Lyons Irish Holdings, the tea group, has recorded a drop in pretax profit from £8.5 million to £7.95 million in the year ended August 16th 1997. The decline was due to a once off provision for an anticipated loss incurred by the closure of its Dunkin' Donuts business. Excluding this, and the small loss understood to have been incurred by Dunkin' Donuts, Lyons showed a modest underlying growth in profits. The chairman, Mr Pierce Butler, said the company had a "reasonably good year", noting that the results are unaudited and the full year will cover a 15-month period which "will be more or less in line with expectations, allowing for the Dunkin' Donuts provision".
A second interim dividend of 6p has been declared, an increase of 1p, making a total of 14.6p, an increase of 14 per cent on last year. There were also unquantified development costs associated with the group's expansion into the Northern Ireland market. Lyons first entered this market two years ago and is now understood to have a 6 per cent market share. This is expected to continue to grow. Mr Butler said the development in Northern Ireland is "showing progress". The tea market in the Republic has been static. Lyons has maintained its market share and profit margins were unchanged. The group has increased its cash hoard still further. Cash has risen from £51.6 million to £54.5 million. This accounts for 93 per cent of net assets, up from 92 per cent. Reflecting the cash, interest receivable rose from £2.36 million to £2.56 million.
This represents a return of 4.7 per cent. However, the real return is higher because part of the return is tax free, reflecting the use of section 69 Government bonds. The tax charge fell from £1.13 million to £876,000, representing a tax rate of 11 per cent. Asked what the group is going to do with the cash, Mr Butler said it is "earning its keep". However, Lyons is understood to be still considering the different options and hopes to have some proposals by the next annual general meeting.
That cash hoard is likely to be boosted further when the group sells the four Dublin Dunkin' Donuts leasehold properties - at Grafton Street, Tallaght, Rathmines and Ballyfermot. The tender date for the sales is December 7th. Mr Butler said the decision to sell "will enable management to concentrate all their efforts on our tea business which continues to prosper".
The latest results are the first 12-months figures since the minority shareholder turned down a bid from Unilever Ireland which increased its stake from 75 per cent to 80.6 per cent. The results show a rise in turnover from £27.1 million to £28.3 million.
Earnings per share fell from 24.59p to 23.58p. Shareholders' funds grew from £55.9 million to £58.6 million.
