Boku, Inc Annual Report 2022

FY2022 Annual Report · Boku, Inc

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Annual
Report
2022

Boku, Inc.
Annual Report and Accounts
for the year ended 31 December 2022

Boku works with the world’s largest merchants. We help
them 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

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

Most things bought online are not bought with cards.
They are bought with a variety of different local payment
methods, including mobile wallets and account to
account/real time payments. There are scores and
scores of them. All different and incompatible

Boku builds custom connections to the most popular
ones incorporating bespoke features that help our
merchants to enrol more customers and sell more of
their products. The mobile-first Payments Network
now reaches over 340 payment methods worldwide,
enabling merchants to transact and receive funds
from 90 countries through a single contract and a
single integration.

Contents

Strategic Report

Governance

Financials

Chair’s Statement .................................. 3
Strategic Report ................................... 4
Chief Executive Officer’s Report............ 12
Chief Financial Officer’s Report ............. 16
Principal Risks and Uncertainties .......... 24

Board of Directors ............................... 30
Senior Management ............................ 34
Corporate Governance Report ............. 36
Audit Committee Report ....................... 43
Remuneration Report ........................... 46
Environmental, Social
and Governance Report (ESG) ............. 53
Directors’ Report ................................. 60
Directors’ Responsibilities Statement .... 62

Independent Auditor’s Report ............... 63
Consolidated Statement
of Comprehensive Income ................... 72
Consolidated Statement
of Financial Position ............................. 73
Consolidated Statement
of Changes In Equity ........................... 74
Consolidated Statement
Of Cash Flows .................................... 75
Notes to the Consolidated
Financial Statements ............................ 76

1Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Highlights60.050.040.030.020.010.0 0Monthly Active Users (millions)9.716.321.933.641.0201720182019202020212016202252.3million706050403020100Revenue ($USD millions)302520151050(5)Adjusted EBITDA ($USD millions)20172018201920202021201720182019202020219876543210TPV ($USD billions)1.73.65.05.06.98.2201720182019202020212022$8.9billion202220223.9+3%+14%constantcurrency24.535.343.551.262.1$63.8million$20.5million+28%40.030.020.010.0-(10.0)(20.0)(30.0)(40.0)Proﬁt After Tax ($USD millions)201720182019202020212022$28.9million(2.3)6.312.712.719.222.9(28.1)(4.3)0.40.4(18.8)6.3+9%+20%constantcurrency2Boku Inc Annual Report and Accounts for the year ended 31 December 2021www.boku.com3Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Chair’s StatementI am delighted to be making my first report as Chair at the end of a year in which Boku has made substantial progress. However, I am not going to comment on trading numbers as they are well covered in my colleagues’ reports.First, however, I would like to thank Mark Britto who has made a huge contribution to this company as founder and, latterly, non-executive chair. We are not saying farewell though as he is remaining as a Non-Executive Director. This means we shall not only have continuing access to the depth of his Boku experience but also the insight from his recent experience as a senior executive at PayPal, one of the world’s largest payment companies.I have been a director of Boku since 2016, the year before Boku was admitted to AIM. Since then it has grown in size, sophistication, the breadth of its operations across the world and become profitable and cash generative. However, although its core business of Direct Carrier Billing (“DCB”) will continue to grow there is a limit to how many people want to charge purchases to their phone bill. As a result, and as part of our growth strategy, we have now moved into processing new payment methods – Local Payment Methods (“LPMs”) – principally eWallets and Real time Account to Account payments (“A2A”). The early growthmer of this strategy has far exceeded our expectations and is now increasingly visible in our results.However, revenue and profit growth are not everything albeit they are crucial to a commercial enterprise’s existence. We also pay close attention to each of the following:• Relevance and resilience: Boku prides itself on its ability to satisfy customers’ demanding requirements to support their growth. As our merchants include many of the major western digital companies, with some of the largest platforms on earth, they demand the highest standards.• Compliance and service: As a payments company, we are proud of our ability to comply with regulatory requirements in the more than 50 countries where we operate. Compliance with regulations and high standards of customer service are central to our culture and are two of the secrets of our success. • Our people: We value all our staff and treat them with the respect and consideration they deserve. We have, and intend to retain, high levels of staff loyalty and diversity. The Boku culture is, in my opinion, one of the most attractive features of this business.Turning to the board composition, we have recently recruited two new Non-Executive Directors, Meriel Lenfestey and Loren Shuster. Boku now has eight directors – two executives, an independent non-executive chair and five other non-executives of whom four are independent. I am proud that our non-executives collectively have a huge amount of relevant and diverse experience. Their areas of expertise include the payments industry, telecoms, internet, Far East operations, accounting, HR, customer experience, ESG (Environmental, Social and Governance) and public company board exposure. This depth of experience is complemented by a wide range of personal backgrounds from different countries and cultures. In conclusion, I believe we are a company with the highest standards of technical skills, customer service and integrity, underlining why and how we continue to supply payment services to the world’s largest digital companies. Alongside this we have a culture which makes Boku an attractive place to work and allows us to hire and retain the very best staff wherever they may be based and whatever their backgrounds are. I am extremely proud to be a member of the Boku team and I look forward to exciting growth in Boku’s revenue and profits in the coming years.Richard HargreavesNon-Executive Chair20 March 2023Strategic Report

“The world needs
unreasonable men.
The reasonable
man adapts himself
to the world; the
unreasonable one
persists in trying to
adapt the world to
himself. Therefore all
progress depends
on the unreasonable
man”

—George Bernard Shaw

Knowing the real job that the customer
wanted done

Boku was able to achieve its position as the market leader
in Direct Carrier Billing (“DCB”) by being unreasonable.
Our competitors simply resold the facilities that mobile
network operators made available. These interfaces were
good enough for game show voting or the purchases of
mobile wallpapers and ring tones – remember them? —
that characterised the carrier billing industry in its early
days. But they were inadequate for the needs of the global
digital entertainment industry. To serve them, we needed to
make some unreasonable demands of the Mobile Network
Operators (“MNOs”).

Global digital companies didn’t want to use DCB to move
money – there were plenty of other ways that they could do
that more efficiently. What they wanted to achieve from a
partnership with a telco, was to acquire new users. Once Boku
understood the value that DCB could bring, we set about
persuading the MNOs to deliver the right interface for us.

Mobile Network Operators had strategic advantages that
could make charging to your phone bill a must have for global
digital companies. There are more phones than payment
cards and, because the phone company knows your number
without having to ask, they could deliver one tap registration.
But basic services were missing from many carrier APIs, such
as the ability to do refunds or to ensure that fat fingers didn’t
result in double charges.

It wasn’t easy. At first the MNOs looked at Boku as an
upstart who didn’t have any place telling them to change their
systems. However, as we successively recruited customers
like Sony, Spotify, Microsoft, Google and Apple, the carriers
understood that changing their systems would allow them to
reach a new class of merchant, with substantial new volume.

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

www.boku.com

For Boku, this set up a virtuous cycle: new merchants led
to new MNO connections and new connections led to new
merchants. Most importantly, each of those new connections
led to new users for our merchants. On average, each time
a new connection is launched, around 15% of all new users
recruited by the merchant in that territory will be recruited
through the simplicity and reach of Direct Carrier Billing. New
users are gold dust for merchants chasing growth. And, as
the economic environment turns chilly, those new users are, if
anything, even more valuable.

In time, that virtuous circle, enabled Boku to establish
itself as the scale player in the specialised payment
method of DCB. By being bigger, we were able to support
simultaneously more merchants and more high quality
carrier connections at lower unit cost than our competition.
Ultimately, practically all of the world’s largest digital
companies, across app stores, streaming music and video,
console, PC and mobile games, became our merchants.
Mostly they used Boku as their sole provider.

Willie Sutton, an American bank
robber, was once asked by
a journalist “Why do you rob
banks?”. He replied, “Because
that’s where the money is.”

Working with big companies is an important part of
Boku’s strategy. Big companies have big volumes. It
was the opportunity presented by big companies that
persuaded MNOs to make changes to their systems. It is
big companies that have the resources to manage multiple
payment providers and thus accept Direct Carrier Billing
alongside more conventional means of payment, such
as cards. Boku developed a series of skills for working
together with global companies which have become core
competences for the organisation.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

6Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022www.boku.comOrder out of chaosThe Mobile Network Operator landscape is a very fragmented one. Whilst there are standards galore to cover messaging, data transmission and telephony, their back-office systems are a mish mash of 3rd party provided systems, bespoke software and in-house developments. No two are the same. Not even within the same carrier group sharing a common brand. That complexity was our opportunity. Since each connection by itself provided relatively little uplift for the merchant, it was infeasible for large companies to directly integrate them all. They needed a partner, like Boku, to simplify the process. Boku’s core proposition is to take the fragmented world of different payment issuers and to provide access to them through a single technical integration, a single contract and, if required, a single settlement process. Growth on DCB steady and predictable Unlike the standardised world of payment cards, the fragmenta-tion means that each connection must be made individually. There are no shortcuts. You can’t just flick a switch and light everything up. It’s frustrating in that growth comes at a steady pace, but it’s also a moat with which to defend our business. Once you’ve taken months to make a connection, it doesn’t get switched off or passed to a competitor, who would have to go through the same multi-month process. The complexity has also built an optimi-sation culture within Boku. Since each connection is different, a plug and play approach will not provide the best results for customers. Instead, Boku intensively analyses the performance of each connection to understand the features and configurations that could be implemented in order to ensure that a higher percentage of at-tempted enrolments and purchases are successfully completed. We differentiate ourselves not only by the reach of our network, but also by its quality (as evidenced by our global merchant testimonials, including being selected by Amazon as a global partner). With the right technical features, optimally configured, the difference in performance that Boku can achieve is consider-able. Our scale is important here too: by having more information about more connections from more merchants, we are better able to deliver new users and more sales for our merchants.Boku’s capabilities• A focus on the needs of global merchants• Customised integrations to payment issuers• Deep analysis and optimisation to improve outcomesThe value of DCB transactions that Boku processes has been growing steadily for some years, but we didn’t want to be the big fish in a small pond. Ultimately DCB was never going to account for more than 15% or so of a merchant’s total sales. Making payments using your phone bill or balance is a minority sport, most people will pay with something else. And we wanted to grow bigger by providing solutions that would be more widely used, solve bigger problems for our merchants. Happily, the skills that Boku has accumulated on DCB can be applied to that bigger canvas, to the larger market of payments through mobile wallets and account to account/real time payments. The growth of Local Payment Methods (“LPMs”) In the Roald Dahl story, The Twits, Mr. Twit fooled his wife into thinking that she was shrinking by gluing a tiny slither of wood onto the bottom of her walking stick every day for month. The change was so slow, so imperceptible, that the wife didn’t notice at first. Gradual change is hard to see.Strategic Report7Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Standardisation: the motor of growth for cardsSince its invention in 1949, driven forward by the efforts of Visa and MasterCard, the general purpose payment card has grown to process trillions of dollars of payments every quarter. That growth, in large measure, has been driven by standardisation. It’s standardisation that has allowed an ecosystem of banks and payment processors to provide a global payment infrastructure, with many different participants competing to provide services to merchants and consumers.Relative decline: The unnoticed eclipse of cardsYet over the last 15 years or so a profound change has occurred to the way in which the world pays for things online. Back in 2010, according to the Worldpay Global Payments report, approximately three quarters of the world’s e-commerce was taking place on cards. By 2020, that figure had reduced to just over a third.People in card-based payment cultures in the West may not have noticed the change, but most online purchases are not made with cards anymore. Why has this change been so hard to see? First it is that Visa and MasterCard have most assuredly been growing. Over the past 10 years Visa’s CAGR has been 11.3%, MasterCard’s 9.3%, but growth in online sales elsewhere has been faster, especially in Asia. Secondly, non-card spending is fragmented across scores and scores of different, mostly domestic payment methods. With very few exceptions, none of these new payment methods are large enough to register in the wider consciousness. You may have heard of Alipay, but what about Grabpay, Paymaya, Toss or Zalopay? Currently, the most successful Local Payment Methods are mobile wallets, but new payment options like Buy Now Pay Later, and, especially, real time Account to Account payments schemes are also rapidly gaining traction.8Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022www.boku.com9Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Growth of Account to Account (“A2A”)Real time Account to Account payments (“A2A”) are a new kid on the payments block. They’re growing incredibly fast and could disrupt cards: they are cheaper, faster, have a better guarantee for merchants and are more secure. The technology was pioneered in the UK with its Faster Payments service back in 2009 – most UK readers of this report will have made payments from a banking mobile app using the service – but it is in other countries where the technology has really taken off. India, for example, launched the Unified Payment Interface (“UPI”) in 2016, by December 2022, 7.8 billion transactions were processed in a single month. – approximately 8 per adult, the same as the UK. In Brazil the usage is even higher. Pix, the Brazilian system was launched in November 2020 and now, just over two years later, in December 2022, usage was 20 transactions per adult per month. With different national systems – A2A, like wallets, will be a fragmented ecosystem. But A2A addresses an even larger potential market than wallets encompassing both Business to Business transactions as well as Consumer to Business. Boku has integrated A2A schemes in Thailand and Korea and further integrations will be done in 2023.Global companies need local paymentsInitially, Local Payment Methods grew in their local markets – Chinese consumers to Chinese merchants, Thai consumers to Thai merchants and so on. But their success led to demand for acceptance from Boku’s existing global merchants. Global merchants needed to accept these payment methods if they wanted to be relevant in the countries where they had become popular, yet, just like with carrier billing, the complexity of connecting to each Local Payment Method individually was a real barrier to them self-supplying.Two Markets: commoditised cards, fragmented Local Payment MethodsFor payment processors there are, in effect, two different markets: the standardised world of cards and the fragmented, unstandardised world of LPMs, including DCB. For a payment processor, the card scheme rules are a given, immutable, non-negotiable, handed down on tablets of stone by Visa and MasterCard. It is possible to differentiate oneself a little by having a more modern payment stack, by being simpler to integrate or by having advanced routing capabilities, but the difference that you will make to the merchant’s business outcome is relatively small. The result is a price driven market where the returns go to scale. The cost of operating a payment platform is broadly fixed, with each incremental transaction adding little or nothing to overall expense. In cards, the spoils go to the largest player who can provide the service at the cheapest price. By contrast, in the Local Payment Method market, differentiation is possible. Since each payment method is different, it is possible to deliver dramatically different levels of performance based on the details of the specific Local Payment Method integration. If you can reduce latency, simplify the user interface, make one tap transactions possible, you can deliver dramatically better outcomes. Better business performance results in, on average, higher prices. The LPM processing market is particularly attractive with a large Total Addressable Market (“TAM”) and the potential for premium pricing.Strategic ReportStrategic Report

“I have a very particular
set of skills, acquired over
a very long career”

—Liam Neeson,
playing the character Bryan Mills

in the film, Taken (2008)

The skills that Boku has learned over ten years of processing
DCB turn out to be ideally suited to operating in the
fragmented ecosystem of local payments. Just as Mobile
Network Operators had multiple different interfaces, so do
mobile wallets; just as telcos are prepared to upgrade their
specifications in order to reap the higher volumes from global
merchants, so are Local Payment Methods; just as global
merchants seek a partner with a single interface to connect
them to many carriers, so are they also looking for partners
who can connect them to the variegated universe of Local
Payment Methods.

Our suitability for the Big Pond of local payments is not a
diversification from our DCB business, it is an extension
of it. It is because we were successful at DCB, that we
are well suited to other LPMs. Applying Boku’s formula of
concentrating on quality, implementing dedicated features
into our platform to ensure the optimal performance of each
issuer makes a tangible difference.

Better business results for our customers allows us to charge
a premium price when compared to the card processors
(over and above the premium to be had from operating the full
service settlement model).

Investment in new capabilities

That’s not to say that there are no differences: swimming in the
Big Pond does require some investment in new capabilities.

The higher values processed through wallets and A2A
schemes mean that merchants want to get their money more
quickly. Boku’s settlement capabilities have been upgraded to
include daily settlement.

Mobile wallets and other Local Payment Methods are
regulated. To offer them, we must obtain payment licences
and comply with the relevant Anti Money Laundering and
Counter Terrorist financing rules. Getting these licences
is costly and time consuming. The fact that we have the
capability to offer regulated payments in 50 markets is a
significant competitive advantage, one that is difficult to
replicate and impossible to do quickly.

Boku’s Strategy

Our strategy is to expand from the small pond, the niche
market of DCB, addressing a market measured in tens
of billions, into the Big Pond of LPMs, where the TAM is
measured in trillions. Whereas DCB is restricted to digital
entertainment, Local Payment Methods are suitable for all
types of goods and services.

Nevertheless, Boku will focus its effort on the parts of the
market, where we have the best opportunity to succeed.

Sales strategy

Many merchants sell internationally, but it costs money and
takes expertise to manage multiple payment providers. The
organisations who do this tend to be big and one of Boku’s
biggest assets is our ability to work with the world’s biggest
merchants. Our efforts are concentrated on the global digital
giants. We have contracts with and payment integrations to all
of these giants and work to upsell into all of their divisions and
to cross-sell into their competitors. We call this the Big Pond.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

11Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Mobile-first network strategyOur mobile-first payment network currently spans more than 7.3 billion accounts, split 57%/43% between our traditional DCB Issuers and new LPMs. Our efforts will be concentrated on expanding the LPMs, especially A2A. The potential for growth from these payment types is greater than DCB, where we have already built almost all of the relevant payment connections. We focus our efforts by responding to merchant demand and by integrating LPMs that are already successful. We do not aim to pick winning LPMs speculatively when they are starting out, but rather to integrate such payment methods that are currently being used intensively within the local market. Operations strategyWe are investing in our operational capabilities, principally to accommodate the growth in our business. The cost of operating the payment platform is broadly fixed for a given set of capabilities, but, as we move further into the Big Pond, we need to build out new capabilities, including in our settlement services, our network of regulated entities, and merchant information and analysis systems.Starting to show through in the numbersAs is outlined in more detail in the CEO report, 2022 has been a breakthrough year for this strategy with growth increasingly being driven by the new Local Payment Methods. This trend will continue into 2023 and beyond. More and more global merchants are trusting Boku to help them recruit new users across a wider set of payment methods. We are now starting to swim more confidently in the Big Pond. Chief Executive Ofﬁcer’s Report

Press reviews of the financial climate in 2022 describe
it as a year that the macro climate turned negative. The
end of the era of cheap money. Interest rates rose as
Central Banks tried to get a grip on double digit inflation;
war broke out in Ukraine; food and energy prices rose in
response; the continuing COVID pandemic affected supply
chains in China. All the macro indicators turned negative.

Tip O’Neill, the former US House Speaker said that “all politics
is local”. There’s a corollary, “all company results are micro”.
Despite the macro headwinds, 2022 was a transformational
year for Boku.

In my last two CEO statements, I have outlined Boku’s
ambition to go from the world of Direct Carrier Billing (“DCB”),
into the larger market represented by general purpose, Local
Payment Methods (“LPMs”) – mobile wallets account for
most of the spending on the internet, exceeding even cards.
Becoming a successful processor for LPMs means expanding
from the multi-billion dollar DCB market, into general
ecommerce, where the value of transactions is measured in
trillions – to move from being a big fish in a small pond, into the
Big Pond. 2022 was the year in which this ambition became
measurably closer to reality.

We started the year by completing the disposal of our Identity
division to Twilio Inc. (“Twilio”) for a maximum transaction value
of $32.5m, allowing us to focus our efforts on payments,
and we ended it with most of our growth coming from LPMs.
Along the way we announced a major new deal for LPMs with
Amazon and launched with the world’s largest wallet in China,
the world’s biggest video games market.

As Ella Fitzgerald sang: “This could be the start of something big”.

LPMs: A fragmented market

All around Asia, the Middle East, Latin America and Africa, as
consumers started to go online, different mobile wallets sprang
up to service their needs. Collectively these new LPMs account
for most online purchases worldwide, but that spending is
spread over dozens of different incompatible companies. Local
merchants can cope – they only have to connect to two or
three brands of wallet to get the coverage that they need, but
global merchants are faced with a considerable problem – to
offer Local Payment Methods in all the markets where they
operate they would have to make scores of different payment
connections and manage many separate collections and
reconciliation processes. It is essentially technically infeasible.
Their problem is our opportunity: one which plays to Boku’s
strengths, honed over a decade of integrating and optimising
incompatible Mobile Network Operator systems.

2022 was the year in which global merchants started to
accelerate their adoption of LPMs and this trend benefited Boku.

Mobile-first payment network

For many years Boku has had a big DCB network. Over
the past two years we have been supplementing the DCB
capability with LPMs. We’re not quite at the point of cross over
but, of the 7.3 billion accounts that can be reached through
the network, approximately 45% of them are now from LPMs.
In 2022, Boku’s network expanded to include new methods
in countries such as China, Vietnam, Pakistan, Saudi Arabia,
Nigeria, Tanzania, Brazil, Egypt and Taiwan.

This network of technical connections is supplemented by
a set of payment licences, partnerships and authorisations
that allow Boku to provide regulated payment services in 50
countries worldwide.

In 2022, a new payment licence was granted in the Philippines
and we’re in the final stages of gaining a licence in Malaysia.
We received in-principle approval for an Payment Aggregator-
Payment Gateway licence in India, giving us more flexibility to
operate in that country. These licences are hard to get and
take resources to maintain. They are essential to our business
and give us the capability to connect to LPMs and move
money around the world.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Volumes processed through the network were $8.9 billion, a
figure affected by the strong dollar. Taking out the effect by
using the average monthly exchange rates from the previous
year, the increase was nearly 20%.

Focus on big merchants

Most companies are happy to work with a single payment
processor. A one-stop shop to look after their payment needs
and minimise the internal support cost. For them a single
contract with a payment processor like Worldpay or Adyen will
satisfy their needs.

But the biggest global companies, with multi-billion dollar
revenues, manage their payments more actively, working with
multiple providers so as to get the best quality. For them, the
rewards from optimising their payment flows, even by small
percentages, can be considerable.

For them, good enough coverage is not good enough. They
don’t want just to see flags planted on the map showing a
capability to accept, they need those implementations to
deliver the best possible results.

Boku focuses its efforts on such merchants: we build
customised connections to payment issuers and major
merchants which deliver better results for our customers:
more new users and higher sales. In 2022 we delivered nearly
150 new connections for our merchants, an increase from the
prior year.

In 2022, we focused in on driving growth through LPMs for
large merchants. We developed new capabilities to support
both mobile wallets and Account to Account/Real Time
Payments, and have implemented daily settlement. We now
trade exclusively under the Boku name – discontinuing the use
of Fortumo brand – and have shifted resources in our Estonian
operation onto the LPMs for big merchants proposition.

Boku People

The United States motto — E Pluribus Unum: (Out of many,
one) — originally represented the fact that thirteen colonies
were coming together to form a single polity, it has come
to represent the way that different people from different
backgrounds came together to form a coherent culture. It
is a noble aim and one that could also be used to represent
Boku. We come from many different countries. We work in
many different countries – 24 at last count. We support many
different payment methods.

We are many. But we are also one.

Together Boku people work to help our customers to achieve
their goals. Together we work to sell to new customers.
Together we solve problems for our merchants. It is the very
diversity of Boku — with people situated all around the world
coming from different cultures, with different experiences
and backgrounds, beliefs and orientations – that gives us
our strength. Because Boku people are all around the world,
we can serve our customers better. Because we come
from different countries, we can understand our customers’
requirements better. And these things make us a better
company. Diversity at Boku is not just some buzzword or bolt-
on, dreamt up to make us look good in the Annual Report. It is
who we are. It is our edge.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

14Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022www.boku.comHow do we compete in the Big Pond?Because in LPMs we are not the big fish, we must earn our right to exist. Our competitors have more money and more people. But our people can ensure that a connection to Boku is more effective: one of our merchants told us that by using our connection they were able to increase their ARPUs by a double digit percentage. This level of performance has meant that most of our largest customers now work with Boku on LPMs, and their deployment speeded up over the course of the year, with just over twenty connections live in H1, growing to nearly fifty by the end of the year. What have been the results?The job that our merchants generally hire us to do is recruit and retain users. They know that they can reach some customers using payment cards. They come to us, a Local Payment Method processor, because those new payment methods help them to recruit new users.In December the number of active users, consumers who had at least one successful transaction or had an active bundle in the month, increased by 28% to 52.3 million, compared with December 2021Of these, LPMs made up 3.8 million or 7.2%, this was a 230% increase over December 2021. Moreover, since LPMs are processed using the settlement model at higher than average take rates, LPMs accounted for an even greater share of revenue. An average LPM user generates more than twice as much revenue as the average DCB user. For new users – a leading indicator of growth — LPMs took a 15% share, with 8.4 million users (up from 2.7 million in 2021) making their first ever payment on Boku using an LPM, out of a total of 56.7 million first time users across all payment methods and bundling.Chief Executive Officer’s ReportChief Executive Officer’s Report

Accelerating growth

New sectors

Growth in the first half of 2022, was affected by comparison
to the COVID boosted volumes in the first half of the previous
year. As this fell out of the comparatives and the volume from
new implementations, especially of Local Payment Methods
started to compound, the growth in the second half of 2022
was materially stronger. On a constant currency basis1, H2
grew 21% year on year, whereas growth in the first half, on
the same basis, was 8%. That acceleration was driven by
launches in big markets like China, where Boku launched with
a major merchant activating both Alipay, the world’s largest
wallet and the second largest one, WeChatPay.

Boku has also been able to break into new merchant verticals.
The digital advertising business is nearly twice as large as the
market for digital entertainment. When Boku only provided
DCB, the advertising segment was unavailable to us – you’re
not going to charge your advertising budget to your phone
bill. But by leveraging our existing payment connection, in
2022, we have been able to grow the number of LPM payment
connections to a major digital advertising platform from three
in one market in 2021 to 16 in nine countries in 2022. This
success gives us the credentials to sell our payment services
to other digital advertising companies.

If growth is good in good times;
it’s better in bad

Getting new users can be particularly important when times
are tough. At the start of 2022, Netflix reported slowing
subscriber numbers. But there was a bright spot: Asia. And
it was in Asia that Boku was helping them to recruit new
users through 27 different LPM and DCB connections. As an
executive acknowledged in a Bloomberg article: “Netflix is […]
attract[ing] sign-ups through innovative payment methods,
like allowing users to include their subscription fees in their
monthly phone bills or pay via digital wallets. […]The number
of new members signing up last year using alternative payment
methods more than tripled from the previous year.”

Outlook

2022 has been a breakout year. Boku’s growth became
primarily driven not by DCB, but by mobile wallets and
account-to-account/real time payments. By the end of the
year nearly 7% of our Monthly Active Users and more than
double that percentage of our revenue came from these newer
payment methods. I expect both those figures to grow further
in 2023. With new customer wins and launches of deals, such
as the new multi-year Amazon LPM contract, Boku is well set
for further progress into the Big Pond. In the immortal words of
Bachman Turner Overdrive: “You ain’t seen nothing yet”.

Jon Prideaux
Chief Executive Officer
20 March 2023

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Chief Financial Ofﬁcer’s Report
Strong underlying growth and key global merchant wins

Group results

2022 was a key year for Boku as we disposed of our Identity
division in February, saw significant take up of our newer
Local Payment Methods (‘LPMs’) from our global merchant
base including our first launches with the world’s largest
eWallets in China and the announcement of a multi-year
global agreement for LPMs with Amazon validating our
investment in building out a global LPM network.

Revenues and Adjusted EBITDA2 were both impacted by
significant currency headwinds but on a constant currency
basis1 revenue growth was up 14% and the underlying metrics
of users and payment volumes process showed similar strong
growth. The profit on disposal of the Identity business helped
increase group net Profit to $28.9 million (2021: $6.3 million)
and the cash proceeds helped balances increase to $116.5
million at year end (2021: $62.4 million).

Consolidated Statement of
Comprehensive Income and restatement
of prior year comparatives

Following the disposal of Boku’s Identity division on 28
February 2022 the Consolidated Statement of Comprehensive
Income includes the results relating only to the continuing
Payments business. The Identity results are shown separately
under “discontinued operations”. The prior year comparatives
have been restated accordingly.

Payments division (continuing operations)

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
payments network has now expanded to offer connections to
offer Local Payment Methods (‘LPMs’) such as eWallets and
Account to Account (‘A2A’) (also known as Real Time Payments
(‘RTP’)) through its ‘mobile-first’ payments platform. These
services are provided to the world’s largest digital merchants
including Apple, Netflix, Meta/Facebook, Google, Amazon,
Spotify, Microsoft and Sony, mainly on an exclusive basis.

In 2022 the Payments division performed strongly on an
underlying basis when looking through significant currency
headwinds, as the US dollar (our reporting currency)
appreciated against almost all major currencies, with
revenues increasing to $63.8 million (2021: $62.1 million) an
increase of 14% on a constant currency basis1 (and 21%
growth in H2), which in turn delivered Adjusted EBITDA2 of
$20.5 million (2021: $22.9 million). Growth comes from both
from the existing merchant base and also from adding new
carrier and LPM connections to new and existing merchants.

Total Payments Volume (“TPV”)4 increased to $8.9 billion
(2021: $8.2 billion) despite currency headwinds while Monthly
Active Users (“MAUs”) grew by 28% to 52.3 million (2021: 41.0
million) and 56.7 million new users made their first payment or
bundling transaction with Boku during 2022.

We saw particularly strong growth in the new Local Payment
Methods: An eight fold increase in volumes processed from
LPMs including eWallets and Account to Account/Real Time
Payments, compared to 2021. A 230% increase in MAUs
of LPMs, to 3.8 million in December 2022 compared to 1.1
million in December 2021, while new users of LPMs increased
considerably to 8.4 million in 2022 (2021: 2.7 million).

In 2022 Boku completed approximately 150 new payment
launches with existing and new merchants including Google,
Apple, Meta, Microsoft, Amazon, Disney, Netflix, Spotify,
Samsung, Sky and EA Games, through Boku’s expanded
mobile-first payments network. Of these launches, around 50
were for LPMs and more than 30 for bundling programmes.

The blended average take rate was broadly stable at 0.73%
however contracts for the new Local Payments Methods,
which are all settlement model and so we handle the cash
and charge higher fees, have generally been at higher overall
take rates than average and so we expect our blended take
rate to increase in future years.

We continued to invest in Boku’s mobile-first payments
platform in 2022 as we further expanded its capabilities
to include LPMs. The mobile-first payments platform has
the capacity to process volumes considerably in excess of
today’s peak transaction rates.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The Fortumo brand has now been discontinued both
internally and externally, and the Payments business now
trades solely as Boku. As a result, the Fortumo brand name
included in intangibles, which was separately valued as part
of the Purchase Price Allocation (“PPA”) work at the time of
the acquisition of Fortumo in July 2020, was fully impaired in
the year.

Adjusted Operating Expenses5 (continuing operations)

Adjusted Operating Expenses5 for the continuing Payments
business increased to $41.5 million (2021: $37.6 million).

Period ended
31 Dec
2022
$’000

Period ended
31 Dec
2021
$’000

Gross profit

61,993

60,511

Adjusted EBITDA2

20,464

22,933

Adjusted
Operating Expenses5

41,529

37,578

Identity division (discontinued operations)

This was due to a number of factors including payroll
increases due to wage inflation and the return of international
travel – but primarily due to the continued investment
into building out Boku’s ‘mobile-first’ Payments network
globally as we added capabilities in eWallets and Real Time
Payments/Account to Account globally, including a further
expansion of our regulatory footprint by adding new licences
and legal entities. These regulated payment capabilities now
cover more than 50 markets. A recent highlight is the granting
of a payments licence in the Philippines.

The Group capitalised $4.9 million of internally generated
intangible assets during the year compared with $5.0 million
in 2021.

Boku’s Identity division was sold to Twilio on 28 February
2022 for a maximum consideration of $32.5 million with
Boku receiving the bulk of the consideration on the date of
the deal with $6.5 million held back by Twilio for a maximum
of 18 months subject to meeting certain criteria. Included
in this total is an indemnity of $5.6 million against possible
future claims for 18 months from the transaction date which
expires at the end of August 2023. No potential claims have
been identified as at the date of this report and management
believes the likelihood of any claims under this indemnity to
be extremely low and therefore that it is highly likely that the
full amount will be received. As a result, the full amount has
been included in the profit from discontinued operations in
the Statement of Comprehensive Income. This amount is
disclosed within current assets on the Statement of Financial
Position.

The sale was well timed from a valuation perspective and
resulted in a Profit on disposal of $25.2 million net of disposal
costs. This along with the Identity losses incurred in the two
months of trading to 28 February 2022 are shown in the
‘Discontinued Operations’ line on the face of the Statement of
Comprehensive Income.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

18Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022www.boku.comThe net consideration received on 28 February 2022 was $17,665,539 with a further $8,125,000 of cash consideration paid directly to Citibank by Twilio to repay Boku’s term loan with Citibank in full on the day of the sale. A further $155,972 was received from Twilio on 22 July 2022 as part of the agreed three month working capital adjustment. On 8 December 2022 a further $600,000 was received from Twilio as payment in full of the Specific Indemnity Holdback per the Identity SPA which was part of the $6,500,000 contingent consideration.The remaining deferred consideration of $5.6 million relating to the final indemnity holdback will be released to Boku net of any claims by the end of August 2023 as detailed above. The group is now debt free and had cash balances of $116.5 million at 2022 year end (31 December 2021: $62.4 million).Adjusted EBITDA2 Adjusted EBITDA2 for the full year 2022 was $20.5 million (2021: $22.9 million). As mentioned previously, revenues and Adjusted EBITDA were impacted by significant currency headwinds as the US dollar strengthened against almost all major currencies. We also continued our investment into expanding Boku’s mobile-first network but still managed to achieve Adjusted EBITDA margins of over 30%. Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, adjusted for share based payments expense, forex gains/losses and exceptional items. It excludes any contribution from the discontinued Identity division. Net profit from continuing operationsNet profit from continuing operations before interest and tax for 2022 was $4.5 million (2021: $10.6 million) as we incurred a fair value adjustment charge of $3.47 million in relation to warrants granted in September 2022 to a subsidiary of Amazon Inc, Amazon.com NV Investment Holdings LLC (see note 3) and impaired the carrying value of the Fortumo brand by $1.26 million (included in exceptionals). This can be broken down as follows:Chief Financial Officer’s Report• Other income of $0.8 million relates to income from Boku providing ongoing accounting services to Twilio following the sale of the Identity business to enable a smooth transition. This amount has been excluded from Adjusted EBITDA2 as a non-trading, non-recurring item. (In 2021 ‘Other Income’ of $1.08 million related to the difference between the fair value of contingent consideration relating to the acquisition of Fortumo as determined at 31 December 2020 and the actual amount paid to Fortumo shareholders. This amount was excluded from Adjusted EBITDA2 as a non-trading, non-recurring item).• Gross margin increased to $62.0 million/97% (2021: $60.5 million/97%)• Depreciation and Amortisation charges decreased to $5.7 million (2021: $6.3 million) • Foreign Exchange movements resulted in a loss of $0.8 million (2021: $0.1 million gain) • Share Based Payments expense fell to $5.2 million from $6.4 million in 2021. The Share Based Payments expense comprises the IFRS 2 charge and related National Insurance expense. The current period includes the part reversal of the National Insurance accrual as the share price was lower at year end than at 31 December 2021. Boku continued with its policy of offering all staff share based awards annually. RSU and stock option charges are spread over three and four years respectively, and in line with their vesting conditions, from the date of grant. Of the $5.2 million booked in 2022, $0.3 million was paid out cash (via employer’s NI), the remainder was non-cash. All comparatives are for the continuing payments business only.• Exceptional Items in the period were $5.1 million (2021: $0.8 million) of which :• $3.47 million relates to the year end fair value movement in relation to the Amazon warrants (see note 3) (2021: nil)• $1.26 million relates to the impairment of the intangible relating to the Fortumo domain and ‘brand’ which has now been discontinued (2021: nil)• The balance of $0.3 million is mainly charitable donations (2021: 0.01 million). Financing expenses remained largely the same at $0.7 million in 2022 (2021: $0.8 million). These costs relate to Interest on leases and bank loans/overdraft. Although the loan taken to finance the Fortumo acquisition was repaid in full on 28 February 2022 from the proceeds of the sale of Boku’s Identity division, the amortisation of the amount on the statement of financial position relating to costs of setting up the loan were accelerated when the loan was repaid.• Tax credit of $0.2 million in the year (2021: $1.9 million credit). Please see Note 12 for details.19Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2021Profit from discontinued operations, net of taxProfit from discontinued Identity business of $24.6 million includes a $25.2 million profit on disposal of Boku’s Identity business to Twilio on 28 February 2022 net of disposal costs, and offset by the Identity trading loss for the two months to end of February 2022 (see note 4).Net Profit after taxThe Group reported a net profit after tax of $28.9 million for the period (2021: $6.3 million) primarily driven by profit from the disposal of the discontinued Identity division of $24.6 million. Excluding this profit on disposal, profit after tax was $4.3 million (2021: $11.8 million)Chief Financial Officer’s Report

Consolidated Statement
of Financial Position

• Intangible assets

Goodwill

Fortumo domain name,
trade marks etc

Other intangibles

Intangible assets

31–Dec
2022
$’000
41,733

–

14,497

56,230

31–Dec
2021
$’000
45,379

1,441

16,297

63,117

Consolidated Statement of Cashflows

During the year there was a net increase in cash and cash
equivalents of $59.6 million.

Cash from operations before working capital changes
increased from $19.5 million to $22.0 million broadly in line
with prior year, however we saw large increases in trade and
other payables of $40.3 million (2021: $15.9 million reduction)
due to timing of payables to merchants as daily settlement
to merchants of funds received from e-wallets was delayed
over the Christmas shut down with their agreement. This was
partly offset by an increase in receivables of $12.3 million
(2021: decrease of $8.7 million) for similar reasons as receipts
from carriers and wallets were delayed. This situation partly
reversed after year end.

Also during the year we received proceeds from the sale of
our Identity business (net of cash disposed) of $26.5 million
from which we paid down our remaining term loan of $8.1m
in full, on 28 February 2022. We also purchased $1.8 million
of our own shares to cover employee RSU awards in the year,
per note 24.

• Closing cash balances were $116.5 million at the end of
2022 (including restricted cash balances of $17.0 million)
up from $62.4 million on 31 December 2021. This includes
proceeds from the disposal of Boku’s Identity division on
28 February 2022 to Twilio, which were used to pay down
remaining bank debt with Citibank of $8.1 million. Boku
also has a Revolving Credit Facility (“RCF”) of $10.0 million
with Citibank. At year end the RCF facility had not been
drawn down.

• The average daily cash balance, a measure which smooths
out the effect of carrier, eWallet and merchant payments,
were $98.8 million in December 2022 (December
2021: $50.8 million) up from $63.3 million in June 2022
(unaudited).

• Deferred tax assets of $3.4 million were recognised at 31

December 2022 (compared to $3.1 million at 31 December
2021). 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 2022 by
$54.4 million compared with $22.9 million at the 2021 year
end.

• Intangible Assets were $56.2 million as at 31 December

2022, compared to $63.1 million at 31 December 2021 due
to amortisation of certain intangibles and disposal of the
Identity business. The Payments CGU (cash generating
unit) was assessed using discounted cashflows and
determined that no impairment was needed.

• Other intangibles and goodwill – the Fortumo brand and
domain name which was separately valued as part of the
PPA work at the time of the acquisition of Fortumo in July
2020 and included in intangibles, has been written down
from $1.26 million to zero ($1.44 million at 31 December
2021 less amortisation of $0.18 million) as the Fortumo
brand is no longer being used internally or externally.
We assessed remining other intangibles and goodwill for
impairment and deemed that no impairment exists at 31
December 2022.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

21Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Amazon contract and warrantsOn 16 September 2022, an Amazon Inc. subsidiary, Amazon.com NV Investment Holdings LLC (“Amazon”), signed a multi-year agreement with Boku to connect to new Local Payment Methods in multiple geographies which validated Boku’s move into offering the new Local Payments Methods including eWallets and real-time payments via our expanded mobile-first network. In conjunction with the agreement, Boku entered into a stock warrant agreement with Amazon allowing them to acquire up to 3.75% (11,215,142 shares) of Boku common stock at 81.20p per share based on Amazon spend with Boku over a seven year period. 747,676 shares of common stock vested immediately on the signing of the warrant agreement on 16 September 2022. The warrant valuation resulted in recognition of a $1.7 million warrant contract asset and a $5.2 million contract liability as at 31 December 2022. Please refer to Note 5 for full details.Looking AheadThe divestment of our Identity business enabled 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’ payments network. We are encouraged by the 2022 results despite significant currency headwinds, particularly the progress of our new Local Payment Methods where volumes and users have increased significantly, including the announcement that Amazon has signed a multi-year agreement with Boku to connect to these new payment types in multiple geographies. As flagged previously, we expect to make continued further investment into building out our LPM network but we also expect this to flatten in FY24 and beyond after this heavy investment phase.We are pleased with the 2022 financial results and believe the company is well positioned for 2023 as a pure play payments company to exploit the substantial opportunities it has. We look forward to the future with confidence.Keith ButcherChief Financial Officer 20 March 2023Highlights

Financial Highlights

• Revenues up 3% to $63.8 million (2021: $62.1 million) despite significant

currency headwinds.

• On a constant currency basis1, revenues were 14% higher than 2021.

• H2 2022 revenues were 21% higher than H2 2021 on a constant currency basis

• Adjusted EBITDA2 of $20.5 million (2021: $22.9 million) at 32% Adjusted EBITDA

margin despite currency headwinds and continued investment in Boku’s mobile-first
payment network.

• Net Profit after tax of $28.9 million (2021: $6.3 million). The increase was largely

due to the profit from discontinued operations after tax of $24.6m.

• Net profit from continuing operations before interest and tax for 2022 was $4.5 million
(2021: $10.6 million) as we incurred a fair value adjustment charge of $3.47 million in
relation to Amazon warrants granted in September 2022 and impaired the carrying
value of the Fortumo brand by $1.26 million.

• Group cash was $116.5 million at year-end, up from $67.8 million at 30 June 2022.

• The Group is debt free.

• The average daily cash balance, a measure that smooths out the effect of carrier

and merchant payments, was $98.8 million in December 2022, up from
$63.3 million in June 2022.

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

was $22.0 million (2021: $19.5 million).

Following the disposal of Boku’s Identity division on 28 February 2022, the results
shown are for the continuing Payments division. The prior period comparatives in the
Consolidated Statement of Comprehensive Income have been restated accordingly
and exclude the Identity division results.

1 Constant currency calculated by applying the monthly average foreign exchange rates in 2021 to the actual 2022 monthly results.
2 Adjusted EBITDA is defined as: Earnings before interest, tax, depreciation, amortisation, non-recurring other income, share based payment expense,
foreign exchange gains/(losses) and exceptional items (see Note 9). Management has assessed this performance measure as relevant for the user of
these financial statements.
3 Monthly Active Users (MAU) data includes all users who successfully processed a payment or had an active bundle during the last month of the period.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Non-Financial KPIs

• 28% increase to 52.3 million Monthly Active Users (“MAUs”)3 in December 2022

(December 2021: 41.0 million)

• 56.7 million new users made their first payment or bundling transaction with

Boku during 2022.

• TPV4 of $8.9 billion in 2022, up from $8.2 billion in 2021 despite currency headwinds.

On a constant currency basis1, TPV was 20% higher than 2021.

• Particularly strong growth in the new Local Payment Methods (“LPMs”):

• 700% increase in volumes processed from LPMs including eWallets and

account to account/real time payments, compared to 2021.

• 230% increase in MAUs of LPMs, to 3.8 million in December 2022 compared

to 1.1 million in December 2021

• 200% increase in new users of LPMs to 8.4 million in 2022 (2021: 2.7 million).

Operational Highlights

• New multi-year global Local Payment Method contract signed with Amazon

in H2 2022.

• Launched in China on Alipay and WeChat Pay wallets for global games merchant.

• Approximately 150 new launches in 2022 with existing and new merchants including
Google, Apple, Meta, Microsoft, Amazon, Disney, Netflix, Spotify, Samsung, Sky
and EA Games, through Boku’s expanded mobile-first network. Of these launches,
around 50 were for LPMs and more than 30 for bundling programmes.

• Continued investment in Boku’s regulated payment capabilities which now cover

more than 50 markets.

• Mobile-first payments network expanded to reach over 7.3 billion end user accounts,

45% of which are non-Direct Carrier Billing (“DCB”).

• Identity business sold to Twilio on 28 February 2022 for a maximum consideration

of $32.5 million.

4 TPV (Total Payments Volume) is the US$ value of transactions processed by the Boku platform and includes transactions from DCB, Bundling, eWallets
and account to account/real-time payments. More bundling programmes are included in 2022 vs. prior years as these contracts switched to an ad valorem
pricing model.
5Adjusted Operating Expenses is defined as: Gross profit less Adjusted EBITDA (see note 9).

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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 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 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 2022

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
behaviour. The impact of changes to the structure of
the app store payment market, competition, pricing
pressure, Payments market changes, could result in
a material loss of revenue and profit for the Group.
Loss of market share and/or a major merchant
customer account and/or a major issuer relationship to
competitors would have a significant affect with regard
to loss in revenue.

Risk level: Medium
Risk tolerance: Amber
Risk movement: Reduced

• Investing in new products, markets and technologies and

improving relationships with key merchants, carriers, and LPMs.

• 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 on new 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 potential app

store market changes.

Inability to evolve the organisation’s processes,
systems and tools to scale efficiently to bring on
new customers and make new connections.

As Boku is growing and continuously evolving, systems
and production, need 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.

• Identify current and future needs of new systems and processes

(production, etc.) to ensure these can support the transactional and
settlement solution requirements of target customers and issuers
(LPM, A2As) in new markets.

• Grow employee skills and experience through recruitment of

industry experts from competitors and market.

• Investing significantly in 2023 in back office systems automation

and headcount.

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

Risk level: High
Risk tolerance: Amber
Risk movement: Unchanged

Product and Platform (AWS).

• Further team optimisation plans.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Principal Risks and Uncertainties

Risk

Increase in regulation

Additional regulatory license requirements for Boku due
to expansion of product offering and target markets.
These additional requirements could require changes to
the Group’s existing processes and systems to comply.

Changes in the regulatory landscape could have
adverse effects on Group’s existing processes and
provision of services. Examples can be:
• 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).

Risk level: Medium
Risk tolerance: Amber
Risk movement: Reduced

Mitigation

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

manage risks and ensure compliance with regulations.

• Liaise with local outside counsels, attending industry events and

associations member meetings to stay current with any significant
changes relevant to our business.

• Increase Compliance team to 4 and plan to hire an internal audit

function in 2023 to focus on regulated activities.

• Ensure sufficient compliance support and addition of 3 Line of

Defence mechanism. That is, Ops Staff, Compliance and Internal
audit to test regulatory compliance and report as required to the
Group Boards.

• Establish internal task force to review ahead of launch of a new
service/product in order to determine any regulatory, legal and
operational impact and assess timeline and project feasibility.

• Invest in solutions such as third-party horizon scanning that
improve the Group’s ability to manage risks and ensure
compliance with regulations.

• Follow European Commissions template of Standard Contractual

Clauses (SCC) and external DPO to provide expert advice.

Failure of issuer intermediaries to pay the amount
due to merchants

• Develop 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.

Risk level: Low
Risk tolerance: Green
Risk movement: Unchanged

• An increasing proportion of Boku’s issuer intermediaries are
regulated, and as a result the risk of failure in settlement is
decreased due to safeguarding obligations of regulated entities.

• Effective credit control and management of receivables.

• Creating direct relationships with issuers and reducing

dependency on intermediaries.

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

by carriers or intermediaries

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

third parties.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Risk

Mitigation

Significant fraud events or social engineering
attack

• Recruiting specialised, experienced fraud prevention staff

• Review investment opportunities in solutions that improve the

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.

Risk level: Medium
Risk tolerance: Amber
Risk movement: Unchanged

Group’s ability to manage risk

• Develop comprehensive internal policies and procedures

• Ensuring there are systems and experienced staff in place to

defend against potential cyber security threats.

• Regularly review risk rules to ensure they are effectively monitoring

customer behaviour.

Cyber Security and Data Protection breeches

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

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: Unchanged

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.

• Significant investment in 2022 in cyber security tools and systems

to mitigation potential risks

• Broaden existing ISO 27001 certification to cover all Boku

business lines.

Failure to effectively integrate newly acquired
business

• Developing the skills and capabilities of staff as part of talent

management.

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: Unchanged

• 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 2022

Principal Risks and Uncertainties

Risk

Mitigation

Failure to attract and retain the best talent

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 and 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: Medium
Risk tolerance: Green
Risk movement: Increased

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: Unchanged

• Creating opportunities within the Group for personal

development and career enhancement.

• Recruiting experienced HR staff and working with specialised

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

• Implement succession planning for key executives and

employees

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 created a “risk universe” which list of risks and their

velocity we monitor regularly

• 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 develop
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 92 countries globally
and therefore its revenues are well spread. Connections to
carriers in Russia have been impacted.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

29Stock code: BOKUBoku, Inc. Annual Report and Accounts for the year ended 31 December 2022Board of Directors

Dr. Richard Lawrence Hargreaves
Independent Non-Executive Chairman

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. He currently
serves as Boku’s Independent Non-Executive Chairman

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.

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.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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 also joined the Board of LHV UK Ltd in May 2022 as
a Non-executive Director. Keith was awarded Finance Director of the Year at the
Quoted Company Alliance Awards (QCA) 2014.

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 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.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Board of Directors

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 Communications 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.

Meriel Lenfestey
Independent Non-Executive Director

Meriel is an experienced customer focused technology entrepreneur and adviser,
having worked across multiple sectors. She is currently a member of several
other boards of companies listed on the London Stock Exchange including
International Public Partnerships Ltd, and Bluefield Solar Income Fund Ltd, as well
as some private and third sector roles including Jersey Telecom where she is Chair.
Mrs. Lenfestey is the Chair of Boku’s Remuneration Committee.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Loren I. Shuster
Independent Non-Executive Director

Loren I. Shuster currently serves as the Chief People Officer & Head of Corporate
Affairs on the Executive Leadership Team at LEGO Group. Before joining the
LEGO Group, he held senior leadership positions within commercial and marketing
at Google, and before that at Nokia and other multinationals. Loren is also a Board
Trustee of the Institute of Business Ethics in the UK.

Mark Britto
Non-Executive Director

Mark Britto has over 20 years as an entrepreneur, sales and financial services
executive. Mark served as a senior executive for PayPal in various capacities for 5
years. He also served 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 First
USA and Bank of America.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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 and marketing, charged with finding
innovative new solutions that help global merchants reach new paying customers.

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

Chris Newton-Smith
Chief Operating Officer

Chris has more than 20 years of experience in B2B software, working in payments,
mobile, digital, and hospitality businesses. At Boku, Chris leads the Technology,
Operations, Human Resources, Information Technology & Security, and Compliance
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.

Previously, Chris was General Manager, Europe, Middle East, and Africa (EMEA)
and Chief Product & Marketing Officer at Redknee Solutions (now Optiva) as the
company grew from a Canadian start-up to a listed global leader in monetisation
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 2022

www.boku.com

Mark Stannard
Chief Business Officer

Mark has over 25 years’ experience in mobile, digital and fintech start-ups and
major PLC’s. At Boku he leads the commercial organisation, which has brought
the biggest digital brands onto its payment platform: Apple, Meta, Spotify, Sony
PlayStation, Google, Netflix, Microsoft and most recently Amazon.

As Boku’s Chief Business Officer, Mark has direct responsibility for Boku’s market-
leading network of 400 local payment connections, including digital wallets, A2A
banking Apps and carriers.

Previously, Mark held positions at Deutsche Telekom & Buongiorno-Vitaminic
(which was acquired by 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 5 major record
labels and later brought leading film & TV brands to mobile – Spider-Man, Pink
Panther & Transformers.

He holds a Masters in Business Administration from the University of Cambridge.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Corporate Governance Report
Chair’s Introduction

Dear Shareholder,

As Chair of the Board of Directors of Boku Inc, it is my responsibility to ensure that the Company has both sound corporate
governance and an effective Board, including leading the Board effectively, overseeing the Group’s corporate governance model,
communicating with shareholders and to ensure that the highest levels of corporate governance are maintained throughout the
Company and also at Board level.

Boku has decided to adopt the Quoted Companies Alliance Corporate Governance (the “QCA Code”), which requires AIM-quoted
companies to adopt a ‘comply or explain’ approach in respect of the application of guidance contained within. The following report
sets out how we do this. It also covers how the Board and its committees operated in 2022 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/.

Dr. Richard Hargreaves
Non-Executive Chair
20 March 2023

Statement of Compliance

Application of the QCA Corporate Governance Code

Principle

Deliver Growth

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

2. Seek to understand and meet
shareholder needs and expectations

Application/Evidence

At Boku we seek to develop an entrepreneurial and supportive culture across our
business so that these values are integral to everything else we do.

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 11.

The Board engages with shareholders via a variety of channels and activities
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.

The main day-to-day engagement with shareholders and prospective investors is
carried out by the Chief Executive Officer and Chief Financial Officer and time to time
by our Chair. 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 and discussed to ensure that the Directors
have a clear understanding of shareholders’ views and expectations.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Principle

Deliver Growth

Application/Evidence

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

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 on pages 24 to 28.

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
Chair (Richard Hargreaves), two Executive Directors: the Chief Executive Officer
(Jon Prideaux) and the Chief Financial Officer (Keith Butcher) and five Non-executive
Directors (Mark Britto, Stewart Roberts, Charlotta Ginman, Meriel Lenfestey and
Loren I. Shuster). Four of the Non-executive directors and the Non-executive Chair
are considered independent.

The Board holds at least six regular meetings per year and has also created separate
Audit and Remuneration Committees comprising of Directors with the necessary
skills and knowledge to discharge their duties and responsibilities effectively.

Both Executive Directors are full time employees. Non-executive Directors are
required to devote sufficient time to prepare for and attend regular Board meetings,
any ad hoc Board sessions, their Committee duties and other stakeholder
engagement.

Further details of the current directors and a note of those who are considered to be
independent are set out on page 30.

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 30
to 33. Collectively, our team has all the necessary skills and experience, to carry out
the Group’s strategy and business model effectively.

They keep their skills up to date through appropriate training, including an annual
refresher Directors’ training on AIM rules provided by the Nomad.

Stewart Roberts is the senior independent director and he is available to speak with
shareholders concerning the corporate governance of the Company. 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.

The Remuneration Committee engaged an external remuneration consultant to
provide advice on the structure and presentation of Executive and Non-executive
compensation.

The latest review of Board effectiveness did not highlight any areas of concern.
Additionally, neither the Chair or Chief Executive have received any representations
to this effect.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Corporate Governance Report

Principle

Application/Evidence

Maintain a Dynamic Management Framework

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

In line with its standard practice, the Board has undertaken a formal annual
evaluation survey of its own performance and effectiveness, including of the
Company’s committees.

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

The evaluation which was discussed at the Board demonstrated overall positive
results of the performance of the Board and committees, by recognising the
strengths suggesting improvements where appropriate.

The board evaluation process reviews performance against a set of criteria which
includes company strategy, board skillset, composition and succession planning,
stakeholder engagement and the effectiveness of the Board committees. The Board
reviews the criteria to ensure that the evaluation survey remains relevant. Following a
recent review of the survey, an ESG question was also added to the survey.

The Board reviews its composition and succession planning following the board
evaluation survey during a meeting. During 2022, the Board appointed two new
independent Non-executive Directors. In addition, succession planning is an item
included in the Company’s risk register and is subject to regular review by the Audit
committee and Board.

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.

The Company’s culture is guided by many different activities, which include regular
senior management meetings and feedback following 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
such as diversity, equity and inclusion, whistleblowing and anti-bribery assist in
embedding a culture of ethical and inclusive behaviour for all employees.

An outline of the corporate culture promoted by the Board is set out in the section
of the Company’s website headed Core Values and is entirely aligned with the
Company’s objectives and strategy.

The Chair and other Non-Executive Directors regularly meet with employees without
Executive Directors present so as to gauge the health of the company’s culture.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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

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
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 are set up by the Board to consider specific
issues when the need arises.

The roles and responsibilities of the Chair, 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 28.

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

Amongst other things the Chair 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

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.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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

(continued)

Principle

Build Trust

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

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 prepare effectively. 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 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.

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.

Application/Evidence

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

• Board: page 41
• Audit Committee: page 43
• Remuneration Committee: page 46

Information about shareholder voting at the 2022 Annual General Meeting of the
Company is set out on Boku’s website.

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 2022
and retrospective years are available from the Company’s website.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The Board Composition
and Responsibilities

The Board currently consists of a non-executive Chair,
the Chief Executive Officer, the Chief Financial Officer and
five Non-executive Directors. There is a clear division of
responsibilities between the Chair and the executive officers
and the Board considers four 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 Prideaux and Mr Britto are up for re-election and Mr
Shuster for election at the Annual General Meeting scheduled
for 24 May 2023. The directors evaluate the balance of skills,
knowledge and experience of the Board when defining the
role and capabilities required for new appointments.

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.

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 separate committee.

Audit committee

The Audit Committee is chaired by Stewart Roberts and
its other members are Charlotta Ginman, Meriel Lenfestey
and Loren I. Shuster, 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 43.

Board Composition

Executive
Non-Executive
62.5% of the Board are independent

25%
75%

Board Tenure

0-3 years
3-6 years
Above 6 years

37.5%
37.5%
25%

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Corporate Governance Report

Remuneration committee

Share Dealing code

The Remuneration Committee is chaired by Meriel Lenfestey
and its other members are Loren I. Shuster and Stewart
Roberts, all of whom are independent Non-Executive
Directors. For part of the year the committee was chaired
by Richard Hargreaves, then Stewart Roberts, until the
permanent chair was appointed. Charlotta Ginman and
Richard Hargreaves stepped down during the year.

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.

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, Chair, 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 Chair and executive directors
of the Board. No director or manager is allowed to partake in
any decisions relating to their own remuneration. A full report
of the Remuneration Committee can be found on page 46.

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 24 May 2023.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Audit Committee Report
Committee Chair Introduction

Dear Shareholders,

I am pleased to introduce the Audit Committee Report for the
year ended 31 December 2022. 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, a new senior statutory auditor for the current audit
period is now in post, replacing the previous senior statutory
auditor who had been our Partner for the past five years and
stepped down after 2021 full year results.

Composition of the committee

The Audit Committee comprises Stewart Roberts (who serves
as chair), Charlotta Ginman, Meriel Lenfestey and Loren I.
Shuster. Mr Roberts and Mrs Ginman both served on the
Board and the Audit Committee throughout the full financial
year. Mrs Lenfestey and Mr Shuster both joined the Board
and Audit Committee in September 2022. Richard Hargreaves
stepped down from the committee during the year, when he
took up his position as Non-Executive Chair.

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 majority of committee meetings and meet privately
with committee members, in the absence of executive
management, at the beginning or end of a number of
committee meetings during the year.

The committee is required to meet a minimum of three times
during each financial year but chose to meet four times
during 2022.

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, review and monitor
the adequacy and effectiveness of 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.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Audit Committee Report

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 management’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 – subsidiary audits (other BDO firms fees)

Audit – related services (BDO review of interim accounts
and other audit related assurance services)

Total audit and audit related fees (BDO)

Audit services – subsidiary audits (non BDO firms fees)

2021
$

393,750

129,000

76,050

598,800

31,478

2022
$

358,822

138,228

27,400

524,450

–

Total audit fees

630,278

524,450

NOTES: The 2021 audit fees included an amount of $69,879 relating to the 2020 audit

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Internal Audit

In 2022 Boku employed an external company to provide
internal audit services for its Irish entity for the first time to
be compliant with its new regulatory obligations. Boku had
not previously employed an internal audit function – which is
considered typical for a company of Boku’s size. However, the
need for an internal audit function for the whole company was
also considered during the year and it has been decided and
agreed that in 2023, an internal audit function will be added
with a limited scope focused around controls and practices as
required by various local regulatory requirements for new local
payment methods and real time account to account payments
in a number of markets. This decision and the scope 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 levels versus its 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 24 to 29.

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 2022

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

Reviewed budgets, forecasts and financial reporting produced
by management, paying particular attention to the changes
required following the divestment of Boku Identity to Twilio
early in 2022, and the impact of significant core currency
movements during the year that could otherwise cloud the
clarity of business performance reporting.

Reviewed the key business risks of the company and agreed
the subsequent updates to the focus areas. (Please refer to
page 24 for a more detailed review of company’s principle
Risks and Uncertainties).

Reviewed and refreshed the process and schedule for
monitoring the Group’s risk management and controls
framework to keep it appropriate, current and ongoing.

Agreed the limited scope of a new internal audit function within
Boku in 2023 to encompass controls and practices as required
by various local regulatory requirements for new LPM’s and
A2A payments in a number of markets.

Reviewed the group’s Going Concern paper and Impairment
review paper produced by management.

Reviewed Discontinued Operations and the estimation
uncertainty over the recoverability of the holdback receivable
from Twilio.

Reviewed Share based payments, recognition of deferred
tax and the appropriateness of the classification of the
exceptional items.

Reviewed the Alternative Performance Measures (non GAAP
measures).

Reviewed the paper, accounting implications and the
estimation in the Amazon warrant contract asset and Amazon
warrant liability.

Reviewed in detail, and agreed the external auditor
services remuneration level for 2022 in light of market wide
inflationary pressures.

Looking ahead

The Audit Committee will review and monitor the enduring
suitability and impact of control processes, regulations and
risks associated with the rapid growth and expansion of LPM’s
and Real Time Payments.

Stewart Roberts
Audit Committee Chair
20 March 2023

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Remuneration Report
Chair’s Introduction

Dear Shareholder,

I am pleased to present the Directors’ Remuneration Report
for the 2022 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.

As the new Remuneration Committee Chair, I’m committed
to maintain Boku’s high standards of corporate governance
as an AIM listed company, transparency on remuneration
disclosures and flexibility to the specific incentivisation needs
of a US-based, high growth, global technology company.

Shareholders’ expectations are important in our decision
process and I welcome shareholder feedback at any
time. We will continue our practice of putting an advisory
resolution on remuneration to shareholders at our Annual
General Meeting.

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
2022, and briefly includes expectations for 2023. The
information provided fulfils the requirements of AIM Rule 19.

Note: 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.

Performance and Decisions on
Remuneration Taken during 2022

The Company performed well in the year and along with
most peer companies continues to navigate the high
inflationary environments in considering remuneration for
staff all around the world. Inflation in the markets in which
we operate varied between a low of 7% up to nearly 25% in
Estonia. An average inflationary rise of between 6.5% - 14%
was applied to all staff (depending on their location) with the
Executive Directors getting 6.5%. Growth was in line with
market expectations although the financial results show the
impact of material adverse foreign exchange headwinds.
The Remuneration Committee awarded Annual Bonuses to
the two Executive Directors to reflect the successful delivery
of strategy.

Awards were made to all employees (other than the senior
executive team) under the company’s Equity Plan in January
2022 and comprised time based Restricted Stock Units.
Additionally, during the year, the company made long term
incentive awards to senior executives and certain other key
employees in the form of Performance Restricted Stock
Units (subject to the meeting of performance conditions).
These stock units have vesting rules which are detailed in
note 24 and vest after three years.

I hope that you find the report helpful and informative.

Meriel Lenfestey
Remuneration Committee Chair
20 March 2023

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Remuneration Committee Composition

The Committee members are Meriel Lenfestey (Chair),
Stewart Roberts and Loren I. Shuster who are all considered
Independent Directors. Charlotta Ginman and Richard
Hargreaves stepped down from the Remuneration Committee
during the year. 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. Other members of the Board may be invited to
attend as appropriate to provide contextual information.

Matters regarding Non-Executive Director remuneration are
decided by the Executive Directors and Chair and are not a
matter for the Remuneration Committee.

Note: For some of the reporting period the Remuneration
Committee was chaired on an interim basis by Stewart
Roberts prior to the appointment of the new permanent chair
on 24 September 2022.

Remuneration Policy

The Company’s approach to remuneration is that the overall
package should be sufficiently attractive to attract, recruit,
motivate and retain individuals of a high calibre with significant
technical and strategic expertise in a competitive and evolving
global sector.

The Committee is focused on applying this approach to
attract, recruit, motivate and retain high quality Executive
Management who will deliver value for shareholders, whilst
remaining aligned with AIM principles.

Executive Directors

Executive Director remuneration consists of 5 elements:

• Salary
• Annual Bonus
• Long Term Incentives (LTI)
• Pension
• Benefits

More detail on each follows:

Salary: Base salary for each Executive Director is reviewed
annually by the Committee. In considering adjustments the
committee takes into account salary levels paid by companies
of a similar size and nature; the performance of the group
as a whole, the Director’s performance, experience and

responsibilities, and any cost-of-living increase applied to
staff pay. External benchmarking was done in 2022 which
confirmed executive salary levels remained aligned with market
norms following the prior year adjustments.

Annual Bonus: Executive Directors participate in the annual
bonus scheme. This delivers a bonus for the effective delivery
of strategy, as demonstrated through the achievement of
in year performance targets. The Company uses revenue,
Adjusted EBITDA and personal performance targets with
equal weightings. The company does not publish the specific
targets but they are broadly aligned with the figures for
expected performance in the market. If either revenue or
Adjusted EBITDA fall below 90% of targets no bonus will
be payable for either. The committee considers ESG factors
alongside other factors in the personal contribution element
and will look at the feasibility of including an ESG element
in the targets as the company’s ESG policy matures. The
Committee has discretion to make adjustments to the level of
bonus to avoid unintended consequences.

Jon Prideaux Chief Executive Officer
On-target performance: up to 50% of salary (split into 2 half
yearly payments)
Over performance cap: up to a further 50% of salary (paid
annually)

Keith Butcher Chief Financial Officer
On-target performance: up to 40% of salary (split into 2 half
yearly payments)
Over performance cap: up to a further 40% of salary (paid
annually)

Long Term Incentives: The Committee sees Long Term
Incentives as an important part of the remuneration of all staff,
to align them with shareholders and reward them for strong
performance. These are structured as Performance-based
Restricted Stock Units (PRSU) which have a normal vesting
period of three years after which they convert into common
shares. They are all subject to performance conditions relating
to Adjusted EBITDA targets set annually for each of the three
years. Details of awards currently held by Executive Directors
are set out later in this report.

Pension: The Company operates a stakeholder pension
scheme for all UK employees. Executive Directors participate
on the same basis as other employees.

Benefits: The Company provides the option for all employees
to participate in a private healthcare plan.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Remuneration Report

Non-Executive Directors

Service Contracts

Non-Executive Director remuneration consists of 2 elements:

• Fees
• Single issue of Restricted Stock Units (RSU)

They do not receive any performance or retention-based
incentives, or other benefits.

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

Executive Directors
Date of contract Notice period (months)

Jonathan Prideaux

1 May 2012

More detail on each follows:

Keith Butcher

1 October 2019

Non-Executive Directors
Date of contract Notice period (months)

Mark Britto

30 August 2017

Richard Hargreaves

8 August 2017

Stewart Roberts

1 January 2020

Charlotta Ginman

24 September 2020

Meriel Lenfestey

21 September 2022

Loren Shuster

21 September 2022

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. Mark Britto and Jonathan
Prideaux are up for re-election and Loren Shuster is up for
election at the 2023 Annual General Meeting.

Fees: The fees paid to the Non-Executive Directors are
determined by the Executive Directors and the Chair. They
receive an annual fee and additional fees for chairing board
committees. They are entitled to recover reasonable expenses
incurred in the performance of their duties.

RSUs: As an additional element of remuneration, as is normal
practice for US domiciled high growth companies Non-
Executive Directors are granted equity to align their financial
interests with those of shareholders. Boku Non-Executive
Directors appointed prior to 30 June 2022 were awarded a
single fixed grant of 103,276 RSUs on the first anniversary
of their appointment date which vests after approximately
2 years. No further allocations are made beyond this single
award, nor are there any performance conditions attached to
the RSUs.

In the light of some shareholder feedback and the likely growth
of the share price, the company has revised its Non-Executive
Director RSU policy to reassure shareholders that such single
grants of non performance related RSUs do not compromise
the Director’s independence. Non-Executive Directors
appointed to the Board after 1 July 2022, have the quantum
of their award set at twice the Director’s basic annual fee at
the 30 day Volume Weighted Average Price (VWAP) of the
shares on the appointment date rather than a fixed allocation.
This policy ensures that the value remains sufficient to align
Non-Executive Directors’ interests with shareholders without
impacting their ability to challenge management and be
independent. The RSUs will continue to have no performance
condition attached, and will vest on the third anniversary of the
Non-Executive Director’s appointment.

Note: The company recognises the points made by proxy
advisers but explains that to attract a high calibre of global
technology candidates and to align them with the interests of
all the Company’s stakeholders (shareholders and staff), an
equity component of remuneration is considered appropriate.
As Non-Executive Director RSUs are not tied to performance,
and are a single award, the Board is confident that they do not
impact their independence.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

2022 Remuneration Summary

2022 was a very good year for Boku. There was strong underlying growth, in line with market expectations and excellent progress
against the strategy of growing new Local Payment Methods, such as wallets and Account to Account/Real Time Payments.
Significant team effort went into building relationships, and developing new products and technologies. The team is growing in
order to deliver the next stages of the strategy. This is the context in which the Remuneration Committee made decisions.

The following sections show how remuneration was managed for year ended 31 December 2022.

Executive Directors

Base Salaries:

Jonathan Prideaux Chief Executive Officer

£309,000

(2021: £300,000)

Keith Butcher Chief Finance Officer

£216,500

(2021: £210,000)

Annual Bonus:

In determining bonus payments for 2022, the Remuneration Committee considered underlying 2022 revenue and adjusted
EBITDA growth, including adjustments for the effect of material fluctuations in foreign exchange rates, progress towards strategy,
share price performance and shareholder sentiment and determined to pay on target awards to the Executives for the Revenue
and Adjusted EBITDA element of the scheme; no over achievement award was made for these elements. The assessment of
personal achievement for both Mr. Prideaux and Mr. Butcher were assessed at 90%, leading to aggregate payouts at 63.3% of
the maximum awardable.

The following annual bonus payments are being made for 2022.

Jonathan Prideaux Chief Executive Officer
Full year award: £195,700 (63.3% salary) (2021: £211,000)

Keith Butcher Chief Financial Officer
Full year award: £109,693 (50.7% of salary) (2021: £118,160)

Long Term Incentive Plan:

During 2022 the Company granted 1,605,103 (2021: 2,449,665) Performance-based Restricted Stock Units (“PRSUs”) over
common shares to Executive Directors, other Executives, and employees under the Company’s 2017 Equity Incentive Plan.

Jonathan Prideaux Chief Executive Officer
Detail PRSU award in 2022: 210,000 PRSU with vesting date of 01/04/25
Detail PRSU award in 2023: 210,000 PRSU with vesting date of 01/04/26

Keith Butcher Chief Finance Officer
Detail PRSU award in 2022: 175,000 PRSU with vesting date of 01/04/25
Detail PRSU award in 2023: 175,000 PRSU with vesting date of 01/04/26

A full breakdown of the Directors’ current interests in the long-term incentive awards is set out below.

Pension:

Mr. Prideaux opted out from the pension scheme.
Mr. Butcher participated for the entire year.

Benefits:

Mr. Prideaux participated in the medical insurance plan for the entire year.
Mr. Butcher did not participate in the medical insurance plan.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Remuneration Report

Non-Executive Directors

Fees:

Name

Mark Britto

Richard Hargreaves

Stewart Roberts

Charlotta Ginman

Loren I. Shuster

Meriel Lenfestey

Fees 2022

62,419

67,033

46,237

41,100

13,733

15,450

245,972

Fees 2021

72,687

45,000

40,000

202,687

Note: Mrs. Lenfestey and Mr Shuster joined the Board in September 2022, and Richard Hargreaves took over the Chair role in
June 2022 with Mark Britto remaining as a Non-Executive Director.

Restricted Stock Units:

No actions took place during 2022 regarding Non-Executive Director RSUs.

All Directors

Summary of Directors’ Total Remuneration for 2022

Executive Directors

Salary

Bonus

Pension

Benefits

Total 2022

Total 2021

Jonathan Prideaux

308,397

195,700

2,523

506,620

507,574

Keith Butcher

215,958

109,693

1,321

326,972

327,262

Directors’ Interests in Shares

The interests of the Directors as at 31 December 2022 in the shares of the company were:

Name

Mark Britto

Jon Prideaux

Richard Hargreaves

Keith Butcher

Charlotta Ginman

Number of Common Shares

Percentage of share capital

10,328,145

3,106,458

1,255,312

578,906

12,715

3.451%

1.039%

0.415%

0.193%

0.004%

Jon Prideaux’s interests include 16,949 shares held by his spouse
Richard Hargreaves’s interest include 622,961 shares held by his family members.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Market value options

Name

Date of Issue

Number
of options

Exercise price

Start
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

Mark Britto

28 Oct 2016

424,514

USD $0.28

23 Jan 2013

23 Dec 2017

23 Dec 2023

Mark Britto

28 Oct 2016

500,000

USD $0.28

23 Sep 2016

23 Sep 2020

27 Oct 2026

Restricted Stock Units

Name

Date of
Issue

Number
of options

Share
price on
award
date

Value
on award
date

Start vesting
date

Final
vesting date

Lapsing
date

Jonathan Prideaux

24 Jan 2023

210,000

£1.525

£320,250

01 April 2026

01 Apr 2026

31 Dec 2026

19 Jan 2022

210,000

£1.64

£344,400

01 April 2025

01 Apr 2025

23 Jan 2026

20 Jan 2021

300,000

£1.40

£420,000

01 April 2024

01 Apr 2024

23 Jan 2025

22 Jul 2020

301,142

£0.87

£261,993

01 Apr2023

01 Apr 2023

31 Jul 2023

15 Jan 2020

150,000

£0.76

£114,000

01 Apr 2023

30 Apr 2023

Keith Butcher

24 Jan 2023

175,000

£1.525

£266,875

01 Apr 2026

31 Dec 2026

19 Jan 2022

175,000

£1.64

£287,000

01 Apr 2025

23 Jan 2026

20 Jan 2021

250,000

£1.40

£350,000

01 Apr 2024

23 Jan 2025

22 Jul 2020

171,046

£0.87

£148,810

01 Apr2023

01 Apr 2023

31 Jul 2023

01 Jan 2020

125,000

£0.76

£95,000

01 Apr 2023

30 Apr 2023

Charlotta Ginman

22 Sep 2021

103,276

£2.04

£210,683

01 Apr 2023

31 Dec 2023

Stewart Roberts

20 Jan 2021

14 Mar 2021

68,814

34,462

£1.40

1.575

£96,339

01 Apr 2023

31 Dec 2023

£54,278

01 Apr 2023

31 Dec 2023

Looking ahead to 2023

In 2022 the team worked tirelessly to build relationships, technologies and products which will be the springboard for growth in
2023. It’s important that the remuneration schemes enable the recruitment and retention of highly skilled and motivated people, at
all levels, to deliver against the strategy.

The following sections show how remuneration will be managed for the year ending 31 December 2023.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Remuneration Report

Executive Directors

Base Salaries:

Benchmarking during 2022 confirmed that the salaries remain aligned with market norms following prior adjustments. In
considering inflationary increases the Committee awarded inflationary increases in line with the lowest levels awarded to staff in
consideration of the cost-of-living crisis which impacts lower earners disproportionally.

From 1 February 2023 the following Base Salaries were applied:

Jonathan Prideaux, Chief Executive Officer
Keith Butcher, Chief Financial Officer

£329,085
£230,572

(2022: £309,000)
(2022: £216,500)

Annual Bonus:

For future years the bonus policy has been adjusted to award achievement against targets using budgeted foreign exchange
rates, but retaining Remuneration Committee discretion in the case of unintended consequences.

Long Term Incentives:

The Committee will continue to consider and award as appropriate to incentivise long term, shareholder aligned efforts.

Pensions:

No change

Benefits:

No change

Non-Executive Directors

Fees:

For 2023, Non-Executive Directors will receive a 6.5% fee increase leading to a basic fee of £44,496 for those Non-executive
Directors ordinarily resident in the UK. US based NEDs will receive a basic fee of $56,160. The fee for chairing a committee is
£5,562. The Chair’s fee is £88,560.

Restricted Stock Units:

In line with the new policy for Non-Executive Director Remuneration, the two new Non-Executive Directors (Mr. Shuster and
Mrs. Lenfestey) have been awarded a single grant of 100,100 RSUs which will vest in September 2025.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Environmental, Social
and Governance Report (ESG)

Boku is not a significant Greenhouse Gas (GHG) emitter
which means that our approach to Environmental, Social and
Governance (ESG) is driven from our values rather than pure
reporting requirements for 2022. We are a global company,
with customers and employees across the planet, and many
of the global technology giants who work with us pay an ever
increasing amount of attention to social and environmental
responsibilities and risks.

Boku provides payment acceptance technology that allows
consumers, who may not have previously had the opportunity,
to pay for everyday online services which people in more
economically developed countries may take for granted,
like streaming services or gaming. Our technology helps our
partners to connect with harder to reach consumers around
the world with solutions that make payments easier, more
accessible and more inclusive for those that need it.

With this in mind, we look at three aspects relating to the
environment for Boku:

1. Strategic: How our strategy can contribute towards a better

outcome for planet and people

2. Risks: What risks may need to be considered related to

climate change

3. Operational: How we as a business can do good and

reduce harm in our day to day working

a. Strategic

A key part of our strategy is built on creating a platform
for global technology companies, and people all around
the world, including in underserved developing economies
in the world to transact. This requires a deep focus on
UN Sustainable Development Goal (SDG) 10, and in
particular 10.5 “Improve the regulation and monitoring of
global financial markets and institutions and strengthen
the implementation of such regulations”. Boku entities are
registered or have regulatory approval to provide payment
services in 37 markets globally. This number is increasing
steadily. This means we can enable a global market in
financial transactions which fulfil all the varied regulatory and
cultural requirements of very diverse markets.

Our payments services extend to populations around the world
where consumers are “unbanked” or “underbanked”. Numerous
populations lack access to payment methods like credit and
debit cards that are the gateway to participation in eCommerce
and the global digital economy in Western countries.

According to the World Bank, 1.4 billion people worldwide
remain unbanked, but many rapidly developing regions like
Africa and Southeast Asia are taking advantage of digital
and payments technology in order to participate in the digital
economy. For instance, while 70% of consumers in Southeast
Asia are underbanked or unbanked according to a Bain &
Co. study1 , the region’s economic growth remains one of the
world’s most robust, with both consumers and merchants fully
embracing digital commerce and payments technology.

b. Risks

The company integrates ESG risk into the corporate risk
register. We operate (using 3rd parties) a resilient hosting
environment with sufficient redundancy and do not consider
climate risk to be a major risk to our operations.

c. Operational

Boku’s primary attention to ESG is in this category. We believe
that these considerations should be integrated into the day-
to-day business of the Company. Boku’s developing ESG
framework ensures that ESG is considered in the decision-
making at all levels of the business.

Environmental

In 2021, Boku began measuring and reporting on energy
usage across each of its offices. To demonstrate our
commitment to our ESG Framework and transparency, we
have opted to report on our Scope 1 and 2 emissions despite
not currently being subject to the Streamlined Energy and
Carbon Reporting (SECR) requirements.

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 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/or energy providers, respectively.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Environmental, Social and Governance Report (ESG)

As expected, the removal of the majority of COVID restrictions
in many countries and an increased shift towards returning
to the office and hybrid working has resulted in energy
consumption increasing in our various offices. In January 2022,
our Tallinn office moved to a larger office space which has also
contributed to increased energy consumption by us in Estonia.

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. Our
offices are also supplied with food and drinkware to reduce
wastage.

Energy
Consumption
(tCO2e)

Scope 1

Scope 2

Total

Intensity Ratio
(tCO2e per $m
group revenue)

Estonia

USA

India

Germany

Total

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

0.40

0.00

0.19

0.00

0.59

6.04

11.93

35.95

79.09

21.72

14.90

20.40

37.69

0.91

1.95

85.01

145.56

6.44

12.33

35.95

79.09

21.72

14.90

20.59

37.88

0.91

1.95

85.60

146.15

Estonia

USA

India

Germany

Total

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

FY 21

FY 22

Scope 1

Scope 2

Total

0.01

0.11

0.12

0.01

0.19

0.20

0.00

0.64

0.00

1.24

0.00

0.39

0.00

0.23

0.00

0.36

0.00

0.59

0.00

0.02

0.00

0.03

0.01

1.51

1.52

0.01

2.28

2.29

Energy consumption by country

Energy consumption by scope

26%

54%

10%

100%

UK Estonia USA India Germany

Scope 1 Scope 2

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Social

Mentoring programme

We take our responsibilities as an employer and guardian of
good culture and values seriously. The following provides a
flavour of how we do this now, and how we will continue to do
so as we grow:

Culture of respect, equity and inclusion

At Boku, we are proud of our values which guide our
decision-making, and sit at the heart of the way we operate
and help drive our behaviours, goals and strategy. One of
Boku’s core values is ‘collaborate’ and with that we have
created a culture where employees are empowered to be
themselves and feel supported to raise and discuss matters
openly in a supportive environment.

We strongly believe at Boku that our people are what makes
the company great and this is why we are committed to
continuing to foster an equitable, diverse and inclusive
workplace which is crucial to our future success.

Caring for our team

While COVID-19 continued to impact certain communities
across the globe during 2022, we continued to prioritise our
people, as we know our team’s dedication and commitment
is the key driver to our success. During the 2022 financial
year, we hosted several events and remote activities to
support employees across the globe. We will continue to
provide resources and support to our people and listen to
their direct feedback on how to make Boku a fantastic place
to work and thrive.

Employee engagement

With the majority of the workforce working remotely, it was
more important than ever for us to stay close to our teams
through regular all-hands meetings with Q&A sessions and
employee engagement surveys to ensure that we are listening
to, and supporting, our employees.

Further, we understand the importance of keeping team
cohesion while our workforce continues to work remotely. This
is why we regularly organise ‘offsite’ events for our various
teams across the globe. These events allow our workforce
to meet up in-person, engage in fun team-building activities,
as well as share ideas of how Boku can improve and further
achieve its goals. For us, a cohesive and happy team is a
successful team.

Boku is a proactive and enthusiastic promoter of social mobility
and inclusion within the workforce, supporting all staff in their
career progression.

Our aim to be equal opportunity employer and to help talented
people from all sectors of society to have the opportunity to
work and thrive in the Fintech sector and we endeavour to
hire and support future talents, empowering and supporting
our people to reach their potential. Their contribution, in turn,
drives the ability of Boku to better meet its business goals.

Boku’s UK office participates in Urban Synergy’s mentoring
and internship (DREAM) programs. Urban Synergy is a youth
empowerment charity whose 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 leadership team in the UK have participated in these
programs helping nurture talent and encourage development in
the next generation, irrespective of their background.

Equity, Diversity and Inclusion (‘EDI’)

At Boku, we believe that an environment of respect, empathy
and inclusion brings out the best in people by making them
feel valued and enables a culture of workplace collaboration
and harmony for everyone. Creating such an environment is
critical to the success of our business but also embedded in
our people, culture and business.

Our EDI strategy is built on the strong foundation we have
cultivated over time which is overseen by our Equity, Diversity
and Inclusion Committee and helps drive progress across our
global workforce and beyond.

• Our Equity, Diversity and Inclusion Committee
Our EDI Committee plays a vital role in developing our EDI
strategy and implementing initiatives to help us achieve our
EDI goals. The Committee meet every two weeks to discuss
key EDI topics and the development of initiatives to further our
continuous drive to support all of our workforce. We regularly
produce an EDI newsletter to raise awareness of key EDI
topics, inform of current and planned initiatives, as well as to
encourage our workforce to share their thoughts on our EDI
strategy and initiatives.

• Equity, Diversity and Inclusion survey
In support of our EDI initiatives, we launched an EDI survey
which anonymously polled Boku’s employees on a variety of
relevant benchmarks.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Environmental, Social and Governance Report (ESG)

Boku’s 2022 EDI survey presented a significant improvement
from the previous financial year’s survey for the following
reasons: (i) the overall engagement score increased from
43% to 64% which represents the levels of enthusiasm and
connection employees have with their organisation at work and
(ii) over 84% of employees responded favourably to inclusion
related questions.

We also added new questions into the 2022 survey to gauge
employees’ opinions on our culture of inclusion, belonging and
social mobility which will serve as a baseline for future programs.
Feedback from these employee surveys provide critical insights
from across the business which will help us continue to drive
progress by putting together targeted initiatives and encouraging
ongoing conversations on EDI topics.

Survey highlights include:

• 77% of employees responded that their managers

demonstrated that diversity was important by fostering a
safe environment for employees to raise and discuss EDI
matters in the workforce;

• 84% of employees responded that Boku provides a flexible
working environment for those with caring responsibilities;
and

• 85% of employees responded that they felt confident that

their social or economic background were not factors in the
hiring process and did not influence the hiring decision.

Gender balance

The Board and senior management at Boku recognises that
there are gender diversity challenges in the FinTech industry. To
resolve this we try to ensure that our recruitment practices are
fair and encourage women to apply for our roles.

In 2022, the proportion of women working in each of Boku’s
offices, other than Estonia, increased. Here at Boku, we want
to be doing more than ‘just enough’ to improve the gender
balance of our workforce, and this is exemplified by the fact
we employ a higher percentage of women in a number of
our offices than the industry benchmark. For example, the
percentage of women in our workforce in the US and UK is
37% and 44% respectively, which is higher than the FinTech
industry benchmarks for each country.

Further, representation of women in technical roles across all of
Boku’s offices has increased from 18% to 25% between 2021
and 2022. While this growth shows good progress, this is an
area where we will place continued focus moving forward.

Another goal of ours was to improve the representation of
women in senior leadership positions and on the board. In
2021, only 17% of our senior leadership positions were filled
by women. Fast-forward to 2022, 26% or our senior leadership
positions are now filled by women, a marked improvement.
In the boardroom, the representation of women has also
improved. In 2022, Boku appointed its second woman to the
board of directors, which now means that 25% of the board
are female compared to just 16% in 2021. For us, it is vital that
we continue to encourage women into senior leadership and
board positions to allow for new and diverse perspectives to
shape our business and drive us towards our goals.

Spread of scores by demographics:

Race / Ethnicity

Location

Gender

Education

Working Parent
Caring for Dependent

27%
Indian or South
Asian

12%
Prefer
not to
say

21%
Estonia

37%
Caucasian

2%
2%
efer to
Pefer to
self-identify

2%
Southeast
Asian

14%
Prefer
not to
say

Not
Not
speciﬁed
speciﬁed

4%
4%
East Asian

3%
Middle
Eastern

3%
Latino or
Hispanic

26%
Indian

10%
USA

Not
speciﬁed

Germany

11%
UK

10%
Other

58%
Male

30%
Female

55%
State run
or state
funded
school

9%
Prefer
not to
say

28%
Fee-paying
school

3%
3%
Fee-paying
school with
bursary

46%
Yes

37%
No

9%
Prefer
not to
say

Not
speciﬁed

Prefer not
to say

Not
speciﬁed

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

While there has been growth in gender diversity in many of
Boku’s offices, as well as in technical, senior leadership and
board positions, we expect that our focused approach to
gender diversity will result in further improvements and the
eventual achievement of gender balance throughout all levels
of the business.

Gender pay gap

We recognise that it is important not only to improve the
gender balance of the workforce and improve representation
of women in senior leadership and board positions, but to also
ensure that they are equitably compensated compared to men
in similar roles.

In 2022, our worldwide gender pay gap (excluding Non-
executive Directors) reduced from 26% in 2021 to 16%. While
this is an improvement from our previous position, we know we

have significant room for improvement and we are committed
to making further reductions in gender pay gap across our
whole workforce. In 2022, the gender pay gap in our USA
and India offices were, however, smaller than the industry
benchmarks, with the pay gap in the US being 5%.

Addressing the gender pay gap is important to us, and we
are aware that we have to make further improvements. More
generally, we are taking a ground up approach to improving
gender diversity.

In recent years, we have appointed a significant amount
of women into entry-level jobs, women that we believe are
the future technical leaders and managers of our company.
Demonstrating this belief and our commitment to reducing the
gender pay gap, the pay gap for employees aged 21-35 is just
5%. We believe this approach will set in motion the achieving
of gender balance and equal pay in our workforce in the future.

Female base salary as percentage of male base salary (by region)

Female base salary as percentage of male base salary

100%

80%

60%

40%

20%

100%

80%

60%

40%

20%

USA

UK excl GMC
and NED

Europe excl
UK and Estonia

Estonia

India

Whole
company

Employees
aged 21-35

Employees
aged 36 & up

Percentage of female staff

50%

45%

40%

35%

30%

25%

20%

15%

10%

Percentage of female senior leadership
35%

30%

25%

20%

15%

10%

USA

Estonia

Europe excl
UK & Estonia

India

All Boku

Employees
aged 22-35

Employees
aged 36 & up

Boku 2021

Boku 2022

Boku 2021 Boku 2022 Benchmark1

1US benchmark - Gender wage gap, OECD Data for 2020. India benchmark - Monster Salary Index (MSI) for India, March 2019 pg 28

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Environmental, Social and Governance Report (ESG)

We also see the value in supporting our workforce in keeping
connected. We want our employees to embrace their passions
outside of the company and share them with their colleagues,
so we have created a number of dedicated Slack channels for
different interests across our office groups. These range from
#food and #bakeoff to #diversityofficeevents and cater to our
people’s wide-range of passions. These Slack channels are a
great place for people to connect, discuss challenges they are
facing and share thoughts.

We are incredibly proud of the cultural diversity within each
of our offices and we love to celebrate significant dates and
rituals that are vital to our workforce’s cultural identity. On
religious holidays like Diwali, we encourage our employees
to take part in the festivities and learn more about their
colleagues’ cultures. We also encourage each office to
create their own local initiatives which cater to their culture.
For example, in Estonia, employees from both offices come
together to celebrate annual ‘winter days’ and ‘summer days’
events. We also like to offer our people in the UK offices free
lunches on Wednesday, with cuisines varying on a weekly
basis with input from our employees. Through celebrating
our cultural diversity, we encourage our people to share their
perspectives and stories, allowing our people to feel valued as
part of the Boku community.

Training

We train our employees with the skills needed for today
and tomorrow. Training efforts across the company include
mandatory onboarding for new hires and focused on topics
from technology to compliance and business processes.
All employees are required to take annual training on anti-
money laundering (AML), privacy and data protection (GDPR),
cybersecurity and anti-corruption. In 2022, all managers at
Boku were requested to take EDI training relating to tackling
unconscious bias in hiring and performance management. We
also encourage and support employees to find seminars and
qualifications relevant to their individual roles. We believe that
by investing in our employees’ own personal skillsets both the
employee and Boku will reap long-term rewards.

As a business, we remain firmly committed to reducing our
gender pay gap. We will continue to monitor these results and
review our policies throughout the year to ensure we are doing
everything we can to further reduce the gender pay gap.

Equity and Inclusion

At Boku we are proud to be an equal opportunities employer
where individuals seeking employment are considered without
regard to age, colour, gender, identity, national origin, race,
sex, marital status, physical or mental disability, religion or
sexual orientation, or any other legally protected categories.

To find and select a diverse pool of talented candidates to
hire from, managers and recruiters are expected to consider
a diverse range of candidates. To help achieve this goal, Boku
uses an online tool which is designed to find and hire the best
talent whilst reducing any unconscious bias throughout every
stage of the hiring process.

We understand the importance of writing inclusive job
descriptions when hiring, so we have placed importance on
guiding our managers on how to write them effectively.

We are also firm believers that hiring diverse talent requires
diverse interview panels, hence why our interview panels are
always made of a diverse range of Boku staff.

We continue to be focused on attracting, developing
and retaining the diverse talent that we need to advance
our business today and into the future. We invest across
the employee life cycle – from recruiting and employee
development to engagement, compensation and benefits - in
order to build a diverse team and inclusive culture where our
employees across the globe are welcomed, valued and are
able to be themselves and produce their best work.

Our goal is to maintain a diverse and inclusive workforce,
reflective of the jurisdictions we operate in, and we are focused
on hiring talent with a wide range of characteristics and
diversity of skill sets and thinking.

Connecting our global workforce and celebrating our
cultural diversity

On a group-wide basis, we like to communicate with our
workforce through regularly publishing internal employee
newsletters (alongside our EDI newsletter) which provides
updates on company events encourages employees
to share thoughts, and help Boku’s global workforce to
remain connected on what is going on in other parts of the
organisation.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Well-Being and Work Life Balance

Governance

Our employees’ health and wellbeing is incredibly important
to us here at Boku. We offer numerous healthcare benefits
for employees and their families and we also encourage our
employees to focus on their well-being. In our London office,
a sports therapist comes in once a month to offer massages
to employees.

We are also focused on supporting our employees’ mental
health. We are committed to building a workplace that
increases awareness of mental health, educates employees
and provides support when people need it. For example,
employees in our US offices have access to confidential third
party counselling and support.

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. The policy has been a
resounding success, with between 50-55% of our employees
company-wide now working remotely full time.

With the success of our remote working policy, we have taken
proactive steps to ensure that all of our people feel included
and able to be at their productive best. Examples of some of
the steps taken by the company include:

i. investing in new technology within our meeting rooms and

team areas to help remote workers feel included;

ii. investing in the technology provided to our remote workers

to help them remain productive;

iii. creating dedicated routes for our remote workers to

continue to enjoy the social aspects of their jobs – such as
hosting remote socials and the creation of the dedicated
Slack channels mentioned above; and

iv. ensuring healthcare benefits cater for all our workers,

including those who work remotely.

We continue to invest in technologies to ensure that our team
members can work productively, regardless of where they are
based. We have a Home Office Expense Policy in which we
pay for all the equipment our remote and hybrid workers need
to do their jobs – the comfort of our people is crucial to us,
regardless of where they are working from.

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 our Board on a regular
basis to ensure that they are fit for purpose and comply with
the Quoted Companies Alliance (QCA) Corporate Governance
Code. A summary of Boku’s compliance with the QCA Code
can be found on page 36.

In 2022, we appointed a further two independent Non-
Executive Directors. Our Board appreciates that, as a quickly
expanding listed company, it is imperative that our Board
comprises of individuals who can offer a wealth of experience,
knowledge and advice. The Board feels that it has achieved
this with the appointment of the new independent Non-
Executive Directors who come from different professional
backgrounds to the existing board members.

We have an 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 including 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.

We are committed to not only preventing unethical practices,
such as modern slavery, within our own business but also
across our 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 standards. Boku has established and published a
modern slavery statement which can be found on our website.

1Fulfilling Its Promise: The Future of Southeast Asia’s Digital Financial Services.
Bain & Company, Google, and Temasek. Accessed February 2022.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Directors’ Report

The Directors present their report and the audited
financial statements for Boku Inc. for the year ended 31
December 2022.

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

Dividends

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.

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

Post Balance Sheet Events

Please see note 31 for details of post balance sheet events

Business review and future developments

Financial Risk management

The review of the period’s activities, operations, future
developments and key risks is contained in the Strategic
Report on pages 4 to 11.

Directors

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

1. Mark Britto
2. Jon Prideaux
3. Richard Hargraves
4. Keith Butcher
5. Stewart Roberts
6. Charlotta Ginman
7. Meriel Lenfestey (appointed 21 September 2022)
8. Loren I. Shuster (appointed 21 September 2022)
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 37 and 33 respectively.

Directors’ interests

Directors’ share options and interests in shares can be found
in the remuneration report on page 37.

Details of financial risk management are provided in note 5 to
the financial statements.

Internal Control

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.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Going Concern

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
2022:

Shareholder

BlackRock Investment Mgt (London)

Build Lux Holdco Sarl (Luxembourg)

Capital Research Global Investors (Los Angeles)

Boku Inc Directors and Related Parties (London)

Danske Capital Mgt (Copenhagen)

abrdn (Standard Life) (Edinburgh)

Canaccord Genuity Wealth Mgt (London)

Octopus Investments (London)

Canaccord Genuity Wealth Mgt (Jersey)

Swedbank Robur (Stockholm)

Danal Co. Ltd (Hwaseong)

7.34%

7.10%

6.86%

5.87%

5.38%

5.16%

4.78%

3.98%

3.88%

3.53%

3.40%

57.28%

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.

Purchase of own shares

The Company, on 7 July 2022, announced a share buyback
programme to repurchase common stock with par value of
$0.0001 per share in the capital of the Company (“Common
Stock”) up to a maximum aggregate consideration of £8 million
and up to a maximum of five million Common Stock. During
the period, the Company purchased a total of 1,500,000
Common Stock on the open market at an aggregate cost
(exclusive of broker commission) of £1,556,750 and an
average cost of £1.04 per share.

After the year end, between 1 January 2023 and the date
of this report, the Company purchased a further 1,687,581
Common Stock on the open market at an aggregate cost
(exclusive of broker commission) of £2,504,564.03 and an
average cost of £1.48 per share. As at the date of this report,
the Company has purchased a total of 3,187,581 Common
Stock on the open market at an aggregate cost (exclusive of
broker commission) of £4,061,314.03 and an average cost of
£1.27 per share.

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.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Directors’ Responsibilities Statement

Website publication

The directors are responsible for ensuring the annual report
and the financial statements are made available on a website.
Financial statements are published on the Group’s website in
accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions.

The maintenance and integrity of the company’s website is the
responsibility of the directors. The directors’ responsibility also
extends to the ongoing integrity of the financial statements
contained therein.

By order of the Board

Jon Prideaux
Chief Executive Officer
20 March 2023

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 directors are 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 financial statements unless they are
satisfied that they give a true and fair view of the state of affairs
of the Group and of the profit or loss of the Group for that
period.

In preparing these financial statements, the Directors are
required to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and accounting estimates that are

reasonable and prudent;

• state whether they have been prepared in accordance

with IFRS subject to any material departures disclosed and
explained in the financial statements; and

• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group will
continue in business.

The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Gorup and enable them to ensure
that the financial statements comply with the requirements of
the IFRS. 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.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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

Opinion on the financial statements
In our opinion:

• the financial statements give a true and fair view of the state
of the Group’s affairs as at 31 December 2022 and of the
Group’s profit for the year then ended;

• the Group financial statements have been properly prepared

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

We have audited the consolidated financial statements of Boku
Inc., and its subsidiaries (the ‘Group’) for the year ended 31
December 2022 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 the
Notes to the Consolidated Financial Statements, including
a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting
standards as issued by the International Accounting Standards
Board (“IFRS”).

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 in accordance with
the ethical requirements that are relevant to our audit of the
consolidated 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.

Conclusions relating to going concern
In auditing the consolidated financial statements, we have
concluded that the Directors’ use of the going concern basis
of accounting in the preparation of the consolidated financial
statements is appropriate. Our evaluation of the Directors’
assessment of the Group’s ability to continue 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 who
are aware of the detailed figures included in the forecast but
also have a detailed 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 (such as, the revenue
forecast) used by management in their prepared models,
to determine whether there is adequate support for the
assumptions underpinning the forecasts. Furthermore, we
considered the outcome of prior year forecasts to consider
the historical budgeting 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 considered
the appropriateness of the sensitivities applied and the
Directors’ available mitigating actions and their effects on
the group’s solvency and liquidity position based on our
knowledge of the business;

• Review of post year-end management accounts, specifically

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 assessment
that may cast significant doubt on the entity’s ability to
continue as a going concern;

• Considering the adequacy and completeness of the
disclosures in the financial statements against the
requirements 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 consolidated 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 2022

Independent Auditor’s Report

Overview

Coverage

Key audit matters

78*% (2021: 98%) of Group profit before tax
84% (2021: 98%) of Group revenue
86% (2021: 88%) of Group total assets
(* on a continuing basis)

Fraud in revenue recognition

Recoverability of holdback receivable (arising from disposal of
Identity)

Valuation of share warrants issued to Amazon

2022

2021

n/a

Materiality

Group financial statements as a whole $405k (2021: $650k) based on 5% of adjusted* profit
before tax (2021: 1% of revenue)

*adjusted for the Fortumo Brand impairment of $1.3m, Change in the Fair value of the
Amazon warrant of $3.5m and Other income of $0.6m

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 consolidated 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 headed by US incorporated parent entity, Boku, Inc. and comprises of one UK incorporated and four non-UK
entities (2021: one UK incorporated and five non-UK entities) which are deemed as significant components. The remaining entities
are a mix of UK and non-UK incorporated and 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
four principal trading entities that were identified as significant components: Boku, Inc., Boku Network Services UK Ltd, Boku
Payments Inc., Boku Network Services Inc. and Boku Network Services Estonia OÜ (formerly named Fortumo OÜ).

For components of the group not considered to be significant components, the group audit team performed limited audit
procedures including a combination of analytical procedures and where considered necessary, certain specific procedures.

Except for Boku Network Services Estonia OÜ (formerly named Fortumo OÜ), which is audited by our network member firm in
Estonia, the other significant components with the consolidated financial statements were audited by the Group engagement team.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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 financial statements as a
whole. Our involvement with component auditors included the following:

• Boku Network Services Estonia OÜ (formerly named Fortumo OÜ): 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.

• We performed a detailed review of the component auditor's work and documentation including planning, execution and key

findings and participated, in person, in the local audit planning and audit close meeting.

Key audit matters

Key audit matters 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

Fraud in revenue
recognition (Group)

Refer to the
accounting policy in
Note 4 and related
disclosures in Note 7

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

We considered the incentive
for management to perpetrate
fraud in revenue recognition.
Consequently, we considered
there to be a risk of material
misstatement in relation to
revenue.

Due to the high volume-low
value nature of transactions,
we determined that this risk
related to the occurrence of
revenue through posting fictitious
journals.

How the scope of our audit addressed the key audit matter

To address the risk of fraud in revenue recognition due to fictitious
revenue posting, we performed the following procedures:

• Included data analytics procedures to test completeness of the
journal entries and to identify specific journal entries to test to
address the risk;

• Performed detailed testing on any unusual journal combinations
(ie credit to revenue and debit to unexpected accounts) and
agree to underlying supporting documentation;

• Tested unsettled revenue at the balance sheet date by sending

debtor’s confirmations and testing subsequent bank collections;
and

• Audited group adjustments to revenue as part of group

consolidation adjustments by agreeing to underlying supporting
documentation.

Key observations:

Based on the work performed we have not detected any instances
of fraud in revenue recognition.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Independent Auditor’s Report

Key audit matter

Recoverability of
holdback receivable
(arising from disposal
of Identity)

Refer to accounting
policy in Note 4 and
related disclosures in
Note 5

As explained in the Note 6
of the consolidated financial
statements, on 28 February
2022, the Group sold its entire
Identity business (Boku Identity
Inc and its 100% subsidiary
Boku Mobile Solutions IRE)
to Twilio Inc. for a maximum
consideration of $32.5m
(including $6.5m of holdback
receivable).

At 31 December 2022 the
holdback amount was $5.6m,
after a reduction of $900k, being
the amount settled by Twilio Inc.
during the year.

There is an estimation
uncertainty involved in assessing
the recoverability of the $5.6m
which is due in August 2023
and is dependent on Twilio not
claiming against the indemnity
clauses stated in the sale and
purchase agreement, and we
therefore considered this to be a
key audit matter.

How the scope of our audit addressed the key audit matter

To address the risk around the recoverability of the holdback
receivable, we performed the following procedures:

• Obtained a detailed assessment of the conditions stated in

the sale agreement from management and their analysis of the
likelihood and basis of any claims.

• Sought evidence to support Management’s assessment,

including sale and purchase agreement (SPA) and completion
statements, due diligence reports and tax returns.

• Reviewed legal expenses to identify any increased costs which

may indicate a potential claim by Twilio Inc.;

• Discussed management's assessment with internal legal counsel
and challenged managements’ position by reference to third
party evidence.

• We obtained external evidence that there were no known claims
in relation to the Indemnity clauses in the sale and purchase
agreement as at 31 December 2022 and as at 8 March 2023.

• Reviewed disclosures in the consolidated financial statements for

completeness and accuracy in line with applicable IFRS.

Key observations:

Based on the work undertaken we consider the estimates and
judgements made in the calculation of the recoverability of the
holdback receivable are reasonable.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

How the scope of our audit addressed the key audit matter

To address the risk around the valuation of the warrant liability, we
have performed the following procedures:

• Reviewed the share warrant agreement with Amazon to validate

the key terms noted in the contract.

• Engaged our technical accounting experts to assist in concluding

on the accounting adopted for the Amazon contract.

• Engaged our valuations experts to assist in concluding on the
approach used to generate possible future scenarios of the
expected qualifying revenue and the fair value of share warrant.

• We have challenged management’s assumptions and estimates
including initial revenue estimates, revenue volatility, share price
volatility, risk-free rates and future revenues from Amazon, by
reference to actual revenue during the year, revenue growth
and share price of comparable companies and other third party
evidence.

• Reviewed the disclosures in the consolidated financial statements

for completeness and accuracy in line with applicable IFRS.

Key observations:

Based on the procedures performed, we consider the assumptions
made relating to the valuation of Amazon share warrants and the
related disclosures in the financial statements, to be appropriate.

Key audit matter

Valuation of share
warrants issued to
Amazon

Refer to accounting
policy in Note and
related disclosures in
Note 24

As explained in the Note of
the consolidated financial
statements, the Group entered
into a share warrant agreement
with Amazon, Inc. ('Amazon') in
conjunction with a commercial
service level agreement for
the Group to provide payment
processing services to Amazon.
Under the agreement, the
Group issued share warrants to
Amazon to subscribe for up to
11.2m shares of Boku’s common
stock, of which 0.7m shares
vested on the issuance of the
warrants.

The remaining 10.5 m warrants
vest based on Amazon achieving
certain revenue targets over the
next seven years.

The determination of the of fair
values involves assumptions
and estimates including initial
revenue estimate, historical share
price growth of comparable
companies, revenue volatility,
Parent Company share price
volatility and risk-free rate.

Due to the long term nature of
the warrants, such estimates
involve significant estimation
uncertainty and we therefore
considered this to be a key audit
matter.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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 consolidated 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 consolidated 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

2022

$405,000

2021

$651,000

Basis for determining materiality

5% of Profit before tax

1% of Revenue

Due to the consistent results of the
continuing operations of the Group year
on year, adjusted* profit before tax for the
year is considered the most appropriate
financial benchmark on which we have
determine materiality.

*Adjusted for the Fortumo
Brand impairment of $1.3m, Change in
the Fair value of the Amazon warrant of
$3.5m and Other income of $0.6m

We considered revenue to be the
most appropriate benchmark as this
is one of the primary key performance
indicators, which is used to address the
performance of the Group by the board
and other users of the consolidated
financial statements.

$303,705

$488,250

Performance materiality was set at 75% (2021: 75%) due to the low value of brought
forward adjustments and expected total value of known and likely misstatements.

Rationale for the benchmark applied

Performance materiality

Basis for determining
performance materiality

Component materiality

We set materiality for each component of the Group based on a percentage of between 14% and 60% of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged
from $58,000 to $243,000. In the audit of each component, we further applied performance materiality levels of 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 $20,250
(2021:$32,550). 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 2022

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 consolidated
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
consolidated 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 consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’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 the Parent Company 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 consolidated 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 consolidated financial statements.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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 consolidated financial statements are those
that 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 a direct effect on the consolidated financial

statements but compliance with which may be fundamental to the Group’s ability to operate. These include compliance with
Financial Conduct Authority (FCA) regulations, and any other regulators regulating activities of trading subsidiaries of the group.

• We obtained an understanding of the licencing requirements in the respective jurisdictions and the governance process around

compliance with local licencing arrangements.

• We understood how the Group is complying with those frameworks by making enquiries of management, those responsible for
legal and compliance procedures. 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 unusual transactions based on our knowledge of the business; enquiries with Group Management; and focused
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 management’s 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 consolidated 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 consolidated 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 2022

www.boku.com

Use of our report

This report is made solely to the Parent Company’s Directors, as a body, in accordance with our engagement letter dated 2
March 2023. Our audit work has been undertaken so that we might state to the Parent Company’s members 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 members as a body, for
our audit work, for this report, or for the opinions we have formed.

BDO LLP
Chartered Accountants
London, UK
20 March 2023

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 2022

Consolidated Statement
of Comprehensive Income

Continuing operations

Note

Revenue

Cost of sales

Gross profit

Other Income (non-recurring)2

Administrative expenses

Operating profit analysed as:

Adjusted EBITDA3

Other Income (non-recurring)2

Depreciation and amortisation4

Share based payment expense4

Foreign exchange (losses)/gains4

Exceptional items – Impairment of intangible assets4

Exceptional items4

Operating profit

Finance income

Finance expense

Profit before tax from continuing operations

Tax credit

Net profit from continuing operations

Discontinued operations

Net profit/(loss) from discontinued operations after tax

Total profit for the year

Other comprehensive losses net of tax

Items that will or may be reclassified to profit or loss

Foreign currency loss on translation of foreign operations

Total other comprehensive loss for the year

Total comprehensive income for the year attributable to equity holders
of the parent company

Earnings per share – Total

Basic EPS

Diluted EPS ($)

Earnings per share – from continuing operations

Basic EPS

Diluted EPS ($)

Year ended
31 December 2022

Restated1 Year
ended
31 December 2021

$’000

63,764

(1,771)

61,993

755

(58,212)

20,464

755

(5,663)

(5,165)

(796)

(1,264)

(3,795)

4,536

201

(675)

4,062

237

4,299

24,605

28,904

(3,576)

25,328

0.09690

0.09338

0.01441

0.01388

$’000

62,082

(1,571)

60,511

1,080

(50,951)

22,933

1,080

(6,251)

(6,414)

115

–

(823)

10,640

(770)

9,892

1,882

11,774

(5,505)

6,269

(2,407)

3,862

0.02133

0.02057

0.04005

0.03863

1 Restated due to discontinued operations (see Note 6 for details)
2 Other income in 2022 relates to the continued provision of services to the buyers of the Identity business after the disposal for business continuity reasons. Other Income
in 2021 relates to the acquisition of Fortumo and is the difference between the expected fair value of the Fortumo earnout escrow amount as at 31 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.
3 Adjusted EBITDA is defined as: Earnings before interest, tax, depreciation, amortisation, non-recurring other income, share based payment expense, foreign exchange
gains/(losses) and exceptional items (see Note 8). Management has assessed this performance measure as relevant for the user of these financial statements.
4 Included in administrative expenses

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Consolidated Statement
of Financial Position

Non-current assets

Property, plant and equipment

Right of use assets

Intangible assets

Warrant contract asset

Deferred tax assets

Total non-current assets

Current assets

Trade and other receivables

Financial asset at fair value through profit or loss

Cash and cash equivalents – unrestricted

Cash and cash equivalents – restricted cash

Total current assets

Total assets

Current liabilities

Trade and other payables

Current tax payable

Bank loans and overdrafts

Lease liabilities

Total current liabilities

Non-current liabilities

Other payables

Deferred tax liabilities

Warrant liability

Bank loans

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

Treasury share reserve

Retained losses

Total equity

31 December
2022

31 December
2021

Note

$’000

5(a)

696

3,662

56,230

1,711

3,383

65,682

90,080

5,600

99,551

16,962

212,193

277,875

669

5,001

63,117

–

3,105

71,892

82,557

–

56,651

5,789

144,997

216,889

156,263

119,641

222

–

1,277

157,762

1,194

–

5,206

–

2,272

8,672

166,434

1,125

1,335

122,101

1,700

456

–

6,688

3,498

12,342

134,443

111,441

82,446

252,385

(6,290)

(1,835)

(132,848)

111,441

246,883

(2,714)

–

(161,752)

82,446

The financial statements on pages 72 to 139 were approved by the Board for issue on 21 March 2023

Jon Prideaux Chief Executive Officer

Keith Butcher Chief Financial Officer

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Consolidated Statement
of Changes In Equity

For the year ended 31 December 2022

Share
capital

Share
premium

Treasury
shares
reserve

Foreign
exchange
reserve

Retained
losses

Total
Equity

$’000

Equity as at 1 January 2021

240,053

Profit for the year

Other comprehensive loss

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

Share based payments expense

Issue of RSU’s related to Fortumo
acquisition

–

1,146

5,434

250

Equity as at 31 December 2021

246,883

Profit for the year

Other comprehensive loss

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

Share based payment expense

Purchase of treasury shares

–

470

5,032

–

Equity as at 31 December 2022

252,385

–

(1,835)

(307)

(168,021)

71,754

–

6,269

(2,407)

(37)

–

(2,714)

(161,752)

–

28,904

(3,576)

–

6,269

(2,407)

1,109

5,434

287

82,446

28,904

(3,576)

470

5,032

(1,835)

(6,290)

(132,848)

111,441

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

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Consolidated Statement
Of Cash Flows

Cash generated from operations

Income taxes paid

Net cash generated from operating activities

Investing activities

Purchase of property, plant and equipment

Payments for internally developed software

Proceeds from discontinued operations (net of cash disposed of)

Proceeds from sale of assets

Interest received

Note

31 December
2022

31 December
2021

$’000

49,966

(314)

49,652

(470)

(4,866)

26,545

201

$’000

12,362

(443)

11,919

(812)

(5,022)

–

Net cash generated/(used) in investing activities

21,411

(5,812)

Financing activities

Payment of principal to lease creditors

Payment of interest to lease creditors

Proceeds from issue of share capital on exercise of options and RSUs
to employees

Purchase of Treasury shares

Interest paid on loan

Repayment of bank loan

Loan settlement costs

Net cash used in 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

(1,556)

(235)

470

(1,835)

(127)

(8,125)

(25)

(11,433)

59,630

(5,557)

62,440

116,513

(1,694)

(235)

1,109

–

(409)

(4,563)

–

(5,792)

315

(579)

62,704

62,440

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the
Consolidated Financial Statements

1. Corporate Information

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.

These consolidated financial statements comprise the Company (Boku Inc.) and its subsidiaries (together referred to as the
“Group”).

The principal business of the Group is the provision of local payment solutions for its merchants.

Boku’s payments network provides multiple mobile payment methods, including via mobile wallets, direct carrier billing and real-
time payment schemes.

2. Basis of preparation

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.

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

The Consolidated Financial Statements have been prepared on a going concern basis. These financial statements have been
prepared for a 12 month 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, “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 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 effective from 1 January 2022.

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

Going concern

The consolidated financial statements have been prepared on a going concern basis. The ability of the Group to continue as a
going concern is contingent on the ongoing viability of the Group. The Group meets its day-to-day working capital requirements
through its cash balances and also has a bank facility that it can use. The 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
21 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.

Furthermore, in carrying out the going concern assessment, the directors considered a number of scenarios, including reductions
in revenues of up to 10% and concluded that the business would still have adequate resources to continue in operational
existence for the foreseeable future. Management also have the ability to identify costs savings if necessary, to help mitigate any
impact on cash outflows.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The Covid-19 pandemic continued to have limited impact on Boku’s business in 2022 indeed the Payments business saw
increased processed volumes in covid impacted countries and regions, and therefore the Board believes that the business is able
to navigate through the continued impact of Covid-19 due to the strength of its customer proposition and business partnerships,
statement of financial position and the strong net cash position of the Group (cash balances of $116.5 million at year end).

The ongoing Russia/Ukraine conflict has not had a material impact on Group revenues.

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 16 of the financial information.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

2. Basis of preparation (continued)

Changes in accounting policies and disclosures

(a) New standards, interpretation and amendments adopted by the Group from 1 January 2022

The following amendments were issued by IASB and are effective for the period beginning 1 January 2022:

1) Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use (applicable for annual periods

beginning on or after 1 January 2022). These amendments had no impact on the year-end consolidated financial statements of
the Group as there were no sales of such items produced by property, plant and equipment made available for use on or after
the beginning of the earliest period presented.

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).
IAS 37 defines an onerous contract as a contract in which the unavoidable costs (costs that the Group has committed to
pursuant to the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received
under it. The Group has not committed to any unavoidable costs and therefore has not recognised any onerous contract
provisions during 2022.

3) Amendments to IFRS 3 Business Combinations: Reference to the Conceptual Framework (applicable for annual periods

beginning on or after 1 January 2022)
In May 2020, the IASB issued amendments to IFRS 3, which update a reference to the Conceptual Framework for Financial
Reporting without changing the accounting requirements for business combinations.

4) Annual Improvements to IFRS Standards 2018–2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 & IAS 41 (applicable for annual

periods beginning on or after 1 January 2022)

• IFRS 1: Subsidiary as a First-time Adopter (FTA)

• IFRS 9: Fees in the ‘10 per cent’ Test for Derecognition of Financial liabilities

• IAS 41: Taxation in Fair Value Measurement

The Group applied for the first time all mandatory standards and amendments, which are effective for annual periods beginning on
or after 1 January 2022, but did not have a material impact on the consolidated financial statements of the Group.

(b) New standards, interpretations and amendments published, not yet effective:

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2023:

1) 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.

2) Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies

The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments
replace all instances of the term “significant accounting policies” with “material accounting policy information”. Accounting
policy information is material if, when considered together with other information included in an entity’s financial statements,
it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make
on the basis of those financial statements. The supporting paragraphs in IAS 1 are also amended to clarify that accounting
policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed.
Accounting policy information may be material because of the nature of the related transactions, other events or conditions,
even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events
or conditions is itself material. Earlier application is permitted and applied prospectively.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

3) 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.

4) Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates.
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under
the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement
uncertainty”. The definition of a change in accounting estimates was deleted. However, the Board retained the concept of
changes in accounting estimates in the standard with the following clarifications:

• A change in accounting estimate that results from new information or new developments is not the correction of an error.

• The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in

accounting estimates if they do not result from the correction of prior period errors.

The amendments are effective for annual periods beginning on or after 1 January 2023 to changes in accounting policies and
changes in accounting estimates that occur on or after the beginning of that period, with earlier application permitted.

The following amendments are effective for the period beginning 1 January 2024:

1) IFRS 16 Leases – (Amendment – Liability in a Sale and Leaseback)

2) IAS 1 Presentation of Financial Statements – Amendments – Classification of Liabilities as Current or Non-Current

The amendments affect only the presentation of liabilities as current or non current in the statement of financial position and not
the amount of timing of recognition of any asset, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non current is based on the rights that are in existence
at the end of the reporting period, specify that the classification is unaffected by expectations about whether an entity will
exercise its right to defer settlement of a liability, explain the rights that are in existence if covenants are complied with at the
end of the reporting period, and introduce a definition of “settlement” to make clear that settlement refers to the transfer to the
counterparty of cash, equity instruments, other assets or services. Early application is permitted.

3) AS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants). Mandatory effective for

periods beginning on or after 1 January 2024)

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 effective on or after 1 January 2024 will not materially affect the Group
after adoption.

The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

3. Critical accounting estimates, assumptions 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
judgements and updates them as required. Actual results could differ. Unless otherwise indicated, the Group does not believe that
there is a significant risk of a material change to the carrying value of assets and liabilities within the next financial year related to
the accounting judgements and assumptions described below. The Group considers the following to be a description of the most
significant estimates and judgements, which require the Group to make subjective and complex judgements related to matters
that are inherently uncertain.

Judgements

a) Discontinued operations

While management were considering strategic options regarding the Identity business, 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 at 31 December 2021. The Identity business was sold on 28 February 2022 and the result of the sale is presented in
Note 6 Discontinued operations.

b) Financial asset at fair value through profit or loss

Management applied judgement in deciding whether any indemnities are going to cause the buyer of Identity to hold back
any funds from the $5.6 million general indemnity. The holdback amount is payable at the end of August 2023. After careful
consideration and analysis, including full receipt of a previous holdback, a review of all contractual terms and confirmation from
the buyer of no claims at year end, management concluded that there are no likely events that will cause a breach of any of the
contractual indemnities with the buyer of Identity business and no notice has been received from the buyer to enquire or notify of
any items related to said indemnity. Boku received $600,000 from the buyer in full payment of the separate ‘specific indemnity
holdback’ in December 2022.

c) 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 cash or
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 or the cost of integrating acquired businesses.

d) Adjusted financial measure/Non-GAAP

Management regularly uses adjusted financial measures internally to understand, manage and evaluate the business and make
operating decisions. These adjusted measures are among the primary factors management uses in planning for and forecasting
future periods. The primary adjusted financial measures are EBITDA, Adjusted EBITDA, Adjusted Operating expenses and
Constant currency revenues which management considers are relevant in understanding the Group’s financial performance.
Management uses the adjusted financial measures by excluding certain one-off items from the actual results. The determination of
whether one-off material or non-recurring items should form part of the adjusted results is a matter of judgement and is based on
whether the inclusion/exclusion from the results represent more closely the consistent trading performance of the business. The
definitions of adjusted items and underlying adjusted results are disclosed in Note 9.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Critical Accounting Estimates

a) Depreciation and amortisation

We estimate the useful lives of property and equipment and intangible assets based on the period over which the assets are
expected to be available for use. The estimated useful lives of property and equipment and intangible assets are reviewed
periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial
obsolescence and legal or other limits on the use of the assets.

b) Taxation

In recognising income and deferred tax assets, management makes estimates of the likely outcome of future taxable profits for
certain jurisdictions. 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. The carrying values of current tax and deferred tax assets and current liabilities are disclosed
separately in the consolidated statement of financial position. It is possible that a change in profit forecasts or risk factors could
result in a material change to the income tax expense and deferred tax assets in future periods.

c) Fair value measurement – Amazon warrants

The Group's accounting for warrants issued to a subsidiary of Amazon.com, Inc, Amazon.com NV Investment Holdings LLC
("Amazon") on 16 September 2022 (see Note 5 for more details) is determined in accordance with accounting standards for
financial instruments and revenue recognition. The initial fair value of warrants issued to Amazon are recognised as a contract
asset and liability respectively. The warrant contract asset is amortised to revenue (reducing revenue) over the seven year vesting
period based on Amazon revenue earned to date as a proportion of total estimated Amazon revenue over the seven year vesting
period. The derivative financial liability is remeasured to fair value at each reporting date. The fair value movement attributable to
the change in the number of shares expected to vest due to a change in estimated Amazon revenues over the seven year vesting
period is recorded as an equal and opposite increase to the financial liability and warrant contract asset, based on the fair value of
the warrant at inception. The fair value movement attributable to the change in the fair value of the underlying warrants is recorded
as gains or losses in profit or loss. The determination of fair values involves assumption and estimates including revenue volatility
and share price volatility, risk-free rate and future Amazon revenues. Due to the long term nature of the warrants, such estimates
involve significant estimation uncertainty.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

4. Accounting policies

Revenue from contracts with customers

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 revenue

Boku’s technology for the Payments 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 digital goods 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, or before the funds are received from the aggregator, MNO or wallet, at contractual agreed rates, in line with IFRS 15.

(ii) Transactional Model: from larger virtual and digital merchants who receive the funds for their sales directly from the MNOs,
wallets or aggregators and pay a service fee to the Group. Management has determined that it is acting as an agent under IFRS
15 because it does not have the primary responsibility for providing the digital goods 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.

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 at a point in time as the obligation is fulfilled at time when a
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

Special merchant integrations are recognised in full once the integrations phase is successfully tested and approved by the
customer.

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 initially 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 business is recognised at one point in time. Therefore, for the Payments
business, at 31 December 2021 and 31 December 2022, the Group does not have deferred revenue on the in the consolidated
statement of financial position.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

2. Identity Revenue (Discontinued operations)

On 28 February 2022, the Group sold its entire Identity business (Boku Identity Inc. and its 100% subsidiary Boku Mobile Solution
Ireland Ltd) to Twilio (please refer to Note 6 – Discontinued operations for full details). Until the date of disposal, Boku’s technology
for the Identity business provided 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 were charged either on a per user basis – for monitoring – or a per transaction basis, typically with monthly
minimums.

For the Identity business, deferred revenue consisted of billings processed in advance of revenue recognition generated by Boku
Identity’s Mobile Identification/TCPA services. For these services, Boku billed its customers at the beginning of the contract term
as a pre-payment for services which were billed at a set price per transaction. The revenue was recognised monthly, at a point
in time, based on the amount of transactional volume processed during the month and services continued to be performed until
the full value of the contract was realised. For the period ended 31 December 2022, deferred revenue in the statement of financial
position for the Identity business was Nil (2021: $303,853 ) due to the disposal of this business.

Discontinued operation

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly
distinguished from the rest of the Group and which:

• represents a separate major line of business or geographical area of operations;

• is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or

• is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified
as held for sale (see Note 6 for details)

When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is represented
as if the operation had been discontinued from the start of the comparative year.

Holdback receivable asset

Any amounts not settled at the time of the transaction are recorded as a financial asset through profit and loss, at the closing
date, and assessed for fair value at each period end for any fair value change.

Cost of sales

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

Operating Segments

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. The Identity segment was sold on
28 February 2022. Details can be found in Note 6 – Discontinued operations. Management reviews the performance of the Group
by reference to total results of a segment against budget on a monthly basis.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

4. 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 United States, the group has a 401(k) plan, a type of defined contribution scheme in which all United States employees can
participate after meeting eligibility requirements. Participants may elect to have a portion of their salary deferred and contributed to
the scheme up to the limit allowed by applicable income tax regulations. The Company has made a matching contribution to the
scheme for the years ended 31 December 2022 and 31 December 2021.

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

Intangible assets and Goodwill

(i) Goodwill

The Group uses the acquisition method of accounting for the acquisition of a subsidiary. Goodwill represents the excess of the
cost of a business combination over the Group’s interest in the fair value of identifiable assets, liabilities and contingent liabilities
acquired. 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
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 15.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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

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

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

Impairment of goodwill and Intangible assets acquired in a business combination

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, IT Platforms and Domain names as well as internally developed
intangibles (capitalised development costs). Acquired intangible assets are recognised at fair value at the acquisition date and are
amortised on a straight-line basis over their estimated useful lives. Initial capitalisation cost for internally generated intangibles is
based on the developer estimate of the time spent on development projects.

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.

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 and the determination of the discount rate are based
on forecasts and assumptions 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 15 for a description of the specific judgements used
including the judgments and assumptions used in the calculation of the goodwill impairment.

(iii) Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight line basis over their
useful economic lives.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

4. Accounting policies (continued)

(iv) Internally generated intangible assets (development costs)

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

1. it is technically feasible to develop the product to be used or sold;

2. there is an intention to complete and use or sell the product;

3. the Group is able to use or sell the product;

4. use or sale of the product will generate future economic benefits;

5. adequate resources are available to complete the development; and

6. expenditure on the development of the product can be measured reliably.

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

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the
statement of comprehensive income as incurred.

(v) Amortisation rates

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line
method over their estimated useful lives, and is recognised in the statement of comprehensive income within administrative
expenses. Goodwill is not amortised.

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

Intangible asset

Trade marks

Merchant relationships

Developed technologies

Domain names

Internally developed software

Useful economic life

Indefinite life – not amortised

5–10 years

10 years

3 years

Trademarks do not expire after a period of time (unlike patents and copyrights). They exist as long as the owner continues to
use the trademark. Therefore, trademarks are considered to have an indefinite life, and are not amortised, as trademarks can
retain their value forever, and contribute to net cash inflows indefinitely. Trademarks will not be amortised until their useful life is
determined to be finite.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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 fixtures and fittings

3–5 years on cost

Computer equipment and software

3 years on cost

Leasehold improvement

Right-of-use assets

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.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Carrying amounts are reviewed on each reporting date for impairment. Where the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately to its recoverable amount.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, Restricted Cash (see below and note 18) and
other short term highly liquid investments with original maturities of three months or less.

Restricted cash

The group holds merchants’ cash in transit and in segregated accounts of some of its regulated subsidiaries and discloses
restricted cash separately from own cash.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

4. Accounting policies (continued)

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.

(i) Financial assets

Financial assets are classified, at initial recognition at fair value and then subsequently measured at amortised costs, fair value
through other comprehensive income and fair value through profit or loss.

a) Financial assets at amortised cost.

The Group’s financial assets mainly comprise cash, trade and other receivables. These assets are non-derivative financial assets
with fixed or determinable payments that are not quoted in an active market (trade receivables), but also incorporate other types
of contractual monetary asset.

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

b) Financial assets at fair value through profit and loss

The holdback receivable asset outstanding at year end from the sale of the Identity business is held at fair value through profit and
loss.

(ii) Financial liabilities

The Group classifies its financial liabilities into two categories, depending on the purpose for which the liability was acquired.

Fair value through profit and loss (“FVTPL”):

The warrant liability is classified as a financial liability at FVTPL and valued using a combination of the Black-Scholes Model and
Monte Carlo simulation. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement
(due to changes in the fair value of the warrant) recognised in profit or loss.

Financial liabilities at amortised cost:

The Group includes in this category loans and trade and other payables and leases.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument.

Trade and other payables (excluding other taxes and social security costs and deferred income) and other short-term monetary
liabilities, are initially measured at their fair value plus, if appropriate, any transaction costs that are directly attributable to the issue
of the financial liability. These financial liabilities are subsequently carried at amortised cost.

Bank borrowings and other interest bearing liabilities are initially recognised at fair value net any of transaction costs directly
attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost ensuring
the interest element of the borrowing is expensed over the repayment period at a constant rate.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

A financial liability is derecognised when the obligation under the liability is discharted, cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.

The gain or loss for fair value changes should be classified based on the classification of the underlying instruments. As the fair
value changes of the Amazon warrant liability are highly dependent on the share price of Boku Inc, rather than the business
performance in the reporting year these gains and losses have been classified as exceptional items and this policy will be applied
consistently going forward.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not
recognised for future operating losses.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The provision for employer taxes on future employee share instruments are not
discounted.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.

Right-of-use assets

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

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. 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.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

4. Accounting policies (continued)

Incremental borrowing rate

IFRS 16 Leases requires that all the components of the lease liability are required to be discounted to reflect the present value of
the payments. The discount rate to use is the rate implicit in the lease, unless this cannot readily be determined, in which case the
lessee’s incremental borrowing rate is used instead.

The definition of the lessee’s incremental borrowing rate states that the rate should represent what the lessee ‘would have to pay
to borrow over a similar term and with similar security, the funds necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment.’ In applying the concept of ‘similar security’, a lessee uses the right-of-use asset granted
by the lease and not the fair value of the underlying asset. This is because the rate should represent the amount that would be
charged to acquire an asset of similar value for a similar period.

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

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

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

• there is a change in the lease term,

• a change in the assessment of whether the lessee is reasonably certain to exercise an option to purchase the underlying asset

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

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

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

Share Capital

Ordinary shares are classified as equity and are stated at the proceeds received net of direct issue costs.

Share buyback

On 7 July 2022 the Group announced the share buyback programme to repurchase common stock in the capital of the Company
(Boku Inc.) up to a maximum aggregate consideration of £8 million and up to a maximum of five million Common Stock.

The purpose of the Buyback programme is to hold the Common Stock in treasury for the purpose of satisfying future obligations
in relation to the staff equity remuneration programme.

The Buyback Programme will operate within certain pre-set parameters, including that the maximum price paid per Common
Stock shall be 105 per cent of the trailing 5 day average mid-market price, and in accordance with the authority granted by the
Company's Board.

The Buyback Programme will be effective from 7 July 2022 and will expire on 30 June 2023, or earlier, if either the maximum
aggregate number of Common Stock have been purchased or the maximum aggregate consideration has been reached.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Due to the limited liquidity in the issued Common Stock, a buy-back of Common Stock pursuant to the Authority on any trading
day may represent a significant proportion of the daily trading volume in the Common Stock on AIM and may exceed 25 per cent
of the average daily trading volume. Accordingly, the Company will not benefit from the exemption contained in Article 5(1) of the
UK version of the Market Abuse Regulation (Regulation (EU) No 596/2014) (as in force in the UK and as amended by the Market
Abuse (Amendment) (EU Exit) Regulations 2019 and the Financial Services Act 2021).

The cost of treasury shares held is presented as a separate reserve (the "treasury share reserve") and recorded in equity. Any
excess of the consideration received on the sale of treasury shares over the weighted average cost of the shares sold is credited
to share premium.

Share-based payments

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

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

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

Where options are cancelled within the vesting period, the remaining cost of the options is accelerated and charged to the
Statement of Comprehensive Income in the year. When the employee leaves the Group, unvested grants are forfeited and the
cumulative share based payment expense is reversed on the leaving date. The unvested RSUs are forfeited on leaving the Group
for any reason including as part of discontinued operations.

The Group’s scheme, which awards shares in the parent entity, includes recipients who are employees in the parent company and
subsidiaries. In the consolidated Financial Statements, the transaction is treated as an equity-settled share-based payment, as the
subsidiary has received services in consideration for Boku Inc’s equity instruments. An expense is recognised in the consolidated
statement of comprehensive income 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 or
intercompany accounts. The credit is treated as a capital contribution, as the parent company is compensating the subsidiaries’
employees with no cost to the subsidiaries where there is no expectation to recharge the cost. In the parent company’s financial
statements, there is no share-based payment charge where the recipients are employed by a subsidiary, with the parent company
recognising an increase in the investment in the subsidiaries as a capital contribution from the parent and a credit to equity or
intercompany, if the recharge is intended. There are no cash settled share-based payments allowed under the scheme, but if they
were they will be recognised as an expense in the income statement with a corresponding credit to liabilities.

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

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

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

4. Accounting policies (continued)

Taxation

The income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. Current taxes are calculated according to local tax rules, using tax rates enacted or substantially
enacted at the reporting date.

A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there
will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to
become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous
experience in respect of such activities and in certain cases based on specialist independent tax advice.

Deferred tax

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

• the initial recognition of goodwill;

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

transaction affects neither accounting or taxable profit; and

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

the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and unused tax loses can be utilised.

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

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

• the same taxable group company; or

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

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.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Presentational currency and balances

The presentational currency for the group is US dollars, as the company is incorporated in the USA which is the currency of its
primary economic environment in line with IAS 21. Boku Group has its main contracts, assets, intellectual property and employees
in the USA. The functional currency for subsidiaries is the local currency of the entity’s country of incorporation. Items included in
the financial statement of each of the Group’s entities are measured in the functional currency of each entity.

Foreign currency

Foreign currency transactions and balances

i) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the

transactions. Revenue is translated using the average monthly rates.

ii) Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange

rate at the reporting date.

iii) Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional

currency at the exchange rate when the fair value was determined.

iv) Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the

date of the transaction.

v) Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting
period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement within administrative expenses.

vi) Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments (including purchased intangible
assets) to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the
foreign operation and translated at the closing rate.

Consolidation of foreign entities

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

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

date of that Consolidated statement of financial position.

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

rates ; and

iii) All resulting exchange differences are recognised in the other comprehensive income and as a separate component of equity

(foreign exchange reserve).

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 2022

Notes to the Consolidated Financial Statements

5. 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 (Interest rate risk & Foreign Exchange risk)

• Credit risk

• Liquidity risk

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

• Trade and other receivables

• Cash and cash equivalents and restricted cash

• Trade and other payables

• Bank loans

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:

• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;

• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either

directly or indirectly; and

• Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable

market data. The Group has classified the warrant liabilities in this category.

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Financial instruments by category

Financial assets – amortised cost

Cash and cash equivalents

Restricted cash

Total Cash

Other financial assets at amortised cost

Accounts receivable (net)

Other receivables

Total other financial assets

Cash and other financial assets at amortised cost

Financial assets at FV through profit and loss

Holdback receivable asset

Total financial assets at FV through profit and loss

Financial liabilities – amortised cost

Trade payables

Accruals

Total other financial liabilities

Bank loans (secured)

Lease liabilities

Loans and borrowings

Financial liabilities – amortised cost

Financial liabilities at Fair Value through profit and loss

Derivative financial liability (Amazon warrant liability) Level 3

Total financial liabilities at Fair Value through profit and loss

31 December 2022
$’000

31 December 2021
$’000

99,551

16,962

116,513

56,651

5,789

62,440

86,210

526

86,736

203,249

78,606

484

79,090

141,530

5,600

–

31 December 2022

31 December 2021

$’000

119,051

35,550

154,601

–

3,549

158,150

5,206

$’000

94,152

23,375

117,527

7,813

4,833

12,646

130,173

–

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

5. Financial instruments – Risk Management (continued)

(a) Amazon warrants

The fair value of the warrant obligations was $5,206,111 as at 31 December 2022 and $1,755,640 at the inception of the
warrants on 16 September 2022. The warrants are classified as Level 3 derivative liabilities as there is no current market for the
warrants, such that the determination of fair value requires significant judgment or estimation. The Group values the warrants
using a combination of Monte Carlo Simulation and Black-Scholes Model valuation methods. Significant unobservable inputs as
at the inception of the warrant agreement on 16 September 2022 included volatility of the Company’s common stock of 40%,
revenue volatility of 30%, a risk free rate of 3.39%, and forecasted revenue from Amazon over the seven year vesting period.

A significant increase in volatility in isolation would result in a significant change in fair value. A significant change to the timing
and value of forecast Amazon revenue would change the vesting dates and the number of warrants that vest and significantly
change fair value as a result. If equity volatility and revenue volatility were both to decrease by 5% to 35% and 25% respectively,
the total fair value of warrants would decrease to $4,960,154, representing a decrease in fair value of $245,958. If equity volatility
and revenue volatility were both to increase by 5% to 45% and 35% respectively, the total fair value of warrants would increase to
$5,467,687, representing an increase in fair value of $261,576.

Movement of the contract asset for Amazon and warrant liabilities as at 16 September 2022 (inception) and 31 December 2022

Warrant Contract Asset

Initial recognition of warrant contract asset (16 September 2022)

Change in number of warrants expected to vest

Amortisation to revenue

Closing balances (31 December 2022)

Financial Liability

Initial recognition of contract liability (16 September 2022)

Change in number of warrants expected to vest

Change in fair value of warrants

Warrants exercised

Closing balances (31 December 2022)

$USD

1,755,640

(19,862)

(24,824)

1,710,954

$ USD

(1,755,640)

19,862

(3,470,333)

–

(5,206,111)

The management of risk is a fundamental concern of the Group’s management. 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. 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).

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Interest rate risk

The Group is exposed to cash flow interest rate risk from bank borrowings at variable rates but with a lower floor. However the
group had no bank loans as at 31 December 2022. The Group has a $10 million revolving facility, which can be used if needed.
Interest rates for the current Boku revolving facility loan were based on LIBOR, however LIBOR was phased out by the end of
2021. The Group manages the interest rate risk centrally. The term loan taken out to part fund the acquisition of Fortumo in 2020
was repaid in full on 28 February 2022 following the disposal of the Identity division to Twilio. As at 31 December 2022 the Group
has no loans. The Group’s bank borrowings and other borrowings are disclosed in note 21.

The following table demonstrates the sensitivity to a one percent change (higher only due to the fixed lower floor) to the interest
rates of the following borrowings at 31 December 2022 to the profit before tax and net assets for the period:

Bank loans

31 December 2022
Increase/(decrease) of loss
before tax and net assets
$'000

31 December 2021
Increase/(decrease) of loss
before tax and net assets
$'000

–

+81

During the last quarter of 2022 interest rates increased in many jurisdictions as governments tried to control inflation. As the
Group has cash balances in many jurisdictions, the increase in interest rates had a positive effect on the Group cash position. The
bank interest earned during 2022 was $189 thousand (2021: $18 thousand).

Foreign currency risk

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

The Group serves many of our U.S. based clients with global operations using the Group subsidiaries in Singapore, Ireland,
UK, Japan and Hong Kong. Although contracts with these clients are typically priced in U.S. dollars a substantial portion of
client funds receivable and related costs and revenues are denominated in the local currency of the country where services are
provided, resulting in foreign currency exposure which have an impact on our results of operations.

Our primary foreign currency exposures are in Japanese Yen, EURO, GBP, Turkish lira, Thai Baht, Korean Won, Taiwanese dollar
and Philippines Peso. There can be no assurance that we can take actions to mitigate such exposure in the future, and if taken,
that such actions will be successful or that future changes in currency exchange rates will not have a material adverse impact on
our future operating results. A significant change in the value of the U.S. Dollar against the currency of any one or more of these
currencies mentioned above may have a material adverse effect on our financial condition and results of operations.

Foreign currency exchange risk arises mainly where receivables and payables exist due to transactions entered into in foreign
currencies. As such, management believe that the Group is exposed to the following foreign currency exchange risks:

a) Transaction foreign currency risk is the exchange risk associated with the time delay between entering into a contract and
settling it. Greater time differences exacerbate transaction foreign currency risk, as there is more time for the two exchange
rates to fluctuate. The Group manages this risk in various ways:

• by implementing procedures to receive funds faster (daily where possible) and settle the funds to merchants daily by

shortening the settlement times.

• by implementing a mark-up fee to cover the FX fluctuations when the settlement currency is different from the transaction

currency

• by contractual agreement to convert the funds at the foreign exchange rate received from the aggregators or other

suppliers.

• by using timely foreign exchange contracts to the extent that any remaining impact on profit after tax is not material.

As a result of implementing these strategies the Group has not incurred material realised foreign exchange losses in the year.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

5. Financial instruments – Risk Management (continued)

b) Translation foreign currency risk is the risk that the Group’s non-U.S. Dollar assets and liabilities, revenues and costs will
change in value as a result of exchange rate changes on converting them to US Dollars, which is the reporting currency of the
group. Monetary assets and liabilities are valued and translated into U.S. Dollars at the applicable exchange rate prevailing at
the applicable date. Any adverse valuation moves due to exchange rate changes at such time are charged directly and could
impact our financial position and results of operations.

For the purposes of preparing the consolidated financial statements, the Group convert subsidiaries’ financial statements as
follows:

Statements of financial position are translated into U.S. Dollars from local currencies at the period-end exchange rate,
shareholders’ equity is translated at historical exchange rates prevailing on the transaction date and income and cash flow
statements are translated at average exchange rates for the period. The Group manages all treasury activities centrally, with
the exception of the acquired Fortumo entities where treasury processes are in the process of being aligned with group
treasury policies and procedures.

As of 31 December 2022, the Group's gross exposure to foreign exchange risk was as follows:

31 December 2022

Trade and other receivables

Cash and cash equivalents and restricted cash

Trade and other payables

Financial assets/(liabilities)

10% impact – +/-

31 December 2021

Trade and other receivables

Cash and cash equivalents and restricted cash

Trade and other payables

Financial assets/(liabilities)

Euro

$’000

23,113

21,284

(49,100)

(4,703)

(523)

Euro

$’000

28,352

14,268

(47,757)

(5,137)

GBP

$’000

12,242

8,521

(16,877)

3,886

432

GBP

$’000

12,399

9,849

(18,934)

3,314

Other

$’000

46,900

32,225

(68,917)

10,208

1,135

Other

$’000

34,500

23,511

(45,006)

13,005

Total

$’000

82,255

62,030

(134,894)

9,391

1,044

Total

$’000

75,251

47,628

(111,697)

11,182

10% impact – +/-

(571)

368

1,445

1,242

The group operates in 48 currencies (2021: 37 currencies). We have separated Euro and GBP as the main affected currencies
by fluctuations in exchange rates for 2022. In 2021 the main currencies were GBP and EUR. Other currencies are included
in the ‘Other’ column. The impact of 10% movement in foreign exchange rate of US$ will result in an increase/decrease of
total comprehensive profit/loss after tax and financial assets/(liabilities) of $1,044 thousand for December 2022 (2021: $1,242
thousand).

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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 is exposed to credit risk in respect of these balances such that, if one or more the aggregators, MNOs or wallet
providers encounters financial difficulties, this could 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 contractually to its customers in the event of non-payment from wallet
providers, 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 the revenue amount 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 $138
thousand was provided at 31 December 2022 (2021: $149 thousand). The provision amounts represent an estimate of potential
bad debt in respect of the year-end Group trade receivables. The Group’s customers are spread across a broad range of sectors
and consequently it is not otherwise exposed to significant concentrations of credit risk on its trade receivables.

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

The Group’s provision matrix is as follows:

31–Dec–2022

< 60 days

61–90 days

91–150 days

> 150 days

Total

Expected credit loss % range

Gross carrier receipts ($’000)

Expected credit loss rate ($’000)

84,792

–

1,384

–

95%–100%

–

1,238

(138)

87,448

(138)

31–Dec–2021

< 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)

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

Notes to the Consolidated Financial Statements

5. Financial instruments – Risk Management (continued)

At 31 December 2022 the Group had a provision for $138 thousand (31 December 2021: $149 thousand) as $11 thousand
was reversed in the year – see Note 17 for full details of the movement in the year. As 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
thousand has been created in the year against receivables. This represents management’s best estimate of the potential revenue
loss for the Group if the $1,238 thousand (2021: $756 thousand) 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 and 2022 is lower than in prior years. The methodology used to assess the
expected credit loss ranges has not been used consistently for 2022 and 2021.

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 (A+). The maximum exposure is the amount of cash held with at the bank (cash and cash equivalents). To date, the Group
has not experienced any losses on its cash and cash equivalent deposits.

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 2022

Within 1 year

2–5 years

More than 5 years

Trade and other payables

Financial liability (Amazon warrant liability)

Leases liabilities

Total

$’000

154,379

–

1,427

155,806

$’000

–

2,407

$’000

–

5,206

–

5,206

31 December 2021

Within 1 year

2–5 years

More than 5 years

Trade and other payables1

Bank loans and overdrafts (secured)

Leases liabilities

Total

$’000

117,527

1,250

1,477

120,254

$’000

–

6,875

3,868

10,743

$’000

–

1 Trade and other payables for the year ended 31 December 2021 have been restated due to incorrect inclusion of statutory obligations.

100

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The Board receives financial reports on a monthly basis as well as information regarding cash balances and investments. The
liquidity risk of each group entity is managed by the Group treasury team at the entity level. Where facilities of group entities need
to be increased, approval must be sought by the entity’s CFO. Where the amount of the facility is above a certain level, agreement
of the Group CFO and the board is needed.

Capital Management

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

The Group’s objectives when maintaining capital are:

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

benefits for other stakeholders; and

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

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

The Group manages its capital structure and makes the necessary adjustments in the light of changes of economic
circumstances, the risk characteristics of underlying assets and the projected cash needs of the current and prospective
operational / financing / investment activities. The adequacy of the Group’s capital structure will depend on many factors,
including capital expenditures, market developments and any future acquisition.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

101

Notes to the Consolidated Financial Statements

6. Discontinued operations

On 28 February 2022, the Group sold its entire Identity business (Boku Identity Inc and its 100% subsidiary Boku Mobile Solutions
Ireland Ltd) to Twilio for a maximum consideration of $32.5 million (including $6.5 million of holdback receivable of which $5.6
million was outstanding at 31 December 2022). Management committed to a plan to sell this business early in 2022, following
a strategic decision to focus on its core Payments business. The Identity business was not classified as held-for-sale or as a
discontinued operation at 31 December 2021 as it did not meet the required criteria at that time.

As required, at 31 December 2022, discontinued operations are excluded from the results of continuing operations and are
presented as a single entry in the Income Statement as ‘Profit from discontinued operations’ in the income statement. The
comparative “Consolidated Statement of Comprehensive Income’ has been re-presented to show the discontinued operation
separately from continuing operations.

The financial results related to the discontinued operations for the period to the date of disposal (28 February 2022) are presented
below:

Discontinued operations

Fee Revenue

Cost of sales

Gross Profit

Administrative Expenses

Operating loss analysed as:

Adjusted EBITDA

Depreciation and amortisation

Share based payments expense

Foreign exchange losses

Exceptional items (included in administrative expenses)

Operating profit/(loss)

Profit on disposal

Disposal costs

Share based payments expense reversed

Total Profit/(Loss) before tax on disposal of Identity business

Tax

2022
(12 months)

2021
(12 months)

$’000

1,153

(719)

434

(1,541)

(652)

(238)

(163)

(54)

–

(1,107)

26,614

(1,408)

506

24,605

–

$’000

7,083

(4,162)

2,921

(8,426)

(2,894)

(1,236)

(977)

(249)

(149)

(5,505)

–

(5,505)

–

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

24,605

(5,505)

102

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The net cashflows used in the Identity business disposed in the period are as follows:

Period ended
31–Dec 2022
$’000

Period ended
31–Dec 2021
$’000

Net cash used in operating activities

Net cash used in investing activities

Net cash from financing activities

Net cash (used in)/from discontinued operations

(1,106)

(178)

570

(714)

Reconciliation of consideration received with the total profit and loss from discontinued operations:

Total consideration received in the year

Financial asset through profit and loss – holdback receivable

Working capital adjustment

Total consideration

Assets and liabilities disposed of:

Assets

Goodwill

Intangible assets

Cash

Trade and other receivables

Total Assets disposed of

Liabilities

Trade payables

Other payables

Total liabilities disposed of

Net assets and liabilities disposed of

Taxation

Gain on disposal of discontinued operation after tax

Disposal costs in the year

Loss from discontinued operations in the year

Total Profit from discontinued operations

2,784

2,278

371

1,547

6,980

780

297

1,077

(567)

(2,818)

4,223

838

31 Dec 2022
$’000

26,761

5,600

156

32,517

5,903

–

26,614

(1,408)

(601)

(2,009)

24,605

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

103

Notes to the Consolidated Financial Statements

6. Discontinued operations (continued)

The working capital adjustment was an agreed adjustment made three months after the disposal date of 28 February 2022 based
Boku Mobile Solutions Ireland Ltd on an updated statement of assets and liabilities at that time.

The total consideration received in the consolidated statement of cashflows ($26,545,448) represents the total amount
received net of the cash disposed. However, the outstanding bank loan of $8,125,000 was paid directly by the buyer. The net
consideration received on 28 February 2022 was therefore $17,665,539. On 22 July Boku received a further $155,972 from Twilio
as part of the agreed three month working capital adjustment. A further $600,000 was received on 8 December 2022 as payment
in full for the specific indemnity holdback.

At 31 December 2022, the Sale and Purchase agreement with Twilio included a final indemnity holdback of $5.6 million against
possible future claims for 18 months from the transaction date which expires at the end of August 2023. Management believes
the likelihood of any claims under this indemnity to be extremely low and therefore that it is virtually certain that the full amount will
be received. As a result, the full amount has been included in the profit from discontinued operations in the Income Statement.
This has been classified as a financial asset through profit and loss and is included within current assets in the Consolidated
Statement of Financial Position.

7. Revenue from contracts with customers

The Group’s revenue is principally its service fees earned from its merchants. All revenue is earned at the time the transaction is
processed and as a result, all revenue is recognised at one point in time. Therefore, 31 December 2021 and 31 December 2022,
the Group does not have deferred revenue in the consolidated statement of financial position.

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, or before the funds are received from the aggregator, MNO or wallet,
at contractual agreed rates, in line with IFRS 15.

104

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Revenue Fee

2022
$’000

63,764

2021
$’000

62,082

The geographical analysis of the revenue by location of the users is presented below:

Group Revenue by Region

Continuing Operations Payments

'$ 000 USD

Americas

APAC

EMEA

Grand Total

Dec–22 YTD

628

36,167

26,969

63,764

1.0%

56.7%

42.3%

100.0%

Group Revenue by Region

Continuing Operations Payments

' $000 USD

Americas

APAC

EMEA

Grand Total

An analysis of non-current assets by geographical market is given below:

United States of America (continuing operations)

United States of America (discontinued operations)

Europe

Rest of the World

Total

Dec–21 YTD

3,018

33,444

25,620

62,082

2022
$’000

49,123

–

12,724

452

62,299

4.9%

53.9%

41.2%

100.0%

2021
$’000

47,322

4,340

16,551

574

68,787

In 2022 there was one customer, with revenue amounting to more than 10% of the payments segment revenue (2021: 2
customers).

On 28 February 2022, the Group sold the entire Identity business segment. As a result, from 1 March 2022, the Group reported
its financial statements on a single segment basis : “Payments segment”. The Identity segment results for the two months of 2022
are presented below under ‘discontinued operations’. The Group operated with two operating segments through financial year
2021, namely, the Payments Segment and the Identity Segment.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and
the Chief Financial Officer. The Group CEO and CFO review the monthly management reports for both segments before sending
the results to the Board.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

105

Notes to the Consolidated Financial Statements

7. Revenue from contracts with customers (continued)

Amazon warrants

On 16 September 2022, the Group entered into a stock warrant agreement with a subsidiary of Amazon Inc, Amazon.com NV
Investment Holdings LLC (‘Amazon’) in conjunction with a commercial service level agreement for the Group to provide payment
processing services to Amazon.

Under the agreement, the Group issued warrants to Amazon allowing them to purchase common stock that will vest
incrementally, based on the amount of revenue earned by the Group from Amazon via Boku payment processing methods.
The warrant agreement grants Amazon the right to acquire up to 11,215,142 shares of common stock in the Group (equivalent
to 3.75% of the Group's total common stock as at the inception of the warrant agreement). 747,676 shares of common stock
vested immediately on the signing of the warrant agreement on 16 September 2022. 209,350 additional shares of common stock
will vest for every $1m of revenue generated by the Group under its service level agreement with Amazon over a 7-year vesting
period ending 15 September 2029. No further warrants will vest if $50 million of revenue is generated under the service level
agreement, which results in a final vesting increment of 209,316 shares of common stock. The exercise price of vested warrants
is 81.20p per share, based on the 30-day volume weighted average trading price as at 16 September 2022.

The Group has determined that the 747,676 warrants of common stock that vest immediately on signing of the warrants are
equity instruments under IAS 32, as they represent a fixed number of shares that will be exercised at a fixed price. The warrants
will therefore not be accounted for until they are exercised and paid, at which point share capital and share premium will be
recorded.

The Group has determined that the remaining warrants linked to revenue under the service level agreement are within the scope
and revenue recognition and financial instruments accounting standards. The warrants represent a derivative financial instrument
classified as a financial liability in accordance with IAS 32 and IFRS 9, remeasured to fair value with gains and losses recorded in
profit or loss.

At inception of the warrant, an equal and opposite derivative financial liability and corresponding warrant contract asset are
recorded at fair value, based on the total number of warrants expected to vest (linked to forecasted Amazon revenues under the
service level agreement) and the fair value a single warrant.

The warrant contract asset, which effectively represents volume rebate, is amortised to revenue based on Amazon revenues to
date as a proportion of total expected Amazon revenues over the seven year vesting period.

The warrant contract asset represent non-cash consideration payable to a customer under IFRS 15, which is recorded as a
reduction to revenue and measured at fair value, but not subsequently remeasured.

The derivative financial liability is remeasured to fair value at each reporting date. The fair value movement attributable to the
change in the number of shares expected to vest due to a change in estimated Amazon revenues over the seven year vesting
period is recorded as an equal and opposite increase to the financial liability and warrant contract asset, based on the fair value of
the warrant at inception. The fair value movement attributable to the change in the fair value of the underlying warrants is recorded
as gains or losses in profit or loss.

The initial fair value of the warrants at inception was $1,755,640, based on a fair value of one warrant of $0.348 and a total
number of warrants expected to vest over the seven year vesting period of 5,049,288. As at 31 December 2022, the total number
of warrants expected to vest decreased to 4,992,086 resulting in an decrease to the warrant contract asset and financial liability
of $19,862, and the fair value of 1 warrant increased to $1.043, resulting in a loss in profit or loss of $3,470,333. The fair value of
the warrants was determined using a combination of Monte Carlo Simulation and Black-Scholes Model valuation methods and
are classified within Level 3 of the fair value hierarchy.

106

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

8. Administrative expenses (including exceptional items)

Audit fees – fees payable to group company’s auditors for the audit of the consolidated
financial statements and UK subsidiaries – BDO LLP

2022
$’000

394

Restated1
2021
$’000

359

Audit fees of the financial statements of the company’s subsidiaries – BDO firms

129

138

Audit fees – non-BDO – subsidiaries audits

Fees payable to companies group auditors for other audit related assurance services – BDO
LLP half year review

Fees payable to companies auditors for other audit related assurance services BDO
Singapore

Total audit fees and audit related assurance services

Taxation services (not performed by auditor)

Professional services not performed by auditor

Consultancy and compliance services

Staff costs (excluding share based payments expense – note 10)

Travel & entertainment

Property occupancy costs

IT, development and hosting

Banking costs

Legal fees

Other costs including marketing, support & testing and other administration expenses

630

287

146

872

30,945

1,157

1,239

4,290

469

856

638

–

524

142

113

1,238

28,687

355

1,160

3,211

495

864

789

Operating Expenses, excluding items in Adjusted EBITDA

41,529

37,578

Depreciation of property, plant and equipment

Amortisation of intangible assets

Foreign exchange loss

Exceptional items

Exceptional Items – Impairment of Fortumo domain name

Share – based expenses (note 24)

Total administrative expenses

1Restated to exclude discontinued operations

2,032

3,631

796

3,795

1,264

5,165

2,242

4,009

(115)

823

–

6,414

58,212

50,951

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

107

Notes to the Consolidated Financial Statements

8. Administrative expenses (including exceptional items) (continued)

Exceptional items include the following:

Impairment of Fortumo domain name

Professional costs

Charitable contributions

Fair value adjustment – Amazon warrant

Total

2022
$’000

1,264

317

3,470

5,059

2021
$’000

–

812

–

823

The impairment of the Fortumo domain name of $1,264 thousand (2021: Nil) is a one off charge, non cash full impairment as the
group stopped using the Fortumo name and domain name during the year.

In 2022, professional costs of $7 thousand (2021: $812 thousand) included in exceptional costs represent the contracted costs
for exploring disposal options for the Identity business.

Charitable contributions of $317 thousand (2021: $11 thousand) were classed as exceptional due to their exceptional large
amount, which was donated to charities helping during the Ukraine war.

Fair value adjustment of $3,470 thousand (2021: Nil) relates to the non-cash change in the valuation of the Amazon warrant
liability at 31 December 2022, which was mainly caused by an increase in the share price of the entity between inception in
September 2022 and year end.

9. Non-GAAP Financial measures

Management present non-GAAP financial measures because they believe that these and other similar measures are widely used
by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity.
These measures are also used internally to establish forecasts, budgets and operational goals to manage and monitor our
business, as well as evaluate our underlying historical performance, as we believe that these non-GAAP financial measures depict
the true performance of the business by encompassing only relevant and controllable events, enabling us to evaluate and plan
more effectively for the future.

The primary adjusted financial measures are EBITDA, Adjusted EBITDA Adjusted Operating expenses and Constant currency
measures (Revenue only), which management considers are relevant in understanding the Group’s financial performance.
Management uses the adjusted financial measures by excluding certain one-off items from the actual results. The determination of
whether one-off items should form part of the adjusted results, is a matter of judgement and it’s based on whether the inclusion/
exclusion from the results represent more closely the consistent trading performance of the business.

We define “EBITDA” as net income / (loss) for the year, less discontinued operations gains, net of tax, before finance expenses
(including finance costs related to lease liabilities), depreciation and amortisation (including depreciation of right-of-use assets),
and income tax expense / (benefit).

108

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

We define “Adjusted EBITDA” as EBITDA before the effect of the following items: foreign exchange losses share based
payments expense, non recurring income and exceptional costs (see note 8). We use Adjusted EBITDA internally to establish
forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical
performance. We believe that Adjusted EBITDA is a meaningful indicator of the health of our business as it reflects our ability to
generate cash that can be used to fund recurring capital expenditures and growth. Adjusted EBITDA from continuing operations
also disregards non-cash or non-recurring charges (exceptional costs) that we believe are not reflective of our long-term
performance. We also believe that Adjusted EBITDA is widely used by investors, securities analysts and other interested parties as
a supplemental measure of performance and liquidity.

We defined “Adjusted Operating expenses” as Gross profit less Adjusted EBITDA (as defined above).

Constant currency measures (Revenue only)

Constant currency revenues are calculated by applying the monthly average foreign exchange rates for each month of 2021 to the
actual 2022 monthly results.

10. Key management personnel costs

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the Group, including the directors of the parent company.

Key management personnel compensation was made up as follows:

Salaries

2022
$’000

3,847

Restated1
2021
$’000

2,810

Short-term employee benefits (health insurance)

Social security costs

Share based payments expense

Long term employee benefits (pension)

Total

1Restated due to discontinued operations

497

2,952

7,407

1,109

1,746

5,705

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

109

Notes to the Consolidated Financial Statements

11. Finance income and expenses

Finance income

Interest income from bank deposits

Total

Finance expenses

Interest on bank loans & overdrafts

Other interest payable

Interest on lease liabilities

Amortisation of debt costs

Total

Net finance expenses

12. Income tax

Current tax

US tax

Foreign tax

Total current tax

Deferred tax credit

Total tax credit

2022
$’000

(201)

121

235

313

675

474

2022
$’000

239

257

496

(733)

(237)

2021
$’000

(22)

385

235

125

770

748

2021
$’000

–

513

(2,395)

(1,882)

110

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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 before tax multiplied by the applicable rate of tax:

Expenses not deductible for tax purposes

US state taxes/Withholding taxes

Utilisation of tax losses

Other– difference in tax rates and adjustments in respect of prior years

Total tax (credit)/expense

Deferred Tax

Net opening position

Net recognition in the year

Foreign exchange revaluation

Net closing position

The net closing position is made up of:

2022
$’000

4,060

21%

853

1,117

1,800

(4,110)

103

(237)

2022
$’000

2,649

733

3,383

2021
$’000

4,387

21%

921

(2,646)

(237)

(1,882)

2021
$’000

253

2,359

2,649

• A deferred tax liability at 31 December 2022 is Nil (2021: $456,097). The prior year deferred tax liability which related to tax

positions connected with the Boku Inc UK fixed temporary differences.

• The deferred asset of $3,383,489 (2021: $3,105,382) relates primarily to the recognition of the US and UK available losses

which management believe that can be utilised within the next two years. Each year the management assess the usability of
the deferred assets.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

111

Notes to the Consolidated Financial Statements

11. Finance income and expenses (continued)

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

Unused tax credits

Unused tax losses

Total deferred tax assets

2022
$'000

1,939

321

189

11,082

13,647

2021
$'000

1,819

527

189

27,952

30,610

The Group has carried forward losses and accelerated timing differences at the reporting date as shown below. In respect of its
UK subsidiary, these can be carried forward and offset against UK taxable income indefinitely. In respect of its US entities, net
operating loss carry forwards can be carried forward and offset against taxable income for 20 years for losses incurred up to and
including 31 December 2017. All net operating loss carry forwards incurred after 31 December 2017 can be carried forward and
offset against US taxable income indefinitely. Utilisation of net operating loss or tax credit carry forwards may be subject to annual
limitations if an ownership change had occurred pursuant to the section 382 Internal Revenue Code and similar state provisions.

The unused tax losses must be utilised by various dates. U.S. federal tax losses expire in various dates through 2027.

112

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

13. Earnings per share

The calculation of basic earnings per share (EPS) has been based on the following profit/(loss) attributable to the shareholders and
weighted average number of ordinary shares outstanding.

Earnings per share – Total

EPS attributable to shareholders of the Company ($’000)

Basic EPS

Diluted EPS

EPS attributable to shareholders of the Company ($’000)

Basic EPS ($)

Diluted EPS ($)

Earnings per share – from discontinued operations

EPS attributable to shareholders of the Company ($’000)

Basic earnings/(loss) per share ($)

Diluted earnings/(loss) per share ($)

2022

28,904

0.09690

0.09338

4,299

0.01441

0.01388

2022

24,605

0.08249

0.07949

2021

6,269

0.02133

0.02057

11,774

0.04005

0.03863

2021

(5,505)

(0.01873)

(0.01806)

2022

2021

Denominator – basic

Weighted average number of equity shares

298,275,521

293,975,346

Denominator – diluted

Weighted average number of equity shares

Weighted average number of equity options, RSUs & warrants

Weighted average number of shares

298,275,521

293,975,346

11,254,745

8,891,611

309,530,266

302,866,957

The calculation of the weighted average number of ordinary shares outstanding excludes the shares held in treasury. As at 31
December 2022 there are 1,500,000 share held in treasury (2021: Nil).

Diluted earnings per share was calculated using the treasury method.

Profit or Loss per share is calculated based on the share capital of Boku, Inc. and the earnings of the Group.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

113

Notes to the Consolidated Financial Statements

14. Property, plant and equipment

Right of use
assets

Computer
equipment and
software

Office equipment
and fixtures
and fittings

Leasehold
improvement

$’000

COST

At 1 January 2021

7,222

1,436

1,645

363

Total

$’000

10,666

4,329

(6,329)

(132)

8,534

914

(201)

(389)

8,858

3,973

(4,307)

(99)

6,789

444

(144)

(291)

6,798

337

(545)

(14)

1,214

422

(41)

(49)

1,546

(1,372)

(16)

276

(16)

(22)

286

–

(105)

(3)

255

–

(27)

228

4,154

1,028

1,543

170

6,895

1,879

(4,187)

(58)

1,788

1,637

(144)

(145)

3,136

3,068

5,001

3,662

270

(545)

(9)

744

313

(34)

(31)

992

408

470

554

(1,370)

(10)

216

(16)

(14)

227

102

(105)

(2)

116

–

(12)

145

193

139

2,255

(6,207)

(79)

2,864

2,032

(194)

(202)

4,500

3,771

5,670

4,358

Additions

Disposals

Exchange adjustment

At31 December 2021

Additions

Disposals

Exchange adjustment

At 31 December 2022

DEPRECIATION

At 1 January 2021

Acquisitions

Charge for the year

Disposals

Exchange adjustment

At 31 December 2021

Charge for the year

Disposals

Exchange adjustment

At 31 December 2022

NET BOOK VALUE

At 1 January 2021

At 31 December 2021

At 31 December 2022

114

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

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 –

Balance as at 1 January 2021

Additions

Disposals

Exchange adjustment

Depreciation charge for the year

NBV balance as at 31 December 2021

Additions

Exchange adjustment

Depreciation charge for the year

NBV balance as at 31 December 2022

Property
$'000

IT Equipment
$'000

2,778

3,543

(120)

(41)

(1,499)

4,661

129

(146)

(1,411)

3,233

290

430

–

(380)

340

315

–

(226)

429

Total
$'000

3,068

3,973

(120)

(41)

(1,879)

5,001

444

(146)

(1,637)

3,662

The additions related to the 1 year renewal of the office lease for Ireland and Singapore and new AWS leases for additional servers
(IT equipment).

Impairment of Property and Equipment

The carrying amounts of the Group’s assets including right-of-use assets are reviewed at the end of each reporting period to
determine whether there is any indication of impairment loss. If any such indication exists, the asset’s recoverable amount is
estimated in order to determine the extent of the impairment loss, if any. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less cost to sell and value in use. Impairment losses are charged to the profit and loss in other operating expenses. During the
years ended 31 December 2022 and 2021, no impairments have been recorded.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

115

Notes to the Consolidated Financial Statements

15. Intangible assets

Domain
name

Developed
technology

Merchant
relationships

$’000

Trade
marks

$’000

Internally
developed
software

Goodwill

$’000

Total

$’000

COST

At 1 January 2021

1,974

8,397

16,976

110

46,620

Additions

Exchange Adjustment

At 31 December 2021

Additions

Disposals

Disposals (discontinued
operations)

Exchange adjustment

At 31 December 2022

AMORTISATION

At 1 January 2021

Charge for the period

Exchange adjustment

At 31 December 2021

Charge for the period

Impairment (domain
name)

–

(138)

1,836

–

(1,562)

–

(396)

8,001

–

(19)

–

(1,918)

(134)

140

232

177

(14)

395

1,264

(271)

5,793

2,818

873

(91)

3,600

494

–

Disposal (domain name)

(1,562)

Disposals (discontinued
operations)

Exchange adjustment

At 31 December 2022

NET BOOK VALUE

At 1 January 2021

At 31 December 2021

At 31 December 2022

–

(1,217)

(38)

140

1,742

1,441

–

(60)

2,817

5,579

4,401

2,976

–

(1,226)

15,750

–

(851)

14,899

8,987

1,832

(708)

10,111

616

–

(523)

10,204

7,989

5,639

4,695

–

(1,241)

45,379

–

9,694

5,022

83,771

5,022

(95)

(3,096)

14,621

85,697

4,866

(3)

4,866

(1,584)

(7,698)

(2,784)

(2,996)

–

110

–

(862)

(87)

(2,205)

110

41,733

16,401

79,076

–

6,175

2,350

(51)

8,474

2,677

–

(1,419)

18,212

5,232

(864)

22,580

3,868

1,264

(1,562)

(2,636)

(47)

(668)

9,685

22,846

110

46,620

45,379

41,733

3,519

6,147

6,716

65,559

63,117

56,230

116

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Management has reviewed goodwill and intangible assets at 31 December 2022 which mainly consist of the assets from the
acquisition of Mopay AG ("Mopay") in October 2014 and Fortumo Holdings Inc. on 1 July 2020.

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).

Fortumo Holdings Inc. was acquired by Boku on 1 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).

Impairment and write off – Fortumo domain name

During the year management decided to discontinue the Fortumo domain name and to rebrand all the Fortumo products and
rename the acquired entities of Fortumo group to Boku’s name. As a result, the Fortumo domain which was separately valued
as part of the PPA work at the time of the acquisition of Fortumo in July 2020 and included in intangibles, was impaired in full by
$1.26 million ($1.44 million at 31 December 2021 less amortisation $0.18 million) as the Fortumo domain name is no longer being
used internally or externally. It was then written off.

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 cash generating unit (“CGU”). 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 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 (“WACC”). 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 to calculate value-in-use is the
weighted average cost of capital of 15.5% (2021:14.6%). 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% (2021: 2%) for each CGU.

The 2023 budget was prepared at the consolidated level. Revenue, Adjusted operational expenses and Adjusted EBITDA were
also projected from fiscal year 2023 through to 2027. In 2022 Group revenue growth was 3% (2021: 23%) while Adj. EBITDA fell
by 11% to $20.5 million (2021: 31% increase).

A forecast for 2023–2027 was prepared and used to calculate the net present value. The 5 year forecast includes the following
growth assumptions (see also the table below):

• Group revenues will grow by 15.4% in 2023, 18.7% in 2024 and 21% in 2025 and 2026 and by 23.8% in 2027

• A constant take rate of 0.7% for 2023–2025 and a take rate of 0.8% for 2026 and 2027 (Take rate = Revenue divided by Total

Payments volume)

• Gross profit of 97% for 2023–2024, 98% for 2025 & 2026 and 99% for 2027.

The payments business is a mature, established business in multinational markets.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

117

Notes to the Consolidated Financial Statements

15. Intangible assets (continued)

From a sensitivity perspective, the model also shows that the Net Present Value of cashflows would have to be reduced by a
factor of 6 in order for the carrying amount of goodwill to equal the value in use of the Payments CGU (the only CGU) on the
statement of financial position the end of 2022 and by a factor of 3.4 in order for the carrying amount of all intangibles to equal the
value in use of the CGU at the end of 2022.

The recoverable amounts of all the CGUs have been determined from value in use calculations based on cash flow projections
from formally approved budgets covering a three year period from 2022 to 2027. The first year of the projections is based on
detailed budgets prepared by management as part of the Group’s performance and control procedures. Subsequent years are
based on extrapolations using the key assumptions listed below which are management approved projections. The discount rate
applied to cash flow projections beyond three-years is extrapolated using a terminal growth rate which represents the expected
long-term growth rate.

The following rates and inputs were used for the Group forecast for the years ended 31 December 2022–2027:

Year

2023

2024

2025

2026

2027

Revenue growth rate

Gross Margin

Discount Rate (WACC)

Terminal Growth Rate

15.4%

18.7%

21.0%

21.4%

23.8%

97%

98%

99%

15.5%

The calculation of value in use for the business operations is most sensitive to changes in the following assumptions:

Revenue growth

Revenue growth assumptions have been derived from projections prepared by management. Management is of the view that
these assumptions are reasonable considering current market conditions. An impairment in the carrying value of goodwill and
intangible would not arise if the 2023–2027 average revenue growth rate declined to nil and all costs remain the same.

118

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Cost of sales and gross margin

Cost of sales has been projected on the basis of multiple strategies planned by management to ensure profitable operations.
These strategies include cost minimisation mechanisms such as offshore migration of labour, centralisation of support activities
and increasing efficiency of service delivery, resulting in improved gross margins over the forecasted period.

Discount rate

The management uses WACC as the discount rate which is calculated after taking into account the prevailing risk-free rate,
industry risk and business risk. An impairment in the carrying value of goodwill would not arise, all other assumptions being the
same until the weighted average cost of capital were to increase to 46.4%.

Terminal growth rate

Terminal growth rate was intentionally kept low and constant at 2% after 2027 and was the same as the terminal growth rate
used in previous years. Sensitivity analysis shows that the terminal value has to reduce by 102% in order for the post tax cash free
cashflow to be equal to the carrying value of all intangible assets.

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.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

119

Notes to the Consolidated Financial Statements

16. Subsidiaries

The principal subsidiaries of the Company, all of which have been included in the consolidated financial information, are presented
below. Boku Identity Inc and Boku Mobile Solutions Ireland were sold on 28 February 2022 and, as required, at 31 December
2022, they are presented as discontinued operations.

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 GmbH (100%)

Boku Inc.

Holding Company

Germany

Boku Network Services UK, Ltd (100%)

Boku Network Services AU Pty Ltd (100%)

Boku Network Services IN Private Limited (100%)

Boku Network Services SG PTE. LTD (100%)

Boku Network Services HK LTD (100%)

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Australia

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

India

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Singapore

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

Boku Network Services Japan Branch Office
(100%)

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Mopay AG Beijing Representative Branch (100%)

Boku Network Services AG
(Germany)

Mobile payment
solutions

Taiwan

Japan

China

Boku Identity Inc.(100%) – Disposed of on 28
February 2022

Boku Mobile Solutions Ireland (100%) – Disposed
of on 28 February 2022

Boku Network Services IE Limited (100%)

Boku Network Services Malaysia (100%)

Boku Inc.

Identity solutions

California, USA

Boku Identity Inc.

Identity solutions

Ireland

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Ireland

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Malaysia

120

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Name (% owned by Parent)

Parent

Principal activity

Location

Boku Network Services EE Holdings, Inc (100%)

Boku Network Services Inc.
(Delaware)

Holding Company

USA

Boku Network Services TH Co Ltd. (49.9%)

Boku Network Services PH, Inc. (100%)

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Thailand

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Philippines

Boku Network Services MX S. DE R.L. DE C.V
50% BNS Inc., 50% Boku Inc.)

Boku Network Services Inc.
(Delaware)

Dormant

Mexico

Boku Network Services Estonia OU (previously
Fortumo OU) (100%)

Fortumo Holdings Inc

Boku Network Services ES S.L (100%)

Fortumo OU

Fortumo Mobile Services Private Pvt. Ltd (100%)

Fortumo OU

Fortumo Singapore Pte. Ltd (100%)

Fortumo OU

Boku Network Services PE S.A.C. (100%)

Boku Network Services CO S.A.S. (100%)

Boku Network Services UY S.A.

Boku Network Services CL S.P.A. (100%)

Boku Network Services ZA (Pty) Ltd (100%)

Boku Network Services KE Limited (100%)

Boku Network Services Inc.
(Delaware)

Mobile payment
solutions

Estonia

Spain

India

Singapore

Dormant

Peru

Dormant

Columbia

Dormant

Uruguay

Dormant

Chile

Dormant

South Africa

Dormant

Kenya

Boku Network Services TZ Limited (99.999% BNS
Inc., 0.001% Boku Inc)

Boku Network Services Inc.
(Delaware)

Dormant

Tanzania

Boku Network Services AR S.R.L. (95% BNS Inc.,
5% Boku Inc.)

Boku Network Services Inc.
(Delaware)

Dormant

Argentina

Boku Network Services UG Limited (99.95% BNS
Inc., 0.05% Boku Inc,)

Boku Network Services Inc.
(Delaware)

Dormant

Uganda

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

121

Notes to the Consolidated Financial Statements

17. 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

Prepayments

Total trade and other receivables

31 December
2022
$’000

31 December
2021
$’000

27,898

59,550

87,448

(1,238)

86,210

100

426

938

2,406

90,080

28,072

51,290

79,362

(756)

78,606

454

1,268

2,199

82,557

Financial asset at fair value through profit and loss

5,600

–

Provision for receivables impairment, net

Opening balance

Utilised during the period

Increase/(decrease) during the period

Closing balance

31 December
2022
$’000

31 December
2021
$’000

149

(19)

138

1,322

(36)

(1,137)

149

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.

122

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

18. Cash and cash equivalents and restricted cash

Cash and cash equivalents – unrestricted cash

Cash and cash equivalents – restricted cash

31 December
2022
$’000

31 December
2021
$’000

99,551

16,962

116,513

56,651

5,789

62,440

The restricted cash primarily includes segregated client funds and other client money received but not yet paid to merchants (in
transit) for Boku’s licenced entities, cash held in the form of letter of credit to secure a lease agreement for the Company’s San
Francisco office and a certificate of deposit held at a financial institution to collateralise Company credit cards.

19. Lease liabilities

The table below shows a reconciliation for discounted lease liabilities (balance sheet amounts):

Property (office leases)

IT Equipment

Lease liabilities

1 Jan 2021

Additions

Interest expense

Payments to lease creditors

Exchange adjustment

Lease liabilities as at 31 Dec 2021

Additions

Interest expense

Payments to lease creditors

Exchange adjustment

Lease liabilities as at 31 Dec 2022

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

2,914

3,423

227

(1,227)

(504)

4,833

129

235

(1,476)

(172)

3,549

264

430

(702)

–

315

–

(315)

–

2022

1,427

2,407

–

3,834

Total

3,178

3,853

235

(1,929)

(504)

4,833

444

235

(1,791)

(172)

3,549

2021

1,477

3,868

–

5,345

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

123

Notes to the Consolidated Financial Statements

19. 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

2022

1,277

2,272

2022

235

–

238

–

2021

1,335

3,498

2021

235

–

Depreciation of right-of-use assets (Note 14)

1,637

1,879

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

2022

1,556

235

1,791

2021

1,694

235

1,929

124

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

20. 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

Deferred revenue

Total

Non-current

Accrued taxes on issued stock options

Total

The carrying values of trade and other payables and accruals approximate to fair values.

21. Loans and borrowings

Current

Bank loans and overdrafts (secured)

Lease liabilities

Total

Non-current

Bank loans

Lease liabilities

Total

31 December
2022
$’000

31 December
2021
$’000

118,829

35,550

154,379

1,024

860

–

94,152

23,375

117,527

788

1,022

304

156,263

119,641

1,194

1,700

31 December
2022
$’000

31 December
2021
$’000

–

1,277

–

2,272

1,125

1,335

2,460

6,688

3,498

10,186

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

125

Notes to the Consolidated Financial Statements

21. Loans and borrowings (continued)

The 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 part finance the acquisition of
Fortumo Holdings Inc, and its subsidiaries on 1 July 2020. The loan was structured as a $10.0 million term loan repayable in 4
years and $10.0 million revolving facility. Borrowing costs of $500,000 were incurred and are amortised over the life of the loan.

The Identity division was sold to Twilio on 28 February 2022. 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. As at 31 December 2022 the Group
has no bank loans, however, the Group retains the $10,000,000 revolving credit facility (RCF) which is currently not drawn upon.
This revolving credit facility expires on 1 July 2024.

The balance of current lease liabilities at period end was $1,276,728 (31 December 2021: $1,334,725) and non-current liabilities
$2,272,065 (31 December 2021: $3,498,493) and relate to server leases and office leases.

Reconciliation of liabilities arising from financing activities

2021

Cash flows

Non-cash changes ($‘000)

2022

Short-term borrowings

Long-term borrowings

Short-term lease liabilities

Long-term lease liabilities

$‘000

(1,125)

(7,000)

(1,791)

$‘000

1,125

6,688

1,335

3,498

Total liabilities from financial activities

12,646

(9,916)

312

1Includes interest and new leases

Reconciliation of liabilities arising from financing activities

Borrowing
costs
expensed in
the year

Foreign
Exchange
Movement

Lease
Liabilities
(IFRS 16)1

(129)

(43)

(172)

1,862

(1,183)

679

2020

Cash flows

Non-cash changes ($‘000)

2021

Borrowing
costs
expensed in
the year

Foreign
Exchange
Movement

Lease
Liabilities
(IFRS 16)1

Short-term borrowings

Long-term borrowings

Short-term lease liabilities

Long-term lease liabilities

$‘000

1,438

(313)

10,813

(4,250)

1,436

1,742

(1,929)

–

Total liabilities from financial activities

15,429

(6,492)

125

1Includes interest and new leases

(10)

(40)

(50)

1,838

1,796

3,634

$’000

–

1,277

2,272

3,549

$’000

1,125

6,688

1,335

3,498

12,646

–

312

–

125

–

126

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

22. Share capital

The Company’s issued share capital is summarised in the table below:

31 December
2022

31 December
2021

Number of shares
issued and fully paid

‘000

$’000

‘000

$’000

295,876

3,394

–

299,270

–

287,566

6,751

1,559

295,876

–

Common shares of $0.0001 each

Opening balance

Exercise of options and RSUs

Shares issued to Fortumo Shareholders

Closing balance

Common Shares

At December 31, 2022, the Company had 299,270,021 (2021: 295,876,395) common shares issued and fully paid. The
Company has only one class of shares with par value of $0.0001 each. The authorised share capital is 500,000,000 shares. The
company holds 1,500,000 shares in treasury purchased for $1,835 thousands.

Consideration paid/received for the purchase/sale of treasury shares is recognised directly in equity. The cost of treasury shares
held is presented as a separate reserve (the "treasury share reserve"). Any excess of the consideration received on the sale of
treasury shares over the weighted average cost of the shares sold is credited to retained earnings.

23. 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 2022

127

Notes to the Consolidated Financial Statements

24. Share-based payment

The Group operates the following equity-settled share-based remuneration schemes for employees, directors and non-
employees:

1. 2009 equity incentive plan (2009 Plan) for the granting of stock options, restricted stock awards (RSA) and restricted stock

units (RSU). No options were available to be issued under this plan as at 31 December 2022 or 2021. There are 3,771 options
vested but not exercised under this plan as at 31 December 2022.

2. 2017 Equity Incentive Plan (new plan started on the 7 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 as explained below. There are 837 options (2021: 969) and 10,069
(2021: 10,454) RSUs outstanding as at 31 December 2022.

2009 Equity Incentive Plan

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 Number of options

WAEP1

Number of RSUs

Number of options

At 1 January 2021

Exercised

Cancelled

At 31 December 2021

Exercised

Cancelled

At 31 December 2022

‘000

–

1WAEP – weighted average exercise price

*RSUs are always granted at zero exercise price

‘000

8,306

(3,509)

(61)

4,736

(965)

–

3,771

$0.327

$0.341

$0.283

$0.340

$0.342

–

$0.340

‘000

–

‘000

8,306

(3,509)

(61)

4,736

(965)

–

3,771

A summary of other information related to the options granted under this plan is presented in the table below:

2009 Plan

Outstanding options at reporting end date:

– total number of options

– weighted average remaining contractual life (years)

Vested and exercisable (‘000):

– weighted average exercise price

Weighted average share price exercised during the period (excluding RSUs)

Share-based payment expense for the period (‘000)

December
2022

December
2021

3,771

2.49

3,771

$0.44

$0.34

–

4,846

3.75

4,846

$0.416

$0.34

128

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

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 behaviour.

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).

2017 Equity Incentive Plan

Options were granted under the 2017 Equity Incentive Plan only in January 2018. Since then, only RSUs have been granted
under the plan. The options granted under this plan vest over 3 years and contain a one-year cliff. Therefore, 25% of the options
vest at the end of year one and from year two a graded quarterly vesting takes place, where each instalment of vesting is treated
as a separate stock option grant.

RSUs under the 2017 Plan may be outstanding for periods of up to three years following the grant date. Outstanding RSU grants
generally vest over three years in three equal portions or one third after two years and two thirds in the third year anniversary from
the grant date. Options under the 2017 Plan may be outstanding for periods of up to ten years from the grant date.

Performance-based restricted stock units (RSUs)

Performance-based RSUs vest on the completion of a specified service period and the achievement of certain performance
targets, which may include individual performance measures as well as Company measures, and are converted into common
stock upon vesting.

Share based payments expense for RSUs is based on the fair value of the shares underlying the awards on the grant date
and reflects the estimated probability that the performance and service conditions will be met; specifically, where the restricted
stock units are nil-cost awards with a non-market performance condition, so they are valued at the share price as at the day
of grant. The share based payments expense is adjusted in future periods for subsequent changes in the expected outcome
of the performance related conditions until the vesting date. Performance-based RSUs vest after three years of issue, in one
vesting event, if the performance conditions are met, however these may also vest at the discretion of the board in the event that
underlying performance conditions are not met.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

129

Notes to the Consolidated Financial Statements

24. Share-based payment (continued)

The options activity under the 2017 Plan (including options and RSU) are as follows:

At 1 January 2021

Authorised

Granted

Exercised

Cancelled

At 31 December 2021

Authorised

Granted

Exercised

Cancelled

At 31 December 2022

Available

Options

WAEP1

RSUs

WAEP1

‘000

27,717

12,312

(5,739)

–

938

35,228

12,565

(3,914)

‘000

1,112

–

(107)

(36)

969

–

(132)

2,216

46,095

837

$1.205

–

$1.205

–

$1.205

‘000

8,961

–

5,739

(3,135)

(902)

10,663

–

3,914

(2,292)

(2,216)

10,069

–

Total

‘000

10,073

–

5,739

(3,242)

(938)

11,632

–

3,914

(2,424)

(2,216)

10,906

1RSUs are issue with a zero exercise price and therefore the WAEP is Nil.

A summary of other information related to the options and RSUs granted under this plan is presented in the table below:

2017 Plan

Outstanding options at reporting end date:

– total number of options (excluding RSUs) (‘000)

– weighted average remaining contractual life (years)

– total number of RSUs

Vested and exercisable (‘000):

– weighted average exercise price

– weighted average remaining contractual life

Weighted average fair value of options granted during the
period (excluding RSU)

Vested and exercisable – Options

Share-based payment expense for the period (‘000)

December
2022

December
2021

837

5.0

969

6.0

10,069

10,454

$1.205

5.0

$0.44

837

$5,165

$1.205

6.0

$0.44

924

$6,412

130

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The following information is relevant in the determination of the fair value of options (excluding RSU’s) granted during the period.
Only RSUs were granted in 2021 and 2022.

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 volatility2

Expected dividend growth rate

Weighted average Risk-free interest rate3

December 2018

Black-Scholes

$1.205

9.05 years

32.66%

2.49%

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 behaviour.

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.

Reconciliation of share-based payment expense

2009 Plan

Options

2017 Plan

Options

RSU’s

Total share-based expense (excluding national insurance)

National insurance (reversal)/accrued

National insurance paid in the year (see Note 4)

Total share-based payment charge

*Restated due to discontinued operations

December 2022
$’000

December 2021
$’000

–

5,553

(639)

251

5,165

5,048

5,075

1,117

222

6,414

In 2021, a board resolution was passed to amend the 2018, 2019 and 2020 GMC LTIP RSU Grants. The vesting condition target
has changed to be measured as an average Adjusted EBITDA over 3 years (previously a performance target of an Adjusted
EBITDA per share amount). No further changes to the vesting condition targets were made in 2022 and the target Adjusted
EBITDA for 2022 has been met.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

131

Notes to the Consolidated Financial Statements

25. Warrants for ordinary shares

Danal Inc warrants

A five year warrant to purchase 1,634,699 Boku shares at an exercise price of $1.8352 USD per share, exercisable at any
time during the 5-year term was issued as part of the Danal acquisition, on 1 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: 5-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 the share premium account.

Amazon warrants

As part of the commercial agreement entered into by Boku and Amazon on 16 September 2022, Boku issued Warrants allowing
Amazon to subscribe for up to a total of 11,215,142 shares of Boku’s common stock, representing up to 3.75% of Boku’s
existing issued share capital. The vesting conditions are as follows:

• 0.25% of the maximum 3.75% of Boku’s existing share capital (i.e. 747,676 shares) vested on signing of the agreement on 16

September 2022; and

• Up to 3.5% of the maximum 3.75% of Boku’s existing share capital may vest over a 7-year period in increments of 0.07%, for
each $1 million of Amazon expenditure (“Qualifying Revenue”) up to a total of $50m, whereby all Warrants will have vested, in
respect of payment processing services.

The exercise term is 10 years from 16 September 2022 to 15 September 2032 (the “Expiry Date”). The Warrants have an exercise
price of 81.20p per share, which was the 30-trading day volume-weighted average price of Boku’s common stock immediately
prior to issuing the initial Warrants.

The Warrants may be exercised in whole or in part at any time up to the Expiry Date.

Amazon is permitted to transfer the vested Warrants to any person except to Boku’s competitors. The exercise consideration may
be in the form of either:

• Cash exercise (i.e., exercise price payable in cash); or

• Cashless exercise (i.e., reduction in the number of Warrants obtainable, either in full, or partially alongside a partial cash

exercise).

These warrants were valued using a combination of Black-Scholes Model and Binomial Model. The Monte Carlo simulation was
used to simulate the qualifying revenue which is used to determine the possible timing of a vesting event and the amount of
warrants vested and to simulate the share price. The Black-Scholes model was used to determine the fair value for the warrants
(payoff of the warrant).

132

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

The summary of the valuation results and inputs on 16 September 2022 (issue date) and at 31 December 2022 is presented
below.

Valuation results and inputs

Valuation date

Warrants expiry date

Number of years to expiry

Time step

Spot price (£)

Exercise price (£)

Risk-free rate (NACC)

WACC

Dividend yield

Revenue volatility

Equity volatility

Fair value of the warrants (£)

Fair value of the warrants ($)

Fair value per warrant (£)

Fair value per warrant ($)

16 September 2022

31 December 2022

16 September 2032

Monthly

0.7700

0.8120

3.39%

15%

30%

40%

1,526,709

1,755,640

0.302

0.347

<10

Monthly

1.395

0.8120

3.81%

15.5%

30%

40%

4,317,487

5,206,112

0.865

1.043

The following inputs and assumptions have been used in the valuation:

i) Dividend yield

For both models a nil dividend yield was assumed. In the event of dividends being paid, the warrant agreement states that
Amazon should be made whole and compensated via a mechanism that adjusts the number of shares per warrant.

ii) Time-step

The vesting condition is based on the accumulated qualifying revenue as part of the commercial agreement. As such, possible
scenarios were modelled for qualifying revenue using monthly time steps. This in line with the expectation that management
accounts and reporting pack is prepared on a monthly basis. The share price simulation also follows a monthly time step for
consistency.

iii) Share price

The quoted closing price of Boku’s shares as at the valuation date (£0.77 as at 16 September 2022 and £1.395 as at 31
December 2022) was used as an input into the valuation.

iv) Risk free rate

The US Government bond yield has been used as a proxy for the risk-free rate. The spot yields as at the valuation date for all
tenors up to a 10-year period expiry date were converted to Nominal Annual Compounded Continuously (“NACC”) spot rates as
required by the Black-Scholes model (“BSM”) and Binomian model (“BM”). A set of forward rates were also calculated as inputs
for the BSM payoff calculations which are forward-starting options, based on the spot NACC risk free rates.

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

133

Notes to the Consolidated Financial Statements

25. Warrants for ordinary shares (continued)

v) Exercise period and price

As per the Warrant Agreement, the exercise term is 10 years from 16 September 2022. The Warrants are exercisable at £0.8120,
which was the 30-trading day volume-weighted average price of Boku’s Common Stock immediately prior to issuing the Warrants.

vi) Simulated share price and simulated revenue

As the payoff of the warrant depends on two random variables, share price and initial estimated revenue. Both have been
estimated using the Binomial method and the risk free growth rate used was the WACC rate. This is so that the resulting
simulation can be used to derive a meaningful number of warrants vesting in each period, in line with the agreed terms. The
WACC analysis takes into consideration historical company information as well as market observable data and was calculated to
be 15% as at 16 September 2022.

vii) Equity volatility and revenue volatility

The annualised equity volatility of 40% was estimated by using Boku’s historical volatility given its observable trading history. The
annualised revenue volatility of 30% was estimated using Boku’s historical revenue from Q3 2016 to Q3 2022.

The warrants were valued at 31 December 2022 using the same methodology.

A sensitivity analysis was performed using the low and high ranges for revenue volatility and equity volatility and it was determined
that these are not materially different from the mid-points used and presented in the table below.

Valuation Results

Indicative FV

Valuation date

Warrant expiry date

No. of years to expiry

Spot Price (£)

Exercise price (£)

Risk-free rate (NACC)

Dividend yield

Revenue Volatility

Equity Volatility

FV of the Warrants, £

FV of the Warrants, $

FV per Warrant, £

FV per Warrant, $

Mid-point

31/12/2022

16/09/2032

9.71

1.395

0.812

3.81%

30%

40%

4,317,487

5,206,112

0.865

1.043

Low

31/12/2022

16/09/2032

9.71

1.395

0.812

3.81%

25%

35%

4,113,511

4,960,154

0.824

0.994

High

31/12/2022

16/09/2032

9.71

1.395

0.812

3.81%

35%

45%

4,534,414

5,467,687

0.909

1.096

134

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

26. Dividends

No dividends were declared or paid in any of the periods.

27. Cash generated from operations

Profit after tax

Add back:

Tax credit

Amortisation of intangible assets

Depreciation of property, plant and equipment

Gain on discontinued operations after tax

Loss on disposal of property, plant and equipment

Loss on disposal of intangible assets

Finance income

Finance expense (includes interest on lease liabilities)

Foreign exchange loss (unrealised)

Employer taxes on stock option and restricted stock units (accrual) charge

Fair value adjustment on warrants valuation

Amortisation of warrant asset

Impairment of intangible asset

Share based payment expense

Cash from operations before working capital changes

(Increase)/Decrease in trade and other receivables

Increase /(Decrease) in trade and other payables

Cash generated from operations

Year ended
31 December
2022

$’000

28,904

(237)

3,868

2,032

(26,614)

(201)

675

4,407

(639)

3,470

1,264

5,045

22,027

(12,328)

40,267

49,966

Year ended
31 December
2021

$’000

6,269

(1,882)

5,232

2,255

–

(22)

770

743

423

–

5,684

19,477

8,748

(15,863)

12,362

Stock code: BOKU

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

135

Notes to the Consolidated Financial Statements

27. Cash generated from operations (continued)

The share based payment expense has been split between the charge using the Black Scholes method for the period ($5,553
thousand) and the change in the accrual for employer taxes on stock option and restricted stock units (-$639 thousand). The total
share based payment expense in the Consolidated Statement of Comprehensive Income includes $251 thousand employer taxes
paid via payroll to tax authorities.

The impairment of intangible assets relates to the full impairment of the Fortumo domain name which was discontinued in the
period.

The increase in receivables includes a $5,600,000 contingent financial asset receivable in 2023 being the balance due on the
disposal of the group’s Identity business.

The foreign exchange loss relates to the unrealised foreign exchange only.

28. Related party transactions

In 2022, the Group was remitted $132,800,653 in net payments from 3 suppliers who are shareholders of the Company (2021:
$123,776,087 – from five suppliers). At 31 December 2022, the Company had receivables of $13,594,020 (2021: $15,767,393)
due from these companies.

29. Ultimate controlling party

There is no ultimate controlling party of the Company.

30. 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
2022 and 2021.

31. Post balance sheet events

Between 1 January 2023 and the date of this report, the Company purchased a further 1,687,581 Common Stock of Boku Inc on
the open market at an aggregate cost (exclusive of broker commission) of £2,504,564.03 and an average cost of £1.48 per share.

As at the date of this report, the Company has purchased a total of 3,187,581 Common Stock of Boku Inc on the open market at
an aggregate cost (exclusive of broker commission) of £4,061,314.03 and an average cost of £1.27 per share.

On 10 March 2023 the US arm of one of Boku’s banking partners Silicon Valley Bank (“SVB”) was placed under receivership with
the Federal Deposit Insurance Corp (“FDIC”) in the US and there were concerns over the financial stability of the separate UK
operations, SVB UK. Ultimately SVB’s deposits were maintained following government support in the US and the acquisition of
SVB UK by HSBC in the UK. SVB was not a material banking partner of Boku and no merchant funds were held with SVB. At
the time of the receivership, total deposits with SVB across the Group were less than $2 million which was less than 2% of the
Group’s $116.5 million cash balances as at 31 December 2022. The funds held with SVB were all Boku’s own cash. Boku has no
bank debt and the events had no impact on the Group’s ordinary operations.

136

Boku, Inc. Annual Report and Accounts for the year ended 31 December 2022

www.boku.com

Boku, Inc.
Stock Code: BOKU