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Cupid PLC (CSI)

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Monday 25 March, 2013

Cupid PLC

Comment re press speculation and trading update

RNS Number : 7245A
Cupid PLC
25 March 2013
 



Date:

25 March 2013

On behalf of:

Cupid plc ('Cupid', the 'Company' or the 'Group')

Embargoed until:

0700hrs

 

Cupid plc

Further comment regarding press speculation and trading update

 

Press Speculation

In response to recent comments and market speculation and further to the Company's announcement on 22nd March, Cupid plc strongly refutes all allegations that its business model or practices and procedures are in any way fundamentally flawed, inappropriate or illegal.

 

The directors believe that there has been a great deal of misrepresentation and ill-informed speculation in the marketplace and the Company is currently taking legal advice on these matters.

 

Following the executive directors' investigation into the allegations across various media, the Board unanimously concluded that the Company does not employ members of staff to create fake profiles, impersonate users or use any other dubious practice to encourage customers to take out subscriptions or in order to retain existing customers, nor would the Company condone, promote or persuade employees to do so.


To address the two distinct sets of activities being discussed in the marketplace:

 

The first relates to allegations that Cupid uses fake profiles to entice prospective users to take out or extend subscriptions; Cupid does not behave in this manner and the Company does not condone any practices where employees use misleading activities to entice customers into new or to renew subscriptions.

Like many online companies, Cupid employs a Motivation Team as part of its focus on customer service in certain territories and brands; this team carries out mystery shopping, monitors and interrogates the sites in order to detect and identify any technical or product issues proactively, and moderates chat rooms and forums. To reaffirm, the internal investigation, launched in response to recent allegations, concluded that this team does not communicate with free members, nor does it exist to entice paying subscribers to renew. The team is not incentivized to convert or extend memberships.  Cupid strives to ensure that all employees behave in an appropriate and ethical manner when interfacing with customers and the Board's internal investigation has examined this extensively. It has concluded that our teams work hard to provide a high level of customer service and we are very proud of the Company's workforce in the Ukraine, UK and all parts of the world. Indeed the workforce in the Ukraine has already achieved Investors in People accreditation.

 

The second relates to scammers in the online industry in general. Unfortunately, scamming exists across a number of online business models. This is targeting by sophisticated groups who focus on many sectors including the dating industry.  Scammers do this to get accurate e-mail information to be sold on and to get access to private information including financial information.  It should be emphasised that scamming exists across the entire online industry and is not something that is specific to Cupid. Scammer activity can give users the impression they are being 'bombarded' with contact and such poor user experience can influence reputation, churn and user reviews. Cupid continues to invest in increasingly sophisticated tools and systems to discourage, deter and eliminate this type of practice, and Cupid intends to do more in this area to ensure that its sites are populated with genuine users.

We continue to invest further in customer service and are focused on improving the quality of our customers' interactions. The number of customers having a good experience with Cupid continues to grow year on year with much greater levels of positive interaction. To illustrate this, queries from customers fell by 47% in Q4 2012 compared to the previous year.

 

In response to recent accusations that the Company is profiting from the telephone numbers used to cancel some of its subscriptions, the Company operates toll free numbers for callers from the USA and Australia and a low cost 0844 number for the UK.  The operation of these lines is a service to our customers at a financial cost to the Company, not a source of revenue.

 

As announced on 5th March, in addition to having conducted our own review and with the unfounded speculation continuing, the Company has already commissioned an independent audit of its customer database and database management processes by a Big Four accounting firm. It is anticipated that the findings of the audit will be provided to the market by the end of Q2.

 

Finally, to eliminate any speculation on the subject of related party transactions, the Company has reached agreement with Interactive Dating & Entertainment Limited (formerly Amorix Ltd) for repayment of the full current balance outstanding of £2.2m within the next three months. As a result, the Company will see a cash inflow of £2.2m before the end of June, 2013, 54 months ahead of the previously announced repayment date.

 

Trading Update

Trading is ahead of where the business was at this time last year. Revenues are more than 20% higher than in the same period of last year and the Company has a strong financial position with cash at over £9m following the £3m share buyback, the marketing investment made in Q1 and having made the £2m deferred purchase consideration payable for the acquisition of NSI Holdings Ltd, trading as Uniform Dating. As stated at Cupid's Preliminary Results announcement on 5th March, the Company has a well-developed and robust product platform, both of which provide the Board with confidence in our ability to continue to execute on our growth strategy.

 

 

For further information please contact:

 

Cupid plc

Tel: +44 (0)131 526 3600

Bill Dobbie, CEO

Niall Stirling, CFO

 

Peel Hunt LLP (Nominated Adviser and Joint Broker)

Tel: +44 (0)207 418 8900

Richard Kauffer

Daniel Harris

 

Numis Securities Ltd (Joint Broker)        

Alex Ham

Nick Westlake

 

Redleaf Polhill

Tel: +44 (0)207 260 1000

Emma Kane

Rebecca Sanders-Hewett

David Ison

Tel: +44 (0)20 7382 4730

cupid@redleafpr.com

 

Notes to Editors

 

§  Cupid plc listed on AIM in June 2010 and is a leading provider of online dating services

 

§  Cupid has built significant and growing revenues in 15 countries.

 

§  Cupid offers a wide variety of online dating services allowing members to interact with each other and access the content available on the Group's websites. These websites are intended to appeal to dating users of diverse ages, cultures and social interest groups. The Group's most heavily visited websites include www.cupid.com, www.flirt.com, www.benaughty.com and www.girlsdateforfree.com. The Group also promotes the niche brands www.datingforparents.com, www.indiandating.com, www.loveagain.com and www.uniformdating.com.

 

§  Cupid plc products are available across the web and also via mobile application stores.

 

§  Further information on the Company can be found at www.cupidplc.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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