Dialogue aims for profitability

Dialogue Holdings, which is running at a loss, expects to become profitable during the new financial year.

The company reported a wider loss of R96.5 million during the year to December, which is almost double the R58.4 million loss it reported a year ago. The loss is mainly the result of R63.4 million in expenses to liquidate Dialogue SA.

Translated into a per share loss, Dialogue reported a loss per share of 32.3c, wider than last year's 20c.

Revenue was 7.1% lower to R344 million, and operating costs rose on the back of the liquidation earlier this year. As a result of the loss, Dialogue's auditor, BDO Incorporated, cast doubt on the company's ability to continue operating.

The auditor states Dialogue's results include those of the folded unit, as it was only liquidated in February. As a result, Dialogue SA has an accumulated loss of R96 million, and Dialogue Group incurred a loss of R37.7 million during the year.

“These conditions... indicate the existence of a material uncertainty that may cast significant doubt about Dialogue Group Holdings Limited's ability to continue as a going concern,” noted the auditor.

Despite the auditor's concerns, Dialogue is confident it can return to profitability this year. “Other than Dialogue SA, the group's businesses have been able to overcome tough trading conditions over the past two years and will benefit directly from an improvement in the markets.”

Chairman Peter Watt says that, without the loss-making Dialogue SA, the rest of the operations are running on a sustainable basis. “Hopefully we can concentrate on the balance of the business.”

He says there are no reasons why the company cannot turn a profit during the current year.

Last year, Dialogue restructured to compensate for the economic downturn, and down-sized some operations to allow for slower growth and the loss of clients. Each of its other units is operating “satisfactorily”, it says.

Interaction, a call centre operation in Durban, reported revenue of R86.6 million, an 8.4% gain on the previous year.

CallForce, a specialist recruitment company, was most affected by the economic downturn, with revenue down 23.7%, to R65.2 million. ContinuitySA, a business continuity operation, was able to maintain revenue levels at R145.5 million, a slight improvement on the previous year's figure of R143.8 million.

Dialogue also bolstered gross margins to 50.9% from 47%, after getting rid of lower margin businesses. However, the company did not declare a dividend, and its share was flat on Thursday at 15c.