DESPITE being a 15-year-old company that is listed on the Jamaica Stock Exchange (JSE), K.L.E Group Limited is still exploring a new path forward for the business which has dabbled in entertainment, restaurants and now real estate.

K.L.E was formed on September 15, 2008, with the moniker standing for Kingston Live Entertainment, which reflects the vision by its founding directors of capitalising on the entertainment and lifestyle business, a highly demanded product and service globally. After forming Fiction Lounge in St Andrew in December 2008, which was a raving success, it turned to the casual restaurant and dining space which was branded Usain Bolt’s Tracks & Records, paying homage to one of the world’s most famous athletes.

K.L.E used this platform to list on the Junior Market of the JSE on October 23, 2012, when it raised $99.90 million at $3.70 per share. This gave it the space to consider expansion into other parts of Jamaica and the world for Tracks and Records; establish a new nightclub called Famous in Portmore, St Catherine; establish high-end gaming facilities with Supreme Ventures Limited; and develop a real estate project with Sagicor Life Jamaica Limited in Oracabessa, St Mary, aptly called Bessa. This was in addition to the Forever Beach party series and Sumfest Acoustic Café, which were developed in the later years.

However, K.L.E.’s various forays have not materialised as planned over the years, with the company selling the nightclubs, divesting the Tracks and Records stake to T&R Restaurant Systems Limited (FranJam) in December 2021, and limiting its grandeur global plans due to the impact it faced from the COVID-19 pandemic. This has resulted in the company swinging between rare years of profit and several years of losses.

“It has been really challenging post-COVID, however, with years of experience in other small businesses one has to be creative and resilient. The financing for the past two years has come from the sale of earned sweat equity in a project, and earned sales and marketing income. This has been used to service debt and invest in our management company,” said K.L.E. Chairman David Shirley in an email with the Jamaica Observer recently.

The company has since transitioned its business model to a real estate and property management entity, with its recently formed subsidiary Bessa Resort Management Limited being used as the vehicle to manage and drive the sale and rental of villas at the Bessa project. K.L.E. is currently looking at three potential options for partnerships in managing and marketing the Bessa villas to a global audience, and expects to have a decision by the end of 2023.

K.L.E. Group has a 25 per cent stake in the Bessa project, which has over 50 per cent of the 86 units sold so far. Of the others, 26 more will be made available for sale. With a need for steady income for the company, it has reserved 11 units which it intends to rent. K.L.E. is currently earning some income from the marketing and sales of units, which saw the company receive payment in the third quarter. K.L.E.’s interest in Bessa is worth $15 million.

K.L.E.’s stand-alone numbers currently reflect $1.30 million in other operating income and a net loss of $5.06 million for the third quarter. For the overall nine months the other operating income line stands at $55.30 million, with net profit at $11.36 million.

While this improved performance has pushed up its equity base by a third, over the nine months, to $48.06 million, the company’s asset base remains relatively unchanged at $145.02 million, with the bulk of its liabilities being long-term debt that has been paid due to the sale of short-term investments.

When asked by Sunday Finance if the company would look to raising new equity capital as part of its transition, Shirley said, “Absolutely! However, as chairman I have been guiding the process of restructuring and completion of the Bessa investment, after which we will feel comfortable to look at raising capital for well-thought-out opportunities.”

K.L.E. will also focus on developing opportunities in lifestyle and entertainment, alongside its real estate focus.

Shirley also added regarding new opportunities, “At our last board meeting one of the directors suggested a retreat and a fresh look at the local and regional landscape in real estate lifestyle projects. We need to have more control over the ideas that we create and ensure that they are operational, sound and capitalised.”

Despite growing its topline over the first nine months of 2023 and bringing in $14.55 million in net profit, FranJam incurred a $10.33-million loss in the third quarter — which was nearly triple last year’s $3.63-million net loss. K.L.E. owns a 49 per cent associate stake in FranJam which was valued at $65.90 million. FranJam operates Tracks and Records.

“There is a new chairman of FranJam and we will give him and the board all the support it needs to carve out profits from its over 300 million JMD [Jamaican dollars] in annual revenues,” Shirley added on the business that is majority-owned by Joseph Bogdanovich, who is also K.L.E.’s largest shareholder.

K.L.E.’s third-quarter consolidated net loss, which includes Bessa Management, swelled to $10.68 million relative to the $12.86 million in the prior period. For the nine months, K.L.E.’s consolidated net loss stood at $9.64 million compared to the $17.61-million net profit. K.L.E.’s shareholder equity closed the period at $24.70 million while consolidated total assets stood at $122.27 million.

K.L.E.’s stock price closed Friday up 10 per cent to $1.64 but remains down 18 per cent year to date, with a 52-week low of $1.10. Norman Peart, Usain Bolt’s former manager, resigned from K.L.E.’s board on November 14, which leaves the firm with six directors. While K.L.E.’s top ten list has remained relatively unchanged, XLR8 Financial Limited emerged as the sixth-largest shareholder at the end of September.