Azlan launches pounds 24m rescue issue

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The Independent Online
Azlan, the computer distributor, is preparing to relist its shares after warning that it will go into receivership unless investors approve a pounds 24m rescue rights issue. The company, whose shares were suspended at 555p in June pending an investigation in accounting irregularities, is proposing a two-for-one rights issue at 37p to pull it back from the brink. Barrie Morgans, who took over as chief executive in July, outlined an astonishing catalogue of failures by the old management but said the problems had now been "cleared out".

The investigation pointed to "serious failures of management and internal financial controls... acts of concealment and improper behaviour... strains arising from the rapid growth of the business" and "disregard of generally accepted accounting principles". The failures led to the resignation of Azlan's chairman, chief executive and finance director. Nine other employees face disciplinary action and six have been warned. Adjustments following the investigation meant the company reported losses in the year to April of pounds 14.1m compared to estimates made less than six months ago of pounds 14.8m profits.

Mr Morgans called the events "really fundamental housekeeping errors". He said the company had grown too quickly: "The expansion would have stretched a much bigger company. When the internal financial controls fail, they go very quickly. All this happened in just six months."

He said he was surprised by the depth of the problems. However he said the problems were limited to the UK business, just one-third of the total, and Akam, the training business bought recently, was performing very strongly.