Durban - Kingco, the owner of Keg and McGinty's pubs, has steadily reduced its losses after a near-disastrous brush with fraud leading to the suspension of four directors three years ago, and expects to post a profit next year.
Tony Cotterell, a leading local businessman, bought a 41 percent stake Kingco in 2000 and proceeded to restructure it, ultimately rescuing it from potential death.
The company recently released its results for the year to February, dramatically reducing its losses from R6.5 million to R649 000.
Financial director Basil Trafalis said Kingco planned to grow the franchise division by 10 percent next year. Part of the focus would be on the profitable Lusitania frozen and chilled food distribution group, with further renovations planned for the Gauteng distribution division and the fish processing factory in Hermanus.
Trafalis said court cases against the former directors - Dennis Finch, Cliff Greyvenstein, Sean Day and Jean Lambrechts - were still pending.
"The four directors were all suspended and charged separately for material irregular activities contravening the Companies Act, and not applying good corporate governance," he said.
Kingco was listed on the JSE Securities Exchange in 1997, under the management of Finch.
After starting out as an engineer, Finch bought a Mike's Kitchen franchise in the eighties and turned the restaurant around to profitability.
With a partner, Greyvenstein, he later bought the whole Mike's Kitchen group. The Kingco group went on to purchase Porterhouse, Bimbo's, Saddles Steak Ranches, and the Keg and McGinty's pubs.
The Lusitania distribution group, currently one of only two profitable divisions, was purchased in August 1997 for R45 million, forming Kingco. Greyvenstein became the group food services director.
Lambrechts was joint managing director of the franchise division, along with Kevin Hedderwick, who is now chief executive of the Famous Brands group.
In 1997, the year of listing on the JSE, Kingco posted a turnover of R192 million. But at operating level it showed a loss of R410 000.
In the years to follow, the operating loss worsened, plummeting to a glaring loss of R3.6 million in 2001, the year the four directors were suspended and the firm underwent major restructuring.
Cotterell purchased a 41 percent stake in Kingco in 2000, which effectively made him majority shareholder.
His former employee, Robin McGregor, was brought in as general manager on a one-year contract to oversee the restructuring process and has since been replaced by the current general manager, Ivan Nitsche.
McGregor had previously been chief executive of Cotterell's Kempston Group and was arrested in East London early in 2001 for attempting to deposit a company cheque worth R21 900.
Trafalis said McGregor was not given any signing powers during his contract with Kingco and acted purely as Cotterell's representative.
Basil O'Hagan was brought in as a consultant at the same time but was hastily fired after the company discovered he was barred from trading in the restaurant industry for three years.
O'Hagan was the former chief executive of O'Hagans Investment Holdings, whose O'Hagans Irish pub venture went into liquidation in 1999 with more than R100 million in debts.
Since 2001, Kingco has steadily reduced its losses while increasing its turnover, and management is optimistic that profit will continue to increase.
Kingco closed unchanged at 4c yesterday, while the sector gained 0.41 percent.