Strong institutional demand should help the shares of computer consumables distributor ISA International Plc get off to a good start when dealings commence next Thursday. Merchant bank NM Rothschild & Sons Ltd said yesterday that its placing of 35% of the equity at 80p has been heavily oversubscribed with 140 funds applying for shares. ISA started in 1970 and now claims to be the leading specialist distributor of branded consumables in the UK. The directors are forecasting pre-tax profits for the year in excess of UKP1.3m, against UKP563,000 for the first half, and last year’s UKP638,000. Turnover this year will be around UKP17m against UKP11.8m last time. John Parkinson, the former chairman of Systime Ltd and Rair Ltd who joined ISA when it staged a highly geared buyout from its previous owner, David Heap, in 1985 says the business is very low risk with no supplier accounting for more than 12% of turnover and none of the 9,000 plus active dealer and end-user customers providing more than 3%. The UKP2.2m net in new money will pay off the banks and the venture capital funds behind the buyout and leave ISA with UKP1m plus to enter the French and Italian markets and to strengthen its UK and German presence which currently account for 60% and 29% of turnover respectively. Compared to its main UK rival, March Data Plc, which recently sold out to Spectrum Group Plc for UKP2.7m (CI No 769) despite making only UKP65,000 on turnover of UKP3m, ISA looks cheap at 17 times prospective earnings on a short term view. However, the long-term outlook is less certain as consumables are a competitive, immature, market.
