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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Network International Holdings Plc | LSE:NETW | London | Ordinary Share | GB00BH3VJ782 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.20 | 0.05% | 394.00 | 393.40 | 394.00 | 394.00 | 394.00 | 394.00 | 120,771 | 08:13:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 490.13M | 65.69M | 0.1233 | 31.95 | 2.1B |
From Apr 2019 to Apr 2024
TIDMNETW
RNS Number : 6668I
Network International Holdings PLC
03 April 2020
Network International Holdings Plc
Annual Report and Accounts 2019
and
COVID-19 likely impact on the Annual General Meeting
Network International Holdings Plc (LSE: NETW) (the "Company"), the leading enabler of digital commerce across the Middle East and Africa (MEA), announces that further to the release of the Company's preliminary results announcement on 09 March 2020, the Annual Report and Accounts for the year ended 31 December 2019 ("2019 Annual Report") has been published today and is available on the Company's website at https://investors.networkinternational.ae/. It has also been submitted to the National Storage Mechanism and will shortly be available at http://www.morningstar.co.uk/uk/nsm .
The appendix to this announcement contains additional information which has been extracted from the 2019 Annual Report for the purposes of compliance with the FCA's Disclosure & Transparency Rules and should be read together with the Company's preliminary results announcement, which can be found at https://investors.networkinternational.ae/ . The 2019 Annual Report was approved by the Board on 08 March 2020 and the COVID-19 situation has rapidly evolved since then. The Group continues to monitor COVID-19 developments closely and has conducted an internal planning exercise to assess the impacts to its operational resiliency and third party supply chains.
Together these constitute the information required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the full 2019 Annual Report.
COVID-19 LIKELY IMPACT ON THE ANNUAL GENERAL MEETING ('AGM')
We are closely monitoring the COVID-19 situation, including UK Government measures, and will continue to do so up to the AGM. The situation continues to develop rapidly and as a result the arrangements for the AGM may change at short notice.
The AGM will be held as a hybrid meeting, which will allow members to participate electronically or, subject to UK Government restrictions, in person.
In normal circumstances, the Board values greatly the opportunity to meet shareholders in person. However, the UK Government has published further compulsory measures in relation to the fight against the COVID-19 situation (the 'Stay at Home Measures') prohibiting, amongst other things, public gatherings of more than two people. The Stay at Home Measures are expected to be set out in more detail in (or pursuant to) emergency legislation currently before the UK Parliament, but currently, they can be found at:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/875246/Full_guidance_on_staying_at_home_and_away_from_others__1_.pdf
If the Stay at Home Measures are extended and/or amended such that restrictions remain in place on 30 April 2020, shareholders must not attend the AGM in person.
Your vote remains important to us. We encourage you to appoint your proxy and cast your vote in paper or electronically, in advance of the AGM, by following the instructions set out in the Notice convening the AGM.
Updates on the status of the AGM and any changes to the proceedings of the meeting will be published at https://investors.networkinternational.ae/.
Any questions that the shareholders may have related to the business at the AGM can be submitted at InvestorRelations@Network.Global and network-lon@finsbury.com . Answers to questions will be published on our website following the AGM.
Enquiries
Network International InvestorRelations@Network.Global Amie Gramlick: Head of Investor Relations Finsbury network-lon@finsbury.com James Leviton, Angy Knill: Media Relations
Appendix: additional information required by DTR 6.3.5R
In compliance with DTR 4.1.12R, the Annual Report and Accounts 2019 contain Directors' responsibilities statements. These are reproduced below, along with the Statement on Risks & Uncertainties and Related Party Balances and Transactions, in line with DTR 6.3.5R. The statements relate to and have been extracted from the 2019 Annual Report.
Page and note references in this appendix refer to page numbers and notes in the 2019 Annual Report.
DIRECTORS' RESPONSIBILITIES STATEMENTS
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and Accounts and the Group and Parent Company financial statements in accordance with applicable law and practice.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the Parent Company financial statements in accordance with UK accounting standards, including FRS 102 Reduced Disclosure Framework.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to:
-- Select suitable accounting policies and then apply them consistently; -- Make judgements and estimates that are reasonable and prudent;
-- For the Group financial statements state whether they have been prepared in accordance with IFRSs as adopted by the EU.
-- For the Parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Parent Company financial statements;
-- Assess the Group's and Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
-- Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic report, Directors' report, Directors' Remuneration report and Corporate Governance statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the Annual Report
We confirm that to the best of our knowledge:
-- The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
-- The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
PRINCIPAL RISKS AND UNCERTAINTIES
Overview
At Network International we are committed to embedding a strong culture of risk management which supports good governance and sound risk management practices across the Group. We operate in dynamic markets across the Middle East and Africa which can be impacted by a multitude of geopolitical events and regulatory changes. Therefore our continued growth in the region, together with our expansion plans for the Saudi Arabia market alongside rapid technological developments in the payments industry present shifting demands on our operational and technology capabilities. All of these factors expose our business to multiple challenges, risks and uncertainties. Consequently, the effective and efficient identification and management of these risks is key to the successful achievement of our strategic objectives.
Since the listing of the Group on the London Stock Exchange in 2019, we have embarked on a journey to enhance our existing risk management model to further align with international standards including the 'Committee of Sponsoring Organizations of Treadway Commission' ('COSO') and 'International Standards Organization' ('ISO'). During 2019 we engaged PwC to support us in the development of an appropriate best-fit 'Enterprise Risk Management Framework ('ERMF')' for our business.
The Group's overarching ERMF has since been approved by the Board, and builds upon and enhances our risk management approach. We have established a clear risk governance model utilising the three lines of defence model to ensure effective risk management, oversight and assurance. Our third line of defence (internal audit function) is now further strengthened following the appointment of a new Chief Internal Auditor in 2019, as discussed further on page 88.
The Internal Audit function reports independently to the chair of the Board Audit and Risk Committee ('BARC').
Our approved risk strategy, risk appetite and principal risks are derived from our five year business strategy. Our key risks identified in 2018 have been further refined by the Board to form our eleven principal risks. For each principal risk we have a defined risk appetite and key risk indicators ('KRIs') to ensure effective monitoring of risk trends.
Our reporting standards have also been enhanced to meet the requirements of the 2018 UK Corporate Governance Code. All of these efforts will help us in the coming years to make better risk based strategic decisions and enable us to provide safe and secure payment solutions to our partners in the Middle East and Africa.
We have generally seen the risk trends remaining stable for our principal risks with investments in our cyber security and technology infrastructure being particularly noteworthy. However, we recognise that we operate in a dynamic business environment and that our risk profile will continue to evolve over time. We remain focused on new and emerging risks which could adversely affect our accepted risk profile and strategic planning in the longer term.
We have identified a number of these risks which are primarily driven by external factors including cyber, regulation, market stability and climate change over which we can have limited control. However we continue to monitor each of them closely to ensure we understand the potential impact to our operations and to ensure we modify our risk mitigation plans accordingly. The increasing risk on execution is much more within our control and we continue to assess and increase our capacity to deliver against our strategic objectives. Further detail on the new and emerging risks can be found below on page 60.
How we manage Risk
We have a dynamic, practical and action-oriented ERMF, which helps us in proactively responding to changes in our business environment, whilst continuing to deliver on our expectations of increased transparency, value protection and creation.
Please refer to Graphic 1 in the attached Appendix pdf document
http://www.rns-pdf.londonstockexchange.com/rns/6668I_1-2020-4-2.pdf
Our approach to Risk Management:
At Network International, we maintain a robust and sustainable ERMF, which ensures risks are properly identified, assessed against tolerance levels and appropriately managed across the Group. Our ERMF is designed to minimize the potential threats to achieve our objectives. We have approached the bottom up risk assessment process on a risk assessed basis and this work will be completed during the course of 2020 for lower risk business units. The overall approach is underpinned by a bottom-up approach and examined from a top-down perspective.
Please refer to Graphic 2 in the attached Appendix pdf document
http://www.rns-pdf.londonstockexchange.com/rns/6668I_1-2020-4-2.pdf
During the year, Management have sought to build a richer picture of the risk facing the Group's operations. Below we have listed a number of our successes as part of the management of our operational risks:
-- During 2019, we completed over 70 functional risk assessments across all group locations and over 400 project/product risk assessments Operational Risk Assessment of Projects ('ORAP') during the product life cycle;
-- Introduced significant changes to enhance our approach to risk assessments including automation, an improved change management process and working efficiencies;
-- We completed 10 on-site vendor risk assessments on our critical vendors to provide comfort over those partners critical to our delivery and supply chain cycle.
-- Approval of the Group's Enterprise Risk Management Framework by the Board.
From a business continuity perspective, we have made great strides in implementing a robust Business Continuity Management ('BCM') framework. The Group risk team completed 98 Business Impact Analysis ('BIA') and over 45 business resiliency tests and exercises across the Group.
Risk Culture:
The Group is committed to embedding a strong risk culture to support good governance and sound risk management practice. The Board and the Executive Management Team play a key role in directing and influencing this by ensuring:
-- that a risk based approach is used during key decision making;
-- consistent tone from the top and clear responsibilities for risk identification and challenge;
-- employees have risk management accountability and escalate issues on a timely basis;
-- our incentive structures promote a risk aware culture to effectively manage risk and remunerates employees accordingly; and
-- we adopt a culture of "earning from our mistakes" to foster continuous improvement of processes and controls.
Risk awareness is embedded within the Group and is grounded in our strong ethical values and pro-active corporate culture. Our risk management philosophy is cascaded top down and bottom up and runs through all our management, employees and connected stakeholders.
To improve risk awareness across the organisation, multiple online training modules were launched and successfully completed in addition to class-room and instructor led training sessions on Information Security, Cyber Incident Management, Payment Card Industry Data Security Standards, Business Continuity Management, Operational Risk, Sanctions, Anti- bribery and Anti- Corruption, AML and Code of Conduct.
The importance of risk culture is reinforced in the Group's policies and standards and the Code of Conduct, to which all employees receive annual training as part of the attestation process.
Focus Areas for 2020:
Work will be undertaken in 2020 that will focus on further embedding our approach to risk management throughout our business, markets and support functions to build an even richer picture of risk information.
The priorities for Group Risk throughout 2020 will be:
-- Complete the rollout and to embed the framework across all Group functions;
-- We have also invested in a new GRC platform - RSA Archer. This will provide us with a common foundation for managing risks, controls, risks assessments and loss management. The platform enables cross-functional collaboration and alignment.
-- Complete 'bottom-up' risk assessments for all functional units. Each of these units will then implement risk and control self-assessments ('RCSA') as part of our ongoing push for greater risk understanding and awareness;
-- Development of contingency planning across our markets and territories to manage any geo-political uncertainty we are subject to as a business; and
-- Based upon our assessment of new and emerging risks facing the business, we will carry out deep-dive thematic reviews into each risk. These risks are outlined below on page 61.
Our Principal Risks
Having completed a robust assessment of emerging and principal risks, the Board considers these to be the most significant risks facing the Group. Not all risks facing the business are listed; however, we have highlighted on page 61 those emerging risks that we consider may have an impact on the business.
These risks are not listed in any particular order of priority.
For 2019, the overall risk profile of the Group is being managed at acceptable levels with the majority of the Group's Principal Risks falling within the 'Informed' risk rating. There are small number of 'High' ratings within Cyber Security and Geopolitical Risks which we expect to remain high given the underlying inherent risks associated with Cyber Risk and the Group's geographical focus on the Middle East and Africa.
The overall risk trend when compared broadly to the risk profile for the prior 12 months has been stable due to the continuous investments in the Group's infrastructure, resources, governance model and internal control framework.
The following section contains information about the principal risks, including a summary of the progress made in 2019 and the priorities for 2020, their potential impact, our risk appetite and the link to our strategic priorities.
Risk appetite rating defined:
Low - We will ensure that we have sufficient controls and mitigations in place to allow for a low level of risk whilst recognizing there may be a limited reward potential.
Informed - An approach which we feel could deliver reasonable rewards, economic or otherwise, by managing the risk in an informed way.
High - Willing to consider opportunities with higher levels of risk in exchange for potential greater reward.
Hot Features
Premium
Risk trends defined:
- Decrease in principal risk impact
and/or probability at residual
level.
---------------------------------------
- No change in principal risk
impact and/or probability at residual
level.
---------------------------------------
- Increase in principal risk impact
and/or probability at residual
level.
---------------------------------------
Cyber Security
------------------------------------------------------------------------------------------------------------------------
A breach of the Group's infrastructure resulting in the compromise of
data or service disruption through cyber security breaches.
------------------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
------------- ------------------ ------------------------------------------------------------- ----------------
An external Approved The Group will
cyber-attack, information continue to focus
insider security standards on the below areas:
threat and policies are * To standardize our security solutions across regions
or 3rd party applied and
breach reviewed
could cause on a regular * Ensure closure of the remaining identified gaps from
the basis. the CSMA review.
loss of All annual audits
confidential were passed with
data or zero * Continue to invest and implement new age security
service non-conformities. solutions to safeguard the Group from emerging risks
disruption. .
Earlier in the
year, Protiviti
(Global Consulting
Firm) completed Continued education
a Cyber Security and cyber security
Maturity awareness programs
Assessment for all personnel.
('CSMA') of the
Group. Based on
the findings of
the report,
current
security trends
and to
standardized
the security
posture
across the group,
further
investments
and multiple
remediation
solutions were
in the process
of implementation
to improve the
overall security
maturity levels.
Robust cyber
security
systems cover all
areas of the
business.
Crisis management
and business
continuity
frameworks are
also in place for
all IT systems.
------------- ------------------ ------------------------------------------------------------- ----------------
Link to Risk appetite:
strategy: Low
The Group will
not accept risks
which may
compromise
the
confidentiality,
integrity and
availability
of its data and
its customer's
data.
------------- ----------------
Technology Resilience
-------------------------------------------------------------------------------------------------------------
Risk of interruption to critical production services and delays to projects
caused by limited availability of technical skills, poor delivery by
vendors, software defects introduced to production which could expose
the Group to financial losses (e.g. client claims and loss of business)
and reputational impact.
-------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
------------------------ ----------------------- ----------------------------- ---------------------
Undesired level Completed major Further investment
of service to customers enhancements across into our technology
due to failure our critical systems and security infrastructure,
in or poor performance including upgrades including the opening
of technology and/or to our 'Network of a world-class
system operating One Platform' and data center in
environment resulting Network Lite Platform. Dubai and expansion
in customer attrition, of the existing
financial and/or Developed a Group-wide facility in Abu
reputational loss. consistent IT disaster Dhabi.
recovery and business
continuity program, Group-wide IT disaster
with some testing recovery and business
activity underway continuity testing
in 2019. to be completed
during 2020.
------------------------ ----------------------- ----------------------------- ---------------------
Link to strategy:
------------------------ ---------------------
Risk appetite:
Informed
We are accepting
of some level of
modest disruption,
within the relative
norms of the markets
in which we operate.
However we ensure
appropriate levels
of resilience are
in place to minimize
the impact to our
customers.
------------------------ ----------------------- ----------------------------- ---------------------
Operational Resilience
--------------------------------------------------------------------------------------------------------------
Risk of inability to execute operational processes and deliver on contractual
obligations due to operational inefficiencies and discontinuity, defects,
errors and delays, which could damage customer relations, decrease potential
profitability and expose the Group to liability.
--------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
------------------------ -------------------------- ----------------------- -------------------------
An unexpected disruption The Group has initiated The Group will
to operational a digitisation further continue
performance that road map as we to automate processes
may cause damage look to automate through RPA for
to customer relations many of the manual next set of manual
or financial loss processes across activities
to the business. operations. This
includes the introduction Continue to strengthen
of robotic process the first line
automation ('RPA') of defence through
and the removal the completion
of redundant processes. of risk and control
self-assessments
Crisis management for all first line
and business continuity operational functions.
framework in place
to support operational
resilience, with
some testing activity
underway in 2019.
------------------------ -------------------------- ----------------------- -------------------------
Link to strategy: Risk appetite:
Informed
Whilst we continue
to enhance our
control framework
across the Group
we are accepting
of some degree
of operational
failure from time
to time provided
the impact of failures
remain within acceptable
limits.
------------------------ -------------------------
Strategy & Business
----------------------------------------------------------------------------------------------------------
Risk of the Group's inability to achieve growth, failure to enter into
new markets and maintain its position as the best payments partner in
the Middle East.
----------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
----------------------- ---------------------- --------------------------- ----------------------
We do not retain Focus on diversified Development of
our strategic position revenue streams Digital Proposition
as the best payments across multiple with MasterCard
partner in the markets. to increase attractiveness
Middle East and of the 4-party
Africa impacting Development of model and develop
our ability to a product road specific strategy
maintain market map linked to the to address the
share and to meet Group's business non 4-party threat.
growth and profit strategy.
targets. The Group also
Five year business has specific plans
plan in place aligned to enter new markets
with market consensus like KSA which
forecasts. would further enhance
our position and
lead to diversification
of our portfolio.
----------------------- ---------------------- --------------------------- ----------------------
Link to strategy: Risk appetite:
Informed
Revenue growth
in line with investor
expectations and
no dilution of
Group's market
position in its
markets of operation.
----------------------- ----------------------
People
------------------------------------------------------------------------------------------------------
Inability to attract, develop & retain a skilled workforce and inconsistent
organisational culture across the Group.
------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
------------------- ------------------------- ---------------------- ------------------------
We are unable to Continued to celebrate Integration of
effectively manage the success of training requirements
our workforce to our employees through into the annual
ensure consistent new reward and performance appraisal
delivery of the recognition initiatives. process to encourage
Group's strategy healthy interaction
and/or operational Recruited widely between line managers
performance. across the Group and employees.
to bring in additional
capacity and capability Assimilation of
to support our inputs from the
growth. Training Needs
Analysis Survey
to form the basis
of the training
calendars that
would be rolled
out on a quarterly
basis in the various
regions of operations
.
Implementation
of additional career
planning and job
shadowing schemes
as part of our
people upskilling
program.
------------------- ------------------------- ---------------------- ------------------------
Link to strategy: Risk appetite:
Informed
Group annual attrition
rate not to exceed
defined parameters
however we accept
a modest number
of regretted losses
which do not materially
impact operational
efficiency or impact
our customers.
------------------- ------------------------
Regulatory Compliance
----------------------------------------------------------------------------------------------------------------
Failure or inability to comply with relevant laws, regulations and scheme
obligations; Failure to identify monitor and respond to changing regulations
or scheme rules; Failure to comply with regulatory reporting requirements
in a timely manner.
----------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
-------------------------- ------------------------- -------------------------- -----------------------
A breach or non-compliance Continued to monitor The Group will
to legal or regulatory for regulatory automate its AML
standards leading change in existing transaction monitoring
to penalties, sanctions markets and to process.
or reputational ensure we are adequately
damage. addressing all Completion of our
compliance risks annual compliance
as per our compliance plan and target
framework. assurance reviews.
We introduced a Continue to ensure
market abuse and all KYC/AML documentation
insider dealing is maintained and
Policy. Awareness reviewed for all
training was also markets and territories.
provided to all
staff including Continue training
senior management programs provided
and Board. to employees and
monitoring of the
The Group implemented 24/7 whistle-blower
and updated the hotline.
obligations register
for all jurisdictions
where the Group
has a physical
presence.
-------------------------- ------------------------- -------------------------- -----------------------
Link to strategy: Risk appetite:
Low
The Group will
not accept practices
which could cause
breaches of laws,
regulations or
scheme rules; or
a delay and/or
failure to adapt
its systems, processes
and controls to
prevent material
compliance breaches
and/or regulatory
censure.
-------------------------- -----------------------
Geopolitical
-------------------------------------------------------------------------------------------------------------
Risk of significant political, social and economic instability in one
or more of the Group's target markets which could have a material adverse
effect on the Group's business, financial condition and results of operations.
-------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
---------------------- ------------------------- --------------------------- -----------------------
A geo-political Further diversification Execution of the
event within our of our markets KSA strategy and
markets that impacts and territories building a sustainable
our ability to including developing business model.
do business or on soil capabilities
to meet our strategic in the KSA. Continued management
objectives. focus on executing
Strong revenue acceleration opportunities
growth in Africa to further diversify
increasing revenue business mix.
diversification.
The Group will
Country risk assessments continue to explore
are currently being acquisition options
done for all cross to more rapidly
border markets. diversify business
Management will
continue to monitor
the geo-political
within the region.
All outstanding
country risk assessments
will be completed
in 2020.
---------------------- ------------------------- --------------------------- -----------------------
Link to strategy: Risk appetite:
High
The Group's growth
strategy is focused
on markets which
are likely to be
subject to higher
levels of political,
legal, economic
and social instability
than those in more
developed markets.
---------------------- -----------------------
Financial
---------------------------------------------------------------------------------------------------------------
Financial risks for the Group arise mainly from the following three
elements: (1) Not having sufficient liquidity to meets its obligations
as they fall due; (2) Exposure to adverse movements in foreign exchange
rates arising from Group's foreign operations and transactions in currencies
other than AED and pegged currencies; and (3) Exposure to adverse Interest
rate risk primarily on its variable rate long-term borrowing/revolving
line of credit, which it uses to manage its working capital needs.
---------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
--------------------------- ---------------------------- ---------------------- ----------------------
Our liquidity, Liquidity requirements The Group is in
foreign exchange continued to be the process of
or interest rate managed and monitored developing its
risks are not effectively through efficient financial risk
managed affecting planning. management policies
the businesses related to Liquidity,
ability to meet We realised savings FX and Funding.
its financial obligations, in interest and
profitability targets acquisition costs. Continued automation
or working capital This was due to of manual processes
needs. downward trends that support data
in interest rates consolidation and
and effective renegotiation reporting.
on margin.
--------------------------- ---------------------------- ---------------------- ----------------------
Link to strategy: Risk appetite:
Informed
The Group will
manage its liquidity,
FX and Interest
rate risks in line
with agreed policies
and thresholds.
--------------------------- ----------------------
Fraud
---------------------------------------------------------------------------------------------------
Risk of compromise of card or merchant data or compromise of systems
or networks or collusive merchants with the intention of performing
unauthorised payment transactions for financial or non-financial gain
resulting in losses to the Group or Group's clients.
---------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
----------------------- ---------------------------- ------------------- -----------------
Internal or external Fraud detection Continue to develop
parties intentionally and awareness training and expand our
and/or illegally is provided to fraud detection
misrepresenting relevant internal capability in line
the Group or any stakeholders. with the latest
of Group's clients technology and
resulting in financial Established e-commerce fraud trends.
losses, legal action authorisation controls
or damage to our to reject unsecure,
reputation. high velocity transactions. .
Enhancement of
24/7 suspicious
transaction monitoring
prior to payment
to merchants.
Investment in additional
fraud monitoring
tools for the Network
One Platform.
----------------------- ---------------------------- ------------------- -----------------
Link to strategy: Risk appetite:
Low
Acquiring fraud
losses vs sales
percentage to be
less than market
averages.
----------------------- -----------------
Credit
-----------------------------------------------------------------------------------------------------------
Risk of merchants' inability to satisfy obligations resulting in chargebacks
or scheme fines. Risk that the Group will be liable for meeting the
settlement obligations of sponsored issuing clients where such clients
are unable to do so or comply with scheme rules.
-----------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
-------------------------- ------------------------ ------------------------ ---------------------
Failure of our The Group initiated The Group is in
sponsored banking periodic reviews the process of
clients to meet (annual and quarterly) enhancing its merchant
their settlement to ensure high assessment to minimize
obligations and risk merchant exposures merchants' risk
our merchants failing remained within levels.
to meet their obligations risk appetite.
to customers resulting The Group will
in financial losses Implemented Group-wide implement early
or reputational acquiring portfolio risk warning monitoring
damage to the Group. risk reviews. of SME merchant
portfolio.
-------------------------- ------------------------ ------------------------ ---------------------
Link to strategy: Risk appetite:
Informed
Credit losses should
not exceed defined
threshold of total
merchant sales
volume by portfolio.
-------------------------- ---------------------
Third Party Risk
---------------------------------------------------------------------------------------------------------------
The Group's reliance on third-parties to provide systems, technology
infrastructure, product development and service delivery. Risk of data
breaches of third parties systems, service disruptions with no alternatives,
non-compliance to contractual obligations, applicable laws and international
standards.
---------------------------------------------------------------------------------------------------------------
Progress during 2020 mitigation
Risk Impact 2019 plan Risk Trend
------------------------- ----------------------- ------------------------ ---------------------------
A third-party provider Classification Conduct assurance
does not meet its exercise completed programme for high-risk
obligations, which across all vendors vendors.
are negatively to identify critical
impacting our customer and high-risk vendors. Monitoring for
relationships, vendor service
and causing disruption Contracts for all performance for
to business performance. other vendors have high-risk vendors.
been reviewed ensuring
they incorporate
mandated provisions.
------------------------- ----------------------- ------------------------ ---------------------------
Link to strategy: Risk appetite:
Informed
The Group will
not accept risks
which may compromise
the confidentiality,
integrity and availability
of its data and
its customers data.
------------------------- ---------------------------
RISK APPETITE
Risk appetite is the amount of risk we are willing to take in pursuit of our objectives. It defines the level of risk at which appropriate actions are needed to reduce risk to a level that we are willing to accept. As defined in our principal risks disclosure we consider risks from a low, balanced and high perspective. Each principal risk has a number of Key Risk Indicators that provide objective evidence of status of risk against risk appetite. Our risk appetite is not static and may change over time in line with changing capabilities for managing risk and our business environment.
The risk appetite statement has been approved by the Board.
Group Risk Appetite Statement
"At Network International ('NI'), our growth strategy is focused on maintaining our position as the best payments partner in the Middle East and Africa. We accept that these markets are subject to higher levels of geo-political uncertainty and business risk than those in more developed markets, and are also accepting of any concentration risk based upon our entry into these markets and territories, though we act to mitigate this through revenue diversification.
We will aim to balance this against a low appetite for any risks that compromise the confidentiality, integrity or availability of our data, our customers' data or our cyber security posture. Additionally, we look to minimize our exposure to any risk which will adversely impact our stakeholders, operational performance or compliance with relevant regulation and legislation. NI has a low appetite to incur losses from financial risk.
We will support this appetite with a level of investment that ensures we have suitable levels of policy and controls to effectively manage these risks, facilitate decision making and continue to support our growth strategy.
This means as a business that we have an informed appetite to taking risks which will enable us to drive growth in a sustainable manner providing an adequate return on investment and which limits our exposure to those areas where we have a low risk appetite and effectively control those to which we have a greater appetite for risk. We believe that managing these risks in the right way will support out our aim of enabling commerce in the world's most under penetrated payments markets."
EMERGING RISKS
Emerging risks have the potential to increase in significance and affect the performance of the Group and, as such, are continually monitored through our existing risk management processes by risk owners at all levels of the Group. We also use tools such as horizon scanning, operational risk aggregation and external sources to support our analysis. The outputs of these processes are reported to the BARC and Board of Directors for their review and assessment.
Our ERM process ensures emerging risks are considered to aid the Board Audit and Risk Committee's assessment of whether the Group is adequately prepared for the potential threats they present. The process enables new and changing risks to be discussed at an early stage allowing us to analyse them thoroughly and assess potential exposure.
We closely monitor emerging risks and with time they may become principal risks as they mature. Emerging risks may also be superseded by other risks or cease to be relevant as the internal external environment in which we operate evolves. A non-exhaustive list of some current emerging risks of relevance to the Group are set out below.
NEAR TERM RISK
Increasingly sophisticated Cybersecurity Threats
We expect to see an increase in the level of sophistication of cyber related attacks as a result of the shifting geo political tensions in the MEA. We regularly intercept sophisticated and malicious third party attempts to identify and exploit system vulnerabilities, or which aim to penetrate or bypass our security measures, in order to gain unauthorised access to our networks and systems or those of our associated third parties.
We follow a defence-in-depth model to ensure we are proactively employing multiple methods of defence at different layers to protect our systems against intrusion and attack. However, we cannot always be certain that these measures will be successful and will be sufficient to counter all current and emerging cyber threats.
Risk of Execution: Operational & Technical Capabilities
Our ambitious growth and expansion plans could be compromised if we are not able to deliver critical internal transformational projects or strategically important projects to clients within expected deadlines.
Our growth plans will create heightened levels of risk with regard to people and management capacity to ensure on time delivery without disruption to our day to day operations. Failure to do so could cause us to lose business, increase our costs and expose us to negative publicity, and/or diversion of operational, technical and other resources to correct or re-perform such services.
Coronavirus
We observe the recent emergence and spread of the coronavirus ('COVID-19 virus') in many regions. We are monitoring developments closely and are conducting internal planning to assess any impact to our operational resiliency and third party supply chains.
MEDIUM-TERM RISK
Evolving payments regulation in the MEA
With the increase in growth and innovation of payments services in our region and particularly in Africa, we recognize the need for regulators to create new regulatory frameworks to drive innovation and competition but also to safeguard the interests of participants in the payments ecosystems. These regulatory initiatives which may be diverse in nature, could present increased complexity and cost to our operating model.
LONG-TERM RISK
Political Change
Our business focus is on the emerging markets of Middle East and Africa. We recognize some countries within this region have a history of political volatility. The risk of continued political and economic change could affect our operating results. Changes in governments may increase the complexity of serving customers in a country due to actual or potential political or military conflict; the imposition of UN, US or other sanctions which may restrict our ability to service customers in those countries.
Climate Change
In an ever-changing world, we recognise that we have a responsibility to meet our environmental and sustainability commitments and obligations. This includes failing to understand our impact on the local environment or reporting requirements.
RELATED PARTY BALANCES AND TRANSACTIONS
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include associates, parent, subsidiaries, and key management personnel or their close family members. The terms and conditions of these transactions have been mutually agreed between the Group and the related parties. Key management personnel consists of the Network Leadership Team.
The Group enters into transactions with Emirates NBD PJSC and its subsidiaries. In the normal course of business, Emirates NBD PJSC also acts as a banker to the Group.
The management believes that the terms and conditions of these transactions are comparable with those that could be obtained from third parties.
The amounts due from Emirates NBD PJSC (and its subsidiaries and group associate) are receivable on demand.
2019 2018
USD'000 USD'000
============================== ======== ========
Emirates NBD PJSC Group
Transactions for the year
Revenue 60,714 48,384
Expenses 7,399 7,772
Net Interest expense/(income) 1,981 (96)
============================== ======== ========
2019 2018
USD'000 USD'000
================================================= ======== ========
Balances as at 31 December
Receivable balances 18,603 10,955
Bank balance 72,154 101,822
Prepaid amounts included under:
Long term receivables 2,326 -
Receivables and prepayments 1,078 -
Overdraft facility (51,204) (97,995)
Performance and other guarantees (refer to
note 30) 7,506 1,764
Transguard Cash LLC
Transactions for the year (refer to note
9)
Balances as at 31 December
Payable balances - 122
Directors remuneration
Directors remuneration during the year 2,363 -
End of service benefits (one executive Director) 31 -
Key management personnel remuneration 17,510 17,206
================================================= ======== ========
**END**
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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