Investor presentation Africa business line - June 2020 - Network International
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Investor presentation Africa business line June 2020
Disclaimer
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.
2Our Africa business: an accelerating growth opportunity
in the worlds most nascent payments markets
Most underpenetrated and fast growing payments markets in the world
Covid-19 causing short term disruption, but is accelerating the move towards digital
payments, and market consolidation
Our competitive strength rooted in a pan Africa presence, across the payments
value chain, ability to localise approach in a highly varied and fragmented market
We are the regional leader with a loyal and developing customer base. Significant
headroom to grow with existing customers, win new business and capitalise on
market dynamics
Opportunities to accelerate our growth through significant outsourcing
contracts or selective acquisitions
3A history of organic growth and selective acquisitions
2000-01 2001-08 2009-15
Operations and services commenced for Signed a further seven customers in Signed new customers across a further
customers in Africa Egypt 15 African countries (outside Egypt) for
Issuer and Merchant Solutions
Office established in Cairo Acquired NPC Egypt, a specialist in ATM
and POS management Continued to win new customers in
Signed first significant contract with Egypt
AAIB in Egypt
2016 2016-19 2019-20
Acquired Emerging Markets Payments, Continued to win new customers across Launched N-Genius product suite across
an Issuer Solutions focused business Africa; and significantly expanded first African countries and customers
with over 129 customers across 37 relationships with Standard Bank and
countries in Africa Orabank Renewed significant contracts with
Orabank and RCS Group and ongoing
EMP acquisition provided office bases in Focus on cross-selling of services across new customer wins
Nigeria and South Africa customer base
4A consistent financial track record of growth
100 74.0%
72.0% 70.6%
90 72.0%
70.6%
80 70.0%
70
68.0%
60
61.7% 66.0%
50 Revenue
22% 90.5 27% of 64.0%
40 Group
23% 74.1
23% 62.0%
30 60.1
48.7 60.0%
20
10 58.0%
0 56.0%
2016 2017 2018 2019
Revenue (USDm) Contribution margin (%)
Contribution is defined as business segment revenue less operating costs (personnel cost and selling, operating & other expenses) that can be directly
attributed to or controlled by the segments. Does not include allocation of shared costs managed at group level
5An established business in Issuer Solutions with
growing presence in Merchant Solutions
Our Merchant Solutions Our Issuer
Solutions
Payment Acquirer Merchant Issuer Issuer
Merchant Acceptance Processing Solutions Card Processing Solutions Issuer
Customers Scheme Customers
Capabilities and competitive differentiators
• Providing solutions and services across the continent and payments value chain
• Serving customers from our technology platforms; Network One and Network Lite
• Trusted partner and reputation in the region
• Market leading products and services can be deployed across the continent
• Ability to localise where needed (regulations, schemes, languages, currencies
6Limited competition from independent players
Geographic Reach Service Offering
Scale Merchant E-commerce Alternative Payments
Africa Issuer Solutions
Solutions gateway Methods
40+ countries
International
Providers Limited geographic reach with no Wide product offering in their main global markets. But limited localised
meaningful scale products for this region (adapted to local regulations, domestic scheme
Region of ‘last priority’ in global group requirements, etc)
Regional Providers
Single country bias, or limited extensions Limited service offering, usually only one side or a selected portion of
to neighbouring /regional countries the payments value chain
Limited innovation across gateway, APMs
Usually focused on one area of the payments value chain
Single country focus Sometimes challenged with operating standards and ability to keep pace
Local Providers
with innovation and investment demands
Can often become a customer of NI
Analysis based on information in the public domain for each company entity
Low Medium High 7Hub and spoke distribution strategy, with local
relationship managers and expertise
North Africa
Sub-Saharan Africa
Southern Africa
Office and Data Centre locations
Regional Relationship manager (based from office)
Country Relationship Manager (based from home)
8A loyal and developing customer base
Working with >140 customers
Pan African presence
For >10 years on average
Revenue breakdown:
47% Northern Africa
32% Sub Saharan Africa
21% Southern Africa
Customers serviced by Network International
Significant markets served by Network International in: Northern Africa (Egypt); Sub Saharan Africa (Nigeria, Ghana, Kenya, Uganda); Southern Africa 9
(South Africa, Angola, Rwanda)Africa: the most underpenetrated payments market
Strong Secular Growth drivers
Shift to digital payments Most underpenetrated Headroom for consumer
payments market card uptake
16% 14% 0.2
Forecast card payments growth 2012-22 Digital payments share of transactions Cards per adult
(comparable stat in Europe: 51%) (comparable stat in Europe: 1.9)
Attractive Macro and Demographic Trends
Large and growing population Attractive demographics Sustained economic
development
1.3bn, 2.5% 60% 3.2%
Total population and growth Of populationSignificant growth opportunities in our main markets
Egypt South Africa Nigeria
30%
19%
Digital payments share of
6%
transactions1 27%
17% 5%
2017 2019 2017 2019 2017 2019
No cards per adult (2019) 0.3 1.3 0.6
No card Tx per adult (2019) 7 110 13
Growth in value of card payments
(2017-19 CAGR) 18% 5% 17%
Total population & growth (2019) 100m, 2.0% 59m, 1.3% 201m, 2.6%
% of Pop under 25 (2019) 51% 45% 63%
Real GDP growth (2019) 5.6% 0.2% 2.2%
Data sources: Digital payments data – Global Data; Demographic data – United Nations; GDP data – IMF
1. Includes consumer and commercial transactions, POS and ATM processed card transactions. Excludes online processed TX and APMs such as mobile money.
11Covid-19 causing short term disruption, but has become
a trigger for digital payments
Covid-19 has become a trigger to accelerate the Impact of online shopping during Covid-19
move towards contactless/QR code payments,
e-commerce, mobile money, digital banking
South Africa: retailers bringing in measures to
reduce cash handling through QR code or 34%
contactless payments. Post Office planning to 27%
introduce cashless ATMs 29%
33%
Egypt: Central Bank limited cash withdrawals
and called for a reduction in cash use. Will also
support the deployment of POS to merchants 26% 24% 21%
13%
Ghana: Ministry of Finance initiatives and
policies aimed at improving financial inclusion Egypt Nigeria South Africa Kenya
and accelerating digital payments Same as before Covid-19 outbreak Shopping more
Source: Neilson consumer insights survey
12Africa growth strategy
Win new customers Grow & expand relationships
across our markets with existing customers
Growing the payments space
across Africa
Widen our product solutions Develop & enable, new or
and value added services alternative solutions, to grow the
payments market
13Win new customers across markets
Ongoing progress in winning bank outsourcing
Our approach Recent customer wins
• Having already achieved pan African presence
we are focused on regional consolidation
• Ongoing trend of payment processing
outsourcing from financial institutions
• Potential for growth acceleration through a
significant outsourcing mandate
• A multi service, multi country
outsourcing mandate would deliver
significant incremental revenue, with
some capital investment required
• Continuing to make progress on
conversations. Some slowdown as a
result of Covid, but confident this is
transitory and no change to structural
approach by banks
14Win new customers across markets
Winning new customers: strategy in action
• Pan regional with localised approach • Trusted partner in the region
Why Network • Market leading services and products • Scale
Business line Merchant Solutions Merchant & Issuer Solutions
Acquirer processing and POS solutions Acquirer & Issuer processing
• Tyme Bank is the first fully digital bank in • Meeza card is a key financial inclusion
South Africa initiative from the Egyptian Government
• NI providing acquirer processing services • NI enabled all partner banks to become
• One of our first customers in South fully integrated and certified to process
Customer delivery transactions under Meeza scheme
Africa to utilise the full suite of N-Genius
products • We provide services to 20 banks issuing
the cards
• Also enable Meeza acceptance for our
acquirer processing customers
15Grow relationships with existing
customers
Our customer relationships typically grow through
additional country and service offerings over time
• Togo based pan-African bank with subsidiaries in 12 countries
• Full pan-Africa outsourcing relationship for Merchant and Issuer Solutions
2013 Value added services such as 2018
Full outsourcing of Issuer fraud solutions, chargeback Acquirer processing in 12
Processing for debit cards in services, settlement and countries
6 countries reconciliation)
2015 2018 2019
Additional 6 countries added Acquirer processing added for all Move into e-commerce acquiring,
twelve countries added CR2 managed services, N-
Genius POS cross-sell, and renewed
our relationship for a further seven
years
16Grow relationships with existing
customers
Our customer relationships typically grow through
additional country and service offerings over time
• One of South Africa’s largest banks with presence across 17 additional countries
• Full pan-Africa outsourcing relationship for Merchant Solutions
2015 2019
2013 Swaziland and
Merchant Solutions services in Kenya added
Lesotho added
5 countries: Namibia, Uganda,
Botswana, Ghana and Zambia
2014 2018
Zimbabwe and Tanzania added
2019-2020
N-Genius POS solutions in
Malawi added
two countries with a further
three planned
Working towards N-Genius
gateway implementation
17Widen product solutions and VAS
Potential to bring our market leading products and
value added services to customers
N-Genius
Strong Internal in rollout
Governance Fraud solutions gaining traction
Customer demand encouraging Card Control in demand by a number of financial
institutions; e.g First Bank of Nigeria
N-Genius POS already live in four countries – with
Standard Bank, Orabank, Tyme Bank 3D Secure, resulting from increasing online transactions
Rollout aligned with major customers and markets
Good
Strong demand
Internal for N-Genius online
Governance Next generation POS in development
Proprietary, market leading online gateway • Micro POS device that allows consumer to use their
smartphone as the PIN keypad
Giving our customers a truly omnichannel approach
• Our lowest cost device. Ideally suited to African market
Working on 6 future customer implementations,
including Standard Bank and Orabank • Planned launch H2
Acceleration of interest as a result of Covid-19
18Develop new solutions to grow the market
Developing digital payments solutions in partnership
with Mastercard
Mobile Wallet Solutions
Fintechs Card Management Systems
Acquirer Processing
Mobile
Network
Operators
Payment Schemes
Digital Platform
Providing connectivity
Banks Mobile Network Operators
between issuers, merchants
and consumers to facilitate
multiple payments options
Developing capabilities to and fund transfers Agency Networks
lead and respond to digital
Retailers
trends in our region
Digital Onboarding & E-KYC
Payment
Service Bill Payments
Providers
Safety & Security SolutionsDevelop new solutions to grow the market
Enabling digital payment capabilities for mobile use
Our
Features of the strategic
payments partnership
acceptance in Africa QR code payment functionality
• Challenging infrastructure and quality of connectivity One of the future products for deployment from our
• Merchants often have multiple POS, securing digital platform
contingency in case of failure
Merchant set up
• Retail dominated by micro merchants
• Merchant downloads app and acquirer provides
• E.g. In Sub Saharan Africa: 60 million micro and authentication and credentials
SMEs; only 3m large enough to be ‘small’ and only
a subset would be retailers with POS Technical and functional requirements
• Barrier around traditional expensive POS • Will be integrated with card schemes, as well as Network
hardware, need to lower cost of acceptance International’s card management & acquiring systems
• Need technologies that are flexible and can enable
acceptance across multiple device types Payment process
• Improving acceptance will lead to a halo effect on • Merchant launches app and generates QR code by entering
issuance payment amount
• Scanned by customer with payment confirmation through
SMS or app notification
20Our Africa business: an accelerating growth opportunity
in the worlds most nascent payments markets
Most underpenetrated and fast growing payments markets in the world
Covid-19 causing short term disruption, but is accelerating the move towards digital
payments, and market consolidation
Our competitive strength rooted in a pan Africa presence, across the payments
value chain, ability to localise approach in a highly varied and fragmented market
We are the regional leader with a loyal and developing customer base. Significant
headroom to grow with existing customers, win new business and capitalise on
market dynamics
Opportunities to accelerate our growth through significant outsourcing
contracts or selective acquisitions
21Appendix
22Current status and evolution of Covid-19 related
lockdown measures in our major markets
Mid-end March April May June
• Closure of airports, restaurants, gyms, • Restrictions largely • Curfew and restrictions eased slightly • Reversion to April
sports clubs. Restaurants limited to the same as March during Ramadan to allow more lockdown measures
Egypt delivery only. Supermarkets and businesses to open in a number of areas
pharmacies limited opening hours • Shops allowed to open at weekends
• Night time curfew • Shortened night time curfew
• Lockdown and curfew in major cities • Restrictions largely • Lockdowns slightly eased • Level 3 lockdown
such as Lagos, Abuja and Ogun the same as March • More businesses and shops allowed to • More businesses
• Only essential activities allowed, such reopen under strict conditions, and at open & curfew lifted
South Africa as food shopping or health related 60% capacity • No leisure travel,
• 24 hour curfew. Permission passes • Restaurants reopening for delivery only eating out, visits to
needed for movement but not enforced • Night time curfew friends or family
• Stringent lockdown, borders closed, • Restrictions largely • Minor easing – some businesses • Some sectors of the
only essential services & borders closed the same as March starting to reopen & restaurants can economy allowed to
• No exercise or other outdoor activities offer collection re-open
Nigeria permitted • Outdoor exercise allowed • Leisure &
• Online shopping also very restricted to • Online shopping begins to be entertainment
essential goods only reintroduced sectors still closedYou can also read
