results for the four months ending May 31 on Wednesday, reporting a drop in profit of 5.6 percent from the same period last year. The news follows poor results during the 1999 fiscal year, when profits fell by 18.6 percent.

In the most recent report, the company's income was $76,841, compared to $93,349 in 1999. This is in spite of reducing operating costs, a 2.8 percent increase in fiscal sales and a 3.8 percent jump in gross profit.

The directors have agreed to pay a dividend of ten cents per share on August 15 to shareholders registered as of July 31.

Chairman of the board Donald Lines attributed the lower incomes to higher operating costs, including salaries, government levies, training and increased capital expenditure during the period.

"Perhaps the most difficult cost to control is salaries and government levies on this cost,'' said Mr. Lines.

"The cost pressure is one we have little ability to control and it is one phenomenon which we understand many local businesses face. On the one hand there is customer resistance to price increases to cover this cost and there is, on the other, an unrelenting demand for increased salaries which in turn increases the cost of payroll taxes and pension plans and the other levies such as health insurance and social insurance which are related to employment.'' He also noted that many of the other expenditures were non-recurring, including repairing a water tank, which raised maintenance costs by $10,000 to $31,000. The defect also resulted in a higher water bill, which increased from $5,400 to $8,600.

"We hope, therefore, that for the remainder of the year our earnings will equal those reported for the year ended 31st January 2000, assuming sales remain at the same level.'' As of May 31, cash resources amounted to $396,000 and payables stood at just over $178,000, which Mr. Lines described as "a very comfortable cash position''.

But KFC expects to spend a further $150,000 this year on major repairs and refurbishment of facilities, needs which Mr. Lines said were largely ignored in the previous year. KFC also plans to relocate office to what is currently a storeroom to allow refurbishment of the existing office facilities which is "desperately needed''.

KFC has also purchased an additional 16,676 of its own shares, leaving the number outstanding to just over 600,000. The company intends to continue purchasing shares to bring the number down the "a more acceptable level''.

BUSINESS BUC