Network International Holdings Plc, 8th March 2021: Preliminary Results for the twelve months ending 31 December 2020


Strongly positioned across our rapidly accelerating digital payments markets

Group financial summary

(USD ‘000)FY 2020FY 2019y/y change
Underlying EBITDA1,2112,561168,522(33.2)%
Underlying EBITDA margin2 (excl. share of associate)36.1%47.4%(11.3) pp
Profit from continuing operations15,59857,317(90.2)%
Underlying freecashflow1,2,351,79069,232(25.2)%
Cashflow from operating activities1107,500132,426(18.8)%
Leverage2 (including the funds raised for the DPO acquisition) 0.0x1.6x
Key Performance Indicators (KPIs)4
Total processed volume (TPV) (USD m)33,54043,779(23.4)%
Total number of cards hosted (m)
Total number of transactions (m)758.1752.00.8%
Nandan Mer, Chief Executive Officer
  • Total revenue1 (15.1)% y/y with performance significantly impacted by COVID-19, but ending the year with positive momentum across both business lines
  • Merchant Solutions revenue (28.5)% y/y, with improving trends in the final months of 2020
    • Although total TPV declined (23.4)% y/y, we saw particularly strong growth in directly acquired TPV from online merchants of 53% y/y (excluding Government and airline online TPV)
    • Directly acquired TPV saw significant impacts from COVID-19 lockdowns but as we exited the year, domestic volumes saw a full recovery to 2019 levels and international volumes were only down (45)% y/y as UAE tourism began to see a recovery 
    • Take rates5 were lower y/y; reflecting merchant sector mix, the regulatory impact on acquiring fees in Jordan, and higher non-TPV related revenue streams in the prior year
  • Issuer Solutions revenue (7.1)% y/y, showing a greater resilience due to the defensive nature of fixed billings such as card hosting, and contractual minimums in some contracts
  • Underlying EBITDA1,2 USD 112.6 million reflects reduced revenues and our largely fixed cost base, albeit we have mitigated some of this impact with cost savings. The reclassification of Mercury as a continuing operation1 has also reduced underlying EBITDA by USD (1.3) million 
  • Profit from continuing operations was USD 5.6 million, reflecting lower u.EBITDA and the write-off of USD 6.7 million of capitalised debt issuance fees linked with the previous lending facility, as a result of our refinancing during the year 
  • Underlying free cashflow1,2 was USD 51.8 million and cashflow from operating activities was    USD 107.5 million. Whilst this reflects COVID-19 impacts and FCF generation was low in the H1, we saw stronger positive cashflow generation in H2 

Strategic and operational achievements

  • Maintained new business momentum: Signed four new payment processing contracts for banks across Africa; saw significant growth in online payments with over 1,600 UAE merchants signing up to our N-GeniusTM payment gateway; and will be entering Sudan as a new market in 2021
  • Expanded capabilities through the launch of a digital payments platform in partnership with Mastercard which will accelerate the adoption of digital payments across all our markets 
  • Excellent results from our annual employee engagement survey with a significant step up in overall engagement to 73% (2019: 65%)
  • Proposed acquisition of DPO progressing as we work towards final regulatory approvals, which are now expected in the second quarter. DPO saw strong performance in 2020 with TPV growth of over 30% y/y in constant currency 

Nandan Mer, Chief Executive Officer, commented 

“Network has made great strides during a challenging year; seeing a number of new business wins, strong demand for online payment acceptance, and the expansion of our capabilities through the launch of the digital product platform in partnership with Mastercard. Whilst trading and revenue was naturally subdued during the year we started to see a number of positive indicators as we exited 2020, including the progressive recovery of volumes and transactions and a pickup in the pace of new business. The pandemic has also accelerated the move away from cash, towards card and other forms of digital payments, which will help to drive our growth.

Having recently joined Network it is exciting to be part of a business at such an important juncture. We are the leading player in a high growth and rapidly accelerating digital payments market. I am motivated by the substantial opportunity available to us; through a combination of our scale and reach across more than 50 markets, our product offering and technology infrastructure, and the multiple growth drivers we have at our disposal.

Our business remains strong and we have excellent foundations. I will be placing an emphasis on innovation and agility, so that Network further extends its leadership position across our markets. My priorities are focused upon being at the forefront of rapidly evolving customer needs, enabling them to serve their consumers with a wide choice of payment options, successful execution, and progressing with growth accelerators such as the completion of DPO and our market entry into Saudi Arabia.” 

2021 outlook and financial guidance

(All outlook commentary excludes DPO Group, as the acquisition has not yet completed)

We are encouraged by the positive momentum we saw at the latter end of 2020 and the accelerating secular trends that will support our business, which gives us confidence in the long term outlook. We have seen some headwinds to trading during the initial months of 2021, linked to the rise in COVID-19 cases across the UAE and some restrictive measures that have been introduced. Whilst the fluidity of the pandemic creates some uncertainty, we expect 2021 total revenues to return approximately to 

those recorded in 2019. In Merchant Solutions, this assumes directly acquired domestic TPV will be higher than that recorded in 2019, but we prudently expect international TPV to be c.50% lower than 2019. In Issuer Solutions we expect to see increased new card issuance, transaction volumes and new business activity, leading to revenue exceeding 2019 levels. We expect low double digit year-on-year underlying expenses growth. This reflects a disciplined approach to cost management, alongside expenses associated with; volume growth, progression in our market entry to Saudi Arabia, separation from Emirates NBD, and the partial return of costs such as bonuses and incentives that were proactively managed through the pandemic. 

2021 technical guidance 

  • Underlying depreciation and amortisation charge USD 56-60 million. This includes amortisation related to the historical technology transformation programme of c.USD 14 million which was previously classified as a Specially Disclosed Item (this reclassification is discussed in the CFO Review).
  • Interest cost USD 19-21 million 
  • Underlying tax rate 8-9%. Effective tax rates are unchanged. However, the underlying tax rate has increased due to the reclassification of amortisation associated with the technology transformation programme into underlying financial performance
  • Specially Disclosed Items lower: i) impacting underlying EBITDA to be c.USD 5 million, plus costs associated with the DPO acquisition; and ii) impacting net income to be a further c.USD 4 million
  • Capital expenditure consists of: i) Core capital expenditure for maintenance and growth of c.USD 35 million; ii) up to USD 20 million to enable our entry to Saudi Arabia, subject to border restrictions easing. The total project investment remains at USD 25 million, with the remaining USD 5 million to be incurred in 2022 iii) up to USD 10 million to continue the separation of shared services from Emirates NBD. The total project investment remains at USD 30 million with the remaining USD 10 million to be incurred in 2022

Results Presentation       

A presentation for analysts and investors will be held today at 9am UK / 1pm GST with a conference call dial-in facility to facilitate live Q&A, as well as a listen only video webcast option:

  • Conference call dial-ins: UK: +44 (0) 20 3936 2999 / UAE: 800 0357 04553 / US: +1 646 664 1960 using the confirmation code: 789891
  • Webcast link:

A replay will be available through the same link above one hour after the presentation finishes.

Forward Looking Statements

This announcement contains certain forward-looking statements with respect to the financial condition, results or operation and businesses of Network International Holdings Plc. Such statements and forecasts by their nature involve risks and uncertainty because they relate to future events and circumstances. There are a number of other factors that may cause actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements. These factors include general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance of programmes, or the delivery of products or services under them; industry; relationships with customers; competition; and ability to attract personnel. You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. We undertake no obligation to update or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances.

Business response to COVID-19

Our business purpose and strategy, to enable the transition from cash to digital payments across our regions, has remained consistent throughout the pandemic. However, in the short term COVID-19 has had a substantial impact on our financial performance over the course of 2020. As a result we developed a Coronavirus Management Strategy to oversee our response for our colleagues, business operations, supply chain, cyber security infrastructure and financial stability. This strategy has served us well and we have seen customer and colleague support for the actions we have taken.

Working hard for our customers: Our payments and processing activities continued uninterrupted as a result of our colleagues’ dedication and expertise, as well as our prior investment in our technology platforms. Our priority was to support customers through a difficult period. In Merchant Solutions this included fee reductions for some SME merchant customers, assistance in transitioning payments for traditional retail businesses to online, and direct cash support to micro merchants. In Issuer Solutions we assisted bank customers and their cardholders by enabling payment holidays or extending expiry periods on cards where suppliers could not guarantee a timely replacement.

Supporting colleagues and our community: From March 2020 we introduced a phased implementation of working from home across our office locations, with a seamless transition in working practices. We ensured our employees were provided with virtual medical services where available, while our leadership team provided regular strategic and operational updates and engaged with colleagues through several digital channels. We also continued our community engagement; making donations to the Rashid Center in Dubai which supports those with disabilities or additional needs, and the Beit Al Khair Society which provides financial and humanitarian support across the UAE.

Managing our risks: The onset of stringent lockdown measures early in the year impacted our merchants’ ability to trade. We took steps to assess and mitigate chargeback loss risk, particularly for merchants that were offering delayed delivery products and services. As a result our chargeback losses were only 0.003% of TPV during the year. We also ensured our approach to cyber security was enhanced in response to emerging cyber risks, particularly in an environment where the majority of colleagues were working from home. We proactively addressed this additional risk through increased security monitoring and controls.

Balancing short term disruption with a focus on the long term: At the start of the financial year and prior to COVID-19 impacts, the business continued its positive momentum from the prior year. The pandemic and related lockdowns started to impact consumer spending and tourism across our markets from the middle of February through to the end of the period. As a result, Merchant Solutions saw a significant reduction in TPV while Issuer Solutions was more resilient, with a proportion of fixed billings or contractual minimums cushioning lower transaction volumes. Whilst the pandemic has certainly caused short term disruption, emerging data indicates COVID-19 will be an accelerant in the transition to digital payments, which underpins our confidence and reinforces our strategic focus. 

Maintaining a robust financial position: As a result of the financial impact to our business we undertook prudent actions to reduce operational expenses and capital spending. Board members voluntarily reduced their fees for part of the year, and the CEO and CFO forewent elements of their compensation. During the year we also refinanced our syndicated lending facility and ended the period with a strong balance sheet including leverage well within the lending covenants.

Chief Executive Officer’s Strategic Review

Market transition to digital payments

COVID-19 is further accelerating market growth

We are seeing a number of trends and developments through the pandemic that indicate fast changing Government and consumer sentiment towards cash. Whilst some of these trends may temper as the pandemic recedes, we believe it is likely there has been a structural acceleration towards digital payments across our markets.

  • ATM usage declining in the UAE: Analysing the cards hosted by Network International in the UAE in January 2020, a cohort of consumers who used their cards almost exclusively at ATMs to withdraw cash are now only using their card at the ATM for less than half (47%) of their transactions in December 2020, with the remainder taking place at a POS terminal or online.
  • Deployment of POS terminals accelerating in some markets: The number of POS terminals in Nigeria has increased by 50%, and by c64% in Saudi Arabia during 2020.
  • Accelerating e-commerce growth through the pandemic: A Mastercard study published in November 2020 has revealed that nearly three out of four consumers in the Middle East and Africa are shopping more online than they did before the pandemic.
  • Mobile money transactions also growing strongly: The Central Bank of Kenya enabled measures to facilitate increased use of mobile money transactions, instead of cash, through the pandemic. The monthly value of mobile money payments grew by 44.5% from March to November 2020. 

Delivery of strategic and business initiatives 

Our strategy is to provide solutions that allow our customers to bring digital payments to more consumers across our regions, leveraging our scale and competitive advantages.

Progress across the core business 

Whilst COVID-19 had a significant impact on transactions and volumes during the year, we saw a steady recovery in trading through the second half and exited the year with positive momentum across both business lines. In our core market of the UAE, domestic direct acquiring fully recovered to prior year levels as we reached December 2020, whilst international volumes (which largely represent overseas visitors) also benefited from a pickup in tourism over the holiday period. Data from STR Global showed hotel occupancy for Dubai returning to almost 70% through December. Naturally, the pace of new business slowed through the pandemic as banks focused more on the immediate operational challenges caused by COVID-19. But our relationships with existing customers and the pipeline of  opportunities remains strong and we are already seeing a pickup in new business wins during 2021, such as the recent signings of Kuda Digital Bank and Carbon Bank in Nigeria, Bank Windhoek in Namibia and Bank Gabarone in Botswana.

Middle East 

New customer wins: In Merchant Solutions this includes a number of new Point-of-Sale (POS) direct acquiring merchant customers such as Alexander McQueen, Adidas and Western Union. We won the e-commerce direct acquiring business for NowNow (‘s on-demand delivery app, part of the digital ecosystem of products and services from the Noon Group), major supermarket Spinneys and Majid Al Futtaim Management Services. We have also signed partnership arrangements with several global brands, including HyperPay, in the online acquiring space. In Issuer Solutions we won a competitive tender to provide exclusive services across five countries for CareemPAY and a mandate to support the issuance of the first Islamic credit card for a bank customer in Jordan.

Contract renewals: We renewed a significant contract with Abu Dhabi Commercial Bank to provide fully outsourced Merchant Solutions and we also renewed our Issuer Solutions contract with United Arab Bank.

Growth in online payments: Our N-GeniusTM roll-out continues apace and we finished the year with c1,900 merchants using our proprietary online gateway, an increase of c1,600 during the year and with record volumes processed through our platform during December. This is reflected in our TPV growth from e-commerce merchants (excluding Government and airline online TPV) which grew at 53% during the year (versus 16% y/y growth in 2019).  

Cross-sell of products and value added services: We saw good demand from merchants for our Easy Payment Plan, which allows consumers to set up a monthly repayment plan for goods or services purchased through a POS terminal. (The Easy Payment Plan is a service we enable, where the lending is provided by the cardholder’s issuing bank). We have also expanded our contracts with UAE based tourism authorities that will see them leverage merchant spending data in order to better understand domestic consumer and tourist spending patterns.


New customers: Payment processing outsourcing wins included; Issuer and Merchant Solutions for Access Bank Kenya, Merchant Solutions for CCA Cameroon Bank, and Issuer Solutions services for Globus Bank in Nigeria and Republic Bank in Ghana.

Expanded contracts: We have supported eight of our banking customers with the issuance and processing of expanded card portfolios, including well-known institutions such as Fidelity Bank, Access Bank and RCS Group. We have further expanded our relationship with GTBank into a ninth country by supporting their subsidiary in Cote’D’Ivoire, and Woolworths Financial Services in South Africa has renewed our Issuer Solutions contract. 

Cross-sell of products: We continue to upsell to existing customers across the region. Signing expanded contracts with Polaris Bank Nigeria and ARCA Nigeria, e-commerce Merchant Solutions using our N-Genius payment gateway for NBS Bank Malawi, and the rollout of our N-GeniusTM POS devices continues with Standard Bank and Orabank across eight countries. We are also working towards N-GeniusTM gateway implementation with customers after certification in five countries.

New market entry: In Africa we will be launching services in Sudan, a new market entry which has been supported through our partnership with Mastercard. We will be providing Issuer Solutions to Faisal Islamic Bank by enabling the bank to issue and accept Mastercard branded debit, credit and prepaid cards through ATMs, Point-Of-Sale terminals and online. This makes Faisal Islamic Bank one of the first in the country to obtain a card issuing and acquiring license from Mastercard.

Executing on our strategic partnership with Mastercard 

Our strategic partnership with Mastercard is progressing well and we have launched a new digital product platform which will accelerate the adoption of digital payments across all our markets. With this new digital platform we will help our customers to enable mobile-based payments for their end consumers and merchants across various payment channels. Merchants will now have one simple to use technology interface through which they will be able to accept multiple payment types, ranging  from USSD (text message), QR codes, to POS terminals and ecommerce, with mobile money and SoftPoS (technology which allows merchants to accept contactless card payments directly on their smartphone or tablet) coming later in 2021. Payment issuers and banks will be able to offer their consumers state-of-the-art payment solutions including digital wallets, person-to-person (P2P) payments and virtual cards. The launch of this platform is the first in a series of steps towards delivering simplified, collaborative payment solutions across the payments value chain in the Middle East and Africa. 

Accelerating growth through the proposed acquisition of DPO 

We continue to progress towards completing the acquisition of DPO. Regulatory approvals are still outstanding in a small number of countries, which we expect to finalise and complete in the second quarter. DPO is the largest online commerce payments platform operating at scale across Africa, offering online and mobile money payment services to over 59,000 active merchants across 19 countries. DPO benefits from a well invested technology platform with a unique combination of intellectual property, products, licences and partnerships in multiple markets, which is particularly advantageous to global merchant brands operating across the continent. The acquisition will further consolidate our presence in Africa, strengthening our position across the entire payments value chain and accelerating our growth. Whilst the acquisition is not yet complete and the 2020 financial performance of DPO is not consolidated within our financial results, we are providing an indicative business and trading update for DPO. The business is performing well, having seen over 30% y/y TPV growth in constant currency.

Our commitment to a sustainable and responsible business

We are committed to operating sustainably and responsibly across our entire business. We aim to operate in a way that maintains strong ethics, respects human rights, supports responsible labour practices and safeguards the environment – while promoting positive social and economic impacts in the markets in which we operate. In 2020 we began working with an expert third-party on the development of a new ESG Strategy. This includes a gap analysis to benchmark our existing approach against international sustainability best practice, prevailing legal requirements and evolving stakeholder expectations. The outputs from this process will inform the development and rollout of the new strategy in 2021.

Our people are at the heart of our business and are instrumental in the delivery of our strategy. We are very pleased to have seen the results of our annual employee engagement survey during the period. Overall we saw both an improvement in survey participation, where 83% of colleagues participated (2019: 72%), and a significant step up in overall engagement to 73% (2019: 65%). Colleagues were also highly satisfied with the business’ approach to employee wellbeing, care and remote working arrangements through the COVID-19 pandemic.

As a digital payments provider, our business activities support and promote the financial inclusion of communities across the markets in which we operate. This includes our ongoing participation in the ‘Smart Dubai Government’ initiative which works to accelerate the adoption of digital payments across the Emirate, or our support of Egypt’s Meeza national payment scheme. In addition, our support for community development projects helps us to deliver further social and economic benefits at a local level. In 2020, over 140 colleagues volunteered in local community initiatives. The Group also collaborated with, or made charitable donations to community organisations that support food distribution, cultural development and individuals with additional needs across the UAE, South Africa and Egypt.

Future strategic focus 

As the digital payments leader in markets with significant structural and secular trends, Network has strong foundations. Whilst our overall strategic approach remains consistent, a CEO transition will bring elements of change and new ideas. We intend to ensure that we remain at the forefront of rapidly evolving customer needs so that we can grow our share and extend our leadership position across our markets. Our strategic aspirations will place more focus upon acceleration and innovation in order to deliver profitable high growth.

Core business and Mastercard strategic partnership: We will continue to support our merchant and financial institution customers through their ongoing recovery from COVID-19. In our acquiring business we will place emphasis on growing high value merchant sectors within the online and SME segments, and providing further value to merchants through the launch of interactive data and spending analytic dashboards. In Issuer Solutions we will have a strong focus on new business generation, including the cross-sell of value added services such as our digital payment platform into the existing customer base.

Our Mastercard partnership will focus on the rollout of the newly launched commercial card solution, the digital payment platform and executing against our market entry to Sudan. We will also continue working together to explore the development of low cost payment acceptance solutions which are targeted at the African market. 

Completion and integration of DPO: Whilst ensuring that DPO continues to grow its TPV and revenues ahead of the market. We will work hard to cross-sell DPO’s services to our existing bank customers in order to support the delivery of revenue synergies. 

Capital allocation and Saudi Arabia market entry: Our capital allocation policy is designed to support both the core business and growth opportunities, whilst generating appropriate returns. In such attractive markets our business has substantial opportunities to deploy capital through both organic and inorganic investment, in order to deliver incremental profitable growth and returns. Given our conviction around the potential growth opportunities for the business, the Board has decided not to declare an ordinary dividend in respect of the 2020 financial year. This decision has been taken after careful consideration and in order to ensure capital allocation is prioritised towards such opportunities that will drive growth, generate attractive returns for shareholders and also to maintain financial flexibility. 

Outside of core investment, we will deploy capital to continue the separation of shared services from Emirates NBD. This includes the separation of a shared data centre in the UAE and the deployment of independent human resources and finance systems in order to improve our operational flexibility. We also remain excited by the opportunity in Saudi Arabia, which is one of the largest payments markets in the MEA region. We intend to progress with our market entry as soon as border restrictions ease and when this occurs, we will update investors on the financial opportunity and expected returns from this new market entry. Our capital investment budget for Saudi Arabia remains the same as previously communicated and is incorporated in our 2021 financial guidance. 

In summary: We have started to see a recovery from the impacts of the pandemic and the underlying drivers of the business and our markets remain strong. We have seen some headwinds to trading during the initial months of 2021, linked to the rise in COVID-19 cases across the UAE and some restrictive measures that have been introduced. Whilst the fluidity of the pandemic creates some uncertainty our overall outlook is unchanged at this stage. There is an intense focus on strong execution and maintaining the good momentum in the business.