Boku, Inc Annual Report 2021

FY2021 Annual Report · Boku, Inc

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Simplicity

Boku, Inc.
Annual Report and Accounts
for the year ended 31 December 2021

Contents

Strategic Report

Chairman’s Statement ............................ 3
Chief Executive Officer’s Report............ 10
Chief Financial Officer’s Report ............. 14
Principal Risks and Uncertainties .......... 20

Governance

Board of Directors ............................... 26
Senior Management ............................ 28
Corporate Governance Report ............. 30
Audit Committee Report ....................... 38
Remuneration Report ........................... 41
Environmental, Social
and Governance Report (ESG) ............. 47
Directors’ Report ................................. 52
Directors’ Responsibilities Statement .... 54

Financials

Independent Auditor’s Report ............... 55
Consolidated Statement
of Comprehensive Income ................... 62
Consolidated Statement
of Financial Position ............................. 63
Consolidated Statement
of Changes In Equity ............................ 64
Consolidated Statement
of Cash Flows ..................................... 65
Notes to the
Consolidated Financial Statements ....... 66

Boku provides a global mobile
payments network, M1ST
(mobile-ﬁrst), which reaches over
7 billion consumer payment
accounts in more than
90 countries worldwide.

In 2020, mobile payments overtook card payments
for eCommerce purchases globally. For billions of
consumers, especially those younger and in emerging
markets, paying with a plastic card is outdated,
inconvenient, or out of reach. Boku integrates and
processes mobile payments for 500+ merchant
customers, including six of the seven most valuable
companies in the world.

Boku’s M1ST Payments Network enables merchants to
accept over 340 payment methods, including eWallets,
Real-Time Payments, and Direct Carrier Billing, through
a single integration.

Boku empowers its merchants to grow their businesses
in every corner of the globe, with payments that reach
mobile-first consumers, targeted marketing programs that
attract, engage, and retain digital subscription users, and
merchant services that ease the complexities of global
settlement, compliance, tax, and fraud mitigation.

To learn more about Boku, as well as obtain the latest
information of interest to investors and stakeholders,
please visit our website at www.boku.com.

Our customers

Highlights

Revenue ($USD millions) Payments Identity

EBITDA ($USD millions)

+23%

(5)

(10)

(15)

+31%

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

Average Daily Active Users (millions)

TPV ($USD billions)

2.5

2.0

1.5

1.0

0.5

+30%

2.04

5.0

3.6

1.7

+18%

8.2

6.9

1.57

1.10

0.73

0.35

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

Stock code: BOKU

Boku Inc Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Chairman’s Statement

But I believe Boku’s best days lie in front of it. In 2021 we
launched our Mobile First (“M1ST”) Payment Network, which
gives our merchants the opportunity to reach seven billion end
user accounts. Four billion of those are Direct Carrier Billing
connections, the remaining three billion are from other payment
methods like eWallets and Real-Time Payments. It is these latter
ones which represent the future. While DCB is growing steadily,
these new payment products are more popular and are used to
buy a wider variety of merchandise. It is right that we have sold
the Identity business despite its improving performance, so as
to focus the attention on the opportunities that these new local
payment methods offer. They will be the motor that drives the
Company to new heights.

It has been my honour to serve as Chairman and to help steer
the Company. As I step back to become a Non Executive
Director and hand over the reins to Richard Hargreaves,
I will continue to contribute to the Company as it writes a
new chapter over the next few years which, I have every
confidence, will be even more exciting than the last decade.

Mark Britto
Non-Executive Chairman
28 March 2022

I am pleased to report on another highly successful year of
record revenues and Adjusted EBITDA for Boku in 2021.
Having founded Boku in 2009 and served as Chairman since
2014, I believe now is the right time to step down from the
Chair to become a Non Executive Director at the forthcoming
Annual General Meeting. The Chair will be in fine hands with
Richard Hargreaves stepping up from Senior Independent
Non-Executive Director (‘SID’) to become Chairman with
Stewart Roberts becoming the new SID.

Such moments of transition are times to take stock and
reflect. There are many successful companies listed on public
markets, but they represent only a fraction of those that
started out, like us, with an idea and bucketloads of hope,
energy and resilience. Most new companies fail or are taken
over, rare it is to make it to the public markets. And, in Boku,
we were able to stay true to our initial vision: to build a global
payment mechanism out of connecting the mobile network
operators of the world. Our plan was to connect directly to
their billing systems (‘Direct Carrier Billing’ or ‘DCB’) to come
up with a platform equivalent to the payment networks built
by the card schemes. With the growth in mobile and digital
entertainment, Boku has been able to develop ways not
only to monetise users but also to simplify their recruitment.
This insight allowed us to transform the way we worked,
progressively persuading digital entertainment companies to
hire us to help them grow. It didn’t come in a straight line.
There were near death experiences, but by 2017 we were
established and ready for life as a public company.

Since then we’ve been able to grow substantially: The
value processed through the system increased nearly five
fold from $1.7 billion in 2017 to $8.2 billion in 2021.
Monthly Active users have quadrupled from eight million
to more than 32 million. Revenues have grown from $17
million in 2017 to just under $70 million in 2021 and we
moved from EBITDA losses of $2.3 million in 2017 to
2021’s EBITDA profit figure of $20.0 million.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

BOKU STRATEGIC REPORT

In the Beginning…

Steve Jobs famously understood
the value of making complex things
simple. He is quoted as saying:
“That’s been one of my mantras–
focus and simplicity. Simple can be
harder than complex: You have to
work hard to get your thinking clean
to make it simple. But it’s worth it
in the end because once you get
there, you can move mountains.”
He charged his designers to study Picasso’s picture of The
Bull to see how the complex can be stripped down to its
essentials. For him, everything had to be reduced to its
essence. We can see that influence in the design of Apple’s
consumer products. It is also a philosophy – focus and
simplicity that informs Boku’s approach.

Simplicity

In 2017 when Boku listed its shares on AIM, we referred to
ourselves as a direct carrier billing (‘DBC’) company, expanding
more broadly into carrier commerce. We understood that the
value in our company was not so much in the code on our
platform, but rather in the network that we assembled.

Harnessing the collective capabilities of the world’s
mobile network operators is hard. Each uses its own non-
standardised technology and connecting for a merchant
one-by-one would be complex, time-consuming and, for all
practical purposes, commercially unsustainable. Imposing a
single standard across this global network of non-standardised
carrier billing payments connections was simply too complex
and never going to happen. Our mission therefore was to
simplify; to provide a solution in which merchants would
integrate once and gain access to many mobile operators.

We developed and refined our ability to engage with mobile
network operators and make them seem like regular payment
methods to our large merchants. We simplified.

But, more than that, we took things down to their essence.
We became successful because we focused on the
merchant’s requirements. We didn’t simply take the capabilities
that the mobile network operators offered. Instead, we worked
closely with our merchants, developing the standards they
required from payment methods. We worked tirelessly with our
mobile operator partners to ensure that they met the needs of
merchants, not the other way around.

Simplifying is not simple.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

The flywheel, the scale player

The ‘light bulb’ moment was the realisation that the unique
benefit of DCB was not primarily about moving money, rather
it was the ability to acquire new users with a single tap on a
mobile phone – which then charged purchases to the phone
bill. Since mobile operator partners already knew the
phone numbers of billions of their subscribers, we
could uniquely streamline customer onboarding. To
merchants, the value of DCB is as a highly effective
customer acquisition tool.

Once Boku had proven the unique value and
capabilities of carrier billing, a flywheel started to spin.
Our payments network grew as operators wanted to
accept payments on behalf of our merchants, and our
growing payments network began to attract more and larger
global merchants.

And so the flywheel turned.

The more it turned, the network effects we had created made
it more difficult for others to compete with Boku, and within
a few years, we had become the scale player in carrier billing
as most of the world’s largest digital merchants used Boku for
DCB, largely on an exclusive basis. In platform businesses,
the scale player has considerable advantages. With the
incremental cost of processing a transaction essentially
zero, the platform with the largest transaction volumes can
simultaneously be the lowest-cost player, whilst carrying the
expense base that allows them to develop features that their
competitors are not able to replicate.

Boku has established itself as the world’s leading DCB
company. We process, mostly on an exclusive basis, mobile
payments for all of the world’s largest digital entertainment
companies: Amazon, Apple, Epic Games, Meta Platforms
(Facebook), Microsoft, Google, Sony, Spotify, Netflix, Tencent,
Activision Blizzard.

However, we haven’t stopped there.

“Growth is the only
evidence of life”

- Cardinal Newman

We had a good runway of growth in front of us. Due to
the complexity of deploying sophisticated carrier billing
connections, it had not proved possible to immediately
switch on all networks for all merchants. Rather, this must
be scheduled with both the carrier and merchant. A steady
roll out has delivered double digit revenue growth rates and
much faster EBITDA growth for the past five years and, with
the average merchant using only 10% of the network, there is
plenty of growth still to come.

But on the horizon, there was a cloud no bigger than a man’s
hand. It’s an unavoidable reality that direct carrier billing is a
niche payment instrument.

An unparalleled user acquisition tool DCB may be, but the
majority of people who buy digital entertainment products and
services are not going to charge it to their phone bill. Saturation
for carrier billing as a payment method comes, it seems, at
about 15%: the other 85% is paid for by other means.

Moreover while, DCB works well in the digital entertainment
industry, it is ill suited to other sectors. Consumers don’t really
want to charge types of product or service to their phone
bill. Digital entertainment is a big and growing market, but
it only accounts for about 5% of online spending. Our Total
Addressable Market was limited.

If we wanted to grow faster, we needed to find new markets.
It was not enough for us to be the big fish in a small pond. We
wanted to swim in the Big Pond.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

In the Beginning...

Which pond?

We contemplated two approaches. We could either utilise our
carrier network and find new uses for our carrier connections,
or we could find new payment products to grab a larger share
of our existing merchants’ sales.

So double down on our suppliers or our customers? That was
the choice. In fact, as we drew up our plans, we realised that
we didn’t have to choose; we could do both.

Boku’s core competence has been in simplifying the complex.
In taking the disparate set of different mobile network operator
platforms and integrating them in such a way that a merchant
can connect to us once and get access to the whole suite of
them, without having to worry about the underlying differences.

In the world of payment cards, standardisation has been
around for years, driven by the card schemes. There is in fact
an international standard – ISO 8583 – which defines how card
payments are processed. Switching costs are low, leading

Boku’s core competence
has been in simplifying
the complex.

to the emergence of super high-volume
commoditised processors, competing on
price. We ran a mile from this part of the
payment processing business. Therefore,
in order to grow faster, we sought out
other payment types that were similarly
unstandardised, yet which were popular -
and in eWallets we found them.

Payments are in a period of significant
change. Whilst in the West, credit and

Carrier Commerce

Boku Identity resulted from a desire to address a large and
growing market – the verification of mobile transactions,
using mobile network operator capabilities. Very often when
undertaking a mobile transaction, the provider will want to
know the phone number of the device with which they are
interacting or its registered owner. Who better to ask than
mobile network operators themselves?

In 2019, Boku bought Danal for $25.1million to kick start our
entry into this industry, renaming it ‘Boku Identity’. Despite
setbacks in 2020 when we suffered an interruption to our
carrier connectivity in the critical US market, we stuck to our
guns, built out new connections in Europe and Asia, and
added new customers. The business bounced back in 2021,
posting revenue growth of 37%. We had found a formula, but
to develop things further needed significantly more investment.

New Payment Methods for our Merchants

The second strand of our growth plan was to integrate new
payment methods into our network, selling them to our existing
merchants. One route for growth was from expansion in the
direct carrier billing segment. In 2020, we acquired Fortumo,
cementing our position as the DCB market leader. But there’s
only so much consolidation that can be done in DCB.

debit cards have long been the dominant means of payment,
in the newly developed markets of Asia, the Middle East, Africa
and Latin America, the card habit tended to be confined to old
money. In those places, spending with cards was not the reflex
for most merchants or consumers. For sure, as they got richer,
people got bank accounts, but when it came to buying online,
entrepreneurial companies sprang up to provide them with
modern tools based around the mobile phone.

This mobile device knows where you are, can see, can
authenticate you, and provide simple ways of displaying and
analysing your spending. It was a no-brainer. Freed from
the constraints of a rectangular piece of plastic, eWallets
provide better ways of paying and have become enormously
popular, particularly in Asia, to the extent that most of the
world’s eCommerce now takes place using them (albeit with a
significant skew to China).

Boku started integrating eWallets in Indonesia and started to
sell them to our customers. We found that the uptake was
good, which encouraged us to invest further. Merchants who
had previously just used us as a specialist Direct Carrier Billing
company were prepared to see us as a Local Payment Method
(‘LPM’) company.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Boku has continued to invest in growing its network, now
styled as our Mobile-First Payment Network, or ‘M1ST’, to
such an extent, that it now reaches seven billion end-user
accounts in 91 countries. Approximately 3 billion of these end-
user accounts are from the new payment methods. eWallets
and Real-Time Payments are no longer a minor part of Boku’s
business – more than 1.1 million monthly active users paid
with eWallets or Real-Time Payments in December 2021 – a
figure that grew nine-fold during the year. The Big Pond is a lot
bigger: According to eMarketer, global eCommerce in 2021
totaled $4.89 trillion. This compares with estimates of the
digital entertainment industry, for which DCB is best suited,
of approximately $300 billion.

Boku’s competitive strengths

Given its size, it’s not surprising that the Big Pond is full of
big fish. Generalist payment processors like Worldpay and
Adyen along with specialist players like dLocal and Rapyd.
Companies with valuations many times Boku’s. Companies
with larger headcounts. So how does Boku compete?

It’s the same formula. Build a good product, focus on the
customer, help them to improve their business and you can
grow. It’s not the big that beat the small, it’s the fast that beat
the slow.

Boku focuses on building out wider coverage and stronger
product features to compete, and this takes investment. We
also continuously improve our platform: with an immediate
focus on settlement capabilities, resellers, and improving the
onboarding experience. We need to expand and support
our network of licences – Boku has already extended its
capabilities to process regulated payments into 50 countries,
with licences in the UK, Ireland (passported across the EEA),
Singapore, Hong Kong, and with applications and partnerships
in several other countries.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

In the Beginning...

Sale of Identity and focus on Payments

During 2021 it became clear that both of our new business
lines needed investment. We had a winning formula in Identity,
but we needed more coverage to help us grow. We had a
winning formula in Payments, but that part of the business too
needed investment.

Back in 2019 we didn’t have to choose. Now we do.

We chose to focus all our efforts on the Payments business,
where we have a proven track record and are aiming at a
larger total addressable market.

While there was no committed plan to sell in 2021, we sold
our Identity business to Twilio after the period close in February
2022 – details of this transaction are described elsewhere in
the report.
Twilio will be
able to give
Boku Identity
the investment
and attention
that it needs.

A pure-play
payments
business

Boku,
therefore,
enters 2022
as a pure-play payments business. We will focus on Boku and
Fortumo as one integrated, cohesive, payments unit ready to
grow its business in mainstream payment methods. The main
planks of our strategy are as follows.

• We will expand the M1ST network to encompass the
leading Local Payment Methods like eWallets in the
countries where the new middle class resides.
• We will build the highest quality connections

enabling merchants to sell more stuff. Our products
will be expanded beyond the requirements of the digital
entertainment industry, also to embrace other merchant
sectors, including digital advertising, software, travel, and
general ecommerce.

• We will enhance our regulated payment and settlement
capability to allow us to help our merchants not only to
process transactions, but also get settled in the currency of
their choice with the frequency and speed they wish.

Our competitive advantage
stems from three areas

1. We will maintain our reputation amongst the world’s largest
merchants for flawless execution and merchant-centric
solutions. There are practically no other companies on earth
who have been able to simultaneously support Amazon,
Apple, Google, Microsoft, Netflix, Spotify, Facebook, and
Tencent amongst others. This reputation is hard-won and will
be defended. Looking after our customers helps us get more
of their business and helps us win more customers too.
2. As well as supporting the biggest Local Payment Methods,
we will also ensure that we have unique capabilities. This
might be licenses that none of our competitors have, or
connectors giving us more coverage, but we will ensure that
there are some things that you can get from Boku that you
won’t be able to get from anyone else.

3. We will differentiate our product by producing features that
help our merchant sell more. Most payment companies are
interested in processing more and more volume, we obsess
about helping our customers to acquire and retain users.
This leads us to develop features that are more to do with
marketing – optimisation of the enrolment process, prompts
to users to renew if a payment fails, integrations directly
into our merchants and suppliers marketing, and point of
sale systems to allow bundled offers between the two to
drive growth. Other payment companies don’t do this.
Our bundling product drives new user adoption for digital
subscription services, from music and video streaming to
dating apps and beyond.

The future for Boku is exciting. A future where we continue
the transition from being the leading player of a niche
payment method, DCB, to providing mainstream payments
to mainstream merchants. A future where we swim in the
Big Pond.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Chief Executive Ofﬁcer’s Report
The second year of the pandemic

Despite being in the second year of the pandemic, it was
another year of significant progress for Boku as we navigated
choppy waters to continue our record of growth, in spite of
continuing distortions to normal life and trading patterns.

Our Group revenues grew by 23% to exceed $69 million.
Profitability, measured through the Adjusted EBITDA measure,
increased by 31% to $20 million. We battled some currency
headwinds in the year – the Japanese Yen and Korean Won
were both down by more than 10% against the US Dollar –
had exchange rates stayed constant our results would have
been better yet.

Boku Payments

The Payments division performed well in 2021. In December
2021, 32.3 million users made one or more transactions on our
platform, up from 28.8 million a year earlier. Taking the year as
a whole, on average, every day more than 2 million users were
making purchases on Boku’s platform.

The spending of these users translated into revenues up
21% to $62.1 million as we saw total processed value (‘TPV’)
increase 18% to over $8.2 billion (2020: $6.9 billion) and
Payments EBITDA grow to $22.9 million (37% EBITDA margin)
in 2021.

Merchant Focus

It’s quite deliberate that I started the review of Boku’s
Payments division by reference to the number of new users
that we’d helped our merchants to acquire. Any chief executive
will tell you that the key to their success comes from focusing
on their customers’ needs. It’s become a platitude. Key to
Boku’s success is a focus not just on the nuts and bolts of
payments – although that is important – it is that we try to look
through the ‘what’ to the ‘why’. Why would a merchant want
to give their users more ways to pay?

When you boil it down, there is one overriding reason why
merchants are driven to support a new payment method. It’s
not because it’s more secure, or even because it’s cheaper
than the alternative – price can be negotiated. The real reason
why a new method gets established is due to its ability to help
the merchant sell more.

How can a new payment method help a merchant make
more sales?

• It can unlock access to new users who simply can’t pay

with traditional payment methods like credit and debit cards
(particularly relevant given the dominant payment method in
much of Asia is now eWallets and not cards).

• It has a better user experience, enabling greater conversion
on microtransactions (whereas higher friction methods will
lead to higher rates of abandonment).

• It increases purchase values by offering credit, or buy now,

pay later functionality.

• It increases purchase frequency due to a loyalty scheme.

In all of these cases, it is the prospect of extra sales that
impels the merchant to make the effort of deploying a new
payment method.

In the case of Boku, we enable our merchants to sell more by
helping them to more easily and cost effectively acquire new
users. Our Direct Carrier Billing (‘DCB’) service acquires new
users through reach – more people have phones than bank
accounts, and also through simplicity – it’s easier to make a
purchase with a single tap, than having to laboriously type in
your card details.

Our local payment method business provides the same
benefits. It allows users to pay with their preferred method.
Many of the emergent middle classes of Asia, the Middle East,
Africa and Latin America don’t have payment cards (even
though, in the main, they do have bank accounts). Having
previously made their purchases in cash, as they acquired
mobile devices, they use mobile native payment methods,
like eWallets, to buy things online. If you want to sell to these
people, you have to support the payment methods that they
actually use.

It is for this reason that the New User metric that stands front
and centre for Boku. As far as I know, we are the only payment
company that focuses on this metric. Others brag about the
value that they process or the number of transactions that flow
through their systems. Our focus is on the things that matter to
our customers.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Subscriptions driving change in
Payments

Larger Market with
Local Payment Methods

The Company will carry on benefiting from growth in DCB,
but the Total Addressable Market (‘TAM’) from deploying local
payment methods such as eWallets and Real-Time Payments
could be fifty times larger. Direct Carrier Billing helps grow digital
entertainment, but is ill-suited to other types of merchants,
such as consumer durables, transportation or foodstuffs. It’s
also a supplementary method, with an effective ceiling: In
practice no more than around 15% of even a digital merchant’s
sales will be charged to the phone bill. The larger TAM comes
from supporting the payment methods that consumers and
businesses use for all of their daily purchases. In the West,
that daily payment method is generally a credit or debit card,
but in most of the rest of the world, consumers instead rely on
eWallets and Real-Time Payments to buy things online.

What do the following have in common? Toothbrushes,
music, toilet roll, snacks, cosmetics, random vegetables and
video? You can buy them on subscription services. One-off
purchases are being superseded by subscriptions because
of the benefits to both buyers and sellers. Buyers get the
latest products conveniently; sellers get predictable revenue
streams. To meet this changing pattern of commerce,
payment methods also have to adapt: new features need to
help in customer acquisition, simplify repeat purchases, and
boost customer retention.

This is one of the things that differentiates Boku. Our products
are optimised for the age of subscriptions. Our bundling
products support co-marketing between brands, our customer
onboarding technology allows consumers to sign up with a
single tap, and our messaging capabilities can prompt users
whose renewals have failed.

Direct Carrier Billing

Boku has established itself as the leading Direct Carrier Billing
company in the world. Our solutions are proven with world’s
largest digital companies: Amazon, Apple, Google, Sony,
Microsoft, Meta Platforms (Facebook), Netflix, Spotify, Tencent,
Activision, Epic Games and DAZN all use our carrier billing
or bundling services, many on an exclusive basis. Growth in
the DCB business can be driven by the expansion of Boku’s
network of mobile network operators and, more importantly by
the expansion of the merchants’ usage of that network. With
the average merchant connected to 10% of the carriers in the
network, there is 90% still to go for. Plenty of room to grow.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Launch of M1ST

2021 was the year in which Boku’s efforts to expand beyond
DCB into these mainstream methods of payments – eWallets
and Real-Time Payments -- started to bear fruit. We launched
M1ST, our mobile-first payment network, and recently
expanded its reach to over seven billion accounts in more
than 90 countries. Four billion are connections to mobile
phone accounts, and, impressively, three billion are for other
mainstream local payment methods. These mainstream
payment methods are regulated: we have also put significant
effort into expanding our ability to process regulated payments,
ending the year with a network spanning 50 countries. Boku is
now regulated as a payment provider in Hong Kong, allowing
us to process in China; in Singapore, where we have a Major
Payment Institution Licence; we have a specific authorisation
from the Reserve Bank of India allowing us to provide services
to foreign merchants and a network of other authorisations
and partners allows us to undertake regulated payments in
50 countries. These are capabilities which will help fuel our
growth in future years.

By the end of the year, the number of monthly active users
on these mainstream methods was more than 1.1 million. In
absolute terms, this is a significant milestone, but when set
against the group’s total of more than 32 million, it was still
relatively small. Looking only at new users, non-DCB was more
significant with 2.7 million new users making their first-ever
transaction with Boku at some stage during the year, compared
to the annual new user total of 28 million (9.6%). Non-DCB
users (eWallets adnd Real-Time Payments) grew nine-fold
during the year and it is this rate of growth that is encouraging.

We have been able to win significant new deals against much
larger companies. Boku has been selected to provide local
payment services to the world’s leading digital advertising
platforms, console games providers, video and music streaming
services, as well as several gaming companies. We’re winning
those deals because we typically have wider coverage of
relevant payment methods and a wider list of features that
matter to our merchants, including support for subscriptions.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Sale of Boku Identity

Ukraine situation

Boku acquired Danal Inc., a US-based provider, in 2019 for
total consideration of $25.1 million and renamed it Boku
Identity. As mobile commerce grew, there was increasing
demand for a service that could easily identify phone numbers
and phone owners. With our network of mobile operators, we
felt we were well placed to build a global business.

Russia’s attack on Ukraine is a tragedy for the people of that
country. Although we have no employees or operations in
Ukraine, we have a number of Ukrainian employees. Their
families are uppermost in my thoughts. Boku has made
a donation to support relief efforts; employees have also
responded generously. Boku will further match their donations.

The division posted improved results in 2021 as the strategy of
building a global network started to pay off. Revenues were up
31% to exceed $7 million and losses fell to below $3 million.
However this success also posed a dilemma: further growth
would require further investment, at precisely the moment
when our Local Payment Methods were gaining traction and
required investment.

Ultimately we resolved the dilemma by selling Boku identity to
Twilio for a transaction value of $32.3 million in February 2022.
I want to place on record my thanks for the work of the Boku
Identity team and management. Twilio will be a good owner of
the business, one that can provide it with the investment and
support that it needs to grow faster. At the same time, it allows
Boku to concentrate on its Payments offering.

Board Changes

At this year’s Annual General Meeting, our Chairman, Mark
Britto, who founded the Company and served as its first CEO,
has decided to relinquish the Chair, though he will remain on
the Board as a Non-Executive Director. I want to place on the
record my thanks for his wise counsel and leadership. Under
his stewardship, the Company has grown considerably, and I
am very grateful to have continued access to his experience
and input.

I am also indeed fortunate that the Company has a worthy
successor in Richard Hargreaves. Richard has served on
the Board since 2016 and knows the Company well, having
also served on the Audit Committee and as Chairman of the
Remuneration Committee. I am delighted to welcome him to
his new position.

Commercially, we have no Russian merchants, nor assets
in Russia. Nor do we have Belarussian or Ukrainian ones.
We do have connections to Russian carriers — as we have
connections in 90 other countries — and, before the war,
used them to process transactions for 24 merchants. Almost
all of them have stopped processing. Revenues from Russia,
Belarus and Ukraine are not material. Given the fluid situation,
the precise impact is difficult to estimate with certainty, but the
worst case is approximately 2% of revenues in 2022.

Summary and Outlook

We are pleased with our performance in 2021. Going forward,
2022 will see the emergence of Boku as a pureplay payments
company, with the leading position in Direct Carrier Billing and
rapid growth in other local payment methods, such as eWallets
and Real-Time Payments. We will invest further in building out
our network and systems. This year we will broaden our M1ST
network, grow existing merchants, recruit more new merchants
who do not use us for DCB and expand into new territories.
Non DCB payments will, for the first time, be a material part of
our growth.

Trading so far this year has started well with growth on eWallets
and Real-Time Payments to the fore. MAUs on these methods
exceeded 1.4m in February - ten times the figure a year
before. Our cash balances are strong and I look forward to the
remainder of 2022 and beyond with considerable confidence.

Jon Prideaux
Chief Executive Officer
28 March 2022

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Chief Financial Ofﬁcer’s Report
Strong Revenue and Adjusted EBITDA growth

The Payments division’s adjusted operating expenditure
increased to $37.6 million (2020: $27.6 million) due to a
number of factors including the full year effect of the acquisition
of Estonian based Fortumo in July 2020, payroll increases,
and some costs incurred in completing the migration of Boku’s
Payments platform into a cloud based environment (AWS).
Identity adjusted operating expenditure remained stable at
$5.8 million (2020: $5.8 million).

Both divisions benefited from continued material savings
in travel and entertainment due to the impact of COVID-19
which reduced operating expenditure and increased Adjusted
EBITDA, but it is expected that this expenditure will return to
previous levels as it becomes possible to travel freely again.

Group results

2021 was another year of significant progress and
achievement for Boku, despite continued challenging
circumstances given the coronavirus pandemic and significant
currency headwinds affecting the Payments division. Good
revenue growth in both Payments and Identity saw Group
revenues increase 23% to $69.2 million which in turn drove an
increase of 31% in group Adjusted EBITDA* to $20.0 million
(2020: $15.3 million***) and a net Profit before tax of
$4.4 million (2020: $17.3 million loss).

After the year end an agreement was reached with Twilio,
Inc. (“Twilio”), the leading cloud communications platform, to
acquire Boku’s Identity division comprising its wholly-owned
subsidiary Boku Identity, Inc., as announced on 19 January
2022, for a maximum consideration of $32.3 million payable
in cash and the transaction was closed on 28 February 2022.
This enables Boku to focus on its core Payments business and
building out the M1ST payments network.

Group Revenue and Gross Margins

Group revenues for the year increased by 23% to $69.2 million
(2020: $56.4 million) as the Company saw good growth in both
its Payments and Identity businesses, while blended gross
margins for the group increased slightly to 91.7% (2020: 91.3%)

Group Operating Expenditure

Adjusted Operating Expenditure (Operating Expenditure
adjusted for depreciation, amortisation, foreign exchange,
stock option expense, exceptional items, goodwill impairment
and restructuring costs) increased to $43.3 million (2020:
$36.2 million), partly driven by the full year effect of the
Group’s acquisition of Fortumo in July 2020 but also due to
investment into building out Boku’s mobile first Payments
network (‘M1ST’) adding capabilities in eWallets and Real-Time
Payments in the second half as flagged previously.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Highlights

Group financial highlights

• Group revenues increased by 23% to $69.2 million (2020: $56.4 million***).

• Group Adjusted EBITDA* up 31% to $20.0 million (2020: $15.3 million).

• Net Profit before tax of $4.4 million (2020: $17.3 million loss).

• Closing cash balances were $62.4 million at 31 December 2021 (including

restricted cash balances of $5.8 million) up from $48.6 million on 30 June 2021.

• Monthly average cash balances, which smooth the impact of intra-month flows
of both carrier and merchant payments, were $50.8 million in December 2021
up from $38.0 million in June 2021.

• Cash generated from Operations before working capital changes during the year

was $19.5 million (2020: $11.5 million).

Payment division highlights

• Payments division revenues up 21% to $62.1 million (2020: $51.2 million**).

• Payments division Adjusted EBITDA of $22.9 million (2020: $19.2 million).

• Monthly Active Users grew by 3.5 million to 32.3 million in December 2021

(December 2020: 28.8 million).

• Total Payment Volume (TPV)** up 18% to $8.2 billion in 2021 compared to

$6.9 billion in 2020.

• Continued progress in building out Boku’s mobile first payments network

‘M1ST’ which now reaches over seven billion end user accounts. Four billion
of those are Direct Carrier Billing connections, three billion are from other
payment methods like eWallets and Real-Time Payments.

Identity division highlights

• Identity business sold to Twilio after year end for up to $32.3 million on 28th
February 2022. Cash receipts of $26.2 million received with balance due in
2023, contingent on the delivery of certain performance terms. Group term loan
paid down in full from proceeds.

• Identity revenues up 37% to $7.1 million and reduced EBITDA loss of

$2.9 million (2020: $3.9 million EBITDA loss).

*Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, impairment of goodwill , non-recurring other income, stock option
expenses, Forex gains/losses and Exceptional items
** TPV is the US$ value of transactions processed by the Boku platform
*** 2020 comparatives include six months of revenues and costs from Fortumo acquired 1 July 2020

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Chief Financial Ofﬁcer’s Report

Payments division

Boku Payments and Fortumo Payments (acquired 1 July 2020)
together form the Payments division and in 2021 the businesses
were combined for both reporting and operational purposes.

Boku’s Payments business was founded on Direct Carrier
Billing (“DCB”) which enables end user customers of Boku’s
merchants to charge payments to their phone bills, but its
product suite has now expanded to offer connections to
eWallets and Real-Time Payments (‘RTP’) through its mobile
first ‘M1ST’ payments platform. These services are provided
to the world’s largest digital merchants including Apple, Netflix,
Facebook, Google, Amazon, Spotify and Sony, mainly on an
exclusive basis.

In 2021 the Payments division again performed strongly,
with revenues increasing 21% to $62.1 million (2020: $51.2
million**) which in turn delivered increased Adjusted EBITDA* of
$22.9 million (2020: $19.2 million) demonstrating the powerful
operational leverage of our payments platform as additional
incremental transaction revenues largely drop through to
Adjusted EBITDA. This growth was despite considerable
exchange rate headwinds without which revenues and EBITDA
would have been higher. We also saw typical seasonal patterns
distorted by COVID-19 lockdowns particularly in Q1 as gaming
merchants saw increased sales which were later offset by slower
second half performance. We expect more normal seasonal
patterns to resume in 2022. Growth comes from both from the
existing merchant base and also from adding new carrier and
eWallet connections to new and existing merchants.

Total Payments Volume (“TPV”) for the Payments division
increased by 18% to $8.2 billion (2020: $6.9 billion) while
Monthly Active Users grew by 3.5 million to 32.3 million
(2020: 28.8 million).

The blended average take rate was broadly stable at 0.75%
as we saw good growth from higher take rate settlement
merchants. Gross margins for the Payments division remained
stable at 97% in the year.

Adjusted operating expenditure for the Payments division
increased to $37.6 million (2020: $27.6 million) due to a
number of factors including the full year effect of the acquisition
of Estonian based Fortumo in July 2020, payroll increases,
some costs incurred in completing the migration of Boku’s
Payments platform into a cloud based environment but also
due to investment in the second half, mainly in headcount, into
building out Boku’s mobile first ‘M1ST’ payments network,
adding capabilities in eWallets and Real-Time Payments as
well as building out our sales and marketing engine as we seek
to sign new merchants outside of our traditional DCB base.
As flagged in our interim statement, this will increase adjusted
opex in 2022, however this is a one time investment to exploit
the opportunity in eWallets and RTP and we expect the drop
through of additional revenues to EBITDA to increase again in
FY23 and beyond.

We continued to invest in the Boku Payments platform and in
2021 completed the migration of our payments platform into a
cloud-based infrastructure (AWS) from two physical colocation
facilities in the U.S. which were then decommissioned.
Although the total running costs are similar in the cloud, the
‘pay as you go’ nature of the cloud services means that we are
able to capitalise less of the cost and so adjusted operating
expense increased as a result. The Boku Payments Platform
has the capacity to process volumes considerably in excess of
today’s peak message rates.

Fortumo earnout

Boku acquired Estonia based carrier billing payments company
Fortumo Holdings Inc (‘Fortumo’) on 1 July 2020, consolidating
Boku’s leading position in the global DCB payments market.
An initial payment of $39.6 million was made in 2020 with a
further $5.4 million put into an escrow account, subject to
Fortumo meeting challenging earnout targets.

The final earnout payment, based on Fortumo Adjusted
EBITDA** performance for the 12 month earnout period
ended 30 June 2021, was $2.16 million, which was paid to
Fortumo’s former shareholders in October 2021, with the
balance of $3.24 million returned to Boku. The excess amount
repayable to Boku over the fair value on the Balance Sheet
at 31 December 2020 of $1.08 million has been shown as
‘Other Income‘ in the Income Statement. It has been excluded
from Adjusted EBITDA* as a non-trading, non-recurring item.
The total consideration for Fortumo was therefore $41.76
million which included $4.0m of working capital resulting in an
enterprise value of $37.76 million for the acquisition.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Identity division

The Operating Profit can be broken down as follows:

Boku’s Identity division was formed in 2019 following the
acquisition of Danal Inc on 1 January 2019 for $25.1 million.
Identity revenues recovered strongly in 2021 growing 37%
to $7.1 million (2020: $5.2 million) as we saw strong growth
from key existing customers complemented by a ramp up
in transaction volumes from new mobile wallet customers in
new geographies such as Indonesia. We continued to build
out Identity supply with new connections added in Germany,
Spain, Italy and Indonesia.

Adjusted operating expenditure for Identity remained low in
2021 due to continued low travel and marketing spend as a
result of the COVID-19 pandemic. The strong revenue growth
and low-cost base resulted in a further reduced Adjusted
EBITDA* loss of $2.9 million (2020: $3.9 million Adjusted
EBITDA loss).

Although at year end no decision had been taken to sell,
an agreement was reached, after year end, with Twilio Inc.
(“Twilio”), the leading cloud communications platform, to
acquire Boku’s Identity division comprising its wholly-owned
subsidiary Boku Identity, Inc., for a maximum consideration
of $32.3 million payable in cash and the transaction was
completed on 28 February 2022. This enables Boku to focus
on its Payments business and in building out the M1ST
payments network.

Group Adjusted EBITDA* and
Operating Profit

Group Adjusted EBITDA* increased by more than 30% to
$20.0 million (2020: $15.3 million) illustrating the powerful
operational gearing in the payments business. Adjusted
EBITDA is earnings before interest, tax, depreciation and
amortisation, adjusted for stock option expenses, forex gains/
losses and exceptional items.

Reported Operating Profit for 2021 of $5.1 million was an
increase of $21.8 million (2020: $16.7 million loss, primarily
due to the goodwill impairment of the Identity division of
$20.8 million).

• Other income of $1.08 million relates to the excess receipts

from the Fortumo earnout escrow over fair value.

• Gross margin increased to $63.4 million (2020: $51.5 million).
• Depreciation and Amortisation charges increased to

$7.5 million (2020: $5.9 million) which included a full year
of Fortumo charges in 2021 (acquired 1 July 2020).

• Foreign Exchange movements resulted in a small loss of

$0.1 million (2020: $1.0 million gain).

• Stock Option Expenses increased to $7.4 million (2020: $4.9
million) as we included awards to Fortumo staff following
the acquisition in 2020 and added headcount in the year.
Boku has a policy of issuing RSUs to all staff annually. RSU
charges are spread over three years from date of grant based
on the Black Scholes method. Of the $7.4 million booked in
2021, $0.7 million was paid out cash (via employer’s NI), the
remainder was non-cash and expensed.

• Impairment of goodwill – there was no impairment in 2021

(2020 impairment of $20.8 million which related to the write
down of the carrying value of the Identity division).
• Exceptional Items of $1.0 million mainly related to the
2021 costs of the disposal of Boku Identity (2020:
$1.4 million mainly costs relating to the acquisition of
Fortumo on 1 July 2020).

• Net financing expenses were $0.7 million in 2021 (2020:
$0.6 million). These costs relate to Interest on leases and
bank loans/overdraft.

• Tax credit of $1.9m (2020: $1.5m charge) relates primarily to
recognition of an additional defered tax asset of $2.4 million
in the year (see Balance sheet section below and note 8)
which was partly offset by a tax charge of $0.5 million.

Net Profit after Tax

The Company reported a net profit before tax of $4.4 million
(2020: $17.3 million loss primarily due to the goodwill
impairment for Identity division of $20.8 million) and a net profit
after tax for the year of $6.3 million (2020: $18.8 million loss).

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Chief Financial Ofﬁcer’s Report

Balance Sheet and Cashflow

• Closing cash balances were $62.4 million at the end of
2021 (including restricted cash balances of $5.8 million)
(December 2020: $62.7 million) up from $48.6 million on
30 June 2021 (unaudited).

• Monthly average cash balances, which smooth the impact

of intra-month flows of both carrier and merchant payments,
were $50.8 million in December 2021 (December 2020:
$46.7 million) up from $38.0 million in June 2021 (unaudited).

• Cash generated from Operations before working capital

changes during the year was $19.5 million (2020:
$11.5 million).

• To part finance the acquisition of Fortumo in July 2020, the
Group took on $20 million of debt with Citibank, comprising
a 3 year term loan of $10.0 million and a Revolving Credit
Facility (“RCF”) of $10.0 million. At year end the RCF had
been paid down in full and the term loan had been paid
down by $1.9 million to $8.1 million. After year end the
balance of the term loan was repaid in full in February 2022
from the sale proceeds of Boku Identity.

• Deferred tax assets of $3.1 million were recognised at

31 December 2021 (compared to $0.5 million at
31 December 2020). This reflects a re-appraisal of the
usability of certain tax losses and future transaction volumes
through its US and UK incorporated entities.

• From a working capital perspective, Current Assets exceeded
Current Liabilities at 31 December 2021 by $22.8 million
compared with $15.6 million at the 2020 year end.

• Intangible Assets were $63.1 million as at 31 December
2021, compared to $65.6 million at 31 December 2020
due to amortization of certain intangibles. Following the
disposal of Boku’s Identity business which was completed
on 28 February 2022 and as noted in PBSE (note 26) we
have assessed the Identity CGU intangibles and determined
that as the fair value less cost of disposal is greater than the
value of the intangibles in the group’s balance sheet and
therefore these intangibles are not impaired. The Payments
CGU was assessed using discount cashflows and again no
impairment was needed.

• We assessed our other intangibles and goodwill for

impairment and deemed that no impairment exists at
31 December 2021.

Going concern
(including consideration of COVID-19)

In carrying out the going concern assessment, the Directors
considered a number of scenarios, taking account of the
possible continued impact of the COVID-19 pandemic in
relation to revenue forecasts for the next 12 months from
March 2022. Given current pandemic and macro-economic
uncertainties, it is not yet fully clear when the global economic
activity will fully return to pre pandemic levels, therefore,
we continue to prepare the business for varying levels of
performance. To that end, we have continued to model the
effects of differing levels of sales performance along with the
measures we can take to ensure that the Group remains within
its available working capital.

In reaching their going concern assessment, the Directors
have considered the foreseeable future, a period extending
at least 12 months from the date of approval of this interim
financial report. This assessment has included the year end
cash balances in excess of $62 million at year end and the
expected net proceeds from the disposal of Boku Identity in
February 2022, consideration of the forecast performance
of the business and the financing facilities available to the
Group. Considering this analysis, the Directors are satisfied
that the Group has sufficient working capital resources over
the period of at least 12 months from the date of approval
of the consolidated financial statements. As such, the
consolidated financial statements have been prepared on a
going concern basis.

Impact of Russia/Ukraine conflict

Boku is an international company providing payments services
to global digital merchants such as Apple, Sony, Spotify,
Google, Netflix and Amazon in over 90 countries. In 2021,
total revenues from Russia/Ukraine/ Belarus were
approximately 1% of Payments revenues.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Boku helps its merchants accept payments from consumers
for their services in Russia and Ukraine, however:

• Boku does not have any relationships with merchants

domiciled in Russia, Belarus or the Ukraine.

• Boku does not send any money to Russia nor has any

active bank accounts domiciled in Russia.

• Boku does not have any employees or infrastructure in
in Russia, Belarus or the Ukraine and has not seen any
disruptions to its operations as a result of the conflict.
• Boku does have connections to Russian carriers almost
all of which have stopped processing and are unlikely to
resume in 2022. Assuming that is the case the revenue
impact for the remainder of 2022 is not expected to be
more than $1.5 million.

Looking Ahead

The divestment of our Identity business will enable Boku to
focus on its core Payments business and to invest to fully
exploit the Big Pond opportunity by continuing to build out the
Boku ‘mobile first’ (M1ST) payments network. As flagged in
our interim report, we expect Adjusted operational expenditure
in the Payments division to increase more quickly in 2022 as
we invest in sales and marketing as well as technology and
operational headcount but we also expect this to flatten again
in FY23 and beyond after this one-time investment.

We are pleased with the 2021 financial results and believe the
company is well positioned for 2022 as a pure play payments
company to exploit the substantial opportunities it has.

Keith Butcher
Chief Financial Officer
28 March 2022

*Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation,
non recurring other income, impairment of goodwill, stock option expenses, forex
gains/losses and exceptional items

** TPV is the US$ value of transactions processed by the Boku platform

*** 2020 comparatives include six months of revenues and costs from Fortumo
acquired 1 July 2020

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Principal Risks and Uncertainties

Risk management in our business

Identifying and managing our risks

Our risk identification process is a combination of a “top
down” approach (driven by the Audit Committee and the
Board) and a “bottom up” process (originating from the
business’ operations).

Risks are classified on two dimensions risk level and risk
tolerance. The former is classified High/Medium/Low and
relates to the potential impact, the latter is classified as Red/
Amber/Green and relates to the likelihood of the risk occurring.

The risk champion of each department shares their most
significant risks after having considered a set of external
factors from the various jurisdictions in which Boku operates to
the internal ways of operating.

All risks are then consolidated into a Group-wide register which
is then presented to our Senior Management and the Board
which in turn will perform their own review and add further
input on the risks before agreeing the Principal Risks.

Effective risk management is critical to achieving the Group’s
objectives. Boku operates a Group-wide risk management
framework across all its lines of business and covering all
departments, ensuring the strategic and operational risks are
identified, evaluated, mitigated, monitored and reported in a
consistent way.

This framework allows us to take a holistic approach to
risk management and to make meaningful analysis and
comparisons of the risks we face and how we manage
them across our footprint, which is essential to achieve our
strategic objectives.

It is an evolving framework as we continuously seek to improve
and enhance our risk management processes.

Responsibility

Risk management at Boku is reviewed and approved at Board
level but delegated to the Audit Committee for ongoing review
through the year.

The Board has oversight responsibility for the effective
management of all major risks affecting the Group. In each
area, the Board is supported by members of the Senior
Management team and other managers with key functional
responsibilities to ensure that an effective risk management
is embedded, considering both opportunities and threats,
throughout the organisation.

The Audit Committee continually monitors and promotes
the highest standards of integrity, financial reporting, risk
management and internal control.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Risk

Mitigation

Competitive and rapidly changing environment

The Group operates in rapidly evolving payments
markets where service provision is subject to rapid
technological change and use is dependent on user
behavior. The impact of changes to the structure of
the app store payment market, competition, pricing
pressure, DCB market shrink, could result in a material
loss of revenue and profit for the Group.

Risk level: High
Risk tolerance: Amber
Risk movement from last year: Unchanged

• Investing in new products, markets and technologies and
improving relationships with key merchants and carriers.

• Launching new payment products and developing the Group’s

offerings to meet changing client demands and market
preferences.

• Develop the necessary expertise and experience to sell and

deliver new products and technologies to new and existing clients.

• Analysis of the external environment to understand where the

market is heading.

• Attending tech fairs, discussion groups etc. to be up to date

with recent technology, find new sources of ideas to create new
products addressing customers needs.

• Experienced sales team that builds close relationships with our

merchants to better understand their needs.

• Engage with merchants potentially impacted by any possible app

store market changes.

Fail to evolve the organisations’ systems and tools
to be fit for today/ future goals

• Identify current and future needs of new systems (production, etc.).

• Identify current and future needs of tools to increase efficiencies.

• Investing significantly in 2021 and 2022 in Technology, both in

Product and Platform (AWS).

• Further team optimisation plans.

As Boku is growing and continuously evolving, systems
and mainly production, should be able to keep up with
scaling demand. Failing to keep up with the growth,
could cause transaction processing failures that could
lead to loss of revenue and even loss of merchants.

Risk level: High
Risk tolerance: Amber
Risk movement from last year: Unchanged

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Principal Risks and Uncertainties

Risk

Mitigation

Adverse changes to the regulatory environment

• Diversifying the range of services available to all types of

Frequent changes in the regulatory arena could have
adverse effects on Group’s existing processes and
provision of services. Examples can be:
- Some EU markets introducing changes to the treatment
of DCB (additional requirements to comply with).
- Privacy/ Data residency (Privacy shield invalidity in EU,
data residency requirements in India and other regions.
- AML and customer due diligence (stricter requirements
from Central Banks & non-financially regulated bodies
introducing new requirements to DCB).

Risk level: High
Risk tolerance: Amber
Risk movement from last year: Unchanged

customers to mitigate the impact of any single regulatory change.

• Continuing to invest in solutions that improve the Group’s ability to

manage risks and ensure compliance with regulations.

• Attending industry events and associations member meetings to

stay current with any significant changes relevant to our business.

• Applied for and granted a Payment Institution license in Ireland to
operate Local Payment Methods (LPM’s) and explore other wider
opportunities.

• Applied for and granted a Major Payment Institution license in

Singapore to support typically global merchants that head their
APAC operations from Singapore registered companies.

• Applied for and granted authorisation as a Money Service

Operator in Hong Kong to support processing payments from
e-wallets, in particular Chinese wallets.

• Applied for and granted Payment Agent license in India to

operate LPMs.

• Continue applying for Payment Institution licenses and setting

up local companies in other jurisdictions (i.e. Malaysia, Thailand,
Philippines) to support the already existing regulated payment
solutions in 45 countries.

• Follow European Commissions template of Standard Contractual

Clauses (SCC) and external expert advice.

Failure of carriers/ intermediaries to pay the
amount due to merchants

• Developing strong relationships with MNOs, aggregators and

Local Payment Methods (LPM’s).

The company is reliant on third parties, including
MNOs, SMS aggregators, Local Payment Methods
(LPM’s) to pay significant amounts due from them in a
timely manner as specified under contract. A large-
scale failure to do so may have an impact on the
Group’s financial condition or operating results.

• Effective credit control and management of receivables.

• Creating direct relationships with fewer intermediaries.

• Use Creditsafe tool for a credit check during onboarding of new

customers.

• Our merchant contracts limit the liability to Boku for non payment

by carriers or intermediaries.

Risk level: Low
Risk tolerance: Green
Risk movement from last year: Reduced

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Risk

Mitigation

Significant fraud events or social engineering
attack

• Regularly review risk rules to ensure they are effectively monitoring

customer behavior.

A large fraud incident or social engineering attack could
lead to reputational damage, losses in revenue, costs
of dealing with the fraud, and potential loss of merchant
confidence.

• Recruiting specialised, experienced fraud prevention staff.

• Review investment opportunities in solutions that improve the

Group’s ability to manage risk.

• Developed comprehensive internal policies and procedures.

Risk level: Medium
Risk tolerance: Amber
Risk movement from last year: Unchanged

Threats from weak Cyber Security and Data
Protection

• Ensuring there are systems and experienced staff in place to

defend against potential cyber security threats.

The Group IT environments may be subject to hacking,
data theft or other cyber security threats which may
harm customer relationships and the market perception
of the effectiveness and resilience of the Group’s
products and services. Such an attack may also have
a material adverse effect on the Group’s financial
position.

Risk level: High
Risk tolerance: Amber
Risk movement from last year: Increased

Fail to effectively integrate newly acquired business

Having acquired Danal Inc in 2019 and Fortumo
Holdings, Inc. in 2020, the period following the merger
of two companies required in-depth analysis and
planning around integration, finding the synergies and
ensuring an effective operational model is in place, and
focusing on how the working cultures and values are
integrated.

Risk level: Medium
Risk tolerance: Amber
Risk movement from last year: Increased

• Building resilience within the Platform to mitigate the impact of an

attack in the event of a successful penetration.

• Continuous testing and assurance activities (internally

and externally).

• Continuous education on and raising awareness of cyber threats

and data theft for staff.

• Broaden existing ISO 27001 certification to cover all Boku

business lines.

• Being a global company that is growing rapidly, an international
environment where we respect our similarities and differences, is
in the core of our values.

• Form working groups to execute the plans following the

synergies identified.

• Align polices and best practices to be followed by all employees.

• Review costs and duplication of activities for better utilisation

of resources.

• Create a consolidated product roadmap with aligned

engineering investment.

• Put in place integrated teams and management with

common objectives.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Principal Risks and Uncertainties

Risk

Mitigation

Difficulty in attracting and retaining the best talent

• Developing the skills and capabilities of staff as part of

The Group’s success depends on its ability to attract
and retain key management and skilled technical
employees. If the Group is unable to identify, attract,
develop, motivate, adequately compensate and retain
well-qualified and engaged personnel, this could have
a material effect on the Group’s reputation, business,
operations and financial performance.

Risk level: Low
Risk tolerance: Green
Risk movement from last year: Decreased

Unforeseen disasters and other Black Swan events

Boku is a global company, operating in a number of
jurisdictions. Because of that global scale and the
current post pandemic world, we face a number of
uncertainties where an unforeseen disaster (Black
Swan) might impact us significantly and in an
immediate way, or emerging risks may potentially
impact us in the longer term.

Risk level: Medium
Risk tolerance: Amber
Risk movement from last year: New

talent management.

• Creating opportunities within the Group for personal development

and career enhancement.

• Recruiting experienced HR staff and working with specialized

recruitment agencies.

• Simplified our recruitment approach to attract and provide a better

experience for potential candidates.

• Flexible working provides more opportunities of attracting and hiring
employees from new locations, outside of the main office locations.

• Ensuring that all Employees have equity in the company through

our RSU programme.

There might be cases where we have insufficient information to
understand the likely scale or impact the risk could have in our
business and people. We also might not be able to fully define a
mitigation plan until we have a better understanding of the threat.
However, currently we are doing the below:

• We have also created a “risk universe” which is a much wider list

of risks which we monitor regularly for changes in priority

• We have created a watchlist of those emerging risks which we

review on a regular basis so that future strategies take into account
future technological, environmental, regulatory or political changes.

• We have created a Business Continuity Program and developed

disaster recovery plans to respond to events as necessary.

The Russia/Ukraine conflict that started in 2022 is an example of
a ‘Black Swan’ event. Boku operates in 91 countries globally and
therefore its revenues are well spread. Connections to carriers
in Russia have been impacted as detailed in the CEO and CFO
reports but the overall revenue impact in 2022 is expected to be
relatively small.

Environmental impact

Given the nature of Boku’s online business servicing only digital merchants, our environmental impact is relatively low. However,
Boku is committed to finding ways to operate the business in a more energy efficient and environmentally advantageous manner,
for example moving its servers into a cloud based environment in 2021 Further, regulatory changes are reviewed regularly to
ensure Boku acts on all relevant local and international requirements accordingly.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Board of Directors

Mark Britto
Non-Executive Chairman

With over 20 years as an entrepreneur,
sales and financial services executive,
Mark Britto is currently the Chief Revenue
Officer at PayPal. He also serves as
Boku’s Non-Executive Chairman.

Mark founded Boku after six years as the
CEO of Ingenio, a service marketplace
and performance advertising company,
which he led to a 2007 acquisition by

AT&T. Prior to Ingenio, Mark spent
4 years as SVP of worldwide services
and sales at Amazon.com.

Mark’s first start-up, Accept.com, was
bought by Amazon.com in 1999 and
served as the primary backbone of
Amazon’s global payments platform. Mark
began his career in senior credit and risk
management roles at leading national
banks FirstUSA and Bank of America.

Jon Prideaux
Chief Executive Officer

Jon has more than 25 years of payments
experience. He was an early Visa Europe
employee and a key contributor to its
growth, leaving in 2006 as EVP Marketing.
He started Visa Europe’s eCommerce
division, was the lead executive on the
introduction of Chip and PIN technology,
and oversaw product launches such as
Visa Electron and V PAY.

He served on the Board of EMVCo,
was the Chairman of the Compliance
Committee, and was a member of Visa’s
Global Product and Brand Councils.

Since leaving Visa in 2006, Jon served
as Deputy CEO for SecureTrading, where
he doubled transaction numbers and
quadrupled profitability. He then led a
management buy-in at Shopcreator, the
ecommerce software platform.

Jon joined Boku in 2012, becoming CEO in
2014 and led the company’s IPO in 2017

Keith Butcher
Chief Financial Officer

Keith has had considerable experience
as a listed company CFO and of online
payments businesses. His experience
includes six years as CFO of AIM listed
online payments company DataCash
Group plc during its period of rapid
growth and ultimate sale to MasterCard.

More recently, he was CFO of LSE listed
payments company Paysafe Group plc
(formerly Optimal Payments plc), which

grew its market capitalisation from
£40 million to £2 billion during his tenure
through a combination of organic growth
and a number of acquisitions including
the €1.1 billion acquisition of Skrill.

Keith became CFO of Boku in 2019,
having originally joined the Board as
a non executive Director on Boku’s
admission to AIM in 2017, where he was
audit committee chairman. Keith was
awarded Finance Director of the Year at
the Quoted Company Alliance Awards
(QCA) 2014.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Dr. Richard Lawrence
Hargreaves
Independent Non-Executive Director

Richard Hargreaves began his career
at ICFC (now 3i plc), which was then
the principal source of equity for UK
unquoted companies. He next started
Baronsmead plc, which he developed
until its sale. He was actively involved
in the growth of the venture capital
industry through the British Private Equity
& Venture Capital Association (BVCA),
where he became chairman. He was
involved with their tax incentive lobbying,
which saw the birth of the Venture Capital
Trust, and Baronsmead’s name is still on
several of the best performing VCTs.

Stewart Roberts
Independent Non-Executive Director

Stewart has over 30 years of experience
in payments, banking and technology,
across both start-ups and institutional
employers and is a recognised payments
industry expert in both the traditional and
emerging payments space, as well as the
mobile application sector.

Stewart had previous roles as Global
Director of Innovation for Barclaycard

More recently, he co-founded Endeavour
Ventures Ltd, which invests in young
technology companies for its client base
of high-net-worth individuals. He retired
from Endeavour in 2018 to focus on
being a professional business angel.

Richard has nearly 50 years’ experience
investing in young technology companies
and helping them to grow. He is a very
experienced non-executive director with
significant understanding of the US market.

He is a graduate of the University of
Cambridge and has an MSc and PhD
from Imperial College, London.

and Head of International – Merchant
Services for the Royal Bank of Scotland
Group. More recently, Stewart was CFO
and then Executive Vice President of
iZettle AB and was a key member of the
team that agreed the sale of iZettle to
PayPal in May 2018 for US$2.2 billion.
Mr. Roberts is the Chairman of Boku’s
Audit Committee and is also Chairman at
HappyOrNot AY

Charlotta Ginman
Independent Non-Executive Director

Charlotta began her career at Ernst &
Young, where she qualified as a Chartered
Accountant. She was then appointed
to a series of senior roles in investment
banking with UBS, Deutsche Bank and
JP Morgan both in London and
Singapore, where she gained considerable
M&A transactional experience. Charlotta
has also held senior roles within Nokia
Corporation, including acting as CFO
of its luxury mobile phone division Vertu
Corporation Limited.

Charlotta is a Non-Executive Director
and Chair of the Audit Committee of
two investment trusts, Polar Capital
Technology Trust PLC and Pacific
Asset Trust PLC, as well as AIM listed
Keywords Studios plc and Gamma
Communicatios plc. She is also a Non-
Executive Director of Unicorn AIM VCT
PLC, a Venture Capital Trust.

As three of Charlotta’s roles are with
investment companies that have only 4-5
meetings a year and the others are all AIM
listed, with less regulatory burden than a
premium listing, Charlotta has sufficient
time to devote to each of her roles.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Senior Management

Adam Lee
Chief Product Officer

Adam has been developing new
products and services for startup
ventures for over 20 years. At Boku,
Adam leads product, design, and
marketing, charged with finding
innovative new applications for the 7B+
consumer payment accounts connected
to Boku’s M1ST Payments Network.

Before joining Boku, Adam was at
Intuit where he launched the world’s
first consumer medical wallet used
to understand, manage, and pay for

Chris Newton-Smith
Chief Operating Officer

Chris has more than 20 years of
experience in B2B software, working
in mobile, digital, and hospitality
businesses. At Boku, Chris leads the
Technology, Operations, and People
Operations teams.

Prior to Boku, Chris was CEO of iRiS
Software Systems, the leading guest
experience SaaS platform serving the
hospitality industry. Chris led the roll-out
of its innovative digital food & beverage
(F&B) ordering solution to global hotel
groups including Marriott International
and Four Seasons Hotels & Resorts.

healthcare expenses, distributed by two
of the largest US healthcare networks,
UnitedHealthcare and CIGNA.

Prior to Intuit, Adam had also worked for
two major industry backed B2B platform
companies, Neoforma and more notably
GlobalNetXchange where he developed
technology and services to drive better
supply chain performance between
companies around the world including
Carrefour, Sears, Sainsburys, Metro
AG, Karstadt Quelle, Unilever, Proctor &
Gamble, and Diageo.

Previously, Chris was General Manager,
Europe, Middle East, and Africa (EMEA)
and Chief Product & Marketing Officer
at Redknee Solutions as the company
grew from a Canadian start-up to a
global leader in monetization software
for telecoms, with more than 200 carrier
customers in 100 countries.

Chris has also held product management
and business development roles at
LogicaCMG Telecoms and BlackBerry.
He has been a mentor for METRO
Accelerator by Techstars and was
Chair of the Board of Trustees and a
Trustee at Emmaus Hertfordshire. He
has a Bachelor of Engineering and
Management degree from McMaster
University in Canada.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Mark Stannard
Chief Business Officer

Mark has over 20 years experience in
mobile, digital, and fintech services and
is a leading member of the team that
has brought the biggest digital brands to
carrier billing: Apple, Facebook, Spotify,
Sony PlayStation, Google, Netflix and
Microsoft.

He played a critical role in building
Boku’s market-leading carrier billing
network of nearly 200 carriers, and as
Chief Business Officer – Payments, has
direct responsibility for Boku’s Worldwide
mobile payments business. This includes
the deployment of new mobile Alternative

Payment Types onto the Boku platform,
such as digital eWallets and mobile
banking Apps.

Previously, Mark held positions at
Deutsche Telekom & Buongiorno-
Vitaminic (now part of NTT-DOCOMO)
where he managed BD, and led
marketing & licensing for music and
digital entertainment services. He
launched Europe’s first mobile music
service in 2001, signing deals with all five
major record labels, and later brought
leading film, TV & toy brands to mobile,
including Spider-Man, Pink Panther and
Transformers.

Corporate Governance Report
Chairman’s Introduction

Dear Shareholder,

Part of my role as Chairman is to ensure that the highest levels of corporate governance are maintained throughout the Company
and also at Board level.

I recognise the importance of, and we as a Board are committed to, high standards of corporate governance, aligned with the
needs of the Company and the interests of all our stakeholders.

My fellow directors and I fully appreciate the importance of sound governance in the efficient running of the company, and in
particular in the effectiveness and independence of the Board. The following report sets out how we do this. It also covers how
the Board and its committees operated in 2021 and how we have continued to comply with the principles of the QCA Corporate
Governance Code (the “QCA Code”). Information of Boku’s compliance with the principles of the QCA Code can also be found on
our website at: https://www.boku.com/investor-relations/corporate-governance-statement/.

Mark Britto
Non-Executive Chairman
28 March 2022

Statement of Compliance

Application of the QCA Corporate Governance Code

Principle

Deliver Growth

Application/Evidence

1. Establish a strategy and business
model which promote long-term value
for shareholders

One of the Board’s principal roles is to provide effective leadership of the company
and to establish and align Boku’s purpose, strategy, values and culture across its
business.

In 2021, Boku’s management team established its first formal set of objectives and
key results (“OKRs”) for the business. The OKRs create a framework for the setting,
and achieving, of goals within each team at Boku. The aim is to create a business
model in which all teams work towards the same goal of promoting the success of
Boku. This aim is further supported through monthly business reviews and “all-
hands” calls which provide all Boku’s employees with updates on the business
performance, upcoming changes and other pertinent issues.

An explanation of the Company’s business model and strategy, including key
challenges in their execution (and how those will be addressed) is included on pages
4 to 19.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Principle

Deliver Growth

Application/Evidence

2. Seek to understand and meet
shareholder needs and expectations

Communication between Boku and its shareholders is an essential element of
Boku’s governance framework.

The main day-to-day engagement with shareholders and prospective investors is
carried out by the Chief Executive Officer and Chief Financial Officer. During the year,
meetings with analysts and institutional shareholders take place immediately after
the results announcements, supplemented by ad hoc meetings and calls at other
times.

Regular market reports are prepared by Company’s Nominated Advisor, Peel
Hunt, which are then forwarded to the Board to ensure the Directors have a good
understanding of shareholders’ views.

The Group has a dedicated investors section on its website, https://www.boku.com/
investor-relations/corporate-governance-statement/, together with a wide range of
Boku’s reports, results and shareholders documents.

The Board engages with shareholders via a variety of channels and activities
during the year including the annual general meeting, updates to shareholders
via its reporting and the regulatory news services, institutional and retail investor
presentations and investor roadshows, all of which provide an opportunity for
shareholders to engage directly with senior management and the Board.

Boku focuses on building strong and sustainable relationships with a range of
different stakeholders in order to support its long-term success.

The Board regularly considers the key stakeholder relationships which give the
Company its competitive advantage and thereby contribute to its long-term success.
The key stakeholders are the skilled people employed by the Company but also its
merchant and carrier relationships together with other service providers, are central
to the success of Boku and its strategy. These relationships are regularly monitored
by the Board.

Boku’s culture is very open and this includes reaching out and seeking feedback on
a regular basis through employee opinion surveys. The results of which are analysed,
presented to the Board and kept under review.

Boku established a Diversity, Equity and Inclusion (“DEI”) Committee in the
period with the objective of improving social mobility and inclusion of one its key
stakeholders, its employees. The Committee conducted its first DEI survey in April
2021, the results of which are summarised on pages 48 to 51.

3. Take into account wider stakeholder
and social responsibilities and their
implications for long term success

4. Embed effective risk management,
considering both opportunities and
threats, throughout the organization

The Board retains overall responsibility for identifying the major business risks
faced by the Group by setting both the framework and risk appetite of the Group,
in line with best practice. Our risk management framework and approach to risk is
summarised pages 20 and 24.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Corporate Governance Report

Principle

Application/Evidence

Maintain a Dynamic Management Framework

5. Maintain the Board as a well-
functioning, balanced team led by the
chair

6. Ensure that between them the
directors have the necessary up-to-date
experience, skills and capabilities

The QCA Code requires that boards have an appropriate balance between
executive and non-executive directors and that each board should have at least two
independent directors. The Board is currently made up of a Non-executive Chairman
(Mark Britto), two Executive Directors: the Chief Executive Officer (Jon Prideaux) and
the Chief Financial Officer (Keith Butcher) and three Non-executive Directors (Richard
Hargreaves, Stewart Roberts and Charlotta Ginman). All three of these directors are
considered independent.

The Board is supported by an appropriate committee structure, comprising of
separate Audit and Remuneration Committees that have the necessary skills and
knowledge to discharge their duties and responsibilities effectively.

In order to develop their skills and keep up to date with market developments,
the directors receive regular training on the AIM Rules and other key rules and
regulations relevant to AIM-listed companies, conducted by Peel Hunt.

Further details of the current directors and a note of those who are considered to be
independent are set out page 26.

The Board is satisfied that its directors have an effective and appropriate balance of
skills and experience, and that there is a suitable balance between independence of
character and judgement, and knowledge of the Company, to enable it to discharge
its duties and responsibilities effectively. All directors are encouraged to use their
independent judgement and to constructively challenge all matters, whether
strategic or operational.

The current directors, their background and experience are described on pages 26
to 27. Collectively, our team has all the necessary skills and experience, to carry out
the Group’s strategy and business model effectively.

Richard Hargreaves is the senior independent director and he is available to speak
with shareholders concerning the corporate governance of the Company or indeed
anything else. Richard Hargreaves will be taking over as Chairman with effect
from the conclusion of the Annual General Meeting on 1st June 2022, at which
point Stewart Roberts will become the senior independent director. The Company
Secretary, Deepa Kalikiri is responsible for advising the Board on governance
matters and ensuring that decisions of the Board in relation to governance matters
are implemented.

Following the latest review of Board effectiveness, various changes were made in the
structure of the Board meeting, in particular to include a non executive session at
each meeting as well as to more clearly set out a calendar of events and reviews.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Principle

Application/Evidence

Maintain a Dynamic Management Framework

7. Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement

8. Promote a corporate culture that is
based on ethical values and behaviours

The Board has undertaken a formal annual evaluation of its own performance,
including of the Company’s committees.

The evaluation demonstrated overall positive results of the performance of the Board
and committees, by recognising the strengths and addressing ways of improvement
where appropriate.

Appropriate training is also available to all directors to develop their knowledge and
ensure they stay up to date on matters for which they have responsibility as a Board
member.

Following feedback from the Directors, the Board reviewed the structure of its bi-
monthly Board meetings. The meetings were subsequently streamlined to consist of
Directors’ only “executive” session and then a wider strategy session, in which other
members of the Company’s management team are invited to report to the Board.
At the end of each Board session, there is a non-executive session to provide an
opportunity for the non-executive Directors to meet privately and discuss certain
topics if necessary.

The Company’s culture is guided by many different activities, which include regular
senior management meetings and feedback following the employee surveys. Such
surveys provide an insight to the views of the workforce on the Company.

The Company’s policies set out its zero-tolerance approach towards any form of
discrimination or unethical behaviour relating to bribery, corruption or business
conduct in all jurisdictions in which it operates. A recruitment policy, used
consistently across the business is in place, which together with training and policies
on whistleblowing and anti-bribery assist in embedding a culture of ethical behaviour
for all employees.

An outline of the corporate culture promoted by the Board is set out in the About Us
section of the Company’s website headed Our Values.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Corporate Governance Report

Principle

Application/Evidence

Maintain a Dynamic Management Framework

9. Maintain governance structures and
processes that are fit for purpose and
support good decision-making by the
Board

Formal Board meetings are held every two months to review strategy, management
and performance of the group. Additional meetings between those dates are
convened as necessary. We have two Board committees: the Audit Committee and
the Remuneration Committee.

The terms of reference of both these committees have been revised to reflect the
principles of the QCA Code. The terms of reference can be viewed at https://www.
boku.com/investor-relations/reports-documents/

Due to the current size of the Company, the Board still considers a Nominations
Committee is not appropriate, any decisions relating to appointments to the Board
will be a matter for the consideration of the whole Board.

From time to time, separate committees may be set up by the Board to consider
specific issues when the need arises.

The roles and responsibilities of the Chairman, Chief Executive and any other
directors who have specific individual responsibilities or remits (e.g. for engagement
with shareholders or other stakeholder groups) are set out on page 26.

The principal responsibilities of Board members are as set out below:

Amongst other things the Chairman is responsible for:

• Promoting the highest standards of corporate governance and ethical leadership;

• Developing effective working relationships with the Executive Directors;

• Promoting effective relationships between all Board members;

• Setting the agenda for Board meetings and ensuring that sufficient time is devoted

to the consideration of agenda items and that each director can express their
views on matters;

• Ensuring that the Board monitors and determines the nature of the significant risks

the Company embraces in the implementation of its strategy;

• Ensuring the Company maintains effective communications with shareholders and
other stakeholders and that the Board as a whole is made aware of shareholder
and stakeholder issues and concerns.

The Chief Executive is responsible for the following matters amongst others:

• Developing and implementing strategy following approval by the Board;

• Reporting on a regular basis to the Board of progress in respect of strategy,

Company performance and business matters;

• Developing the senior management teams and creating the appropriate

organisational environment to deliver the strategy;

• Acting as the principal spokesman for the Company.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Principle

Application/Evidence

Maintain a Dynamic Management Framework

9. Maintain governance structures and
processes that are fit for purpose and
support good decision-making by the
Board

[continued]

The Chief Financial Officer is primarily responsible for the delivery of high quality
information to the Board on the financial position of the Company.

The Non-executive Directors are responsible for providing a challenge to
the Executives where required and to make the Board aware of their views
on matters before Board decisions are made. They must be able to devote
sufficient time to develop their knowledge and skills to be able to make a positive
contribution to the Board.

The Board has a schedule of matters reserved for the Board which requires the
following key matters to considered and approved by the Board:

• Strategy and overall management of the Group;
• Financial reporting and controls;
• Ensuring a sound system of internal controls;
• Approval of major capital projects and contractors;
• Communication with shareholders;
• Board membership and appointments;
• The Remuneration Policy;
• Delegated authorities;
• Corporate governance matters;
• Approval of key policies.

The Board and its committees receive appropriate and timely information before
each meeting, a formal agenda is produced for each meeting, and Board and
committee papers are distributed several days before meetings take place allowing
all Board members to contribute even if they cannot attend. Any director can
challenge proposals, and decisions are taken democratically after discussion. Any
director who feels that any concern remains unresolved after discussion may ask for
that concern to be noted in the minutes of the meeting, which are then circulated
to all directors. Specific actions arising from such meetings are agreed by the
Board or relevant committee and then followed up by management. The Board’s
Remuneration Committee is supported by a remuneration consultant who provides
the Committee, from time to time, with advice on remuneration structures and
market updates and sentiments.

The Board established the General Management Committee (“GMC”) and two
sub-committes, Payments Management Committee and Identity Management
Committee, in the period. The two sub-committees reported on matters relating
to each line of the business into the GMC. The GMC is responsible for the day-to-
day running of the business. The GMC reports into the Board on all aspects of the
business, providing useful and important business oversight.

The Board continues to receive departmental ‘deep dives’ during the Board
meetings, which has strengthened the Board’s exposure to the executive committee
and other senior management.

Following the improvements made in the course of the year, the Board is satisfied
that the governance arrangements for the business remain appropriate and that the
delegations in place are effective and with strong oversight and controls. This is, of
course, subject to regular Board and managerial oversight and review.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Corporate Governance Report

Principle

Build Trust

10. Communicate how the company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders

Application/Evidence

Reports on the work of the Board and its committees are set out as follows:

• Board: pages 26
• Audit Committee: pages 38
• Remuneration Committee: pages 41

The Group’s approach to investor and shareholder engagement is described under
Principle 2 above. Annual Reports, Annual General Meeting notices, regulatory
announcements, trading updates and other governance related materials for 2021
and retrospective years are available from the Company’s website.

The Board Composition
and Responsibilities

The Board currently consists of a non-executive Chairman,
the Chief Executive Officer, the Chief Financial Officer and
three non-executive Directors. There is a clear division of
responsibilities between the Chairman and the executive
officers and the Board considers three of the non-executive
directors to be independent.

The composition of the Board ensures that no single individual
or group of individuals is able to dominate the decision-making
process.

By rotation, Directors are subject to reappointment by a
shareholder vote at the Company’s Annual General Meeting.
Mr Roberts and Mr Hargreaves are up for re-election at
the Annual General Meeting scheduled for 1st June 2022.
The directors evaluate the balance of skills, knowledge and
experience of the Board when defining the role and capabilities
required for new appointments.

Directors’ Duties

As a US incorporated company, Boku is subject to the laws of
the State of Delaware such that our Directors are not obliged
to comply with the principles of the Companies Act 2006. The
Directors nonetheless take pride in following a general set of
director duties throughout their engagements. In particular, the
Directors act in good faith and in the way that they consider
will be most likely to promote the success of the Company for
the benefit of its shareholders as a whole. The Directors also
act with reasonable care, skill and diligence, taking steps to
ensure that they exercise independent judgement at all times
and that processes are in place to enable robust decision-
making, especially when there are more difficult decisions to
be made. Boku recognises the importance and responsibility
that lays in continuous engagement with stakeholders and in
continuously acting in members’ best interests, Directors have
regard (amongst other matters) to:

The Board is responsible for setting the
strategic direction and policies for the
business. The Board meets regularly to attend
to any issues which require its attention and
oversees the financial position of the Company,
monitoring performance on behalf of the
shareholders, to whom the Directors are
accountable. The primary duty of the Board
is to act in the best interests of the Company
at all times. The Board also addresses issues
relating to internal controls and the Company’s
approach to risk management. The day-to-day
management of the Company’s business is
delegated to the Chief Executive Officer and
the senior executives.

Board Composition

Board Tenure

33%

non-executive

33%

0-3 years

33%

3-6 years

66%

executive

33%

6+ years

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

• the likely consequences of any decisions in the long term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships

with suppliers, customers and others;

• the impact of the Company’s operations on the community

and environment;

• the desirability of the Company maintaining a reputation for

high standards of business conduct; and

• the need to act fairly as between shareholders of the

Company.

Management Team

The Board meets at least once every two months and Board
meetings are attended by all directors either in person or
over the phone. The Board formulates and approves the
Company’s strategy, budgets, corporate actions and monitors
the Company’s progress towards its goals.

It has established an audit committee and a remuneration
committee with formally delegated duties and responsibilities
and with written terms of reference.

From time to time, separate committees may be set up by the
Board to consider specific issues when the need arises. Due
to the size of the Company, the directors have decided that
issues concerning the nomination of directors will be dealt with
by the Board rather than by a committee.

Audit committee

The Audit Committee is chaired by Stewart Roberts and its
other members are Richard Hargreaves and Charlotta Ginman,
all of whom are independent non-executive Directors. The
Audit Committee meets formally at least three times a year and
otherwise as required. It has the responsibility of ensuring that
the financial performance of the Company is properly reported
and reviewed and its role includes monitoring the integrity of
the financial statements of the Company (including annual
and interim accounts and results announcements), reviewing
internal controls and risk management systems, reviewing
any changes to accounting policies, reviewing and monitoring
the extent of the non-audit services undertaken by external
auditors, and advising on the appointment of external auditors.
A full report of the Audit Committee can be found on page 38.

Remuneration committee

The Remuneration Committee is chaired by Richard
Hargreaves and its other members are Charlotta Ginman and
Stewart Roberts, all of whom are independent non-executive
directors. The Remuneration Committee meets at least twice
a year and at such other times as required. It has responsibility
for determining, within the agreed terms of reference, the
Company’s policy on the remuneration packages of the
Company’s Chief Executive, Chairman, and the executive
directors and such other members of the executive
management as it is designated to consider. The remuneration
of non-executive directors will be a matter for the Chairman
and executive directors of the Board. No director or manager
is allowed to partake in any discussions relating to their own
remuneration. In addition, the Remuneration Committee
engages with a remuneration consultant from time to time in
order to obtain independent advice to provide the committee
with thorough and effective oversight on remuneration topics
such as executive and management compensation and
share market trends. The Remuneration Committee has the
responsibility for reviewing the structure, size and composition
(including the skills, knowledge and experience) of the
Board and succession planning. It also has responsibility for
recommending new appointments to the Board. A full report of
the Remuneration Committee can be found on page 41.

Share Dealing code

The Company has adopted a dealing code for the directors
and all employees, which is appropriate for a company whose
stock is admitted to trading on AIM. The Company takes all
reasonable steps to ensure compliance by the Directors and
employees with the terms of that dealing code by providing
regular training and making the share dealing code and
associated documents readily available at all times.

Shareholders

The Board is committed to regular, open and effective
communication with shareholders to ensure that the
Company’s strategy and performance are clearly understood.
The Company provides annual and interim statutory financial
reports, investor and analyst presentations, regular trading
and business updates. At the Annual General Meeting all
shareholders have the opportunity to meet and ask questions
of the Board of Directors. The next Annual General Meeting is
scheduled for 1 June 2022.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Audit Committee Report
Committee Chairman Introduction

Dear Shareholders,

I am pleased to introduce the Audit Committee report for the
year ended 31 December 2021. In the report below we explain
how the committee discharged its responsibilities during the
year, including the significant issues that we considered in
relation to the financial statements and how we safeguarded
the independence and objectivity of the external auditors.

Our external auditors are BDO LLP who were appointed in
2017. Taking account of the Auditing Practice Board’s Ethical
Standard 3 the exiting senior statutory auditor who has been
our Partner for the past five years will be stepping down and
a new senior statutory auditor will be appointed for our next
audit period.

Composition of the committee

The Audit Committee comprises Stewart Roberts (who serves
as chair), Richard Hargreaves and Charlotta Ginman, who have
all served on the Board and the audit committee throughout
the full financial year.

All members of the committee are non-executive directors and
are independent of management. Both Mr Roberts and Mrs
Ginman have significant accounting, auditing and other related
financial management expertise and the Board considers that
the Audit Committee as a whole has competence relative to
the sector in which the Company operates.

Executive directors and senior executives (the Group
Financial Controller and Company Secretary) attend meetings
by invitation as required, but do not do so as of right.
Representatives of BDO LLP (external auditor) also attend
the committee meetings and meet privately with committee
members, in the absence of executive management, prior to
each committee meeting.

The committee is required to meet a minimum of three times
during each financial year but chose to meet four times
during 2021.

The Role and the responsibilities of
the committee

The Audit Committee Terms of Reference are published on our
website but for clarity, the committee’s principal responsibilities
are to:

• monitor the integrity of the financial statements of the

Company and any formal announcements relating to the
Company’s financial performance, reviewing significant
financial reporting judgements contained in them. The
committee also reviews the Group’s Annual Report and
Accounts and Interim Report prior to submission to the full
board for approval.

• monitor the Group’s accounting policies and review the

Company’s internal financial controls and financial reporting
procedures and, on behalf of the board, the Company’s
internal control and risk management systems.

• monitor the adequacy and effectiveness of the Company’s

internal controls and internal financial controls, risk
management systems and insurance arrangements.

• make recommendations to the board, for it to put to the

shareholders for their approval in the Annual General Meeting,
in relation to the appointment, reappointment and removal
of the external auditor and to approve the remuneration and
terms of engagement of the external auditor.

• oversee the relationship with the external auditors and review

and monitor their independence and objectivity and the
effectiveness of the audit process, taking into consideration
relevant UK and US professional and regulatory requirements.
• develop and implement policy on the engagement of the
external auditor to supply non-audit services, taking into
account relevant ethical guidance regarding the provision of
non-audit services by the external audit firm; and to report
to the board, identifying any matters in respect of which
it considers that action or improvement is needed and
making recommendations as to the steps to be taken;
• provide a forum through which the Group’s auditors
and external tax advisors report to the board; and
report to the board on how The Committee has
discharged its responsibilities.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

External Audit

Non-audit services and fees

The scope of the audit work undertaken by external auditors
is agreed in partnership with the Audit Committee and typically
covers the following areas:

• the External Auditor’s overall work plan for the

forthcoming year;

• the External Auditor’s fee proposal;
• the major issues that arose during the course of the audit

and their resolution;

• key accounting and audit judgements and estimates;
• the levels of errors identified during the audit, and;
• recommendations made by the External Auditor in their

management letters and the adequacy of managem ent’s
response.

The Audit Committee meets privately with the External Auditor
in the absence of management to review matters within their
sphere of interest and responsibility.

It can occasionally be more efficient or necessary for a
company to engage the external auditors to provide non-audit
services because of their knowledge and experience and/or for
reasons of confidentiality. However, safeguarding the objectivity
and independence of the external auditors is an overriding
priority. The external auditors will only be appointed to perform
a service when doing so would be consistent with both the
requirements and principles of the relevant external regulations
including the Revised Ethical Standards 2019, and when their
skills and experience make the firm the most suitable supplier.

We classify work that the external auditors might be permitted to
perform into one of two categories and manage these as follows:

• Audit services – the scope and fees for the statutory audit

are agreed by the committee.

• Audit – related services (including the review of interim

financial information) – the scope of any such services and
the fees must be pre-approved by the committee.

Audit services – core

Audit services – new subsidiary audits

Audit services – specific to FY20 year end

Audit - related services (audit review of interim accounts)

Sub total: audit and audit related fees

Third party audit fees specific to FY20

Total audit fees

The 2021 audit fees include an amount of $69,879 relating to the 2020 audit.

2021
$

358,822

138,228

27,400

524,450

2020
$

232,655

59,773

42,000

26,300

360,728

45,000

524,450

405,728

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Audit Committee Report

Internal Audit

Boku does not employ an internal audit function - as is
typical for a company of Boku’s size. However, the need for
an internal audit team was considered during the year and
deemed not necessary at this stage. This decision will be
reviewed periodically by the Audit Committee.

Boku has a Risk & Compliance Team whose primary focus
is to ensure that the company remains compliant with all
relevant regulation, most notably the FCA in the UK/ EU
(issuer of our e-money license) and relevant local Telecoms
regulation within each specific market; in addition to broader
regulatory requirements such as GDPR and PSD2 within the
EU. The company also employs a dedicated team focused on
transaction monitoring and revenue and reconciliation.

Risk management and internal controls

As detailed in the Corporate Governance Statement, the
Group’s risk management and controls framework is monitored
by the Committee. The framework is designed to manage the
Group’s risk appetite rather than being designed to eliminate
any risk of failure to meet the Group’s strategic objectives. The
principle risks are set out in the Risk Management section of
this report on pages 20 to 24.

In the weeks following the initial invasion the current Russia/
Ukraiane conflict has been considered in detail and has been
deemed not to constitute a material business risk by the
committee for the reasons laid out in the CFO report and Risks
sections.

Changes of accounting policies/
Application of IFRSs

The Committee is satisfied that there are no changes in
accounting policies impacting the current year and that there
are no IFRSs yet to be adopted that the Committee expects to
have a significant impact on the financial statements.

Key activities in the year ended
31 December 2021

Fulfil each of the business considerations commensurate with
the Audit Committee Terms of Reference.

Reviewed budgets, forecasts and the group’s Going Concern
paper produced by management.

Reviewed the key business risks of the company and agreed
the subsequent updates to the focus areas. (Please refer to
page 20 for a more detailed review of company’s principal
Risks and Uncertainties).

Reviewed the Impairment review paper produced by
management.

Reviewed and agreed the fitness for purpose of primary
control processes in the business including updates for
implementation in 2022.

Monitored the result of the project to migrate Fortumo’s
accounting systems onto the Boku Navision system in the first
half of 2021.

Looking ahead

The agreed divestment of Boku Identity to Twilio will result
in a requirement to refresh and review budgets and financial
reporting accordingly.

Final review and implementation of refreshed Internal Control
processes and procedures for 2022.

Stewart Roberts
Audit Committee Chairman
28 March 2022

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Remuneration Report
Chairman’s Introduction

Dear Shareholder,

I am pleased to present the Directors’ Remuneration Report
for the 2021 financial year. This letter introduces the report,
outlines the major decisions on Directors’ remuneration during
the year and explains the context in which these decisions
have been taken.

Boku is committed to high standards of corporate governance
and our policy and disclosures on Directors’ remuneration are
intended to reflect this approach. We welcome shareholder
feedback and will continue our practice of putting an advisory
resolution on remuneration to shareholders at our AGM.

This report sets out the remuneration policy and the detailed
remuneration for both the Executive and Non- Executive
Directors of the Company for the period to 31 December
2021. The information provided fulfils the requirements of
AIM Rule 19. Boku, Inc, being US incorporated and quoted
on AIM is not required to comply with the UK’s Companies
Act Schedule 8 of the Large and Medium- sized Companies
and Groups (Accounts and Reports) Regulations 2008. The
information is unaudited.

Remuneration Policy

The Company’s approach to remuneration is that the overall
package should be sufficiently attractive to recruit, motivate
and retain individuals of a high calibre with significant technical
and strategic expertise. The Company needs to ensure
that key personnel can deliver its objectives and value for
shareholders in a competitive sector.

The four main elements of the remuneration package are base
salary, benefits, annual performance related bonuses and long-
term share incentives, payable to Executive Directors, namely
the CEO and CFO, and other executive team members. The
policy in each area is detailed in this report.

Performance and Decisions on
Remuneration Taken

The Company performed well in 2021 and continues to
grow fast. Revenues and Adjusted EBITDA were in line with
market expectations and were upgraded during the course
of the year. This was achieved despite material adverse
foreign exchange headwinds.

Bonuses for 2021 were awarded to the two Executive
Directors as detailed in note 32. Awards were made to all
eligible employees under the 2021 company’s Equity Plan in
January 2022 and comprised time based Restricted Stock
Units (RSUs).

Additionally, during the year, the company made long term
incentive awards to executives and other employees in the
form of Performance Restricted Stock Units (PRSUs). These
stock units have vesting rules which are detailed in note
20. Awards of performance stock units were made to Jon
Prideaux, Keith Butcher, other members of the Executive
Team and various other key employees. These awards vest
after three years.

The remuneration report for 2020 was the subject of an
advisory vote at the Annual General Meeting of the company.
The report was approved by 84% of votes cast. Those
who voted against the report indicated that it was due to
the fact that 50% of the Executive Long Term Incentive
Plan RSUs were time based without a further performance
condition. As a result, the remuneration committee has
revised its approach for 2022 and applied an EBITDA based
performance condition to all LTIP RSU grants.

Decisions for 2022

Annual bonuses for 2022 will operate in a similar way
to 2021, reflecting the core objectives of revenue and
Adjusted EBITDA growth and personal contribution. LTIP
Performance RSUs (PRSUs) have also been granted to
Executive Directors. These PRSUs will vest in three years
subject to a long term Adjusted EBITDA target.

I hope that you find the report helpful and informative.

Richard Hargreaves
Remuneration Committee Chairman
28 March 2022

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Remuneration Report

Composition of Committee

Long Term Incentives

During 2021, the company made long term incentive awards
to executives and other employees in the form of performance-
based restricted stock units. In general, restricted stock units
vest and convert into common shares on the vesting date.
Details of awards currently held by directors are set out later in
this report.

The Committee sees long term incentives as an important
part of the remuneration of executives, to align them with
shareholders and reward them for strong performance. In
line with its policy of making annual awards, in 2021 the
Committee made further PRSU awards to executives. New
grants to Executive Directors and key employees have a
minimum normal vesting period of three years, and all are
subject to a performance condition relating to long term
Adjusted EBITDA performance.

Pension Provision

The Company operates a stakeholder pension scheme for
UK employees. Executive Directors participate on the same
basis as other employees. Mr. Prideaux has opted out from the
pension scheme.

Beneﬁts

The Company provides the option for employees to participate
in a private healthcare plan. Mr. Prideaux participated for the
entire year and Mr. Butcher did not participate in 2021.

Remuneration of Non-Executive Directors

The fees paid to the Non-Executive Directors are determined
by the Executive Directors. They receive an annual fee and
additional fees for chairing board committees but they are not
entitled to receive any bonus or other benefits. Non-Executive
directors are entitled to reasonable expenses incurred in the
performance of their duties. Non-Executive Directors become
eligible for a single grant of RSUs after they have served on the
Board for a year.

The Committee members are Richard Hargreaves (Chairman),
Stewart Roberts and Charlotta Ginman. The Committee
meets at least twice a year to review the remuneration of
the Executive Directors and other executive team members
and to set the overall pay policy. The views of the Chief
Executive Officer are sought in respect of awards to the
other Executive Director and Executive Team members.

Remuneration Policy

The Committee’s overall approach is focused on ensuring the
company’s remuneration policy is aligned with shareholders’
interests whilst enabling the company to attract, retain and
motivate high quality executive management. A full external
benchmarking exercise was undertaken in 2020 to rebase
compensation in line with market norms and practices. This
year adjustments to Executive pay were made in line with the
pay increases awarded to staff.

Base Salary

Base salary for each Executive Director is reviewed annually
by the Committee: salary levels paid by companies of a similar
size and nature; the performance of the Group as a whole and
the Director’s performance, experience and responsibilities
are all taken into account. Changes will be effective from 1
February 2022 (2021: 1 February 2021).

Annual Bonus

Bonuses are paid at the discretion of the Committee. The
Committee’s general policy is that Executive Directors should
receive a bonus for the achievement of stretching performance
targets. Currently the Company uses revenue, Adjusted
EBITDA and personal performance targets.

Bonuses for achievement of target performance will be paid
in cash on a half-yearly basis. Bonuses for over performance
will only be paid annually. The Committee has discretion to
make adjustments to the level of bonus to avoid unintended
consequences. For 2021, the bonus for the CEO was set at
50% of salary for achieving target performance and capped at
100% of salary for over performance. For the CFO, on target
performance bonus was 40% and capped at 80% for over
performance.

The bonus scheme extends to the other executives who are
members of the Executive Management Team.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Service Contracts

The service contracts and letters of appointment of the Directors include the following terms:

Executive Directors

Date of contract

Notice period (months)

Jonathan Prideaux

Keith Butcher

Non-Executive Directors

Mark Britto

Richard Hargreaves

Stewart Roberts

Charlotta Ginman

1 May 2012

01 Oct 2019

30 August 2017

8 August 2017

1 January 2020

24 September 2020

The service contracts of the Executive Directors do not provide for any extra payment on the termination of employment.
The letters of appointment of the Non-Executive Directors have an initial period of 12 months.

Directors are subject to re-election by rotation every third year at the Annual General Meeting. Mr. Roberts and Dr. Hargreaves are
up for election at the 2022 Annual General Meeting.

Annual Report on Remuneration

The following sections show how remuneration was managed during 2021.

Salaries

Base salaries for Executive Directors at 31 December 2021 were as follows:

Jonathan Prideaux

Chief Executive Officer

Keith Butcher

Chief Finance Officer

£300,000

£210,000

Fees

Fees for Non-Executive Directors at 31 December 2021 were as follows:

Name

Role

Committee Chairman

Base Fee

Committee Chairman Fee

Mark Britto

Chairman

Richard Hargreaves

Non-Executive Director

Remuneration

Stewart Roberts

Non-Executive Director

Audit

Charlotta Ginman

Non-Executive Director

$100,000

£40,000

£5,000

£40,000

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Remuneration Report

2021 Bonus (Payable in 2022)

The annual bonus targets for 2021 were based on growth in revenue, Adjusted EBITDA and personal performance. Half of the
maximum is payable for the achievement of Board defined targets, with the balance being awarded for over-performance.

The maximum awardable to Mr. Prideaux was £150,000 (50% of salary) for achieving targets, with a maximum further amount of
£150,000 (50% of salary) payable for over performance. On-target bonus was set at £84,000 (40% of salary) for Mr. Butcher, with
a maximum further amount of £84,000 (40% of salary) payable for over performance.

In 2021, revenue was in line with the company’s targets and Adjusted EBITDA was ahead of them. Following the publication
of the audited accounts, total bonuses in respect of 2021 scheduled to be paid to Mr. Prideaux and Mr. Butcher are £211,000
(70.3% of the maximum; 2020: £164,172) and £118,160 (70.3% of the maximum; 2020: £130,591) respectively.

Summary of Directors’ Total Remuneration for 2021and 2020

Executive Directors

Jonathan Prideaux

Keith Butcher

Non-Executive Directors

Mark Britto

Richard Hargreaves

Stewart Roberts

Charlotta Ginman

Total

Salary
£

294,544

208,047

Performance
Bonus
£

Pension
£

Total
Benefits
£

Total
2021
£

Total
2020
£

211,000

2,030

507,574

400,918

118,160

1,055

327,262

313,878

Fees 2021
£

Fees
2020
£

72,687

46,743

45,000

35,000

45,000

35,000

40,000

10,000

1,037,523

841,539

Performance bonuses reflect performance in 2021 but are for payment in 2022. 2021 FX Rate used: GBP/USD= 1.376

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Equity Plan and Long-Term Incentive Plan

During 2021 the Company granted 2,449,665 (2020: 2,092,873) PRSUs and 2,753,774 (2020: 2,342,189) RSUs over common
shares to Executive Directors, other executives, employees, and Non-Executive Directors, under the Company’s 2017 Equity
Incentive Plan.

The PRSUs granted to the executives and Executive Directors will vest as Common Shares three years from the award date, in
one event, subject to meeting a long term Adjusted EBITDA performance target.

Boku also makes a once only award of RSUs to Non-Executive Directors of the Company after a year’s service to support
retention and align the interests of these directors with those of the Company’s shareholders. These RSUs vest after two years,
subject to certain conditions. The programme was established in 2018, and the level of award is reviewed if and whenever new
Non-Executive Directors are appointed and become eligible.

A breakdown of the Directors’ current interests is set out below.

Market value options

Name

Date of grant

Number

Exercise price

Initial vesting date

Final vesting date

Lapsing date

Mark Britto

28 Oct 2016

569,930

USD $0.28

23 Jan 2013

23 Dec 2016

23 Dec 2023

28 Oct 2016

424,514

USD $0.28

23 Jan 2013

23 Jan 2017

23 Dec 2023

28 Oct 2016

500,000

USD $0.28

23 Sep 2016

23 Sep 2020

27 Oct 2026

Performance Restricted Stock Units

Name

Date of
Issue

Number

Share Price
on award
date

Value on
award
date

Initial Vesting
Date

Final Vesting Date

Lapsing Date

Jonathan Prideaux

19 Jan 2022

210,000

£1.64

£344,400

01 April 2025

23 Jan 2026

20 Jan 2021

300,000

£1.40

£420,000

01 Apr 2024

01 April 2024

20 Jan 2025

22 Jul 2020

301,142

£0.87

£261,993

01 Apr 2023

01 April 2023

31 Jul 2023

15 Jan 2020

150,000

£0.76

£114,000

01 Apr 2023

30 Apr 2023

15 Feb 2019

300,000

£0.89

£267,000

01 Apr 2022

15 Feb 2024

Keith Butcher

19 Jan 2022

175,000

£1.64

£287,000

01 April 2025

23 Jan 2026

20 Jan 2021

250,000

£1.40

£350,000

01 Apr 2024

20 Jan 2025

22 Jul 2020

171,046

£0.87

£148,810

01 Apr 2023

31 Jul 2023

15 Jan 2020

125,000

£0.76

£95,000

01 Apr 2022

01 Apr 2023

30 Apr 2023

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Remuneration Report

Restricted Stock Units

Name

Date of Issue

Number

Initial Vesting Date

Final Vesting Date

Lapsing Date

Charlotta Ginman

22 Sep 2021

103,276

£2.04 £210,683

01 Apr 2023

31 Dec 2023

Stewart Roberts

20 Jan 2021

68,814

£1.40

£96,339

01 Apr 2023

31 Dec 2023

14 Mar 2021

34,462

£1.575

£54,278

01 Apr 2023

31 Dec 2023

Directors’ Interests in Shares

The interests of the Directors as at 31 December 2021 in the shares of the company were:

Name

Mark Britto

Jonathan Prideaux

Richard Hargreaves

Keith Butcher

Charlotta Ginman

Number of Common Shares

Percentage of share capital

10,328,145

2,949,716

1,241,998

542,500

12,715

3.5%

1.0%

0.4%

0.2%

0.0%

*Jon Prideaux’s interests include 16,949 shares held by his spouse and 1,694 shares held by a family member. Richard Hargreaves’s interest include 589,897 shares
held by his family members.

Directors’ Remuneration for the Year Commencing 1 February 2022

Executive Director salary levels as at 1 February 2022 were as follows:

Jon Prideaux

£309,000

Keith Butcher

£216,500

In setting salaries for 2022, the Committee adjusted executive salaries by 3% in line with pay rises awarded to other employees.
The Committee undertakes a regular benchmarking review of executive compensation against market rates. The last such review
was in 2020, the next one is expected to be undertaken in 2023.

The Executive Directors’ annual bonus for the year commencing 1 January 2022 will be operated in line with the policy disclosed
elsewhere in this report. Mr. Prideaux’s maximum bonus will be set at 50% of salary for on-target performance with amounts
above this paid for exceeding targets. Maximum bonus is capped at 100% of salary. For Mr. Butcher, the equivalent amounts are
40% for on target performance, with maximum bonus capped at 80% of salary.

The company has also awarded PRSUs to Executive Directors and other executives in 2022. Mr Prideaux was awarded 210,000
and Mr. Butcher, 175,000 as shown in the PRSU table above. These PRSUs are subject to EBITDA related performance conditions.

Non-Executive Director fees in 2022 were increased by 3% in line with pay rises awarded to employees. The Chairman’s fee was
increased to $103,000 from 1st February 2022. The rates for other Non-Executive Directors were increased to £41,200 from 1st
February 2022; the supplementary fee for chairing a Board Committee was increased to £5,150, from 1st February 2022.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Environmental, Social
and Governance Report (ESG)

At Boku, environmental, social and governance (‘ESG’)
considerations are an integral part of the decision making
process at all levels across the business. As such, we are
committed to evolving Boku’s ESG framework through
developing, in particular, an improved understanding and
resolution of diversity and inclusion issues across the business,
reducing Boku’s environmental footprint and, increasing
transparency in, and quality of, our ESG reporting.

Environmental

Given the nature of our business our environmental impact
is relatively low compared with other, more production
intense sectors. However, we are committed to finding
ways to operate the business in a more energy efficient and
environmentally advantageous manner.

We have already taken some measures which have helped us
to reduce our carbon footprint, such as moving our platform
to Amazon Web Services, encouraging the use of digital
signatures where possible and encouraging a reduction in
printing. Despite the measures taken, we anticipate energy
use to increase in 2022 due to an increased return to office
working following the end of the pandemic.

As part of Boku’s commitment to a more robust and
transparent ESG framework, work has been undertaken to
record energy consumption across its offices in 2021. It is
Boku’s intention, from 2022 onwards, to report its greenhouse
gas emissions in compliance with the UK’s Streamlined Energy
and Carbon Reporting regime requirements for large unquoted
companies and LLPs. We intend to use 2021 as our base
year and to spend 2022 improving our data collection and
consumption calculation methods.

The Scope 1 figures, which capture our refrigerant emissions
only, were calculated using the screening method. This is a
method whereby an organisation multiplies the refrigerant
amount by an emission factor, based on the specific type of
equipment and emission event, to determine the operating
emissions of our equipment.

The Scope 2 figures, showing emissions from purchased
electricity and heat, were calculated using location-based
reporting methods. The Scope 2 figures for Germany were
calculated using an energy consumption estimate provided
by the landlord for our office building in Munich. The Scope
2 figures for UK and, from September 2021, USA were
calculated using the area method. This allows users to
estimate their energy use based on their share of the building’s
floor space and total energy consumption, as individual energy
consumption data was not available. The Scope 2 figures
for Estonia and India were calculated using monthly bills with
individual usage data from the building landlords and energy
providers, respectively.

As a provider of online services, our Scope 3 emissions consist
primarily of upstream emissions, notably capital goods, waste
generated in operations, business travel, employee commuting
and upstream leased assets. In 2021, office working and
travel were impacted by COVID-19 and it is anticipated that
the Company’s Scope 3 emissions will increase in 2022 when
business travel and office working begin to increase.

Several of our offices are supplied by energy tariffs which are
either powered wholly or partly by renewable sources, with our
London office supplied by a 100% renewable energy tariff.

Energy Consumption (tCO2e) FY21

Scope 1

Scope 2

Total

Intensity Ratio (tCO2e per $m group rev.) FY21

Scope 1

Scope 2

Total

0.40

6.04

6.45

0.01

0.11

Estonia

USA

35.95

21.72

Estonia

USA

0.64

0.39

India

0.19

20.40

20.58

India

0.36

Germany

0.91

Total

0.59

85.02

85.61

Germany

Total

0.02

0.01

1.51

1.52

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Environmental, Social and Governance Report (ESG)

Climate change

Diversity

Diversity is integral to Boku’s structure and operation, which
brings together a group of people from many different
backgrounds, nationalities and cultures with a wide-ranging set
of skills and experience. Boku cultivates an open environment
where employees are encouraged to participate in decision
making at all levels - this empowers our people to bring their
own unique perspective and ideas in order to improve the
quality of the discussions and decision making which, in turn,
delivers on the wider Boku strategy by making our business
more robust and sustainable.

We value the fact that our colleagues, at both a domestic and
international level, come from a diverse range of backgrounds,
ethnicities and nationalities. Overall, Boku’s workforce is
spread globally, across countries including Brazil, Canada,
China, Czech Republic, Estonia, France, Germany, Italy,
India, Indonesia, Ireland, Japan, Latvia, Malaysia, Mexico, the
Netherlands, Romania, Singapore, Spain, Sweden, Taiwan,
UAW, Vietnam, the United Kingdom and the United States.

Our 2021 DEI survey gathered data across several groups of
respondents. Our plan in 2022 is to investigate how to improve
DEI data collection in our multiple jurisdictions.

Boku is an online payments company servicing most of the
world’s largest digital merchants and as such its climate
change impact is low as its business is all online and its
merchants’ business is the sale of digital goods such as
streaming services. In the last two years Boku has moved
most of its physical servers into a cloud based environment
(AWS) and has reduced international travel for its staff thereby
reducing any climate change impact.

Social
Mission Statement:
Embracing our differences,
just the way we are…
Since Boku’s incorporation, we have maintained a focus on
the people at the core of our operation, recognising the role
that the team plays in being the key driver of Boku’s success.
To this day, consideration for our staff still plays an integral role
in our strategy. In particular, we look to build our company’s
progression on three fundamental pillars: Diversity, Equity and
Inclusion. These three concepts guide our decision-making
and permeate our culture, which is underpinned by Boku’s
overarching responsibility towards its employees, prioritising their
wellbeing and helping them to develop and achieve their goals.

These efforts were formalised when Boku established a
Diversity, Equity and Inclusion (DEI) committee at the start
of 2021. The DEI committee has membership from across
the company, improves our working culture and promotes
representation for all employees.

We conducted the first annual Boku DEI survey in 2021. The
goals of the survey included: providing a baseline breakdown
of our current demographic makeup, understanding whether
employees of all backgrounds feel a sense of belonging
at Boku, obtaining data on how employees think about or
experience DEI and identifying our strengths and opportunities
so that we can improve DEI at Boku.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Equity and Inclusion

At Boku, we work continuously to provide equal opportunities
to all our employees and candidates. In particular, we are
committed to developing an environment where anyone
from any background can flourish and this ethos is applied
throughout the organisation. Our recruitment processes are
reviewed regularly and are designed to enhance diversity and
social mobility in our recruitment channels. For example:

• we aim to make our opportunities available to those who
can show us that they have the aptitude to join Boku and
the attitude our clients are looking for, regardless of their
background or educational path;

• we use competence-based questions during the interview
process, ensuring candidates are not assessed on social
capital; and

• all of our staff involved in interviewing applicants undergo

training to help mitigate any unconscious bias.

Our inclusive approach to recruitment enables us to strive for
balanced representation and a culture of equality.

Gender balance

It is commonly cited that gender diversity in FinTech is not
where it should be. For example, in the UK, around 30% of
the FinTech workforce is female (Brett, Louise. “Fintech has a
bigger gender problem than it realises” Deloitte, https://www2.
deloitte.com/uk/en/pages/financial-services/articles/fintech-
has-bigger-gender-problem-than-it-realises.html). As at the
time of this report, Boku is currently ahead of the curve in this
regard, with a global workforce that is 34% female. However,
this figure can be improved and Boku is committed to taking
actionable steps to level the gender balance within Boku.

With this in mind, in 2021 we started to collect and publish
data from across our global workforce on gender diversity.
This is to help inform action plans and areas on which to focus;
from attraction and recruitment to progression and retention.

Location

U.S.

U.K.

India

Other

Germany

Estonia

Sexuality

Heterosexual

Rather not say

Homosexual

Bisexual

Other

Race/Ethnicity

White

South Asian/Indian

East Asian/Asian

Other

2+ Races

Black/Afro-Caribbean/
African

Parents/Carers

Yes

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Environmental, Social and Governance Report (ESG)

Gender pay gap

Our worldwide (excluding NEDs) gender pay gap at December
2021 was 26%. Females made up 17% of senior leadership
roles at Boku in 2021. We monitor these results and keep our
policies under review in order to encourage female applicants
and to help support the advancement of our female members
of staff. The gender pay gaps in our USA and India offices are
already lower than the local industry benchmark in both cases.

Due to the lack of comparable information across the various
seniority levels at Boku, we have reported our gender pay gap
information using salary averages across the whole male and
female employee population rather than by seniority level. The
data we provided in this report, shows that we do not have an
equal pay issue but we have more to do to increase female
representation in our workforce, in particular at more senior
levels which we are committed to improve.

We are committed to creating an inclusive atmosphere in
which all members of staff are valued for their differences and
can feel comfortable being themselves, creating a sense of
belonging. In doing so, we hope to create an environment
in which all employees can develop and feel empowered to
reach their full potential. We value each individual for their
differences, in addition to what they are able to offer to their
team and to the wider company. We will continue to work
hard to increase the number of women we employ, develop
and promote to improve our gender balance and become a
more diverse organisation. We plan on doing that by focusing
on attracting more women into traditionally male dominated
roles and supporting their development; and providing more
opportunities for women to progress into senior positions, and
thereby improving the overall gender balance of our company.

Female base salary
as percentage of male base salary (age)

Female base salary
as percentage of male base salary (geographic)

benchmark

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

Company
(no NED)

Aged 21-35 Aged 36+

UK
(no GMC &NED)

EU
(no UK & EE)

Estonia

India

Percentage of female staff

benchmark

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

Estonia

EU
(no UK & EE)

India

All Boku

Aged 22-35 Aged 36+

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Percentage of female
senior leadership

benchmark

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

Company culture

Beyond Diversity, Equity and Inclusion, we focus on
supporting our employees’ health and wellbeing. For example,
many members of our staff balance work commitments
alongside family responsibilities, whether managing childcare
commitments or looking after a sick or elderly relative. Over
half of the staff at Boku are parents or carers.

We are committed to supporting all our staff in balancing
work and family life and we have implemented certain policies
and support mechanisms to deliver on this objective. One
such policy is to offer staff the choice to work flexibly, giving
them some control over their schedule. This policy allows
employees to organise their time by working around external
commitments, such as childcare duties.

We continue to invest in technologies to ensure that our team
members can work productively, regardless of where they are
based. We also have a Home Office Expense Policy, which
provided a stipend to all employees to put in place a suitable
home working environment.

Furthermore, we recognise the pressures of modern life and
so we run initiatives to reduce potential stress and to allow our
employees to take a breather and to focus on their wellbeing.
As part of our Zen Friday policy, we ask all employees, where
possible, to avoid having meetings on Fridays to facilitate a
calm end to the working week. We also offer Press Pause
Days, an extra day of holiday every quarter for all members of
staff, which is on the same day and as a result creates a break
from work for everyone.

Improving Social Mobility

Boku is a proactive and enthusiastic promoter of social mobility
and inclusion within the workforce, supporting all staff in their
career progression. Through our DEI committee, we aim to
raise awareness of social mobility issues across the business
and sector. Our goal is to help those who would otherwise
not have the opportunity to work in the Fintech sector and
we strive to hire and support future talents, empowering them
to reach their potential. Their contribution, in turn, drives the
ability of Boku to better meet the goals of its customers.

Boku’s UK office participates in Urban Synergy’s mentoring
and externship (DREAM) programs. Urban Synergy is a youth
empowerment charity whose stated mission is to inspire, guide
and ignite the ambitions of young people. They run an early
intervention scheme which helps youths, aged from 10 – 18
years old, to reach their full potential. Multiple members of the
Boku team in the UK have participated in these programs in
order to help nurture talent and encourage development in the
next generation, irrespective of their background.

Governance

Boku recognises that a strong corporate governance
framework is an essential foundation for the running of a
successful, sustainable and ethically run business. Governance
arrangements are reviewed by the Boku Board on a regular
basis to ensure that they are fit for purpose and comply with
the Quoted Companies Alliance Corporate Governance Code.
A summary of Boku’s compliance with the QCA Code can be
found on page 30.

Boku has established a Code of Ethics which is underpinned
by several policies, procedures and training modules to ensure
that staff adhere to its principles. We also have specific staff
conduct policies include whistleblowing, information security
and anti-bribery and corruption. Compulsory training modules
on data protection, information security and anti-money
laundering are taken by all staff on an annual basis.

Boku is committed to not only preventing unethical practices,
such as modern slavery, within its own business but across its
supply chain. Due to the nature of our business Boku’s main
suppliers are mostly involved in IT and Marketing services and
are largely considered to be low risk. As part of our onboarding
process, we conduct due diligence on all our prospective
partners and suppliers, applying a risk-based approach to
ensure that all our partners are meeting our highest standard.
Boku has established and published a modern slavery
statement which can be found on our website.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Directors’ Report

The Directors present their report and the audited financial
statements for Boku Inc. for the year ended 31 December
2021.

The preparation of financial statements is in compliance
with IFRS issued by the International Accounting Standards
Board (IASB) (“IFRS”) and IFRIC Interpretations issued by the
International Accounting Standards Board (IASB).

Directors’ indemnities

The Company has made qualifying third party indemnity
provisions for the benefit of its directors which were made
during the period and remain in force at the date of this report.
The Company also purchased and maintained throughout
the financial year Directors’ and Officers’ liability insurance in
respect of itself and its Directors.

Principal Activities

The principal activity of Boku Inc. and its subsidiaries (the
“Group”) is the provision of digital payments, including mobile
wallets, real-time payments schemes, and direct carrier billing
for global merchants. These solutions enable merchants to
acquire new customers and accept online payments from
billions of consumers who prefer to pay without credit cards.

Business review and future developments

The review of the period’s activities, operations, future
developments and key risks is contained in the Strategic
Report on pages 4 to 19.

Directors

The Directors who held office during the period and
subsequently were as follows:

Dividends

The Directors do not recommend a final ordinary dividend for
the period (2021: £nil).

Post Balance Sheet Events

On 18 January 2022, Boku reached an agreement for the
divestment of its wholly owned subsidiary, Boku Identity, Inc.
to Twilio, Inc. for a maximum transaction value of $32.3 million
and the transaction was completed on 28 February 2022.

Financial Risk management

Details of financial risk management are provided in note 3 to
the financial statements.

1. Mark Britto
2. Jon Prideaux
3. Richard Hargraves
4. Keith Butcher
5. Stewart Roberts
6. Charlotta Ginman

With regard to the appointment and replacement of directors,
the Company is governed by its Charter (the US equivalent of
the Articles of Association) and related legislation. The Charter
may be amended by special resolution of the shareholders.

The Remuneration and Audit Committee reports can be found
on pages 41 and 38 respectively.

Directors’ interests

Directors’ share options and interests in shares can be found
in the remuneration report on page 41.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Internal Control

Purchase of own shares

The Board has overall responsibility for the Group’s system
of internal control and for reviewing its effectiveness. The
processes to identify and manage the key risks of the group
are an integral part of the internal control environment.

Such processes, which are regularly reviewed and improved
as necessary, include strategic planning, approval of annual
budgets, regular monitoring of performance against budget
(including full investigation of significant variances), control of
capital expenditure, ensuring proper accounting records are
maintained, the appointment of senior management and the
setting of high standards for health, safety and environmental
performance. The effectiveness of the internal control system
and procedures is monitored regularly through a combination
of review by management, the results of which are reported to
and considered by the Audit Committee. The system of internal
control comprises those controls established to provide
assurance that the assets of the Group are safeguarded
against unauthorised use and to ensure the maintenance
of proper accounting records and the reliability of financial
information used within the business or for publication. Any
system of internal control can only provide reasonable, but not
absolute, assurance against material misstatement or loss, as
it is designed to manage rather than eliminate the risk of failing
to achieve the business objectives of the Group.

Going Concern

The Group going concern assessment is based on forecasts
and projections of anticipated trading performance. The
assumptions applied are subjective and management applies
judgement in estimating the probability, timing and value of
underlying cash flows.

The Directors confirm that they have a reasonable expectation
that the Group will have adequate resources to continue in
operational existence for the next 12 months from approval
of these financial statements and accordingly these financial
statements are prepared on a going concern basis, with no
material uncertainty over going concern.

As outlined in the CFO report the impact of the Russia/
Ukraine conflict is not expected to have a material effect on
2022 revenues.

The Group does not hold any shares in treasury.

Statement of Disclosure to the Auditors

All of the current directors have taken all the steps that
they ought to have taken to make themselves aware of any
information needed by the Group’s auditors for the purposes of
their audit and to establish that the auditors are aware of that
information. The directors are not aware of any relevant audit
information of which the auditors are unaware.

Auditors appointment

BDO were appointed during the period and have expressed
their willingness to continue in office and a resolution to re-
appoint them will be proposed at the annual general meeting.

Substantial shareholdings

The Company has been advised of the following interests in more
than 3% of its ordinary share capital as at 31 December 2021:

Shareholder

Build Lux Holdco Sarl (Luxembourg)

Capital Research Global Investors (Los Angeles)

BlackRock Investment Mgt (London)

Boku Inc Directors and Related Parties (London)

Danske Capital Mgt (Copenhagen)

Canaccord Genuity Wealth Mgt (London)

Aberdeen Standard Investments (Standard Life)
(Edinburgh)

Swedbank Robur (Stockholm)

Canaccord Genuity Wealth Mgt (Jersey)

Danal Co. Ltd (Hwaseong)

7.16%

6.92%

6.28%

5.78%

5.68%

5.19%

5.11%

4.16%

3.69%

3.43%

53.4%

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Directors’ Responsibilities Statement

The directors are responsible for keeping adequate accounting
records that correctly explain the transactions of the Company,
enable the financial position of the Company to be determined
with reasonable accuracy at any time and allow financial
statements to be prepared. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.

The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Information published on the
website is accessible in many countries and legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions. The directors’ responsibility also extends to the
continued integrity of the financial statements contained therein.

By order of the Board

Jon Prideaux
Chief Executive officer
28 March 2022

The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.

The Company is incorporated in and subject to the laws
of the State of Delaware, USA, which does not require the
directors to prepare financial statements for each financial
year. However, the Group is required to do so to satisfy
the requirements of the AIM Rules for Companies. When
preparing the financial statements, the directors are required
to prepare the group financial statements in accordance with
an appropriate set of generally accepted accounting principles
or practice. The Directors have elected to use International
Financial Reporting Standards as issued by the International
Accounting Standards Board (IASB) (“IFRS”).

The directors must not approve the accounts unless they are
satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for
that period. In preparing these financial statements, International
Accounting Standard 1 (revised) requires that directors:

• Properly select and apply accounting policies;
• Present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and
understandable information;

• Provide additional disclosures when compliance with the

specific requirements in IFRS are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance; and

• Make an assessment of the Company’s ability to continue

as a going concern.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Independent Auditor’s Report
to the directors of Boku, Inc.

Opinion on the ﬁnancial statements

Conclusions relating to going concern

In our opinion:

• the financial statements give a true and fair view of the

state of the Group’s affairs as at 31 December 2021 and
of the Group’s profit for the year then ended;

• the Group financial statements have been properly

prepared in accordance with IFRSs as issued by the
International Accounting Standards Board (IASB);

We have audited the financial statements of Boku Inc.,
(the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2021, which comprise
the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement
of cash flows, and notes to the financial statements, including
summaries of significant accounting policies.

The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and International Financial Reporting Standards (IFRSs)
as issued by the International Accounting Standards Board
(IASB).

Basis for opinion

We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Company
in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.

In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evalu-
ation of the Directors’ assessment of the Group’s ability to contin-
ue to adopt the going concern basis of accounting included:

• Review of the internal forecasting process to confirm the
projections are prepared by an appropriate level of staff
that is aware of the detailed figures included in the forecast
but also have a high-level understanding of the entity’s
market, strategy and changes in the customer base;
• Review of the forecasts prepared and challenge of the

key assumptions and inputs used by management in their
prepared models, to determine whether there is adequate
support for the assumptions underlying the forecasts. Fur-
thermore, we considered the outcome of prior year fore-
casts to consider the historical accuracy of the Directors’
forecast and agreed the consistency of the model to those
used elsewhere in the business, for example discounted
cashflow models used in impairment reviews;

• The Directors have applied downwards sensitivities to the
more variable aspects of the forecasts and also modelled
a number of mitigating cash saving initiatives. We con-
sidered the appropriateness of the sensitivities applied
in respect of the impact of COVID-19 and the Directors’
available mitigating actions and their effects on the group’s
solvency and liquidity position;

• Review of post year-end management accounts, specifi-
cally comparing the cash position against that budgeted.
• Making inquiries of the Directors as to their knowledge of
events or conditions beyond the period of their assess-
ment that may cast significant doubt on the entity’s ability
to continue as a going concern;

• Considering the adequacy and completeness of the dis-
closures in the financial statements against the require-
ments of the accounting standards and the Directors’
going concern assessment.

Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.

Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections
of this report.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Independent Auditor’s Report

Overview

Coverage

Key audit matters

98% (2020: 99%) of Group revenue
98% (2020: 98%) of Group profit/loss before tax
88% (2020: 97%) of Group total assets

Revenue Recognition

Fair values recognised in relation to the Fortumo Acquisition
(2020 only; as Fortumo was acquired in 2020)

Impairment of Goodwill in the Identity cash generating unit
(2020 only: as strong impairment indicators existed)

2021

2020

–

Materiality

Group financial statements as a whole
$651k (2020: $532k) based on 1% (2020: 0.9%) of revenue.

An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.

The Group is comprised of two (2) incorporated UK trading or holding companies, one of which is deemed significant and five (5)
significant non-UK components; the remaining entities are deemed non-significant components.

Based on our assessment of the group, we focused our group audit scope primarily over the parent company (Boku Inc.) and five
principal trading entities that were identified as significant components: Boku Network Services UK Ltd, Boku Identity Inc, Boku
payments Inc., Boku Network Services Inc. and the sub-group headed by Fortumo OÜ. These components accounted for 98% of
the Group’s revenue in both 2021 and 2020. Furthermore:

• Boku Inc, Boku Network Services UK Ltd, Boku Identity Inc, Boku payments Inc., Boku Network Services Inc, were subject

to full scope audits by the group audit team, as the Group’s finance team and information for these territories are based within
the UK; and

• Fortumo OÜ (and its sub group) was subject to a full scope audit by our network member firm in Estonia.

For components of the group not considered to be significant components:

• Boku AG: our member firm in Germany performed a specific scope audit; and
• All other entities: The group audit team performed limited audit procedures including a combination of analytical procedures

and where considered necessary, certain specific procedures.

Our involvement with component auditors

For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude
whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group’s financial statements as
a whole. Our involvement with the component auditors included the following:

• Fortumo OÜ and subsidiaries: We instructed our member firm in Estonia as to the scope and timing of their work on the

financial information for group reporting purposes, we held virtual meetings through the planning, execution and completion
stage with the audit team and performed a review remotely of their audit documentation and findings and participated,
virtually, in the local audit close meeting; and

• BNS AG: We instructed our member firm in Germany as to their specific scope and timing of their work on the financial

information for group reporting purposes, we held virtual meetings with the audit team, and reviewed their audit
documentation and findings remotely.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Key audit matter

Key audit matters (‘KAM’) are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or
not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.

Key audit matter

Revenue Recognition

See accounting
policy in Note 2 on
page 70 and related
disclosures in Note 4
on page 86

The Group’s revenue is earned
primarily from services earned
on mobile payment transactions,
integration fees and identity
verification.

There is a risk that Group’s
revenue streams have not been
recognised appropriately in line
with their respective performance
obligations and that the revenue
policy itself is not in accordance
with appropriate accounting
standards.

The risk of a material
misstatement was focused on
whether revenue during the
period and around the year end
(existence and completeness)
was correctly recognised, and
the gross receipts from mobile
network operators (‘MNO’s’) and
the associated gross payables
to merchants are appropriately
accrued at year end (accrued
income and deferred revenue
existence and completeness).
These amounts are material.

How the scope of our audit addressed the key audit matter

With regards to the risk of material misstatement related to the
recognition of revenue we performed the following procedures:

We assessed whether the revenue recognition policies adopted by
the Group comply with accounting standards.

In relation to accrued and deferred revenue at year-end, we selected
a sample of carriers and performed the following audit procedures:

• Obtained and tested management’s reconciliation of accrued
revenue to the underlying transaction systems, checking that
the amounts recorded agreed with and were supported by the
existence of transactions;

• Recomputed the accrued revenue based on the contractual

terms with the carrier;

• Obtained the post-year end statements for a sample of carriers
and agreed the amounts recorded to the amounts subsequently
received and paid.

In relation to revenue recognition during the year, we agreed a
sample of the revenue recognised to original contracts and receipt
of funds and we reviewed documentation to confirm the delivery
date of work. In making our assessment of compliance with the
Group’s accounting policy, we also checked that revenues were only
recognised at the point of delivery of the Group’s services.

Key observations:

Based on the work performed we consider that the Group’s revenue
recognition accounting policy is appropriate and that revenue has
been recognised in accordance with the Group’s revenue policy.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Independent Auditor’s Report

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:

Materiality

Group financial statements

2021

$651,000

2020

$532,000

Basis for determining materiality

1% of Revenue

0.9% of Revenue

Rationale for the benchmark applied

Performance materiality

Basis for determining
performance materiality

Component materiality

We considered revenue to be the most appropriate benchmark as this is
the primary key performance indicator, which is used to address the
performance of the Group by the board and an important performance-based
metric to the users of the financial statements.

$488,250

$399,000

Performance materiality was set at 75% (2020: 75%) due to the low value of brought
forward adjustments and expected total value of known and likely misstatements.

We set materiality for each component of the Group based on a percentage of between 23% and 50% (2020:12% and 60%)
of the group materiality dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from $147,000 to $318,000 (2020: $65,000 to $292,000). In the audit of each component, we
further applied performance materiality levels of 75% (2020:75%) of the component materiality to our testing to ensure that the
risk of errors exceeding component materiality was appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $32,550 (2020:
$26,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Other information

The directors are responsible for the other information. The other information comprises the information included in the ‘Annual
Report and Accounts’ other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.

We have nothing to report in this regard.

Responsibilities of Directors

As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the ﬁnancial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Independent Auditor’s Report

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that
the most significant frameworks which are directly relevant to specific assertions in the financial statements are those than
relate to the reporting framework, AIM Rules for Companies and the relevant tax compliance regulations;

• We considered provisions of other laws and regulations that do not have direct effect on the financial statements but

compliance with which may be fundamental to the Group’s ability to operate. These include compliance with FCA regulations,
Money Laundering Regulations 2007 and Proceeds of Crime Act, and the Data Protection Act;

• We understood how the Group is complying with those frameworks by making enquiries of management, those responsible

for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of board
minutes and papers provided to the Audit Committee;

• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by

meeting with management from across the Group to understand where they considered there was a susceptibility to fraud;

• Our audit planning identified fraud risks in relation to management override of controls and inappropriate or incorrect

recognition of revenue (revenue recognition assessed as a Key Audit Matter above) across the Group. We obtained an
understanding of the processes and controls that the Group has established to address risks identified, or that otherwise
prevent, deter and detect fraud; and how management monitors those processes and controls;

• We designed our audit procedures to detect irregularities, including fraud. Our procedures included journal entry testing, with
a focus on large or unusual transactions based on our knowledge of the business; enquiries with Group Management; and
focussed testing as referred to in the Key Audit Matters section above;

• With regards to the fraud risk in management override of controls, our procedures included journal transaction testing, across
the group, with a focus on large or unusual transactions based on our knowledge of the business. We also performed an
assessment on the appropriateness of key judgements and estimates, which are subject to managements’ judgement and
estimation, and could be subject to potential bias; and

• We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members

and component auditors, who were all deemed to have appropriate competence and capabilities, to remain alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Use of our report

This report is made solely to the Parent Company’s directors, as a body, in accordance with the terms of our engagement letter
dated 17 August 2021. Our audit work has been undertaken so that we might state to the Parent Company’s directors those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s directors as a body,
for our audit work, for this report, or for the opinions we have formed.

Iain Henderson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
28 March 2022

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Consolidated Statement
of Comprehensive Income

Revenue

Cost of sales

Gross profit

Other Income (non-recurring)*

Administrative expenses

Operating profit/(loss) analysed as:

Adjusted EBITDA**

Other Income (non-recurring)

Depreciation and amortisation

Stock Option expense

Foreign exchange (losses)/gains

Impairment of goodwill

Exceptional items (included in administrative expenses)

Operating profit/(loss)

Finance income

Finance expense

Profit/(loss) before tax

Tax credit/(expense)

Net profit/(loss) for the period attributable to equity holders of the parent company

Other comprehensive income/(losses) net of tax
Items that will or may be reclassified to profit or loss

Foreign currency translation (loss)/profit

Total comprehensive (loss)/profit for the period

Total comprehensive profit/(loss) for the period attributable to equity holders of the parent company

Profit/(loss) per share attributable to the owners of the parent during the year

Basic EPS and

Fully diluted EPS ($)

Year ended

31 December

2021

$’000

69,165

(5,733)

63,432

1,080

Year ended

31 December
2020

$’000

56,402

(4,925)

51,477

–

(59,377)

(68,200)

20,028

1,080

(7,487)

(7,391)

(134)

–

(961)

5,135

(770)

4,387

1,882

6,269

(2,407)

3,862

0.0213

0.0206

15,268

–

(5,917)

(4,925)

1,048

(20,775)

(1,422)

(16,723)

(662)

(17,315)

(1,470)

(18,785)

1,720

(17,065)

(0.069)

Note

* Other Income in 2021 relates to the acquisition of Fortumo and is the difference between the expected fair value of the Fortumo earnout escrow amount as at 31st
December 2020 and the actual amount paid to Fortumo shareholders in September 2021; to better reflect underlying performance, this non-recurring income is
excluded from Adjusted EBITDA. Further information on this non-recurring Payment Income is detailed in Note 4.
**Earnings before interest, tax, depreciation, amortisation, non-recurring other income, stock option expense, foreign exchange gains/(losses), impairment of goodwill
and exceptional items. Management has assessed this performance measure as relevant for the user of the accounts.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Consolidated Statement
of Financial Position

Non-current assets

Property, plant and equipment

Intangible assets

Deferred tax assets

Total non-current assets

Current assets

Trade and other receivables

Cash and cash equivalents - unrestricted

Cash and cash equivalents - restricted cash

Total current assets

Total assets

Current liabilities

Trade and other payables

Bank loans and overdrafts

Lease liabilities

Total current liabilities

Non-current liabilities

Other payables

Deferred tax liabilities

Loans and borrowings

Lease liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity attributable to equity holders of the company

Share capital

Share premium

Foreign exchange reserve

Retained losses

Total equity

The financial statements were approved by the Board for issue on 28 March 2022

Jon Prideaux
Chief Executive Officer

Keith Butcher
Chief Financial Officer

31 December
2021

31 December
2020

Note

$’000

5,670

63,117

3,105

71,892

82,557

56,651

5,789

144,997

216,889

3,771

65,559

483

69,813

92,535

61,290

1,414

155,239

225,052

119,641

136,779

1,125

1,335

1,438

1,436

122,101

139,653

1,700

456

6,688

3,498

12,342

134,443

82,446

246,883

(2,714)

862

228

10,813

1,742

13,645

153,298

71,754

240,053

(307)

(161,752)

(168,021)

82,446

71,754

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Consolidated Statement
of Changes In Equity

Equity as at 1 January 2020

Loss for the year

Other comprehensive income

Issue of share capital upon exercise of 8,906,542 stock
options and RSUs

Share-based payment1

Shares issued

Issue of RSU’s related to Fortumo acquisition

Share issue costs

Other reserves

Share issued for warrant

Equity as at 31 December 2020

Profit for the year

Other comprehensive income/(loss)

Issue of share capital upon exercise of 6,751,318 stock
options and RSUs

Share-based payment1

Issue of RSU’s related to Fortumo acquisition

Foreign
exchange
reserve

$’000

(2,027)

Retained
losses

$’000

(149,236)

–

(18,785)

1,720

(32)

–

Share
capital

$’000

Share
premium

$’000

208,196

–

1,700

4,313

25,159

1,340

(654)

(2,447)

2,446

240,053

(307)

(168,021)

–

6,269

–

1,146

5,434

(2,407)

(37)

–

250

–

Total

$’000

56,958

(18,785)

1,720

1,668

4,313

25,194

1,340

(654)

(2,447)

2,447

71,754

6,269

(2,407)

1,109

5,434

287

Equity as at 31 December 2021

246,883

(2,714)

(161,752)

82,446

1 Share based expense has been credited against share premium in accordance with the local company law and practice in US.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Consolidated Statement
of Cash Flows

Cash generated from operations

Income taxes paid

Net cash from operating activities

Investing activities

Purchase of property, plant and equipment

Purchase of internally developed software

Purchased financial asset

Investment in subsidiary, net of cash acquired

Interest received

Net cash used in investing activities

Financing activities

Payment of principal to lease creditors

Payment of interest to lease creditors

Issue of common stock to employees

Issue of new ordinary shares

Share issue costs

Settlement of loan by shareholder

Interest paid on borrowings

Proceeds from bank loan

Repayment of bank loan

Borrowing costs

Repayment of bank facility

Net cash (used in)/from financing activities

Net increase in cash and cash equivalents

Effect of foreign currency translation on cash and cash equivalent

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Note

Year ended
31 December

2021

$’000

12,362

(443)

11,919

(812)

(5,022)

–

Year ended
31 December

2020 restated

$’000

31,529

(269)

31,260

(489)

(2,920)

(2,160)

(34,435)

(5,812)

(39,934)

(1,694)

(235)

1,109

–

(409)

–

(4,563)

–

(5,792)

315

(579)

62,704

62,440

(2,045)

(292)

1,700

25,129

(654)

793

(307)

20,000

(7,313)

(500)

(2,092)

34,419

25,745

1,336

35,623

62,704

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the
Consolidated Financial Statements

1. Corporate Information

The consolidated financial information represents the results of Boku Inc. (“the Company”) and its subsidiaries (together referred to
as “the Group”).

Boku Inc. is a company incorporated and domiciled in the United States of America. The registered office of the Company is
located at 660 Market Street, Suite 400, San Francisco, CA 94104, United States.

The principal business of the Group is the provision of mobile billing and payment solutions for mobile network operators and
merchants. These solutions enable consumers to make online payments using their mobile devices.

2. Accounting policies

The financial information has been prepared using the historical cost convention, as stated in the accounting policies below.
These policies have been consistently applied to all periods presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (IASB) and IFRIC Interpretations 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 period.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed below in II, “Critical accounting estimates, assumptions and judgements”. The accounting policies
adopted in these financial statements have been consistently applied to all the years presented and are consistent with the
policies used in the preparation of the financial statements for the year ended 31 December 2020, except for those that relate to
new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2021. There are deemed
to be no new standards, amendments and interpretations to existing standards, which have been adopted by the Group, that
have had a material impact on the financial statements.

The principal accounting policies adopted by the Group in the preparation of the Consolidated financial statements are set out below.

The presentation currency of the consolidated financial statements is US Dollars, rounded to the nearest thousands ($’000) unless
otherwise indicated. The main functional currencies for the Company’s subsidiaries are the United States Dollar, Euro and Great
Britain Pound.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Going concern

The consolidated financial statements have been prepared on a going concern basis. The ability of the Group to continue as a
going concern is contingent on the ongoing viability of the Group. The Group meets its day-to-day working capital requirements
through its cash balances and also has a bank facility that it can use. The current economic conditions continue to create
uncertainty, particularly over (a) the level of consumer engagement; and (b) the level of new sales to new customers. The Group’s
forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group expects to
be able to operate within the level of its current cash resources and bank facilities. Further information on the Group’s borrowings
and available facilities is given in Note 17 to these consolidated financial statements.

The directors have prepared cash-flow forecasts covering a period of at least 12 months from the date of approval of the financial
statements which foresee that the Group will be able to operate within its existing facilities.

The COVID-19 pandemic continued to have limited impact on Boku’s business in 2021, indeed the Payments business saw
increased processed volumes in COVID-19 impacted countries and regions, and therefore the Board believes that the business
is able to navigate through the continued impact of COVID-19 due to the strength of its customer proposition and business
partnerships, statement of financial position and the strong net cash position of the Group (cash balances of $61.4 million at year
end with further cash receipts from the disposal of the identity business on 28th February 2022).

The ongoing Russia/Ukraine conflict is not expected to have a material impact on Group revenues in 2022 as detailed in the CEO
and CFO reports.

Having assessed the principal risks and the other matters discussed in connection with the going concern statement, the
Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting and deem there to be no
emphasis over going concern, in preparing the financial information.

Basis of consolidation

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of
the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the
investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that
there may be a change in any of these elements of control.

The consolidated financial information presents the results of the Company and its subsidiaries (“the Group”) as if they formed a
single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial information incorporates the results of business combinations using the acquisition method. In the
statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their
fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive
income from the date on which control is obtained. They are deconsolidated from the date on which control ceases. The excess
of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

A list of the subsidiary undertakings is given in Note 12 of the financial information.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

2. Accounting policies (continued)

Changes in accounting policies and disclosures

(a) New and amended standards adopted by the Group

The accounting policies adopted in these consolidated financial statements are consistent with those of the annual financial
statements for the 12 months ended 31 December 2020. The IABS issued the following new and updated standards for annual
reporting periods beginning on or after 1st January 2021. The Group adopted the amendments to the following existing standards
during 2021:

Amendments to Existing Standards

Interest Rate Benchmark Reform –
Phase 2 (Amendments to IFRS 9, IAS39, IFRS,&, IFRS 4and IFRS 16)

Amendments to IFRS 4 Insurance Contracts

COVID-19 Related Rent concessions beyond 30 June 2021

IASB effective date

01-Jan-21

01-Apr-21

1) Interest rate benchmark reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The Phase 2 amendments address issues that might affect financial reporting during the reform of an interest rate benchmark,
including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate
benchmark with an alternative benchmark rate.

Major changes:
(i) Added a practical expedient that enables a company to account for a change in the contractual cash flows that are required by
the reform by updating the effective interest rate to reflect, for example, the change in an interest rate benchmark from LIBOR to
an alternative benchmark rate, i.e., apply IFRS 9:B5.4.5 rather than IFRS 9:B5.4.6, and
(ii) Provide relief from specific hedge accounting requirements.

There is no impact on the Group Financial Statements for the 12 months ending 31st December 2021 as a result of this standard.

2) Amendments to IFRS 4 – Insurance Contracts (deferral of IFRS 9)

The Amendments made to IFRS 4 related to companies providing insurance. The Group does not provide insurance services so
this standard has no current or future impact on the Group financial statements.

The amendment is effective for periods beginning on or after 1 January 2021.

3) COVID-19 Related rent concessions beyond 30 June 2021 (Amendments to IFRS 16)

In March 2021, IASB issued an amendment to IFRS 16 which extended the COVID-19 related rent concessions beyond 30
June 2021. This amendment is required to be mandatorily adopted by a lessee who had elected to apply the original practical
expedient. The Group did not benefit from any rent concessions during the twelve months ending 31 December 2021.

The amendment is effective for periods beginning on or after 1st April 2021.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

(b) New and amended standards published, but not yet applicable for the annual period beginning on 1st January 2021, not yet
adopted by the Group :

1) Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use (applicable for annual periods
beginning on or after 1 January 2022)

2) Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts — Cost of Fulfilling a
Contract (applicable for annual periods beginning on or after 1 January 2022)

3) Amendments to IFRS 3 Business Combinations: Reference to the Conceptual Framework (applicable for annual periods
beginning on or after 1 January 2022)

4) Annual Improvements to IFRS Standards 2018–2020 (applicable for annual periods beginning on or after 1 January 2022)

5) IFRS 17 Insurance Contracts (applicable for annual periods beginning on or after 1 January 2023). This standard will have no
impact on the future Group financial statements as the group does not issue Insurance contracts.

6) Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (applicable
for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU)

7) Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting
Policies (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU)

8) Amendments to IAS12 Income taxes: require companies to recognise deferred tax on transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences. The amendments are effective for annual reporting
periods beginning on or after 1 January 2023.

Management continues to monitor the issuance of new standards and any further amendments to the existing standards and
considers that the application of the new amendments in the table above will not materially affect the Group after adoption.

Foreign currency translation

The presentation and functional currency for the group is US dollars. Items included in the financial statement of each of the
Group’s entities are measured in the functional currency of each entity.

Foreign currency transactions and balances:

i) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions.
ii) Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the
reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the
income statement within administrative expenses.
iii) Non-monetary items that are measured in terms of historical costs in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Any goodwill arising on the acquisition of a foreign operation and any fair value
adjustments (including purchased intangible assets) to the carrying amounts of assets and liabilities arising on the acquisition
are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Consolidation of foreign entities

On consolidation, the results and financial position of all the Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:

i) Assets and liabilities for each Consolidated statement of financial position presented are translated at the closing rate at the
date of that Consolidated statement of financial position.

Income and expenses for each Consolidated statement of comprehensive income item are translated at average exchange

ii)
rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and

iii) All resulting exchange differences are recognised as a separate component of equity.

Exchange differences are recycled to profit or loss as a reclassification adjustment upon disposal of the foreign operation.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

2. Accounting policies (continued)

Revenue

Boku recognises revenue in accordance with IFRS 15 Revenue from Contracts with Customers by applying the required five
steps: identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction
price, allocate the transaction price to the performance obligations in the contract and recognise revenue when (or as) the entity
satisfies a performance obligation. Revenue is allocated to the various performance obligations on a relative stand-alone selling
price (“SSP”) basis.

An analysis of the key considerations that IFRS 15 has on the Group’s revenue streams is summarised below.

1. Payments Segment revenue

Boku’s technology for the Payments segment delivers a low friction way for mobile phone users to buy things and charge them
to their phone bill or pre-paid phone or wallet balance. The Group’s revenue is principally its service fees which are earned from its
merchants.

(i) Settlement Model: when it acts as an agent between a merchant and mobile network operators (MNOs), or an aggregator (a
middleman between the Group and the MNO) or an eWallet provider. Management has determined that it is acting as an agent
under IFRS 15 because it does not have the primary responsibility for providing the services to the customer. Therefore, there has
been no change in the classification as an agent from the previous assessment. Fees are calculated as a percentage of the value
of transaction. An additional fee is also earned when a merchant requires settlement in a different currency than the currency
received, at contractual agreed rates, in line with IFRS 15.

(ii) Transactional Model: from larger virtual and digital merchants who receive the sale collections directly and pay a service fee to
the Group.

Under both the transactional and settlement model (see point (i) and (ii) above), the Group’s contracts with customers include one
performance obligation only. This relates to an obligation to facilitate the payment for the transaction between the merchant and
their end users. Under IFRS 15 revenues for this service is recognised under this contract at a point in time as the obligation is
fulfilled at time when transaction happens, as the point of delivery of the performance obligation is the same as when the risks and
rewards have been transferred. Payments are due once the Group receives the statement of information from the Aggregator or
the MNO or wallet provider.

(iii) Other revenue: from special merchant integrations, subscription services and early settlement of funds.

In 2020, Special merchant integrations were recognised in full once the integrations were successfully tested and approved by
the customer. Maintenance arrangements were negotiated separately and fees were paid monthly and were recognised in full at
each month end, in line with IFRS 15. In 2021 the pricing model was changed from this fixed fee plus monthly maintenance fees
model, to charging a percentage of the a value of the transaction volumes processed for that merchant.

Contract assets and contract liabilities are included within ‘trade and other receivables’ and ‘trade and other payables’
respectively on the face of the statement of financial position.The group recognises all revenue initally as accrued income/contract
asset, until the reports from carriers are received at which points these contract assets are recognised as debtors/receivables.

The Group’s revenue is principally its service fees earned from its merchants. There are slight differences to contracts depending
on the services provided. All revenue from the Payment segment is recognised at one point in time. Therefore, for the Payments
segment, at 31 December 2020 and 31 December 2021, the Group does not have deferred revenue on the balance sheet.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

2. Identity Segment Revenue

Boku’s technology for the Identity segment provides identity services to customers by silently validating a mobile device using
automatic mobile number verification, streamlining the Know Your Client (‘KYC’) processes by validating the name and address
entered by a user against the MNOs data, and reduce fraud on marketing promotions by linking marketing promotions to secure
SIM based user identities instead of email or unverified mobile numbers etc.

Identity merchants are charged either on a per user basis – for monitoring – or a per transaction basis, typically with monthly
minimums.

For the Identity segment, deferred revenue consists of billings processed in advance of revenue recognition generated by Boku
Identity’s Mobile Identification/TCPA services. For these services, Boku bills its customers at the beginning of the contract term as
a pre-payment for services which are billed at a set price per transaction. The revenue is recognised monthly, at a point in time,
based on the amount of transactional volume processed during the month and services will continue to be performed until the full
value of the contract is realised. For the period ended 31 December 2021, deferred revenue on the balance sheet for the Identity
Segment was $303,853 (2020: $443,585).

Cost of sales

Cost of sales is primarily related to the monthly fees and service charges from MNOs and other providers, customer services fees,
some marketing expenses and bad debt.

Operating Segments

In accordance with IFRS 8, “Operating Segments”, the Group has derived the information for its segmental reporting using the
information used by the Chief Operating Decision Maker (“CODM”), defined as the General Management Committee (GMC).
The segmental reporting is consistent with those used in internal management reporting and the measure used by the GMC is
Adjusted EBITDA.

The Board considers that the Group’s provision of a payment platform for the payment processing of virtual goods and digital
goods purchases constitutes one operating and one reporting segment (Payments segment), and the provision of identity
services another operating and reporting segment (Identity segment) as defined under IFRS 8. Management reviews the
performance of the Group by reference to total results against budget as well as for each of the two operating segments.

Exceptional Items

Exceptional items are those significant items, which are separately disclosed by virtue of their size, nature or incidence to enable a full
understanding of the Group’s financial performance. In setting the policy for exceptional items, judgement is required to determine
what the Group defines as “exceptional”. The Group considers an item to be exceptional in nature if it is non-recurring or does not
reflect the underlying performance of the business. Exceptional items are recorded separately below Adjusted EBITDA.

Management of the Group evaluates Group strategic projects such as acquisitions, divestitures and integration activities, Group
restructuring and other one-off events such as restructuring programmes. In determining whether an event or transaction is
exceptional, management of the Group considers quantitative and qualitative factors such as its expected size, precedent for
similar items and the commercial context for the particular transaction, while ensuring consistent treatment between favourable
and unfavourable transactions impacting revenue, income and expense. Examples of transactions which may be considered of
an exceptional nature include major restructuring programmes, cost of acquisitions, the cost of integrating acquired businesses or
gains or losses on the disposal of discontinued operations.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

2. Accounting policies (continued)

Retirement Benefits: Defined contribution schemes

The Group operates various pension schemes in various jurisdictions, all being defined contribution schemes (pension plans). A
defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has
no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior periods.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.
The contributions are recognised as an employee benefit expense when they are due.

In the U.S. the group has a 401(k) plan, a type of defined contribution scheme in the United States in which all employees can
participate after meeting eligibility requirements. Participants may elect to have a portion of their salary deferred and contributed to
the scheme up to the limit allowed by applicable income tax regulations. The Company has made a matching contribution to the
scheme for the years ended 31 December 2021 and 31 December 2020.

Contributions to defined contribution schemes are charged to the consolidated statement of comprehensive income in the year to
which they relate.

Share-based payments

Where equity settled share options and Restricted Stock Units (‘RSUs’) are awarded to employees, the fair value of the options
or RSUs at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-
market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting
date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options or RSUs
that eventually vest.

Where the terms and conditions of options or RSUs are modified before they vest, the increase in the fair value of the options,
measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income
over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is
charged with the fair value of goods and services received.

Where options are cancelled within the vesting period, the remaining cost of the options is accelerated and charged to the income
statement in the year. The value of share-based payment is taken directly to reserves and the charge for the period is recorded in
the income statement.

The Group’s scheme, which awards shares in the parent entity, includes recipients who are employees in subsidiaries. In the
consolidated Financial Statements, the transaction is treated as an equity-settled share-based payment, as the subsidiary has
received services in consideration for Boku Inc’s equity instruments. An expense is recognised in the consolidated Group income
statement for the fair value of share-based payment over the vesting year, with a credit recognised in equity. In the subsidiaries’
financial statements, the awards, in proportion to the recipients who are employees in said subsidiary, are treated as an equity-settled
share-based payment, as the subsidiaries do not have an obligation to settle the award. An expense for the grant date fair value of
the award is recognised over the vesting period, with a credit recognised in equity. The credit is treated as a capital contribution,
as the parent company is compensating the subsidiaries’ employees with no cost to the subsidiaries as there is no expectation
to recharge the cost. In the parent company’s financial statements, there is no share-based payment charge where the recipients
are employed by a subsidiary, with the parent company recognising an increase in the investment in the subsidiaries as a capital
contribution from the parent and a credit to equity. There are no cash settled share-based payments allowed under the scheme, but
if they were they will be recognised as an expense in the income statement with a corresponding credit to liabilities.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

RSU’s issued in connection with business combinations as replacements for instruments held by employees are treated as
part of the consideration transferred to the extent that the Company is obliged to issue the replacement awards and that they
compensate for service that has been provided pre-combination. To the extent awards are voluntary or that they relate to the
provision of future services they are treated as a post-combination expense.

Share options and RSUs which will incur future employer payroll taxes on exercise, are accrued for the future cost of Employer’s
National Insurance from the point the options are granted over their vesting period. This liability is then amended at each
subsequent balance sheet date under IFRS 2.

Intangible assets

(i) Goodwill

The Group uses the acquisition method of accounting for the acquisition of a subsidiary. The consideration transferred is
measured at the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of
exchange. Costs directly attributable to the acquisition are expensed in the period. Identifiable assets acquired, liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

In respect of business combinations that have occurred since January 2014, goodwill represents the excess of the cost of the
acquisition and the Group’s interest fair value of net identifiable assets and liabilities acquired. In respect of business combinations
prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under US GAAP. As
permitted by IFRS 1, Goodwill arising on acquisitions prior to 1 January 2014 is stated in accordance with US GAAP and has not
been remeasured on transition to IFRS. Goodwill is recognised and measured at the acquisition date.

Goodwill is capitalised as an intangible asset at cost less any accumulated impairment losses. Any impairment in carrying value is
being charged to the consolidated statement of comprehensive income. An impairment loss recognised for goodwill is not reversed.

Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess
is credited in full to the consolidated statement of comprehensive income on the acquisition date.

Goodwill is allocated to appropriate cash generating units (CGUs). Goodwill is not amortised but is tested annually for impairment
or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable
amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows
and the determination of a discount rate in order to calculate the present value of the cash flows. The major assumptions are
disclosed in note 11.

(ii) Intangible assets acquired as part of a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the
definition of an intangible asset. All intangible assets acquired through business combinations, are amortised over their useful lives.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses. The carrying values are tested for impairment when there is an indication that
the value of the assets might be impaired.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

2. Accounting policies (continued)

(iii) Research and development

Expenditure on research activities as defined in IFRS is recognised in the income statement as an expense as incurred.

Expenditure on internally developed software products and substantial enhancements to existing software product is recognised
as intangible assets only when the following criteria are met:

1. it is technically feasible to develop the product to be used or sold;
2. there is an intention to complete and use or sell the product;
3. the Group is able to use or sell the product;
4. use or sale of the product will generate future economic benefits;
5. adequate resources are available to complete the development; and
6. expenditure on the development of the product can be measured reliably.

The capitalised expenditure represents costs directly attributable to the development of the asset from the point at which the
above criteria are met up to the point at which the product is ready to use. The costs include external direct costs of materials
and services consumed in developing and obtaining internal-use computer software, and payroll and payroll-related costs for
employees who are directly associated with and who devote time to developing the internal-use software. If the qualifying
conditions are not met, such development expenditure is recognised as an expense in the period in which it is incurred. Product
development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

(iv) Amortisation rates

The significant intangibles recognised by the Group and their useful economic lives are as follows:

Intangible asset

Tradenames

Useful economic life

Indefinite life – not amortised

Acquired intangibles (Fortumo acquisition)

10 years

Merchant relationships

Developed technologies

Domain names

Internally developed software

5-10 years

5 years

10 years

3 years

The amortisation expense is recognised within administrative expenses in the consolidated statement of comprehensive income.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Property, plant and equipment

Property, plant and equipment are held under the cost model and are stated at historical cost less accumulated depreciation and
any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by management.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance expenditures are charged to the Consolidated statement of comprehensive income
during the financial year in which they are incurred. Depreciation is calculated using the straight-line method to write off the cost of
each asset to its residual value over its estimated useful life as follows:

Office equipment and furniture

Computer equipment and software

Leasehold improvement

Right-of-use assets

3-5 years on cost

3 years on cost

3-5 years on cost

Shorter of useful life of the asset or lease term

Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in
the Consolidated statement of comprehensive income.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short term highly liquid investments
with original maturities of three months or less.

Financial assets

The Group’s financial assets mainly comprise cash, trade and other receivables.

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost less provisions for impairment
based upon an expected credit loss methodology. The Group applies the IFRS 9 simplified approach to measuring expected
credit losses which uses a lifetime expected loss allowance matrix for all trade receivables (including accrued receivables). A
provision of the lifetime expected credit loss is established upon initial recognition of the underlying asset and are calculated
using historical account payment profiles along with historical credit losses experienced. The loss allowance is adjusted for
forward looking factors specific to the debtor and the economic environment. The amount of the provision is recognised in the
Consolidated statement of comprehensive income.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

2. Accounting policies (continued)

Financial liabilities

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. The Group’s
financial liabilities are categorised as loans and Trade and other payables.

At initial recognition,

• Financial liabilities (trade and other payables, excluding other taxes and social security costs and deferred income), are

measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue of the financial
liability. These financial liabilities are subsequently carried at amortised cost.

• Bank borrowings are initially recognised at fair value net any of transaction costs directly attributable to the issue of the

instrument. Such interest-bearing liabilities are subsequently measured at amortised cost ensuring the interest element of the
borrowing is expensed over the repayment period at a constant rate.

Leases

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made on or before the commencement date less any lease incentives received. Unless
the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use
assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets
are subject to impairment.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. In calculating the present value of lease payments, the Group uses the incremental borrowing
rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In
addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of office equipment that are considered of low value (i.e., below £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.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

In practice, judgement may be needed to estimate an incremental borrowing rate in the context of a right-of-use asset, especially
when the value of the underlying asset differs significantly from the value of the right-of-use asset.

The analysis showed that the incremental borrowing rate as at 1st January 2019 was 8.5% which was used as discount rate for all
leases in all subsidiaries, which were acquired before 1st July 2020. The Group borrowed funds from its bankers in June 2020 and
reviewed the incremental borrowing rate to be 4.285% and applied this rate to all leases acquired after 1st July 2020.

The discount rate will be revised, in line with IFRS 16, and the lease liability remeasured only when:

• there is a change in the lease term,
• a change in the assessment of whether the lessee is reasonably certain to exercise an option to purchase the underlying

asset or

• a change in floating interest rates, resulting in a change in the future lease payments (this approach is consistent with IFRS 9’s

requirement for the measurement of a floating rate financial liabilities subsequently measured at amortised cost)

A lessee is not required to reassess the discount rate when there is a change in future lease payments due to a change in an
index. – e.g. the consumer price index.

Share Capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial
liability. The Group’s ordinary share capital and share premium are classified as equity instruments.

Taxation

Current tax

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax
rates enacted or substantially enacted at the balance sheet date.

Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of
financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the

transaction affects neither accounting or taxable profit; and

• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable

that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against
which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are
not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

• the same taxable group company; or
• different company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets
and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities
are expected to be settled or recovered.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

2. Accounting policies (continued)

Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Costs related to acquisitions, other than those directly attributable to
the issue of debt or equity, are expensed as incurred.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the profit or loss.

Critical accounting estimates and judgements

In preparing these Consolidated financial statements, the Group has made its best estimates and judgements of certain amounts
included in the financial statements, giving due consideration to materiality. The Group regularly reviews these estimates and
updates them as required. Actual results could differ from these estimates. Unless otherwise indicated, the Group does not
believe that there is a significant risk of a material change to the carrying value of assets and liabilities within the next financial year
related to the accounting estimates and assumptions described below. The Group considers the following to be a description of
the most significant estimates and judgements, which require the Group to make subjective and complex judgements and matters
that are inherently uncertain.

(a) Goodwill, Intangible assets acquired in a business combination

As set out in the accounting policies above, intangible assets acquired in a business combination are capitalised and amortised
over their useful lives. Both initial valuations and valuations for subsequent impairment tests are based on risk adjusted future
cash flows discounted using appropriate discount rates. These future cash flows are based on forecasts which are inherently
judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results
of the Group. Refer to note 11 for a description of the specific estimates and judgements used including the critical accounting
estimates and judgments used in the calculation of the goodwill impairment.

(b) Held for sale

Non-current assets and disposal groups are classified as held for sale if it is probable their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is
highly probable and the asset (or disposal group) is available for immediate sale in its present condition. For a sale to be highly
probable, management should be committed to a plan to sell the asset (or disposal group), an active program to locate a buyer
and plan initiated, the asset (or disposal group) should be actively marketed at a price which is reasonable in relation to its current
fair value, the sale should be expected to be completed within one year from the date of classification, and actions required
to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be
withdrawn. In respect to the group’s Identity business and as of year end, while management were considering strategic options,
they were not committed to a plan nor was there knowledge or belief that a sale would be definitively complete; taking account of
this the Identity business was not deemed held for sale.

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments
at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining
the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and
making assumptions about them. Where such a model is required, the group is using the Black Scholes model to calculate its
share-based compensation expenses. (Please refer to note 20 for full details).

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

(d) Taxation

In recognising income tax assets and liabilities, management makes estimates of the likely outcome of decisions by tax authorities
on transactions and events whose treatment for tax purposes is uncertain. Where the final outcome of such matters is different, or
expected to be different, from previous assessments made by management, a change to the carrying value of income tax assets
and liabilities will be recorded in the period in which such a determination is made. In recognising deferred tax assets and liabilities
management also makes judgements about likely future taxable profits. The carrying values of current tax and deferred tax assets
and liabilities are disclosed separately in the consolidated statement of financial position.

(e) Impairment of goodwill and other intangible assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Goodwill
impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. The carrying value of goodwill is compared to the recoverable amount of the cash generating unit to which the
goodwill has been allocated, which is the higher of value in use and the fair value less costs of disposal. Any impairment is
recognised immediately as an expense and is not subsequently reversed.

Other intangible assets include acquired merchant relationships, an IT Platform and Domain names as well as internally developed
intangibles (capitalized development costs). Acquired intangible assets are recognised at fair value at the acquisition date and are
amortized on a straight-line basis over their estimated useful lives.

Impairment reviews are undertaken if events or changes in circumstances reveal any indicators of impairment. If indicators of
impairment are present, the carrying value of the asset is compared to the recoverable amount of the cash generating unit
to which the asset is allocated, which is the higher of value in use and the fair value less costs of disposal. Any impairment is
recognised immediately as an expense.

It is possible that changes in economic conditions or deviations in actual performance from forecast could result in a material
adjustment to the carrying value of the CGU within the next financial year. The key estimates made by management are set out in
note 11.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

3. Financial instruments – Risk Management

The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The
overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. The Group reports in US$. All funding requirements and financial risks are managed based on
policies and procedures adopted by the Board of Directors. The Group does not issue or use financial instruments of a speculative
nature.

The Group is exposed to the following financial risks:

• Market risk

• Credit risk

• Liquidity risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. The principal
financial instruments used by the Group, from which financial instrument risk arises, are as follows:

• Trade and other receivables

• Cash and cash equivalents and restricted cash

• Trade and other payables

• Bank loans

To the extent financial instruments are not carried at fair value in the consolidated statement of financial position, book value
approximates to fair value at 31 December 2021 and 31 December 2020.

Trade and other receivables are measured at book value and amortised cost. Book values and expected cash flows are reviewed
by the Board and any impairment charged to the consolidated statement of comprehensive income in the relevant period.

Trade and other payables are measured at book value and amortised cost.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Financial instruments by category

Financial assets

Cash and cash equivalents

Restricted cash

Total Cash

Accounts receivable (net)

Other receivables (including contingent asset)

Total other financial assets

Cash, and other financial assets

Financial liabilities

Trade payables

Accruals

Total other financial liabilities

Bank loans (secured)

Lease liabilities

Loans and borrowings

Financial liabilities at amortised cost

31 December
2021

31 December
2020

$’000

56,651

5,789

62,440

78,606

$’000

61,290

1,414

62,704

86,360

484

3,100

79,090

141,530

89,460

152,164

31 December
2021

31 December
2020

$’000

94,152

23,375

$’000

105,376

28,135

117,527

133,511

7,813

4,833

12,646

12,250

3,178

15,428

130,173

148,939

The management of risk is a fundamental concern of the Group’s management. This note summarises the key financial risks to
the Group and the policies and procedures put in place by management to manage them.

a) Market risk

Market risk arises from the Group’s use of interest bearing and foreign currency financial instruments. There is a risk that the fair
value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk) or foreign
exchange rates (currency risk).

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

3. Financial instruments – Risk Management (continued)

Interest rate risk

The Group is exposed to cash flow interest rate risk from bank borrowings at variable rates but with a lower floor. The Group’s bank
borrowings and other borrowings are disclosed in note 17. Interest rates for the current Boku bank loan were based on LIBOR,
however the decision was made to phase out LIBOR by the end of 2021. Current contracts have been agreed at similar or equivalent
rates after transition and did not have a material effect on the Group finances. The Group manages the interest rate risk centrally.
After year end, the term loan was repaid in full on 28th February 2022 following the disposal of the Identity division to Twilio.

The following table demonstrates the sensitivity to a 1 percent change (higher only due to the fixed lower floor) to the interest rates
of the following borrowings at 31 December 2021 to the profit before tax and net assets for the period:

Bank loans

Foreign exchange risk

31 December 2021

31 December 2020

Increase/(decrease) of loss
before tax and net assets

$’000

+81

$’000

+124

Foreign exchange risk is the risk that movements in exchange rates affect the profitability of the business.

The effect of fluctuations in exchange rates on the Euro and GBP denominated trade receivables is partially offset through the use
of foreign exchange contracts to the extent that any remaining impact on profit after tax is not material.

The Group aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level
by matching the currency in which revenue is generated and expenses are incurred. The Group manages all treasury activities
centrally, with the exception of the acquired Fortumo entities where treasury processes are in the process of being aligned with
group treasury policies and procedures.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

As of 31 December, the Group’s gross exposure to foreign exchange risk was as follows:

31 December 2021

Trade and other receivables

Cash and cash equivalents and restricted cash

Trade and other payables

Financial assets/(liabilities)

GBP

$’000

12,399

9,849

(18,934)

3,314

Euro

$’000

28,352

14,268

(47,757)

(5,137)

Other

$’000

34,500

23,511

Total

$’000

72,521

47,628

(45,006)

(111,697)

13,005

11,182

10% impact - +/-

368

(571)

1,445

1,242

31 December 2020

Trade and other receivables

Cash and cash equivalents and restricted cash

Trade and other payables

Financial assets/(liabilities)

GBP

$’000

11,630

10,083

(21,138)

575

Euro

$’000

25,375

15,912

(60,967)

(19,680)

Other

$’000

46,476

21,053

Total

$’000

83,481

47,048

(41,542)

(123,647)

25,987

6,882

10% impact - +/-

(2,187)

2,887

765

The group operates in 37 currencies. We have separated GBP and Euro as the two primary currencies. The other 35 currencies are
include in the ‘Other’ column. The impact of 10% movement in foreign exchange rate of US$ will result in an increase/decrease of total
comprehensive profit/loss after tax and financial assets/(liabilities) of $1,242 thousands for December 2021 (2020: $765 thousands).

b) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Group is mainly exposed to credit risk from credit sales. The Group’s net trade receivables for the
three reported periods are disclosed in the financial assets table above.

The Group is exposed to credit risk in respect of these balances such that, if one or more the aggregators or MNOs encounters
financial difficulties, this could affect the Group’s financial results. The Group attempts to mitigate credit risk by assessing the
credit rating of new customers and MNOs prior to entering into contracts, by entering contracts with customers with agreed credit
terms and also by limiting its liability to its customers in the event of non-payment from MNOs and aggregators.

To minimise this credit risk, the Group endeavours only to deal with companies which are demonstrably creditworthy and this,
together with the aggregate financial exposure, is continuously monitored. The maximum exposure to credit risk is the value of
the outstanding receivables amount from carriers/aggregators less the value of corresponding outstanding amount payable to
merchants, which equals to the loss of revenue recorded in the financial statements in respect of the uncollected funds.

At the reporting date, the exposure was represented by the carrying value of trade and other receivables, against which $149
thousands was provided at 31 December 2021 (2020: $1,323 thousands). The provision amounts represent an estimate of
potential bad debt in respect of the year-end Group trade receivables. The Group’s customers are spread across a broad range of
sectors and consequently it is not otherwise exposed to significant concentrations of credit risk on its trade receivables.

A debt is considered to be bad when it is deemed irrecoverable, for example when the debtor goes into liquidation, or when
a credit or partial credit is issued to the customer for goodwill or commercial reasons. The Group has applied the Simplified
Approach applying a provision matrix based on number of days past due being greater than 150 days to measure expected
credit losses and after taking into account customer sectors with different credit risk profiles,history of collections and current and
forecast trading conditions.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

3. Financial instruments – Risk Management (continued)

The Group’s provision matrix is as follows:

31-Dec-21

< 60 days

61–120 days

121–150 days

> 150 days

Total

Expected credit loss % range

Gross carrier receipts ($’000)

77,775

491

Expected credit loss rate ($’000)

–

340

–

95%-100%

756

(149)

79,362

(149)

At 31 December 2021 the Group had a provision for $149 thousands (31 December 2020: $1.323 million) of which $36
thousands was utilised and $1,137 thousands was fully reversed in the year – see Note 13 for full details of the movement in
the year. As the company revenue is recorded as the net between the amounts received from carriers and aggregators less
the amounts payable to merchants, the provision of $149 thousands has been created in the year against receivables. This
represents the management best estimate of the potential revenue loss for the Group if the $756 thousands old receivables
were not received from carriers. The acquisition of Fortumo and the alignment of our Payment divisions policies and procedures
has resulted in an enhanced contractual position in the event of carrier non-payment, which has increased protection from the
possible downside risk and related credit loss and as a result the expected credit risk loss in 2021 is lower than in prior years.

31-Dec-20

< 60 days

61–120 days

121–150 days

> 150 days

Total

Expected credit loss % range

95%-100%

Gross carrier receipts ($’000)

82,597

1,880

Expected credit loss rate ($’000)

–

1,883

–

1,323

(1,323)

87,683

(1,323)

86,360

Other receivables are considered to be low risk. Management do not consider that there is any concentration of risk within other
receivables. No other receivables have been impaired.

Credit risk on cash and cash equivalents is considered to be small as the counterparties are all substantial banks with high credit
ratings. The maximum exposure is however the amount of the deposit. To date, the Group has not experienced any losses on its
cash and cash equivalent deposits.

c) Liquidity risk

Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it
to meet its liabilities when they become due. The table below analyses the Group’s financial liabilities by contractual maturities (all
amounts disclosed in the table are the undiscounted contractual cash flows):

31 December 2021

Trade and other payables

Bank loans and overdrafts (secured)*

Leases liabilities

Total

*No material difference between discounted and undiscounted fair value.

Within 1 year
$’000

119,641

1,250

1,477

122,368

2-5 years
$’000

More than 5 years
$’000

1,700

6,875

3,868

12,446

–

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

31 December 2021

Trade and other payables

Bank loans and overdrafts (secured)*

Leases liabilities

Total

Within 1 year
$’000

136,779

1,438

1,625

139,842

2-5 years
$’000

More than 5 years
$’000

862

10,813

1,937

13,612

–

*No material difference between discounted and undiscounted fair value.

Capital Management

The Group’s capital is made up of share capital, foreign exchange reserve and retained losses.

The Group’s objectives when maintaining capital are:

• To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and

benefits for other stakeholders; and

• To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in equity.
All working capital requirements are financed from existing cash resources and borrowings.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

4. Segmental analysis

(a) Operating Segments – primary basis

Prior to 1 Jan 2019, the Group considered that for executive management purposes, the Group had one reportable segment -
provision of a payment platform for processing payments for virtual goods and digital goods purchases. Following the acquisition
of Danal Inc on 1 January 2019, the Group revised its activities into two operating segments, Payments and Identity, as disclosed
below. The segments are based on the Group’s main revenue generating activities. On 1st July 2020, the Group completed the
acquisition of payments company Fortumo Holdings Inc and its subsidiaries. Fortumo was a competitor to Boku and operated
in the same carrier billing space as the existing Boku payments business. Therefore, the results of Fortumo O(cid:0) (the trading
subsidiary of Fortumo Holdings Inc) and its subsidiaries together with the existing Boku Payments business are viewed by the
management as one Payments segment.

The Group CEO and CFO review the management reports for both segments monthly before sending the results to the Board.

The following summary describes the operations in each of the Group’s reportable segments:

Payments Segment - provision of payment platform which enables mobile phone users to buy goods and services and charge
them to their mobile phone or prepaid balance.

In 2021 there were two customers, within the Payments Segment with revenue amounting to more than 10% (each) of the
payments segment revenue (2020: 1 customer).

Identity Segment - provision of Identity services which are used to simplify transactions or combat fraud.

Operating segment information under the primary reporting format is disclosed below:

Boku Income Statement by segment
for 12 months to 31 December 2021

Fee Revenue

Cost of sales

Gross Profit

Other Income (non-recurring)

Administrative Expenses

Operating gain/(loss) analysed as:

Adjusted EBITDA*

Other Income (non-recurring)

Depreciation and amortisation

Stock Option expense

Foreign exchange gains / (losses)

Exceptional items (included in administrative expenses)

Operating gain/(loss)

Finance income

Finance expense

Profit/(Loss) before tax

Tax credit

Total Payments

Total Identity

Total Group

2021

$’000

62,082

(1,571)

60,511

1,080

$’000

7,083

(4,162)

2,921

–

$’000

69,165

(5,733)

63,432

1,080

(50,951)

(8,426)

(59,377)

22,922

1,080

(6,251)

(6,414)

115

(812)

10,640

(770)

9,892

1,882

(2,894)

–

(1,236)

(977)

(249)

(149)

(5,505)

–

(5,505)

–

20,028

1,080

(7,487)

(7,391)

(134)

(961)

5,135

(770)

4,387

1,882

6,269

Net profit/(loss) for the period attributable to equity holders
of the parent company

11,774

(5,505)

*Earnings before interest, tax, depreciation, amortisation, non-recurring other income, stock option expense, foreign exchange gains/(losses) and exceptional items.
Management has assessed this performance measure as relevant for the user of the accounts.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

The consideration for the Fortumo acquisition included $5.4m, representing 12% of the total maximum consideration, held in
escrow in cash, subject to certain Adjusted EBITDA* earnout, working capital and indemnity conditions being satisfied in the
period 1st July 2020 to 30 June 2021.

The final earnout payment, based on Fortumo Adjusted EBITDA* performance for the 12 months period ended 30 June 2021,
was $2.16m, with the balance of $3.24 million returned to Boku.

The difference of $1.08 million between the expected fair value of the Fortumo earnout escrow amount as at 31st December 2020
of $3.24 million and the actual amount paid to Fortumo shareholders in September 2021, of $2.16 million has been shown as
“Other Income” in the Income Statement. This amount has been excluded from the adjusted EBITDA* as a non-trading, non-
recurring item.

Boku Income Statement by segment
for 12 months to 31 December 202

Fee Revenue

Cost of sales

Gross Profit

Administrative Expenses

Operating gain/(loss) analysed as:

Adjusted EBITDA*

Payments Revenue Adjustment (non-recurring)

Depreciation and amortisation

Stock Option expense

Goodwill impairment

Foreign exchange gains

Exceptional items (included in administrative expenses)

Operating gain/(loss)

Finance income

Finance expense

Profit/(Loss) before tax

Tax expense

Total Payments

Total Identity

Total Group

2020

$’000

51,231

(1,669)

49,562

$’000

5,171

(3,256)

1,915

$’000

56,402

(4,925)

51,477

(39,737)

(28,463)

(68,200)

19,176

(3,908)

15,268

(4,726)

(4,010)

–

807

(1,422)

9,825

(649)

9,246

(1,469)

(1,191)

(915)

(20,775)

241

–

(26,548)

–

(13)

(26,561)

(1)

(5,917)

(4,925)

(20,775)

1,048

(1,422)

(16,723)

(662)

(17,315)

(1,470)

Net gain/(loss) for the period attributable to equity holders
of the parent company

7,777

(26,562)

(18,785)

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

4. Segmental analysis (continued)

The net assets for each segment are disclosed below:

Net Assets by segment

Non-current assets

Property, plant, and equipment

Intangible assets

Deferred tax assets

Total non-current assets

Current Assets

Trade and other receivables

Cash and cash equivalents

Restricted cash

Total current assets

Total assets

Current liabilities

Trade and other payables

Loans and borrowings

Total current liabilities

Non-current liabilities

Trade and other payables

Loans and borrowings

Total non- current liabilities

Total liabilities

Net assets

2021

Payments

Identity

Consolidated

$’000

5,668

$’000

58,777

4,340

3,105

–

67,550

4,342

81,102

55,565

1,455

1,086

5,789

–

142,456

210,006

118,201

2,455

120,656

2,541

6,883

1,440

1,445

2,156

–

10,191

12,347

(5)

$’000

5,670

63,117

3,105

71,892

82,557

56,651

5,789

144,997

216,889

119,641

2,460

122,101

2,156

10,186

12,342

133,003

1,440

134,443

77,003

5,443

82,446

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Net Assets by segment

2020

Non-current assets

Property, plant, and equipment

Intangible assets

Deferred tax assets

Total non-current assets

Current Assets

Trade and other receivables

Cash and cash equivalents

Restricted cash

Total current assets

Total assets

Current liabilities

Trade and other payables

Loans and borrowings

Total current liabilities

Non-current liabilities

Trade and other payables

Loans and borrowings

Total non- current liabilities

Total liabilities

Net assets

Payments

Identity

Consolidated

$’000

3,749

$’000

60,252

5,307

483

–

64,484

5,329

91,122

61,038

1,413

252

1,414

–

$’000

3,771

65,559

483

69,813

92,535

61,290

1,414

153,574

1,665

155,239

218,058

6,994

225,052

135,203

2,863

138,066

1,576

1,587

1,090

–

12,560

13,650

(5)

136,779

2,874

139,653

1,090

12,555

13,645

151,716

1,582

153,298

66,342

5,412

71,754

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

4. Segmental analysis (continued)

(b) Geographic segment – secondary basis

The geographical analysis of the revenue by location of the users and segment is presented below:

Group Revenue by
Region and Segment

‘ 000 USD

Americas

APAC

EMEA

Grand Total

Group Revenue by
Region and Segment

‘ 000 USD

Americas

APAC

EMEA

Grand Total

Payments

Identity

Total

Dec-21 YTD

3,018

4.9%

5,621

79.4%

8,639

12.5%

33,444

53.9%

1,065

15.0%

34,509

49.9%

25,620

41.3%

397

5.6%

26,018

37.6%

62,082

100.0%

7,083

100.0%

69,165

100.0%

Payments

Identity

Total

Dec-20 YTD

1,556

3.0%

4,847

93.7%

6,403

11.4%

28,398

55.4%

1.7%

28,488

50.3%

21,277

41.5%

234

4.5%

21,511

38.1%

51,231

100.0%

5,171

100.0%

56,402

100.0%

An analysis of non-current assets by geographical market is given below:

United States of America

Europe

Rest of the World

Total

2021

$’000

51,662

16,551

574

68,787

2020

$’000

47,613

20,996

721

69,330

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

5. Administrative expenses (including exceptional items)

Audit fees - BDO LLP & all subsidiaries audits

Third party audit fees specific to FY 2020 – EY fees

Taxation services (not performed by auditor)

Professional services not performed by auditor

Consultancy and compliance services

Staff costs (excluding stock option expense – note 6)

Travel & entertainment

Property occupancy costs

Total IT, development and hosting

Total banking costs

Legal fees

Other costs including marketing, support & testing and other administration expenses

Operating Expenses, excluding items in Adjusted EBITDA

Depreciation of property, plant and equipment

Amortisation of intangible assets

Impairment of goodwill (Identity Business)

Foreign exchange loss/(gain)

Exceptional items – restructuring costs*

Exceptional items – acquisition costs

Share – based expenses (note 20)

Total administrative expenses

2021

$’000

524

–

749

113

835

33,598

408

1,203

3,453

506

879

1,136

43,404

2,255

5,232

–

134

961

–

7,391

2020

$’000

361

289

122

1,005

29,032

343

935

2,721

718

586

36,209

2,446

3,471

20,775

(1,048)

184

1,238

4,925

59,377

68,200

*Exceptional items of $961 thousands represent professional fees related to contracted costs exploring opportunities for the
Identity business.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

6. Key management personnel costs

Key management personnel compensation was made up as follows:

Salaries

Short-term benefits

Social security costs

Stock option expense

Pension costs

Total

Directors’ remuneration included in staff costs:

Salaries including bonuses

Short-term benefits

Total

7. Finance income and expenses

Finance income

Interest income from bank deposits

Total

Finance expenses

Interest on bank loans & overdrafts

Other interest payable (including interest paid for factoring)

Interest on lease liabilities

Amortisation of debt costs

Total

Net finance expenses

2021

$’000

3,455

2020

$’000

2,431

1,298

2,126

240

1,464

6,922

2021

$’000

4,183

2020

$’000

1,424 1,077

1,427

1,080

2021

$’000

2020

$’000

385

235

125

770

748

277

292

662

592

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

8. Income tax

Current tax

US tax

Foreign tax

Total current tax

Deferred tax (credit)/expense

Total tax (credit) / expense

2021

$’000

–

513

(2,395)

(1,882)

2020

$’000

374

376

1,094

1,470

The reasons for the difference between the actual tax charge for the period and the applicable rate of income tax of the US
reporting entity applied to the result for the period are as follows:

Profit before tax

Tax rate

Profit/(loss) before tax multiplied by the applicable rate of tax:

Expenses not deductible for tax purposes

Withholding taxes

Recognition of tax losses

Other - difference in tax rates and adjustments in respect of prior years

Total tax (credit)/expense

Deferred Tax

Net opening position

Arising from business combinations

Net recognition (de-recognition) / in the year

Foreign exchange revaluation

Net closing position

2021

$’000

4,387

21%

921

(2,646)

(237)

(1,882)

2021

$’000

253

–

2,359

2,649

2020

$’000

(17,315)

21%

(3,636)

4,628

–

410

1,470

2020

$’000

1,377

–

(1,094)

(30)

253

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

8. Income tax (continued)

The net closing position is made up of:

• A deferred tax liability of $456,097 (2020: $227,956): This constitutes tax positions connected with the Boku Inc UK fixed

temporary differences. The 2020 balance is connected with a deferred tax liability associated with intangible assets acquired
as part of the legacy business combination with the group’s now German business: this was released in the year.

• The deferred asset of $3,105,382 (2020: $482,573). This increase relates primarily to the recognition in the USA and UK of

available losses.. Each year the management assess the usability of the deferred assets.

A deferred tax asset (liability) has not been recognised for the following:

Non-deductible Reserves

Accrued Compensation

Stock Based Compensation

Other temporary and deductible differences

Accelerated Capital Allowances

Losses recognised

Acquired Intangibles

Unused tax credits

Unused tax losses

Total deferred tax assets

2021
$’000

1,819

527

(1,510)

(2,623)

2020
$’000

100

161

1,857

648

(1,000)

–

(169)

(245)

189

32,254

30,610

189

30,816

32,526

The Group has carried forward losses and accelerated timing differences at the reporting date as shown below. In respect of its
UK subsidiary, these can be carried forward and offset against UK taxable income indefinitely. In respect of its US entities, net
operating loss carry forwards can be carried forward and offset against taxable income for 20 years for losses incurred up to and
including 31 December 2017. All net operating loss carry forwards incurred after 31 December 2017 can be carried forward and
offset against US taxable income indefinitely. Utilisation of net operating loss or tax credit carry forwards may be subject to annual
limitations if an ownership change had occurred pursuant to the section 382 Internal Revenue Code and similar state provisions.

US losses and tax credit – federal and states

2021

$’000

2020

$’000

183,226

181,516

Non-US losses (includes US entities deemed to be under non-US tax jurisdictions)

7,525

5,021

Total

190,751

186,537

The unused tax losses must be utilised by various dates. German tax losses as at 31 December 2021 are now reduced to zero,
as all losses were to be used before 2022. U.S. federal tax losses of $175,283,600 expire in various dates through 2027.
Other unused losses of $15,467,430 do not expire.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

9. Proﬁt / (Loss) per share

Profit/(loss) attributable to shareholders of the Company ($’000)

Weighted average number of common shares

Basic profit/(loss) per share

Diluted profit/(loss) per share

2021

$’000

6,269

2020

$’000

(18,785)

293,975,346

273,836,772

0.0213

0.0206

(0.069)

Profit or Loss per share is calculated based on the share capital of Boku, Inc. and the earnings of the Group. Diluted earnings
per share was calculated using the treasury method. In 2020, due to the loss, in the reporting period diluted loss per share is the
same as basic loss per share.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

10. Property, plant and equipment

COST

At 1 January 2020

Additions

Acquisitions

Disposals

Computer
equipment
and software
$’000

Office equipment
and fixtures
and fittings
$’000

Leasehold
improvement
$’000

Right of use
assets

4,992

1,213

1,525

184

1,526

542

215

109

171

–

566

(30)

(2)

(37)

–

(69)

Total
$’000

7,914

2,021

Exchange adjustment

192

234

As at 31 December 2020

7,222

1,436

1,645

363

10,666

Additions

Disposals

Exchange adjustment

At 31 December 2021

DEPRECIATION

At 1 January 2020

Acquisitions

Charge for the year

Disposals

Exchange adjustment

At 31 December 2020

Charge for the year

Disposals

Exchange adjustment

At 31 December 2021

NET BOOK VALUE

At 1 January 2020

At 31 December 2020

At 31 December 2021

3,973

(4,307)

(99)

6,789

2,009

–

2,121

(30)

4,154

1,879

(4,187)

(58)

1,788

2,983

3,068

5,001

337

(545)

1,214

800

–

227

(2)

1,028

270

(545)

(9)

744

413

408

470

(1,372)

(16)

276

1,473

(37)

1,543

(1,370)

(10)

216

102

–

(105)

(3)

255

120

–

170

(105)

(2)

116

193

139

4,329

(6,329)

(132)

8,534

4,402

2,446

(69)

107

6,895

2,255

(6,207)

(79)

2,864

3,512

3,771

5,670

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

The Group leases many assets including buildings and IT equipment. The information about leases for which the group is a lessee
is presented below:

Type of right-of-use assets - $’000(USD)

Property

IT Equipment

Balance as at 1st January 2020

Additions

Disposals

Depreciation charge for the year

NBV balance as at 31 December 2020

Additions

Disposals

Exchange adjustment

Depreciation charge for the year

NBV balance as at 31 December 2021

2,303

2,182

(30)

(1,677)

2,778

3,543

(120)

(41)

(1,499)

4,661

680

–

(443)

290

430

–

(380)

340

Total

2,983

2,235

(30)

(2,120)

3,068

3,973

(120)

(41)

(1,879)

5,001

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

11. Intangible assets

COST

At 1 January 2020

Additions

Domain
name

Developed
technology

Merchant
relationships

Trade
marks Goodwill

Internally
developed
software

$’000

Total

$’000

140

–

3,774

–

9,010

110

41,085

–

6,939

2,920

61,058

2,920

Additions from acquisitions

1,834

4,343

7,172

–

25,068

–

38,417

Goodwill Impairment

Disposal

Exchange Adjustment

At 31 December 2020

Additions

Exchange adjustment

At 31 December 2021

AMORTISATION

At 1 January 2020

Charge for the period

Disposal

Exchange adjustment

At 31 December 2020

Charge for the period

Exchange adjustment

At 31 December 2021

NET BOOK VALUE

At 1 January 2020

At 31 December 2020

At 31 December 2021

–

1,974

–

(138)

1,836

140

–

232

177

(14)

395

–

1,742

1,441

–

280

8,397

–

(396)

8,001

2,240

556

–

2,818

873

(91)

3,600

1,534

5,579

4,401

–

794

–

(20,775)

–

1,242

16,976

110

46,620

–

(20,775)

(257)

9,694

5,022

(95)

–

(1,241)

110

45,379

14,621

–

110

41,085

46,620

45,378

5,116

1,252

(257)

6,175

2,350

(51)

8,474

1,823

3,519

6,147

(257)

2,408

83,771

5,022

(3,096)

85,697

14,239

3,471

(257)

759

18,212

5,232

(864)

22,580

46,819

65,559

63,117

–

(1,226)

15,750

6,743

1,572

–

672

8,987

1,832

(708)

10,111

2,267

7,989

5,639

Management has reviewed goodwill and intangible assets on the balance sheet which mainly consist of the assets from the
acquisition of Fortumo Holdings Inc. on 1st July 2020, Danal Inc (renamed Boku Identity Inc) on 1st January 2019 and Mopay AG
(“Mopay”) in October 2014.

Fortumo Holdings Inc. was acquired by Boku on 1st July 2020 for cash and restricted stock units (RSUs) for a total maximum
consideration of $45.0 million with a fair value of $42.3 million. The fair value measurement of Fortumo Holdings’ Inc. intangible
assets and goodwill arose from the purchase price allocation work which was undertaken in July 2020. As a result, several assets
have been identified and their fair value has been determined in accordance with IFRS 3. The carrying value of the goodwill and
other intangibles from the Fortumo acquisition are therefore assessed in total as part of the Boku Payments Segment (Payments
CGU).

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Boku Inc. acquired payments company Mopay in October 2014 for a total value of $24.2 million in cash and shares. After the
merger in 2014, the Mopay business was reorganised and incorporated into the Boku Payments business The carrying value of
goodwill from the Mopay acquisition and other intangibles are therefore assessed in total as part of the Boku Payments Segment
(Payments CGU).

Danal Inc (renamed ‘Boku Identity Inc’) was acquired on 1st January 2019) for a total value of $25.1 million. The fair value
measurement of Danal’s intangible assets and goodwill arose from the purchase price allocation which was undertaken in January
2019. As a result, the Identity platform and contracts were determined to be one asset and have a fair value of $1.9m USD as
at 1st January 2019. The two platforms (Identity and Payments platforms) are operated independently and have independent
cashflows. The carrying value of goodwill and the Identity platform were allocated to the Identity segment.

Impairment of Goodwill

At the year-end date an impairment test has been undertaken by comparing the carrying values with the recoverable amount
of the Group’s two cash generating units (CGUs). The recoverable amount of the cash generating unit is based on value-in-use
calculations. These calculations use cash flow projections covering future periods based on financial budgets and a calculation of
the terminal value, for the period following these formal projections.

The key assumptions used for value-in-use calculations are those regarding projected cash flows, growth rates, increases in costs
and discount rates. The discount rate used was the Weighted Average Cost of Capital. The discount rate is reviewed annually
to take into account the current market assessment of the time value of money and the risks specific to the cash generating
units and rates used by comparable companies. The pre-tax discount rate used for both CGU’s to calculate value-in-use is the
weighted average cost of capital (WACC) of 14.6% (2020:13.8%). Growth rates for forecasts take into account historic experience
and current market trends. Costs are reviewed and increased for various cost pressures. The terminal value calculation for 2021
was based on growth rate of post-tax free cashflow of 2% (2020:2%) for each CGU.

The 2022 budget was prepared at the consolidated level and by division (Payments division and Identity division). Revenue and
Adjusted EBITDA were also projected from fiscal year 2022 through to 2024. In 2021 Group revenue growth was 23% (2020:
12.5%) while Adj. EBITDA increased by 31% (2020: 107% increase).

Payments CGU

The goodwill assessment includes the following Payments CPU’s revenue growth assumptions for years following the 2021
financial year: revenues will grow by 11.9% in 2022, 18.6% in 2023 and 9.8% in 2024 and remain fairly constant after that,
showing a conservative increase, but still in double digits, but with revenues growing at a slower pace than previously. The
payments business is a mature, established business in multinational markets.

From a sensitivity perspective, the impairment analysis shows that the net present value of cashflows would have to be reduced
by a factor of five in order for the carrying amount of goodwill to equal the value in use of the CGU on the balance sheet at the
end of 2024 and by a factor of four in order for the carrying amount of all intangibles to equal the value in use of the CGU on the
balance sheet at the end of 2021 which the group considers to be highly unlikely.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

Notes to the Consolidated Financial Statements

11. Intangible assets (continued)

Identity CGU

In 2020 Identity business revenues were impacted by COVID-19, this together with a lower pipeline conversion resulted in lower
expected revenue. As a result, the Group reassessed the recoverability of goodwill and based on this recorded an impairment of
Goodwill in 2020 of $20.8 million reducing it from $23.6 million to $2.8 million.

In 2021 the Identity CGU performance improved with revenues up 31% to $7.1m and a reduced adjusted EBITDA loss. After
the year end an agreement was reached with Twilio, Inc. (“Twilio”), the leading cloud communications platform, to acquire Boku’s
Identity division comprising its wholly-owned subsidiary Boku Identity, Inc., as announced on 19 January 2022, for a maximum
consideration of $32.3 million payable in cash and the transaction was closed on 28 February 2022. As the recoverable amount is
much higher than the value in use, no impairment was deemed necessary for this CGU at 31st December 2021.

Climate change

We considered climate change when reviewing cashflows and impairment however as stated in the ESG section of this report,
Boku is an online payments company and as such its climate change impact is low as its business is all online and its merchants’
business is the sale of digital goods such as streaming services. Therefore any potential impact was not considered material when
looking at cashflows and intangibles.

100

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

12. Subsidiaries

The principal subsidiaries of the Company, all of which have been included in the consolidated financial information, are as
follows:

Name (% owned by Parent)

Boku Payments Inc. (100%)

Boku Network Services Inc. (100%)

Boku Account Services Inc. (100%)

Parent

Boku Inc.

Principal activity

Location

Holding Company

USA

Holding Company

Delaware, USA

Holding Company

Virginia, USA

Boku Account Services UK, Ltd. (100%)

Boku Account Services Inc. (Virginia)

Mobile payment solutions

Paymo Brazil Servicios de Pagamentos Ltd (99.9%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Brazil

Boku Network Services AG (100%)

Boku Inc.

Holding Company

Germany

Boku Network Services UK, Ltd (100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Boku Network Services AU Pty Ltd (100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Australia

Boku Network Services IN Privates Limited (100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

India

Boku Network Services SG PTE. LTD(100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Singapore

Boku Network Services HK LTD(100)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Hong Kong

Boku Network Services Taiwan Branch Office (100%) Boku Network Services Inc. (Delaware) Mobile payment solutions

Taiwan

Boku Network Services Japan Branch Office (100%) Boku Network Services Inc. (Delaware) Mobile payment solutions

Japan

Mopay AG Beijing Representative Branch (100%)

Boku Network Services AG (Germany)

Mobile payment solutions

China

Boku Identity Inc.(100%)

Boku Inc.

Identity solutions

California, USA

Boku Mobile Solutions Ireland (100%)

Boku Identity Inc.

Identity solutions

California, USA

Boku Network Services SG PTE. LTD.(100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Singapore

Boku Network Services HK LTD (100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Hong Kong

Boku Network Services IE Limited (100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Ireland

Boku Network Services Malaysia (100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Malaysia

Fortumo Holdings Inc (100%)

Boku Network Services Inc. (Delaware)

Holding Company

USA

Boku Network Services TH Co Ltd. .(49.9%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Thailand

Boku Network Services PH, Inc. .(100%)

Boku Network Services Inc. (Delaware) Mobile payment solutions

Philippines

Boku Network Services MX S. DE R.L. DE C.V
.(100%)

Boku Network Services Inc. (Delaware)

Dormant

Mexico

Fortumo OU (100%)

Fortumo Holdings Inc

Mobile payment solutions

Estonia

Fortumo Mobile Payments S.L (100%)

Fortumo Mobile Services (100%)

Fortumo Singapore Pte. Ltd (100%)

Fortumo OU

Mobile payment solutions

Spain

Mobile payment solutions

India

Mobile payment solutions

Singapore

Boku Network Services PE S.A.C. (100%)

Boku Network Services Inc. (Delaware)

Dormant

Boku Network Services CO S.A.S. (100%)

Boku Network Services Inc. (Delaware)

Dormant

Boku Network Services CL S.P.A. (100%)

Boku Network Services Inc. (Delaware)

Dormant

Boku Network Services ZA (Pty) Ltd (100%)

Boku Network Services Inc. (Delaware)

Dormant

Boku Network Services KE Limited (100%)

Boku Network Services Inc. (Delaware)

Dormant

Peru

Columbia

Chile

South Africa

Kenya

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

101

Notes to the Consolidated Financial Statements

13. Trade and other receivables

Trade receivables - gross

Accrued income

Accounts receivable - gross

Less: provision for impairment

Accounts receivable - net

Other receivables

Deposits held

Sales taxes receivable

Financial asset

Deferred cost of sales

Prepayments

Total trade and other receivables

Provision for receivables impairment

Opening balance

Utilised during the period

Decrease during the period

Foreign exchange movement

Closing balance

31 December
2021

31 December
2020

$’000

28,072

51,290

79,362

(756)

78,606

454

1,268

–

2,199

82,557

$’000

28,087

59,596

87,683

(1,322)

86,361

190

749

1,339

2,160

256

1,480

92,535

31 December
2021

31 December
2020

$’000

1,322

(36)

(1,137)

–

149

$’000

2,001

(25)

(705)

1,322

In accordance with IFRS9, the Group reviews the amount of credit loss associated with its trade receivables based on forward
looking estimates that take into account and forecast credit conditions as opposed to relaying on past default rates. The Group
has applied the Simplified Approach, applying a provision matrix based on the number of days past due to measure lifetime
expected credit losses and after taking into account customer sectors with different credit risk profiles and current and forecast
trading conditions.

102

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

14. Cash and cash equivalents and restricted cash

Cash and cash equivalents - unrestricted cash

Cash and cash equivalents - restricted cash

31 December
2021

31 December
2020 restated

$’000

56,651

5,789

62,440

$’000

61,290

1,414

62,704

The restricted cash primarily includes e-money and other client money received but not yet paid to merchants (in transit) and
cash held in the form of a letter of credit to secure a lease agreement for the Company’s San Francisco office facility.

In the prior year restricted cash was excluded from cash and cash equivalents in presenting the cashflow statement. Having
considered the nature of this asset, the company determined that despite the restrictions it should be presented as part of cash
and cash equivalents, and the prior year casflow has been restated accordingly.

15. Lease liabilities

Details of lease liabilities as at 31 December 2021, which includes the addition of two new leases in the year, for the Group’s new
offices in San Francisco, U.S. and Tallin, Estonia:

Lease liabilities

1st Jan 2020

Additions

Interest expense

Payments to lease creditors

Lease liabilities as at 31 Dec 2020

Additions

Interest expense

Payments to lease creditors

Lease liabilities as at 31 Dec 2021

The maturity analysis for lease liabilities is presented below:

Lease liabilities – Maturity analysis
(contractual undiscounted cash flows) - $’000 (USD)

Less than one year

One to five years

More than five years

Total undiscounted lease liabilities as at 31 December

There are no leases with a term of more than 5 years

Property

IT Equipment

Total

2,377

704

3,081

2,142

– 2,142

229

292

(1,834)

(503)

(2,337)

2,914

264

3,178

3,114

227

(1,422)

4,833

–

(272)

–

2021

1,477

3,868

–

5,345

3,114

235

(1,694)

4,833

2020

1,625

1,937

–

3,562

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

103

Notes to the Consolidated Financial Statements

15. Lease liabilities (continued)

Lease liabilities included in the statement of financial position at 31 December -
$’000 (USD)

Current

Non-current

Amounts recognised in profit or loss- $’000 (USD)

Interest on lease liabilities

Variable lease payment not included in the measurement of lease payments

Expenses related to short term leases

Expenses related to leases of low-value assets,
excluding short-term leases of low-value assets

Depreciation of right-of-use assets (Note 10)

The amounts recognised in the Consolidated Statement of Cashflows are presented below:

Amounts recognised in the statement of cashflows- $’000 (USD)

Payment of principal

Payment of interest

Total cash outflows

2021

1,335

3,498

2021

235

–

2020

1,436

1,742

2020

292

–

1,879

2,121

2021

1,694

235

1,929

2020

2,045

292

2,337

104

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

16. Trade and other payables

Current

Trade payables

Accruals

Total financial liabilities classified as financial liabilities measured at amortised cost

Other taxes and social security costs

Accrued tax on issued stock options

Other payables

Deferred revenue

Total

Non-current

Accrued taxes on issued stock options

Total

The carrying values of trade and other payables approximate to fair values.

17. Loans and borrowings

Current

Bank loans and overdrafts (secured)

Lease liabilities

Total

Non-current

Bank loans

Lease liabilities

Total

31 December
2021

31 December
2020

$’000

94,152

23,375

117,527

788

1,022

–

304

105,376

28,135

133,511

1,353

1,466

444

119,641

136,779

1,700

862

31 December
2021

31 December
2020

$’000

1,125

1,335

2,460

6,688

3,498

10,186

1,438

1,436

2,874

10,813

1,742

12,555

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

105

Notes to the Consolidated Financial Statements

17. Loans and borrowings (continued)

Principal terms and the debt repayment schedule of the Group’s loan and borrowings are as follows:

On 26 June 2020 the Group entered into a loan agreement with its bankers for $20.0 million to finance the acquisition of Fortumo
Holdings Inc, and its subsidiaries on 1st July 2020. The loan was structured as a $10.0 million term loan repayable in 4 years and
$10.0 million revolving facility. The revolving facility was paid down in full by 31 December 2021. Borrowing costs of $500,000
were incurred and are amortised over the life of the loan.

After year end the Identity division was sold to Twilio. The outstanding term loan with Citibank of $8.125 million was repaid in full
from the deal consideration, as part of the closing conditions, on 28 February 2022.

Reconciliation of liabilities arising from financing activities

2020 Cash flows

Non-cash changes ($‘000)

2021

Short-term borrowings

Long-term borrowings

Short-term lease liabilities

Long-term lease liabilities

$‘000

1,438

10,813

1,436

1,742

(313)

(4,250)

(1,929)

–

Total liabilities from financial activities

15,429

(6,492)

Borrowing
costs
expensed in
the year

Foreign
Exchange
Movement

Lease
Liabilities
(IFRS 16)

–

125

–

125

(10)

(40)

(50)

1,838

1,796

3,634

$’000

1,125

6,688

1,335

3,498

12,646

2019 Cash flows

Non-cash changes ($‘000)

2020

$‘000

2,098

–

1,723

1,358

5,179

(563)

10,813

(2,337)

–

7,913

Converted to
shares

Foreign
Exchange
Movement

Lease
Liabilities
(IFRS 16)

–

(97)

–

(18)

–

(115)

–

2,068

384

2,452

$’000

1,438

10,813

1,436

1,742

15,429

Short-term borrowings

Long-term borrowings

Short-term lease liabilities

Long-term lease liabilities

Total liabilities from financial activities

106

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

18. Share capital

The Company’s issued share capital is summarised in the table below:

Number of shares
issued and fully paid

31 December
2021

Number of shares
issued and fully paid

31 December
2020

‘000

$’000

‘000

$’000

287,566

6,751

–

1,559

295,876

–

252,335

23,600

2,724

8,907

287,566

–

Common stock of $0.0001 each

Opening balance

Exercise of options and RSUs

Shares issued to Danal Shareholders

Shares issued to Fortumo Shareholders

Closing balance

Common Stock

At December 31, 2021, the Company had 295,876,395 (2020: 287,566,248) common shares issued and outstanding.

19. Reserves

The share premium disclosed in the consolidated statement of financial position represents the difference between the issue price
and nominal value of the shares issued by the Company. It includes all stock options expenses reserves.

Retained losses are the cumulative net profits / (losses) in the consolidated income statement.

Foreign exchange reserve stores the foreign exchange translation gains and losses on the translation of the financial statements
from the functional to the presentation currency.

Movements on these reserves are set out in the consolidated statement of changes in equity.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

107

Notes to the Consolidated Financial Statements

20. Share-based payment

The Group operates the following equity-settled share-based remuneration schemes for employees, directors and non-
employees:

1. 2009 equity incentive plan (2009 Plan) for the granting of stock options (incentive or non-qualified), restricted stock awards
(RSA) and restricted stock units (RSU). No options were available to be issued under this plan as at 31 December 2021 or
2020.

2. 2017 Equity Incentive Plan (new plan started on the 7th November 2017) for the granting of stock options and restricted

stock units (RSUs). The Group reserved an initial ten million shares of common stock for issue under the plan. The activity
under this plan is presented separately from the rest of the plans. There are 969 options (2020: 1,112) and 10,454 (2020:
8,962) RSUs outstanding as at 31 December 2021.

Options under the 2009 Plan

Options under the 2009 Plan and UK plan may be outstanding for periods of up to ten years following the grant date.
Outstanding options generally vest over four years and may contain a one-year cliff, where 25% of the options vest. Stock options
with graded vesting is based on the graded vesting attribution approach, whereby, each instalment of vesting is treated as a
separate stock option grant, because each instalment has a different vesting period.

RSUs under the 2017 Plan

RSUs under the 2017 Plan may be outstanding for periods of up to five years following the grant date. Outstanding RSU grants
generally vest over three years in three equal portions or one third after two years and two thirds in the third year anniversary from
the grant date.

Performance-based restricted stock units (RSU)

Performance-based RSUs vest upon the earlier of the completion of a specified service period and the achievement of certain
performance targets, which may include individual and Company measures, and are converted into common stock upon vesting.

Share-based expense for RSUs is based on the fair value of the shares underlying the awards on the grant date and reflects
the estimated probability that the performance and service conditions will be met; specifically, where the 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 expense is adjusted in future periods for subsequent changes in the expected outcome of the performance related
conditions until the vesting date. Performance-based RSUs vest after three years of issue, in one event, if the performance
conditions are met, however these may also vest at the discretion of the board in the event that underlying performance
conditions are not met.

108

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

Options under the 2009 Plan and 2009 UK plan

Stock options with graded vesting is based on the graded vesting attribution approach, whereby, each instalment of vesting is
treated as a separate stock option grant, because each instalment has a different vesting period.

The options activity under the 2009 Plan (including RSUs) are as follows:

Available 2009 Plan

2009 Plan (Options)

2009 Plan (RSUs)

Total

Number of options

WAEP1

Number of RSUs

Number of options

At 1 January 2020

Exercised

Cancelled

‘000

–

At 31 December 2020 –

Exercised

Cancelled

–

At 31 December 2021 –

‘000

15,693

(5,224)

(2,163)

8,306

(3,509)

(44)

4,753

‘000

157

$0.268

$0.346

(157)

$0.281

$0.327

$0.341

$0.283

$0.340

–

‘000

15,850

(5,381)

(2,163)

8,306

(3,509)

(44)

4,753

1WAEP – weighted average exercise price
*RSUs are always granted at zero exercise price

2009 Plan

Outstanding options at reporting end date:

- total number of options (including RSU)

- weighted average remaining contractual life
(all except 2017 Plan, and excluding RSUs) (years)

- weighted average remaining contractual life – RSU (years)

Vested and exercisable (‘000):

- weighted average exercise price

- weighted average remaining contractual life – all plans (excluding RSUs)

Weighted average share price exercised during the period (excluding RSUs )

Weighted average fair value of each option granted during the period (excluding RSUs)

Vested and exercisable – RSUs

Share-based expense for the period (‘000)

December 2021

December 2020

4,846

3.75

–

4,846

$0.416

3.75

$0.34

–

8,399

4.43

–

8,275

$0.384

4.4

$0.35

–

$24

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

109

Notes to the Consolidated Financial Statements

20. Share-based payment (continued)

The following information is relevant in the determination of the fair value of options (excluding RSUs) granted during the period
under the equity- settled share-based remuneration schemes operated by the Group.

2009 Plan

Option pricing model used

Weighted average share price at grant date (dollar)

Exercise price (options only)

Weighted average contractual life (years)1

Weighted expected volatility2

Expected dividend growth rate

Weighted average Risk-free interest rate3

December 2017

Black-Scholes

$0.370

5.82(E*+ NE*)

45% (E*+ NE*)

1.9% (E*+ NE*)

1Weighted average contractual life represents the period of time options are expected to be outstanding and is estimated considering vesting terms and employees’
historical exercise and post-vesting employment termination behavior.
2Expected volatility is based on historical volatilities of public companies operating in the Company’s industry.
3The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.
*E – employees NE – non-employees

The fair value of each option (excluding RSUs) has been estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: expected terms ranging from 4.99 to 6.89 years; risk-free interest rates ranging from
0.73% to 3.05%; expected volatility of 58%; and no dividends during the expected term (2017: expected terms ranging from 5.04
to 6.01 years; risk-free interest rates ranging from 1.87% to 1.92%; volatility of 45%; and no dividends during the expected term).

110

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

www.boku.com

The options activity under the 2017 Plan (including options and RSU) are as follows:

At 1 January 2020

Authorised

Granted

Exercised

Cancelled

At 31 December 2020

Authorised

Granted

Exercised

Cancelled

At 31 December 2021

Options available
‘000

19,545

11,163

(6,393)

–

3,402

27,717

12,312

(5,739)

–

1,111

35,401

Options
‘000

1,281

–

(39)

(130)

1,112

–

(107)

(36)

969

WAEP1

$1.205

–

$1.205

–

$1.205

RSUs
‘000

7,888

–

6,393

(1,918)

(3,402)

8,961

–

5,739

(3,135)

(1,111)

10,454

WAEP1

–

Total
‘000

9,169

–

6,393

(1,957)

(3,532)

10,073

–

5,739

(3,242)

(1,147)

11,423

2017 Plan

Outstanding options at reporting end date:

- total number of options (excluding RSUs) (‘000)

- weighted average remaining contractual life (excluding RSUs) (years)

- weighted average remaining contractual life – RSUs (years)

Vested and exercisable (‘000):

- weighted average exercise price

- weighted average remaining contractual life (excluding RSU) (years)

Weighted average fair value of options granted during the period (excluding RSU)

Vested and exercisable – RSUs

Share-based expense for the period (‘000)

December 2021

December 2020

969

6.02

5.85

$1.205

6.02

$0.44

924

$5,682

1,112

6.91

6.85

$1.205

6.91

$0.44

793

$4,920

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

111

Notes to the Consolidated Financial Statements

20. Share-based payment (continued)

The following information is relevant in the determination of the fair value of options (excluding RSU’s) granted during the period
under the equity- settled share-based remuneration schemes operated by the Group. Only RSUs were granted in 2021 and 2020.

2017 Plan

Option pricing model used

Weighted average share price at grant date (dollar)

Exercise price (options only)

Weighted average contractual life (years)1

Weighted expected volatility 2

Expected dividend growth rate

Weighted average Risk-free interest rate3

December 2018

Black-Scholes

$1.205

9.05 years

32.66%

2.49%

Warrants for ordinary shares

A five year warrant to purchase 1,634,699 Boku shares at an exercise price of $1.8352 USD per share, exercisable at any time
during the 5-year term was issued as part of the Danal acquisition, on 1st January 2019. This warrant was valued using the
Binomial Lattice Model using the following inputs:

a) Term: 5 years

b) Starting share price: $0.8982 USD

c) Expected Annual Volatility: Used 5-year comparable companies equity volatilities from Capital IQ (26.6%)

d) Risk Free Rate: Five-year US risk-free rate (2.51%)

e) Strike Price: $1.8352 USD

Using the inputs above the warrant was valued at $94,606 USD and accounted as part of the purchase consideration as an
equity instrument and credited to other reserves until such time when it is exercised when it will be reclassified to the share
premium account.

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Reconciliation of share-based payment expense

2009 Plan

Options

RSU’s

2017 Plan

Options

RSU’s

Total share-based expense (excluding national insurance)

National insurance accrued

National insurance paid in the year (see Note 4)

Total share-based payment charge

December 2021

December 2020

$’000

–

5,657

5,684

423

1,284

7,391

–

154

4,136

4,313

159

453

4,925

In the current year, a board resolution was passed to amend the 2018, 2019 and 2020 GMC LTIP RSU Grants. The EPS target has
changed to be measured as an average EBITDA per share over 3 years (previously a performance target of an EBITDA amount).

The change has resulted in the increase in the probability of the targets being met from 80% to 100% likelihood and this had resulted
in a cumulative adjustment recognised as an expense in the current year of $582k for the 2018, 2019 and 2020 LTIP plan.

21. Dividends

No dividends were declared or paid in any of the periods.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

113

Notes to the Consolidated Financial Statements

22. Cash generated from operations

Profit/(loss) after tax

Add back:

Tax (credit)/expense

Amortisation of intangible assets

Depreciation of property, plant and equipment

Restructuring write-offs

Loss/(profit)on disposal of property, plant and equipment

Finance income

Finance expense (includes interest on lease liabilities)

Exchange loss/(gain)

Employer taxes on stock option (accrual)

Impairment of goodwill

Share based payment expense

Cash from operations before working capital changes

Decrease/(Increase) in trade and other receivables

(Decrease)/Increase in trade and other payables

Cash generated from operations

23. Related party transactions

Year ended
December 2021

Year ended
December 2020

$’000

6,269

(1,882)

5,232

2,255

–

(22)

770

743

423

–

5,684

19,477

8,748

(15,863)

12,362

$’000

(18,785)

1,470

3,471

2,446

158

–

(70)

662

(3,130)

159

20,775

4,313

11,469

(9,545)

29,605

31,529

In 2021, the Group was remitted $123,776,087 in net payments from five suppliers who are shareholders of the Company (2020:
$100,206,645 - from five suppliers). At 31 December 2021, the Company had receivables of $15,767,393 (2020: $12,404,487)
due from these companies.

24. Ultimate controlling party

There is no ultimate controlling party of the Company.

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25. Contingent liabilities

In the normal course of business, the Group may receive inquiries or become involved in legal disputes regarding possible patent
infringements. In the opinion of management, any potential liabilities resulting from such claims, if any, would not have a material
adverse effect on the Group’s consolidated statement of financial position or results of operations.

From time to time, in its normal course of business, the Group may indemnify other parties, with whom it enters into contractual
relationships, including customers, Aggregators, MNOs, lessors and parties to other transactions with the Group. The Company
has also indemnified its directors and executive officers, to the extent legally permissible, against all liabilities reasonably incurred
in connection with any action in which such individual may be involved by reason of such individual being or having been a
director or executive officer. The Group believes the estimated fair value of any obligation from these indemnification agreements
is minimal; therefore, this consolidated financial information do not include a liability for any potential obligations at 31 December
2021 and 2020.

26. Post balance sheet events

After the year end an agreement was reached with Twilio, Inc. (“Twilio”), the leading cloud communications platform, to acquire
Boku’s Identity division comprising its wholly-owned subsidiary Boku Identity, Inc., as announced on 19 January 2022, for a
maximum consideration of $32.3 million payable in cash and the transaction was closed on 28 February 2022.

The Russia/Ukraine conflict that started in early 2022 impacted Boku’s connections to Russian carriers in its network as detailed
in the CFO report. However Boku operates in 91 countries and the impact on 2022 revenues is not expected to exceed 2% of
2022 revenues.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2021

115

Boku, Inc.
Stock Code: BOKU