1、Enhancing Every Mobile InteractionBoku,Inc.Annual Report and Accounts for the year ended 31 December 2019Bokus Platform,which is linked to billing,identity and sales systems of more than 190+mobile network operators,simplifies transacting on mobile devices.Bokus Payment products enable mobile phone
2、users,of which there are more than five billion worldwide,to buy goods and services and charge them to their mobile phone bill or pre-pay balance.Its Identity products are used to verify user details.Companies like Apple,Google,Facebook,Microsoft,PayPal,Spotify,Square,Sony and Western Union use Boku
3、 to simplify sign-up,acquire new paying users and prevent fraud.We maintain a corporate website containing a wide range of information of interest to investors and stakeholders at Boku is the worlds leading carrier commerce companyOur customers3Stock code:BOKUBoku Inc Annual Report and Accounts for
4、the year ended 31 December 2019STRATEGIC REPORTHighlightsContentsStrategic ReportChairmans Statement.4Strategy Overview.5Chief Executive Officers Report.12Chief Financial Officers Report.14Principal Risks And Uncertainties.18GovernanceBoard of Directors.20Senior Management.22Corporate Governance Rep
5、ort.24Audit Committee Report.30Remuneration Committee Report.32Directors Report.38Directors Responsibility Statement.40FinancialsIndependent Auditors Report.41Consolidated Statement of Comprehensive Income.46Consolidated Statement of Financial Position .47Consolidated Statement of Changes In Equity.
6、48Notes to the Consolidated Financial Statements.5050m40m30m20m10m02016201720182019Strong Revenue Growth$17m$24m$35m$50m151050-5-10EBITDA Growth 2016 to 20202016201720182019$6m$12.7mPayments($5.3m)($12m)($2m)Billable Transactions,Identity201720182019300m250m200m150m100m50m0+45%2016-012016-022016-032
7、016-042016-052016-062016-072016-082016-092016-102016-112016-122017-012017-022017-032017-042017-052017-062017-072017-082017-092017-102017-112017-122018-012018-022018-032018-042018-052018-06$USD millions2018-072018-082018-092018-102018-112018-12500450400350300250200150100502019-012019-022019-032019-04
8、2019-052019-062019-072019-082019-092019-102019-112019-12Total Payment Volume,Payments+40%90m175m254mIdentity4STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December Chairmans Statement2019 has been a year of further progress for Boku.Adjusted EBITDA more than doubled to$12
9、.7 million(excluding the effect of$3.3 million of non-recurring Pay-ment revenue)up from$6.3 million in 2018.A reconciliation from Adjust-ed EBITDA*to net profit(FY18:loss)after tax is on the face of the income statement.In January 2019,the company ac-quired Danal Inc.The strategic ob-jective was to
10、 build a global Identity business leveraging Bokus global carri-er network.The plan was to build out identity capability during 2019 and be-yond and for revenues within the US market to fund this expansion.Unfor-tunately,mobile network operators in the US have constrained their supply of identity da
11、ta,including one completely shutting off the service,which led to a performance below initial expectations.Nevertheless,the Identity unit turned in a creditable performance with reve-nues growing 25%to$6.7 million and Adjusted EBITDA losses reduced.There have been some changes on the Board throughou
12、t the year.Stuart Neal,the CFO who took Boku public in 2017 moved within the company to take up a new position as Chief Busi-ness Officer,Identity.His role was filled by Keith Butcher who,was up until that point,a non-executive Di-rector of Boku and Chairman of Bo-kus Audit Committee.Keith brings a
13、wealth of AIM experience having been CFO for AIM listed payments busi-nesses Datacash plc and Optimal Pay-ments plc(Paysafe).We are very for-tunate to have a new Non-Executive Director in Stewart Roberts,formerly CFO at iZettle and a senior executive at Barclaycard and at RBS Worldpay.Richard Hargre
14、aves continues to chair the Remuneration Committee as the Senior Independent Director.I want to thank them all for their service and contribution to the company.In 2020,the focus of the manage-ment is to drive more volume through on the payment side as well as to de-velop the international side of t
15、he Identity business.With exposure to the growth of mobile commerce,the growth of digital and streaming servic-es and connections to the worlds lead-ing telecoms operators,Boku is stra-tegically very well positioned.I look forward to another successful year.Mark BrittoNON-EXECUTIVE CHAIRMAN25 MARCH
16、20202019 has been a year of further progress for Boku which resulted in good revenue growth in both Payments and Identity divisions leading to improved group Adjusted EBITDA.These results have been delivered by the Boku Platform which connects many of the worlds largest digital merchants to 190+mobi
17、le network operators.The first application of the Platform was to provide a payment mechanism allowing consumers to buy things and put the charge onto their phone bill.Subsequently,the company has launched other services leveraging the Platform and its connected merchant base and carrier networks.Pa
18、yments is the heart of our busi-ness.Leading companies like Apple,Netflix,Spotify and Microsoft rely on us to help them to recruit new paying users.Driven by a record number of new carrier connections,payment volumes broke through the$5 billion barrier for the year,40%up on 2018s figure of$3.6 billi
19、on.Monthly Active Users reached 17.8 million in Decem-ber,another new record.These figures reinforce our position as the scale player in the sector.Scale is important to platform businesses.Being the largest allows us to simulta-neously carry the cost base necessary to serve the worlds largest digit
20、al com-panies,whilst also being able to pro-cess incremental transactions at neg-ligible cost.This leads to exceptional operating leverage:in 2019,Payments*Adjusted EBITDA:Earnings before interest,tax,depre-ciation,amortisation,non-recurring payments revenue adjustment,stock option expense,foreign e
21、xchange gains/(losses),and exceptional items.5Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORTMobile:You Aint Seen Nothing Yet.There are more active SIMs on the planet than there are hu-mans.Smartphone penetra-tion is not far behind,with approx-i
22、mately 4 billion in use worldwide,ranging from the most upmarket expensive iPhones to cheap Android devices.From its dawn with mainframes,computing moved to the PC age,which in its turn yielded to the march of the mobile device.Computing is no longer the province of governments and big companies,nor
23、 middle class families.Its available to everyone.And the computing capabilities of these de-vices are different to those that have preceded it.Driven on by the remorseless logic of Moores law,the computer in your pocket knows where you are,can see through its camera and communicate both locally and
24、over the internet.Al-though the distribution phase of the mobile computing revolution is near-ing completion,the usage phase,the phase in which we figure out what to do with these things,is only just get-ting started.The phone has already displaced the PC as the most popular way to buy things online
25、,yet purchas-es from mobiles are still only a fraction of the total opportunity.There are more active SIMs on the planet than there are humans.One of the things holding back growth is that the tools that support online business-in payment,in iden-tity,in fraud management-have not really been able to
26、 keep pace.6STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December 7Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORTThe World is Flat and Hedgehogs are Beating Foxes.In about 650 B.C.,the Greek phi-losopher and poet Ar
27、chilochus wrote about the Fox and the Hedgehog.He said,“The fox knows many things;the hedgehog one big thing”.The business guru,Theodore Levitt,took this analogy and applied it to business:in his account,Foxes are multinational companies oper-ating in many countries around the world,adapting their o
28、ffering to the local market conditions and working through a series of operating subsidi-aries,doing many things.The Hedge-hogs are global companies,as far as possible,doing the same thing all around the world,treating the planet as a single marketplace.Levitt argued that Hedgehogs beat Foxes.Nation
29、al preferences turn out to be mostly illusory and catering for them just adds cost and complexity.As he was writing in 1983,people were drinking Coke,eating at McDonalds,wearing Levi jeans and sleeping on Ikea beds.Global manufacturing uses global supply chains.As in products,more in services.The wo
30、rld is flat,barriers are being removed.We drink coffee in Starbucks,work in Excel and Powerpoint and use iPhone and Android phones.We communicate using WhatsApp,foregoing the global SMS infrastructure.Netflix appears to be beating the BBC and NBC.These Hedgehog companies like Spo-tify,Netflix and Wh
31、atsApp win when they compete with Mo-bile Network Operators(“MNO”),who,in theory should have a lot of nat-ural advantages.MNOs hold a privileged place in the mobile ecosys-tem.They literally own the(cryptographic)keys to the kingdom,they control the SIM.With it they can provide connectivi-ty and sec
32、urely identify the user and charge them.They have a billing rela-tionship with all their customers,rich and poor,with more distribution than the banks.They have highly skilled sales forces who can sell hardware and service plans to the public.So why have they been displaced?Why is it not the mobile
33、compa-nys music service,messaging or TV service that we consume?It is because they are Foxes compet-ing with Hedgehogs.Even when they operate in many countries they do not do so as a glob-al business.Their licences and spec-trum are allocated by national gov-ernments,the competition law and other re
34、gulations that they must follow means that,in practice,global telecoms groups oper-ate a portfolio of na-tional businesses.Two operators in two differ-ent countries from the same group may share little other than a brand and the fact that their accounts are consolidated by a holding company.Their pr
35、icing,platform and systems will likely be very different.The wheels of mobile commerce would spin more smoothly if there was a way to access the capabilities of the mobile network operators,masking the complexity and providing a single simple interface.That is the role that Boku plays.“The fox knows
36、 many things;the hedgehog one big thing”8STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December The Boku Platformnections were made and information exchanged through Premium SMS messages.They were an imperfect means of payment.Messages didnt get through and transactions f
37、ailed.Now we have a system with capabilities broadly equivalent to regular payment methods.Con-nections are not only through an API a feature known as Direct Carrier Billing or DCB but also include features like duplicate transaction protection,the ability to offer multiple partial refunds,and dai-l
38、y reconciliation.The scale and quality of our DCB network is unmatched.Our Platform is high capacity and performant too.It has processed vol-umes as high as 400 transactions per second(with room to more than dou-ble).Average latency on these trans-actions is about a tenth of a second.Reliability is
39、assured through an ac-tive-active configuration allowing cus-tomers to continue to process even in the event of a cata-strophic failure of one data centre.The volumes processed are also material:more than$5 billion in value was pro-cessed through the Platform in 2019,an increase of more than 40%on 2
40、018.This value has increased nine-fold since 2016.December 2019 was our highest ever month with more than$500 million going through the system.Global companies want the ef-ficiency of dealing with global suppliers.Mobile businesses benefit from being able to leverage the capabilities of MNOs.The Bok
41、u Plat-form provides that connection,allow-ing MNOs to earn revenue from the boom in mobile commerce.The Boku Platform connects 190 of the worlds mobile network oper-ators with the worlds largest digital merchants,companies like Apple,Google,Sony,Spotify and Netflix.These companies use our Platform
42、to acquire new paying users that cannot be acquired through other means.Our products now allow pay-ment or registration to take place in as little as a single tap.But it has not always been that easy.Building the Boku Platform has been a lengthy process.In the beginning,con-Size is ImportantThis sca
43、le is not just about brag-ging rights:it is because scale is important to our proposition.Despite the fact that volumes have increased so fast,operating expens-es have stayed reasonably stable.The incremental cost of processing each new extra transac-tion is negligible.New revenue falls through to t
44、he bottom line.Our scale means that we can simul-taneously have low unit costs and the cost base that allows us to serve the worlds largest customers.Although our merchants are grow-ing their businesses,helping us,in turn,to grow,most growth has been driven by connecting our merchants to more carrie
45、rs in our network.We have a considerable way to go.Most of our large merchants have 20 30 carrier connections live.Albeit that theres a tendency to connect larger carriers early,theres still a considerable way to go.Saturation is probably some-where around 150 carriers for each merchant.New connecti
46、ons mean that the carriers subscribers have the opportunity to pay,an opportuni-ty that gradually is adopted over a two-year period leading to predictable growth in users and processed value.As well as organic growth from more deployments,we will continue to pur-sue accretive opportunities to push e
47、x-tra scale through our Platform.More transactions mean more revenue and more revenue means more profit.Nevertheless,although not imme-diately in view,there is clearly some kind of limit to the potential revenue that can be generated from carrier bill-ing.In many countries,DCB is limited to digital
48、content,excluding physical goods.DCB operates at a premium to other payment types as Boku is a cheap way of acquiring new users.But our merchants are watchful to ensure that DCB does not simply recruit users who would have paid anyway.In practice,that places a ceiling on our growth at around 15%-20%
49、share of checkout.15%-20%of the worlds digital com-merce(estimated at$125 billion)is a fairly respectable Total Available Mar-ket(TAM),but the Boku Platform is capable of supporting other products which can expand this further.More than$5 billion in value was processed through the Platform in 2019,a
50、n increase of more than 40%on 2018We can simultaneously have low unit costs and the cost base that allows us to serve the worlds largest customers9Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORTMobile First Markets Mobile Walletsand other mobile
51、 first markets turn to their mobile wallet to pay digitally.Mobile wallets are a hybrid meth-od of payment.They are priced com-petitively against cards and are not restricted to digital,being used for all merchant sectors.But they also are domestic and unstandardized and not interoperable.Money is n
52、ot con-veniently remitted to the merchants home territory in the currency of their choice,but rather settled locally in wallets local currency.They are Foxes and,like MNOs need to be aggregated for global merchants to be able to use them at scale.The skills that Boku developed working with MNOs are
53、easily trans-ferable to connecting mobile wallets.And there is a considerable appetite from both wallets to access Bokus ex-isting merchant base and from Bokus merchants to access the customers of the mobile wallets.We have made good progress in sign-ing up wallets and are hopeful that the extra vol
54、umes,processed at marginal extra cost will provide a new pathway for growth with a Total Addressable Market of approximately the same size as DCB.Its early days,but our success to date in setting up a wallet network includ-ing 10 wallets in 9 countries reaching more than 1.4 billion users gives us c
55、ause for optimism.New revenues generated through this channel will drop through to Adjusted EBITDA in the same way that the existing carrier billing payment gross profit does.Mobile wallets are a phe-nomenon that has emerged in those countries which skipped the PC age and went straight to mobile.Loc
56、ated mainly in Asia,in these countries it was mostly a few rich people who used payment cards for travel and entertainment.The mass of the emerging middle class didnt have an electronic payment method.As apps like WeChat and Alipay sought to monetise they were essentially com-pelled to develop a pay
57、ment method alongside their other functionality.Collectively mobile wallets are now the mainstream payment method in Asia,accounting for more than 50%of electronic payments.Whether its face-to-face using QR codes or online from within the app,most people in China Carrier Billing Network 190+Carriers
58、 62 Countries 1bn subscribersMobile Wallet Network 10 e-Wallets 9 Countries,1.4bn end users$43mTAM forMobile Walletscould belarger thanDCBCarrier Identity Network$6.7m 26 connections 12 carriers 4 countries10STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December Who Likes
59、 Typing SMS Passcodes?If mobile wallets are a way for Boku to leverage its merchant network,then our Identity business is a way for us to leverage the carrier network.With new technology come new ways of committing fraud,tools developed in the PC era are not able to address the very real problems ex
60、perienced by many mobile businesses.One problem that needs solving is reliably understanding that the person attempting a transaction or to access a system is authorised to do so.The technology being used to address this problem-as in the early days of Carri-er Billing-is the SMS message.SMS One Tim
61、e Passcodes(or OTPs)are sent in their billions.Its the technology thats used be-cause it is the only global solution available.But theres a problem.Its unreliable(with messages sometimes not arriving),inconvenient(typing a six-digit code across is never a fun ex-perience)and,worst of all,insecure.Vi
62、ctims can be induced to hand over the code,Android phones have been infected with malware and,in ex-treme cases,SIMs can be comprised by identity stealing fraudsters fooling the phone company.In Payments we use the technology that allows the MNO to know your number without having to ask as a way to
63、deliver a one tap payment,in Identi-ty the same basic technology is used to deliver a no-tap authentication check,reassuring the company that its in ses-sion with the right phone and that its SIM has not been compromised.Its our vision to deliver these servic-es globally,to global companies.The acqu
64、isition of Danal gave us a base in Identity in the US and whilst revenues there have not grown as quickly as an-ticipated,weve grown the network with new connections made to carriers in India,Indonesia and the UK to sup-plement those acquired in the USA and Canada.A global silent authentication netw
65、ork cannot be created overnight-though Boku starts with advantages de-rived from its payment network-but the prize for doing so is significant.STRATEGIC REPORTSummaryBokus core business of Direct Carrier Billing is secure,profit-able and growing.As the scale player,we will continue to expand through
66、 rollout of our existing mer-chants and through adding further volume to our Platform.Having positioned ourselves at the intersection of important secular trends the growth of mobile,the needs of global companies,the growth of digital subscriptions we are devel-oping our Payments business by sup-ple
67、menting our existing DCB network with a second mobile wallet payment network of equivalent size and in iden-tity services by helping to secure mo-bile commerce.11Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019Our Platform has the chance to enhance every mobile
68、interaction and to play a meaningful role in the expansion of mobile commerce around the world.12STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December Chief Executive Ofcers Report2019 has been another year of significant growth.At the Group level,revenues increased by 4
69、2%to$50.1 million and Adjusted EBITDA was up by 17%to$7.4 million.This Adjusted EBITDA number excludes$3.3 million of non-recurring Payment revenue relating to a change in the es-timate of a transaction price related to a performance obligation satisfied in a prior period.As a non-recurring item we
70、excluded it from our EBITDA pres-entation to better show the underlying performance of the business.Our Pay-ments division delivered a very solid performance with revenues growing to$43.5 million and Adjusted EBITDA growing by over 100%to$12.7 million(once again,excluding the impact of the$3.3 milli
71、on non-recurring item).Within our Identity division,which we acquired on 1 January 2019,revenues grew by 26%to stand at$6.7 million and Adjusted EBITDA improved to a$5.3 million loss,down from an un-audited$6.4 million loss in the year prior to Boku acquiring the company.We have built an incredible
72、asset in the Boku Platform.It has taken 10 years and cost us more than$100 mil-lion,and it is very difficult for anyone else to replicate.It now connects 190+mobile network operators around the world to most of the worlds largest dig-ital merchants in app stores,streaming music,streaming video and g
73、ames.The Platform is extremely reliable and can support high volumes of transactions(volumes have peaked at more than 400 transactions per second)and is ca-pable of supporting many more.The primary product run through the Platform is Bokus Direct Carri-er Billing(DCB)Payments business.Users of this
74、service are many of the worlds largest digital companies,in-cluding Apple,Sony,Spotify,Netflix,Facebook,Google and Microsoft who come to Boku for a simple reason we help them to acquire new paying users.Underpinning Bokus products is a key capability that only mobile network operators possess:they k
75、now your telephone number without hav-ing to ask.With Boku Payments we convert this knowledge into one-tap-to-pay technology,or better yet,one-tap-to-register,removing friction not only from the time of the transaction,but also from the registration process.This technology helped nearly 18 million p
76、eople make their very first Boku payment transaction in 2019 around one and a half million new pay-ing users a month,helping to drive the growth of our customers as more people play games and watch movies on their phones and listen to music on the move.In December 2019 alone,17.8 mil-lion users boug
77、ht a product through the Platform 4.3 million more than in the same period last year generating more than$500 million in transaction value.Over the course of the whole year more than$5 bil-lion was spent through the Boku Platform,40%up from last years figure of$3.6 billion.We convert this processed
78、value into revenue for Boku by taking a percent-age based fee.We operate two models:the settlement model a full service offering where we provide technical processing services and are involved in the flow of funds,and the transac-tion model where we only provide the technical connectivity.The former
79、 at-tracts higher fees than the latter which has more volume.This growth has mostly been driven by connecting our merchants to car-riers within our network.Each new connection reaches maturity over a two-year period.Meaning that much of our growth is baked in.A big effort this year has been to impro
80、ve network quality,to get more carriers able to support Bokus one-tap-to-register offering,Boku Account.These new connections have been to transaction model merchants at lower margins in 2020 and beyond these connections can be reused by higher margin settle-ment model customers.Growth is underpinne
81、d by the growth in popularity of the services that our merchants offer as digital services dis-place physical products in the music,film and games industries.We also get a boost from cross selling into other di-visions of our customers,for example,being used for Office 365 subscriptions by Microsoft
82、 as well as Xbox.2019 has also been a year in which we laid a lot of groundwork for future growth with Mobile Wallets which are a second distinct payment network available to our merchants through their existing Boku connection.Mobile Wallets have emerged as the mainstream payment mecha-nism in most
83、 mobile first markets.In Asia,for example,companies like Al-ipay,Wechatpay and Paytm account for 58%of electronic spending and have around 2.5 billion customers.For wallets which have a strong do-13Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
84、mestic presence,Boku is a valuable partner as we are connected to an unrivalled portfolio of global digital merchants.By the same token,glob-al merchants value the benefit of us-ing their existing connection to the Boku Platform to provide their users with a new way to pay.To date,Boku has contracte
85、d with 10 wallets in 9 countries reaching approx-imately 1.4 billion customers.We are now live with three wallets and during 2020 we will activate more,building,in effect,a second payment network connected to the Boku Platform.This can be achieved without significant extra cost.Connecting the Boku P
86、ay-ments Platform to wallets is similar to connecting to carriers and the cost of an incremental transaction is close to zero.Therefore any extra gross margin generated from wallets will largely flow through to Adjusted EBITDA.Its early days for wallets,and 2020 revenues are not expected to be mater
87、ial,but they clearly have significant potential.While wallets are an example of growth by exploiting the Boku Plat-form and our existing merchant base,our efforts in Identity are a demon-stration of how we can exploit our car-rier network to launch new products reaching new customers.To kick start t
88、he Identity business,we bought Danal Inc.,for$25.1 mil-lion on 1 January 2019.The plan was to strengthen sales in its US domestic market and use the funds generated to help build out a global carrier identi-ty network,building on our existing global carrier billing network.Progress in the US can bes
89、t be de-scribed as respectable rather than spectacular and certainly less than we would have liked.Volumes of billable transactions were up by 45%to 254 million and revenues increased by 26%to$6.7 million compared to 2018s un-audited figure(the year prior to Boku acquiring the company).We were af-fe
90、cted by supply side issues in the US,in particular,the loss of a carrier.Despite results falling below our ex-pectations,I retain a strong conviction about the Identity business.We didnt buy Danal for it to continue be a US fo-cused company,we have ambitions for it to be global.Building out the supp
91、ly side through our international carrier network is in progress but takes time.Our key Identity product offering uses the same core technology as Pay-ments,the fact that the carrier knows your phone number without having to ask.In Identity this manifests as silent authentication checking your phone
92、 number matches the one on file with-out the user having to do anything.To verify your phone number today,peo-ple are put through the ordeal of re-ceiving a 6-digit code by text message.Its not a fun experience.Text messag-es get lost and transactions dont get completed.Worse,far from being a secure
93、 system,the SMS message itself can act as a source of fraud when the genuine user is induced by a fraudster to give away the code.Demand for a better solution,a silent validation,is strong.Our challenge is to build the supply network interna-tionally.While it was disappointing to make slower progres
94、s than we wanted in the US during 2019,the milestones marking progress on this business are about internationalisation,activating more carriers outside the US.In this regard,it is good to be able to report that we have activated new connec-tions in India and Indonesia,but there is still further work
95、 for us to do.OutlookBoku is a business where much of the growth is built in.A lot of groundwork has been done in 2019 to set us up for success in 2020.Volumes and reve-nues in one year are,barring accidents,largely the result of efforts made in the previous one.Just such a shock,the Coronavirus,has
96、 cast a long shadow over many businesses.Boku however is very well placed:operations are un-affected-our team is used to work-ing remotely.New implementations are mostly proceeding with,at worst,minor delays.New sales and busi-ness development are more difficult without face to face contact,though o
97、pportunities are being pursued.As our services are delivered digitally,supply has not been disrupted;on the demand-side,the more people stay at home the more they play games,download apps and use streaming ser-vices.We have seen definite evidence of increased volumes in countries with social distanc
98、ing measures in place.In Payments,our existing merchants and connections will continue to perform strongly for as long as lock-down measures are in place.There is a strong pipeline of new deployments,especially from higher margin settle-ment model merchants to be imple-mented.As yet,our DCB deployme
99、nt plans have not been materially affect-ed.There is also potential material up-side from mobile wallets.On Identity,our focus in 2020 is continuing to build out our interna-tional carrier connections to create a truly global offering.Demand remains strong,including from global custom-ers.Transactio
100、n processing on existing customers is continuing unaffected.Identity has a greater dependence on new business to hit full year expecta-tions and so is unlikely to perform as strongly as Payments,with its larger installed base.We remain confident that Boku is well positioned in difficult times.Jon Pr
101、ideaux CHIEF EXECUTIVE OFFICER 25 MARCH 202014STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December Chief Financial Ofcers ReportStrong growth in Payments Adjusted EBITDA and progress in Identity2019 was a year of significant change for Boku following the acquisition of
102、US based mobile Identity business Danal Inc on 1 Jan-uary 2019 for$25.1 million which turned Boku into a two product global business.Danal was renamed Boku Identity and we report on the first full year of our Identity busi-ness here for the first time.The Pay-ments division performed well with reven
103、ues increasing to$43.5 million which in turn delivered a 100%in-crease in Adjusted EBITDA of$12.7 million(2018:$6.3 million)demon-strating the operational leverage of our Payments Platform as addition-al incremental transaction revenues largely drop through to Adjusted EBITDA.The newly acquired Iden
104、-tity division was loss making prior to acquisition and we saw progress in 2019 as revenues grew by 26%to$6.7 million while Adjusted EBITDA losses reduced from$6.4 million to$5.3 million.These losses are ex-pected to further reduce in 2020 and we are aiming to reach monthly breakeven in 2021.Net Pro
105、fit after TaxThe Company reported a Net Profit after tax for the year of$0.4 million(2018:$4.3 million loss)and a net loss before tax of$1.3 million(2018:$3.0 million loss).Group Revenue and Gross MarginsRevenue for the year of$50.1 mil-lion was up by 42%on 2018(2018:$35.3 million)as the Company saw
106、 growth in its Payments business and added Danal Inc to form its Identity division on 1 January 2019.Noting that the balance includes a non-re-curring Payment revenue of$3.3 million relating to a change in the estimate of a transaction price relat-ed to a performance obligation satis-fied in a prior
107、 period.Payments rev-enues,including the non-recurring item noted in the previous sentence,were$43.5 million(87%of total rev-enues)with Identity revenues of$6.7 million(13%).Gross margins on the Payments side improved from 93%to 96%as volumes from our transaction model merchants,which has 100%gross
108、margins,increased.The newly formed Identity business had gross margins of 41%for 2019.Group Operating ExpenditureAdjusted Operating Expenditure(Operating Expenditure adjusted for depreciation,amortisation,foreign exchange,stock option expense,ex-ceptional items,and restructuring costs)increased to$3
109、3.9 million(2018:$26.4 million),mostly driven by the Groups acquisition of Danal Inc in January 2019 which added operat-ing expenditure of$8.0 million in the year(2018 pro forma;$7.4 million).Payments operating expenditure fell slightly to$25.9 million(2018:$26.4 million)as we continued to expand ou
110、r technology operations in lower costs locations such as India while continuing to invest in our Platform.The Boku Platform is now capable of processing up to 800 transactions per second(TPS)more than double the highest TPS the Platform has ever had to process.From 1 January 2019 onwards,costs relat
111、ing to Right-of-Use Assets(op-erating leases)have been required to be capitalised and depreciated under IFRS 16.This had the effect of reduc-ing the companys adjusted operating expenses and increasing its Adjust-ed EBITDA in 2019 by$1.9 million(please refer to Note 2&10 of the Fi-nancial Statements
112、for details).Payments divisionThe Payments division comprises Bo-kus Direct Carrier Billing(DCB)business which enables customers of Bokus merchants to charge payments to their phone bills.Bokus Payments division is the sole DCB provider to some of the worlds largest digital mer-chants including Appl
113、e,Netflix,Face-book and Sony.In 2019 revenues grew by 23%to$43.5 million(2018:$35.3 million).Growth comes from existing mer-chants and carrier connections but also from adding new carrier connec-tions to new and existing merchants and this growth continued in 2019.Revenues included a one-off amount
114、of$3.3 million relating to a change in the estimate of a transaction price re-lated to a performance obligation sat-isfied in a prior period.Boku Payments operates two rev-enue models both based on a per-centage of the processed value:the higher margin settlement model where Boku collects funds from
115、 car-15Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORTriers worldwide in multiple curren-cies before settling to the merchant,and the lower margin transaction model where we only provide the technical connectivity.Total Payments Volume(TPV)for t
116、he year increased to$5.0 billion in 2019 from$3.6 billion.The majority of growth came from our lower mar-gin/higher volume transaction model merchants.As a result of this mix ef-fect the weighted average take rate re-duced to 0.8%in 2019(2018:1.0%).Since IPO,Boku has not reduced its rates to any of
117、its merchants nor has it lost a material merchant.Gross margins for the Payments di-vision improved from 93%to 96%in the year primarily driven by the vol-ume growth of our transaction model merchants where there is no cost of sale(100%gross margin).Adjusted operating expenditure for the Payments div
118、ision was slightly lower than 2018 at$25.9 million.Un-der IFRS 16,leases over one year are now required to be capitalised and depreciated.This reduced operating expenditure and increased Adjusted EBITDA by approximately$1.9 mil-lion(Note 10).Adjusted operating ex-penditure for Payments is expected t
119、o increase modestly in 2020.Identity divisionBokus Identity division was formed at the start of 2019 following the acquisi-tion of Danal Inc on 1 January 2019 for$25.1 million,including$24.1 million of equity and$1 million of cash(see footnote 27).Identity revenues for the year in-creased by 25%to$6
120、.7 million(2018 pro forma:$5.5 million).Almost all of this came from the US where the busi-ness operates.Gross margin for the year was 41.3%.Identity Cost of Sales is primarily transaction related fees paid to carriers and other data providers.Adjusted operating expenses were$8.0 million in the year
121、(2018 pro for-ma:$7.4 million)as we expanded our US salesforce and added additional non-US heads as we move to interna-tionalise our offering.Adjusted EBITDA for the year for the Identity division was a loss of$5.3 million(2018 pro forma:$6.4 million loss)and is expected to further reduce during 202
122、0.Acquisition of Danal IncBoku completed the acquisition of Danal Inc on 1 January 2019 for a total consideration of$25.1 million.Danal Inc is a US based mobile Identity business.As announced on 6 January 2020 no additional consideration was payable following the performance of Danal Inc during 2019
123、.Group Operating Results and EBITDAAdjusted EBITDA increased by 17%to$7.4 million in 2019,from$6.3 million in 2018.Adjusted EBITDA is earnings before interest,tax,depreci-ation and amortisation,adjusted for stock option expenses,forex gains/Revenue of$50.1 million up 42%on 2018(2018:$35.3 million)Ad
124、justed EBITDA*17%higher at$7.4 million(2018:$6.3 million)Reported Net Profit after tax of$0.4 million compared with Net Loss after tax of$4.3 million for FY 2018 Closing cash balances as at 31 December 2019 were$35.6 million compared with$32.3 million at 31 December 2018 Monthly average cash balance
125、s in December 2019 were$22.4 million,compared with$22.2 in June 2019 and$24.4 million in December 2018 Active Payments users in the month of December 2019 of 17.8 million(up from 13.5 million users in December 2018)Total Payment Volume(TPV)of$5.0 billion in 2019 compared to$3.6 billion Identity bill
126、able transactions up by 45%to 254 million*Adjusted EBITDA:Earnings before interest,tax,depreciation and amortisation,non-recurring payment revenue adjusted for stock option expenses,Forex gains/losses and Exceptional items16STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 De
127、cember losses and exceptional items.It also excludes$3.3 million of non-recurring Payment revenue so as to show the un-derlying performance of the business.Reported Operating Losses for 2019 were reduced at$0.9 million(2018:$2.4 million).This can be broken down as follows:Foreign Exchange movements
128、re-sulted in a small gain of$0.1 mil-lion(2018:$0.3 million loss)Stock Option Expenses stock option expenses were$6.8 mil-lion in 2019 compared with$4.6 million in 2018.Boku has issued either RSUs or share options to all staff annually.RSU and stock op-tion charges are spread over three and four yea
129、rs respectively from date of grant based on the Black Scholes method and the increase in the 2019 charge over 2018 is as a result of 2019 having costs from both the 2018 and 2019 awards.Of the$6.8 million booked in 2019,$0.2 million was paid out cash(via employers NI),the remainder was non-cash and
130、expensed.Exceptional Items were reduced at$0.4 million(2018:$1.1 million).Exceptional Items in 2019 related to the closure of our Italian entity and restructuring costs relating to our Irish entity.Net financing expenses were re-duced to$0.5 million in 2019(2018:$0.6 million).These costs relate to I
131、nterest on operating leas-es and bank loans/overdraft.Balance Sheet and Cashflow Closing cash balances increased to$35.6 million(including restricted cash balances of$0.9 million)at the end of 2019 from$27.9 million at 30 June 2019 and$32.3 million at 31 December 2018.Monthly average cash balances,w
132、hich smooth the impact of in-tra-month flows of both carrier and merchant payments,were$22.4 million in December 2019 from$22.2 million in June 2019.Cash generated from Operations during the year was$8.9 million(2018:$13.5 million).The Groups Revolving Credit Fa-cility of 15.0 million with Silicon V
133、alley Bank(SVB)was terminat-ed on 26 December 2019.It was re-placed with an overdraft facility of 5.0 million with SVB.At year end$2.1 million was drawn down on this overdraft facility and this was repaid in full on 9 January 2020.As a result of the implementation of IFRS 16(see note 1)resulted in$4
134、.9 million of right of use assets and corresponding lease liabilities being recognised on 1 January,2019,with$3.0 million and$3.1 million respectively in-cluded on the balance sheet at 31 December 2019.Deferred tax assets of$1.4 million were recognised at 31 December,2019 compared to deferred tax li
135、-abilities in 2018.This reflects the expectation that operating losses will be utilized over the next two years primarily in our UK tax ju-risdictions.From a working capital perspective,Current Assets exceeded Current Liabilities at 31 December 2019 by$7.4 million compared with$4.4 million at the 20
136、18 year end.Intangible Assets increased to$46.8 million over the period,up from$22.5 million at December 2018 reflecting the acquisition of Danal Inc on 1 January 2019.This total includes$41.1 million of Goodwill emanating from the acquisition of Danal and other his-torical acquisitions($23.6 millio
137、n Goodwill from Danal acquisition Note 27).Keith ButcherCHIEF FINANCIAL OFFICER25 MARCH 2020 Chief Financial Officers Report18STRATEGIC REPORTBoku Inc Annual Report and Accounts for the year ended 31 December Principal Risks And UncertaintiesManaging the risk in our businessEffective risk management
138、 is critical to achieving the Groups objectives.Boku operates a 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.Our risk management proce
139、ss is a combination of a“top down”approach(driven by the Audit Committee and the Board)and a“bottom up”process(originating from the opera-tions).It is an evolving framework as we continuously seek to improve and enhance our risk management processes.ResponsibilityThe risk champion of each department
140、 shares their most significant risks after having considered a set of external factors from the various jurisdictions Boku operates,to the internal ways of operating.All risks are then consolidated,shared and reviewed with the Senior Management and the Board who agree on the Principal Risks.The Boar
141、d 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 executive management team and other managers with key functional responsibilities.Risk categoriesThe Groups principal risks can be categorized into
142、“Strategy and Commercial”,“Legal and Regulatory”,“Operational”or“Financial”risks,as shown in the tables below.Strategy and Commercial(Description and Impact)Examples of mitigating activities include:Loss of major merchantLoss of one or more major merchants of the Group could result in a material los
143、s of revenue and profit for the Group.Two customers of the Group account for more than 15%of group revenues.Concentration of revenue is a consequence of the digital markets that the Group serves,where winners take disproportionate share.The Group expends considerable resources in ensuring that its k
144、ey customers are satisfied with the Groups service to them.Additionally,to reduce dependence in the medium-term further lines of business,namely,Boku Identity are being developed so as to lessen dependence on one particular sector.Legal and Regulatory Risks(Description and Impact)Examples of mitigat
145、ing activities include:Changes to the regulatory environmentChanges in the law and regulatory framework which prohibit the provision of services by some of Groups suppliers or customers could have a material adverse effect on the Group.For example,the Groups business could also be adversely affected
146、 by:an increase in“Know-your-customer”regulations aimed at money laundering and affecting small content providersBoku is not materially impacted by Britains 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 rev
147、enue is derived from passporting our e-money licence.Diversifying the range of services available to all types of customers to mitigate the impact of any single regulatory changeContinuing to invest in solutions that improve the Groups ability to manage credit risk and fraud and ensure compliance wi
148、th regulations.Employing and retaining experienced risk and compliance staff who can monitor any changes and ensure timely compliance.Attending industry events and associations member meetings to stay current with any significant changes relevant to our business.Apply for a Payment Institution licen
149、ce in an EU country.19Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORTFinancial Risks(Description and Impact)Examples of mitigating activities include:Movements in foreign currency exchange ratesThe majority of the Groups revenues are derived out
150、side of the USA and therefore,fluctuations in currency exchange rates may adversely affect the reported financial condition of the Group.The Group uses foreign exchange contracts to manage its exposure to adverse fluctuations in foreign exchange rates.Failure of carriers to pay the amount due to mer
151、chantsThe company is reliant on third parties,including MNOs and SMS aggregators to pay significant amounts due from them in a timely manner as specified under contract.A large-scale failure to do so would have a material effect on the Groups financial condition or operating results.Developing stron
152、g relationships with MNOs and aggregators.Effective credit control and management of receivables.Operational Risks(Description and Impact)Examples of mitigating activities include:Attracting and retaining the best talentThe Groups success depends on its ability to attract and retain key management a
153、nd 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 Groups reputation,business,operations and financial performance.Developing the skills and capa
154、bilities of staff as part of talent management.Creating opportunities within the Group for personal development and career enhancement.Recruiting specialized,experienced staff.Cyber Security and Data ProtectionThe Group IT environments may be subject to hacking,data theft or other cyber security thr
155、eats which may harm customer relationships and the market perception of the effectiveness and resilience of the Groups products and services.Such an attack may also have a material adverse effect on the Groups financial position.Ensuring the group has the systems and experienced staff in place to de
156、fend against potential cyber security threats.Building resilience within the Platform to mitigate the impact of an attack in the event of a successful penetrationContinuous education on and raising awareness of cyber threats and data theft for staff.20GOVERNANCEBoku Inc Annual Report and Accounts fo
157、r the year ended 31 December Board of DirectorsMark BrittoNON-EXECUTIVE CHAIRMANWith over 20 years as an entrepreneur,sales and financial services executive,Mark Britto is currently the Chief Rev-enue Officer at PayPal.He also serves as Bokus Non-Executive Chairman.Mark founded Boku after six years
158、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 A.Marks first start-up,A,was bought by A in 1999 and served as the primary backbone of Amazons glob
159、al payments platform.Mark began his career in senior credit and risk management roles at leading national banks FirstUSA and Bank of America.Jon PrideauxCHIEF EXECUTIVE OFFICERJon has more than 25 years of pay-ments experience.He was an early Visa Europe employee and key con-tributor to its growth,l
160、eaving in 2006 as EVP Marketing.He started Visa Europes ecommerce division,was the lead executive on the introduction of Chip and PIN technology and oversaw product launches such as Visa Elec-tron and V PAY.He served on the Board of EMVCo,was the Chairman of the Compliance Committee and was a member
161、 of Visas 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.Keith ButcherCHIEF FINANCIAL OFFICERKeith
162、 has had considerable experience as a listed company CFO and of on-line payments businesses.His experi-ence includes six years as CFO of AIM quoted online payments company Da-taCash Group plc during its period of rapid growth and ultimate sale to Mas-terCard.More recently,he was CFO of LSE listed pa
163、yments company Paysafe Group plc(formerly Optimal Payments plc),which grew its market capitali-sation from 40 million to 2 billion during his tenure,through a combina-tion of organic growth and a number of acquisitions including the 1.1 billion acquisition of Skrill.Until his appoint-ment as CFO,Kei
164、th was an Independ-ent Non-Executive Director and Chair-man of Bokus Audit Committee from Bokus admission to AIM in 2017.Keith was awarded Finance Director of the Year at the Quoted Company Alliance Awards(QCA)2014.21Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2
165、019GOVERNANCEDr Richard Lawrence HargreavesINDEPENDENT NON-EXECUTIVE DIRECTORRichard co-founded Endeavour Ven-tures in 2006 and has been investing and advising companies for over 30 years.He began his career at 3i plc where he spent ten years before starting Baron-smead and launched one of the first
166、 VCTs Baronsmead VCT.He sold this to Friends Ivory&Sime plc in 1995(it later became ISIS Equity Partners).Richard was MD of their unquoted investment business at that time which had 180 million funds under management.Richard is a former chairman of the British Venture Capital and Private Equity Asso
167、ciation(BVCA).He has significant experience as a non-executive director on both public and private company boards.He is a graduate of the University of Cambridge and has an MSc and PhD from Imperial College,London.Mr Hargreaves is the Chairman of Bokus Remuneration Committee.Stewart RobertsINDEPENDE
168、NT NON-EXECUTIVE DIRECTORStewart has over 30 years of experience in payments,banking and technology,across both start-ups and institution-al employers and is a recognised pay-ments industry expert in both the tra-ditional and emerging payments space,as well as the mobile application sector.Stewart h
169、ad 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 iZet-tle to PayPa
170、l in May 2018 for US$2.2 billion.Mr Roberts is the Chairman of Bokus Audit Committee.22GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Senior ManagementMike CahillCHIEF OPERATING OFFICERMike joined Boku from American Ex-press where he served as VP of Mobile Engineering a
171、nd where he managed both national and international engi-neering teams.In that role,Mike was responsible for American Express app development and company-wide mo-bile application and mobile payment frameworks,as well as projects rang-ing from the implementation of Apple Pay to the development of sev
172、eral mo-bile applications.Prior to American Express Mike was Bokus VP of Engineering for four years where he led multiple engineering teams in the development of Bokus industry leading mobile payment Platform.He returned to Boku as CTO in 2014 to lead Bokus engineering and technical operations acros
173、s the globe.Prior to joining Boku,Mike held senior engineering roles at companies including Sepialine,Wakesoft,Autodesk,B,and Synon.Adam LeeCHIEF PRODUCT OFFICERAdam has been developing new prod-ucts and services for startup ventures for over 20 years.At Boku,Adam leads product,design,and market-ing
174、,charged with finding innovative new applications for the 4B+mobile phones the Boku Platform is currently connected to.Before joining Boku,Adam was at Intuit where he launched the worlds first consumer medical wallet used to understand,manage,and pay for healthcare expenses,distributed by two of the
175、 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
176、 the world including Carrefour,Sears,Sainsburys,Metro AG,Karstadt Quelle,Unilever,Proctor&Gamble,and Diageo.Stuart NealCHIEF BUSINESS OFFICER-IDENTITYStuart was CFO of Boku from June 2017 to October 2019 before moving into the new role as Chief Business Of-ficer.Prior to re-joining Boku in 2017,Stua
177、rt was advising new technology ventures,bringing to market cutting edge technology in AI Machine Learn-ing,Crypto Currency and Blockchain.Previously,he was Chief Commercial Officer at Vocalink Zapp(acquired by Mastercard),building distribution channels and creating merchant demand for their Pay by B
178、ank App product.Stuart was also Commercial Director at Barclaycard,Europes second largest card acquirer,where he oversaw the roll out of contactless payments across the UK market.He has held senior Commercial and Finance positions within a number of blue chip corporations including Glax-oSmithKline,
179、Worldcom and Virgin Media.Stuart was previously CFO at Boku between 2012 and 2014.23Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEMark StannardCHIEF BUSINESS OFFICER-PAYMENTSMark has over 20 years experience in mobile,digital and fintech services.He
180、played a critical role in building Bokus market-leading carrier billing network of nearly 200 carriers,and as Chief Business Officer Payments,has direct responsibility for Bokus Worldwide mobile payments business.This includes the deployment of new mobile Alternative Payment Types onto the Boku Plat
181、form,such as digital eWallets and mobile banking Apps.Previously,Mark held positions at Deutsche Telekom&Buongiorno-Vitaminic(now part of NTT-DOCOMO)where he managed BD,and led marketing&licensing for music and digital entertainment services.He holds a Masters Degree in Business Administration from
182、Cambridge University,specialising in Strategy,Innovation and Organisational Behaviour.24GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Corporate Governance ReportChairmans IntroductionDear Shareholder,Part of my role as Chairman is to ensure that the highest levels of c
183、orporate governance are maintained throughout the Company and also at board level.In September 2018,the board of di-rectors of Boku(the“Board”)decided to adopt The QCA Corporate Gov-ernance Code(the“QCA Code”)as the benchmark for corporate govern-ance of the Company.It is the Boards continuing belie
184、f that the QCA Code continues to be the most appropriate governance code for the Company.Good corporate governance is not a static process.As a result,we have continued to develop existing struc-tures and practices during 2019 and the following report summarises how the QCA Code has been applied.The
185、 Board believes that the com-pany substantially complies with the QCA Code and there are no significant areas where the Companys govern-ance structures and practices differ from the expectations set by it.Any divergence from the QCA Code these is mentioned in this report.My Board colleagues and I be
186、lieve that good governance allows our inter-nal processes and controls to operate efficiently and helps mitigate financial and other risks which could otherwise impact the value of the Company.This provides a platform upon which the Companys medium to long-term suc-cess can be built.Mark BrittoNON-E
187、XECUTIVE CHAIRMAN 25 MARCH 2020Statement of ComplianceApplication of the QCA Corporate Governance CodeDeliver GrowthPrincipleApplication1Establish a strategy and business model which promote long-term value for shareholdersAt Boku we seek to develop an entrepreneurial and supportive culture across o
188、ur business so that these values are integral to everything else we do.An explanation of the Companys business model and strategy,including key challenges in their execution(and how those will be addressed)is included on pages 5 to 18.2Seek to understand and meet shareholder needs and expectationsA
189、description of the ways in which the Company seeks to engage with shareholders and how successful this has been is set out in the Sharehold-ers section of the Boku Website.The Board engages with shareholders via a variety of channels and activities including the annual general meeting,updates to sha
190、reholders via reporting and the,regulatory news services and institutional presentations.In 2019,we held a well attended Capital Markets Day.3Take into account wider stakeholder and social responsibilities and their implications for long-term successBokus culture is very open and this includes reach
191、ing out and seeking feedback and insights from our various stakeholders.The Board has considered the key stakeholder relationships which give its competitive ad-vantage and thereby contribute to the long-term success of the company.These key stakeholders are the skilled people employed by the compan
192、y and its merchant and carrier relationships.These relationships are regular-ly monitored by the Board.4Embed effective risk management,considering both opportunities and threats,throughout the organisationThe Board is responsible for identifying the major business risks faced by the group and for d
193、etermining the appropriate course of action to manage those risks.Our risk management framework and approach to risk is sum-marised on pages 18 and 19.25Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEMaintain a Dynamic Management Framework PrincipleAp
194、plication5Maintain the board as a well-functioning,balanced team led by the chair.The QCA Code requires that boards have an appropriate balance between ex-ecutive and non-executive directors and that each board should have at least two independent directors.The Board is currently made up of two exec
195、utive directors and 3 non-executive directors.The names of the current directors and a note of those who are considered to be independent are set out on page 28.There were six Board meetings held during 2019 and each Director attended all meetings.The Board is satisfied that its directors have an ef
196、fective 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 judge
197、ment and to constructively challenge all matters,whether strategic or operational.6Ensure that between them the directors have the necessary up-to-date experience,skills and capabilitiesThe current directors,their background and experience are described on pages 20 to 23.Collectively,our team has al
198、l the necessary skills and experience,to carry out the groups strategy and business model effectively.Richard Hargreaves is the senior independent director and he is available to speak with shareholders concerning the corporate governance of the Company.The Company Secretary,Deepa Kalikiri is respon
199、sible for advising the Board on governance matters and ensuring that decisions of the Board in relation to governance matters are implemented.Appropriate training is also available to all directors to develop their knowl-edge and ensure they stay up to date on matters for which they have responsi-bi
200、lity as a Board member.7Evaluate board performance based on clear and relevant objectives,seeking continuous improvementThis exercise is expected to be repeated by the Board in Q3 2020.Once it has been undertaken,further information will be set out in the,Corpo-rate Governance reportLow scoring or d
201、ivergent scoring responses will be discussed,and gaps and actions for improvement identified.8Promote a corporate culture that is based on ethical values and behavioursAn outline of the corporate culture promoted by the Board is set out in the section of the Companys website headed Core Values.26GOV
202、ERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December PrincipleApplication9Maintain governance structures and pro-cesses that are fit for purpose and support good decision-making by the boardFormal board meetings are held every two months to review strategy,manage-ment and perfor
203、mance of the group.Additional meetings between those dates are convened as necessary.We have two board committees:the Audit Commit-tee 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
204、 be viewed at .Due to the current size of the Company a Nominations Committee is not considered to be appropriate,any decisions relating to appointments to the Board will be a matter for the consideration to the Board.From time to time,separate committees may be set up by the Board to consid-er spec
205、ific issues when the need arises.The roles and responsibilities of the chair,chief executive and any other direc-tors who have specific individual responsibilities or remits(e.g.for engagement with shareholders or other stakeholder groups)are set out on pages 28.The principal responsibilities of boa
206、rd members are as set out belowAmongst other things the Chairman is responsible for:Promoting the highest standards of Corporate Governance and ethical leadership Developing effective working relationships with the Executive Directors Promoting effective relationships between all board members Setti
207、ng 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 signifi-cant risks the Company embraces in the implementation
208、 of its strategy Ensuring the Company maintains effective communications with share-holders 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
209、 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 create the appropriate organizational environment to deliver the strategy Acting as
210、the principal spokesman for the Company The Chief Financial Officer is primarily responsible for the delivery of high qual-ity 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
211、to make the Board aware of their views on matters before Board decisions are made.They must be able to devote suffi-cient time to develop their knowledge and skills to be able to make a positive contribution to the Board.Maintain a Dynamic Management Framework(continued)Statement of Compliance(conti
212、nued)Corporate Governance Report27Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEPrincipleApplication9Maintain governance structures and processes that are fit for purpose and support good decision-making by the board(continued)The Board has a schedul
213、e 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 Communica
214、tion with shareholders Board membership and appointments The Remuneration Policy Delegated authorities Corporate governance matters Approval of key policiesThe Board and its committees receive appropriate and timely information before each meeting,a formal agenda is produced for each meeting,and Boa
215、rd and committee papers are distributed several days before meetings take place allowing all Board members to contribute even if they cannot attend.Any director can challenge proposals,and decisions are taken democratically after discussion.Any director who feels that any concern remains unresolved
216、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.Over the past year,the Board continued to receiv
217、e departmental deep dives during the Board meetings,which has increased Board exposure to the execu-tive committee and other senior managementBuild TrustPrincipleApplication10Communicate how the company is gov-erned and is performing by maintaining a dialogue with shareholders and other relevant sta
218、keholdersReports on the work of the Board and its committees are set out as follows:Board:pages 38 Audit Committee:pages 30 Remuneration Committee:pages 32Information about shareholder voting at the 2019 annual general meeting of the Company is set out on Bokus website.The Groups approach to investo
219、r and shareholder engagement is described under Principle 2 above.Annual Reports,Annual General Meeting notices,reg-ulatory announcements,trading updates and other governance related mate-rials for 2019 and retrospective years are available from the Groups website.The Company is subject to the exclu
220、sive jurisdiction of the Delaware Courts and the Companys Certificate of Incorporation and Bylaws.As such,the rights of shareholders may differ from the rights of shareholders in a UK incorporated company.28GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December The Board Compos
221、ition and ResponsibilitiesThe Board currently consists of a non-executive Chairman,the Chief Executive Officer,the Chief Finan-cial Officer and two non-executive Directors.There is a clear division of responsibilities between the Chair-man and the executive officers and the Board considers two of th
222、e non-exec-utive directors to be independent of management.The composition of the Board ensures that no single individual or group of individuals is able to domi-nate the decision-making process.Following Keith Butchers change of role from Non-Executive Director to CFO and Stuart Neals move to be-co
223、me Chief Business Officer,Identity on 1 October 2019,Mr Neal agreed to remain as a member of the Board until a new Non-Executive Director had been appointed.Following the appointment of Stewart Roberts as a Non-Executive Director on 1 January 2020,Mr Neal resigned as a Direc-tor.On appointment,Mr Ro
224、berts was appointed as Chairman of the Audit Committee and is a member of the Re-muneration Committee.By rotation,Directors are subject to reappointment by a shareholder vote at our Annual General Meeting.Mr Prideaux and Mr Britto are up for re-election at the meeting scheduled for 20 May 2020.The d
225、irectors eval-uate the balance of skills,knowledge and experience of the Board when defining the role and capabilities re-quired for new appointments.The Board is responsible for setting the strategic direction and policies for the business.The Board meets regular-ly to attend to any issues which re
226、quire its attention and oversees the financial position of the Company monitoring performance on behalf of the share-holders,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 int
227、er-nal controls and the Companys ap-proach to risk management.The day-to-day management of the Companys business is delegated to the Chief Executive Officer and the Executive.Management TeamThe Board meets at least once every two months to review and is attended by all Directors either in person or
228、over the phone.The Board formulates and approves the Companys strategy,budg-ets,corporate actions and monitors the companys progress towards its goals.It has established an audit committee and a remuneration committee with for-mally delegated duties and responsibili-ties and with written terms of re
229、ference.From time to time,separate com-mittees 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 direc-tors will be dealt with by the Board rather than by a committee.Audit co
230、mmitteeThe audit committee is chaired by Stew-art Roberts and its other members are Richard Hargreaves and Mark Britto,all of whom are non-executive directors.The audit committee meets formally at least twice a year and otherwise as re-quired.It has the responsibility of ensur-ing that the financial
231、 performance of the Company is properly reported and re-viewed and its role includes monitoring the integrity of the financial statements of the Company(including annual and interim accounts and results announce-ments),reviewing internal controls and risk management systems,reviewing any changes to
232、accounting policies,re-viewing 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 30.Remuneration committeeThe remuneration committee is chaired by Richard
233、Hargreaves and its other members are Mark Britto and Stewart Roberts,all of whom are non-executive directors.The remuneration commit-tee meets at least twice a year and at Board CompositionExecutive .40%Non-Executive .60%Board Tenure0-3 years.40%3-6 years .40%Above 6 years .20%Corporate Governance R
234、eport29Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEsuch other times as required.It has re-sponsibility for determining,within the agreed terms of reference,the Compa-nys policy on the remuneration pack-ages of the Companys chief executive,chairman,
235、and the executive directors and such other members of the execu-tive management as it is designated to consider.The remuneration of non-ex-ecutive directors will be a matter for the chairman and executive directors of the Board.No director or manager is allowed to partake in any discussions as to th
236、eir own remuneration.In addition,the remuneration committee has the responsibility for reviewing the struc-ture,size and composition(including the skills,knowledge and experience)of the Board and succession planning.It also has responsibility for recommend-ing new appointments to the Board.A full re
237、port of the Remuneration com-mittee can be found on page 32.Share Dealing codeThe Company has adopted a dealing code for the Directors and all employ-ees,which is appropriate for a compa-ny whose stock is admitted to trading on AIM.The Company takes all rea-sonable steps to ensure compliance by the
238、Directors and employees with the terms of that dealing code.ShareholdersThe Board is committed to regular,open and effective communication with shareholders to ensure that the Companys strategy and per-formance are clearly understood.The Company provides annual and interim statutory financial report
239、s,investor and analyst presenta-tions,regular trading and busi-ness updates to the London Stock Exchange.At the Annual General Meeting all shareholders will have the opportunity to meet and ask questions of the Board of Directors.The next Annual General Meeting is scheduled for 20 May 2020.The Boku
240、Board is committed to communicating openly with its share-holders to ensure that its strategy and performance are clearly understood.30GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Audit Committee ReportCommittee Chairman IntroductionThe committee normally meets twice
241、during each financial year and more frequently as required.The Role and the responsibilities of the committeeThe committees principal responsibil-ities are to:monitor the integrity of the finan-cial statements of the Company and any formal announcements relating to the Companys financial performance
242、,reviewing significant financial reporting judgements contained in them.The committee also reviews the Groups Annual Report and Accounts and Interim Report prior to submission to the full board for approval.monitor the Groups accounting policies and review the Companys internal financial controls an
243、d fi-nancial reporting procedures and,on behalf of the board,the Compa-nys internal control and risk man-agement systems.monitor the adequacy and effec-tiveness of the Companys inter-nal controls and internal financial controls,risk management systems and insurance arrangements.make recommendations
244、to the board,for it to put to the shareholders for their approval in the Annual General Meeting,in relation to the appoint-ment,reappointment and removal of the external auditor and to approve the remuneration and terms of en-gagement of the external auditor.oversee the relationship with the ex-tern
245、al auditors and review and moni-tor their independence and objectiv-ity and the effectiveness of the audit process,taking into consideration relevant UK and US professional and regulatory requirements.develop and implement poli-cy on the engagement of the external auditor to supply non-audit service
246、s,taking into account relevant ethical guid-ance regarding the provision of non-audit services by the ex-ternal audit firm;and to report to the board,identifying any matters in respect of which it considers that action or im-provement is needed and mak-ing recommendations as to the steps to be taken
247、;provide a forum through which the Groups auditors and exter-nal tax advisors report to the board;and report to the board on how it has discharged its responsibilities.External AuditThe scope of the audit work undertaken by external auditors is agreed in partnership with the Audit Committee and typi
248、cally covers the following areas:the External Auditors overall work plan for the forthcoming year the External Auditors fee proposal the major issues that arose during the course of the audit and their resolution key accounting and audit judge-ments and estimates the levels of errors identified dur-
249、ing the audit,and recommendations made by the External Auditor in their manage-ment letters and the adequacy of managements response.The Audit Committee meets private-ly with the External Auditor in the ab-sence of management to review mat-ters within their sphere of interest and responsibility.Dear
250、 Shareholders,I am pleased to introduce the audit committee report for the year ended 31 December 2019.In the report below we explain how the committee discharged its responsi-bilities during the year,including the significant issues that we considered in relation to the financial statements and how
251、 we safeguarded the inde-pendence and objectivity of the exter-nal auditors.Our external auditors are BDO UK,who were appointed as our external auditors for the first time in 2017.Composition of the committeeThe audit committee comprises Stew-art Roberts(who serves as chair),Richard Hargreaves and M
252、ark Britto.Mr Roberts joined Boku as the chair of the audit committee on 1 Janu-ary 2020 replacing Mr Butcher who moved from being a non-executive director to becoming Bokus CFO on 1 October 2019.All members of the committee are non-executive directors.The Board considers that the audit committee as
253、 a whole has competence relative to the sector in which the Company operates.Mr Roberts is independent of management,and has significant accounting,auditing and other related financial management expertise.Executive directors and senior executives(the Group Financial Controller and Company Secretary
254、)attend meetings by invitation as required,but do not do so as of right.Representatives of BDO LLP(external auditor)also attend the committee meetings and meet privately with committee members,in the absence of executive management,prior to each committee meeting.31Stock code:BOKUBoku Inc Annual Rep
255、ort and Accounts for the year ended 31 December 2019GOVERNANCENon-audit services and feesIt can occasionally be more efficient or necessary to engage the external auditors to provide non-audit services because of their knowledge and experience and/or for reasons of confidentiality.However,safeguardi
256、ng the objectivity and independence of the external auditors is an overriding priority.The external auditors would only be appointed to perform a service when doing so would be consistent with both the requirements and principles of the relevant external regulations,and when their skills and experie
257、nce make the firm the most suitable supplier.We classify work that the external auditors might be permitted to per-form into one of three 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
258、review of interim financial information)the scope of any such services and the fees must be pre-approved by the committee;and Other non-audit services(such as taxation compliance support and other assurance-type work)the scope of any such services and the fees must be pre-approved by the committee.I
259、nternal AuditBoku does not currently employ an in-ternal audit function-as is typical for a company of Bokus size however,the need for one will be reviewed by the Audit Committee on a periodic basis.Boku has a small Risk&Compli-ance Team whose primary area of focus is to ensure that the company rema
260、in compliant with all relevant regulation,most notably the FSA in the UK/EU(issuer of our e-money license)and relevant local Telecoms regulation within each specific mar-ket;in addition to broader regulato-ry requirements such as GDPR and PSD2 within the EU.The company also employs a dedicated team
261、fo-cused on transaction monitoring and revenue and reconciliation.Key activities in the year ended 31 December 2019The committee reviewed the Group Transfer Pricing(TP)study performed by KPMG with a focus on reviewing and refreshing the existing TP ar-rangements and ensure that the new OECD Transfer
262、 pricing guidance is considered.Reviewed the Purchase Price Acqui-sition paper done by KPMG for the ac-quisition of Danal.As part of the tax compliance a“Section 382 analysis”for the Iden-tity business(ex-Danal Inc)was also performed after the acquisition in order to assess the companys abil-ity to
263、utilize carried forward losses going forward following the acqui-sition of Danal.This work was per-formed by Altum Partners,which are the dedicated US tax advisors for the Group.Reviewed the key business risk of the company(Please refer to page 18 for a more detailed review of compa-nys principal Ri
264、sk and Uncertainties.Reviewed the IFRS paper IFRS 16 and the Impairment review paper pro-duced by management.Looking aheadThe company implemented a new ac-counting system during 2020 which will improve working practices and provide opportunities to cross-train the Finance team across multiple ge-ogr
265、aphies on one set of systems and processes.A new accounting standard,IFRS 16 Leases,has been adopted as at 1 Janu-ary 2019.IFRS 16 had a material effect on Bokus reported numbers.Please refer to Note 2(Leases)of the finan-cial statements for details.Stewart RobertsAUDIT COMMITTEE CHAIRMAN 25 MARCH 2
266、0202019$2018$Audit services-core$198,500$171,750 Audit services-specific to FY19 year end$50,000-Audit-related services$25,000$3,000Sub-Total:audit and audit related fees$273,500$174,750 Other assurance services-Services related to taxation-Sub-Total:fees other assurance and services related to taxa
267、tion fees-Total$273,500$174,750 Audit and other fees32GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Remuneration Committee ReportChairmans IntroductionDear Shareholder,I am pleased to present the Directors Remuneration Report for the 2019 financial year.This letter int
268、roduces the report,outlines the major decisions on Directors remuneration during the year and explains the context in which these decisions have been taken.Boku is committed to high standards of corporate governance and our policy and disclosures on Directors remuneration are intended to reflect thi
269、s approach.We welcome shareholder feedback and will continue our practice of putting an advisory resolution on remuneration to shareholders at our AGM.This report sets out the remuneration policy and the detailed remuneration for both the Executive and Non-Executive Directors of the Company for the
270、period to 31 December 2019.The information provided fulfils the requirements of AIM Rule 19.Boku,Inc,being US incorporated is not required to comply with the UKs Companies Act Schedule 8 of the Large and Medium-sized Companies and Groups(Accounts and Reports)Regulations 2008.The information is unaud
271、ited.Remuneration policyThe Companys approach to remuner-ation is that the overall package should be sufficiently attractive to recruit,mo-tivate and retain individuals of a high calibre with significant technical and strategic expertise.The Company needs to ensure that key personnel can deliver the
272、 Companys objectives and value for shareholders in a competitive sector.The four main elements of the remuneration package are basic salary,benefits,annual performance related bonuses and long-term share incentives.The policy in each area is detailed in this report.Performance and decisions on remun
273、eration takenThe Company performed well in its second full financial year as an AIM listed company and continues to grow fast.However,although the financial performance was in line with market expectations,it was below the Companys more demanding targets for both revenues and Adjusted EBITDA(if we e
274、xclude the one-off provision release of$3.3 million).Bonuses for 2019 were paid to the two executive directors as detailed on page 35.Awards were made to all employees under the companys Equity Plan in January 2019 and comprised time based restricted stock units.During the year,the company made long
275、 term incentive awards to executives and other employees in the form of performance restricted stock units.These stock units have vesting rules which are detailed on page 33.Awards of performance stock units were made to Jon Prideaux,Keith Butcher,Stuart Neal,Adam Lee,Mark Stannard and Mike Cahill a
276、nd various other key employees.These awards vest after three years subject to an Adjusted EBITDA per share performance condition.Decisions for 2020Annual bonuses for 2020 will operate in a very similar way to 2019,reflect-ing the core objectives of revenue and Adjusted EBITDA growth and person-al co
277、ntribution.The Committee sees long term incentives as an important part of executive remuneration.It intends to make awards to executives during the first half of 2020.I hope that you find the report helpful and informative.Richard HargreavesREMUNERATION COMMITTEE CHAIRMAN 25 MARCH 202033Stock code:
278、BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEComposition of CommitteeThe Committee members are Richard Hargreaves(Chairman),Mark Britto and Stewart Roberts.The Committee meets at least twice a year to review the remuneration of the Executive Directors and othe
279、r executive team members and to set the overall pay policy.The views of the Chief Execu-tive are sought in respect of awards to the other Executive Director and Exec-utive Team members.Remuneration policyThe Committees overall approach is focused on ensuring the companys remuneration policy is align
280、ed with shareholders interests whilst also enabling the company to attract,retain and motivate high quality executive management.The Committee will take into account periodic external comparisons to examine current market trends and practices at equivalent roles in similar companies.Base SalaryBase
281、salary for each Executive Direc-tor is reviewed annually by the Com-mittee,taking account of the Direc-tors performance,experience and responsibilities.Changes in 2020 will be effective from 1 February 2020(2019:1 February).The Committee takes salary levels paid by companies of a similar size and na
282、ture into ac-count but also considers wider eco-nomic factors and the performance of the Group as a whole.Annual bonusBonuses are paid at the discretion of the Committee.The Committees general policy is that Executive Directors should receive a bonus for the achievement of stretching performance tar
283、gets.Currently the Company uses revenue,Adjusted EBITDA and personal performance targets.Bonuses for achievement of target performance will be paid in cash on a half-yearly basis.Bonuses for over per-formance will only be paid annually.The Committee has discretion to make ad-justments to the level o
284、f bonus to avoid unintended consequences.Bonuses for the executive directors are currently set at 35%of salary for achieving target per-formance and capped at 70%of salary.The bonus scheme extends to the oth-er four executives who are members of the Executive Management Team.Long term incentivesDuri
285、ng 2019,the company made long term incentive awards to executives and other employees in the form of performance-based restricted stock units.In general,restricted stock units vest and convert into common shares on the vesting date.Details of awards currently held by directors are set out later in t
286、his report.The Committee sees long term incentives as an important part of the remuneration of executives,to align them with shareholders and reward them for strong performance.The Committee intends to make awards to executives during the first half of 2020,and on an annual basis thereafter,and is c
287、urrently considering the level of such awards.Awards to executive directors and key employees will have a minimum normal vesting period of three years and earnings per share and individual performance conditions.Executives only receive awards with performance conditions.Pension provisionThe Company
288、operates a stakeholder pension scheme for UK employees.Executive Directors participate on the same basis as other employees.Mr Prideaux opted out from the pension scheme.BenefitsThe Company provides the option for employees to participate in a private healthcare plan.Mr Prideaux par-ticipated for th
289、e entire year and Mr.Butcher did not participate in 2019.Remuneration of non-executive directorsThe fees paid to the non-executive di-rectors are determined by the Board.They receive an annual fee and addi-tional fees for chairing board commit-tees.Non-executive directors are not entitled to receive
290、 any bonus or oth-er benefits.Non-executive directors are entitled to reasonable expenses incurred in the performance of their duties.They were granted RSUs in 2018 and 2019.34GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Service ContractsThe service contracts and lett
291、ers of appointment of the Directors include the following terms:Executive DirectorsDate of contractNotice period(months)Jonathan Prideaux1 May 20123Keith Butcher(appointed 1 October 2019)11 October 20193Stuart Neal(resigned 1 January 2020)225 May 20173Non-executive DirectorsMark Britto30 August 2017
292、2Richard Hargreaves8 August 20172Keith Butcher(resigned 1 October 2019)25 July 20172Stewart Roberts31 January 202021.Mr Butchers Appointment as CFO became effective on 1 October 2019.2.Mr Neal resigned as CFO on 1 October 2019 and as an Executive Director on 1 January 2020,but remains employed by th
293、e Group as its Chief Business Officer,Identity.3.Mr Roberts appointment became effective 1 January 2020.The service contracts of the executive directors do not provide for any extra payment on the termination of employment.The letters of appointment of the non-executive directors have an initial per
294、iod of 12 months.Directors are subject to re-election by rotation at the Annual General Meeting.Mr Britto and Mr.Prideaux are up for election at the 2020 Annual General Meeting.Remuneration Report 35Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEAnnua
295、l Report on RemunerationThe following sections show how remuneration was managed during 2019.SalariesSalaries for Executive Directors at the year ended 31 December 2019 were as follows:Jonathan Prideaux Chief Executive Officer 227,700Stuart Neal(resigned 1 January 2020)1 Chief Finance Officer 181,12
296、5Keith Butcher(appointed 1 October 2019)Chief Finance Officer 175,0001.Mr Neal resigned as CFO on 1 October 2019 and as an Executive Director on 1 January 2020,but remains employed by the Group as its Chief Business Officer,Identity.Fees of non-executive directorsFees for Non-Executive Directors at
297、the year ended 31 December 2019 were as follows:NameRoleCommittee ChairmanBase FeeCommittee Chairman FeeMark BrittoChairmanNomination$60,000Richard HargreavesNon-Executive DirectorRemuneration30,0005,000Keith ButcherNon-Executive DirectorResigned 1 October 201930,0005,000BonusThe annual bonus target
298、s for 2019 were based on growth in revenue,Adjusted EBITDA and personal performance.The maximum awardable to Mr Prideaux was 79,695(35%of salary)for achieving targets,with a maximum further amount of 79,695(35%of salary)payable for over performance.On-target bonus was originally set at 63,394(35%of
299、salary)for Mr Neal,with a maximum further amount of 63,394(35%of salary)payable for over performance.Mr Keith Butcher joined Boku as the CFO on the 1 October 2019 and his bonus has been prorated accordingly.As a result,his maximum on-target bonus was set at 15,313(35%of three months salary)with a ma
300、ximum further amount of 15,313(35%of salary)payable for over performance.In 2019 revenue was below companys targets but Adjusted EBITDA once the$3.3 million non recurring item was taken into account,exceeded the companys targets for the year by 19%.At the half year on target bonuses were paid to the
301、 Executive Directors.Total bonuses in respect of 2019 will be paid to Mr Prideaux and Mr Neal and Mr Butcher of 73,417(2018:122,665),57,770(2018:97,574)and 19,339(2018:Nil)respectively.36GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Summary of Directors Total Remunerat
302、ion(audited)Executive DirectorsSalary Annual BonusPerformance Bonus PensionBenefitsTotal 2019Total 2019$Total 2018Total 2018$Jonathan Prideaux227,20552,71620,071-1,768301,780385,399343,352458,588Keith Butcher43,75011,626 7,713439 63,52881,136-Stuart Neal 180,61541,81315,9661,5581,043240,995307,79127
303、4,693366,859Non-Executive DirectorsFees 2019 Fees 2019$Fees 2018 Fees 2018$Mark Britto46,97960,00044,92360,000Richard Hargreaves35,00044,70135,00046,847Keith Butcher30,00038,31533,33344,520Equity Plan and Long-Term Incentive PlanDuring 2019 the Company granted 1,909,766 performance-based restricted
304、stock units(“PRSUs”)and 3,229,379 restricted stock units(“RSUs”)over common shares to Executive Directors,other executives,employees and Non-Executive Directors,under the Companys 2017 Equity Incentive Plan.An additional 276,344 RSUs were issued to ex-Danal employees in exchange for their shareholdi
305、ng in Danal and 1,478,967 Earn-out RSUs were issued to employees and executives of former Danal Inc.The PRSUs granted to the executives and Executive Directors will vest over Common Shares three years from the award date,in one event,subject to the meeting of an adjusted EBITDA per share performance
306、 target for the year ending 31 December 2022.Boku also granted RSUs to the Non-Executive Directors of the Company to support retention and align the interests of these directors with those of the Companys shareholders.The RSUs granted to the Non-Executive Directors will vest on 20 November 2020,subj
307、ect to certain conditions.A breakdown of the Directors current interests in the long-term incentive awards is set out below.Market value optionsDate of grantNumberExercise priceInitial vesting dateFinal vesting dateLapsing dateJonathan Prideaux28 Oct 2016200,000USD$0.2812 Dec 201212 Dec 201623 Dec 2
308、023Jonathan Prideaux28 Oct 20161,500,000USD$0.2823 Apr 201423 Apr 201822 Apr 2024Jonathan Prideaux28 Oct 2016750,000USD$0.2823 Sep 201623 Sep 202027 Oct 2026Jonathan Prideaux13 Oct 20172,000,000USD$0.3720 Nov 201820 Nov 201812 Oct 2027Stuart Neal26 July 2017500,000USD$0.3719 Jun 201719 Jun 202125 Ju
309、l 2027Mark Britto28 Oct 2016569,930USD$0.2823 Jan 201323 Dec 201623 Dec 2023Mark Britto28 Oct 2016424,514USD$0.2823 Jan 201323 Dec 201723 Dec 2023Mark Britto28 Oct 20161,209,697USD$0.2828 Jan 201028 Dec 201315 Mar 2020Mark Britto28 Oct 2016842,760USD$0.2828 Jan 201028 Jan 201415 Mar 2020Mark Britto2
310、8 Oct 2016500,000USD$0.2823 Sep 201623 Sep 202027 Oct 2026Jon Prideaux is obliged to exercise a portion of his options and sell some of the resultant common shares in order to repay the promissory note of US$793,000 issued to him on 24 December 2013 in connection with the issue of 1,150,000 common s
311、hares to him prior to its expiry on 3 December 2023.Remuneration Report 37Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCERestricted Stock UnitsDate of IssueNumber of RSUsInitial Vesting DateFinal Vesting DateLapsing DateJonanthan Prideaux15 Feb 201930
312、0,00001 Apr 202201 Apr 202215 Feb 202425 Jul 2018350,00001 Apr 202101 Apr 202104 Sep 2023Mark Britto10 Sep 201989,96820 Nov 202020 Nov 202010 Sep 202404 Sep 2018 51,39920 Nov 202020 Nov 202003 Sep 2028Stuart Neal15 Feb 2019250,00001 Apr 202201 Apr 202215 Feb 202425 Jul 2018400,00001 Apr 202101 Apr 2
313、02104 Sep 2023Keith Butcher04 Sep 2018 38,46220 Nov 202020 Nov 202003 Sep 202810 Sep 201964,81420 Nov 202020 Nov 202010 Sep 202425 Sep 2019200,00001 Apr 202101 Apr 202425 Sep 2024Richard Hargreaves04 Sep 2018 38,46220 Nov 202030 Dec 202003 Sep 202810 Sep 201964,81420 Nov 202020 Nov 202010 Sep 2024Di
314、rectors interests in sharesThe interests of the Directors as at 31 December 2019 in the shares of the company were:NameNumber of Common SharesPercentage of share capitalMark Britto9,024,1153.58%Jonathan Prideaux2,593,9241.03%Stuart Neal353,5140.14%Richard Hargreaves1,556,8040.62%Keith Butcher150,474
315、0.061.Jon Prideauxs interests include 16,949 shares held by his spouse and 1,694 shares held by his family member.2.Richard Hargreavess interest include 213,342 shares held by his family members.3.Stuart Neal was a director until 1 January 2020.Directors remuneration for the year commencing 1 Februa
316、ry 2020Executive Director salary levels as at 1 February 2020 were as follows:Jon Prideaux 234,531Keith Butcher 175,000The salary of the CEO,Jon Prideaux,was increased from 220,000 to 227,700 from 1 February 2019 and to 234,531 from 1 February 2020.The salary of the CFO,Keith Butcher,will increase f
317、rom 175,000 on 1 October 2019 to 186,559 effective from 1 August 2020.Non-executive director fees will remain unchanged.Annual bonus for the year commencing 1 January 2020 will be operated within the policy disclosed in this report.Bonus is paid based on the achievement of revenue,Adjusted EBITDA an
318、d individual performance targets.35%of salary will be paid for on-target performance with amounts above this paid for exceeding targets.Maximum bonus is capped at 70%of salary.38GOVERNANCEBoku Inc Annual Report and Accounts for the year ended 31 December Directors ReportThe directors present their r
319、e-port and the audited financial statements for Boku Inc.for the year ended 31 December 2019.The preparation of financial state-ments is in compliance with IFRS is-sued by the International Accounting Standards Board(IASB)(“IFRS”)and IFRIC Interpretations issued by the International Accounting Stand
320、ards Board(IASB).Principal ActivitiesThe principal activity of the Boku Inc.and its subsidiaries(“the Group”)is the provision of mobile billing,pay-ment and identity solutions for mobile network operators and merchants.These solutions enable consumers to make online payments and verify their identit
321、ies using their mobile devices.Business review and future developmentsThe review of the periods activities,operations,future developments and key risks is contained in the Strategic Report on pages 5 to 19.DirectorsThe directors who held office during the period and subsequently were as follows:1.Ma
322、rk Britto2.Jon Prideaux3.Stuart Neal(resigned 1 January 2020)4.Richard Hargraves5.Keith Butcher(appointed as CFO as 1 October 2019)6.Stewart Roberts(appointed 1 January 2020)With regard to the appointment and replacement of Directors,the Com-pany is governed by its Charter(the US equivalent of the A
323、rticles of Asso-ciation)and related legislation.The Charter may be amended by special resolution of the shareholders.The Remuneration and Audit Com-mittee reports can be found of pages 32 and 30 respectively.Directors interestsDirectors share options and interests in shares can be found in the remun
324、er-ation report on page 32.Directors indemnitiesThe 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.DividendsThe Directors do not recommend a final ordinary dividend for the
325、 period(2018:nil).Post Balance Sheet EventsThere were no post balance sheet events.Financial Risk managementDetails of financial risk management are provided in note 3 to the financial statements.Internal ControlThe Board has overall responsibili-ty for the Groups system of internal control and for
326、reviewing its effec-tiveness.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 perf
327、ormance 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 t
328、he internal control system and procedures is monitored regularly through a combination of review by management,the results of which are reported to and considered Substantial shareholdingsThe Company has been advised of the following interests in more than 3%of its ordinary share capital as at 31 De
329、cember 2019:ShareholderPercentBuild Lux Holdco Sarl(Luxembourg)6.15%Boku Inc Directors and Related Parties(London)5.48%NewView Capital(San Mateo)5.44%Danal Co.Ltd(Hwaseong)5.28%Danske Capital Mgt(Copenhagen)5.17%Benchmark Capital Partners VI(California)3.79%DAG Ventures(Palo Alto)3.53%River&Mercanti
330、le Asset Mgt(London)3.50%Swedbank Robur(Stockholm)3.46%Schroder Investment Mgt(London)3.37%Jupiter Asset Mgt(London)3.13%39Stock code:BOKUBoku Inc Annual Report and Accounts for the year ended 31 December 2019GOVERNANCEby the Audit Committee.The system of internal control comprises those controls es
331、tablished to provide assurance that the assets of the Group are safeguarded against unauthorized 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 rea
332、sonable,but not absolute,assurance against material misstatement or loss,as it is designed to manage rather than eliminate the risk of failing to achieve the business objectives of the Group.Going ConcernThe Directors,having made appropri-ate enquiries,consider that the Com-pany and the Group as a w
333、hole have adequate resources to continue in op-erational existence for the foreseeable future.Therefore,they continue to adopt the going concern basis in pre-paring the financial statements.Other Matter COVID 19The directors are continuing to monitor the effects of the outbreak of COVID-19 on the group and have the ability to implement plans related to maintaining effective business continuity,to
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