Azlan surges to the market

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A MANAGEMENT buyout from Logitek, the computer services company, is coming to the market after achieving five-year sales and profit targets twice as quickly as had been expected.

Shares in Azlan, which distributes hardware and software to link computers in networks, are to be placed at 230p, valuing the company at pounds 50m.

Azlan is a middle man between manufacturers - such as Intel, Digital and Microsoft - and end users in the growing market for equipment that allows personal computers to 'talk' to each other.

Research by Dataquest suggests that by 1997 more than 75 per cent of the 50 million PCs in Europe will be linked through networks. Currently, 36 per cent of 28 million PCs can exchange information.

Azlan estimates that the market will be worth pounds 7.7bn in four years' time, and more than half will be supplied through distribution companies.

The increasing sophistication of networks and the rapid obsolescence of products means that Azlan, which employs one technical expert for every salesman, is able to generate much higher margins than are usual for the distribution industry.

The issue of 9.65 million shares will raise more than pounds 15m for existing shareholders and pounds 6m for the company. On the basis of forecast profits for the year to March 1994 of pounds 4m, the shares are being sold on a prospective p/e ratio of 18, or 27.4 times last year's profits.

In the year to March, Azlan made profits before tax of pounds 2.95m from sales of pounds 41m. During the five years since 1988, the company has averaged sales and profits growth of 47 per cent a year.

A notional dividend of 3p puts the shares on a yield of 1.6 per cent.

Within the past year, Azlan has set up greenfield operations in Germany and Denmark. Sales in Germany have grown during the company's first nine months to an annualised rate of pounds 6m.