Jamaica’s KLE Group considers capital raise

Directors of Kingston Live Entertainment (KLE) Group Limited said the company is moving towards a significant capital raise which will enable the business to execute a growth plan built around franchisees in major markets.

The KLE Group operates the Tracks and Records restaurant in Marketplace on Constant Spring Road in St Andrew. (Photo: Caribbean Business Report)

The aim, the company said, is to recapitalise the company, retire some of its  long-term debt, establish a smaller format fast-casual concept, expand the ‘corporate-owned’ footprint throughout Jamaica, and focus on franchising through FranJam in the international markets.

 The international franchising will grow through partnerships with investors similar to the UK Franchisee.

The level of fundraising involved in the capital raise was not stated in the management discussion attached to audited results which have just been released.

The Kingston location of Tracks and Records has been open operating for the past nine years. (Photo: Caribbean Business Report)

Franchise infrastructure, directors note has been underutilised in Jamaica, hence the new plan to focus on more experienced partners and deeper markets abroad.

In remarks attached to its 2019 audited results, directors noted that this investor profile requires a different level of support than the smaller single unit franchisee.

KLE absorbed a $4.7 million loss from its associate company T&R Restaurant Systems Limited. (Photo: Caribbean Business Report)

The company is also zeroing in on two additional markets to move in while UK market penetration continues with focus on Toronto and South Florida. Already, they note, there are solid leads with some investors. 

It was noted that while the company has successfully operated the Kingston location of Tracks and Records for the past nine years, with infrastructure existing to operate companion services, this has been underutilised.

KLE said it is targeting two other markets for expansion. (Photo: Caribbean Business Report)

Directors stated, “the franchising model will serve us better in major markets where we can capitalise on the infrastructure and market knowledge of major players already operating in these markets. This has proven very effective with our London franchisee.”

The company ended the year on December 31, 2019 with a loss of $16.8 million, down from losses of $25.7 million the year before.

Total revenue for the 2019 financial year was $224.57 million compared to $219.93 million in 2018, an increase of approximately 2.10 per cent.

Revenue for the Group was driven by its flagship restaurant and management fees.
(Photo: Caribbean Business Report)

Revenue came from flagship restaurant, Tracks and Records Marketplace and management fees earned throughout the year.

Directors said sales from the restaurant performed better than expected given that major construction on Constant Spring Road continued into 2019, as well as the Marketplace location underwent a major renovation to the complex which made it difficult for customers to access the property. 

However, the company absorbed a $4.7 million loss from its associate company T&R Restaurant Systems Limited T/A Franchise Jamaica which was a significant contributor to it net loss position.

FranJam’s revenue totalled $30 million, up from $19 million in 2018.
(Photo: Caribbean Business Report)

Franchise Jamaica reported total revenues of $30 million for the 2019 year in comparison to $19 million in 2018.

Total assets increased by $15.6 million over 2018 to $214.49 million in 2019 linked to an addition of  $9.75 million in investments during the year.

Directors noted the company’s positive working capital and current ratios as well as improvements in its liquidity for the 2019 financial period. These positive ratios are expected to further improve in the short to medium term.