FISHING: Lusitania Keeps Struggling On
Recent Western Cape Business News
AN inability to eke even a semblance of profitability from Cape Town-based seafood distributor Lusitania Food Products is starting to take a terrible toll on parent company, King Consolidated.
Kingco, which also owns fast food/restaurant interests, suffered the indignity of having its auditors question its ability to continue as a going concern following publication of its financial statements to end February 2009.
Kingco results showed a deep loss of R15.6 million off turnover of R235 million.
CEO Tony Cotterell says the closing down of Lusitania’s processing division (a major contributor to Kingco’s losses in the recent past) resulted in additional once off expenses being incurred for the financial year.
He says the distribution division experienced continued cost pressures due to high inflation in transport costs.
Cotterell remains hopeful, expecting an improvement in results in the year ahead.
He points to the curtailment of costs resulting from the rationalisation processes within Lusitania and the expected reduction in transport related costs.
Cotterell says management also instituted various corrective measures to improve the results in Kingco’s loss making divisions.
Not for the first time, Cotterell – who is the biggest shareholder in Kingco – had to bail out the company due to the ongoing under-performance at Lusitania.
Kingco’s balance sheet now shows that loans from ‘related parties’ have extended to R38 million (last year: R21 million).
The related party loans are now worth more than Kingco’s entire market capitalisation on the JSE of around R5 million.
A reasonable observer may wonder why Kingco does simply not shutdown the remaining bits of Lusitania and concentrate on growing profits from its franchised and company owned restaurant/fast food interests.
Perhaps there is a belief in Kingco that Lusitania will eventually catch a strong spending tide that will whisk the business away from the rocks.
Cotterell does observe that Kingco expects to benefit from the increased tourism market expected in SA in the period leading up to and including the 2010 Soccer World Cup.
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