KLE Group Limited (KLE) has temporarily restructured its operations in order to eliminate the cost of a chief executive officer until the company returns to stability.
Following the company’s board meeting on November 6, 2020, KLE advised that the decision to restructure its management team aims “to adjust the cost side of the business to better align with the new revenue realities facing the company, particularly, as a result of the corona[virus] pandemic’s impact on their business.”
In the interim, the company’s management will become the responsibility of two new board committees tasked with overseeing the operations of the Restaurant Division and another for the Real Estate Division.
The Restaurant Division Sub-Committee will include directors David Shirley, Normal Peart, Joe Bogdanovich, and Marlon Hill, with Gary Matalon as chairman.
The membership of the Real Estate Division Sub-Committee will comprise Chairman David Shirley and directors Gary Matalon, Zuar Jarrett, Stephen Shirley, and Joe Bogdanovich.
Gary Matalon, who previously served as CEO, will continue to oversee franchise opportunities and other opportunities for growth, KLE noted.
The changes took effect on Monday, November 23, 2020, and “will allow the company to alleviate the burden of the executive costs of a CEO until the external environment stabilises and more reasonable predictions can be made on the way forward”.
The notice from the board said that the newly implemented structure is subject to revision in the coming months for appropriateness as things evolve.
The company reported net losses of JM$20.9 million for the quarter ended September 30, 2020, an increase over losses of JM$3.3 million for the corresponding period in 2019. For the nine-month period ended September 30, 2020, accumulated losses were JM$65.1 million compared to losses of $2.7 million in September 2019.
Third-quarter revenue was JM$27.4 million, a decrease from JM$52 million in September 2019. For the nine months ended September, total revenue was $107,85 million, down from $210,17 million in revenue posted in September 2019.
KLE started restructuring its senior management team at mid-year 2020, noting that changes made will have “a positive impact on the financial performance of the business in Q3 without jeopardising the operating standards we have worked so hard to build”.
Matalon said then that the company is reporting a loss from operations as a direct result of the bad debt write-off and the drastic decline in revenues in the quarter due to the coronavirus pandemic.
At the end of its second quarter, in June, the company reported negative cash flow from operations and investing activities due mainly to the purchase of assets and increases in advances made to an associated company. There was, however, a positive cash flow from financing activities due to a related party loan.
Altogether, the company has reported a net decrease in cash and cash equivalents at the end of the period of approximately JM$4.98 million. At the end of September, cash and cash equivalents were a negative JM$9.68 million compared to JM$3.2 million for the same period in 2019.
Matalon commented at the end of the June quarter that the company’s focus remained on cost containment “while we rework our product and brand to enable the company to thrive in the new realities facing full-service restaurants”.
For the months April to June, the Montego Bay outlet remained closed while the Kingston operation was open for delivery and take-out only.
Some of the expense-reduction strategies employed then included lay-off of team members, mandatory salary cuts for all staff, decommissioning of all heavy-duty equipment.