CDIALOGUES PLC CDialogues plc (AIM: CDOG), the provider of mobile marketing solutions to Mobile Network Operators ('MNOs'), is pleased to announce its unaudited Half Yearly Report for the six months ended 30 June 2015.
Financial highlights Revenues increased 31% to €5.31m (1H 2014: €4.05m)
o Subscription revenues accounted for 82% of total revenues (1H 2014: 79%)
EBITDA increased 12% to €1.62m (1H 2014: €1.44m)
Profit before tax increased 8% to €1.39m (1H 2014: €1.29m)
Earnings per share of €0.217 (1H 2014: €0.227)
Free cash flow* increased 214% to €1.47m (1H 2014: €0.47m)
Net cash as of 30 June 2015 at €3.70m (31.12.2014: €2.42m) increased by 53%
Interim dividend of 1.25p
*After development costs and capital expenditure and excluding one-off items relating to AIM listing
Operational highlights During the period, the Company operated mobile marketing projects in five countries across
Middle East and Southeast Asia
Delivery of mobile marketing projects to a total subscriber base of 20 million customers
Continuous and successful implementation of subscription-based recurring revenue model
The Board has declared an interim dividend for the year ending 31 December 2015 of 1.25 pence per share which will be paid on 30 October 2015 to shareholders on the register on 2 October 2015. The Company's shares will go ex-dividend on 1 October 2015.
Pale Spanos, Chief Executive Officer, commented: 'We continue to focus on extending our geographic reach and establishing relationships with new MNOs via our growing network of regional representatives. Whilst it has taken longer than we anticipated to commence some new contracts, we continue to have a strong pipeline of new projects and remain excited by the potential scalability of our services and customer base' Enquiries:CDialogues Plc | Tel: +30 2106 300 930 |
George Karakovounis | |
Pale Spanos | |
Allenby Capital Limited | Tel: 0203 328 5656 |
David Hart | |
Alex Brearley | |
Walbrook PR Ltd | Tel: 020 7933 8780 |
Paul Cornelius | cdialogues@walbrookpr.com |
Nick Rome |
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About CDialogues
CDialogues provides mobile marketing solutions enabling Mobile Netwrok Operators (MNOs) to retain and acquire market share, increase average revenue per user (ARPU) and reducing subscriber churn.
The Company's products and services deliver fully managed solutions, utilizing advanced Data analytics techniques combined with Linguistic engineering marketing, to build awareness and multiply sales and opt- ins of promotional offerings and other mobile content being offered by the MNOs.
The solutions designed by the Company, are tailored and served with the appropriate Linguistic format, to each individual mobile network subscriber typology and geography it operates in, using its proprietary software and scalable infrastructure.
The majority of CDialogues' revenues are derived from a recurring subscription-based revenue model, which has been pioneered by the Company. As a result, the Company benefits from incremental cash flow growth from each new campaign customer and mobile network subscriber.
The Company's near-term focus is on growing both its customer base and expanding its geographic footprint in selected markets in the Middle East, East Africa, Eastern Europe and Latin America, where mobile device penetration and mobile network usage is growing rapidly.
CDialogues has been profitable and cash flow positive since commercial operations began in early 2012.
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CHIEF EXECUTIVE OFFICER REVIEW
We are pleased to report our financial results for the six months ended 30June 2015.This was a very productive period for the Company as we built on the momentum achieved last year. Growing revenues, profits and cash generation were driven by increases in subscriber numbers, the number of active campaigns and our extended geographic reach.
This time last year we were new to the market and were bedding in our position as a public entity having joined AIM in June 2014. The focus since then has been on building relationships with MNOs, moving into new territories and diversifying our geographic reach. At the time we joined AIM, our sales were derived from a small number of contracts and territories. As such it was a key objective to diversify our revenue streams via successful market penetration. During the first half of 2015 we operated in five countries across the Middle East and Southeast Asia.
Our focus remains on growing our presence in the Middle East, East Africa, Eastern Europe and Latin America, where subscriber churn has traditionally been high due to the fact that mobile phone subscribers typically utilise pre-pay mobile phone tariffs, making these markets price sensitive.
Our products and services deliver fully managed solutions, utilizing advanced data analytics techniques combined with linguistic engineering marketing, to build awareness and multiply sales and opt-ins of promotional offerings and other mobile content being offered by the MNOs. As such, our solutions are tailored and served with the appropriate linguistic format, to each individual mobile network subscriber typology and geography the Company operates in, using its proprietary software and scalable infrastructure.
By providing these services through our software and marketing tools, MNOs have for the first time been able to facilitate subscriber growth and increase customer loyalty as well as potential revenues. In order to boost our presence, we grew our regional reach and established relationships with a number of new MNOs, enabling us to increase subscriber numbers at a low marginal cost. As a result, during the period we operated mobile marketing projects for seven MNOs addressing a total subscriber base of 20 million customers. Currently we operate four mobile marketing projects in two countries across the Middle East.
The opt-in nature of our model and resultant recurring subscription-based revenue streams provide high levels of visibility. In addition this ensures that the Company benefits from incremental cash flow growth for each new campaign customer and mobile network subscriber.
CDialogues announced a trading update on 18 September 2015. In this it stated that the Company has continued to develop its operations during the final third of the year, focusing on extending its customer network and accelerating subscriber growth.
However, whilst the momentum achieved to date has been pleasing, some projects which were due to commence in the final quarter of the current financial year have been delayed, due to decisions taken by the MNOs regarding the potential start date. As a result, the Board now anticipates that the Company will generate revenue and EBITDA in the second half of the current financial year similar to that achieved in the first half.
Notwithstanding, the Board remains confident that the Company will continue to expand its client base, subscriber numbers and geographical footprint. CDialogues remains well placed to capitalise on the long- term growth opportunities across its addressable markets. Given the strong existing pipeline of new projects and indicative launch dates, the Company expects to announce a number of new launches over the coming quarters.
The Board is pleased to announce today an interim dividend for the year ending 31 December 2015 of
1.25 pence per share, demonstrating its confidence in the ongoing opportunities available to CDialogues.
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CHIEF FINANCIAL OFFICER REVIEW
In the six month period ended 30 June 2015, the Company was able to further leverage its position within a number of countries. The business model, which derives higher gross margins as campaigns mature and benefits incrementally from the addition of each new campaign customer and mobile network subscriber, continued to demonstrate its viability and scalability during the period.
We are delighted with another six months of strong financial performance, which resulted in the Company ending the period with a strong balance sheet and, as such, it remains well placed to grow further and continue its progressive dividend policy.
Revenues for the six months to 30 June 2015 increased 31.2% to €5.31m (1H 2014: €4.05m) as a result of
the increased number of projects the Company operated within the period.
Gross profit was up by 22.0% to €2.01m (1H 2014: €1.65m) representing a gross margin of 37.8% (1H
2014: 40.6%). The reduction in gross margin resulted from increased cost of sales as new projects came on stream. Administration and selling & distribution costs were €0.61m (1H 2014: €0.35) representing
11.4% of revenues (1H 2014:8.6%).
Operating profit (after depreciation and amortisation) was up by 8.2% to €1.40m (1H 2014: €1.30m) representing a margin of 26.4% (1H 2014: 32.0%). While variable costs increase with each new project, due to marketing and associated incentive costs, our subscription revenue model and 'opt-in' nature of our service ensures we have high revenue visibility as the number of participants in each project increases.
EBITDA increased by 12.4% to €1.62m (1H 2014: €1.44m) representing a margin of 30.4% (1H 2014: 35.6%
and FY2014: 29.6%).
Profit before tax increased by 7.7% to €1.39m (1H 2014: €1.29m) with a margin of 26.2% (1H 2014:
31.9%) while basic earnings per share were €0.217 (1H 2014: €0.227).
Operating cash flow remained strong with net cash flows before changes in working capital increased by
13.8% to €1.64m (1H 2014: €1.44m) representing over a 100% of EBITDA. After taking into account
working capital movements, cash flow from operating activities increased by 181.3% to €1.96m (1H 2014:
€0.70m) as a result of the efficient working capital management. Cash flows used in investing activities
(which comprise primarily investment in software development) were € 0.49m (1H 2014: 0.23m).
Free Cash Flow (being net operating cash flows less net cash flows used in investing activities) was up by
213.6% to €1.47m (1H 2014: €0.47m) which illustrates the ability within the business to manage working capital requirements as the business expands.
As a result, net cash as of 30 June 2015 was €3.70m (31.12.2014: €2.42m) increased by 53.0%, which provides a firm foundation for further growth. The Company (and its subsidiaries) maintains over 90% of its cash in banks in the United Kingdom and does not generate any revenues in the Greek market.
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2015
(Amounts in Euro, except share information, per share data and unless otherwise stated)
Notes Period ended 30 June 2015 Unaudited Period ended 30 June 2014 Unaudited Year ended 31 December 2014 AuditedRevenue 5,312,384 4,048,286 9,924,449
Cost of sales 5 (3,304,675) (2,403,225) (6,401,796)
Administrative expenses 5 (319,207) (116,650) (353,167) Selling and distribution costs 5 (287,771) (233,301) (543,135) Other operating income - - 1,758
Operating profit 1,400,731 1,295,110 2,628,109Finance income 27 638 1,660
Finance costs (11,680) (5,803) (15,934)
Income tax expense 7 (37,113) (35,463) (60,924)
Other comprehensive income to be reclassified to profit or
loss in subsequent periods:
Exchange differences on translation of foreign operations 209 7,693 (1,349) Net loss on available-for-sale financial assets - - (80,212)
209 7,693 (81,561)
Net other comprehensive income to be reclassified to profit or loss in subsequent periods 209 7,693 (81,561)Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Actuarial loss - - (1,223) Income tax effect - - 318
- - (905)
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods - - (905) Other comprehensive income/(loss) for the period, net of tax 209 7,693 (82,466)Equity holders of the parent 1,351,965 1,254,482 2,552,911
Equity holders of the parent 1,352,174 1,262,175 2,470,445
Basic, profit for the period attributable to ordinary equity
holders of the parent 8 0.2166 0.2269 0.4336
Diluted, profit for the period attributable to ordinary
equity holders of the parent 8 0.2154 0.2265 0.4313
The accompanying notes on pages 9 to 17 are an integral part of these interim financial statements. All results are derived from continuing operations.
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
Consolidated statement of financial position as at 30 June 2015(Amounts in Euro, except share information, per share data and unless otherwise stated)
ASSETS Non-current Assets Notes 30 June 2015 Unaudited 30 June 2014 Unaudited 31 December 2014 AuditedProperty, plant and equipment 9 37,671 43,793 37,185
Intangible Assets 10 1,020,459 638,714 749,440
Deferred tax assets 16,286 18,695 25,880
Trade and other receivables 11 9,508 9,508 9,508
Trade and other receivables 11 2,493,117 2,069,183 3,952,938
Available for sale financial assets 22,230 102,443 22,230
Cash and cash equivalents 3,702,381 1,752,480 2,419,927
Issued share capital 12 75,213 24,213 75,213
Share premium 12 579,583 570,673 565,572
Reserves 21,862 95,679 16,745
Retained earnings 5,328,188 2,919,800 4,156,004
Employee benefit liability 23,905 13,514 16,505
Trade and other payables 13 1,207,190 919,392 2,311,912
Income tax payable 65,711 91,545 75,157
The accompanying notes on pages 9 to 17 are an integral part of these interim financial statements.
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
Consolidated statement of changes in equity for the period ended 30 June 2015(Amounts in Euro, except share information, per share data and unless otherwise stated)
Balance at 1 January 2014 | 15,000 | - | 93,743 | 1,659,561 | 1,768,304 |
Profit for the period | - | - | - | 1,254,482 | 1,254,482 |
Other comprehensive income | - | - | - | 7,693 | 7,693 |
Total comprehensive income | - | - | - | 1,262,175 | 1,262,175 |
Issue of share capital net of issue cost | 9,213 | 570,673 | - | - | 579,886 |
Transfers to reserves | - | - | 1,936 | (1,936) | - |
Balance at 30 June 2014 (Unaudited) | 24,213 | 570,673 | 95,679 | 2,919,800 | 3,610,365 |
Profit for the period | - | - | - | 1,298,429 | 1,298,429 |
Other comprehensive loss | - | - | (80,212) | (9,947) | (90,159) |
Total comprehensive income | - | - | (80,212) | 1,288,482 | 1,208,270 |
Issue of share capital net of issue cost Share capital increase through capitalization of profits | - 51,000 | (5,101) - | - - | - (51,000) | (5,101) - |
Transfers to reserves | - | - | 1,278 | (1,278) | - |
Balance at 31 December 2014 (Audited) | 75,213 | 565,572 | 16,745 | 4,156,004 | 4,813,534 |
Profit for the period | - | - | - | 1,351,965 | 1,351,965 |
Other comprehensive income | - | - | - | 209 | 209 |
Total comprehensive income | - | - | - | 1,352,174 | 1,352,174 |
Share-based payments | - | 14,011 | - | - | 14,011 |
Transfers to reserves | - | - | 5,117 | (5,117) | - |
Dividends (Note 14) | - | - | - | (174,873) | (174,873) |
Balance at 30 June 2015 (Unaudited) | 75,213 | 579,583 | 21,862 | 5,328,188 | 6,004,846 |
The accompanying notes on pages 9 to 17 are an integral part of these interim financial statements.
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
Consolidated statement of cash flows for the period ended 30 June 2015(Amounts in Euro, except share information, per share data and unless otherwise stated)
Cash flows from Operating Activities Notes Period ended 30 June 2015 Unaudited Period ended 30 June 2014 Unaudited Year ended 31 December 2014 AuditedProfit before income tax 1,389,078 1,289,945 2,613,835
Adjustment to reconcile profit before tax to net cash flows
Non-cash items:Depreciation of property, plant and equipment 5 7,201 8,207 16,050
Amortization of intangible assets 5 208,623 134,477 294,063
Share-based payment expense 14,011 - - Finance income (27) (638) (1,660)
Finance costs 11,680 5,803 15,934
Movements in provisions and provisions for
employee benefits 6 7,400 1,706 3,474
(Increase)/Decrease in trade and other accounts
receivable 1,459,821 (938,194) (2,977,503) Increase/(Decrease) in trade and other accounts
payable (1,104,722) 209,169 1,815,756
Income tax paid (36,759) (14,976) (64,296)
Purchase of property, plant and equipment | (7,687) | (2,091) | (3,326) |
Purchase of intangible assets | (479,642) | (225,589) | (495,900) |
Interest received | 27 | 638 | 1,660 |
Net cash flows used in investing activities | (487,302) | (227,042) | (497,566) |
Proceeds from the issuance of share capital net of issue costs | 638,399 | 574,785 | ||
Interest paid | (11,680) | (5,803) | (15,934) | |
Dividends paid to equity holders of the parent | 14 | (174,873) | - | - |
Net cash flows from/(used in) financing activities (186,553) 632,596 558,851 | ||||
Net increase in cash and cash equivalents | 1,282,451 | 1,101,053 | 1,776,938 | |
Cash and cash equivalents at beginning of year | 2,419,927 | 643,717 | 643,717 | |
Net foreign exchange differences | 3 | 7,710 | (728) | |
Cash and cash equivalents at end of the period | 3,702,381 | 1,752,480 | 2,419,927 |
The accompanying notes on pages 9 to 17 are an integral part of these interim financial statements.
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
Notes to the unaudited interim consolidated financial statements for the period ended 30 June 2015 (Throughout the notes to the financial statements all amounts are presented in Euros except share information, per share data and unless otherwise stated) 1. Corporate information
The interim consolidated financial statements of CDialogues plc and its subsidiaries (collectively, the
'Group') for the six months ended 30 June 2015 have been prepared on the basis set out below.
CDialogues plc (the 'Company') was incorporated in England and Wales as a Limited Liability Company in June 2011 and during 2014 as a consequence of its listing on AIM became a public company limited by shares.
The operations of CDialogues Plc are not affected by seasonal variations.
The interim report for the six months ended 30 June 2015 was approved by the Directors on 18 September
2015.
The interim consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and issued by the International Accounting Standards Board (IASB).
The interim consolidated financial statements have been prepared on a historical cost basis, except for, available-for-sale (AFS) financial assets that have been measured at fair value.
The interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The Directors have assessed the Group to continue operating as a going concern and believe that the preparation of these financial statements on the going concern basis is appropriate.
The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2014.
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2014, except for the adoption of new standards and interpretations effective as of 1 January 2015. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The nature and the effect of these changes are disclosed below. Although these new standards and amendments apply for the first time in 2015, they do not have a material impact on the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group. The nature and the impact of each new standard or amendment are described below:
IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
contributions to the periods of service. This amendment is effective for annual periods beginning on or after 1 July 2014. This amendment is not relevant to the Group, since none of the entities within the Group has defined benefit plans with contributions from employees or third parties.
The IASB has issued the Annual Improvements to IFRSs 2011 - 2013 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January
2015.
IFRS 3 Business Combinations:This improvement clarifies that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself.
IFRS 13 Fair Value Measurement:This improvement clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contracts accounted for within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation.
IAS 40 Investment Properties:This improvement clarifies that determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as defined in IAS 40 Investment Property requires the separate application of both standards independently of each other.
Standards issued but not yet effective and not early adoptedIn addition to those standards and interpretations that have been disclosed in the financial statements for the year ended 31 December 2014, the following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2015 and have not been early adopted from the Group:
IAS 16 Property, Plant & Equipment and IAS 38 Intangible assets (Amendment): Clarification of
Acceptable Methods of Depreciation and Amortization
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 11 Joint arrangements (Amendment): Accounting for Acquisitions of Interests in Joint
Operations
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
IAS 27 Separate Financial Statements (amended)
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and
Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception
(Amendments)
IAS 1: Disclosure Initiative (Amendment)
The IASB has issued the Annual Improvements to IFRSs 2010 - 2012 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1
February 2015. Management estimates that those amendments will not affect the financial statements except from possible additional disclosures.
IFRS 2 Share-based Payment
IFRS 3 Business combinations
IFRS 8 Operating Segments
IFRS 13 Fair Value Measurement
IAS 16 Property Plant & Equipment
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CDialogues Plc - Financial Statements in accordance with IFRS
30 June 2015
IAS 24 Related Party Disclosures
IAS 38 Intangible Assets
The IASB has issued the Annual Improvements to IFRSs 2012 - 2014 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1
January 2016. These annual improvements have not yet been endorsed by the EU. Management estimates that those amendments will not affect the financial statements except from possible additional disclosures.
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 7 Financial Instruments: Disclosures
IAS 19 Employee Benefits
IAS 34 Interim Financial Reporting
4. Operating segment information
For the purpose of IFRS 8, the chief operating decision-maker ('CODM'), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. The CDialogues Group is a provider of Mobile Marketing services. The Group's revenue and profit before taxation were all derived from its principal activity. Over 95% of revenues from the period were derived from external customers based in the Middle East which is considered as one geographical segment. Based on the above considerations, there is considered to be one reportable segment: mobile marketing services in the Middle East. Internal and external reporting is on a consolidated basis, with transactions between Group companies eliminated on consolidation. Therefore the financial information of the single segment is the same as that set out in the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated statement of cash flows.
Note | Period ended 30 June 2015 | Period ended 30 June 2014 | Year ended 31 December 2014 | |
Payroll and related costs | 6 | 190,834 | 153,000 | 266,845 |
Depreciation of property, plant and equipment | 9 | 7,201 | 8,207 | 16,050 |
Amortization of intangible assets | 10 | 208,623 | 134,477 | 294,063 |
Operating lease payments | 34,599 | 39,064 | 73,888 | |
Cost of mobile marketing projects | 3,058,304 | 2,260,498 | 6,193,677 | |
Connectivity & hosting costs | 64,864 | 64,024 | 124,712 | |
Auditors' remuneration | 21,832 | 9,750 | 58,299 | |
Third parties fees | 199,196 | 8,270 | 135,948 | |
Directors' salaries and fees | 91,455 | - | 116,373 | |
Traveling expenses | 63,487 | 24,053 | 46,255 | |
Net foreign exchange differences | (79,018) | 8,783 | (124,199) | |
Other | 50,276 | 43,050 | 96,187 | |
Total | 3,911,653 | 2,753,176 | 7,298,098 |
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