Azlan reaches recovery crossroad

Results Networking distributor trades off margin growth for volume to achieve increase in half-year turnover.

City analysts are predicting that Azlan will hit pre-tax profits ofto achieve increase in half-year turnover. nearly #5 million by its year-end, as its interim results indicated a hesitant return to stability.

One city source also claimed that the networking distributor was predicted to incur a loss of #1.8 million for the six months ended 3 October 1998.

However, income for the interim period hovered around the break-even mark of #100,000 against losses of #7.3 million in 1997. This was before exceptional charges of #600,000 relating to redundancies in the UK and Germany earlier this year (PC Dealer, 2 September).

A source confirmed that analysts have predicted a profit of #5 million for the year. Barrie Morgans, chairman of Azlan, which has been under investigation by the Serious Fraud Office since April, was confident at the distributor's ability to reach the profit prediction, stating: 'We are not unhappy with that forecast. There is no reason for the company to put out a statement to say it cannot achieve that.'

Peter Bertram, chief executive of Azlan, claimed the City was less interested in small companies at present, but added: 'Our results were not that bad.'

The results revealed a nine per cent rise in turnover from #141 million last year to #153.7 million, while margins increased from #28.7 million last year to #34.9 million.

Bertram conceded that the market growth rate for internet working in the UK was between 15 and 20 per cent, but said the distributor had been concentrating on increasing margin rather than chasing volume: 'We have been focusing on controlled growth.'

Revenue for the services division remained flat at #4.4 million, but Azlan's pan-European training unit increased turnover from #15.4 million to #17.9 million.

The distributor also increased its stock turns to 9.1 during the period, compared with 6.6 turns in the previous year.

Morgans also strengthened his investment in the company on 18 November by purchasing a further 20,000 shares at a price of 47p each.

Shares rose 21 per cent from 44p on 18 November to 56.5p as PC Dealer went to press.