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Cupid Says "All Options" Being Considered As Loss Widens

Tue, 23rd Sep 2014 09:46

LONDON (Alliance News) - Shares in online dating operator Cupid PLC were trading lower Tuesday after it said its loss widened in the first half of 2014, despite keeping a very tight lid on costs, as the company tries to turn the business around and said its reviewing whether to sell some of its subsidiaries or assets.

Cupid posted a pretax loss of GBP3.0 million for the six months to June 30, compared with a pretax loss of GBP2.8 million a year earlier. It generated GBP7.2 million in revenue, compared with GBP43.4 million in the first half of 2013, when it still had its casual businesses.

Last month, Cupid said it was expecting to post a smaller-than-previously-anticipated loss for the first half of the year, as it continued to manage costs tightly, even though it said revenue would be slightly lower than its earlier expectations.

The dating operator swung to a loss in 2013 and saw a significant drop in revenues, as a result of selling off its casual businesses, which represented 70% of its overall revenue. The casual businesses were aimed at people who want to flirt and included the sites BeNaughty.com, Flirt.com and CheekyLovers.com.

Since then, the internet dating company has commenced plans to restructure the business, having outlined a three-year strategic plan back in April.

Cupid said Tuesday that it has now initiated a review of strategic options, in order to help with its cash burn.

"At this stage, all options available to the company are being considered including further cost reductions and the disposal of certain subsidiaries or assets. However, there can be no certainty that any offers will be made, any sales concluded, nor as to the terms of any offer or sale," said Chairman George Elliott in a statement.

Cupid also said it now expects to be cash generative in the fourth quarter, after taking into account the deferred proceeds from the sale of its casual assets. It has previously guided for a positive run rate for profits when it enters 2015.

"After reviewing the outlook for the next six months, the board now believes that the company will be cash generative, after including the deferred proceeds from the sale of the casual assets in the fourth quarter, although a positive run rate for profitability will be later than anticipated," the company said.

"Revenue is expected to be around GBP12 million for the full year. We will continue to control and reduce costs aggressively in the balance of year and expect the adjusted Ebitda loss in the second half to be less than in the first half. Closing cash is expected to be in excess of GBP9 million," it added.

The company said it made significant operational progress in the first six months, having delivered on a series of key products and initiatives.

"Given the value being created by adtech and the alternative dating models we are well positioned to accelerate our move into this new landscape," said Elliott.

The company is currently preparing for the launch of a new mobile matchmaking app called 'Tangle', which it plans to release in October.

"We have a number of key activities planned in the second half. We will be busy with targeted product launches and initiatives as we look to enhance the core dating offering," the company said.

It said the first product to launch on its newly built platform will be Uniform Dating USA, which it said will launch in early October as a mobile-only application with a more flexible payment model.

Cupid shares were trading 6.2% lower Tuesday morning at 30.50 pence.

By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty

Copyright 2014 Alliance News Limited. All Rights Reserved.

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