Network International's $288m DPO acquisition on track
The group said its proposed $288 million acquisition of DPO remains on track
Network International, a leading enabler of digital commerce, reported on Tuesday an 11.9 per cent drop in the first half 2020 revenue to $134.2 million year-on-year.
The company, listed on the London Stock Exchange, said its performance through the first half of 2020 was significantly impacted by Covid-19 related lockdowns, and the resultant reductions in domestic and tourism-related consumer spending throughout our regions.
The group said its proposed $288 million acquisition of DPO, an online commerce platform in Africa, remains on track with expected completion at the end of 2020.
In July, the Dubai-headquartered group said the cost of acquisition would be almost entirely funded through the proceeds from an equity placing representing 10 per cent of Network's existing issued share capital, $50 million vendor consideration shares issued to Apis Growth Fund I, managed by Apis Partners (Apis), $13 million consideration shares issued to the DPO co-founders, with any small remaining balance to be funded via existing debt facilities.
In the Middle East, the group's largest segment representing 70 per cent of total revenue, saw a revenue decline of 15.3 per cent in the first half to $94.5 million year-on-year.
The group also reported significant growth in online payments in the first-half with e-commerce volumes up 45 per cent year-on-year as growth rates continued to remain high through July, at 61 per cent.
Simon Haslam, chief executive officer, said there has been much for the business to focus on through this period and the company has continued to prioritise supporting customers and colleagues in navigating through the challenges presented by Covid-19.
"Though this has, and will, impact financial performance in the short term; we have a strong balance sheet with significant liquidity. We are very pleased with the recent improvement in trading momentum during July, although it is still early in the second half and seasonally this always a lower revenue month, so our overall outlook for 2020 remains unchanged," said Haslam.
He said Network International's strategic approach remains consistent. "We are very excited by the proposed acquisition of DPO, the leading high-growth online commerce platform in Africa; which will widen our capabilities across online and mobile money payments, bring an extensive range of direct merchant relationships to our business, and accelerate our growth."
He said the company has numerous opportunities remaining to pursue, whether that be its market entry to Saudi Arabia, its strategic partnership with Mastercard or discussions with banks around substantial outsourcing contracts. "We are making excellent progress and remain confident in the industry fundamentals."
Revenue from African business dropped 10.5 per cent year-on-year, demonstrating more resilience due to the higher proportion of Issuer Solutions business, although also impacted by Covid-19 and the associated reduction in card cancellations and transactions.
The group's Africa segment operates in over 40 countries and contributed 27 per cent of the total revenue in the period.
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