Enabling Commerce In The World’s Most Under Penetrated Payments Market Network International Holdings Plc Annual Report and Accounts 2019 Network International Holdings Plc 01 Annual Report and Accounts 2019 We are Network International, the leading payment solutions provider in the Middle East and Africa. Our innovative solutions drive revenue and profitability for our customers. To read our Annual Report online go to www.network.ae Market opportunity Under penetrated payments markets R Read more on page 10 Business model A unique We are enabling and leading the transition from cash proposition to digital payments across the Middle East and Africa, one of the fastest growing payments markets in the world. R Read more on page 14 Strategic Report Governance Financial Statements 2019 Highlights 02 Corporate Governance Report 72 Independent Auditor’s Report 138 Our Industry 04 Board of Directors 74 Consolidated Statement Strategy in action Our Business at a Glance 06 Executive Management Team 76 of Financial Position 144 Chairman’s Statement 08 Audit and Risk Committee Report 88 Consolidated Statement of Profit or Loss 145 Market Overview 10 Nomination Committee Report 100 Market leading Consolidated Statement of Our Track Record 12 Directors’ Remuneration Report 102 other Comprehensive Income 146 Our Business Model 14 Directors’ Report 130 Consolidated Statement technology Chief Executive Officer’s Review 16 Going Concern Statement of Changes in Equity 147 Our Strategic Framework 20 and Viability Statement 136 Group Statement of Cash Flows 149 platforms Strategy in Action 24 Notes to the Consolidated Business Review 28 Financial Statements 150 Statement of Financial Position 194 R Read more on page 24 Key Performance Indicators 40 Chief Financial Officer’s Review 42 Statement of Changes in Equity 195 Principal Risks and Uncertainties Disclosure 52 Notes to the Company Financial Statements 196 Responsible Business 62 Contact Information IBC Non-Financial Statement 69 Stakeholder Engagement 70 Directors’ Duties 71 02 Network International Holdings Plc Network International Holdings Plc 03 Annual Report and Accounts 2019 Annual Report and Accounts 2019 STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS 2019 Highlights Financial Strategic Revenue Underlying EBITDA1 Technology transformation Expanded our complete customer base Customers successfully migrated With new Merchant and USD 334.9m USD 172.3m to Network One or Network Lite. Issuer Solutions customers. +12.4% +13.3% Profit from continuing operations Underlying EPS1 USD 59.0m USD 21.0 cents +26.3% +7. 5% R Read Case Studies Strategy on page 24 R Read Chief Executive Officer’s Review on page 17 R Read Key Performance Indicators on page 40 N-Genius™ rollout Mastercard partnership 1 This is an Alternative Performance Measure (‘APM’). See note 4 of the consolidated financial statements progressing initiatives underway for APMs definition and the reconciliations of reported More than 15,000 N-Genius™ terminals have To drive adoption of digital figures to APMs. been rolled out and are now in four African markets. payments across our markets. R Read Case Studies Strategy on page 25 R Read Chief Executive Officer’s Review on page 17 04 Network International Holdings Plc Network International Holdings Plc 05 Annual Report and Accounts 2019 Annual Report and Accounts 2019 STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS Our Industry The digital consumer payments industry is built around interlinked How does it work? services that allow businesses to provide digital payment options to consumers, for goods and services provided. 1 Consumer initiates transaction with Who is involved in the payments chain? Consumer Merchant (in-store Merchant or online) Merchant Person or company selling products or services 2 Card details Direct Merchant Acquirer and transaction information The institution that maintains the merchant’s account, transmit to enabling the merchant to accept digital payments and Merchant Acquirer Issuer taking on the risk of the transaction Processor Acquirer Processor Issuer Acts on behalf of the Merchant Acquirer, providing the technology and operations to authorise transactions, route them to the appropriate payment scheme and receive settlement information 5 4 7 Issuer (or Issuer Payment Scheme Merchant Acquirer Processor) assesses receives request (or Acquirer Payment Scheme fraud risk for for payment Processor) sends Includes card payment schemes such as Mastercard, transaction, verifies authorisation and Acquirer authorisation Visa, American Express and Diners Club, alongside other sufficient funds routes transaction to Merchant (in- or credit and sends to Issuer Processor store or online), digital payment schemes. The schemes connect the authorisation to approving the Acquirer to the Issuer, routing transaction information Payment Scheme transaction and authorisation and settlement Merchant Acquirer (or Acquirer Processor) identifies Payment Issuer Processor Scheme and transfers Acts on behalf of the Issuer and the payment schemes, transaction details authorising transactions and ensuring the transfer of 3 funds from the consumer’s bank account to the Issuer 6 Issuer Payment scheme Payment Schemes forwards authorisation Merchant Acquirer The institution that provides payment methods or to Merchant Acquirer services to the consumer and is responsible for debiting (or Acquirer Processor) funds from the consumer’s account 8 Merchant Acquirer receives Flow of funds funds from Issuer via Payment Scheme and sends R To understand how Network International participates in the funds to Merchant’s account payments chain, please read the Business Review from page 28 06 Network International Holdings Plc Network International Holdings Plc 07 Annual Report and Accounts 2019 Annual Report and Accounts 2019 STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS Our Business at a Glance Who we are and what we do Where we operate What makes us different Our purpose is to enable and lead the transition from cash to digital payments Across the MEA, providing We are the only pan-regional provider across the Middle East and Africa (‘MEA’), one of the fastest growing payments markets services to customers in more of digital payment solutions, with scale in the world, with a strategy focused on providing solutions that allow our customers than 50 countries. and presence across the entire acquiring to bring digital payments to more consumers across the region. and issuing payments chain. Middle East Key addressable markets in Merchant Solutions Issuer Solutions the Middle East include the United Arab Emirates (‘UAE’), Jordan and Saudi Arabia. Driving digital payment acceptance through Driving digital payment usage through 73% Of revenue Direct acquiring services Issuer and processing services For our merchant customers. Hosting and processing credit, debit and prepaid Market leading technology Pan-regional scale cards for our customers. platforms in the MEA in the MEA Acquirer processing services For our customers. Fraud solutions Inbuilt and managed fraud operations. Payment acceptance solutions Proprietary omnichannel solutions and products. Loyalty solutions Card loyalty schemes and management. Loyalty solutions Merchant loyalty programmes and management. Value Added Services Including instant card issuance, card control services and customer data analytics. Value Added Services Including customer data analytics, Diversified business Long term client dynamic currency conversion and payment plans. model with multiple relationships revenue drivers >15 Years >13 Years Africa average customer tenure average customer tenure We provide services for We provide services for >70,000 merchants >200 financial institutions 27% Of revenue Proprietary Long track record of Key addressable omnichannel products profitable financial growth markets in Africa Where we provide services include Egypt, Nigeria R Read more about Merchant and Issuer Solutions in the and South Africa. Business Review on pages 29 and 32 08 Network International Holdings Plc Network International Holdings Plc 09 Annual Report and Accounts 2019 Annual Report and Accounts 2019 STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS Chairman’s Statement Positive transformation products in South Africa. We have also engagement practices and will continue Introducing our Independent Non-Executive Directors It has been a year of positive transformation made good progress in supporting to make further enhancements to for our business. Network International financial inclusion and digital transaction support our expanding business needs. R Read Board of Directors on page 74 has evolved considerably over its 25 year conversion in Egypt, by supporting As part of this, during the year, we history; from a small privately owned the issuance of the first cards on the engaged with shareholders to discuss Darren Pope business to one of the biggest technology Government payment scheme, Meeza. our approach to Board composition Senior Independent Non-Executive Director companies to list on the London Stock and Executive remuneration. Exchange. This was also a year of strategic Meanwhile, our entry to the Saudi Arabian Committee memberships transformation, as we successfully market presents a significant opportunity Strengthened approach • Chair of Audit & Risk Committee migrated customers onto our market for future growth. This will require near to risk management • Member of Nomination Committee leading, next generation technology term investment,