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November 28, 2008By Thabiso Mochiko

Johannesburg – Listed franchise group King Consolidated (Kingco) expected the holiday season to boost the company’s business, which had continued to make losses for the six months to August, the company said yesterday.

The eatery franchise owner said the half-year headline loss a share widened to 20.5c from 12.4c in the previous period.

Kingco operates more than 70 franchised restaurants, pubs and fast food outlets under brands such as Bimbo’s, KEG, McGinty’s and Saddles.

Non-executive director Paul Cotterell said: “We are not satisfied with the results.”

However, Cotterell expects an improvement in the second period because of the anticipated reduction of fuel costs and a programme by the company to cut costs within its processing division.

Turnover for the group was R119.5 million from R110.9 million, due mainly to the expansion of the franchise divisions.

The franchise unit opened an undisclosed number of new franchises during the period.

The group would look at expanding its franchises, but there were no plans to grow outside the country or make new acquisitions, he said.

Loss attributable to ordinary shareholders grew to R3.4 million from more than R2 million, thanks to the processing unit, Lusitania, which continued to be the main contributor to the group’s losses.

The losses were also fuelled by a strike at Lusitania, which distributes frozen food, chilled and dry products.

This led to reduced capacity and resulted in a loss of market share and a slow subsequent recovery of operational efficiencies. The company was considering closing the business. So far it had closed its factory in Hermanus.

“We are hoping the closure will reduce costs.”

The company’s major shareholder has also committed millions of additional funds to the group to assist with the company’s operations and expansion activities.

In July, the JSE suspended trading in Kingco’s shares following the company’s failure to submit audited results in time. The suspension was later lifted after it complied with the bourse’s requirements.

The company had negative cash resources of R2.9 million for the period under review, from a negative of R3.9 million in the previous year.

Kingco’s share price closed unchanged at 80c, while the sector fell 0.47 percent. The share price touched its year high last December 4, when it was trading at R1.52.

So far this year the share price has shed 46.9 percent.