TIDMBOKU
RNS Number : 0943Z
Boku Inc
16 September 2020
16 September 2020
Boku, Inc.
("Boku" or the "Company" and, together with its subsidiaries,
the "Group")
Interim results for the six months ended 30 June 2020
Strong performance in Payments Division
Boku, a leading global mobile payment and mobile identity
company, is pleased to announce the following unaudited interim
results for the six months ended 30 June 2020.
Highlights
Group
-- Group Adjusted EBITDA(*) for H1 2020 of $6.4 million is 84%
higher than H1 2019 (H1 2019: $3.5 million adjusted for a one time
revenue item(**) . H1 2019 reported Adjusted EBITDA $4.3
million)
-- Group Revenues for H1 2020 increased to $24.7 million (H1
2019 $22.7 million(**) , excluding the impact of a non-recurring
payments item: $23.5 million reported)
o Payments - Underlying Payments revenue(**) growth has been
strong at over 13.7% to $22.0 million
o Identity revenue of $2.7 million impacted by coronavirus
though with minimal effect on Group Adjusted EBITDA
-- Adjusted operating expenditure (***) of $16.0 million for H1
2020 is in line than the same period last year (H1 2019: $16.3
million) as coronavirus reduced marketing/events costs and T&E
across the Group
-- Operating Profit for H1 2020 of $0.2m compared to an
operating loss of $2.3 million for the same period in 2019
-- Acquisition of DCB payments company Fortumo Holdings Inc
("Fortumo") completed on 1 July consolidating Boku's dominant
position in the global Direct Carrier Billing ("DCB") market
-- Group cash of $80.7 million at 30 June 2020 which included
$44.5 million of cash held to pay for the acquisition of Fortumo on
1 July 2020. Excluding this cash, Group cash balance were $36.2
million inclusive of $0.8 million of restricted cash (31 December
2019: $35.6 million including $0.9 million of restricted cash). To
part-fund the Fortumo acquisition a new $20.0m debt facility was
taken out in June and was fully drawn down at 30 June 2020. The
balance of the acquisition funding was from a successful placing in
June at 85p per share
-- The average daily cash balance - a measure which smooths out
the effect of carrier and merchant payments, was $25.7 million in
June 2020 (December 2019: $22.4 million)
Payments division
-- Underlying Payments revenues (**) increased by 13.7% to $22.0
million (H1 2019 $19.4 million , excluding the impact of a
non-recurring item, $20.2 million reported) as Boku Payments
benefited from the coronavirus pandemic particularly in April and
May 2020.
-- Payments Adjusted EBITDA (*) increased by 45% to $8.4 million
(H1 2019 $5.8 million (**) excluding the impact of a non-recurring
item. $6.6 million reported)
-- Total Payment Volume ("TPV") (****) of $3.1 billion in H1
2020, 36% up on H1 2019 ($2.3 billion)
-- 10.8 million new users made their first ever Boku transaction
during the first half of the year, 19% up on the prior year, driven
by increased adoption during the coronavirus lockdowns
-- 20.3 million Monthly Active Users ("MAU") of the Boku
platform in June 2020 (June 2019: 15.3 million), a 33% increase
-- Carrier billing launches in H1 2020 with Google, Netflix, Sony, Spotify and Tencent
-- Good progress with eWallets with seven mobile wallets now
live including Grabpay, GoPay and Dana and further contracts
signed
Identity division
-- Identity revenues of $2.7 million (H1 2019: $3.4 million).
Revenues and new sales were impacted by coronavirus, though with
minimal impact on expected Adjusted EBITDA
-- Identity Adjusted EBITDA loss reduced to $2.0 million (H1 2019 $2.3 million loss)
-- Good progress on building out international carrier supply -
now live with more than 200 carriers in 60 countries. Contract wins
including LexisNexis and FIS (owners of Worldpay) with merchants
now live and generating revenues in five countries.
* Adjusted EBITDA (Earnings before interest, taxation,
depreciation and amortization): Adjusted for stock option expenses,
Forex gains/losses and Exceptional items. Underlying Group Adjusted
EBITDA is Adjusted EBITDA less the $790k one time item mentioned in
item **
** 2019 H1 revenue included $790k of one off revenues relating
to a contractual change that accelerated revenue recognition of a
large contract. This increased H1 2019 Adjusted EBITDA by the same
amount
*** Adjusted operating expenditure is Gross Profit less Adjusted
EBITDA
**** TPV is the US$ value of transactions processed by the Boku
platform
Jon Prideaux, Boku's CEO, commented :
"Boku's core business of Direct Carrier Billing is in rude
health. The Company has seen a boost in the adoption of digital
services during the pandemic and has proved its ability to execute
even as the majority of the Company are working from home. With
this foundation, enhanced by a contribution from Fortumo,
supporting our investment in Identity and a strong pipeline of
customers for our Local Payment Method offer, including eWallets, I
remain confident that full year Group Revenue and Adjusted
EBITDA(*) performance will be at least in line with current market
expectations."
Enquiries:
Boku, Inc.
Jon Prideaux, Chief Executive Officer +44 (0)20 3934
Keith Butcher, Chief Financial Officer 6630
Peel Hunt LLP (Nominated Adviser and Broker)
Edward Knight / Nick Prowting / Christopher +44 (0)20 7418
Golden 8900
IFC Advisory Limited (Financial PR & IR)
Tim Metcalfe / Graham Herring / Florence +44 (0)20 3934
Chandler 6630
Notes to Editors
Boku Inc. (AIM: BOKU) is a leading global provider of mobile
payment and mobile identity solutions. Boku's technology platform,
which is linked to more than 200 mobile wallets and network
operators worldwide, verifies user identity, executes payments, and
provisions new services, simplifying daily mobile interactions
between consumers and digital organizations.
Boku's technology platform is used in over 59 countries with
over 815 million verified transactions in 2019, contributing $5
billion to the digital economy. Businesses that currently employ
Boku's platform to simplify sign-up, acquire new paying users and
prevent fraud include global leaders such as Apple, Amazon,
Discover, Experian, Facebook, FIS, Fiserv, Google, Microsoft,
Netflix, Paypal, Sony, Spotify and Western Union.
Boku Inc. was incorporated in 2008 and is headquartered in
London, UK, with offices in various locations globally including in
the US, Mumbai, Munich, Beijing, Paris, Sao Paulo, Singapore,
Taipei, and Tokyo.
To learn more about Boku Inc., please visit:
https://www.boku.com .
Chief Executive Officer's Report
Simplicity: it's worth paying for
Charlie Mingus the American jazz musician once said, "Making the
simple complicated is commonplace; making the complicated simple,
awesomely simple, that's creativity."
Boku's customers, global companies like Apple, Sony, Spotify and
Netflix don't want to deal with 200+ different connections to
mobile network operators ("MNOs") they need someone to make the
complicated simple. And that someone is Boku. We have done the hard
work of building direct connections to most of the world's big
telcos and can thus provide a single, simple interface for them to
implement. Connect once - reach the world. That aggregation unlocks
the value latent in the MNOs of the world. By aggregation we have
created value.
But it doesn't stop there: in this new mobile world the way that
people pay is also changing. We have also simplified the payment
process. In the past, in the PC era, payment was a distinct step.
You clicked to put things in your shopping basket and then clicked
to checkout selecting your payment method, which could differ from
transaction to transaction. Checkout was a fairly complex process.
It was Amazon who introduced a 1-Click checkout and things have
been taken further for mobile commerce.
It is complex and fiddly to enter card details on a glass
screen. It adds friction to the payment process. Friction that
leads to fewer transactions, to more abandoned baskets. The
simplest way of dealing with this friction is to eliminate the
payment step altogether. To make payment a by-product of
interacting with the app, to indicate the transaction or service
you require and for payment to happen invisibly in the background.
For this to happen you need register, to store a payment method on
file.
Boku has made that awesomely simple: because the phone company
knows your phone number without having to ask, it's a simple as
tapping once on the screen to put future charges through to your
phone bill.
This philosophy has helped Boku's core business of Direct
Carrier Billing ("DCB") to grow. Total Payment Volume ("TPV") of
$3.1 billion in the first half of 2020 was a 36% increase compared
with the same period in 2019. Other companies have suffered through
the pandemic. Not Boku. For us, adoption was accelerated as more
people spent more time at home due to the coronavirus lockdowns and
discovered digital entertainment. Nearly 11 million new users (+19%
on H1 2019) made their first Boku transaction and experienced that
simplicity for the first time, growing monthly active users in the
month of June 2020 alone to more than 20 million.
Revenues in Payments grew by 13.7% (adjusting for a
non-recurring item) and Adjusted EBITDA by 45% reflecting the high
operating leverage implicit in Boku's platform business.
Boku is now by some distance the leading player in the DCB
industry, with strong volume growth, increasing revenue and
operating leverage driving increases in Adjusted EBITDA. The
acquisition of Fortumo on 1 July 2020 for an enterprise value of
$41 million further cemented our position in this sector.
Business doesn't travel in straight lines
Business doesn't go in straight lines; it rises and falls in
S-curves. The job of the CEO is not only to grow his business
through a single S-curve, but to be laying the foundations for
future growth by investing to find new S-curves to climb.
Boku has established itself as the leading Direct Carrier
Billing company in the world. We're processing transactions at a
run rate of $7bn annually. Apple, Google, Sony, Microsoft, Spotify,
and Netflix all use our services. We have grown revenues from $17
million in 2016 to more than $50 million in 2019. We will continue
to grow as we roll out our merchants into new geographies.
Investors appreciate this growth. But we are not going to rest
on our laurels, we're investing to find new S-curves to climb.
DCB payments are mostly confined to digital commerce and, whilst
this is not a small market, it is still only a fraction of global
mobile commerce. DCB payments are strong in Europe, Asia and the
Middle East. Growth in Latin America is picking up, but mainland
China and North America are areas where for a combination of
regulatory and commercial reasons, it's not able to achieve
traction. Boku aspires to enhance every mobile interaction: digital
and physical in all parts of the world.
Boku's merchant base and carrier network can be repurposed to
new objectives. Rather than just allowing digital merchants to
acquire new customers we can also help simplify mobile commerce for
merchants in other verticals and re-use the skills developed to
enable charges to be put through to phone bills also to support a
whole range of Local Payment Methods ("LPM"), not just carrier
billing.
One such Local Payment Method is eWallets. They're the way that
people, especially in Asia are starting to pay and Boku is now live
and processing transactions with nine eWallets in seven countries.
Mainstream Console and Digital Streaming Music merchants use Boku's
technology to reach eWallets in Indonesia and Korea. This expansion
from DCB to LPM offers the chance of substantial returns. The same
skills, platform and people can be repurposed to integrate LPMs at
minimal additional cost to Boku giving powerful operating leverage.
Volumes are currently modest, but will grow over the coming years
to become a significant profit driver for the Group.
We're also helping merchants to simplify the business of
verifying phone numbers through our Identity business - heretofore
a fiddly business involving text messages and one time codes. We
can check the ownership of phones and detect account takeovers, one
of the curses of our modern connected world. Boku Identity has made
great strides in growing its network in 2020, but this is not yet
reflected in the revenue numbers. Whilst DCB benefited from more
people staying at home, Identity services, more dependent on people
being out and about, suffered. Volumes and revenues on our existing
customers were impacted, and new revenues in new geographies have
not yet risen to compensate. First half revenues at $2.7 million
were lower than the same period last year. Despite this, targeted
investment and strict expense control delivered reduced Adjusted
EBITDA(*) losses to $2.0 million in the first half (2019: $2.3
million).
We are building the world's largest carrier identity network.
The forward-looking indicators for the division are strong. The
international supply network now extends to more than 200 carriers
in 57 countries. Large customers are interested in the service and
moving through the pipeline. Recent successes include LexisNexis
and FIS, the owner of Worldpay.
Gradually then suddenly. eWallets and Identity are new
businesses travelling the lower reaches of their S curves, but in
time, will power our growth into the future.
Taken together the established business of DCB and the emerging
Local Payment Method and Identity businesses have delivered growth:
Group Revenues increased to $24.7 million and underlying Group
Adjusted EBITDA(*) grew by 84% to $6.4 million . We are also
pleased to be able to report a small operating profit for the
period of $0.2 million.
Current Trading and Outlook
Boku's core business of Direct Carrier Billing is in rude
health. The company has seen a boost in the adoption of digital
services during the pandemic and has proved its ability to execute
even as the majority of the company are working from home. With
this foundation, enhanced by a contribution from Fortumo,
supporting our investment in Identity and a strong pipeline of
customers for our Local Payment Method offer, including eWallets, I
remain confident that full year Group Revenue and Adjusted
EBITDA(*) performance will be at least in line with current market
expectations.
Jon Prideaux
Chief Executive Officer
15 September 2020
Chief Financial Officer's Report
The first half of 2020 was challenging for many companies due to
the global coronavirus pandemic. The effect on Boku was positive in
Payments, but less so in Identity.
Our Payments division benefited as international digital
merchants like Apple, Netflix, Sony and Spotify benefited from an
increase in demand for home entertainment and as a result this
division performed strongly in H1. Good revenue growth to $22.0
million and lower than expected costs as the pandemic restricted
travel, led to enhanced Adjusted EBITDA for the period. We also
successfully completed a $25.0 million fundraise from existing
investors in June to partly finance the acquisition of DCB company,
Fortumo Holdings Inc ("Fortumo") which was announced on 17 June
2020 and completed on 1 July 2020, and which consolidated Boku's
leading position in the global DCB market.
The impact on Boku's Identity division was less positive.
Revenues from some existing merchants - for example taxi services -
reduced as their businesses were affected and new sales
understandably slowed. However, headcount cost measures and Covid19
related savings in travel and marketing/events meant that Identity
Adjusted EBITDA for H1 2020 was in line with expectations at a
reduced loss of $2.0 million (2019: $2.3 million loss) on lower
revenues of $2.7 million (2019: $3.4 million). Good progress was
made on Identity supply during the period.
As a result, underlying Group Adjusted EBITDA of $6.4 million(*)
was 50% higher than H1 2019 (H1 2019: reported $4.3 million). When
adjusted for a one time revenue item(**) in H1 2019, the underlying
like for like increase in H1 2020 is 84%, with Payments delivering
$8.4 million of Adjusted EBITDA in the first half, partly offset by
an Identity Adjusted EBITDA loss of $2.0million.
Financial review - Strong Adjusted EBITDA growth driven by
Payments division performance
Group Income Statement to Adjusted EBITDA
We are pleased to report an 84% increase in Group Adjusted
EBITDA to $6.4 million for the first half of 2020, (H1 2019: $3.5
million adjusted for a one time revenue item(**) . Reported $4.3
million), with Payments Adjusted EBITDA of $8.4 million up 45% on
H1 2019 (H1 2019: $5.8 million(**) , $6.6 million reported) being
offset by a reduced $2.0 million Adjusted EBITDA loss in Identity,
(H1 2019: $2.3 million loss).
Group revenues for H1 2020 increased 9% to $24.7 million on an
underlying basis (H1 2019 $22.7 million(**) , excluding the impact
of a non-recurring payments item: $23.5 million reported).
Coronavirus related lockdowns positively impacted the Payments
division revenue which increased by over 13.7%(**) to $22.0 million
while Identity revenues were negatively impacted and reduced
slightly to $2.7 million.
Adjusted operating expenditure(***) of $16.0 million for H1 2020
is in line than the same period last year (H1 2019: $16.3 million)
as coronavirus materially reduced marketing/events costs in the
Identity division and reduced travel and expenditure across the
Group which we expect to continue in H2 however these costs are
likely to return to normal levels next year. Payroll costs
increased slightly due to planned annual pay rises and the Payments
division invested in additional sales resource. However, Identity
payroll costs were lower than in H1 2019 as the business refined
its cost base.
$1.0 million of development expenditure was capitalised in H1
2020 reflecting the work undertaken to integrate and enhance the
Boku Identity and Payments platform (2019: $0.7 million).
Boku Payments
Underlying Payments revenues(**) increased by 13.7% to $22.0
million (H1 2019 $19.4 million(**) , excluding the impact of a
non-recurring item, $20.2 million reported) as Total Payment Volume
("TPV") (****) increased by 36% to $3.1 billion (H1 2019: $2.3
billion). Gross margin improved in the period as we received
payment for previously provided for bad debts which increased
margin by $211k.
Underlying Payments Adjusted EBITDA increased 45% to $8.4
million (H1 2019: $5.8 million(**) )
10.8 million New Users made their first ever Boku transaction
during the first half of the year, 19% up on the prior year, driven
by increased adoption during the coronavirus lockdowns . Monthly
Active Users ("MAU") of the Boku platform in June 2020 increased by
33% to 20.3 million (June 2019: 15.3 million).
Carrier billing launches were largely unaffected by Covid-19 and
we launched multiple carriers worldwide in H1 2020 with major
merchants such as Google, Netflix, Sony, Spotify and Tencent.
Average weighted take rates for Payments were in line with
expectations at 0.7%. Boku's transaction merchants, which have a
lower take rate, continued to grow more quickly than its settlement
merchants (where Boku provides a full cash collection service)
where we charge a higher take rate. Take rates in both divisions
were stable so the mix effect of more volume through our
transaction merchants accounts for the small decline in blended
take rates. Since IPO, Boku has not reduced its rates to any of its
merchants nor has it lost a material merchant.
Good progress was made with integrations with eWallets, which is
an entirely new market for Boku Payments, which it can access at
minimal cost, with nine mobile wallets now live including Grabpay,
GoPay and Dana and further contracts signed.
Acquisition of Fortumo
Boku completed the acquisition of DCB payments company Fortumo
on 1 July for a maximum enterprise value of $41.0 million ($5.4
million of the consideration subject to meeting first year earnout
targets) consolidating Boku's leading position in the global DCB
payments market. Fortumo primarily focuses on providing mobile
payment solutions to over 400 small-to-medium sized enterprises,
but also services larger merchants including Google, Amazon and
Tencent. In 2019, Fortumo generated revenues of $7.2 million and
Adjusted EBITDA of $2.3 million.
Boku Identity
Boku Identity revenues were impacted by the US carrier supply
issue that occurred in late 2019 and by Covid-19 restrictions,
which impacted both existing merchant revenues and new Identity
sales. Revenues in the first half were $2.7 million (H1 2019: $3.4
million). Adjusted operating expenditure was lower than H1 2019 due
to cost savings in headcount, reduced travel and marketing spend
due to the pandemic, delivering a reduced Adjusted EBITDA loss of
$2.0 million, (2019: $2.3 million Adjusted EBITDA loss).
Boku Identity made good progress on building out international
carrier supply in H1 2020 and is now live with more than 200
carriers in 57 countries. Merchants are now live and generating
revenues in five countries and Boku Identity saw a number of
contract wins including with LexisNexis and FIS (owners of
Worldpay) .
Group Operating Profit
Group Operating Profit for H1 2020 improved by $2.5 million to
$0.2 million compared to an operating loss of $2.3 million for the
same period in 2019. This can be broken down as follows:
-- Foreign Exchange movements resulted in a small gain of $0.1
million (H1 2019: $0.2 million gain)
-- Stock Option Expenses - stock option expenses reduced to $3.0
million from $4.2 million in H1 2019 as Boku issued fewer
Restricted Stock Units ("RSUs") to staff in the period and during
2019 when compared to 2018. We expect this trend to continue going
forward and that the annual charge for Stock Option Expenses will
fall. Boku has issued either RSUs or share options to all staff
annually. RSU and stock option charges are spread over three and
four years respectively from the date of grant based on the Black
Scholes method
-- Exceptional Items of $0.9 million (2019: $0.3 million)
related to acquisition costs incurred up to 30 June 2020 in
relation to the acquisition of Fortumo which completed on 1 July
2020. Exceptional Items in H1 2019 related to the closure of our
Italian entity and transaction costs relating to the Danal
acquisition in January 2019
-- Net financing expenses were reduced to $164k in 2020 (2019:
$224k) which related to interest on right-of-use assets in
particular office leases. There were no other interest payments as
the Group had no borrowings until the loan to finance the Fortumo
acquisition which was taken out on 30 June 2020
-- The Group generated $6.0 million of cash from operations
during H1 2020, prior to movements in working capital. (H1 2019:
$2.8 million. This has been driven primarily by the improvement in
Adjusted EBITDA
Balance Sheet and Cashflow
-- Group cash balances were $80.7 million at 30 June 2020 which
included $44.5 million of cash held to pay for the acquisition of
Fortumo on 1 July 2020. Excluding this cash, the balances were
$36.2 million (31 December 2019: $35.6 million). Included in this
cash were restricted cash balances of $0.8 million
-- To part finance the acquisition of Fortumo which completed on
1 July, Boku took on a debt facility of USD $20.0 million with
Citibank in June which was fully drawn at 30 June 2020. This
facility was split:
o $10m term loan repayable over 4 years; and
o $10m Revolving Credit Facility ("RCF", "Revolver") available
to be drawn down in Euro, GBP or US$. Boku intends to use its
surplus cash balances (see average daily cash balance point below)
to partially offset the RCF balance during the monthly cycle and
thereby reduce interest payments.
-- The balance of financing was by way of a placing at 85p per
share in June raising net proceeds of $24.1 million primarily from
existing shareholders
-- The average daily cash balance - a measure which smooths out
the effect of carrier and merchant payments, was $25.7 million in
June 2020 (December 2019: $22.4 million)
-- We assessed our goodwill and intangibles for impairment and
deemed that no impairment exists at 30 June 2020.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Group remain
broadly consistent with the Principal Risks and Uncertainties
reported in Boku's 2019 Annual Report. Since the 2019 Annual
Report, the Board have been monitoring and mitigating the effects
of the following international events on the Group's business:
Covid-19
In March 2020, the World Health Organisation declared a global
pandemic due to the Covid-19 virus that has spread across the
globe, causing different governments and countries to enforce
restrictions on people movements, a stop to international travel,
and other precautionary measures. This has had a widespread impact
economically and a number of industries have been heavily impacted.
This has resulted in impacts on certain industries and a more
general need to consider whether budgets and targets previously set
are realistic in light of these events.
As described above, the Covid-19 pandemic has impacted our
business, both positively and negatively. The Board believes that
the business is well positioned to be able to navigate through the
impact of Covid-19 due to the positive impact of Covid-19 on its
main Payments businesses, its dominant position in the niche Direct
Carrier Billing market, its strong balance sheet and strong cash
position.
Brexit
The United Kingdom ('UK') formally left the European Union
('EU') on 31 January 2020. The period of time from when the UK
voted to exit the EU on 23 June 2016 and the formal process
initiated by the UK government to withdraw from the EU, or Brexit,
created volatility in the global financial markets. The UK is now
in a transition period, being an intermediary arrangement covering
matters like trade and border arrangements, citizens' rights and
jurisdiction on matters including dispute resolution, taking
account of The EU (Withdrawal Agreement) Act 2020, which ratified
the Withdrawal Agreement, as agreed between the UK and the EU. The
transition period is currently due to end on 31 December 2020 and
ahead of this date, negotiations are ongoing to determine and
conclude a formal agreement between the UK and EU on the
aforementioned matters.
Boku is not materially impacted by Britain's withdrawal from the
EU. Our business is growing fastest in Asia and already traded in a
Europe of nations pre-Brexit. An immaterial amount of revenue is
derived from EU passporting of our e-money licence.
Looking Ahead
The Covid-19 pandemic had a positive impact on our Payments
division in H1 2020 increasing transaction volumes and revenues
particularly in April and May, but also reducing our operating
expenses as travel and entertainment costs reduced significantly -
both of which improved Payments Adjusted EBITDA. Whilst most
launches have proceeded as expected, a few have been pushed back.
While the peak of the pandemic uplift has passed as full lockdown
has ended in many countries, we have seen a continuing benefit from
the accelerated adoption of subscription services, which is
encouraging for H2 2020.
Boku's Identity division was more adversely impacted by Covid-19
with volumes from existing merchants reduced as their businesses
slowed and a slowdown in new sales as face to face meetings were
not possible. However careful cost management and a continued build
out of our Identity supply both directly and through partners means
that progress was made and the Identity division is expected to
show revenue growth and further reduced losses in 2021 as it moves
towards cash breakeven.
While Identity remains a work in progress, on the Payments side
the market consolidation from the Fortumo acquisition plus the
substantial opportunity that eWallets present, allied to
significant operational leverage that comes from our platform means
we are confident for the future.
Keith Butcher
Chief Financial Officer
15 September 2020
Consolidated Statement of Comprehensive Income
Note (Unaudited) Period ended (Unaudited) Period ended
30-Jun 2020 30 -Jun 2019
$'000 $'000
==================================================== ======= ============================ =========================
Revenue 3 24,690 23,531
Cost of sales (2,242) (2,938)
==================================================== ======= ============================ =========================
Gross profit 22,448 20,593
Administrative expenses (22,227) (22,898)
==================================================== ======= ============================ =========================
Operating profit/(loss) analysed as:
Adjusted EBITDA* 6,441 4,291
Depreciation and amortisation (2,455) (2,262)
Share Option expense (3,009) (4,226)
Foreign exchange gains 164 223
Exceptional items (included in administrative
expenses) (920) (331)
==================================================== ======= ============================ =========================
Operating profit/(loss) 221 (2,305)
Finance income 4 30 29
Finance expense 4 (164) (224)
==================================================== ======= ============================ =========================
Profit/(loss) before tax 87 (2,500)
Tax expense (51) (77)
==================================================== ======= ============================ =========================
Net Profit/(loss) for the period attributable to equity
holders of the parent company 36 (2,577)
============================================================= ============================ =========================
Other comprehensive losses net of tax
============================ =========================
Items that will or may be reclassified to profit or
loss
==================================================== ======= ============================ =========================
Foreign currency translation loss (427) (67)
Net decrease in fair value of cash flow hedge derivatives - (3)
============================================================= ============================ =========================
Total comprehensive loss for the period (427) (70)
============================================================= ============================ =========================
Total comprehensive loss for the period attributable to
equity holders of the parent company (391) (2,647)
============================================================= ============================ =========================
Profit/(loss) per share for loss attributable to the owners
of the parent during the year
============================================================= ============================ =========================
Basic and fully diluted ($) 0.0001 (0.0108)
============================================================= ============================ =========================
*Earnings before interest, tax, depreciation, amortisation,
share-based payment, foreign exchange gains/(losses), and
exceptional items.
Consolidated Statement of Financial Position
Note ( Unaudited) (Audited)
30-Jun 2020 31-Dec 2019
$'000 $'000
====================================================== ===== ============== =============
Non-current assets
Property, plant and equipment 3,920 3,512
Intangible assets 46,968 46,819
Deferred income tax assets 1,777 1,826
====================================================== ===== ============== =============
Total non-current assets 52,665 52,157
============================================================= ============== =============
Current assets
Trade and other receivables 59,723 53,592
Cash and cash equivalents 5 79,864 34,747
Restricted cash 5 836 876
====================================================== ===== ============== =============
Total current assets 140,423 89,215
============================================================= ============== =============
Total assets 193,088 141,372
============================================================= ============== =============
Current liabilities
Trade and other payables 85,096 77,995
Loans and borrowings 6 1,123 2,098
Lease liabilities 6 983 1,723
====================================================== ===== ============== =============
Total current liabilities 87,202 81,816
============================================================= ============== =============
Non-current liabilities
Other payables 394 791
Deferred tax liabilities 450 449
Loans and borrowings 6 18,377 -
Lease Liabilities 2,377 1,358
====================================================== ===== ============== =============
Total non-current liabilities 21,598 2,598
============================================================= ============== =============
Total liabilities 108,800 84,414
============================================================= ============== =============
Net assets 84,288 56,958
============================================================= ============== =============
Equity attributable to equity holders of the company
Share capital 28 25
Share premium 235,913 208,196
Foreign exchange reserve (2,453) (2,027)
Retained losses (149,200) (149,236)
====================================================== ===== ============== =============
Total equity 84,288 56,958
============================================================= ============== =============
Consolidated Condensed Statement of Cash Flows
(Unaudited) Period ended (Unaudited) Period ended
30-Jun 2020 30-Jun 2019
$'000 $'000
============================================================= ============================ =========================
Cash from/(used in) in operations 5,561 (1,965)
Income taxes paid (60) -
============================================================= ============================ =========================
Net cash from/(used in) operating activities 5,501 (1,965)
============================================================= ============================ =========================
Investing activities
Purchase of property, plant and equipment (395) (184)
Purchased of software development (1,392) (744)
Restricted cash (net) 40 (445)
Interest received 30 29
============================================================= ============================ =========================
Net cash used in investing activities (1,717) (1,344)
Financing activities
Repayment of lease liabilities (1,077) (910)
Cash paid for acquisition, net of cash acquired - (742)
Issue of common stock on exercise of options and RSUs 284 421
Interest paid on borrowings (15) (224)
Proceeds from issue of new ordinary shares for acquisition 25,129 -
Share issue costs (654) -
Proceeds from line of credit 20,000 -
Loan issue costs (501) -
Repayment of line of credit (2,092) (150)
Net cash from/(used in) financing activities 41,074 (1,605)
============================================================= ============================ =========================
Net increase/(decrease) in cash and cash equivalents 44,858 (4,914)
Effect of foreign currency translation on cash and cash
equivalent 259 4
Cash and cash equivalents at beginning of period 34,747 31,073
============================================================= ============================ =========================
Cash and cash equivalents at end of period 79,864 26,163
============================================================= ============================ =========================
Notes to the Consolidated Financial Information
1. Corporate Information
The consolidated financial information represents the results of
Boku Inc. ("the Company") and its subsidiaries (together referred
to as "the Group").
Boku Inc. is a company incorporated and domiciled in the United
States of America. The registered office of the Company is located
at 735 Battery St, 2nd Floor, San Francisco, CA 94111, United
States.
On 20th November 2017, the Company's shares were listed on the
AIM Market of the London Stock Exchange ("AIM").
The principal business of the Group is the provision of mobile
billing and identity solutions for mobile network operators and
merchants. These solutions enable merchants to accept online
payments, simplify transactions and avoid fraud, especially on
mobile devices.
The Board of Directors approved this interim financial
information on 15 September 2020.
2. Basis of preparation and accounting policies
These interim consolidated financial statements have been
prepared using accounting policies based on International Financial
Reporting Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB"). They do not
include all disclosures that would otherwise be required in a
complete set of financial statements and should be read in
conjunction with the 31 December 2019 Annual Report. The financial
information for the half years ended 30 June 2020 and 30 June 2019
does not constitute full financial statements and both periods are
unaudited.
The annual financial statements of Boku Inc., ('the group') are
prepared in accordance with IFRS as issued by the IASB. The Annual
Report and Financial Statements for 2019 have been issued and are
available on the group's investor relations' website:
https://www.boku.com/investor-relations/reports-documents. The
Independent Auditors' Report on the Annual Report and Financial
Statements for the year ended 31 December 2019 was unqualified and
did not draw attention to any matters by way of emphasis.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 31 December 2019 annual financial statements, except for
those that relate to new standards and interpretations effective
for the first time for periods beginning on (or after) 1 January
2020 and will be adopted in the 2020 financial statements. There
are deemed to be no new and amended standards and/or
interpretations that will apply for the first time in the next
annual financial statements that are expected to have a material
impact on the Group.
Changes in accounting policies and disclosures
Going concern
In March 2020, the World Health Organisation declared a global
pandemic due to the COVID-19 virus that has spread across the
globe, causing different governments and countries to enforce
restrictions on people movements, a stop to international travel,
and other precautionary measures. This has had a widespread impact
economically and a number of industries have been heavily impacted.
This has resulted in supply chain disruption in certain industries,
uncertainty over cash collection from certain suppliers, and a more
general need to consider whether budgets and targets previously set
are realistic in light of these events.
In carrying out the going concern assessment, the Directors have
considered a number of scenarios, taking account of the possible
impacts of the pandemic, in relation to revenue forecasts for the
next 12 months. A scenario analysis also assessed what the Adjusted
EBITDA will need to be reduced by in order for the Group to fail
the new debt covenants. The analysis shows that only a drastic drop
in Adjusted EBITDA will cause such a concern. The Board also
considered milder scenarios were with a smaller reduction in
revenues was forecasted. In such a scenario, the Group has
identified cost reductions which could be implemented, to help
mitigate the impact on cash outflows.
In reaching their going concern assessment, the Directors have
considered the foreseeable future, a period extending 12 months
from the date of approval of this half-yearly financial report.
This assessment has included consideration of the forecast
performance of the business, as noted above, the cash and financing
facilities available to the Group. In light of all of this
analysis, the Directors are satisfied that, even if this downside
scenario were to occur, the Group has sufficient cash resources
over the period. As such, the consolidated financial statements
have been prepared on a going concern basis.
3. Segmental analysis
(a) Revenue from operations (Unaudited) (Unaudited)
30-Jun 2020 30-Jun 2019
$'000 $'000
============================= ============ ============
Revenue arises from: 24,690 23,531
============ ============
Provision of services
============================= ============ ============
(b) Operating segments
The Group's main operating segments are based on its main
revenue generating activities. For each of the segments, the Group
CEO and CFO review internal management reports to profit before
taxation, on a monthly basis. The following summary describes the
operations in each of the Group's reportable segments.
Payments business segment: provision of a payment platform which
enables mobile phone users to buy goods and services and charge
them to their mobile phone bill or prepaid balance.
Identity business segment: Provision of identity services which
are used to simplify transactions or combat fraud.
Operating segment information under the primary reporting format
is disclosed below:
H1 2020 Payments Identity Total
$'000 $'000 $'000
---------------- ---------------------- -----------------
Fee Revenue 22,032 2,658 24,690
Cost of sales (391) (1,851) (2,242)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Gross Profit 21,641 807 22,448
Administrative Expenses (18,914) (3,313) (22,228)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Operating loss analysed as:
Adjusted EBITDA* 8,478 (2,037) 6,441
Depreciation and amortisation (2,042) (413) (2,455)
Stock Option expense (2,928) (81) (3,009)
Foreign exchange gains 139 25 164
Exceptional items (included in administrative expenses) (920) - (920)
Operating Profit 2,727 (2,506) 221
Finance income 30 - 30
Finance expense (154) (10) (164)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Profit before tax 2,603 (2,516) 87
--------------------------------------------------------- ---------------- ---------------------- -----------------
H1 2019 Payments Identity Total
$'000 $'000 $'000
---------------- ---------------------- -----------------
Fee Revenue 20,167 3,364 25,531
Cost of sales (1,017) (1,921) (2,938)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Gross Profit 19,150 1,443 20,593
Administrative Expenses (18,225) (4,653) (22,898)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Operating loss analysed as:
Adjusted EBITDA* 6,637 (2,346) 4,291
Depreciation and amortisation (2,054) (208) (2,262)
Stock Option expense (3,573) (653) (4,226)
Foreign exchange gains/(losses) 226 (3) 223
Exceptional items (included in administrative expenses) (331) - (331)
Operating loss 905 (3,210) (2,305)
Finance income 29 - 29
Finance expense (205) (19) (224)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Loss before tax 729 (3,229) (2,500)
--------------------------------------------------------- ---------------- ---------------------- -----------------
4. Finance income and expenses
(Audited) (Unaudited)
30-Jun 2020 30-Jun 2019
$'000 $'000
=============================================================== ================ ============
Finance income 30 29
================ ============
Interest income from bank deposits
=============================================================== ================ ============
Total 30 29
=============================================================== ================ ============
Finance expenses
Interest on bank loans & overdrafts - 77
Interest on finance leases and hire purchase contracts - 2
Interest on lease liabilities 149 131
Other interest payable (including interest paid for factoring) 15 14
Total 164 224
=============================================================== ================ ============
Net finance expenses 134 195
=============================================================== ================ ============
5. Cash and cash equivalents and restricted cash
(Unaudited) (Audited)
30-Jun 2020 31-Dec 2019
$'000 $'000
Cash and cash equivalents 79,864 26,163
========================== ============ ============
Restricted cash 836 1,696
========================== ============ ============
Total cash 80,700 27,859
========================== ============ ============
The restricted cash primarily includes e-money received but not
yet paid to merchants (in transit), cash held in the form of a
letter of credit to secure a lease agreement for the Company's San
Francisco office facility and a certificate of deposit held at a
financial institution to collateralise Company credit cards.
6. Loans and borrowings
(Unaudited) (Audited) 31-Dec 2019
30-Jun 2020 $'000
$'000
======================================== ============ =====================
Current
Bank loans (secured) net of loan costs 1,123 2,000
Obligations under lease contracts 983 1,897
Total 2,106 3,897
Non-current 2,377 2,184
Obligations under lease contracts
Bank loans (secured), net of loan costs 18,377 -
---------------------------------------- ------------ ---------------------
Total 20,754 2,184
======================================== ============ =====================
Principal terms and the debt repayment schedule of the Group's
loan and borrowings are as follows:
In November 2013, the Group entered into a Loan and Security
Agreement (the Agreement) with a financial institution that allows
for borrowings of up to $15,000,000 under a revolving line of
credit through to February 2015. This was extended first, through
to March 2017 and subsequently through to September 2019. However,
the amounts borrowed under this Agreement were partially repaid
after the IPO; the balance outstanding at 31 December 2019 was
$2,000,000 and was repaid in full in January 2020.
On 17(th) June the Group entered into a new Loan Security
Agreement with a different financial institution and borrowed
$20,000,000 which was used for the acquisition of Fortumo on 1(st)
July 2020 (further information on this borrowing is the Chief
Financial Officer's report and Note 7 below).
The balance of lease liabilities at period end was $983,170 (31
December 2019: $1,723,250 and non-current liabilities by $2,377,416
(31 December 2019: $1,358,785).
7. Post balance sheet events
On 1st July 2020 the Group acquired a 100% interest in Fortumo
Holdings Inc. ('Fortumo') from its shareholders.
Fortumo was acquired for a maximum consideration of $45.0
million (the "Total Maximum Consideration"), which includes Boku
acquiring $4.0 million of net working capital. The Total Maximum
Consideration comprises $37.8 million in cash along with
approximately $1.8 million in restricted stock units payable to the
selling equity holders of Fortumo (the "Vendors") plus further
consideration of up to $5.4 million in cash, representing 12% of
the total maximum consideration, which is to be held in escrow
subject to certain Adjusted EBITDA earn-out, working capital and
indemnity conditions being satisfied.
The Acquisition and associated costs were funded by way of; (i)
an unconditional placing that raised gross proceeds of
approximately $25.1 million (the "Placing"); and (ii) new bank
facilities of approximately $20.0 million.
The acquisition is a significant step in Boku's global Direct
Carrier Billing ("DCB") growth strategy, bringing together the two
most profitable platforms in the DCB market with complementary
capabilities and customer bases. The acquisition will cement the
Group's positioning as a leading mobile payment and mobile identity
solutions company.
Fortumo primarily focuses on providing mobile payment solutions
to over 400 small-to-medium sized enterprises, but also services
larger merchants including Google, Amazon and Tencent.
The acquisition is expected to deliver operational efficiencies
for Boku through access to Fortumo's lower operational cost base in
Estonia and use of Fortumo's direct connections in many Asian
markets to complement the existing Boku network. The acquisition is
expected to be immediately earnings accretive for Boku (before
synergies).
8. Cautionary Statement
Boku has made forward-looking statements in this financial
information, including statements about the market and benefits of
its products and services; financial results; product development
plans; the potential benefits of business relationships with third
parties and business strategies. The Group considers any statements
that are not historical facts as "forward-looking statements". They
relate to events and trends that are subject to risk and
uncertainty that may cause actual results and the financial
performance of the Group to differ materially from those contained
in any forward-looking statement. These statements are made by the
directors in good faith based on the information available to them
and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors underlying any such forward-looking information.
INDEPENT REVIEW REPORT TO BOKU INC.
Introduction
We have been engaged by Boku Inc. (the "Company") to review the
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2020 which comprises the
consolidated statement of Comprehensive income; consolidated
statement of financial position; consolidated condensed cash flow
statement; and associated notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial information.
Directors' Responsibilities
The interim financial report, including the financial
information contained therein, is the responsibility of and has
been approved by the directors. The directors are responsible for
preparing the interim financial report in accordance with the rules
of the London Stock Exchange for companies trading securities on
AIM, which require that the financial information must be presented
and prepared in a form consistent with that which will be adopted
in the Company's annual financial statements having regard to the
accounting standards applicable to such annual financial
statements.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity', issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies whose
shares are admitted to trading on AIM.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants & Registered Auditors, London, United
Kingdom
15 September 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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END
IR BRGDCRUBDGGU
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