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Send  Share  RSS  Twitter  27 Mar 2009

INFOTECH: Dialogue Suffers Loss


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Cape Town-based Dialogue Group Holdings (DGH) has ended the year to 31 December 2008 with a loss of R54,0m despite increasing revenue 61% to R370,3m. This compares with a profit of R21,1m in 2007.

DGH reported a diluted headline loss of 9,7c a share (2007: diluted earnings of 5,1c a share). No dividend was declared.

The substantial turnover growth resulted mainly from the acquisition at the end of 2007 of several companies in the business process outsourcing (BPO) sector of which the results are reflected for the first time for a full year. Just more than R30m of the loss for the period relates to goodwill impairment in respect of certain of these acquisitions.

Peter Watt, who was appointed non-executive chairman in October 2008, said the acquisitions made over the past two years to broaden its BPO value proposition had more than trebled the size of the business. “Management’s focus shifted from operating a single call-centre business to collaborating across five businesses.” The group now consists of five components: three call-centre operations, a business continuity and disaster recovery company and a specialist recruitment company focused on the call-centre industry.

Watt said with the exception of Dialogue, the group’s original call-centre business in Cape Town, all four the other companies delivered operating profits. “The traditional Dialogue call centre business was always heavily geared towards the financial services industry. The introduction of the NCA and the slowing in consumer credit demand adversely affected its client base. However, management was slow in signing up new clients, offering new services and reducing overheads to bring them in line with lower revenue.

“Dialogue is at present undergoing extensive restructuring and has at the same time launched a number of new business development initiatives.” Watt said the benefits of improved operating effectiveness, headcount reduction and the expectation of additional bandwidth in the second half of 2009 provided Dialogue with renewed opportunities to market its inbound and outbound services abroad.

Since November when DGH chief executive Jason Drew resigned, Watt, until recently CEO of Business Connexion Group, has been closely overseeing the business. This is a temporary arrangement until a new CEO has been appointed.

Of the subsidiaries the best performance was delivered by ContinuitySA, South Africa’s largest disaster recovery business. The demand for its services has been growing in line with the increasing awareness among corporates of the risks associated with business interruption. It increased its capacity during the year with the takeover of SunGard Availability Services (Pty) Ltd and integrating it with its own operations.

“ContinuitySA is expanding further into Africa. It has launched a new site in Mozambique and entered into a joint venture agreement with local vendors in Mauritius. Consultancy work was undertaken in several countries in Africa and the Middle East which is generating significant opportunities for establishing new sites in those countries.”

Looking ahead Watt said he believed the present economic slowdown presented the BPO industry with new opportunities as the pressure increases on companies to reduce their fixed overhead expenditure. To take advantage of these opportunities, Dialogue SA, which Watt said had become marginalised during the recent spate of takeovers, would be given a new focus.

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