Azlan issues profit warning

Azlan is still struggling in the financial mire, after the networking distributor issued a profit warning predicting the company's failure to reach market expectations in its latest results.

In a trading statement issued on 27 February, Azlan said it expected to break even for the second half of the financial year ended 4 April 1998. Restructuring costs were estimated at #600,000, which will include charges for a number of redundancies during the period.

According to Barrie Morgans, Azlan chairman and CEO, the distributor was expected to make a profit of #3 million for the second six months of the year.

The warning said the anticipated shortfall in profits was attributed to 'the completion of the rights issue and revised banking facilities in November 1997', plus 'a slow start to business activity in January'.

According to Morgans, strict inventory controls also blocked the distributor's access to the latest product releases.

Morgans was disappointed with the results, but added: 'The rights issue is the key, as it took six weeks longer to get approval and then we had to wait for the money which appeared in November. I do not consider this a profits warning - at market level people should consider where we have come from.'

Azlan launched a rights issue for #24.4 million, which was approved in October, the same time as it proposed to refloat its shares after suspension from the stock market on 13 June.

The distributor had also sustained a pre-tax loss of #7.9 million in the six months ended 4 October.

Wayne Channon, chairman of rival distributor Ilion, said Azlan was not out of the woods but added: 'It is a good performance. From being #8 million in debt to breaking even is a good thing.'

Morgans refused to comment on speculation that Azlan has been losing up to #1 million a month but admitted: 'I accept that we have lost money.'