The owners of the O'Flaherty business empire - which holds the Irish distribution franchise for Mercedes, Volkswagen and Audi - have increased their annual dividend by 25 per cent to €25 million, writes Arthur Beesley, Senior Business Correspondent

New accounts for O'Flaherty Holdings, which also owns an aerial lift business in Europe and the US, show that the group's turnover broke through the €1 billion barrier for the first time last year to reach €1.14 billion. Turnover in 2005 was €993 million.

The organisation is controlled by brothers Michael and Nigel O'Flaherty - sons of the late Stephen O'Flaherty, who secured the exclusive Irish franchise for the German-made Volkswagen marque in the immediate aftermath of the second World War.

They own Motor Distributors Ltd (MDL), whose car showrooms include Ballsbridge Motors and Grange Motors in south Dublin and Park Motors on the Navan Road in the north city.

The O'Flahertys' 57-year distribution agreement with Volks-wagen will come to an end next October, following a deal last January to sell back its rights for that marque to the car company.

The latest O'Flaherty accounts, approved in April but only recently lodged in the Companies Office, are silent on the terms of the sale. "Negotiations to finalise an agreement on this matter were ongoing between the parties at the date of approval of these accounts," the filing said.

Pretax profits rose last year to €64.39 million from €55.11 million and accumulated profits rose to €295.6 million from €260.3 million. Shareholders' funds at year-end stood at €369.36 million, up from €337.15 million. Net debt amounted to €8.09 million in 2006, compared with €6.17 million a year earlier.

One of the biggest privately-held businesses in the State, the group is known to have moved into the digital imaging sector a year ago with the acquisition of a 92 per cent stake of a Dublin-based business C3.

The new accounts indicate that this rapidly-expanding firm, with significant interests in Britain, was acquired at a cost of €17.17 million.

Beneficiaries of the transaction included C3 chairman Brian Molloy, businessmen Bernard Somers, Henry Lund and Tom Toner, and Clondalkin Group, Delta Partners, IIB Bank. O'Flah-erty Holdings has committed to acquire the 8 per cent of C3 that it does not own "at the option of the current shareholders at the fair value of the shares".