Max’s posts ‘pro-forma’ net loss of P56M in ’14

MAX’S Group Inc., a listed restaurant group best known for its chain of fried chicken outlets, posted a “pro-forma” net loss in 2014 following expenses related to the acquisition of Pancake House Inc. through a P4-billion deal.

Max’s said in a stock exchange filing Monday that its pro-forma full-year losses in 2014 amounted to P56 million. Excluding one-time costs and extraordinary expenses, Max’s said its pro-forma core net income in 2014 would have been P154.1 million. Revenues during the period hit P9.55 billion, it said.

“The Max’s Entities-Pancake House integration came with the challenges that are typical of transactions of this scale and magnitude,” the company said in its filing.

“Last year was a transformative and preparatory period for the company, anchored on a series of market-moving transactions, beginning with the acquisition of Pancake House Group, post-integration activities and capped off by a successful follow-on offering,” Dave Fuentebella, chief financial officer of Max’s, said in a statement.

He noted that the company’s expenditures in 2014 included marketing costs, write-off of doubtful accounts receivables, one-off fees and expenses for kitchen upgrades, repairs and maintenance, along with the revamping of new and key branches of Pancake House, Teriyaki Boy and Dencio’s.

The company underwent a comprehensive revamping program to align its portfolio of brands and consolidate operations—which included enhancing top brands and discontinuing underperformers and upgrading service platforms, the disclosure said. This revamping program is currently underway.

For 2015, Max’s “expects to benefit from considerable cost savings” as it plans to realize a significant portion of these initiatives, said Robert Trota, president and CEO of Max’s.

The company is also expanding its business with plans to roll out 80 to 90 stores in the Philippines and abroad in 2015. It ended last year with 540 stores, up 5 percent.

“We are bullish about growth prospects moving forward as we see consumer buying power improving in the Philippines and across Asia in the next couple of years,” Trota said in the filing.

“Operational integration is on track with the company’s overall development strategy and we look forward to unlocking the potential of a larger group and to propelling our brands to the next phase of growth,” he added.