Reported net profit for the year was USD 56.6 million, a significant increase on USD 5.6 million recorded in 2020
Revenue increased 23.7% year on year to USD 352.2 million in 2021 with Middle East revenue increasing 25.0% year on year; Underlying EBITDA[1,2] increased by 27.5% to USD 143.5 million reflecting strong revenue performance and prudent discretionary expenditure; Reported net profit for the year was USD 56.6 million, a significant increase on USD 5.6 million recorded in 2020; 2022 margin outlook improved as a result of strong performance at DPO and the rest of the Group; Delivering on the focused growth strategy announced in 2021, based on two pillars – accelerate and innovate; Record new merchant sign ups during the year, supporting a 47% year on year increase in Merchant Solutions revenue; Saudi Arabia market entry ahead of original schedule, new processing customer signed and live services are expected in the coming weeks; Realizing new growth opportunity in Egypt with a plan to begin providing payment services directly to merchants.
Nandan Mer, Chief Executive Officer, commented
“Network made significant strides in 2021 and ended the year in a position of strength. Our KPIs not only recovered to pre-pandemic levels but showed solid growth, reflecting our successful strategic delivery and the broader regional economic recovery.
During my first year in the business, I have been focused on refreshing our strategy to deliver a higher growth outlook, revitalising our management team with a number of new appointments and launching a new ESG framework. I am particularly proud of the accelerated growth we achieved in our UAE merchant business, the successful cross-selling of services to our existing customers from the acquisition of DPO, as well as the progress made in our Saudi Arabia market entry. The credit for this success goes to our colleagues. The ultimate glue in any company is its purpose and all 1,700 colleagues at Network are united in this respect – to help businesses and economies prosper by simplifying commerce and payments.
Looking ahead, my focus remains on the delivery of our organic growth strategy, as we work towards our target of 20%+ revenue growth. Our plans are not limited to organic expansion and we will also continue to evaluate acquisition opportunities on an ongoing basis.
I continue to be positively surprised by the scale of opportunities in our markets. I am confident that Network’s capabilities will best serve the industry in which we operate and we will deliver on our ambition to be the fastest growing and most innovative customer centric payments company in our regions.”
Rohit Malhotra, Chief Financial Officer and Chief Strategy Officer, commented
“Network delivered a strong performance in 2021 as the UAE economy recovered from the pandemic, reflecting the underlying resilience of the business. Total revenue grew 24% year-on-year and was 5% higher than 2019, whilst underlying EBITDA margin  expanded by over 200 bps year-on-year, driven by the strong revenue performance and our discipline around discretionary expenditure.
Our strong performance contributed to healthy underlying free cash flow  growth of 19% year-on-year to USD 62 million and we maintained a robust balance sheet with a leverage ratio [1,4] of 0.9x. This provides us with a strong platform to deploy capital to power our growth strategy, built upon a rigorous capital allocation policy which we believe will generate attractive returns for shareholders.”
2022 outlook – improved margin guidance
Due to the strong positive momentum in 2021, Network has improved its margin outlook. The company continues to expect Group revenue growth of 27-29%  in 2022 but now expect modest underlying EBITDA margin expansion year on year, compared to previous guidance of remaining broadly flat, given the positive contribution from the acquisition of DPO.
Delivering on a focused growth strategy – Accelerate & Innovate
Network continues to deliver on its refreshed strategy that it unveiled in September 2021. The strategy enables the company to leverage the multitude of opportunities available to it in its fast-growing markets, by focusing on two strategic approaches – Accelerate and Innovate.
Accelerate focuses on growth in the company’s focus markets such as the UAE, Saudi Arabia, South Africa, Egypt and Jordan, by expanding its customer base faster than it had previously. This will be achieved by increasing the speed of signing up merchants and financial institution customers, growing its merchant base by lowering the cost of signups and by accessing new markets.
In 2021, Network saw record levels of merchant signups, including a number of key merchant signings away from competitors. In addition, the company also experienced rapid SME growth supported by dedicated relationship management, referral partnerships and bespoke services such as merchant lending.
The company’s Kingdom of Saudi Arabia market entry is on track and services will launch in the coming weeks, ahead of the original plan and below the original budget. Network expects its first customer revenues in 2022 and sees the region as at least a cUSD50 million revenue opportunity in the medium-long term.
Innovate drives Network’s ambition to be at the forefront of the evolution in consumer payment trends and develop its capabilities beyond traditional cards and into the alternative payments landscape. Network will harness the power of partnerships, extend the range of its value-added services and transform into an e-commerce champion in the region to ensure it remains the region’s leader in innovative payment solutions.
Network has leveraged its partnerships to increase the number of payment types that can be accepted by merchants in the year ahead, including: Rupay, UPI Payments, mobile money wallets and Buy Now Pay Later with Tabby. It also launched value added services such as Smartview interactive dashboards that provide valuable insights on consumer spending trends for merchants. Network’s data analytics and analysis services were also adopted by a number of Government customers in 2021.
The company’s acquisition of DPO, the largest e-commerce payments platform operating across Africa, provides it with a strong launch pad to realise it e-commerce ambitions, enabling access to direct-to-merchant services in 21 African markets. Network launched ‘DPO Pay’ to UAE merchants, a convenient solution for SMEs which includes an online store and payment checkout in line with its strategy to capture opportunities in the increasingly important e-commerce segment. The transaction also provides Network the widest range of payment acceptance options for merchants across the region whilst also consolidating its exposure to the fastest growing payments markets.
Expanding payment services in Egypt
Network intends to begin providing payment services directly to merchants in Egypt, realising a further growth opportunity. Whilst it currently offers outsourced merchant and issuer payment services in Egypt to financial institutions, going directly to merchants will be a new service offering.
Egypt has an attractive merchant acquiring market, with cUSD 22 billion in volumes (source: Edgar Dunn & Company). In 2022, Network will enable the technology and systems to support services, seek the appropriate licences and establish a local sales team.
Launching new responsible business framework
Network has established a new Environment, Social and Governance (ESG) strategy framework which aims to enhance its existing commitment to strong governance, responsible behaviour and local community support.
Given the company’s unique position as a leading payments provider in the Middle East and Africa, Network can make the greatest impact by focusing on financial inclusion, a key element of which is access to the banking system or other means of securely storing and exchanging value. Key initiatives which support its financial inclusion goals include:
- Launching direct-to-merchant payment services in Egypt to support small and micro merchants with low cost ‘Tap on phone’ payment acceptance capability, making digital payment acceptance economically viable for many small merchants for the first time.
- Partnering with a financial institution customer in Malawi to enable the onboarding of unbanked citizens through a branchless virtual service that harnesses Network’s digital platform.
- Assisting the Jordanian Government and NGOs to support the use of mobile wallet payments by sections of the community who are currently unbanked, including low income and refugee communities.
Financial results for the year ended 31 December 2021
|(USD‘000)||2021 ||2020||y/y change|
|Underlying EBITDA [1,2]||143,477||112,561||27.5%|
|Underlying EBITDA margin  (excl. share of associate)||38.3%||36.1%||2.2pp|
|Profit for the year||56,558||5,598||910.3%|
|Underlying free cash flow (underlying FCF) ||61,908||51,790||19.5%|
|Cash flow from operating activities ||17,405||107,500||(83.8)%|
|Key Performance Indicators (KPIs)|
|Total processed volume (TPV) (USD m) ||42,814||33,540||27.7%|
|Total number of credentials hosted (m) ||16.6||16.2||2.2%|
|Total number of transactions (m) ||979.9||758.1||29.3%|
Network delivered a strong set of results in 2021 with total revenue increasing 24% compared to the previous year to USD 352.2 million, as KPIs across the business recovered to pre-COVID levels by the end of the year. Growth was driven by the stellar performance of the Merchant Solutions business, which delivered revenue growth of 47% in 2021 compared to the previous year, as the value of consumer payments processed (Total Processed Volumes (TPV)), increased 28% to USD 42.8 billion. This was supported by the company’s record new merchant sign ups during the year, improved consumer confidence and an increase in the inflow of tourism into the UAE. Issuer Solutions revenue grew 11% year on year, demonstrating continued resilience in the business and broadly balanced performance across both the Middle East and Africa.
Underlying EBITDA was up 27% year on year to USD 143.5 million in 2021. Network delivered margin expansion of over 200 bps year on year, reflecting its strong revenue performance and prudent cost management, whilst also investing in its capabilities and people to drive future growth. Profit for the year was USD 56.6 million, driven by strong revenue performance, prudent cost management and lower interest charges whilst underlying FCF was USD 61.9 million, up 19% year on year, primarily driven by higher underlying EBITDA.