumers, but is not part of a globally
harmonised payment brand, such as Visa or MasterCard. Included
within this definition (but not exhaustively) are digital wallets,
domestic Bank-run Account to Account ("A2A") (real time payments)
schemes and Direct Carrier Billing ("DCB").
In a world now dominated by mobile commerce,
the use of plastic cards seems a somewhat old-fashioned concept
when it comes to completing a transaction, and relying on them
excludes many people around the world from participating in global
digital platforms. Payments are becoming an embedded part of the
way in which companies attract, onboard, service and retain
consumers. Global organisations are acutely aware of the need to
offer payment choice as a means of accessing and retaining the
largest pool of consumers in each individual country they choose to
operate within. That's where Boku comes in.
The problem for such large global merchants is
how to access what are disparate and non-standardised LPMs. After
all, the beauty of the card networks is that everything works the
same, wherever you happen to be in the world. Standardisation is
the key.
However, no
two LPMs are the same; have the same technology; same way of
operating; same APIs; same underlying commercial framework. To
solve this, Boku has created a platform which connects to over 300
funding sources, creating a global network of LPMs to help many of
the world's largest digital merchants grow in territories where
connecting to card networks simply isn't enough. The Boku network
offers merchants one simple API connection that provides a slick,
tokenised payments experience for an end customer that allows for
repeat transactions and subscriptions, irrespective of the
underlying funding source. Put simply, Boku deals with the
complexity of LPMs and harmonises connectivity for our global
merchants and their customers.
Importantly, the shift toward LPMs is not just
a developing markets phenomenon. Whilst it is true that, in certain
countries, the emergence of LPMs has been to leapfrog the
investment in card-based technology, driven by the need for
respective governments to drive financial inclusion through rapid
deployment of new payment technologies (India for example). In many
developed markets (Italy, Sweden, Switzerland, Spain, China, Korea,
to name a few) the rise of the digital wallet has been driven by
demographic preference, the 'Gen Z' effect, whereby an entire
generation is growing up with no affinity to plastic cards, but a
high expectation when it comes to user experience and convenience.
It is also reasonable to say that technology and regulation have
been equally influential in instigating the rapid emergence of
direct A2A banking payments, which allow for a wallet-style mobile
experience, but with a direct link to a user's bank account (ref
UPI in India, PIX in Brazil, PromptPay in Thailand, Open Banking in
the EU).
Why our
merchants choose Boku - The bundle of services
At Boku, we see ourselves as a growth partner
to our large global merchants and not merely a supplier of payment
services. This tying of our own success to the success of our
merchants ensures that our goals are mutual and clearly
linked.
It may not be immediately obvious, even to
those who study the payments landscape closely, but there is a
subtle but important difference between the role of Boku and that
played by more mainstream card (payment) processors. Over the past
20 years, the goal of the global payment processor has been to
generate economies of scale through large M&A combinations and
standardisation of product and processes, hinged around
well-established protocols issued by the card networks (e.g. Visa
and MasterCard). Boku, to the contrary, has been aggregating
disparate local payment methods (and bank operated schemes)
globally, creating a network that adds value by dealing with
complexity and tailoring our offering to each of our large global
merchants. In this arena, Boku's focus is on customisation and
specialisation.
Over the same 20-year period, LPMs have grown
in popularity to now comprise over two-thirds of global online
payment volume. (source:
Worldpay]
The role of Boku is therefore
threefold:
1)
|
'Before a transaction'
|
|
|
|
To help our merchants to commercialise in
places where customer payment choice is key to commercial success.
Offering better payment choice also brings with it the opportunity
for consumer acquisition. During 2023, Boku helped our merchants to
add over 66 million new paying consumers through a number of
targeted bundling and user acquisition programmes.
|
|
|
2)
|
'During a transaction'
|
|
|
|
To create 'effective simplicity' by connecting
to popular local payment methods around the world and then working
with our merchants to build APIs that provide a frictionless user
experience and consequently have the highest possible user
conversion rate (payment success).
|
|
|
3)
|
'After a transaction'
|
|
|
|
To move money, convert currencies and remit
funds in multiple countries. Allowing consumers to pay in local
currencies and enabling merchants to receive funds in whichever
currency they wish.
|
At the heart of our momentum is the incredible
set of assets that have been created by Boku. Boku's network now
spans more than 70 countries and connects to around 300 LPMs,
including over 240 Mobile Network Operators plus 52 digital wallets
& local Banking (A2A) schemes. Supporting this technical
infrastructure are licences to move money in over 60 countries
worldwide, underpinned by banking facilities covering 34 currencies
via 190 distinct bank accounts.
The Next
Stages of Growth:
To capitalise on the significant foundations
and momentum that we have created, the Company has identified a
number of key strategic focus areas to ensure success over the
coming years.
·
|
Continued development of the LPM
network
|
o
|
Our heritage in delivering complex
connectivity to mobile operator billing capability globally has
created an expertise in-house that places the business in a unique
position to be successful when it comes to connecting to local
digital wallets and domestic bank schemes. We will continue to grow
our global reach in line with demands of our merchants.
|
·
|
Deliver Account to Account (A2A) payments for
mobile commerce
|
o
|
Banks around the world are investing $millions
in developing 'open banking' style real time networks that are
increasingly being used to power commerce - reference UPI in India
or PIX in Brazil. This new style of payment methods comes with some
added nuances - such as real time cleared funds and the requirement
for direct scheme participation.
|
·
|
Marketing via LPMs
|
o
|
This may be the world's fastest growing
marketing channel. Boku's network can now connect to seven billion
standalone consumer accounts. That equates to a lot of eyeballs and
a significant opportunity for our merchants to market services
using Boku's network.
|
·
|
Expand Banking and settlement capabilities -
moving the money
|
o
|
To fully capitalise on the opportunity
generated by the LPM network, Boku will be adding increasing value
to our merchants by continuing to invest in our ability to process,
reconcile, convert and settle funds globally.
|
|
| |
'You're going
to need a bigger boat!'
Of course, executing on all of the above is
not straightforward or easy. There is a reason that many of the
most successful payments companies in the world are themselves
giant global organisations. Servicing a global payments network for
large global companies requires scale itself, to efficiently
connect demand and supply, authenticate, secure and process a
material value of commerce through one centralised platform takes
enormous corporate muscle.
To ensure that we continue to win in Direct
Carrier Billing ("DCB") and digital wallets, but also to press our
advantage in emerging A2A commerce, Boku will be making strategic
investments for long term growth in core back-end processing
capabilities, driving automation in the back office, introducing
sophisticated tooling for our engineers (including early
exploration of AI), adding bench strength in our finance
operations, governance and compliance teams whilst layering on
dedicated customer success capabilities.
To get ourselves ready for the next period of
expansion - it's not sufficient to simply reach the 'Big
Pond' of global cross-border payments -
we have to win in the Big Pond! Boku is no longer a start-up, we
are scaling up. To access the material opportunity provided by the
world of local payments, the company is increasing scalability
across all facets of the organisation - from sales & product,
through to engineering, legal/regulatory & finance.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
|
|
|
|
restated*
|
|
|
|
Year ended
|
Year
ended
|
|
|
|
31 December
2023
|
31
December
2022
|
|
Note(s)
|
|
$'000
|
$'000
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
Revenue
|
3
|
|
82,720
|
63,764
|
Cost of sales
|
|
|
(2,050)
|
(1,771)
|
Gross profit
|
|
|
80,670
|
61,993
|
Administrative expenses
|
4
|
|
(71,057)
|
(54,742)
|
Other Income
|
|
|
103
|
755
|
Operating profit
|
|
|
9,716
|
8,006
|
|
|
|
|
|
Fair value gain/ (loss) on
warrants
|
3,
23
|
|
53
|
(3,470)
|
Finance income
|
6
|
|
1,887
|
201
|
Finance expense
|
6
|
|
(249)
|
(675)
|
Profit before tax from continuing
operations
|
|
|
11,407
|
4,062
|
Taxation
|
7
|
|
(1,321)
|
237
|
Profit from continuing operations
|
|
|
10,086
|
4,299
|
|
|
|
|
|
Profit from discontinued
operations
|
8
|
|
-
|
24,605
|
Total profit for the year
|
|
|
10,086
|
28,904
|
|
|
|
|
|
Other comprehensive income/ expense net of
tax
|
|
|
|
|
Items that will or may be
reclassified to profit or loss:
|
|
|
|
|
Foreign currency gain/(loss) on
translation of foreign operations
|
|
|
1,572
|
(3,576)
|
Total other comprehensive income/
(expense) for the year
|
|
|
1,572
|
(3,576)
|
Total comprehensive income for the year attributable to
equity holders of the parent company
|
|
|
11,658
|
25,328
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
9
|
|
|
|
Total
|
|
|
|
|
Basic EPS ($)
|
|
|
0.0339
|
0.0969
|
Diluted EPS ($)
|
|
|
0.0322
|
0.0934
|
from continuing operations
|
|
|
|
|
Basic EPS ($)
|
|
|
0.0339
|
0.0144
|
Diluted EPS ($)
|
|
|
0.0322
|
0.0139
|
|
|
|
|
|
Alternative performance measures
|
|
|
|
restated*
|
Adjusted
EBITDA1
|
|
|
25,799
|
20,238
|
*The prior year has been restated
to exclude the fair value loss on warrants from administrative
expenses, further details can be found in note 2.
|
The accompanying notes form an
integral part of these consolidated financial statement
1 Adjusted EBITDA is a non-IFRS measure defined as earnings
before interest, tax, depreciation, amortisation, non-recurring
income, share based payment expense, foreign exchange
gains/(losses) and exceptional items.
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
|
|
|
|
Restated*
|
restated*
|
|
|
|
31
December
|
31
December
|
1
January
|
|
|
|
2023
|
2022
|
2022
|
|
Note(s)
|
|
$'000
|
$'000
|
$'000
|
Non-current assets
|
|
|
|
|
|
Property, plant and
equipment
|
10
|
|
758
|
696
|
669
|
Right-of-use assets
|
10
|
|
2,784
|
3,233
|
4,661
|
Intangible assets
|
11
|
|
56,620
|
56,230
|
63,117
|
Warrant contract asset
|
3,
23
|
|
1,840
|
1,519
|
-
|
Deferred tax assets
|
7
|
|
15,306
|
15,518
|
15,981
|
Total non-current
assets
|
|
|
77,308
|
77,196
|
84,428
|
Current assets
|
|
|
|
|
|
Trade and other
receivables
|
13
|
|
148,522
|
90,509
|
82,897
|
Warrant contract asset
|
3,
23
|
|
122
|
192
|
-
|
Financial asset at fair value
through profit or loss
|
|
|
-
|
5,600
|
-
|
Cash and cash
equivalents
|
14
|
|
150,859
|
116,513
|
62,440
|
Total current assets
|
|
|
299,503
|
212,814
|
145,337
|
|
|
|
|
|
|
Total assets
|
|
|
376,811
|
290,010
|
229,765
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other
payables
|
15
|
|
233,049
|
156,263
|
119,641
|
Current tax payable
|
|
|
509
|
222
|
-
|
Bank loans and
overdrafts
|
17
|
|
-
|
-
|
1,125
|
Current lease
liabilities
|
16
|
|
1,370
|
1,277
|
1,335
|
Total current
liabilities
|
|
|
234,928
|
157,762
|
122,101
|
Non-current liabilities
|
|
|
|
|
|
Other payables
|
15
|
|
979
|
1,194
|
1,700
|
Warrant liabilities
|
3,
23
|
|
5,511
|
5,206
|
-
|
Deferred tax
liabilities
|
7
|
|
182
|
-
|
456
|
Bank loans
|
|
|
-
|
-
|
6,688
|
Non-current lease
liabilities
|
16
|
|
1,682
|
2,272
|
3,498
|
Total non-current
liabilities
|
|
|
8,354
|
8,672
|
12,342
|
|
|
|
|
|
|
Total liabilities
|
|
|
243,282
|
166,434
|
134,443
|
|
|
|
|
|
|
Net assets
|
|
|
133,529
|
123,576
|
95,322
|
Equity attributable to equity holders of the
company
|
|
|
|
|
|
Share capital
|
18
|
|
29
|
29
|
29
|
Other reserves
|
19
|
|
255,249
|
252,385
|
246,883
|
Foreign exchange
reserve
|
19
|
|
(4,718)
|
(6,290)
|
(2,714)
|
Treasury shares
|
19
|
|
(6,628)
|
(1,835)
|
-
|
Retained losses
|
|
|
(110,403)
|
(120,713)
|
(148,876)
|
Total equity
|
|
|
133,529
|
123,576
|
95,322
|
*Deferred
tax positions and right-of-use assets in the year ended 31 December
2022 and opening balances as at 1 January 2022 have been restated,
further details can be found in note 2.
The financial statements were
approved by the Board for issue on 19 March 2024
Stuart
Neal
Keith Butcher
Chief Executive
Officer
Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
Year ended
|
Year
ended
|
31
December
|
31
December
|
|
|
2023
|
2022
|
|
Note(s)
|
$'000
|
$'000
|
Operating activities
|
|
|
|
Cash generated from operations
|
22
|
40,935
|
49,966
|
Income taxes paid
|
|
(338)
|
(314)
|
Net cash from operating activities
|
|
40,597
|
49,652
|
Investing activities
|
|
|
|
Purchase of property, plant and
equipment
|
10
|
(434)
|
(470)
|
Payments for internally developed
software
|
11
|
(5,430)
|
(4,866)
|
Proceeds from discontinued
operations (net of cash disposed)
|
8
|
5,600
|
26,545
|
Proceeds from sale of
assets
|
|
-
|
1
|
Interest received
|
6
|
1,887
|
201
|
Net cash (used in)/ from investing
activities
|
|
1,623
|
21,411
|
Financing activities
|
|
|
|
Principal elements of lease
payments
|
16
|
(1,478)
|
(1,556)
|
Interest paid on leases
|
16
|
(171)
|
(235)
|
Issue of share capital on exercise
of options and RSUs
|
|
406
|
470
|
Purchase of treasury
shares
|
|
(9,802)
|
(1,835)
|
Cash received on sale of treasury
shares
|
|
2,333
|
-
|
Interest paid on loan
|
6
|
(78)
|
(127)
|
Loan settlement costs
|
|
-
|
(25)
|
Repayment of bank loan
|
|
-
|
(8,125)
|
Net cash used in financing activities
|
|
(8,790)
|
(11,433)
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
33,430
|
59,630
|
Effect of foreign currency
translation on cash and cash equivalent
|
|
916
|
(5,557)
|
Cash and cash equivalents at
beginning of year
|
|
116,513
|
62,440
|
Cash and cash equivalents at end of year
|
14
|
150,859
|
116,513
|
The accompanying notes form an
integral part of these consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1. General
Information
Boku, Inc. is a public company
incorporated and domiciled in the United States of America. The
shares of the Company are traded on AIM, a market of the London
Stock Exchange Group plc. The registered office of the Company is
located at 660 Market Street, Suite 400, San Francisco, CA 94104,
United States.
These consolidated financial
statements comprise the Company (Boku, Inc.) and its subsidiaries
(together referred to as the "Group").
The principal business of the
Group is the provision of local payment solutions for its
merchants.
Boku's payments network provides
multiple mobile payment methods, including via digital mobile
wallets, direct carrier billing and real-time account to account
payment schemes.
Going concern
The consolidated financial
statements have been prepared on a going concern basis. The Group
meets its day-to-day working capital requirements through its cash
balances and also has a revolving credit facility that it can use.
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 to December 2024,
to which they foresee that the Group will be able to operate within
its existing facilities.
Furthermore, in carrying out the
going concern assessment, the Directors considered a number of
scenarios, including revenue falling between 29% and 9% over the
forecast, which would bring profit before tax in 2024 to
break-even. This is a severe but plausible scenario and it was
concluded that the business would still have adequate resources to
continue in operational existence for at least 12 months from the
approval of the accounts. Management also has the ability to
identify cost savings, if necessary, to help mitigate any impact on
cash outflows.
The ongoing Russia/Ukraine
conflict has not had a material impact on Group
revenues.
The Directors confirm that they
have a reasonable expectation that the Group will have adequate
resources to continue in operational existence for at least the
next 12 months from approval of these financial statements and meet
its financial obligations as they fall due for at least the next 12
months from the date of signing these financial statements.
Accordingly, these financial statements are prepared on a going
concern basis.
2. Accounting
policies
Basis of
preparation
The financial information has been
prepared using the historical cost convention, except for
derivative financial liabilities recognised, as stated in the
accounting policies below. These policies have been consistently
applied to all years presented, unless otherwise stated.
The consolidated financial
statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and International Financial
Reporting Interpretations Committee ("IFRIC") as issued by the
International Accounting Standards Board ("IASB").
The consolidated financial
statements have been prepared on a going concern basis. These
financial statements have been prepared for a 12-month calendar
year.
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,
"critical accounting estimates, assumptions and judgements". 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 effective from
1st January 2023.
The Group's consolidated financial
statements are presented in US Dollars, rounded to the nearest
thousands (expressed as $'000) unless otherwise indicated. The main
functional currencies for the Company's subsidiaries are US Dollar,
Euro and Pounds Sterling.
Basis of
consolidation
The consolidated financial statements presents
the results of the Company and its entities
controlled by the Company ("the Group")
made up to 31 December 2023.
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 achieved: 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. Intercompany transactions and
balances between Group companies are eliminated in full on
consolidation.
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.
There were no business transaction
costs accounted for as a deduction from equity in the current or
prior year.
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.
Restatement
During the change in auditors, an
error in application of deferred tax recognition was identified
relating to the look forward period for future taxable profits. As
a result, it was identified, that the Group had under-recognised
deferred tax assets from prior years. Accordingly, the opening
consolidated statement of financial position as at 1 January 2022
and year ended 31 December 2022 has been restated. The opening
balances at 1 January 2022 had increased deferred tax assets
recognised from $3,105k to $15,981k and the year ended 31 December
2022 had increased deferred tax assets recognised from $3,383k to
$15,518k. The net deferred tax asset recognised as at the 31
December 2023 balance sheet date is $15,124k (FY22:
$15,518k).
The consolidated statement of
comprehensive income in the year end 31 December 2022 has been
restated to move the fair value gain/(loss) on warrants from
administrative expenses to a separate line below operating profit,
to more appropriately reflect the accounting judgement.
Additionally, for the year ended
31 December 2022 and opening balances as at 1 January 2022 amounts
previously accounted for under IFRS 16 as right-of-use assets of
$429k and $340k respectively, were restated to prepayments in the
consolidated statement of financial position. In 2022, notes 4, 10
and 13 have also been restated to reflect the movement to
prepayments and the reduction in depreciation of $226k.
None of these adjustments have had
any impact on the consolidated statement of cash flows.
Deferred tax
|
|
As originally
reported
|
Effect of
restatement
|
Group restated
amounts
|
1
January 2022
|
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
Consolidated statement of Financial Position
(extract)
|
|
|
Deferred tax asset
|
|
3,105
|
12,876
|
15,981
|
Accumulated losses
|
|
161,752
|
(12,876)
|
148,876
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
(extract)
|
|
|
Total equity
|
|
82,446
|
12,876
|
95,322
|
|
|
|
|
|
Deferred Tax
|
|
|
|
|
Net opening position
|
|
253
|
-
|
253
|
Net recognition in the year
|
|
2,396
|
12,876
|
15,272
|
P&L
|
|
2,359
|
-
|
2,359
|
Equity
|
|
-
|
12,876
|
12,876
|
Foreign exchange
revaluation
|
|
37
|
-
|
37
|
Net closing position
|
|
2,649
|
12,876
|
15,525
|
|
|
|
|
|
A
deferred tax asset (liability) has not been recognised for the
following (Gross):
|
|
Non-deductible Reserves
|
|
39
|
(39)
|
-
|
Accrued Compensation
|
|
84
|
(84)
|
-
|
Stock Based
Compensation
|
|
1,819
|
227
|
2,046
|
Other temporary and deductible
differences
|
|
527
|
(527)
|
-
|
Unused tax credits
|
|
189
|
(189)
|
-
|
Unused tax losses
|
|
27,952
|
94,840
|
122,792
|
Total deferred tax assets (not recognised)
|
|
30,610
|
94,228
|
124,838
|
|
|
As originally
reported
|
Effect of
restatement
|
Group restated
amounts
|
31 December 2022
|
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
Consolidated Statement of Financial Position
(extract)
|
|
|
Deferred tax asset
|
|
3,383
|
12,135
|
15,518
|
Accumulated losses
|
|
132,848
|
(12,135)
|
120,713
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
(extract)
|
|
|
Opening balance (Total equity)
|
|
82,446
|
12,876
|
95,322
|
Profit for the year
|
|
28,904
|
-
|
28,904
|
Other comprehensive
loss
|
|
(3,576)
|
-
|
(3,576)
|
Correction of error
|
|
3,667
|
(741)
|
2,926
|
Closing balance (Total equity)
|
|
111,441
|
12,135
|
123,576
|
|
|
|
|
|
Deferred Tax
|
|
|
|
|
Net opening position
|
|
2,649
|
12,876
|
15,525
|
Net recognition in the year
|
|
734
|
(741)
|
(7)
|
P&L
|
|
733
|
-
|
733
|
Equity
|
|
-
|
(741)
|
(741)
|
Foreign exchange
revaluation
|
|
1
|
-
|
1
|
Net closing position
|
|
3,383
|
12,135
|
15,518
|
|
|
|
|
|
A
deferred tax asset (liability) has not been recognised for the
following (Gross):
|
|
Non-deductible Reserves
|
|
60
|
(60)
|
-
|
Accrued Compensation
|
|
56
|
(56)
|
-
|
Stock Based
Compensation
|
|
1,939
|
(1,698)
|
241
|
Other temporary and deductible
differences
|
|
321
|
(321)
|
-
|
Unused tax credits
|
|
189
|
(189)
|
-
|
Unused tax losses
|
|
11,082
|
17,976
|
29,058
|
Total deferred tax assets (not recognised)
|
|
13,647
|
15,652
|
29,299
|
Fair value gain or loss on warrants
The prior year consolidated
statement of comprehensive Income has been restated to exclude fair
value loss on warrants of $3,470k from administrative expenses. The
impact on operating profit is detailed below:
|
As originally
reported
|
Effect of
restatement
|
Group restated
amounts
|
31 December 2022
|
$'000
|
$'000
|
$'000
|
|
|
|
|
Consolidated Statement of Comprehensive Income
(extract)
|
|
|
Gross profit
|
61,993
|
-
|
61,993
|
Administrative expenses
|
(58,212)
|
3,470
|
(54,742)
|
Other Income
|
755
|
-
|
755
|
Operating profit
|
4,536
|
3,470
|
8,006
|
Fair value loss on
warrants
|
-
|
(3,470)
|
(3,470)
|
Finance income
|
201
|
-
|
201
|
Finance expense
|
(675)
|
-
|
(675)
|
Profit before tax from continuing
operations
|
4,062
|
-
|
4,062
|
Right-of-use assets
|
|
As originally reported
(after restatement from FV g/l warrants)*
|
Effect of
restatement
|
Group restated
amounts
|
31 December 2022
|
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
Consolidated Statement of Financial Position
(extract)
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
Right-of-use assets
|
|
3,662
|
(429)
|
3,233
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
90,080
|
429
|
90,509
|
|
|
|
|
Alternative performance measures (extract)
|
|
|
Adjusted EBITDA
|
20,464
|
(226)
|
20,238
|
|
|
As originally
reported
|
Effect of
restatement
|
Group restated
amounts
|
1
January 2022
|
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
Consolidated Statement of Financial Position
(extract)
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
Right-of-use assets
|
|
5,001
|
(340)
|
4,661
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
82,557
|
340
|
82,897
|
Adoption of new and revised
standards
New and amended standards that are effective for the current
year
A number of new or amended
standards became applicable from 1 January 2023 and as a result the
Group has applied the following standards:
- Amendments to IFRS 16: Property, Plant and Equipment -
Proceeds before Intended Use
|
- Amendments to IFRS 3: Reference to Conceptual
Framework
|
- Amendments to IAS 1: Presentation of Financial Statements -
Classification of Liabilities
|
- Amendments to IAS 37: Onerous Contracts - Cost
|
The above requirements did not
have a material impact on the consolidated financial statements.
There are no other new or revised standards or interpretations that
are effective for the first time for the financial year beginning
on or after 1 January 2023 that would be expected to have a
material impact on the Group.
New standards, interpretations and amendments not yet
effective
Name
|
Description
|
Effective date
|
IAS 1 (amendments)
|
Non-current liabilities with
covenants
|
1 January 2024
|
The Directors do not expect the
adoption of these standards and amendments to have a material
impact on the consolidated financial statements.
Critical accounting estimates,
assumptions and judgements
In preparing these consolidated
financial statements, the Group has made its best estimates and
judgements of certain amounts, giving due consideration to
materiality. Actual results may differ from those
reported.
The Group regularly reviews these
estimates and judgements and updates them as required. 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 judgements 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 related to matters that are inherently
uncertain.
Judgements
Goodwill, Intangible assets acquired in a business
combination
The useful economic lives of
intangible assets (other than goodwill) acquired in a business
combination are estimated in order to calculate the appropriate
amortisation charge. Goodwill is subject to an annual impairment
review which is performed by comparing the balance value with the
recoverable amount of the asset or CGU.
Annually for Goodwill, or where an
indication of impairment exists, value in use calculations are
performed to determine the appropriate carrying value of the asset.
The value in use calculation requires the estimations of the future
cash flows expected to arise for the CGU and a suitable discount
rate in order to calculate present value. Where the actual future
cash flows are less than expected, a material impairment loss may
arise. See note 11 for specific judgements and assumptions used to
calculate the value in use of the CGU.
It is necessary to consider the
forecasted cashflow of the Group when comparing against the
carrying value and why it has been considered that there is only
one payments CGU. This is since the contracts in place with a
merchant, regardless of whether they have been acquired will
generally follow the same cashflow for that specific
merchant.
Discontinued operations
The Identity business was sold on
28th February 2022 and the result of the sale is
presented in Note 8 Discontinued operations.
Capitalised internally generated intangible
assets
Other intangible assets include
acquired merchant relationships, IT Platforms and Domain names as
well as internally developed intangibles (capitalised development
costs). Acquired intangible assets are recognised at fair value at
the acquisition date and are amortised on a straight-line basis
over their estimated useful lives. Initial capitalisation cost for
internally generated intangibles is based on the developer estimate
of the time spent on development projects.
Deferred tax
In recognising income and deferred
tax assets, management makes judgements of the likely outcome of
future taxable profits for certain jurisdictions. Judgements are
also made regarding the probability of these forecasts.
Critical accounting
Estimates
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 uses the
Black Scholes model to calculate its share-based payments
expense (please refer to Note 20 for full
details).
Taxation
In recognising income and deferred
tax assets, management makes estimates of the likely outcome of
future taxable profits for certain jurisdictions. Where the 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.
Fair value measurement - Amazon warrants
The Group's accounting for
warrants issued to Amazon is determined in accordance with
accounting standards for financial instruments and revenue
recognition. The initial fair value of the warrants issued were
recognised as a contract asset and liability respectively (see note
3 for more details). The contract asset is amortised to revenue
(reducing revenue) over the 7-year vesting period based on Amazon
revenue earned to date as a proportion of total estimated Amazon
revenue over the 7-year vesting period. The derivative financial
liability is remeasured to fair value at each reporting
date. The fair value movement
attributable to the change in the number of shares expected to vest
due to a change in estimated Amazon revenues over the 7-year
vesting period is recorded as an equal and opposite increase to the
financial liability and contract asset, based on the fair value of
the warrant at inception. The fair value movement
attributable to the change in the fair value of the underlying
warrants is recorded as gains or losses in profit or loss. The
determination of fair values involves assumptions and estimates of
revenue and share price volatility, risk-free rate, and future
Amazon revenues. Due to the long-term nature of the warrants,
such estimates involve significant estimation
uncertainty.
Revenue from contracts with customers
Boku builds custom digital payment
connections between many payment methods (LPMs) and
merchants.
The merchant's end users will make
an online purchase via a LPM, Boku will provide the reconciliation,
connection and often transfer of these funds from the LPM to the
Merchant. Revenue generated is the service fee from this
connection. In this regard, Boku acts as the agent between the
merchant and LPMs.
For each connection with a
merchant, a contract is agreed. It is determined that there is one
performance obligation for each contract, being the facilitation of
the payment connection between the merchant and their end
users. This service fee is recognised at a point in time as
the obligation is fulfilled when the transaction occurs, since the
risks and rewards have been transferred on completion of the
transaction. Therefore, there is no deferred revenue recognised in
the current or prior year.
Revenue is initially recorded as
accrued income prior to receiving a statement of information from
the LPMs. Accrued income is recognised as a contract asset within
trade and other receivables.
Collection of service fees will
vary depending on the nature and agreement between each
merchant.
The different types of service
fees can be categorised as follows:
i. Settlement
For each purchase a merchant's end
user makes, Boku will collect the funds from the LPM, deduct a
service fee and pass the net funds on to the merchant. On initial
receipt of a statement of information from the LPM, accrued revenue
is recognised as a percentage of the underlying transaction and a
corresponding payable is recognised as a contract liability within
trade and other payables, representing the amount owed from the
LPM.
Amounts become due to the merchant
on receipt of funds from the LPM and are settled in the original
currency of the transaction.
Additional settlement fees may
arise under the following circumstances:
a)
|
Foreign currency translation
fees
|
|
An additional foreign exchange fee
is charged when settlement is required by the merchant in another
currency.
|
b)
|
Advanced payment service
fees
|
|
An additional fee is charged when
the merchant requires early settlement, prior to Boku receiving
funds from the LPM.
|
ii. Transactional
Boku will provide the connection
between the merchant and their end user and the LPM will pay the
funds directly to the merchant. A service fee is then due from the
merchant to Boku.
Identity Revenue (discontinued)
On 28 February 2022, the Group
sold its entire Identity business (Boku Identity Inc. and its 100%
subsidiary Boku Mobile Solution Ireland Ltd) to Twilio (see Note 8
for full details).
Discontinued operations
A discontinued operation is a
component of the Group's business, the operations and cash flows of
which can be clearly distinguished from the rest of the Group and
which:
• represents a separate major line of business or geographical area
of operations;
• is part of a single co‑ordinated plan to
dispose of a separate major line of business or geographical area
of operations; or
• is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of
disposal or when the operation meets the criteria to be classified
as held for sale (see Note 8 for details).
When an operation is classified as a discontinued operation, the
comparative statement of comprehensive income is re‑presented as if the operation had been discontinued
from the start of the comparative year.
Cost of sales
Cost of sales is primarily related
to the monthly fees and some service charges from MNOs and other
providers, customer services fees, some marketing expenses and bad
debt.
Operating Segments
The Group determines and presents
operating segments-based information provided internally to the
Group's operating decision makers, defined in the Group as the
General Management Committee ("GMC").
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). Management reviews
the performance of the Group by reference to total results of a
segment against budget on a monthly basis.
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 United States, the Group
has a 401(k) plan, a type of defined contribution scheme in which
all United States 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 2023 and 31 December 2022.
Contributions to defined
contribution schemes are charged to the consolidated statement of
comprehensive income in the year to which they relate.
Intangible
assets and Goodwill
Goodwill
Goodwill arising on consolidation
represents the excess of the cost of a business combination over
the Group's interest in the fair value of identifiable assets,
liabilities and contingent liabilities acquired from the business
combination, at the date of acquisition. Costs directly
attributable to the acquisition are expensed in the period.
Goodwill is initially measured at cost and subsequently measured at
cost less any accumulated impairment losses.
An impairment in carrying value is
charged to the consolidated statement of comprehensive
income. An impairment loss recognised for goodwill is not
reversed.
For the purposes of impairment
testing, Goodwill is allocated to the Group's cash generating unit
(CGU). 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.
Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. 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.
Intangible assets acquired as part of a business
combination
Intangible assets acquired in a
business combination are identified, valued 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.
Externally acquired intangible assets
Externally acquired intangible
assets are initially recognised at cost and subsequently amortised
on a straight-line basis over their useful economic
lives.
Internally generated intangible assets (development
costs)
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. Development costs previously recognised as
an expense are not recognised as an asset in a subsequent
period.
Subsequent expenditure is
capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other
expenditure, including expenditure on internally generated goodwill
and brands, is recognised in the statement of comprehensive income
as incurred.
Amortisation rates
Amortisation is calculated to
write off the cost of intangible assets less their estimated
residual values using the straight-line method over their estimated
useful lives and is recognised in the statement of comprehensive
income within administrative expenses. Goodwill is not
amortised.
The significant intangibles
recognised by the Group and their useful economic lives are as
follows:
Intangible asset
Trademarks
Merchant relationships
Developed technologies
Domain names
Internally developed
software
|
Useful economic life
Indefinite life - not
amortised
5 -10 years
2-10 years
10 years
3 years
|
Trademarks do not expire after a
period of time (unlike patents and copyrights). They exist as long
as the owner continues to use the trademark. Therefore, trademarks
are considered to have an indefinite life, and are not amortised,
as trademarks can retain their value forever, and contribute to net
cash inflows indefinitely. Trademarks will not be amortised as
their useful life is determined to be infinite.
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 fixtures and
fittings
Computer equipment and
software
Leasehold improvement
Right-of-use assets
|
3-5 years
3 years
3-5 years
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.
Depreciation methods, useful lives
and residual values are reviewed at each reporting date and
adjusted if appropriate. Carrying amounts are reviewed on each
reporting date for impairment. Where the carrying amount of an
asset is greater than its estimated recoverable amount, it is
written down immediately to its recoverable amount.
Cash and cash equivalents
Cash and cash equivalents include
cash in hand, deposits held at call with banks, Restricted Cash
(see below and note 14) and other short term highly liquid
investments with original maturities of three months or
less.
Restricted cash
The Group holds merchants' cash in
transit and in segregated accounts of some of its regulated
subsidiaries and discloses restricted cash separately from own
cash. Other funds not available to the Group are also classified as
restricted and presented as restricted cash.
Financial instruments
A financial instrument is any
contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another
entity.
Financial assets
Financial assets are classified on
initial recognition at fair value and then subsequently measured at
amortised costs, fair value through other comprehensive income and
fair value through profit or loss.
i. Financial assets at amortised
cost
The Group's financial assets
mainly comprise of cash, trade and other receivables. These assets
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market (trade
receivables), but also incorporate other types of contractual
monetary asset.
Trade and other 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 is 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.
ii. Financial assets at fair value through
profit and loss
The holdback receivable asset
outstanding from the sale of the Identity business in the prior
year and the Amazon warrant contract asset are held at fair value
through profit and loss.
Financial liabilities
The Group classifies its financial
liabilities into two categories, depending on the purpose for which
the liability was acquired.
Fair value through profit and loss
("FVTPL"):
The warrant liability is
classified as a financial liability at FVTPL and valued using a
combination of the Black-Scholes Model and Monte Carlo simulation.
Financial liabilities at FVTPL are stated at fair value, with any
gains or losses arising on re-measurement (due to changes in the
fair value of the warrant) recognised in profit or loss.
Financial liabilities at amortised cost:
The Group includes in this
category loans, trade and other payables and liabilities to related
parties.
Financial liabilities are
recognised when the Group becomes a party to the contractual
agreements of the instrument.
Trade and other payables
(excluding other taxes, social security costs and deferred income)
and other short-term monetary liabilities, are initially 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 and other
interest-bearing liabilities 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.
A financial liability is
derecognised when the obligation under the liability is discharged,
cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a
new liability. The difference in the respective carrying amounts is
recognised in the statement of comprehensive income.
The gain or loss for fair value
changes should be classified based on the classification of the
underlying instruments. As the fair value changes of the Amazon
warrant liability are highly dependent on the share price of Boku,
Inc. rather than the business performance in the reporting year
these gains and losses have been classified as exceptional items
and this policy will be applied consistently going
forward.
Provisions
Provisions are recognised when the
Group has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources will be
required to settle the obligation, and the amount can be reliably
estimated. Provisions are not recognised for future operating
losses.
Provisions are measured at the
present value of management's best estimate of the expenditure
required to settle the present obligation at the end of the
reporting period. The provision for employer taxes on future
employee share instruments are not discounted as it is not
considered material.
Leases
The Group assesses at contract
inception whether a contract is, or contains, a lease. That is, if
the contract conveys the right to control the use of an identified
asset for a period of time in exchange for
consideration.
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.
Break clauses may be provided in the lease agreements, calculations
are prepared up to the end of 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 $5,000). 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 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
Ordinary shares are classified as
equity and are stated at the proceeds received net of direct issue
costs.
Share buyback
On 7th July 2022 the
Group announced the share buyback programme to repurchase common
stock in the capital of the Company (Boku, Inc.) up to a maximum
aggregate consideration of £8 million and up to a maximum of five
million Common Stock.
The purpose of the Buyback
Programme is to hold the Common Stock in treasury for the purpose
of satisfying future obligations in relation to the staff equity
remuneration programme.
The Buyback Programme will operate
within certain pre-set parameters, including that the maximum price
paid per Common Stock shall be 105 per cent of the trailing 5-day
average mid-market price, and in accordance with the authority
granted by the Company's Board.
The Buyback Programme became
effective from 7th July 2022 with an expiry date of 30
June 2023, or earlier, if either the maximum aggregate number of
Common Stock have been purchased or the maximum aggregate
consideration had been reached. On 8 June 2023 it was announced
that the Buyback Programme was to be extended for a further 12
months (the "Extended Buyback Programme") and will expire
on 30 June 2024, or earlier, if either the maximum aggregate
number of Common Stock have been purchased or the maximum aggregate
consideration has been reached. The extended programme will involve
the repurchasing of common stock with par value
of $0.0001 per share in the capital of the Company
("Common Stock") up to an additional maximum aggregate
consideration of £10.5 million and up to an additional
maximum of 5.25 million Common Stock.
Due to the limited liquidity in
the issued Common Stock, a buy-back of Common Stock pursuant to the
Authority on any trading day may represent a significant proportion
of the daily trading volume in the Common Stock on AIM and may
exceed 25 per cent of the average daily trading volume.
Accordingly, the Company will not benefit from the exemption
contained in Article 5(1) of the UK version of the Market Abuse
Regulation (Regulation (EU) No 596/2014) (as in force in the UK and
as amended by the Market Abuse (Amendment) (EU Exit) Regulations
2019 and the Financial Services Act 2021).
The cost of
treasury shares held is presented as a separate reserve (the
"treasury share reserve") and recorded in
equity. Any excess of the consideration received on the sale of
treasury shares over the weighted average
cost of the shares sold is credited to other
reserves.
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 statement
of comprehensive income in the year. When
an employee leaves the Group, unvested grants are forfeited and the
cumulative share-based payment expense is reversed on the leaving
date. Unvested RSUs are forfeited on leaving the Group for any
reason including as part of discontinued operations.
The Group's scheme, which awards
shares in the parent entity, includes recipients who are employees
in the parent company and 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 where 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.
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 reporting date under IFRS
2.
Taxation
The income tax expense represents
the sum of the tax currently payable and deferred tax. Deferred tax
relating to the timing differences arising on share-based payments
recognised in equity, is also recognised in equity and not as a tax
expense.
Current tax
The tax currently payable is based
on taxable profit for the year. Taxable profit differs from net
profit as reported in profit or loss because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or
deductible. Current taxes are calculated according to local tax rules,
using tax rates enacted or substantially enacted at the reporting
date.
A provision is recognised for
those matters for which the tax determination is uncertain, but it
is considered probable that there will be a future outflow of funds
to a tax authority. The provisions are measured at the best
estimate of the amount expected to become payable. The Group's
method for calculating the tax provision under IFRS on an
individual entity basis for the year ending 31 December 2023,
involves the following approach.
Entities are categorised according
to a materiality threshold, considering current tax impacts and
deferred tax effects from categories such as share-based payments,
carried forward losses, and PPE. Tax provisioning calculations for
immaterial entities utilise profit/(loss) before tax figures
multiplied by foreign tax rates. Material entities include
corporations in the UK and USA. These entities undergo a more
detailed calculation process, with US and UK group entities
preparing the tax provision closely aligned with their actual tax
return. This approach ensures that the Group's tax provision aligns
accurately with its tax obligations under IFRS on an individual
entity basis.
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
are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences and unused tax loses can be utilised.
The amount of the deferred asset
or liability is determined using tax rates that have been enacted
or substantively enacted by the reporting 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.
|
Presentational currency
The presentational currency for
the Group is US dollars, as the company is incorporated in the USA
which is the currency of its primary economic environment in line
with IAS 21. Boku Group has its main contracts, assets,
intellectual property.
Functional currency
The functional currency for
subsidiaries is the local currency of the entity's country of
incorporation. Items included in the financial statement of each of
the Group's entities are measured in the functional currency of
each entity.
Foreign currency
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)
|
Monetary assets and liabilities
denominated in foreign currencies are translated into the
functional currency at the exchange rate at the reporting
date.
|
iii)
|
Non-monetary assets and
liabilities that are measured at fair value in a foreign currency
are translated into the functional currency at the exchange
rate.
|
iv)
|
Non-monetary items that are
measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the
transaction.
|
v)
|
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.
|
vi)
|
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 of the Group 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; 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.
3. Revenue from contracts
with customers and other segmental disclosures
The Group's revenue is principally
service fees earned from merchants. All revenue is earned at the
time the transactions is processed and as a result, all revenue is
recognised at one point in time. Therefore, at 31 December 2023 and
31 December 2022, the Group does not have deferred revenue on the
Consolidated statement of financial position.
Fees are calculated as a
percentage of the value of transaction. Additional fees are also earned when a merchant
requires settlement in a foreign currency from the currency
received, or before the funds are received from LPMs:
|
2023
|
2022
|
|
$'000
|
$'000
|
Revenue
|
82,720
|
63,764
|
The geographical analysis of the
revenue by location of the users is presented below:
Group Revenue by Region
|
Continuing Operations
Payments
|
'$
000 USD
|
2023
|
%
|
Americas
|
3,204
|
3.9%
|
APAC
|
47,230
|
57.1%
|
EMEA
|
32,286
|
39.0%
|
Grand Total
|
82,720
|
100.0%
|
Group Revenue by Region
|
Continuing Operations
Payments
|
'
$000 USD
|
2022
|
%
|
Americas
|
628
|
1.0%
|
APAC
|
36,167
|
56.7%
|
EMEA
|
26,969
|
42.3%
|
Grand Total
|
63,764
|
100.0%
|
An analysis of non-current assets
by geographical market is given below:
|
|
|
restated*
|
|
|
2023
|
2022
|
|
|
$'000
|
$'000
|
United States of America (continuing
operations)
|
|
50,240
|
48,502
|
Europe
|
|
11,504
|
12,724
|
Rest of the World
|
|
258
|
452
|
Total
|
|
62,002
|
61,678
|
*Right-of-use assets in the prior
year were restated to prepayments, see note 2 for further
details.
In FY23 there were four customers
(FY22: one customer), with revenue amounting to more than 10% of
the payments segment revenue, contributing $57.6m (FY22:
$30.9m).
Amazon warrants
On 16 September 2022, the Group
entered into a stock warrant agreement with Amazon in conjunction
with a commercial service level agreement for the Group to provide
payment processing services to Amazon.
Under the agreement, the Group
issued warrants to Amazon allowing them to purchase common stock
that will vest incrementally, based on the amount of revenue earned
by the Group from Amazon via Boku payment processing methods. The
warrant agreement grants Amazon the right to acquire up to
11,215,142 shares of common stock in the Group (equivalent to 3.75%
of the Group's total common stock as at the inception of the
warrant agreement). 747,676 shares of common stock vested
immediately on the signing of the warrant agreement on 16 September
2022. 209,350 additional shares of common stock will vest for every
$1 million of revenue generated by the Group under its service
level agreement with Amazon over a 7-year vesting period ending 15
September 2029. No further warrants will vest if $50 million
of revenue is generated under the service level agreement, which
results in a final vesting increment of 209,316 shares of common
stock. The exercise price of vested warrants is 81.20p per
share, based on the 30-day volume weighted average trading price as
at 16 September 2022.
The Group has determined that the
747,676 warrants of common stock that vested immediately on signing
of the warrants are equity instruments under IAS 32, as they
represented a fixed number of shares that will be exercised at a
fixed price. The warrants are therefore not accounted for until
they are exercised and paid, at which point share capital and other
reserves will be recorded.
The Group has determined that the
remaining warrants linked to revenue under the service level
agreement are within the scope and revenue recognition and
financial instruments accounting standards. The warrants
represent a derivative financial instrument classified as a
financial liability in accordance with IAS 32 and IFRS 9,
remeasured to fair value with gains and losses recorded in profit
or loss. The warrants also represent non-cash consideration payable
to a customer under IFRS 15, which is recorded as a reduction to
revenue and measured at fair value, but not subsequently
remeasured.
At inception of the warrant, an
equal and opposite derivative financial liability and corresponding
contract asset were recorded at fair value, based on the total
number of warrants expected to vest (linked to forecasted Amazon
revenues under the service level agreement) and the fair value a
single warrant.
The contract asset, which
effectively represents a prepaid or deferred volume rebate, is
amortised to revenue based on Amazon revenues to date as a
proportion of total expected Amazon revenues over the 7-year
vesting period.
The derivative financial liability
is remeasured to fair value at each reporting date. The fair
value movement attributable to the change in the number of shares
expected to vest due to a change in estimated Amazon revenues over
the 7-year vesting period is recorded as an equal and opposite
increase to the financial liability and contract asset, based on
the fair value of the warrant at inception. The fair value
movement attributable to the change in the fair value of the
underlying warrants is recorded as gains or losses in profit or
loss within operating profit.
The initial fair value of the
warrants at inception was $1,755,640, based on a fair value of 1
warrant of $0.348 and a total number of warrants expected to vest
over the 7-year vesting period of 5,049,288. As at 31
December 2022, the total number of warrants expected to vest
decreased to 4,992,086, resulting in a decrease to the contract
asset and financial liability of $19,862, and the fair value of 1
warrant increased to $1.043, resulting in a loss of
$3,470,333. As at 31 December 2023, the total number of
warrants expected to vest increased to 5,333,781, resulting in an
increase to the contract asset and financial liability of $358,774,
and the fair value of 1 warrant decreased to $1.033, resulting in a
gain of $53,476. The fair value of the warrants was
determined using a combination of Monte Carlo Simulation and
Black-Scholes Model valuation methods and are classified within
Level 3 of the fair value hierarchy, see Note 23 for further
details.
Amounts recognised from
amortisation of the warrant contract assets in the year were as
follows:
|
31-Dec-23
|
31-Dec-22
|
|
$'000
|
$'000
|
Amortisation to revenue
|
108
|
25
|
On 28 February 2022, the Group sold
the entire Identity business segment. As a result, from
1st March 2022, the Group reported its
financial statements on
a single segment basis: "Payments segment". The Identity segment
results for the two months of 2022 are presented below under
'discontinued operations'. The Group operated with only one
operating segment through financial year 2023, the Payments
Segment. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been
identified as the management team including the Chief Executive
Officer and the Chief Financial Officer. The Group CEO and CFO
review the monthly management reports for both segments before
sending the results to the Board.
4. Administrative
expenses
Operating profit from continuing
operations is stated after charging:
|
|
restated*
|
|
2023
|
2022
|
|
$'000
|
$'000
|
Staff costs (excluding
share-based payments expense - Note 5)
|
39,981
|
30,946
|
Depreciation of property,
plant and equipment (Note 10)
|
385
|
395
|
Right-of-use asset
depreciation (Note 10)
|
1,430
|
1,411
|
Amortisation of intangible
assets (Note 11)
|
5,742
|
3,631
|
Impairment of intangible
assets (Note 11)
|
-
|
1,264
|
Share-based payments expense
(Note 20)
|
7,595
|
5,165
|
Foreign exchange loss
|
1,034
|
796
|
*Right-of-use assets in the
prior year were restated to prepayments, see note 2 for further
details.
5. Employee
information
Included in administrative
expenses are costs related to employee benefits, analysed as
follows:
|
2023
|
2022
|
Payroll costs
|
$'000
|
$'000
|
Salaries
|
32,536
|
24,805
|
Short-term benefits
|
1,767
|
1,390
|
Social security costs
|
4,293
|
3,339
|
Pension costs
|
249
|
236
|
Other staff costs
|
1,136
|
1,176
|
Staff costs excluding share-based payments
|
39,981
|
30,946
|
Share-based payments
|
7,595
|
5,165
|
Total staff costs
|
47,576
|
36,111
|
Key management personnel
compensation was made up as follows:
|
2023
|
2022
|
|
$'000
|
$'000
|
Salaries
|
5,104
|
3,847
|
Short-term benefits
|
101
|
95
|
Social security costs
|
1,108
|
497
|
Share-based payments
|
3,402
|
2,952
|
Long-term employee
benefits
|
18
|
16
|
Total compensation
|
9,733
|
7,407
|
6. Finance income and
expense
|
2023
|
2022
|
|
$'000
|
$'000
|
Finance income
|
|
|
Interest income from bank
deposits
|
(1,887)
|
(201)
|
Total finance income
|
(1,887)
|
(201)
|
|
|
|
Finance expenses
|
|
|
Interest on bank loans
|
76
|
121
|
Other interest payables
|
2
|
6
|
Interest on operating
leases
|
171
|
235
|
Amortisation of debt
discount
|
-
|
313
|
Total finance expenses
|
249
|
675
|
|
|
|
Net finance (income)/ expense
|
(1,638)
|
474
|
7. Taxation
|
2023
|
2022
|
|
$'000
|
$'000
|
Current tax
|
|
|
Current tax on profits for the
year
|
427
|
239
|
Foreign tax
|
903
|
257
|
Adjustments in respect of prior
years
|
(7)
|
-
|
Total current tax
|
1,323
|
496
|
Deferred tax
|
|
|
Origination and reversal of
temporary differences
|
355
|
(1,870)
|
Adjustments in respect of prior
years
|
(357)
|
1,137
|
Total deferred tax
|
(2)
|
(733)
|
Total tax
expense/(credit)
|
1,321
|
(237)
|
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
results for the period are as follows:
|
2023
|
2022
(restated)*
|
|
$'000
|
$'000
|
Profit before tax
|
11,407
|
4,062
|
Tax rate (US income tax
rate)
|
21%
|
21%
|
Profit before tax multiplied by
the applicable rate of tax:
|
2,395
|
853
|
Variance in overseas tax
rates
|
28
|
1,182
|
Impact of change in tax
rates
|
(204)
|
-
|
Impact of difference between CT
& DT rate
|
1,010
|
-
|
Expenses not deductible for tax
purposes
|
1,003
|
1,143
|
Utilisation of tax
losses
|
(3,532)
|
(6,429)
|
Non qualifying
depreciation
|
7
|
-
|
Adjustments in respect of prior
years
|
(364)
|
1,137
|
Foreign tax
|
249
|
77
|
Other differences
|
288
|
-
|
US state taxes/ Withholding
taxes
|
441
|
1,800
|
Total tax (credit)/
expense
|
1,321
|
(237)
|
*Deferred tax positions in the prior
years ended 31 December 2022 and opening balances as at 1 January
2022 have been restated, further details can be found in note
2.
|
2023
|
2022
(restated)*
|
Deferred Tax
|
$'000
|
$'000
|
Net opening position
|
15,518
|
15,525
|
Net recognition in the
year
|
(394)
|
(7)
|
P&L
|
2
|
733
|
Equity
|
(396)
|
(741)
|
Foreign exchange
revaluation
|
-
|
1
|
Net closing position
|
15,124
|
15,518
|
*Deferred
tax positions in the prior years ended 31 December 2022 and opening
balances as at 1 January 2022 have been restated, further details
can be found in note 2.
The net closing position is made
up of:
·
|
The deferred tax liability at 31
December 2023 is $182k (2022: $NIL Restated). The current year
deferred tax liability relates to tax positions connected with the
Boku, Inc. UK fixed temporary differences.
|
·
|
The deferred asset of $15,306k
(2022: $15,518k restated) relates primarily to the recognition of
the US and UK available losses which management believe can be
utilised within the next eight years. Each year management assess
the usability of the deferred assets
|
A deferred tax asset/ (liability)
has not been recognised for the following items:
|
2023
|
2022
(restated)*
|
|
$'000
|
$'000
|
Stock Based
Compensation
|
-
|
241
|
Other temporary and deductible
differences
|
(7,925)
|
-
|
Unused tax losses
|
6,197
|
29,058
|
Total deferred tax
assets
|
(1,728)
|
29,299
|
*Deferred tax positions in the
prior years ended 31 December 2022 and opening balances as at 1
January 2022 have been restated, further details can be found in
note 2.
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.
The unused tax losses must be
utilised by various dates. U.S. federal tax losses expire in
various dates through to 2037.
At the reporting date,
undistributed reserves on non-US subsidiaries $7,115k which would
attract withholding tax and $810k undistributed Estonian subsidiary
profits for which deferred tax liabilities have not been
recognised. No liability has been recognised in respect of these
differences because the timing of any distribution is under the
Group's control and no distribution which gives rise to taxation is
contemplated.
UK corporation tax rates increased
from 19% to 25% with effect from 1 April 2023, in accordance with
the Finance Act 2021. Current taxes have been calculated using a
blended rate, while deferred taxes have been computed at 25%,
aligning with the substantively enacted rate as of 31 December
2023. There have been no significant changes in tax rates enacted
or effective in the current or prior year that are expected to have
a material impact on the financial statements. The company will
continue to monitor any potential changes in tax legislation that
may impact its future financial performance.
8. Discontinued operations
On 28 February 2022, the Group
sold its entire Identity business (Boku Identity Inc and its 100%
subsidiary Boku Mobile Solutions Ireland Ltd).
As required, at 31 December 2022,
discontinued operations were excluded from the results of
continuing operations and were presented as a single entry in the
Income Statement as 'Profit from discontinued operations' in the
income statement.
The financial results related to
the discontinued operations for the period to the date of disposal
are presented below:
2022 (2
months)
|
|
$'000
|
Fee Revenue
|
1,153
|
Cost of sales
|
(719)
|
Gross Profit
|
434
|
Administrative Expenses
|
(1,541)
|
Operating loss analysed as:
|
|
Adjusted EBITDA
|
(652)
|
Depreciation and
amortisation
|
(238)
|
Share based payments
expense
|
(163)
|
Foreign exchange losses
|
(54)
|
Operating loss
|
(1,107)
|
Profit on disposal
|
26,614
|
Disposal costs
|
(1,408)
|
Share based payments expense
reversed
|
506
|
Total Profit before tax on disposal of Identity
business
|
24,605
|
Tax
|
-
|
Net
profit for the period attributable to equity holders of the parent
company
|
24,605
|
The net cashflows used in the
Identity business disposed in the prior period are as
follows:
|
31-Dec
|
|
2022
|
|
$'000
|
Net cash used in operating
activities
|
(1,106)
|
Net cash used in investing
activities
|
(178)
|
Net cash from financing
activities
|
570
|
Net cash used in discontinued
operations
|
(714)
|
Reconciliation of consideration received with the total
profit and loss from discontinued operations:
|
|
31 Dec
2022
$'000
|
Total consideration received in
the prior year
|
|
26,761
|
Financial asset through profit and
loss - holdback receivable
|
|
5,600
|
Working capital
adjustment
|
|
156
|
Total consideration
|
|
32,517
|
The holdback receivable of $5.6m
was received during the year.
Assets and liabilities of disposal
The assets and liabilities
relating to the Identity business were reclassified as held for
sale at 31 December 2021. As at 31 December 2022, these values were
nil as the sale completed in February 2022.
9. Earnings per
share
Basic EPS is calculated by
dividing the profit or loss attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue
during the year, excluding shares purchased by the Company (Note
18). As at 31 December 2023 there were
4,007,868 shares held in treasury (FY22: 1,500,000).
Diluted EPS represents the basic
EPS, adjusted for the effect of the dilutive shares issuable on
exercise from employee share options under the Group's share-based
payment schemes, weighted for the relevant period.
The weighted average number of
shares in issue during the year was as follows:
|
2023
|
2022
|
Weighted average number of shares
in issue
|
297,942,357
|
298,275,521
|
Effect of dilutive share options,
RSU's and warrants
|
15,337,750
|
11,254,745
|
Diluted weighted average number of shares in
issue
|
313,280,107
|
309,530,266
|
|
|
|
|
|
|
Total
|
|
|
Profit for the year attributable
to shareholders of the Company ($,000)
|
10,086
|
28,904
|
Basic earnings per share
($)
|
0.0339
|
0.0969
|
Diluted earnings per share
($)
|
0.0322
|
0.0934
|
|
|
|
|
|
|
From continuing operations
|
|
|
Profit for the year attributable
to shareholders of the Company ($,000)
|
10,086
|
4,299
|
Basic earnings per share
($)
|
0.0339
|
0.0144
|
Diluted earnings per share
($)
|
0.0322
|
0.0139
|
|
|
|
|
|
|
From discontinuing operations
|
|
|
Profit for the year attributable
to shareholders of the Company ($,000)
|
-
|
24,605
|
Basic earnings per share
($)
|
-
|
0.0825
|
Diluted earnings per share
($)
|
-
|
0.0795
|
The Amazon Warrants increase the
number of diluted shares reported, which has an effect on our fully
diluted earnings per share. Further, the Amazon Warrants are
presented as an asset and derivative financial liability in the
audited consolidated statement of financial position The liability
is subject to fair value measurement adjustments during the periods
that it is outstanding. Accordingly, future fluctuations in the
fair value of the Amazon Warrant could adversely impact our results
of operations. If Amazon exercises its right to acquire Boku common
shares pursuant to the Amazon Warrant, it will dilute the ownership
interests of then-existing shareholders and reduce earnings per
share.
10.
Property, plant and equipment
|
|
|
|
|
|
*restated
|
|
Computer
equipment & software
|
Office
equipment and fixtures and fittings
|
Leasehold improvement
|
Property, plant and
equipment Total
|
|
Right-of-use
assets
|
|
$'000
|
$'000
|
$'000
|
$'000
|
|
$'000
|
Cost
|
|
|
|
|
|
|
At 1 January 2022
|
1,214
|
276
|
255
|
1,745
|
|
6,789
|
Restatement of right-of-use
asset
|
-
|
-
|
-
|
-
|
|
(305)
|
At 1 January 2022
(restated*)
|
1,214
|
276
|
255
|
1,745
|
|
6,484
|
Additions (restated*)
|
422
|
48
|
-
|
470
|
|
129
|
Disposals
|
(41)
|
(16)
|
-
|
(57)
|
|
(144)
|
Exchange adjustment
|
(49)
|
(22)
|
(27)
|
(98)
|
|
(291)
|
At 31 December 2022
(restated*)
|
1,546
|
286
|
228
|
2,060
|
|
6,178
|
Additions
|
372
|
62
|
-
|
434
|
|
957
|
Disposals
|
(37)
|
(4)
|
-
|
(41)
|
|
(975)
|
Exchange adjustment
|
20
|
12
|
9
|
41
|
|
89
|
At 31 December 2023
|
1,901
|
356
|
237
|
2,494
|
|
6,249
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
At 1 January 2022
|
744
|
216
|
116
|
1,076
|
|
1,788
|
Restatement of right-of-use
assets
|
-
|
-
|
-
|
-
|
|
35
|
At 1 January 2022
(restated*)
|
744
|
216
|
116
|
1,076
|
|
1,823
|
Charge for period
(restated*)
|
313
|
41
|
41
|
395
|
|
1,411
|
Disposals
|
(34)
|
(16)
|
-
|
(50)
|
|
(144)
|
Exchange adjustment
|
(31)
|
(14)
|
(12)
|
(57)
|
|
(145)
|
At 31 December 2022
|
992
|
227
|
145
|
1,364
|
|
2,945
|
Charge for period
|
305
|
38
|
42
|
385
|
|
1,430
|
Disposals
|
-
|
-
|
-
|
-
|
|
(971)
|
Exchange adjustment
|
(25)
|
6
|
6
|
(13)
|
|
61
|
At 31 December 2023
|
1,272
|
271
|
193
|
1,736
|
|
3,465
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
At 1 January 2022
(restated*)
|
470
|
60
|
139
|
669
|
|
4,661
|
At 31 December 2022
(restated*)
|
554
|
59
|
83
|
696
|
|
3,233
|
At 31 December 2023
|
629
|
85
|
44
|
758
|
|
2,784
|
*Right-of-use assets in the prior
year were restated to prepayments, see note 2 for further
details.
The additions related to the
renewal of the Estonia office, together with the 1-year renewal of
the office lease for Ireland, Germany, Japan and Singapore.
Additions in the prior year (FY22) related to the 1-year renewal of
the office lease for Ireland and Singapore. The Group had no contractual commitments for the acquisition
of property, plant and equipment in the current or prior
year.
Impairment of Property and Equipment
The carrying amounts of the
Group's assets including right-of-use assets are reviewed at the
end of each reporting period to determine whether there is any
indication of impairment loss. If any such indication exists, the
asset's recoverable amount is estimated in order to determine the
extent of the impairment loss, if any. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less cost to sell and value in use.
Impairment losses are charged to the profit and loss in other
operating expenses. During the years ended 31 December 2023 and
2022, no impairments have been recorded.
11.
Intangible assets
|
Domain
name
|
Developed technology
|
Merchant
relationships
|
Trade-marks
|
Goodwill
|
Internally developed software
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2022
|
1,836
|
8,001
|
15,750
|
110
|
45,379
|
14,621
|
85,697
|
Additions
|
-
|
-
|
-
|
-
|
-
|
4,866
|
4,866
|
Disposals
|
(1,562)
|
(19)
|
-
|
-
|
-
|
(3)
|
(1,584)
|
Disposals (discontinued
operations)
|
-
|
(1,918)
|
-
|
-
|
(2,784)
|
(2,996)
|
(7,698)
|
Exchange adjustment
|
(134)
|
(271)
|
(851)
|
-
|
(862)
|
(87)
|
(2,205)
|
At 31 December 2022
|
140
|
5,793
|
14,899
|
110
|
41,733
|
16,401
|
79,076
|
Additions
|
-
|
-
|
-
|
-
|
-
|
5,430
|
5,430
|
Exchange adjustment
|
-
|
389
|
444
|
-
|
450
|
(167)
|
1,116
|
At 31 December 2023
|
140
|
6,182
|
15,343
|
110
|
42,183
|
21,664
|
85,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation
|
|
|
|
|
|
|
|
At 1 January 2022
|
395
|
3,600
|
10,111
|
-
|
-
|
8,474
|
22,580
|
Charge for period
|
81
|
494
|
616
|
-
|
-
|
2,677
|
3,868
|
Impairment
|
1,264
|
-
|
-
|
-
|
-
|
-
|
1,264
|
Disposals
|
(1,562)
|
-
|
-
|
-
|
-
|
-
|
(1,562)
|
Disposals (discontinued
operations)
|
-
|
(1,217)
|
-
|
-
|
-
|
(1,419)
|
(2,636)
|
Exchange adjustment
|
(38)
|
(60)
|
(523)
|
-
|
-
|
(47)
|
(668)
|
At 31 December 2022
|
140
|
2,817
|
10,204
|
-
|
-
|
9,685
|
22,846
|
Charge for period
|
-
|
1,276
|
904
|
-
|
-
|
3,562
|
5,742
|
Exchange adjustment
|
-
|
383
|
(15)
|
-
|
-
|
46
|
414
|
At 31 December 2023
|
140
|
4,476
|
11,093
|
-
|
-
|
13,293
|
29,002
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
At 31 December 2021
|
1,441
|
4,401
|
5,639
|
110
|
45,379
|
6,147
|
63,117
|
At 31 December 2022
|
-
|
2,976
|
4,695
|
110
|
41,733
|
6,716
|
56,230
|
At 31 December 2023
|
-
|
1,706
|
4,250
|
110
|
42,183
|
8,371
|
56,620
|
The amortisation charge of
intangible assets is recognised in administrative expenses in the
consolidated statement of comprehensive income.
Goodwill
Goodwill acquired in a business
combination is allocated to the cash generating units ("CGU's")
that expect to benefit from that business combination.
Goodwill mainly consists of the
assets from the acquisition of Mopay AG ("Mopay") in October 2014
and Fortumo Holdings Inc. on 1st July 2020, absorbed
into the payment CGU.
Goodwill is reviewed annually for
impairment and at the year-end an impairment test was undertaken by
comparing the carrying value with the recoverable amount of the
Group's CGU. The recoverable amount of the cash generating unit is
based on value-in-use calculations. These calculations have been
calculated using pre-tax discounted cash flow projections based on
financial budgets and forecasts approved the Board of Directors.
The projections cover a five-year period and a calculation of the
terminal value, for the period following these
projections.
The recoverable amount of the
Payments CGU was calculated to be in excess of the carrying value,
indicating there is no impairment required. The key underlying
assumptions used in the calculations are those regarding projected
cash flows, growth rates, increases in costs and discount
rates.
Growth rates consider historic
experience and current market trends:
- Revenue growth ranges from 19.2% to 24.9% (FY22: 15.4% to
23.8%).
- Take rate growth rate of 0.1% (FY22: 0.1%)
- Gross profit ranging from 97% to 99% (FY22: 97% to
99%)
The pre-tax discount rate was
calculated at 15% (FY22: 15.5%). This is based on the Group's
assessment of risk-free interest rates and the risks specific to
the CGU. The terminal value calculation for 2023 was based on
growth rate of post-tax free cashflow of 2% (FY22: 2%) for the
CGU.
Sensitivity analysis has been
performed and the net present value of the
cashflows would need to fall by a factor of 9.5 to equal the
carrying value of the CGU (FY22: 3.4).
Fortumo domain name
During the prior year management
decided to discontinue the Fortumo domain name and to rebrand all
the Fortumo products and rename the acquired entities of Fortumo
group to Boku's name. As a result, the Fortumo domain which was
separately valued as part of the PPA work at the time of the
acquisition of Fortumo in July 2020 and included in intangibles,
was impaired in full by $1.26 million ($1.44 million at 31 December
2021 less amortisation $0.18 million) as the Fortumo domain name is
no longer being used internally or externally.
The Group had no contractual
commitments for the acquisition of intangible assets in the current
or prior year.
Developed technology
During the year it was agreed to
begin a project to migrate the merchants purchased under the
Fortumo acquisition from the Fortumo platform to the Boku platform,
after which the Fortumo platform would become obsolete. The project
is expected to complete in 2025 and as a result the amortisation
has been accelerated to align with the expected remaining useful
life of the platform.
12.
Subsidiaries
The subsidiaries of the Company,
all of which have been included in the consolidated financial
information, are presented below.
Name
|
Ownership
|
Principal activity
|
Place
of Incorporation
|
Boku Payments, Inc.
|
100%
owned by Boku, Inc.
|
Holding
Company
|
United
States
|
Boku Network Services,
Inc.
|
100%
owned by Boku, Inc.
|
Holding
Company
|
United
States
|
Boku Account Services,
Inc.
|
100%
owned by Boku, Inc.
|
Holding
Company
|
United
Stated
|
Boku Account Services UK
Ltd.
|
100%
owned by Boku Account Services, Inc.
|
Mobile
payment solutions
|
United
Kingdom
|
Boku Brasil Participações
Ltda.
|
100%
owned by Boku Network Services, Inc.
|
Holding
company
|
Brazil
|
Boku Network Brasil Instituição De
Pagamento Ltda.
|
100%
owned by Boku Brasil Participações Ltda.
|
Mobile
payment solutions
|
Brazil
|
Boku Network Services
GmbH
|
100%
owned by Boku, Inc.
|
Mobile
payment solutions
|
Germany
|
Boku Network Services UK
Ltd
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
United
Kingdom
|
Boku Network Services AU Pty
Ltd
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Australia
|
Boku Network Services IN Pvt.
Ltd.
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
India
|
Boku Network Services SG Pte.
Ltd.
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Singapore
|
Boku Network Services HK
Limited
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Hong
Kong
|
Boku Network Services Taiwan Branch
Office
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Taiwan
|
Boku Network Services Japan Branch
Office
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Japan
|
Mopay AG Beijing Representative
Branch
|
100%
owned by Boku Network Services AG (Germany)
|
Mobile
payment solutions
|
China
|
Boku Network Services IE
Limited
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Ireland
|
Boku Network Services MY Sdn.
Bhd.
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Malaysia
|
Boku Network Services EE Holdings,
Inc.
|
100%
owned by Boku Network Services, Inc.
|
Holding
Company
|
United
States
|
Boku Network Services TH Co
Ltd.
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
Thailand
|
Boku Network Services PH,
Inc.
|
100%
owned by Boku Network Services, Inc.
|
Mobile
payment solutions
|
Philippines
|
Boku Network Services MX S. de R.L.
de C.V.
|
50%
owned by Boku Network Services, Inc. 50% owned by Boku,
Inc.
|
Dormant
|
Mexico
|
Boku Network Services Estonia OÜ
(previously Fortumo OÜ)
|
100%
owned by Boku Network Services EE Holdings, Inc.
|
Mobile
payment solutions
|
Estonia
|
Boku Network Services ES
S.L.
|
100%
owned by Boku Network Services Estonia OÜ
|
Mobile
payment solutions
|
Spain
|
Fortumo Mobile Services Pvt.
Ltd.
|
100%
owned by Boku Network Services Estonia OÜ
|
Mobile
payment solutions
|
India
|
Fortumo Singapore Pte.
Ltd.
|
100%
owned by Boku Network Services Estonia OÜ
|
Mobile
payment solutions
|
Singapore
|
Boku Network Services PE
S.A.C.
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
Peru
|
Boku Network Services CO
S.A.S.
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
Colombia
|
Boku Network Services CL
S.P.A.
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
Chile
|
Boku Network Services ZA (Pty)
Ltd
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
South
Africa
|
Boku Network Services KE
Limited
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
Kenya
|
Boku Network Services TZ
Limited
|
99.999%
owned by Boku Network Services, Inc. 0.001% owned by Boku,
Inc.
|
Dormant
|
Tanzania
|
Boku Network Services AR
S.R.L.
|
95%
owned by Boku Network Services, Inc. 5% owned by Boku,
Inc.
|
Dormant
|
Argentina
|
Boku Network Services UG
Limited
|
99.95%
owned by Boku Network Services, Inc. 0.05% owned by Boku,
Inc.
|
Dormant
|
Uganda
|
Boku Network Services UY S.A.
|
100%
owned by Boku Network Services, Inc.
|
Dormant
|
Uruguay
|
13. Trade
and other receivables
|
|
restated*
|
|
31
December
|
31
December
|
|
2023
|
2022
|
|
$'000
|
$'000
|
Trade receivables
|
53,117
|
27,898
|
Accrued income
|
92,527
|
59,550
|
Accounts receivable
|
145,644
|
87,448
|
Less: provision for
impairment
|
(2,047)
|
(1,238)
|
Net accounts receivable
|
143,597
|
86,210
|
Other receivables
|
281
|
100
|
Deposits held
|
448
|
426
|
Sales taxes receivable
|
1,011
|
938
|
Prepayments (restated*)
|
3,185
|
2,835
|
Total current trade and other
receivables
|
148,522
|
90,509
|
|
|
|
Financial assets at fair value
through profit and loss
|
-
|
5,600
|
*Right-of-use assets in the prior year were restated to
prepayments, see note 2 for further details.
|
Accrued income relates to expected
revenue generated from settlement and transaction fees. On receipt
of statements from carriers and eWallets the accrued income is
reversed, and actual receivable balances are recognised
accordingly.
$5.6m was received in the current
year relating to the final settlement from the sale of the Identity
business. See note 8 for further details.
Provision for receivables:
|
31
December
|
31
December
|
|
2023
|
2022
|
|
$'000
|
$'000
|
|
|
|
Opening balance
|
1,238
|
756
|
Utilised during the
period
|
(208)
|
(19)
|
Increase/(decrease) during the
period
|
1,017
|
501
|
Closing balance
|
2,047
|
1,238
|
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
|
|
2023
|
2022
|
|
$'000
|
$'000
|
Cash and cash
equivalents
|
117,360
|
99,551
|
Restricted cash
|
33,499
|
16,962
|
|
150,859
|
116,513
|
The restricted cash primarily
includes segregated client funds and other client money received
but not yet paid to merchants (in transit) for Boku's licenced
entities, cash held at bank to secure a lease agreement for the
Company's San Francisco office and monies held at a financial
institution to collateralise Company credit cards.
15. Trade
and other payables
|
31
December
|
31
December
|
|
2023
|
2022
|
Current
|
$'000
|
$'000
|
Trade payables
|
182,397
|
118,829
|
Accruals
|
48,678
|
35,550
|
Total financial liabilities
classified as financial liabilities
|
231,075
|
154,379
|
Other taxes and social security
costs
|
1,386
|
1,024
|
Provision for social security
costs on issued stock options
|
588
|
860
|
Total current trade and other
payables
|
233,049
|
156,263
|
|
|
|
Non-current
|
|
|
Accrued taxes on issued stock
options
|
979
|
1,194
|
Total non-current trade and other
payables
|
979
|
1,194
|
The carrying values of trade and
other payables and accruals approximate to fair values.
16.
Lease liabilities
The table below shows a
reconciliation for discounted lease liabilities included in the
statement of financial position:
|
Property
(office leases)
|
IT
Equipment
|
Total
|
|
$'000
|
$'000
|
$'000
|
Lease liabilities as at 1 January 2022
|
4,833
|
-
|
4,833
|
Additions
|
129
|
315
|
444
|
Interest expense
|
235
|
-
|
235
|
Payments to lease
creditors
|
(1,476)
|
(315)
|
(1,791)
|
Exchange adjustment
|
(172)
|
-
|
(172)
|
Lease liabilities as at 31 December 2022
|
3,549
|
-
|
3,549
|
Additions
|
937
|
-
|
937
|
Interest expense
|
171
|
-
|
171
|
Payments to lease
creditors
|
(1,649)
|
-
|
(1,649)
|
Exchange adjustment
|
44
|
-
|
44
|
Lease liabilities as at 31 December 2023
|
3,052
|
-
|
3,052
|
The table below represents the
maturity analysis of contractual undiscounted lease
payments:
|
2023
|
2022
|
|
£'000
|
£'000
|
Less than one year
|
1,294
|
1,427
|
One to five years
|
1,768
|
2,407
|
Total undiscounted lease liabilities as at 31 December
2023
|
3,062
|
3,834
|
There are no leases with a term of
more than 5 years.
Lease liabilities included in the
statement of financial position:
|
2023
|
2022
|
|
£'000
|
£'000
|
Current
|
1,370
|
1,277
|
Non-current
|
1,682
|
2,272
|
The following represents the lease
expenses and depreciation of right-of-use assets in relation to
leases charged to the Consolidated statement of comprehensive
income:
|
|
restated*
|
|
2023
|
2022
|
|
£'000
|
£'000
|
Interest on lease
liabilities
|
171
|
235
|
Expenses related to short term
leases
|
329
|
238
|
Depreciation of right-of-use
assets (Note 10) (restated*)
|
1,430
|
1,411
|
*Right-of-use assets in the prior year were restated to
prepayments, see note 2 for further details.
The amounts recognised in the
consolidated statement of cashflows are presented below:
|
2023
|
2022
|
|
£'000
|
£'000
|
Payment of principal
|
1,478
|
1,556
|
Payment of interest
|
171
|
235
|
Total cash outflows
|
1,649
|
1,791
|
17. Loans
and borrowings
On 26 June 2020 the Group entered
into a loan agreement with its bankers for $20.0m to part finance
the acquisition of Fortumo Holdings Inc, and its subsidiaries on
1st July 2020. The loan was structured as a $10.0m term
loan repayable in 4 years and $10.0m revolving facility. Associated
costs of $500k were incurred and are amortised over the life of the
loan.
On the sale of the Identity
division, the outstanding term loan with Citibank of $8.125m was
repaid from the consideration. As at 31 December 2023 the Group has
no bank loans (FY22: Nil). The Group retains the $10m revolver
facility (RCF) which is currently not drawn upon (FY22: $10m
facility, $nil drawn upon). This revolver facility expires on 1
July 2024.
|
2022
|
|
Non-cash
changes
|
2023
|
|
|
Cash flows
|
Borrowing costs expensed in
the year
|
Foreign Exchange
Movement
|
Lease Liabilities (IFRS
16)
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Short-term lease
liabilities
|
1,277
|
(1,649)
|
-
|
44
|
1,698
|
1,370
|
Long-term lease
liabilities
|
2,272
|
-
|
-
|
-
|
(590)
|
1,682
|
Total liabilities from financial activities
|
3,549
|
(1,649)
|
-
|
44
|
1,108
|
3,052
|
|
2021
|
Cash flows
|
Non-cash
changes
|
2022
|
|
|
|
Borrowing costs expensed in
the year
|
Foreign Exchange
Movement
|
Lease Liabilities (IFRS
16)
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Short-term borrowings
|
1,125
|
(1,125)
|
-
|
-
|
-
|
-
|
Long-term borrowings
|
6,688
|
(7,000)
|
312
|
-
|
-
|
-
|
Short-term lease
liabilities
|
1,335
|
(1,791)
|
-
|
(129)
|
1,862
|
1,277
|
Long-term lease
liabilities
|
3,498
|
-
|
-
|
(43)
|
(1,183)
|
2,272
|
Total liabilities from financial activities
|
12,646
|
(9,916)
|
312
|
(172)
|
679
|
3,549
|
18. Share
capital
The Company's issued share capital
is summarised in the table below:
|
31
December
|
31
December
|
|
2023
|
2022
|
Common shares of $0.0001
each
|
|
Number of shares issued and
fully paid
|
|
Number
of shares issued and fully paid
|
|
|
|
|
'000
|
$'000
|
'000
|
$'000
|
Opening balance
|
|
299,270
|
29
|
295,876
|
29
|
Exercise of options and
RSUs
|
|
1,797
|
-
|
3,394
|
-
|
Closing balance
|
|
301,067
|
29
|
299,270
|
29
|
|
|
|
|
|
|
|
| |
Common Shares
At 31 December 2023, the Company
had 301,066,914 (FY22: 299,270,021) common shares issued and fully
paid. The Company has only one class of shares with par value of
$0.0001 each. The authorised share capital is 500,000,000
shares. The Company holds 4,007,868 shares
in treasury (FY22: 1,500,000 shares held in treasury).
19.
Reserves
The other reserves disclosed in
the consolidated statement of financial position includes share
premium representing 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.
Treasury reserve relates to the
amounts paid to buy back shares in Boku, Inc. from the
market.
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,
restricted stock awards (RSA) and restricted stock units (RSU). No
options were available to be issued under this plan as at 31
December 2023 or 2022. There are 2,218k options vested but not
exercised under this plan as at 31 December 2023 (FY22:
3,771k).
2. 2017 Equity
Incentive Plan (2017 Plan) 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, as explained below. There are 836k options (FY22: 837k)
and 11,597k (FY22: 10,069k) RSUs outstanding as at 31 December
2023.
2009 Equity Incentive Plan
The options activity under the
2009 Plan (including RSUs) are as follows:
|
2009
Plan (Options)
|
|
Number
of options
|
WAEP1
|
|
|
'000
|
|
|
At 1 January 2022
|
4,736
|
$0.34
|
|
Exercised
|
(965)
|
$0.34
|
|
At 31 December 2022
|
3,771
|
$0.34
|
|
Exercised
|
(1,513)
|
$0.31
|
|
Cancelled
|
(40)
|
$0.28
|
|
At 31 December 2023
|
2,218
|
$0.30
|
|
1WAEP - weighted average exercise price
A summary of other information
related to the options granted under this plan is presented in the
table below:
2009 Plan
|
|
December
2023
|
December
2022
|
Outstanding options at reporting end
date:
|
|
|
|
- total number of
options
|
|
2,218
|
3,771
|
- weighted
average remaining contractual life excluding RSUs
(years)
|
|
2.43
|
2.49
|
Vested and exercisable
('000):
|
|
2,218
|
3,771
|
- weighted
average exercise price
|
|
$0.30
|
$0.44
|
Weighted average share price
exercised during the period (excluding RSUs)
|
|
$0.31
|
$0.34
|
Share-based payment expense for the
period ('000)
|
|
-
|
-
|
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).
2017 Equity Incentive Plan
Options were granted under the
2017 Equity Incentive Plan only in January 2018. Since then, only
RSUs have been granted under the plan. The options granted under
this plan vest over 3 years and contain a one-year cliff.
Therefore, 25% of the options vest at the end of one year and from
year two a graded quarterly vesting takes place, where each
instalment of vesting is treated as a separate stock option
grant.
RSUs under the 2017 Plan may be
outstanding for periods of up to three 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. Options under
the 2017 Plan may be outstanding for periods of up to ten years
from the grant date.
Performance-based restricted stock units
(RSUs)
Performance-based RSUs vest on the
completion of a specified service period and the achievement of
certain performance targets, which may include individual
performance measures as well as Company measures, and are converted
into common stock upon vesting.
Share based payments 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 restricted 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 payments 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
vesting 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.
The activity under the 2017 Plan for
both options and RSU are as follows:
|
Available1
|
Options
|
WAEP
|
RSUs
|
WAEP2
|
Total
|
|
'000
|
'000
|
|
'000
|
|
'000
|
At 1 January 2022
|
35,228
|
969
|
$1.205
|
10,663
|
-
|
11,632
|
Authorised
|
12,565
|
-
|
-
|
-
|
-
|
-
|
Granted
|
(3,914)
|
-
|
-
|
3,914
|
-
|
3,914
|
Exercised
|
-
|
(132)
|
$1.205
|
(2,292)
|
-
|
(2,424)
|
Cancelled
|
2,216
|
-
|
$1.205
|
(2,216)
|
-
|
(2,216)
|
At 31 December 2022
|
46,095
|
837
|
$1.205
|
10,069
|
-
|
10,906
|
Authorised
|
12,982
|
-
|
-
|
-
|
-
|
-
|
Granted
|
(5,832)
|
-
|
-
|
5,832
|
-
|
5,832
|
Exercised
|
-
|
(1)
|
$1.205
|
(3,290)
|
-
|
(3,291)
|
Cancelled
|
1,014
|
-
|
-
|
(1,014)
|
-
|
(1,014)
|
At 31 December 2023
|
54,259
|
836
|
$1.205
|
11,597
|
-
|
12,433
|
1- The number of
available RSUs available for future use in the plan.
2- RSUs are issued
with a zero-exercise price and therefore the WAEP is
Nil.
A summary of other information
related to the options and RSUs granted under this plan is
presented in the table below:
2017 Plan
|
|
31 December
2023
|
31
December 2022
|
Outstanding options at reporting end
date:
|
|
|
|
- total number of
options (excluding RSUs) ('000)
|
|
836
|
837
|
- weighted
average remaining contractual life (years)
(excluding RSUs) (years)
|
|
4.0
|
5.0
|
Vested and exercisable
('000):
|
|
|
|
- weighted
average exercise price
|
|
$1.205
|
$1.205
|
Weighted average fair value of
options granted during the period (excluding RSU)
|
|
$0.44
|
$0.44
|
Total number of RSUs
outstanding
|
|
11,597
|
10,069
|
|
|
|
|
Vested and exercisable -
Options
|
|
836
|
837
|
Share-based payment expense for the
period ('000)
|
|
$7,595
|
$5,165
|
Reconciliation of share-based payment expense (continuing
operations)
|
December
2023
$'000
|
December
2022
$'000
|
2009 Plan
|
|
|
Options
|
-
|
-
|
|
|
|
2017 Plan
|
|
|
Options
|
-
|
-
|
RSUs
|
7,467
|
5,553
|
Total share-based expense
(excluding national insurance)
|
7,467
|
5,553
|
National insurance reversal
accrued
|
(435)
|
(639)
|
National insurance paid in the
year (see Note 4)
|
563
|
251
|
Total share-based payment charge
|
7,595
|
5,165
|
21.
Dividends
No dividends were declared or paid
in the current year (FY22: Nil).
22. Cash
generated from operations
|
|
Year-ended
31
December
|
Year-ended
31
December
|
|
|
2023
|
2022
|
|
|
$'000
|
$'000
|
Profit after tax
|
|
10,086
|
28,904
|
Add back:
|
|
|
|
Tax charge/ (credit)
|
|
1,321
|
(237)
|
Amortisation of intangible
assets
|
|
5,742
|
3,868
|
Depreciation of property, plant
and equipment
|
|
1,815
|
2,032
|
Gain on discontinued operations
after tax
|
|
-
|
(26,614)
|
Loss on disposal of property,
plant and equipment
|
|
1
|
6
|
Loss on disposal of intangible
assets
|
|
-
|
22
|
Finance income
|
|
(1,887)
|
(201)
|
Finance expense (includes interest
on lease liabilities)
|
|
249
|
675
|
Foreign exchange loss
(unrealised)
|
|
(1,352)
|
4,407
|
Employer taxes on stock option and
restricted stock units (accrual) charge
|
|
(435)
|
(639)
|
Fair value adjustment on warrants
valuation
|
|
(53)
|
3,470
|
Amortisation of warrant
asset
|
|
108
|
25
|
Impairment of intangible
asset
|
|
-
|
1,264
|
Share based payment
expense
|
|
7,467
|
5,045
|
Cash from operations before working capital
changes
|
|
23,062
|
22,027
|
Increase in trade and other
receivables
|
|
(53,004)
|
(12,328)
|
Increase in trade and other
payables
|
|
70,877
|
40,267
|
Cash generated from operations
|
|
40,935
|
49,966
|
The share-based payment expense
has been split between the charge using the Black Scholes method
for the period $7,467k (FY22: $5,553k) and the change in the
accrual for employer taxes on stock option and restricted stock
units $-435k (FY22: -$639k). The total share-based payment expense
in the consolidated statement of comprehensive income includes
$563k (FY22: $251k) employer taxes paid via payroll to tax
authorities.
The impairment of intangible
assets in 2022 relates to the full impairment of the Fortumo domain
name which was discontinued in the comparative period.
23.
Financial Risk Management
The Board has overall
responsibility for the determination of the Group's risk management
objectives and policies. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without
unduly affecting the Group's competitiveness and flexibility. The
Group reports in US$. 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 (Interest rate risk & Foreign Exchange
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
|
Fair value hierarchy
The Group uses the following
hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
• Level 1: quoted (unadjusted)
prices in active markets for identical assets and
liabilities
• Level 2: other techniques for
which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly;
and
• Level 3: techniques which use
inputs that have a significant effect on the recorded fair value
that are not based on observable market data. The Group has
classified the warrant liabilities in this category.
The following tables present the
Group's assets and liabilities that are measured at fair value by
the level in the fair value hierarchy as at the reporting
date:
Financial instruments by category
|
31
December
|
31
December
|
|
2023
|
2022
|
Measurement level 1
Financial assets
|
$'000
|
$'000
|
Cash and cash
equivalents
|
117,360
|
99,551
|
Restricted cash
|
33,499
|
16,962
|
Total Cash
|
150,859
|
116,513
|
|
|
|
Other financial assets at
amortised cost
|
|
|
Net accounts receivable
|
143,597
|
86,210
|
Other receivables
|
729
|
526
|
Total other financial
assets
|
144,326
|
86,736
|
Cash and other financial assets at amortised
cost
|
295,185
|
203,249
|
Measurement level 3
Financial assets at fair value through profit and
loss
|
|
|
|
Holdback receivable
asset
|
-
|
5,600
|
|
|
|
|
|
|
|
|
|
| |
|
31
December
|
31-Dec-22
|
|
2023
|
2022
|
Measurement level 1
Financial liabilities
|
$'000
|
$'000
|
Trade payables
|
182,397
|
118,829
|
Current tax payable
|
509
|
222
|
Total other financial
liabilities
|
182,906
|
119,051
|
Lease liabilities
|
3,052
|
3,549
|
Financial liabilities at amortised cost
|
185,958
|
122,600
|
Measurement level 3
|
|
|
Financial liabilities at fair value through profit or
loss
|
|
|
Derivative financial liability
(Amazon warrant liability)
|
5,511
|
5,206
|
Amazon warrants
The fair value of the warrant
obligations was $5,511k as at 31 December 2023, $5,206k as at 31
December 2022 and $1,756k at the inception of the warrants on 16
September 2022. The increase in fair value from inception to 31
December 2022 was primarily due to an increase in the spot price
from $0.77 to $1.395. The increase in fair value from 31 December
2022 to 31 December 2023 was primarily due to an increase in the
number of warrants expected to vest from 4,992k to
5,334k.
The warrants are classified as
Level 3 derivative liabilities as there is no current market for
the warrants, such that the determination of fair value requires
significant judgment or estimation. The Group values the warrants
using a combination of Monte Carlo Simulation and Black-Scholes
Model valuation methods.
Significant unobservable inputs as
at the inception of the warrant agreement on 16 September 2022
included volatility of the Company's common stock of 40%, revenue
volatility of 30%, a risk-free rate of 3.39%, and forecasted
revenue from Amazon over the 7-year vesting period. Significant
unobservable inputs as at 31 December 2022 and 31 December 2023
included volatility of the Company's common stock of 40%, revenue
volatility of 30%, a risk-free rate of 3.81%, and forecasted
revenue from Amazon over the 7-year vesting period.
A significant increase in
volatilities in isolation would result in a significant change in
fair value as at 31 December 2023. If equity volatility and
revenue volatility were both to decrease by 5% to 35% and 25%
respectively, the total fair value of warrants would decrease to
$5,281k, representing a decrease in fair value of $230k. If equity
volatility and revenue volatility were both to increase by 5% to
45% and 35% respectively, the total fair value of warrants would
increase to $5,771k, representing an increase in fair value of
$259k.
Movement of the contract asset for
Amazon and warrant liabilities as at 16 September 2022 (inception)
to 31 December 2023
Warrant contract asset
|
$'000
|
Initial recognition of warrant
contract asset
|
1,756
|
Change in number of warrants
expected to vest
|
(20)
|
Amortisation to revenue
|
(25)
|
Balance as at 31 December 2022
|
1,711
|
Change in number of warrants
expected to vest
|
359
|
Amortisation to revenue
|
(108)
|
Balance as at 31 December 2023
|
1,962
|
Financial liability
|
$'000
|
Initial recognition of contract
liability
|
(1,756)
|
Change in number of warrants
expected to vest
|
20
|
Change in fair value of
warrants
|
(3,470)
|
Balance as at 31 December 2022
|
(5,206)
|
Change in number of warrants
expected to vest
|
(358)
|
Amortisation to revenue
|
53
|
Balance as at 31 December 2023
|
(5,511)
|
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 has a $10m revolving
facility, which can be used if needed (FY22: $10m). Interest rates
for the current Boku revolving facility loan were based on LIBOR,
however LIBOR was phased out by the end of 2021. Current rates are
based on the Secured Overnight Financing Rate. The Group manages
the interest rate risk centrally. The term loan taken out to part
fund the acquisition of Fortumo in 2020 was repaid in full on
28th February 2022 following the disposal of the
Identity division to Twilio. As at 31 December 2023 the Group has
no loans (FY22: Nil). The Group's borrowings are disclosed in note
18.
During the year to 31 December
2023 interest rates increased in many jurisdictions as governments
tried to control inflation. The Group has cash balances in many
jurisdictions and the increase in interest rates had a positive
effect on the Group cash position. The bank interest earned during
2023 was $1,887k (FY22: $189k).
Foreign currency risk
Foreign exchange risk is the risk
that movements in exchange rates affect the profitability of the
business.
The Group serves many of our U.S.
based clients with global operations using the Group subsidiaries
in Singapore, Ireland, UK, Japan and Hong Kong. Although contracts
with these clients are typically priced in U.S. dollars a
substantial portion of client funds receivable and related costs
and revenues are denominated in the local currency of the country
where services are provided, resulting in foreign currency exposure
which have an impact on our results of operations.
Our primary foreign currency
exposures are in Japanese Yen, EURO, GBP, Turkish lira, Thai Baht,
Korean Won, Taiwanese dollar and Philippines Peso. There can be no
assurance that we can take actions to mitigate such exposure in the
future, and if taken, that such actions will be successful or that
future changes in currency exchange rates will not have a material
adverse impact on our future operating results. A significant
change in the value of the U.S. Dollar against the currency of any
one or more of these currencies mentioned above may have a material
adverse effect on our financial condition and results of
operations. A 10% impact on foreign currency balances is detailed
further in this note.
Foreign currency exchange risk
arises mainly where receivables and payables exist in different
currencies due to transactions entered into in foreign currencies.
As such, management believe that the Group is exposed to the
following foreign currency exchange risks:
a)
|
Transaction foreign currency risk
is the exchange risk associated with the time delay between
entering into a contract and settling it. Greater time differences
exacerbate transaction foreign currency risk, as there is more time
for the two exchange rates to fluctuate. The Group manages this
risk in various ways:
|
|
|
·
|
by implementing procedures to
receive funds faster (daily where possible) and settle the funds to
merchants daily by shortening the settlement times.
|
|
·
|
By implementing a mark-up fee to
cover the FX fluctuations when the settlement currency is different
from the transaction currency
|
|
·
|
by contractual agreement to
convert the funds at the foreign exchange rate received from the
aggregators or other suppliers.
|
|
·
|
by using foreign exchange
contracts timely to the extent that any remaining impact on profit
after tax is not material.
|
|
|
|
| |
b)
|
Translation foreign currency risk
is the risk that the Group's non-U.S. Dollar assets and
liabilities, revenues and costs will change in value as a result of
exchange rate changes on converting them to US Dollars, which is
the reporting currency of the Group. Monetary assets and
liabilities are valued and translated into U.S. Dollars at the
applicable exchange rate prevailing at the applicable date. Any
adverse valuation moves due to exchange rate changes at such time
are charged directly and could impact our financial position and
results of operations.
|
|
|
|
For the purposes of preparing the
consolidated financial
statements, the Group convert
subsidiaries' financial statements
as follows:
|
|
|
|
Statements of financial position
are translated into U.S. Dollars from local currencies at the
period-end exchange rate, shareholders' equity is translated at
historical exchange rates prevailing on the transaction date and
income and cash flow statements are translated at average exchange
rates for the period. 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 2023, the Group's
gross exposure to foreign exchange risk was as follows:
|
Euro
|
GBP
|
Other
Currency
|
Total
|
31 December 2023
|
$'000
|
$'000
|
$'000
|
$'000
|
Trade and other
receivables
|
41,076
|
15,933
|
75,150
|
132,159
|
Cash and cash equivalents and
restricted cash
|
25,220
|
8,379
|
37,631
|
71,230
|
Trade and other
payables
|
(54,702)
|
(19,074)
|
(109,554)
|
(183,330)
|
Net financial assets
|
11,594
|
5,238
|
3,227
|
20,059
|
10 % impact +/-
|
1,288
|
582
|
358
|
2,228
|
|
Euro
|
GBP
|
Other
Currency
|
Total
|
As at 31 December 2022
|
$'000
|
$'000
|
$'000
|
$'000
|
Trade and other
receivables
|
23,113
|
12,242
|
46,900
|
82,255
|
Cash and cash
equivalents
|
21,284
|
8,521
|
32,225
|
62,030
|
Trade and other
payables
|
(49,100)
|
(16,877)
|
(68,917)
|
(134,894)
|
Net financial (liabilities)/
assets
|
(4,703)
|
3,886
|
10,208
|
9,391
|
10% impact +/-
|
(523)
|
432
|
1,135
|
1,044
|
The Group operates in 60
currencies (FY22: 48 currencies). We have identified Euro and GBP
as the main affected currencies by fluctuations in exchange rates
for 2023. In 2022 the main currencies were GBP and EUR. Other
currencies are included in the 'Other' column. The impact of 10%
movement in foreign exchange rate of US$ will result in an
increase/decrease of total comprehensive profit/loss after tax and
financial assets/(liabilities) of $2,228k for December 2023 (FY22:
$1,044k).
c) 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 exposed to credit
risk in respect of these balances such that, if one or more the
aggregators, MNOs or wallet providers encounters financial
difficulties, this could impact the Group's financial results. The
Group mitigates its 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
primarily by limiting its liability contractually to its
customers/merchants in the event of non-payment from wallet
providers, MNOs or aggregators.
To minimise this credit risk, the
Group endeavours only to deal with companies that 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
amounts payable to merchants, which equals the revenue amount
recorded in the financial statements in respect of the uncollected
funds. An APS fee is also charged to merchants for early
settlement.
At the reporting date, the
exposure was represented by the carrying value of trade and other
receivables, against which $2,047k was provided at 31 December 2023
(FY22: $138k). The provision amounts represent an estimate of
potential bad debt in respect of the year-end Group trade
receivables. The Group's customers are concentrated to certain
sectors, however the concentration of credit risk from trade
receivables relating to carriers and aggregators is mitigated by a
corresponding trade payable to merchants. Boku only settles
merchant payable balances after corresponding funds are collected
from carriers and wallets, mitigating credit risk.
A debt is considered to be bad
when it is deemed irrecoverable, for example when the debtor goes
into liquidation, or when a credit or partial credit is issued to
the customer for goodwill or commercial reasons. The Group has
applied the simplified approach applying a provision matrix based
on number of days past due being greater than 150 days to measure
expected credit losses and after taking into account customer
sectors with different credit risk profiles, history of collections
and current and forecast trading conditions.
The Group's receivable provision
matrix is as follows:
31
December 2023
|
< 60
days
|
61-90 days
|
91-150
days
|
> 150
days
|
Total
|
Expected credit loss %
range
|
0%
|
0.30%
|
0.72%
|
59.7%
|
|
Gross carrier receipts
($'000)
|
130,844
|
7,395
|
4,066
|
3,339
|
145,644
|
Expected credit loss rate
($'000)
|
-
|
(22)
|
(30)
|
(1,995)
|
(2,047)
|
31
December 2022
|
< 60
days
|
61-90 days
|
91-150
days
|
> 150
days
|
Total
|
Expected credit loss %
range
|
0%
|
0%
|
0%
|
95%-100%
|
|
Gross carrier receipts
($'000)
|
84,792
|
1,384
|
34
|
1,238
|
87,448
|
Expected credit loss rate
($'000)
|
-
|
-
|
-
|
(1,238)
|
(1,238)
|
At 31 December 2023 the Group had
a net provision for $1,712k (FY22: $138k)
of which $1,574k was provided for in the year (FY22: $11k was
reversed in the year). The Company revenue is recorded as the net
between the amounts received from carriers and aggregators less the
amounts payable to merchants. This represents management's best
estimate of the potential revenue loss for the Group if the $2,047k
(FY22: $1,238k) old receivables were not received from
carriers.
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.
The maximum credit risk exposure
is the amount of cash held with at the bank (cash and cash
equivalents). To date, the Group has not experienced any losses on
its cash and cash equivalent deposits. $122.4m (FY22: $89.6m) of
cash and cash equivalents were held in A+ rated bank
accounts.
d) 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 statement of financial
positions related to merchant funds flows are considered to be
neutral from a liquidity perspective as these cash balances and
related payables are interrelated from a liquidity
perspective. This is due to the fact that Boku only settles
merchant payables after cash is collected from carriers and
wallets.
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 2023
|
Within 1
year
|
2-5
years
|
More
than 5 years
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Trade and other payables
|
233,049
|
-
|
-
|
233,049
|
Financial liability (Amazon warrant
liability)
|
-
|
-
|
5,511
|
5,511
|
Leases liabilities
|
1,294
|
1,768
|
-
|
3,062
|
Total*
|
234,343
|
1,768
|
5,511
|
241,622
|
*No material difference between
discounted and undiscounted fair value.
31
December 2022
|
Within 1
year
|
2-5
years
|
More
than 5 years
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Trade and other payables
|
154,379
|
-
|
-
|
154,379
|
Financial liability (Amazon warrant
liability)
|
-
|
-
|
5,206
|
5,206
|
Lease liabilities
|
1,427
|
2,407
|
-
|
3,834
|
Total*
|
155,806
|
2,407
|
5,206
|
163,419
|
*No material difference between
discounted and undiscounted fair value.
The Board receives financial
reports on a monthly basis as well as information regarding cash
balances and investments. The liquidity risk of each group entity
is managed by the Group treasury team at the entity level to meet
any liquidity obligations. Where facilities of group entities need
to be increased, approval must be sought by the entity's CFO. Where
the amount of the facility is above a certain level, agreement of
the Group CFO and the Board is needed.
Capital Management
The Group's capital is made up of
share capital, other reserves, treasury shares, 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.
The Group manages its capital
structure and makes the necessary adjustments in the light of
changes of economic circumstances, the risk characteristics of
underlying assets and the projected cash needs of the current and
prospective operational / financing / investment activities. The
adequacy of the Group's capital structure will depend on many
factors, including capital expenditures, market developments and
any future acquisition.
24. Related
party transactions
In 2023, the Group was remitted
$119,711,637 in net payments from 2 suppliers who are shareholders
of the Company (FY22: $132,800,653 - from 3 suppliers). At 31
December 2023, the Company had receivables of $23,853,885 (FY22:
$13,594,020) due from these companies.
25.
Ultimate controlling party
There is no ultimate controlling
party of the Company.
26.
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 2023 and 2022.
27. Events
after the reporting date
Stuart Neal was appointed CEO on 1
January 2024 and appointed as a Director of the Company on 17
January 2024.