company recently reported first-quarter earnings of $80,000, about $11,000 more than it made in the entire financial year to January 31.

Sales are five-to-eight percent higher than a year ago, when the company had two outlets, KFC Chairman Donald Lines told shareholders at the annual general meeting last week. Sales in March were about ten-percent higher than in March 1997.

The company's bank debt of about $1 million at December 1996 has in the process been whittled down to $350,000 and money in the bank stood at $160,00 at the end of first quarter.

He commended consultant Graham Redford for the turnaround from the dark days of 1996, when the company was close to bankruptcy.

"With the invaluable help of Graham Redford, our consultant, we materially reduced our operating costs, established a better working relationship with KFC and staff and then started a programme of improving the quality of our service and products,'' Mr. Lines said.

He added KFC expects to complete paying the bank debt by the end of the coming year, and consider "rewarding'' shareholders who supported the company during the recovery programme.

KFC was in dire straits at the end of 1996, losing money at about $400,000 a year and accumulated losses of $1 million. At the time, KFC had racked up debts of $1.5 million -- including the bank loan and had no cash resources to call on.

Lines Overseas Management Ltd. stepped in to advance the company $100,000 and underwrite a rights issue to raise about $800,000. The company closed its Burnaby Street outlet and renegotiated its lease for the remaining Queen Street location.

A new executive committee to the board of directors was formed with overall responsiblity for day-to-day management of the company.

Mr. Redford is vice president of local firm Total Office Management Ltd.

(TOM), part of the Total Group whose principals also include Viv Redford, Rick Correia, and Steve Marklew.

"Shortly after the retention of Mr. Redford, the executive decided to retain TOM Ltd. to provide accounting and secretarial assistance at a lower cost than previous office staff eliminating the need for such staff which had been previously under-utilised and whose services were less than satisfactory in the accounting area,'' a separate report on the past financal year by KFC President Crayton Green, and Mr. Redford stated.

The company's strategy has been to have monthly specials "matched to specific target markets'', to build on a programme attracting children and their families to KFC using tie-ins to popular movies, and to implement service improvements.

An independent agency has been hired to monitor service provision at the restaurant once a month. Rating scores have increased to 63 percent in February from 38 percent in November.

In a separate survey by a international KFC representative, the local company scored 80.4 percent on its last inspection compared with 44 percent in March 1997.

BUSINESS BUC