Dialogue to be wound up

It's the end of an era for Dialogue Holdings, once the darling of SA's cell centre industry, as the cash shell is set to be wound up and de-listed.

Dialogue was the first local call centre company to list in SA when it debuted on the JSE in September 2006, with ambitious plans to expand across SA and Africa.

At the time, then CEO Jason Drew told the audience: “We are at the beginning of our journey, not at the end of it.” Drew added he was looking forward to the company being the first call centre firm to be listed.

Its share price opened at R1.40 on the day of the listing, before settling to R1.32 by mid-morning. Yesterday, the company's share closed at 7c, a steep decline from its heyday in 2007, when its stock peaked at R2.45 on 11 May.

The company is now a cash shell, with no operating entities. In its results for the year to December, released yesterday, the board says it will recommend that Dialogue be wound up and any cash it has be returned to shareholders.

Dialogue started the year with five business units: the three call centre operations Dialogue SA, Interaction and Sibize, as well as stakes in ContinuitySA and CallForce.

Dialogue SA was officially liquidated in April, after the company could no longer stem its losses, while CallForce and ContinuitySA have been sold. Interaction and Sibize are being shut down because both call centres lost major contracts, which meant they were no longer sustainable.

Dialogue's fall from grace began a few years ago, when Dialogue SA started experiencing trying financial times at its Cape Town call centre.

In 2007, the company was growing strongly and adding to its core operations. It reported net profit of R21 million, up from 2006's R15.7 million. However, the following year its fortunes reversed due to the economic slowdown.

Dialogue, which had “more than trebled in size” in the previous two years, reported a net loss of R54 million in 2008, which almost doubled to a loss of R96.5 million in 2009.

Alan Farthing, who took over from Drew in April last year, says Dialogue's demise is “unfortunate”. He explains that Dialogue SA started experiencing difficulties a few years ago as the result of the economic downturn.

Farthing says the company still has outstanding issues to sort out, such as collecting the balance of payment from the Gauteng provincial government after it cancelled Sibize's contract early. The company also has to resolve a labour dispute at Interaction and sort out a supplier claim at Sibize.

Once these issues have been resolved, says Farthing, the board will take the next step. If shareholders agree to wind up the cash shell, the company will be delisted and any cash it has returned to shareholders, he adds.

Dialogue reported a net profit of R49.1 million, which Farthing explains was due to contributions mostly from Sibize, Interaction and ContinuitySA before the units were disposed off.

Farthing says, however, despite the stronger financial position, after the two major contracts were cancelled at the call centres, the group did not have sufficient assets to develop a decent business structure.