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Scots online firm becomes investment shell

Cupid ends dating relationship and sells assets

Bill DobbieCupid, the Scottish online dating firm that enjoyed soaring success immediately after floating just four years ago, is selling all its remaining trading assets and turning itself into an investment company.

The Edinburgh-based business, co-founded as Easydate in 2005 by Scots entrepreneur Bill Dobbie (pictured) and Ukrainian tycoon Max Polyakov, will change its name to Castle Street Investments and strip down to just seven employees.

It sold its casual dating businesses Benaughty.com and Flirt.com in July 2013 and has agreed to revise the sale price of those assets to Grendall from £43.1m to £35.6m

It is now  selling the remaining businesses in Britain and Ukraine, including the online sites UniformDating and LoveBeginsAt,  to Tradax IP Licensing Ltd; Together Networks Holdings Limited; and Together Networks Limited, for a total of £3 million.

The company said today it is burning cash and the pace of change in the industry means it will not break even in the timeframe expected. The sale of the remaining assets follows a strategic review.

Revenue attributable to the rump business – called the traditional dating assets – fell from £22m for the whole of last year to £7.2m for the six months to June this year. It racked up a £1.2m loss in the first half against a profit of £200,000 for the 12 months in 2013.

The company has not been without its problems. It was forced to change its original Easydate name following objections from EasyJet founder Stelios Haji-Ioannou.

Apart from technological change in the sector, chief executive Phil Gripton was forced to move quickly to recover ground lost when the company was accused last year of using fake profiles. The company was cleared by an investigation led by KPMG but investors became twitchy. From flotation on the Alternative Investment Market in June 2010, shares soared from 60p to 250p by September 2011, creating personal fortunes for its founders.

But the shares have plummeted and were trading this morning at 23p against a year high of 69.5p.

 It is now involved in a race against time to acquire businesses or face being wound up. Under stock market rules it has 18 months to conclude a reverse takeover and continue to trade its shares on AIM.

If shareholders do not back the changes at a general meeting on 23 December it will mean a phased closure of the dating sites.

The group’s data adtech business, Mimir Data, is said to be “making promising steps but will not generate any significant revenue until 2016”.  This business will need £250,000 in the first half of 2015 to keep going.

Cupid has set aside £1.7m to cover the costs of closing out the operations in UK, USA, France and Ukraine along with terminating various operating contracts.

Ian McCaig and Russell Shaw will stand down as non-executive directors.  George Elliott will remain as independent non-executive Chairman and Dobbie will remain as non-executive director.

Gripton intends to continue leading the company as executive director and Niall Stirling will remain as executive director and company secretary. Further board changes are expected.

In a statement to the London Stock Exchange, Cupid said: “The board believes that the disposal and related reduced and accelerated payment schedule for the sale of the casual dating business is in the best interests of shareholders as it enables a swift exit from the dating business and therefore the ability to stem trading losses.

“It reduces the period during which payments will be made and the risk of default and enhances the security arrangements; and given the unstable political situation in Ukraine allows an immediate withdrawal from that country and a significant reduction in risk.

“It also supports an earlier transition to Investing Company status and a more substantial and earlier return of proceeds to Shareholders than would have been possible under the existing deferred consideration payment schedule.

 

 

 

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