Western Cape Business News

Send  Share  RSS  Twitter  27 Feb 2009

VENTURES: Crossed Lines At Dialogue


Recent Western Cape Business News

MUCH vaunted Cape Town outsourcing group Dialogue, which specialises in call centres, seems to be in a spot of bother.

The group’s CEO and founder Jason Drew resigned on the same day that the group advised it would be finishing the 2008 financial year deep in the red.

No replacement for Drew, who still serves on the Dialogue board, has been announced yet. No explanation was given for the sudden decision by Drew to step down as CEO.

Naturally speculation is rife that things have gone awry during Drew’s watch – especially in terms of a number of large acquisitions undertaken by Dialogue to broaden its outsourcing services away from call centres.

The extent to which things have gone awry at Dialogue is evident in the group’s recent trading statement, which indicates that bottom line will show a loss of between R36 million to R42 million.

While Dialogue explains the hefty loss was mainly due to impairment losses recognised on goodwill, CBN estimates the physical operational loss will be around R10 million to R12 million.

This means Dialogue has seen a massive reverse of fortunes since the interim period ending June 2008 when the group showed respectable bottom line profits of R6.5 million. By CBN’s calculations Dialogue must have traded the second half ending December 2008 more than R16 million in the red.

The trading update makes a mockery of Drew’s contention at the interim stage that integrating the individual components of the group into ‘effective interrelated businesses’ would continue in the second half of the year. If anything the trading update would suggest matters at Dialogue are ineffective and hopelessly disjointed.

But there are indications that there is a new force emerging at Dialogue’s executive management with Drew’s resignation coinciding with the appointment of respected chartered accountant Alan Farthing as independent non-executive director.

Farthing was previously the financial director of technology giant Business Connexion, and becomes the second executive from BusConnex to join the Dialogue board in recent months.

Earlier in 2008 former BusConnex CE Peter Watt was appointed chairman of Dialogue to replace Stephen Rodgers (who resigned to concentrate on his UK business interests).

Watt is a highly experienced and well-regarded executive, who also served as deputy chairman of the giant Altron technology conglomerate and CEO of Dorbyl Automotive Technologies.

With Watt and Farthing probably brought in at the behest of an influential shareholders (perhaps Dialogue’s empowerment partners?), it will be interesting to see who is pushed into the CEO’s chair in the weeks ahead.

Or is Dialogue – which has seen its market value decimated in recent months – simply being prepared for a takeover bid?

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