Ilion Group said trading was "satisfactory" for the six months ended 30 June, but it was still in takeover talks.
The networking distributor's sales for June were at a record high for the half year trading update. UK revenues were down on the same period last year.
"However, the restructuring which was announced on 18 June has now been implemented and the early signs of an improvement in operating performance are encouraging," it said in a company statement.
Sales from business in continental Europe showed over 50 per cent growth compared to the first half of 1998. France was now its largest trading operation, with businesses in Spain, Benelux, Germany and Austria developing rapidly, the group said.
Working capital had "significantly improved" since the start of the year, mainly through a major stock cut and improved management of debtors. This had resulted in positive cashflow for the half-year and a less money owing.
It added: "The board of Ilion remains in discussions with a number of parties which may or may not lead to an offer for Ilion."
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