Payments processor Network International is putting a freeze on hiring and halting capital expenditure, as it looks to conserve cash and cut costs amid the coronavirus pandemic.
“We have decided to pause on capital expenditure related to the separation of shared services with Emirates NBD, and to support our entry to the Saudi Arabian market, which were anticipated to be $40 million (Dh146.8m) in total during 2020,” the company said in statement on Thursday.
“Saudi Arabia remains an important future growth accelerator for the business and we are committed to entering this market when more normal circumstances resume.”
Network International said it is also taking “prudent measure to protect” its cashflows. While around two-thirds of the company’s operational expenditure is fixed, it is enforcing a hiring freeze and cutting discretionary spending among other measures, it noted.
The company’s chief executive Simon Haslam will also forgo his annual pay increase on base salary and any annual cash bonus.
“Our chairman and the rest of the board will also reduce their fees by 25 per cent for the remainder of the [current] financial year,” the company said.
Companies across the world are implementing stringent cost cutting measures, including redundancies, unpaid leaves and pay cuts to offset the impact of coronavirus-forced recession. From global banks to oil and gas firms and airlines, major corporations are cutting capital expenditure and shelving expansion plans, as they look to bolster their cash reserves during the crisis.
Network international said it has seen a significant impact from the downturn in consumer spending and its revenues at the end of the first quarter remained “broadly flat”, it said without providing a quarterly revenue figure.
The company said it has a strong balance sheet and liquidity position, following the refinancing of its syndicated debt facility, it said.
“At the end of the Q1 period we have a cash balance of $40m and total available headroom on our revolver [financing facility] and new syndicated debt facility of [about] $270m,” according to the statement.
Network International, which listed in the London Stock Exchange last year, reported a 26 per cent increase in its 2019 net profit on the back of double-digit revenue growth. Its net income from continuing operations climbed to $59m, as revenue grew 12.4 per cent to $334.9m.
