Network distributor Azlan is showing signs of recovery but is attempting to reassure suffering shareholders that an overdue Internet business launch will give it a further boost. Azlan’s shares rose 2p to 46.5p yesterday after figures indicated the networking distributor was recovering financially. The group, still under investigation by the Serious Fraud Office after a £30 million ‘black hole’ was found in its accounts, showed turnover up 9 per cent to £154 million. Operating losses went down to £354,000 for the six months to October 4, against a loss of £6.4 million the same period the previous year. Losses per share were cut from 14.2p to just 0.3p, but no dividend will be paid to shareholders for the year ending April 3, 1999. However, yesterday Azlan claimed long-suffering shareholders would benefit from a £3 million investment in an Internet business. The company, which distributes networking products for Cisco Systems and IBM, will offer a comprehensive service over the Internet. George O’Connor, research analyst at Granville, countered that the move itself would not boost share prices. He said: "It’s now critical that distributors get into the Internet arena to follow their competitors." Connor said that the problem also lay in the long-term pessimism from the city towards distribution in general. He added: "There is a lot of uncertainty in this sector." Clive Longbottom, strategy analyst at CSL, agreed, but said the Azlan results were better than expected. The six-month operating losses included an exceptional charge of £560,000 relating to a company restructure, resulting in redundancy and severance costs. ®