We are happy to report this position has now been completely reversed and the Company is in a healthy state. Shareholders will be pleased to note, despite the write-off of close to $130,000 in connection with the closing of the Burnaby Street outlet, we achieved a modest profit of $69,439 in the year ended January 31, 1998 compared with losses of $600,087 in the seven month period ended January 31, 1997 and $414,276 and $296,868 for the years ended June 30, 1996 and 1995 respectively.
More importantly, it should be noted that we have settled all outstanding amounts due to creditors and our payables are now current. Bank indebtedness has been materially reduced during the past year from $1,034,000 to $670,000 and at the present time we have over $200,000 in the bank with which to meet ongoing obligations of the Company.
The first six months of the year to July 31, 1997 was a period of reexamination and consolidation of the operations of the Company. We are particularly indebted to the President, Mr. Crayton Greene, and our consultant, Mr. Graham Redford, for the immense amount of work they did during this very difficult period for while managing day to day demands they made great improvements by trimming costs, improving relations with staff and addressing a long list of deficiencies in management and operating procedures. The benefits of these steps become very evident in the ensuing six month period where we generated profits of $164,000 to offset losses sustained in the first half of the year. It now appears based on recent projections and monthly earnings reports that we can expect the Company to continue to generate profits in the future at least equal to the rate of earnings in the last six months.
The Company has, in addition to steps noted above, established procedures which will allow us to generate timely management reports and monthly accounts and with this information we are able to analyze every expense, sales, cost of goods and trends. We have also established budgets for the coming year so it is with some confidence we can state, that barring any unexpected event, future earnings would be at least equal to the past year's reported "net income before discontinued operations". Net cash flow as a result should, in turn, be sufficient to eliminate our bank indebtedness by the end of this fiscal year.
To summarize all the steps taken to reduce costs and to improve our operations would we believe, be counter productive to our interests, however, it is important to note that our relations with Tricon International (KFC's head office) have been reestablished after what was a rather uneasy position due to the precarious financial state of the Company last year and an unacceptable decline in the quality standards to which they insist we must adhere.
Last summer, our ratings based on KFC's Operational Facility Review - which checks out speed of service, cleanliness, preparation to approved standards and other requirements - was a mere 44%, a very low level which could have easily resulted in KFC asking us to surrender our franchise. This rating has now dramatically improved and as at January, 1998 was 80.4%.
Shareholders will recall that Mr. Ian Paton decided not to stand for reelection as a Director at the time of the Annual General Meeting in June, 1997 and on March 16, 1998 Mr. Richard S. L. Pearman submitted his resignation. Mr. James A. Pearman was appointed a Director to fill one of the vacancies on the Board.
I would like to thank my fellow Executive, Crayton Greene, Graham Redford, Susan Wilson and William Thomson for their assistance and hard work during the past year and I would also like to express my appreciation to all the staff of KFC (Bermuda) Limited who made valuable contributions in the reversal of fortunes of this Company.
Copies of the financial statements for the year ended January 31, 1998 will be mailed to shareholders fairly shortly together with Notice of the Annual General Meeting to be held in the offices of Millpoint Limited, Penthouse, 73 Front Street, Hamilton, HM 12, 4:00 pm, May 27, 1998 together with a Proxy should you wish to appoint the Chairman or another individual to represent you at that meeting.