boku 2

Consolidating the carrier billing market

Boku 22 June 2020 Update
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Boku

Consolidating the carrier billing market

Acquisition of Fortumo

Software & comp services

22 June 2020

Price

100p

Market cap

£281m

$1.24:£1

Net cash ($m) at end FY19

32.6

Shares in issue

281.4m

Free float

89%

Code

BOKU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

21.2

86.9

(16.7)

Rel (local)

14.8

49.5

(3.4)

52-week high/low

129p

49p

Business description

Boku operates a billing and identity verification platform that connects merchants with mobile network operators in more than 50 countries. It has c 215 employees, with its main offices in the US, UK, Germany and India.

Next events

AGM

8 July 2020

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Boku is a research client of Edison Investment Research Limited

Boku has announced plans to acquire Fortumo, a direct carrier billing (DCB) competitor, for an enterprise value of $41m. While not large in volume terms, Fortumo’s focus on smaller merchants attracts higher take rates and, combined with its low-cost Estonian operations, results in a highly profitable business. The acquisition is being funded by the recent equity raise (23.6m shares at 85p) and new debt. We estimate that the deal is immediately earnings enhancing, and strengthens Boku’s already dominant position in the DCB market. While no cost or revenue synergies are currently factored in, in the medium term there is potential for Boku to take advantage of Fortumo’s lower cost base, and for Fortumo to benefit from Boku’s carrier relationships and scale.

Year
end

Revenue ($m)

EBITDA*
($m)

Diluted EPS*
($)

DPS
($)

P/E
(x)

EV/EBITDA
(x)

12/18

35.3

6.3

0.016

0.0

80.1

53.3

12/19

50.1

7.4**

0.012

0.0

103.4

45.6

12/20e

56.2

12.1

0.021

0.0

59.9

27.9

12/21e

70.1

17.7

0.032

0.0

39.3

19.1

12/22e

80.1

21.0

0.040

0.0

31.0

16.0

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Excludes one-off revenue recognition.

Acquiring a highly profitable DCB business

Estonia-based Fortumo’s DCB business generated revenue growth of 25% pa over the last two years and achieved an EBITDA margin of 32.4% in FY19. With 280 carrier connections across 80 countries, Fortumo is focused on a large number of SMEs (c 400), earning take rates of c 4% compared to Boku Payments’ 0.81% in FY19. Fortumo also serves several large merchants including Google and Amazon.

Earnings-accretive deal

Boku is paying $45m to acquire Fortumo: $41m enterprise value plus $4m in working capital. This is made up of initial cash consideration of $37.6m, up to a $5.4m earnout and $2m-worth of restricted stock units for employees. This is being funded by the recent placing ($25m) and new debt worth $20m. We lift our normalised EPS forecasts by 2.1% in FY20, 0.8% in FY21 and 0.7% in FY22.

Valuation: Sum-of-parts suggests upside

On EV/Sales and EV/EBITDA, Boku is trading at a discount to the average of payment processor peers and identity management peers. However, we believe that Boku’s investment in the Identity business is masking the performance of the Payments business. As the two businesses have different growth and profitability dynamics, we take a sum-of-the-parts approach to assign value to each separately, generating a group equity value of 123p per share (119p previously). Excluding the Identity business entirely, Boku would be worth 116p per share (111p previously), still well ahead of the current share price. Key catalysts for the share price include continued revenue growth in the Boku Identity business, new major merchants being signed up in either business or a growing contribution from the wallets service.

Acquisition of Fortumo

On 17 June, Boku announced plans to acquire Fortumo, one of the three main competitors in the direct carrier billing (DCB) market.

Terms of the deal

Boku is acquiring Fortumo for a maximum enterprise value of $41m/£33m. The maximum consideration of $45m includes $4m of working capital and is made up of:

initial cash consideration of $37.6m;

further cash consideration of up to $5.4m which will be held in escrow subject to EBITDA earnout targets and meeting working capital and indemnity conditions; and

the issue of restricted stock units (RSUs) worth $2m. These are being issued to Fortumo employees to replace existing RSUs in Fortumo.

The company is funding this through an equity raise and debt. Boku placed 23.6m shares at 85p per share (7.1% discount to the closing price on 17 June) raising gross proceeds of £20.1m/$25.2m. In addition, the company has put in place a debt facility with Citibank for $20m/£15.9m, consisting of a $10m revolving credit facility and a $10m term loan. The loan has a four-year term, with $1.25m repaid each year and an interest rate of Libor + 2.5%.

The placing shares are expected to be admitted on 22 June. The acquisition is conditional on the shares being placed and the target date for completing the acquisition is 1 July (latest date 17 September).

Boku expects the deal to be immediately earnings accretive, before synergies.

Background on Fortumo

Fortumo was founded in Estonia in 2007 and has been profitable since 2009. The company has 73 employees, most who are based in Estonia, with small regional offices in India, the US, Singapore, Vietnam and Indonesia. Fortumo has built up a network of 280 carrier connections in 80 countries, with the majority of merchants using its platform based in Europe and Asia. It has tended to focus on supporting small to medium-sized enterprises (c 400), although it does also work with large merchants such as Amazon, Google, Spotify and Tencent.

Its platform is typically used to buy the same kind of digital content as Boku’s: gaming, music, streaming video, apps. In addition, it supports merchants in the Nordic parking market and the digital publishing market.

The table below shows the company’s financial performance over the last three years.

Exhibit 1: Fortumo financial highlights, FY17–19

$m

FY17

FY18

FY19

Revenue

4.578

5.748

7.207

Adj. EBITDA

0.583

1.219

2.338

Adj. operating profit

0.505

1.017

2.084

Revenue growth

25.6%

25.4%

Adj. EBITDA margin

12.7%

21.2%

32.4%

Adj. operating margin

11.0%

17.7%

28.9%

Source: Boku. Note: Accounts adjusted to match Boku’s revenue recognition. EBITDA and operating profit exclude exceptional items, share-based payments and foreign exchange movements.

Clearly, the business has shown strong revenue growth over the period and has more than doubled EBITDA margins over the same period. EBIT margins are very close to EBITDA margins, implying a historical low level of capitalised development costs. At the end of FY19, Fortumo had net assets of $8.7m and gross assets of $25.5m. The majority of merchants contract with Fortumo via the settlement model (c 90% of volume), while some of the larger merchants (Google, Amazon) contract via the transaction model.

The company has also disclosed Fortumo’s performance during Q120. As for Boku, Fortumo has seen increased demand from gaming during lockdown, countered by a delay in some deployments. According to management, Fortumo hit its Q120 targets, despite the disruption from COVID-19.

Exhibit 2: Fortumo quarterly performance

$m

Q120

Q119

y-o-y

Revenues

1.796

1.531

17%

EBITDA

0.618

0.454

36%

EBITDA margin

34.4%

29.7%

Source: Boku

Strategic rationale

Management outlined the logic behind the deal:

Consolidates two most profitable DCB businesses

Based on its own research, Boku estimates that it is the largest DCB provider, with TPV (total payment volume) of $5bn and Payments EBITDA margin of 31.6% in FY19 (excluding one-off revenue of $3.3m). It estimates that the next largest provider is DOCOMO Digital, a subsidiary of NTT DOCOMO, with TPV of c €3bn in the year ended 31 March 2019 (no profitability data are available for the Payments business, but the group reported an EBITDA margin below 10%). In third place by volume is Bango, with £1.1bn of end-user spend in CY19 generating £7.2m of Payments revenue (0.65% take rate). The company is just profitable at the group EBITDA level, although this is after investment in its data business. Smallest by TPV is Fortumo (we estimate c $180m in FY19), but with a higher take rate of c 4% and an EBITDA margin of 32.4%. Buying Fortumo provides Boku with access to the smaller end of the merchant market, where take rates are much higher – partly due to the reduced bargaining power compared to the likes of Google and Apple, but also because most merchants are using the settlement model.

Earnings accretive immediately

Due to Fortumo’s high level of profitability, we estimate that the deal will be earnings accretive for FY20 and onwards. After factoring in the placing and acquisition (as of 1 July), our normalised diluted EPS forecasts increase by 2.1% for FY20, 0.8% for FY21 and 0.7% for FY22.

Potential for operational efficiencies

The company has no immediate plans to make cost savings but noted that Fortumo’s Estonian operations result in a lower cost base than Boku’s on a per head basis. In particular, development activities are based in Estonia, where the cost of developers can be as little as 20% of the cost of developers in the US. So, while we are not likely to see any immediate cuts to the cost base, future headcount increases are likely to be biased towards Estonia. For non-staff costs, Fortumo may be able to take advantage of Boku’s buying power.

Fortumo’s platform provides self-service capabilities for merchants resulting in a much lower onboarding cost. Boku has typically focused on fewer, much larger merchants who require customisation of the service in return for providing high transaction volumes. The combined entities will now be able to service all types of merchant efficiently.

In terms of operator relationships, Fortumo has better direct connections in some Asian countries, including Indonesia, Vietnam and Pakistan. On the other hand, in some countries it has connections via intermediaries where Boku has direct connections. There could be scope for both businesses to leverage the other’s connections.

Expanded Payments business

Boku plans to keep Fortumo as a standalone business, retaining the current management team headed by Martin Koppel (CEO) and the brand.

Boku noted that there is limited customer overlap between the two businesses. The combined entity will encompass high-volume, large merchants mainly using the transaction model (and hence lower take rates) and small and medium-sized merchants, mostly using the settlement model (with higher take rates).

The earnout requires Fortumo to generate EBITDA of €4.3m in the 12 months to 30 June 2021 in order to receive the maximum $5.4m payout. EBITDA below €2m will result in no earnout being paid, and EBITDA in the range €2–4.3m will generate a payout on a sliding scale.

Changes to estimates

We have assumed that the acquisition completes on 1 July. We factor in revenue growth in the low to mid-teens for Fortumo with a gradually expanding EBITDA margin. We have also factored in an increase in capitalised development costs and related amortisation, and higher share-based payments. This results in enhanced EBITDA and operating margins in all forecast years, and we raise our normalised diluted EPS forecast by 2.1% in FY20, 0.8% in FY21 and 0.7% in FY22. Even with the debt taken on to fund the acquisition, we estimate that the company will maintain a growing net cash position over the forecast period.

Exhibit 3: Changes to forecasts

$m

FY20e

FY21e

FY22e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Payment revenues

45.0

49.2

9.3%

13.2%

50.0

59.3

18.6%

20.5%

54.9

65.6

19.4%

10.6%

Identity revenues

7.0

7.0

0.0%

4.9%

10.8

10.8

0.0%

54.3%

14.5

14.5

0.0%

34.3%

Total revenues

52.0

56.2

8.1%

12.1%

60.8

70.1

15.3%

24.7%

69.4

80.1

15.4%

14.2%

Gross profit

45.6

49.5

8.8%

11.1%

51.8

60.7

17.0%

22.4%

58.0

68.1

17.5%

12.3%

Gross margin

87.6%

88.1%

0.6%

-0.8%

85.2%

86.5%

1.3%

-1.6%

83.5%

85.0%

1.5%

-1.5%

Payment EBITDA

14.9

16.5

10.3%

3.3%

17.5

20.8

19.0%

26.6%

19.2

23.2

20.7%

11.5%

Identity EBITDA

(4.4)

(4.4)

0.0%

-16.7%

(3.2)

(3.2)

0.0%

-27.7%

-2.2

(2.2)

0.0%

-30.8%

Total EBITDA

10.5

12.1

14.6%

13.2%

14.3

17.7

23.2%

46.4%

17.0

21.0

23.4%

19.1%

Payment EBITDA margin

33.2%

33.5%

0.3%

-3.2%

35.0%

35.1%

0.1%

1.7%

35.1%

35.4%

0.4%

0.3%

Identity EBITDA margin

-62.9%

-62.9%

0.0%

16.3%

-29.4%

-29.4%

0.0%

33.4%

-15.2%

-15.2%

0.0%

14.3%

EBITDA margin

20.2%

21.5%

6.0%

0.2%

23.6%

25.2%

6.9%

3.7%

24.6%

26.3%

6.9%

1.1%

Normalised operating profit

7.8

8.6

11.0%

91.4%

11.6

13.5

15.8%

55.9%

14.5

16.7

14.6%

23.7%

Normalised operating margin

15.0%

15.4%

0.4%

6.4%

19.1%

19.2%

0.1%

3.8%

21.0%

20.8%

-0.1%

1.6%

Reported operating profit

1.1

(1.9)

-272.0%

118.1%

5.0

6.4

28.7%

-432.0%

8.7

10.4

19.8%

62.7%

Reported operating margin

2.2%

-3.4%

-5.6%

-1.7%

8.2%

9.1%

1.0%

12.6%

12.5%

13.0%

0.5%

3.9%

Normalised PBT

7.1

7.6

7.9%

85.7%

11.0

12.2

11.5%

60.2%

13.9

15.5

11.4%

26.8%

Reported PBT

0.4

(3.0)

-843.0%

N/A

4.3

5.1

19.7%

-274.0%

8.1

9.2

14.6%

79.7%

Normalised net income

5.6

6.1

9.3%

88.0%

8.7

9.8

12.9%

60.2%

11.0

12.4

12.8%

26.8%

Reported net income

0.4

(2.8)

-884.3%

N/A

3.6

4.6

26.8%

-264.9%

6.8

7.8

14.6%

69.7%

Normalised basic EPS

0.022

0.023

3.7%

73.8%

0.034

0.035

1.8%

51.9%

0.043

0.044

1.8%

26.8%

Normalised diluted EPS

0.020

0.021

2.1%

72.6%

0.031

0.032

0.8%

52.7%

0.040

0.040

0.7%

26.8%

Reported basic EPS

0.001

(0.011)

-843.9%

N/A

0.014

0.016

14.4%

-256.3%

0.027

0.028

3.4%

69.7%

Net debt/(cash)

(34.2)

(14.9)

-56.3%

-54.3%

(47.5)

(32.2)

-32.2%

115.5%

(64.5)

(51.8)

-19.8%

60.9%

TPV ($bn)

6.30

6.40

1.7%

26.8%

7.53

7.77

3.2%

19.6%

8.57

8.85

3.2%

13.9%

Take rate

0.71%

0.77%

0.1%

-0.04%

0.66%

0.76%

0.1%

-0.01%

0.64%

0.74%

0.1%

-0.02%

Source: Edison Investment Research

Valuation

The table below summarises the valuation of Fortumo, based on historic and forecast revenue and EBITDA. On a sales multiple, the price paid for Fortumo is in line with Boku’s valuation prior to the deal announcement. On an EV/EBITDA basis, Fortumo is valued at a discount to Boku, reflecting its higher profitability compared to Boku’s group profitability (which includes the loss-making Identity business).

Exhibit 4: Valuation multiples

FY19

FY20e

FY21e

FY22e

Fortumo

EV/Sales (x)

5.7

5.1

4.4

3.8

EV/EBITDA (x)

17.5

15.3

12.4

10.3

Boku (pre-deal)

EV/Sales (x)

5.7

5.1

4.4

3.8

EV/EBITDA (x)

36.0

25.3

18.6

15.6

Source: Edison Investment Research

The table below shows the new enlarged Boku group valuation versus Payment and Identity peers.

Exhibit 5: Peer group valuation metrics

Share

Market cap

EV

EV/Sales (x)

EV/EBITDA (x)

P/E (x)

price

List ccy

Rep ccy

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

Boku

100

281

337

6.0

4.8

4.2

27.9

19.1

16.0

59.9

39.3

31.0

Bango

180

134

132

11.1

N/A

N/A

41.2

N/A

N/A

105.9

N/A

N/A

Ingenico

136.1

8,687

10,419

3.5

3.2

3.2

17.7

15.9

14.9

29.1

25.5

23.3

Worldline

72.06

13,198

13,984

5.9

5.4

5.0

23.9

20.5

18.2

44.2

35.8

31.2

FIS

138.59

85,626

102,483

8.3

7.6

7.1

19.3

16.4

14.8

25.5

20.7

18.1

Fiserv

103.15

69,057

91,832

6.6

6.1

5.8

16.7

14.9

13.3

23.4

19.3

16.6

Global Payments

180.97

54,129

62,611

9.5

8.4

7.6

21.1

17.6

15.4

29.0

23.0

19.3

PayPal

163.83

192,333

190,158

9.4

8.1

6.8

34.8

28.3

23.6

49.1

39.9

32.6

Square

97.03

42,630

41,907

8.0

6.4

4.9

215.5

80.5

48.3

365.6

103.6

65.3

Average Payment Processors

7.8

6.5

5.8

48.8

27.7

21.2

84.0

38.3

29.5

Average Payment Processors exc. Square

7.8

6.5

5.9

24.9

18.9

16.7

43.7

27.4

23.5

Equifax

170.5

20,693

23,874

6.5

6.3

5.9

20.1

18.5

16.3

33.0

29.8

24.6

Experian

2822

25,700

36,390

7.3

6.7

6.3

21.7

19.3

17.9

37.7

32.6

30.2

GB Group

695

1,352

1,407

7.1

7.6

6.8

28.8

35.7

29.3

38.8

52.6

40.0

TransUnion

89.76

17,036

20,458

8.0

7.4

6.8

21.5

18.8

16.8

35.8

29.7

25.4

Average ID management

7.2

7.0

6.4

23.0

23.1

20.0

36.3

36.2

30.0

Source: Edison Investment Research, Refinitiv (as at 18 June)

As we have done before, we look at the valuation on a sum-of-the-parts basis to reflect the different profiles of the Payments and Identity businesses. We use the peer group average EV/EBITDA multiple for FY21 (to reflect a full year ownership of Fortumo) for the Payments business. For Identity, we use the value of the acquisition of $25m; this is conservative compared to peer valuations but reflects the fact that the business is currently loss-making. This generates an equity value for the group of $432m or 123p per share, compared to the current share price of 100p. Excluding the Identity business entirely, the group would be worth $407m or 116p per share, still well ahead of the current share price. When we last wrote (10 June), we estimated a group per share value of 119p, and excluding Identity, 111p. A slight increase in the peer average EBITDA multiple combined with the higher EBITDA forecast for Boku in FY21 more than outweigh the cost of acquiring Fortumo.


Exhibit 6: Financial summary

$'m

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

18.3

19.2

17.2

24.4

35.3

50.1

56.2

70.1

80.1

Cost of Sales

(4.1)

(4.0)

(3.2)

(2.3)

(2.5)

(5.6)

(6.7)

(9.4)

(12.0)

Gross Profit

14.2

15.2

14.0

22.1

32.8

44.6

49.5

60.7

68.1

EBITDA

 

 

(9.6)

(11.4)

(12.3)

(2.3)

6.3

10.7

12.1

17.7

21.0

Normalised operating profit

 

 

(9.8)

(12.4)

(13.8)

(4.0)

4.8

4.5

8.6

13.5

16.7

Amortisation of acquired intangibles

(0.8)

(1.9)

(1.7)

(1.3)

(1.3)

(1.6)

(1.6)

(1.6)

(0.8)

Exceptionals

(2.1)

(0.1)

(2.4)

(2.2)

(1.4)

(0.3)

(2.0)

0.0

0.0

Share-based payments

(1.7)

(1.8)

(2.1)

(1.5)

(4.6)

(6.8)

(7.0)

(5.5)

(5.5)

Reported operating profit

(14.4)

(16.2)

(19.9)

(9.0)

(2.4)

(4.1)

(1.9)

6.4

10.4

Net Interest

(0.6)

(0.4)

(1.2)

(2.4)

(0.6)

(0.4)

(1.0)

(1.3)

(1.2)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

(17.1)

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(10.4)

(12.8)

(15.0)

(6.4)

4.3

4.1

7.6

12.2

15.5

Profit Before Tax (reported)

 

 

(15.0)

(16.6)

(21.1)

(28.5)

(3.0)

(1.3)

(3.0)

5.1

9.2

Reported tax

(0.4)

(0.4)

0.5

(0.1)

(1.3)

1.7

0.1

(0.5)

(1.4)

Profit After Tax (norm)

(7.8)

(9.6)

(11.2)

(4.8)

3.4

3.2

6.1

9.8

12.4

Profit After Tax (reported)

(15.4)

(17.0)

(20.6)

(28.7)

(4.3)

0.4

(2.8)

4.6

7.8

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(7.8)

(9.6)

(11.2)

(4.8)

3.4

3.2

6.1

9.8

12.4

Net income (reported)

(15.4)

(17.0)

(20.6)

(28.7)

(4.3)

0.4

(2.8)

4.6

7.8

Basic ave. number of shares outstanding (m)

21.3

27.4

140.1

150.3

217.1

246.8

266.9

281.4

281.4

EPS - basic normalised ($)

 

 

(0.36)

(0.35)

(0.08)

(0.03)

0.02

0.01

0.02

0.03

0.04

EPS - diluted normalised ($)

 

 

(0.36)

(0.35)

(0.08)

(0.03)

0.02

0.01

0.02

0.03

0.04

EPS - basic reported ($)

 

 

(0.72)

(0.62)

(0.15)

(0.19)

(0.02)

0.00

(0.01)

0.02

0.03

Dividend ($)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

#DIV/0!

4.7

(10.4)

42.0

44.5

42.2

12.1

24.7

14.2

Gross Margin (%)

77.6

79.1

81.4

90.7

92.9

88.9

88.1

86.5

85.0

EBITDA Margin (%)

(52.5)

(59.2)

(71.4)

(9.5)

17.9

21.3

21.5

25.2

26.3

Normalised Operating Margin

(53.2)

(64.4)

(80.0)

(16.5)

13.7

9.0

15.4

19.2

20.8

BALANCE SHEET

Fixed Assets

 

 

32.7

30.8

26.8

26.9

23.0

52.2

96.1

94.2

92.1

Intangible Assets

32.5

30.1

25.7

25.8

22.5

46.8

91.0

89.5

88.8

Tangible Assets

0.2

0.7

0.5

0.4

0.3

3.5

2.5

1.5

0.5

Investments & other

0.0

0.0

0.6

0.7

0.3

1.8

2.7

3.2

2.8

Current Assets

 

 

72.5

53.0

48.9

79.3

84.0

89.2

103.8

146.8

179.3

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

59.7

43.3

37.1

59.1

51.7

53.6

65.9

92.9

107.1

Cash & cash equivalents

12.0

9.0

11.3

18.7

31.1

34.7

37.0

53.0

71.4

Other

0.7

0.6

0.5

1.4

1.3

0.9

0.9

0.9

0.9

Current Liabilities

 

 

(69.6)

(65.5)

(61.0)

(78.0)

(79.6)

(81.8)

(94.0)

(126.1)

(144.5)

Creditors

(64.6)

(60.4)

(54.9)

(75.5)

(77.4)

(78.0)

(88.7)

(122.3)

(140.6)

Tax and social security

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Short term borrowings

(5.0)

(5.1)

(6.1)

(2.5)

(2.2)

(2.1)

(3.3)

(3.3)

(3.3)

Other

0.0

0.0

0.0

(0.0)

0.0

(1.7)

(1.9)

(0.5)

(0.6)

Long Term Liabilities

 

 

0.0

(0.3)

(15.2)

(0.2)

(0.8)

(2.6)

(20.0)

(18.7)

(17.5)

Long term borrowings

0.0

(0.2)

(15.1)

(0.0)

0.0

0.0

(18.8)

(17.5)

(16.3)

Other long term liabilities

0.0

(0.1)

(0.1)

(0.1)

(0.8)

(2.6)

(1.2)

(1.2)

(1.2)

Net Assets

 

 

35.5

18.0

(0.4)

28.0

26.6

57.0

85.9

96.1

109.4

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

35.5

18.0

(0.4)

28.0

26.6

57.0

85.9

96.1

109.4

CASH FLOW

Op Cash Flow before WC and tax

(9.6)

(11.4)

(12.3)

(2.3)

6.3

7.4

12.1

17.7

21.0

Working capital

9.3

11.6

(3.4)

1.0

7.2

3.0

(1.6)

6.6

4.1

Exceptional & other

(1.6)

1.1

4.2

(5.5)

0.2

(1.3)

(2.4)

0.0

0.0

Tax

(0.0)

(0.0)

(0.0)

0.0

(0.2)

(0.1)

(0.7)

(1.0)

(1.0)

Net operating cash flow

 

 

(1.9)

1.3

(11.5)

(6.8)

13.5

9.0

7.5

23.2

24.1

Capex

(1.1)

(3.6)

(1.5)

(0.3)

(0.3)

(2.1)

(2.5)

(2.7)

(2.8)

Acquisitions/disposals

5.9

0.3

0.0

0.0

(0.2)

(0.7)

(43.0)

0.0

0.0

Net interest

(0.3)

(0.3)

(0.3)

(0.9)

(0.6)

(0.4)

(0.9)

(1.2)

(1.1)

Equity financing

0.2

0.1

0.1

19.8

0.5

0.6

23.1

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.6

(0.0)

0.1

(1.1)

0.2

(1.5)

(1.9)

(2.1)

(0.6)

Net Cash Flow

3.3

(2.2)

(13.1)

10.6

13.1

4.857

(17.7)

17.3

19.6

Opening net debt/(cash)

 

 

(4.9)

(7.0)

(3.6)

9.9

(16.2)

(28.9)

(32.6)

(14.9)

(32.2)

FX

(1.2)

(0.8)

(0.4)

0.4

(0.5)

(1.1)

0.0

0.0

0.0

Other non-cash movements

0.0

(0.4)

(0.0)

15.1

(0.0)

(0.0)

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(7.0)

(3.6)

9.9

(16.2)

(28.9)

(32.6)

(14.9)

(32.2)

(51.8)

Source: Boku, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Boku and prepared and issued by Edison, in consideration of a fee payable by Boku. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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United Kingdom

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1,185 Avenue of the Americas

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United States of America

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Boku and prepared and issued by Edison, in consideration of a fee payable by Boku. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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