27 Jun 2014 07:00
27 June 2014
CDialogues plc
("CDialogues" or the "Company")
Admission to AIM
&
First Day of Dealings
CDialogues, the provider of specialised mobile marketing services to Mobile Network Operators ("MNOs"), announces the admission of its ordinary shares of 1 penny each ("Ordinary Shares") to trading on AIM and the commencement of dealings in its Ordinary Shares under the ticker CDOG.
HIGHLIGHTS
· CDialogues is a growing, profitable and cash generative provider of mobile marketing services to Mobile Network Operators ("MNOs") in emerging markets, principally in the Middle East. The Group has successfully monetized proprietary algorithms to provide value added services to MNOs with the aim of maintaining and increasing subscriber numbers and increasing Average Revenue Per User ("ARPU").
· It has successfully implemented a subscription-based recurring revenue model. As such it generates recurring revenue streams, which it shares with its customers and local operating partners.
· The current financial year has shown significant growth over the same period last year. Turnover for the three months ended 31 March 2014 was €1.92m which is 152 per cent ahead of the same period last year (Q1 2013: €0.76m, FY 2013: €4.6m). Similarly, EBITDA for the first quarter was €0.69m which represents a 208 per cent increase over the prior year (Q1 2013: €0.22m, FY 2013: €1.6m). Operating cash flow remained positive with net cash inflows from operating activities of €0.38m (FY 2013: €0.37m).
· The Company has successfully raised £1.25m via the placing of 588,000 new ordinary shares at a price of £2.12. Funds raised will be used:
o To fund business development and support the acquisition of new contracts in the current and targeted markets
o To set up offices and recruit regional sales teams in current and targeted markets
o To invest in expanding network technology equipment and further enhance its technology platform's data mining and profiling capacity
· On admission, the Company has 6,240,550 ordinary shares in issue
· The market Capitalisation of the Company on Admission at the placing price is £13.23m
The Company's admission document dated 24 June 2014 is available for download from the Company's website: www.cdialogues.com
Pale Spanos, Chief Executive Officer of CDialogues, and George Karakovounis, CFO and Vice Chairman, commented:
"We look forward to using our listing to accelerate growth and develop our business in new markets. This year has started well with sales and profits growing significantly and we anticipate building on this as mobile penetration continues to grow rapidly in emerging markets."
Enquiries:
CDialogues plc Tel: +30 (210) 630 0930
George Karakovounis
Pale Spanos
Strand Hanson Limited Tel: 020 7409 3494
Andrew Emmott
Mirabaud LLP Tel: 020 7321 2508
Peter Krens
Walbrook PR Ltd Tel: 020 7933 8780/
cdialogues@walbrookpr.com
Paul Cornelius Mob: 07866 384 707
Nick Rome Mob: 07748 325 236
BACKGROUND
The Group's business was founded in 2011 in Athens by Pale Spanos and George Karakovounis, the Group's CEO and Vice Chairman/CFO respectively.
Pale Spanos and George Karakovounis have considerable experience in the telecoms and technology industries internationally, and in direct sales and marketing; they formed CDialogues to exploit that experience and their industry networks. Prior to founding CDialogues, Pale and George held the positions of Chief Operations Officer and Chief Financial Officer respectively at InternetQ leaving prior to its flotation on AIM in December 2010.
CDialogues's proprietary algorithms enable MNOs to provide targeted value added services to existing and new subscribers with the aim of maintaining and increasing subscriber numbers and increasing ARPU.
CDialogues is principally active in the Middle East and North Africa. In most of these emerging market economies, mobile phone usage and penetration is growing rapidly. MNOs need to market continually their services to take advantage of this growth and add to their subscriber bases. In addition, in these markets, the majority of MNO customers access mobile phone services through pre-pay rather than contractual arrangements. As a result, such pre-pay subscribers are able to switch between MNOs according to their general preferences or to take advantage of varying promotions offered by the MNOs.
In this environment, CDialogues' services are in demand as they enable MNOs to market directly to such subscribers. The Group's algorithmic software enables it to provide bespoke and dynamic campaigns which create loyalty to a particular MNO through establishing a dialogue between the MNO and the subscriber.
CDialogues provides a proven and profitable method of maintaining and increasing subscriber numbers for its clients. MNOs working with CDialogues receive a share of the income generated by marketing campaigns, typically with CDialogues and its local partners bearing the costs of initiating and operating each marketing campaign.
The dialogue with subscribers can take the form of access to mobile content, information services, competitions or offers. CDialogues is typically given access to certain data relating to the registered subscriber base of a MNO and has developed technologies and specialised marketing techniques which use this data to profile and segment subscribers throughout a campaign according to their preferences, and then accordingly tailors the marketing approach for each subscriber.
STRATEGY
The Group intends to become a leading mobile data analytics and marketing language engineering provider in emerging markets. The Group's strategy is to develop and expand the existing business, moving into new regions and markets in order to increase revenue and generate higher profit margins through scale.
An overview of the Group's strategy and key objectives is as follows:
· Focus primarily in emerging markets where mobile penetration is growing fast, competition between MNOs for market share is intense and there is a strong potential for greater ARPUs, in particular Africa, the Middle East and the Commonwealth of Independent States;
· Diversify the Group's customer base, both internationally and in terms of its MNO partners;
· Maintain relatively low overheads (compared with competitors), so as to retain price advantage. Staff growth will be gradual depending on the requirements of new projects acquired and launched; and
· Use additional funds to accelerate growth - the funds from the Placing will also strengthen the Group's balance sheet.
In the future, the Board may consider it appropriate to make acquisitions. However no such corporate activity is currently envisaged in the near future.
The Group's primary aspiration in the mobile marketing and mobile data analytics industry is to provide best-in-class technology and customer service in an increasingly complex and demanding global market.
CUSTOMER CONCENTRATION AND EXPOSURE TO IRAQ
CDialogues is a young business and has not yet achieved a diverse customer base. In 2013, approximately 95 per cent. of revenues came from Zain Iraq and Zain Kuwait, MNOs within the Zain Group which is a leading mobile telecommunications provider in the Middle East and North Africa. The Directors and the Proposed Directors recognise that CDialogues is currently reliant on these customers and relationships, but are confident that the sources of the Group's revenues in 2014 and 2015 will be materially more diversified. The majority of new projects which are currently being developed are with new MNOs in new territories, albeit many of these will continue to be in co-operation with local partners.
Currently, approximately half of the Group's revenues are generated from its campaigns in Iraq. The pipeline of opportunities which the Company is developing is expected to diversify its sources of revenue, but at the present time the Company is significantly exposed to the Iraqi economy. Iraqi armed forces are currently engaged in heavy clashes with Sunni Islamist militants led by the Islamic State of Iraq and the Levant ("ISIS") across the central and northern parts of Iraq. However, despite this deterioration in the political situation in Iraq, revenues have not suffered a material change. If the political or economic situation in Iraq deteriorates further, this could significantly and adversely affect the business and operating revenue of the Group.
CURRENT TRADING AND PROSPECTS
In the financial year ending 31 December 2013, the Group managed to deliver strong financial results with revenues reaching almost €4.6 million, EBITDA €1.6million, Profit After Tax €1.3 million and Free Cash Flow €0.6 million.
The Group has continued to trade in line with the Board's expectations during the current financial year and has shown significant growth over the same period last year. Turnover for the three months ended 31 March 2014 was €1.92m which is 152 per cent ahead of the same period last year (Q1 2013: €0.76m). Similarly, EBITDA for the first quarter was €0.69m which represents a 208 per cent increase over the prior year (Q1 2013: €0.22m). Operating cash flow remained positive with net cash inflows from operating activities of €0.38m (FY 2013: €0.37m).
In the year to date, the majority of revenues continued to be generated from Zain Iraq and Zain Kuwait. However, Zain Kuwait has become a significantly larger contributor and currently accounts for around 50 per cent. of daily revenues and, in addition, a new campaign launched in May 2014 with another MNO in the Middle East is making good progress.
Looking ahead, the Group has identified a pipeline of potential new contracts, a number of which are currently undergoing preparations for launch in the coming months.
GROWTH PROSPECTS
· CDialogues' software platform allows marketing messages to be tailored dynamically according to how subscribers respond over the course of a marketing campaign.
· Its proprietary software platform combined with its strong relationships provides a robust commercial model which has been thoroughly proven over the last 24 months.
· In most of the Middle East and North African economies, mobile phone usage and penetration is growing rapidly.
· The global mobile industry continues to grow, with the number of global mobile connections forecast to grow from 6.9 billion in 2014 to 8.1 billion in 2018 and annual mobile service revenue forecast to grow from US$968 billion in 2014 to US$1.1 trillion in 2018.
· The mobile messaging market's worth is forecast to reach US$310 billion by the end of 2016 and SMS traffic is expected to reach 8.3 trillion messages in 2015. The Board believes that the market environment, particularly in emerging markets, offers significant potential for the Group's growth prospects in the coming years.
THE BOARD
Mark Horrocks, aged 52 - Non-Executive Chairman
Mark began his career in the City in 1983 as a financial analyst at Guardian Royal Exchange Group plc and went on to manage the UK equity portfolios of the main pension and life funds, which had assets of over £2 billion, until leaving in 1997 to pursue his own interests in the small company marketplace. In 1999, he co-founded and launched the small company investment trust Intrinsic Value plc and is currently a partner in Intrinsic Capital LLP. He has also served on the boards of numerous quoted small companies and is currently a non-executive director of AIM-quoted Immedia Group plc, a company which provides bespoke audio digital networks and music strategies. Mark gained a Bachelor of Arts degree from Manchester Polytechnic in Business Studies.
Palaiologos (Pale) Spanos, aged 37 - Chief Executive Officer
Pale is a co-founder of CDialogues. He has extensive experience in TMT companies in the USA and Europe. He previously served as Chief Operations Officer of InternetQ (prior to its flotation on AIM), with responsibility for its international operations and mobile marketing promotions business, where he contributed substantially to its growth. He previously held several management positions with Upstream SA in Greece, DirecTV, Intel Inc. and Accenture in the USA. He has a track record working in diversified environments with intense operations, utilizing innovation to accelerate business growth. Pale holds a Bachelor degree in Electrical & Computer Engineering from the National Technical University of Athens and a M.Sc. from the University of California, Los Angeles.
Georgios (George) Karakovounis, aged 43 - Vice Chairman & Chief Financial Officer
George is a co-founder of CDialogues. He has more than 10 years of experience in the telecommunications sector holding key financial positions in various listed companies. In 2001, George joined Forthnet SA a leading telecom and satellite subscription TV operator in Greece, initially as Accounting Director and then as group CFO having a key role in the 2006 IPO on the Athens Stock Exchange, which raised €120 million. In 2008, George joined InternetQ assuming the position of CFO and contributed to its growth. He held this position until shortly prior to its AIM flotation in December 2010. He has a proven track record working in complex environments, developing and executing strategies that support business growth. George qualified as a certified accountant in Greece in 1995 and also holds a M.Sc. in Finance from the University of Leicester and a CSI qualification in Investment Management in the UK.
Jeffrey (Jeff) Gordon, aged 58 - Independent Non-Executive Director
Jeff Gordon has more than 36 years' experience in the IT and communications sectors and has a track record in holding executive leadership roles with large corporate entities in the telecoms sector, as well as various executive and non-executive roles with venture backed businesses. Jeff's previous experience includes heading up Motorola's EMEA infrastructure business in which he was responsible for US$1.6 billion in annual revenues and leading 1400 employees. Prior to Motorola he chaired the Unisys European Management Board. Jeff was previously chairman of Axiom Systems, a leading provider of service delivery solutions to the telecommunications industry and Celltick, a leading provider of mobile content discovery and marketing solutions. Jeff has been CEO of OpenCloud Ltd., a creator of software products for telecoms networks, since 2008 and is also non-executive Chairman of T-Tech Ltd., a UK based provider of IT outsourcing solutions to the SME market.