Junior market entertainment companies, KLE Group and C2W Music continue to burn cash with relatively large losses in the in the quarter and six months to June with one having shredded shareholders capital and the other on the edge of doing so.
C2W Music reported revenues of just US$4,976 in the June quarter and US$6,028 for the half year but cost rose in the quarter over that of 2014 with US$16,000 versus $12,193 and for the half year US$28,866 versus US$93,605. Finance cost ended at US$1,381 for the quarter and US$2,762 for the year to June. The company reported a loss of US$12,297 and for the six months and US$25,649 in 2014.
The cash burn for the company has virtually wiped out the share capital with only US$17,402 left out of US$1,286,619 raised when it went public, forcing them to seek loan funding which amounted to US$80,950 at June. The results are well off track from what investors were promised when the company had its IPO.
Over at KLE Group the focus is said to be on cost containment and the launching of franchising of the Tracks and Records concept as well as some new income stream.
For the quarter to June revenues amounts to $54 million with a loss of$12.85 million versus $8.3 million in 2014. For the six months, revenues was $103 million compared with $128 million with losses of $34.6 million and $20.9 million in 2014.
The company has burn through all the equity is raised and more and ended up with negative equity of $10.56 million at June and borrowings of $99 million. While borrowings have grown and payables have fallen from $116 million in June 2014 to $84 million, the composition of the amount tells the story of a company with serious challenges, with GCT due of $7.34 million versus just $146,000 in 2014 and Statutory payables of $10.7 million up from $2.3 million in June 2014 and credit card payables of $9.8 million, at the end of last year June the amount was at $7.2 million.
The lack of capital is driving the nail in the coffins of both companies as revenues are just not there at least currently, to allow for survival.
KLE and C2W Music burnt up cash
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[…] KLE Group operators of the Famous nightclub and Usain Bolt Tracks & Records received US$650,000 loan from its largest shareholder Joe Bogdanovich this financial year, IC Insider understands as the music promoter deepens his interest in the struggling junior market entertainment company. KLE was listed in late 2012 after raising $90 million in an initial public offering. Bogdanovich acquired 23 per cent of KLE Group at market value between $0.90 and $1 on the Jamaica Stock Exchange in 2014 when two directors exited the company. The loan listed on the books as other loan at J$73.59 million, represents more than four-fifths of its total loans payable at $87.6 million. The loan propped up the cash position at the company to record cashflow and equivalents at $30 million in December 2014 but it now returned to a cashflow deficit of $6.9 million at September 2025. The loan was in part utilised to pay down debt, particularly trade payables but left very costly statutory debts at higher levels than before at $21 million, as well as credit card debt at $11 million, with the latter increasing from $2.5 million in 2014. The company, however, continues to operate with huge negative working capital and negative equity capital of $8 million with accumulated deficit at $130 million. On the positive side, the company made a rare profit of $2.6 million or 2.8 cents per share from flat revenues of $48.3 million, for the three months ending September 2015 which reversed the $8 million loss for the corresponding quarter a year earlier. Over the nine months, it however, recorded a $32 million loss. The quarterly profit came as the company cut administrative and interest cost sharply by $20 million, partially by limiting the number of days its operates the Portmore based Famous Nightclub. If the bottom-line trend were to continue, the struggling group could end up with profit of $12 million in a full year, and although small, would represent a major turnaround for a company that has been bleeding badly for the past 3.5 years, with losses amounting $139 million during that period. The group continued its restructuring exercise from 2014 with base operating costs reduced to reflect the leaner organization. Further changes will be made to ensure total alignment with the company’s portfolio and its strategic direction. The Famous operating model was changed in August from a weekly 3 night per week club to a promoter model which saw the location being marketed to promoters as a venue. This has allowed for significant reduction in operating costs with a major shift from fixed to variable expenses,” stated management in the financials adding that it continues plans to franchise its Tracks & Records restaurants globally. Since the release of the results were released on the December 2, last year, the stock has climbed from 73 cents to trade at $1.87 after bottoming at 43 cents in October. […]
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