| Fri 8 Sep 2006, 9:55 | | Dialogue Group Holdings Limited - Abridged Prospec |
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JSE
DLG
Dialogue Group Holdings Limited - Abridged Prospectus
Dialogue Group Holdings Limited
(formerly Africa"s Best 364 Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/039219/06)
Share code: DLG & ISIN: ZAE000083820
("Dialogue Holdings" or "the company" or "the Dialogue group")
ABRIDGED PROSPECTUS
PRIVATE PLACEMENT OF UP TO 50 999 300 DIALOGUE SHARES
AT A PRICE OF 100 CENTS PER SHARE
The JSE Limited ("the JSE") has granted Dialogue Holdings a listing in respect
of a maximum of 210 000 000 ordinary shares on the Alternative Exchange
("Altx") with effect from the commencement of trade on Tuesday, 19 September
2006, subject to the JSE receiving confirmation that the company has achieved
the required spread of shareholders as prescribed by the JSE Listings
Requirements.
BACKGROUND
The Dialogue group is a call centre outsourcing group servicing many local and
foreign blue chip companies. The Dialogue group performs a range of call
centre services for and on behalf of these companies, from managing their in-
house staff and technology, through to full outsourcing at three separate
sites around South Africa.
The Dialogue group has grown into a business with approximately 1 500 call
centre seats. It is the largest independent company of its kind in South
Africa and the second largest call centre outsourcer.
Local businesses are increasingly outsourcing their internal call centres.
International companies that have already outsourced are looking to move
offshore to lower cost destinations including South Africa and its leading
outsourcers, such as the Dialogue group. This rapidly growing marketplace
underpins the growth projections of the Dialogue group for the next two years.
In addition, the call centre industry has significant backing from Government,
as a result of its investment in people, skills development and job creation.
The company has won numerous local and international accolades for the service
it has delivered to its clients and their customers, and continues to invest
in both its staff and the quality of work they deliver, as these are key to
its future success. Clients include MTN, ABSA, Standard Bank, Edgars and
McCarthy.
The Dialogue group has a good growth track record and has developed a strong
management team to support its results. The business is projecting continued
profitable growth in a rapidly expanding industry.
RATIONALE FOR LISTING
Dialogue Holdings is seeking a listing on Altx to enhance its profile with
clients, create a more transparent governance and ownership structure, fund
future growth and expand its infrastructure to meet demand. In addition, the
listing will be used to incentivise key staff and attract management talent.
For the last three years the Dialogue group has been at the forefront of the
explosive global call centre industry and it has continuously challenged the
norms by setting and exceeding ambitious goals. The Dialogue group is moving
into a new era as a leading international call centre based in South Africa.
Listing on Altx is the ideal platform to launch the Dialogue group into this
next phase of its development.
PROSPECTS
The Dialogue group has exciting prospects, both locally and internationally:
Local market
The trend to outsource call centre functions has been growing in the United
States and Europe for a number of years and this is now starting to happen in
the local South African market. Many clients are entering into outsourcing
through "on site" management contracts. This then progresses to larger scale
outsourcing off-site.
The growing trend for local companies is not to build or expand their own call
centres but rather outsource, allowing them to:
invest in core projects;
achieve cost savings through outsourcing;
achieve flexibility to scale their call centre requirement; and
maximise on customer service experience.
There is a growing trend to outsource some of the large local internal call
centres in South Africa, a market that is estimated to be at least 75 000
agents. Outsourcing"s local market penetration (based on number of agents) is
only 4%, highlighting the growth prospects and opportunities that exist for
outsourcers.
According to the 2005 Key Indicator Update issued by Deloitte Touche Tohmatsu
for the Call Centre and Business Process Outsourcing Market in the Western
Cape, it is the fastest growing sector by virtue of employment. The industry
grew by 74% in the last two years to a current total of 14 345 people.
The Dialogue group is well positioned to take advantage of, and share in, this
growth, best demonstrated by its recent success in acquiring local call centre
business from MTN and ABSA.
International market
Over the last five years there has been a growing number of international
companies wishing to place a portion of their call centres within South
Africa, servicing their onshore customers. International research has
demonstrated that South Africa has both the cost and service advantage to
create an additional 100 000 agent positions over the next five years as a
direct result of acquiring such business.
The Dialogue group has spent the last three years marketing both itself, as
well as South Africa, in the delivery of such business, and has seen a number
of successful contracts concluded with European businesses. It has a healthy
order book of confirmed European and US business.
THE PRIVATE PLACEMENT
The private placement is made up of an offer for subscription of 34 999 300
new ordinary shares at an issue price of 100 cents per share ("the offer for
subscription") and an offer for sale by the existing shareholders of 16 000
000 ordinary shares at a sale price of 100 cents per share ("the offer for
sale"). Therefore, a total amount of R51 million will be raised through the
private placement to private individuals, corporations and institutions. The
proceeds received from the private placement will first be applied to the
offer for subscription and thereafter to the offer for sale. The proceeds from
the offer for subscription will allow the company to grow its market share in
the call centre industry, through funding organic growth, facilitating the
working capital requirements of the existing business, as well as facilitating
potential acquisition opportunities. The proceeds from the offer for sale will
allow existing shareholders to partially realise their investments in the
company.
No offer will be made to the general public in terms of the private placement.
The private placement will be made to selected applicants only. The placement
will not be underwritten and is not subject to a minimum subscription being
achieved.
The salient features of the private placement are as follows:
Offer/Sale price per ordinary share (cents) 100
Par value per ordinary share (cents) 1
Premium per ordinary share (cents) 99
Number of ordinary shares offered for subscription in terms
of private placement 34 999 300
Number of ordinary shares offered for sale in terms
of the private placement 16 000 000
Total consideration before expenses R51 million
The opening and closing dates of the private
placement are as follows:
Opening date of the private placement
at 09:00 on Monday, 11 September 2006
Closing date of private placement at 12:00 on Wednesday, 13 September 2006
Anticipated listing date on Altx at 09:00 on Tuesday, 19 September 2006
FINANCIAL INFORMATION
Set out below is the consolidated historical financial information of the
Dialogue group for the ten months ended 31 December 2003, the two years ended
31 December 2004 and 31 December 2005 and the six months ended 30 June 2006,
as well as the consolidated forecast financial information for the six months
ending 31 December 2006 and the year ending 31 December 2007, the preparation
of which is the responsibility of the directors.
Consolidated historical
Ten Six
months months
ended Year ended ended
31 December 31 December 30 June
R"000 2003 2004 2005 2006
Revenue 8 825 43 408 78 255 44 432
Revenue growth (%) 391.1 80.3 38.6
Gross profit 3 240 17 704 27 908 18 553
Gross profit margin (%) 36.7 40.8 35.7 41.8
Attributable
(loss)/earnings (4 579) (3 616) 6 312 2 774
Consolidated forecast*
Six
months Year Year
ending ending ending
31 December 31 December 31 December
R"000 2006 2006 2007
Revenue 69 525 113 957 157 774
Revenue growth (%) 45.6 45.6 38.5
Gross profit 29 777 48 330 63 940
Gross profit margin (%) 42.8 42.4 40.5
Attributable
(loss)/earnings 9 521 12 295 19 065
*Pre private-placement
DIRECTORS
The full names, nationalities, qualifications, ages, functions and business
addresses of the directors are set out below:
Director Qualification Function Business address
Stephen James CA(SA) Chairman 3/1A Parliament Lane,
Harley Rodger (58)*# Gibraltar
John Jason Drew# Graduate of the Chief Executive 6th Floor,
(40) European Business Officer Dialogue House
School Rua Vasco da Gama
Foreshore
Cape Town, 8001
Duncan Edward CA(SA) Strategic 6th Floor,
Bach Miller (SA) Business Dialogue House
(34) Development Rua Vasco da Gama
Director Foreshore
Cape Town, 8001
Paul Stefanus CA(SA) Financial 6th Floor,
Oosthuizen (SA) Director Dialogue House
(33) Rua Vasco da Gama
Foreshore
Cape Town, 8001
Jo-Ann Deidre Post-Graduate Chief Director: 6th Floor, Southern
Johnston (SA) Diploma in Higher Sector Life Building
(38)*+ Education Development 8 Riebeeck Street
in the Cape Town, 8001
Department
of Economic
Development
and Tourism
(Western Cape
Provincial
Government)
Kopano Richard Graduate in Managing 71 Bowling Avenue
Mangena (SA) Human Resources Director Morningside Manor
(41)* of Tlhalefang Sandton, Johannesburg
Placements CC
*Non-Executive
+Independent
#British
SHARE CAPITAL
Authorised and issued share capital
The authorised and issued share capital of Dialogue Holdings before and after
the private placement is set out below:
R"000
Authorised
600 000 000 ordinary shares of 1 cent each 6 000
Issued, before the private placement
175 000 700 ordinary shares of 1 cent each 1 750
Share premium 652
Issued, after the private placement
210 000 000 ordinary shares of 1 cent each(1) 2 100
Share premium(2) 33 232
Notes:
1. Based on the assumption that 34 999 300 ordinary shares are issued at
100 cents per share in terms of the private placement.
2. Based on the assumption that share issue expenses of R2.069 million are
written off against share premium.
Major shareholders
The following shareholders are beneficially interested in 5% or more of
Dialogue Holdings" issued share capital:
Number of shares held Percentage held
Before the After the Before the After the
Name of private private private private
shareholder placement placement placement placement
Marlion Holding Limited 32 319 125 28 349 995 18.47 13.50
Savannah Consulting
Limited 15 346 410 15 346 410 8.77 11.02
Penguin Trust 25 252 088 23 152 098 14.43 7.78
AK Holdings Limited 17 978 068 16 334 872 10.27 7.31
S.J.H. Rodger
Children"s Trust 15 745 598 14 306 450 9.00 6.81
Andrew Planting 13 325 375 11 695 708 7.61 5.57
Duncan Miller 13 325 375 10 771 011 7.61 5.13
Dromorlane Limited 9 269 941 9 269 941 5.30 4.41
Dimary Incorporated 9 979 602 9 067 466 5.70 4.32
Marc Spendlove 9 831 756 8 901 281 5.62 4.24
COPIES OF THE PROSPECTUS
An English copy of this prospectus, dated 8 September 2006, was registered by
the Registrar of Companies on 5 September 2006 in terms of section 155(1) of
the Companies Act, 1973 (Act 61 of 1973), as amended.
Copies of the prospectus may be obtained during business hours from the
registered offices of Dialogue Holdings (Dialogue House, Rua Vasco da Gama,
Foreshore, Cape Town) or the offices of Bridge Capital Services (Pty) Limited
(1st Floor, Building 22A, The Woodlands Office Park, Woodlands Drive,
Woodmead) and the transfer secretaries (Computershare Investor Services 2004
(Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg).
Cape Town
8 September 2006
Designated Advisor
BRIDGE CAPITAL
Auditors and reporting accountants
BDO Spencer Steward
Chartered Accountants
Attorneys
Bowman Gilfillan Attorneys
Date: 08/09/2006 09:57:41 AM Produced by the JSE SENS Department
