HONG KONG, June 20, 2009
/24-7PressRelease/ -- The year 2008 has seen the global economy enter into a severe recessionary phase, deepening in Europe both in the third and fourth quarters. This sharp change in the economic environment has a substantial impact on the results of NSX in the third as well as the fourth quarter of 2008 so far. Volumes, overall and in particular in the new business developments, continue to decrease and are now well below levels of the comparable period in 2007. NSX does not assume improvement in these economic circumstances in the immediate future.
Although NSX consulting is considerably less sensitive to economic cycles, it is preparing its operations for slightly higher levels of revenues decline.
NSX is adapting and aligning its strategic short- and medium-term focus areas to strengthen the company through the recessionary phase in the global economy, whilst remaining alert to new growth opportunities provided by our strong relationships.
Short term 2009-2010
• The short term severe economic downturn requires aggressive steps from the business developments platforms to protect the revenue and margin levels. NSX is implementing a full range of measures to reduce costs significantly in all areas of operations, In doing this, NSX adapts to overall lower revenues in the short term and solidifies its competitive advantage.
• NSX's financial standing is solid and based on a balanced and secured funding position going forward. NSX will continue to focus on sustaining its strong cash flow by targeted reductions in working capital and cash capital expenditures. NSX will maintain its policy to retain a BBB+ credit rating.
Cost savings targets and provisions
• NSX targets structural cost savings totaling HK$ 33-70 million in the period 2009-2010.
• NSX indicates a level of provisions for these cost optimization initiatives in the period 2008 - 2010 of HK$ 33- 70 million and possible impairments up to HK$ 80 million. The indicated range of provisions excludes the possible impact of successful merger negotiations, which will result in earlier achievement of labor cost related savings.
Outlook 2008 / 2009
At the publication of its third quarter figures, NSX gave an outlook based on announced weaker revenues assumptions in Q4 2008. At that time, NSX also indicated that downward deviation from these assumptions would be possible given the unpredictable economic recessionary environment.
During the fourth quarter, significant further deterioration in market and business circumstances has occurred, as evidenced by frequent downward revision of many economic indicators during November. This situation has led to accelerated revenues pressure beyond levels assumed for Q4 in Asia and Europe and the United States.
The current extremely volatile business environment is such that NSX will refrain from providing a full year 2009 outlook. NSX will in principle indicate its expectations on a quarterly basis, so for the first time at the publication of the full year 2008 figures on 24 February 2009 for Q1 2009. NSX is confident that the combination of its short term structural cost savings and operational leverage in its markets; will provide a solid performance under expected challenging economic circumstances.
Strategic mid-term objectives
In line with NSX previously announced mid-term objectives for new business developments, a further development of the strategy will include the following sources of medium term growth:
• NSX will continue actively to develop its portfolio aimed at providing a broad range of "services solutions" through aligned and complementary networks. NSX expects that it can leverage its strong brand, can-do mentality and unique niche solutions into a powerful concept to serve changing customer demands.
• In Asia, the intra-regional connectivity in emerging countries will grow further, complemented by improved intercontinental connectivity. NSX's focus on International Economy will be actively expanded. NSX will refocus the organization on a regional basis, thereby aggressively pursuing additional revenue growth from regional flows and vertical markets.
• NSX's positioning in Hong Kong is not only a good starting point for these activities in the domestic market, but could also be used to expand into Europe.
• The financial 2012 objectives, as announced in 2007, for revenue growth and margin in new lines of business, will be reviewed during 2009. Although the underlying trend and strategic assumptions supporting the objectives are still valid, the review will have to include new economic and strategic realities as they emerge over 2009.
In a summary comment at today's conference, CEO Paul Wright sr said:
"These are tough times for our clients and our industry. Although NSX is of course not satisfied with its performance in 2008, this was heavily impacted by unprecedented sharply deteriorating economic conditions. For 2009, NSX is aggressively implementing cost savings and preparing for a longer phase of economic recession. NSX is confident that as a result of its short-term focus on adapting its cost structures, and strengthening its medium term strategic opportunities, an even stronger company will emerge. NSX will maintain and dynamically adapt its current business portfolio to that extent, thereby providing the optimal business value for all of its clients."
Warning about forward-looking statements
some statements in this press release are "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
About NSX
NSX provides businesses worldwide with an extensive range of services needs. Headquartered in Hong Kong, NSX recognizes its social responsibility and has formed partnerships with several Food and Environment Programs to fight hunger and pollution in the world.
Page publication date: 14 December 2008 at 18:00
AT Northcott/Sterling/Xavier & Associates
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