Ilion's UK operation has been kept afloat by a 55 per cent increase in turnover from its profitable French division after its interim figures revealed a drop in local sales of 35 per cent.
For the six months ended 30 June, turnover in France rose to £64m. But UK sales fell off from a total of £63.3m for the comparable period last year to £41.2m for the first half of 1999.
Operating profit also dropped to £253,000 before exceptional costs of £1.5m this year, compared with £1.4m for the first six months of last year.
The exceptional costs were mainly incurred from the UK arm after Ilion was forced to make a £600,000 provision for a disputed transaction involving Cisco kit.
The irregular transaction resulted in an undignified end to Ilion's relationship with Cisco, the sales of which accounted for 18 per cent of the distributor's total revenue.
Overall, group turnover was up by 10 per cent at £131.9m for the first six months of the year, while pre-tax profit rose 85 per cent to £2.1m.
One source claimed the UK operation continued to drag the group down: "If the French division splits from the UK operation, the UK will be left in a disastrous position."
But Serge van Gorkum, group chief operating officer at Ilion, remained upbeat about the results, denying the group would sell off the UK office: "We are a European group and for that we need to be in three countries - France, the UK and Germany. We are very happy with what the management has done in the UK. The downturn is a strategic decision."
In terms of the back office, he added that the group's stock level had dropped from approximately £8m last year to £6.4m.
But van Gorkum admitted the UK's overall contribution to the group will diminish at the end of the year because its European business is growing at a faster rate.
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