Famous Nightclub which was operated by Kingston Live Entertainment Limited (KLE) at its location in Portmore, St Catherine, was sold in January this year. The sale was disclosed in year-end financials published this week.

The company continues to restructure its operations with a view to regaining profitability. The largest shareholder with 23.17 per cent of the company is Josef Bogdanovich, the investor who recently bought the rights to Jamaica’s largest reggae show, Reggae Sumfest, and CEO of Downsound Record.

In second place is Gary Matalon 16.07 per cent of shareholding. Other top shareholders include the Gleaner Company and Supreme Ventures Ltd.

Attempts to find out from directors who was the new owner and the price at which the Portmore property was sold were not successful up to press time.

The entertainment group, which made losses of $64 million for the year ended December 2015, compared to losses of $34 million in 2014, said in its year-end report that it is now going full speed ahead with its restaurant franchise model.

The Group operated Famous Nightclub and a restaurant under the brand of Tracks and Records in the reporting year. KLE Group also has 100 per cent shareholding in T and R Restaurant Systems Ltd trading as Franjam which was formed to own, develop, manage and license ‘Tracks & Records’-themed restaurants, as well as manage the future growth, franchising and licensing of other ‘Tracks & Records’-themed restaurants.

The operations of the Famous Nightclub was discontinued prior to its sale and the space leased for events instead of as a nightclub open to the public for the entire week. Substantial progress towards a sale was made before the end of 2015, and the disposal was completed in January 2016, it is noted in the financials.

The group notes that lease commitments in relation to Famous Nightclub set to expire on 30 April 2021 were terminated by notice, effective 31 January 2016. Resulting from the early termination of the lease, KLE is indebted to the lessor in the amount of $20.8 million.

Subsequently, KLE agreed that in settlement of the debt KLE will transfer to the lessor certain items of equipment and material owned by KLE located in the leased premises and formerly used in the operation of the Famous Nightclub together with the benefit of leasehold improvement done by KLE at its expense at the leased premises, it was also noted in the financials.

Previously, on 12 March 2014, Fiction Lounge ceased operations and all of the assets were subsequently sold.

Auditors for KLE said in the company’s latest financials that while they are concerned about the company’s viability they are satisfied with plans for extending restaurant network via the franchise system.

Management itself, noting the operating loss, said in notes attached to the financials: “There exists the issue of going concern due to continued losses by the business and its related entities. However, the company has the full support if its majority shareholders. Management continues to be optimistic on the direction of the company, and to refine strategies aimed at propelling the company towards profitability. Management also believes that the company is at its best position to achieve real growth, through franchise expansion.”

Revenue for the company for the year ended was $168.2 million compared to $205 million the year before. Loss per stock unit was $0.64 compared to $0.34 the year before.

The board in its comments said the focus in 2015 of making Tracks & Records Marketplace the operational and financial franchise model has resulted in improved operations; improvements in the control environment and better overall financial management.

It was also noted that the business reduced its cost of goods sold in the last half of the year from 41 per cent to 34 per cent.

Directors stated: “This was achieved by a combination of price adjustments and menu re-engineering. The increased gross margin essentially fell straight to the bottom line. Improvements in the operations and controls came directly from implementation of the operating manuals and training programme developed as part of the restaurant system being franchised.”