| Thu 30 Aug 2007, 16:14 | | DLG - Dialogue - Unaudited interim results and rem |
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DLG
DLG
DLG - Dialogue - Unaudited interim results and reminder of cautionary
Dialogue Group Holdings Limited
(Formerly Africa`s Best 364 Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/039219/06)
JSE code: DLG & ISIN: ZAE000083820
("Dialogue" or "the company" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 ("the period")
AND REMINDER OF CAUTIONARY ANNOUNCEMENT
HIGHLIGHTS
Earnings up 114%
Revenue up 87%
HEPS up 77%
Profit before tax up 69%
UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Consolidated Income Statement
Unaudited Pro forma Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2007 2006 1 2006
R`000 R`000 R`000
Revenue 83 141 44 432 121 255
Cost of sales (53 953) (25 880) (69 158)
Gross profit 29 188 18 552 52 097
Operating expenses excluding (23 511) (13 451) (31 455)
depreciation
Depreciation (975) (1 062) (2 014)
Other income 291 296 1 340
Operating profit for the period 4 993 4 335 19 968
Finance income 2 883 328 2 196
Finance expenses (8) (8) (17)
Profit before tax 7 868 4 655 22 147
Income tax expense (1 105) (1 704) (6 466)
Profit for the period 6 763 2 951 15 681
Attributable to
- Minority shareholders 820 177 1 532
- Equity holders of the Group 5 943 2 774 14 149
Profit for the period 6 763 2 951 15 681
Headline Earnings calculation
Net profit attributable to 5 943 2 774 14 149
equity holders of the company
Adjusted for
- Gain on loan expunged - - (178)
Headline Earnings 5 943 2 774 13 971
Number of shares (`000)
- Total 210 000 175 000 210 000
- Weighted in issue 210 000 175 000 184 877
- Fully Diluted 210 635 175 000 184 877
Headline Earnings Per Share
(cents)
- Weighted in issue 2.8 1.6 7.6
- Fully Diluted 2.8 1.6 7.6
Earnings Per Share (cents)
- Weighted in issue 2.8 1.6 7.7
- Fully Diluted 2.8 1.6 7.7
Consolidated Balance Sheet
Unaudited Pro forma Audited
As at As at As at
30 June 30 June 31
December
2007 2006 1 2006
R`000 R`000 R`000
Assets
Non current assets 5 862 3 979 5 338
Property, plant and equipment 5 809 3 539 4 646
Deferred tax asset 53 440 692
Current assets 64 488 13 050 61 001
Loans to shareholders - 44
Taxation 513
Trade and other receivables 25 169 8 079 16 077
Cash and cash equivalents 38 806 4 927 44 924
Total assets 70 350 17 029 66 339
Equity and liabilities
Capital and reserves 54 981 2 580 48 046
Share capital 360 10 360
Share premium 33 659 1 372 33 659
Share option reserve 276 - 101
Revaluation reserve 63 63 63
Retained earnings 18 271 957 12 331
Attributable to equity holders 52 629 2 402 46 514
of the Group
Minority interest 2 352 178 1 532
Current liabilities 15 369 14 449 18 293
Loan from shareholder - 1 220 -
Current portion of instalment - 55 -
sale
Other current liability 1 351 217 641
Trade and other payables 14 018 11 607 17 055
Taxation - 1 350 597
Total equity and liabilities 70 350 17 029 66 339
Net asset value and net tangible 25.1 1.4 22.1
asset value per share (cents)
Consolidated Cash Flow Statement
Unaudited Pro forma Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2007 2006 1 2006
R`000 R`000 R`000
Cash flow from operating (3 979) 5 037 15 571
activities
Cash flows from investing (2 139) (412) (2 472)
activities
Cash flows from financing 0 (4 785) 26 738
activities
Net increase in cash and cash (6 118) (160) 39 837
equivalents
Cash and cash equivalents at 44 924 5 087 5 087
beginning of year
Cash and cash equivalents at end 38 806 4 927 44 924
of year
Consolidated statement of changes in equity
Unaudited Pro forma Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31
December
2007 2006 1 2006
R`000 R`000 R`000
Opening Equity 48 046 (147) (147)
Issue of shares 0 0 34 999
Share options issued 172 101
Share issue expenses 0 (225) (2 588)
Net profit for the year 5 943 2 774 14 149
Minorities 820 178 1 532
Closing Equity 54 981 2 580 48 046
Commitments
Non cancellable operating lease
rental:
- Less than one year 10 969 8 409 8 752
- Between one and five years 47 050 21 565 29 845
- More than five years 32 441 12 373 20 560
Note:
1 During August 2006, the Group was restructured to facilitate the listing on
the Alternative Exchange of the JSE Limited. All the shares of the Group`s
previous holding company were acquired by Dialogue Group Holdings Limited.
This restructuring constitutes a reverse acquisition in terms of IFRS 3
Business Combinations. Accordingly, the comparative consolidated interim
financial statements of the Group are pro forma to reflect the results and
financial position of Dialogue Group SA (Pty) Limited at 30 June 2007 as
reported in the prospectus dated 8 September 2006.
COMMENTS
The directors of Dialogue are pleased to present the interim financial results
for the period.
Headline earnings per share ("HEPS") increased by 77% in 2007, in line with
forecasts for the full year to December 2007 in the pre-listing prospectus dated
8 September 2007. The interim results signal a strong start to the year that is
expected to continue.
Interest in "offshoring", with South Africa as a destination of choice,
continues to increase and a number of trials for large international companies
are currently underway locally.
REVIEW OF OPERATIONS
During the period Dialogue successfully moved its Johannesburg premises to the
Central Business District, increasing its operational capacity from 200 to 1 100
seats at completion. The Group also continues to operate from its 1 000-seat
operation in Cape Town and the 700-seat insourced operation in Durban (through
subsidiary Interaction Call Centre (Pty) Limited ("Interaction")).
Dialogue continues to serve its five JSE listed companies, four FTSE 100 clients
and two FORTUNE 500 clients predominantly from the financial services, telecoms,
FMCG and media sectors.
Dialogue handled in excess of 24 million calls in the period compared to 10
million in the same period last year. Securing recognition for its service
delivery, the Group was awarded "Best Call Centre for 2007" and "Best Outbound
Campaign for 2007" by CallingtheCape, the industry body in the Western Cape.
BLACK ECONOMIC EMPOWERMENT ("BEE")
On 10 April 2007 MSG Afrika Investment Group ("MSG") purchased 7% of Dialogue
shares from existing shareholders. MSG is a consortium with several media
interests including The Jupiter Drawing Room, Capricorn FM and Telkom Media. MSG
sees value in Dialogue in the ability to align the marketing message more
closely with the client experience.
Further Tlhalefang Placements CC ("Tlhalefang"), Dialogue`s existing staffing
partner and minority shareholder in subsidiary Interaction, has acquired 1%
shareholding in the Group from existing shareholders. This, together with
further investment into a joint sales effort to secure further contracts in
Interaction, underpins the strong relationship between Dialogue and Tlhalefang.
FINANCIAL RESULTS
The interim results reflect the Group`s strong operational performance. Revenue
increased significantly from R44.4 million in the previous period to R83.1
million.
Increased investment in staff training, higher telephony costs due to capacity
constraints at low cost providers and International Financial Reporting
Standards ("IFRS") adjustments to revenue reduced gross margins. However, the
increased investment in training reduced the tax charge for the period, as 85
learnerships were completed through a joint initiative with Calling the Cape and
Service SETA.
Compliance with the National Credit Act ("NCA") led to increased overheads in
the area of salaries, insurance and network operating costs. Growth in
operating expenses is further distorted as expansion to the Group`s operations
in Johannesburg and extensive new business acquisition activity both result in
expenditure being necessarily incurred ahead of client delivery and subsequent
revenue growth.
The Group`s receivables include an amount of R6m, which was overdue at reporting
date and received in the first week of July, thus distorting the investment in
working capital and resultant decrease in cash generated from operating
activities. The Group continued its infrastructure investment with an additional
R2.1 million during the first six months, which will accelerate as new premises
approach completion.
POST BALANCE SHEET EVENT
As previously announced on 2 August 2007, Dialogue has entered into an agreement
to acquire 51% of ContinuitySA (Pty) Limited ("ContinuitySA") for a maximum
amount of R41 million. ContinuitySA is the largest provider of business
continuity and disaster recovery services in South Africa, servicing blue chip
clients including many of the major financial institutions in the country and
shares many clients with Dialogue. This acquisition forms part of the strategy
of providing a broader range of outsourced services to existing clients both
locally and internationally. The infrastructure platforms used by ContinuitySA
are similar to those used by Dialogue thereby providing co-location
opportunities for both businesses.
The acquisition is subject to the fulfilment of a number of conditions
precedent, including a comprehensive due diligence. The acquisition
consideration will be funded by the placement of a maximum of R20 million of new
ordinary shares.
PROSPECTS
Dialogue is constantly securing new local and offshoring contract wins. The
ongoing investment in business acquisition and market development is expected to
result in continued expansion of client contracts during the latter half of 2007
and into 2008.
Benefiting from government`s commitment to the Business Process Outsourcing
("BPO") industry, Dialogue has successfully applied for an incentive from the
Department of Trade & Industry and Dialogue is further likely to benefit from
the recently announced BPO incentive programme.
The Group continues to seek opportunities to expand its range of outsourced
services to its core client base of local and international blue chip businesses
and local government. Debt management, back office processing, applications
hosting, training services and call centre related in-house operations have been
identified as appropriate areas for acquisitive growth.
PEOPLE
The Group recognises the value in its people and continues to foster a strong
management team, along with a continued investment in personnel at all levels.
Dialogue thanks our team for their commitment and hard work which were integral
to achieving these results. The Group also thanks its business partners,
customers, business advisors and shareholders for their continued support.
DIRECTORATE
Duncan Miller changed his role from that of an executive to a non-executive
director of the Group with effect from 30 June 2007.
Paul Oosthuizen will, in addition to his role as Finance Director, assume the
role of Chief Operating Officer of Dialogue Group SA (Pty) Limited as part of
restructuring of the management team in advance of planned expansion.
BASIS OF PREPARATION
The consolidated interim financial statements have been prepared in accordance
with the recognition and measurement requirements of International Financial
Reporting Standards ("IFRS") and the presentation and disclosure requirements of
IAS 34 Interim Reporting, its interpretations adopted by the International
Accounting Standards Board ("IASB") and the requirements of the South African
Companies Act. The results have not been audited. The accounting policies
applied in preparing these interim financial results are consistent with those
applied in the audited annual financial statements for the year ended 31
December 2006.
ACQUISITION OF 51% OF CALLFORCE DIRECT
Shareholders are referred to the separate announcement released by the company
today pertaining to the acquisition by Dialogue of a 51% interest in CallForce
Direct.
REMINDER OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 27 July 2007
wherein shareholders were informed that the company was involved in discussions.
Shareholders are advised that these discussions are ongoing and are therefore
reminded to continue exercising caution when dealing in their Dialogue shares
until a further announcement is made.
By order of the Board
Jason Drew (CEO) Paul Oosthuizen (FD)
30 August 2007
Directors: SJH Rodger (Chairman)*=, JJ Drew (CEO)=, PS Oosthuizen, RK Mangena*,
DEB Miller*, G Mkhari#*
* Non-executive # independent = British
Registered office: Douglas Murray House, Rua Vasco da Gama, Foreshore, Cape Town
(P O Box 8355, Rogge Bay, 8012)
Company Secretary: SH Rodger FCIS BL, Douglas Murray House, Rua Vasco da Gama,
Foreshore, Cape Town (P O Box 8355, Rogge Bay, 8012)
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001
(P O Box 61051, Marshalltown, 2107)
Designated Advisor: Bride Capital Advisors (Pty) Limited, 27 Fricker Road,
Illovo Boulevard, Illovo, 2196
(P O Box 651010, Benmore, 2010)
Date: 30/08/2007 16:14:01 Produced by the JSE SENS Department.
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