ilion today turned in dismal pre-tax losses of over £3 million for 1998, blaming redundancy, management changes, and reorganisation costs. Last year, the troubled networking distributor posted a £6.1 million pre-tax profit but despite an increase in turnover for the year ending 31 December 1998, ilion saw this turn into a loss of £3.24 million. Turnover for the period stood at £240.6 million, up 18 per cent on last year’s £203.1 million. In the UK, ilion saw a pre-tax loss of £1.4 million, against 1997’s £5.6 million profit. Turnover fell to £108.4 million from £115.5 million. Redundancy costs in the UK, reorganisation costs in Germany and the closing of its Swiss operation were cited as reasons for the disappointing figures. ilion blamed difficult UK trading conditions for the two profit warnings issued in 1998. This morning it said the UK business was: "Now on the road towards profitability with a new management team." The distributor has seen a steady trickle of staff leave the company recently. Last December, Wayne Channon, ilion chairman and chief executive, jumped ship. See earlier story. This month has seen the departure of two key sales staff. Richard Holway, analyst at Richard Holway Ltd and publisher of the Holway Report , described the results as: "A very sad state of affairs." Holway said distributors needed to get big, or go niche and develop services. "As far as I can see, ilion is neither," he added. "I think things have the potential to get better. ilion was faced with problems and took the necessary tough action. But it needs to change its business model, and as yet it has outlined no such plans," said Holway. Michael Sayers, ilion chairman, commented: "The Group now has a strong and united senior management team. The difficulties experienced during 1998, primarily in the UK, are being addressed effectively and the board looks forward to the rest of the current year with confidence." ®