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September 20, 1995

DORLING KINDERSLEY GETS BACK ON AN EVEN KEEL

By CBR Staff Writer

The fortunes of Dorling Kindersley Holdings Plc look considerably more healthy than they did this time last year. After a poor year-end performance last financial year, the UK publishing house has revived its fortunes and reported profits up 46% at ú5.4m on turnover up 30% at ú138.8m. Trading in the US was reported to be particulary strong with 34% of group turnover coming from over the pond. US turnover increased by 43.5% to $47.4m. DK Multimedia, the company’s CD-ROM publishing division, contributed 9% or ú13.1m to group turnover. Again the US proved to be the most lucrative market, accounting for 43% of revenues, with 18% coming from the UK and the rest from worldwide licensing agreements. The company said that it expected the multimedia division to continue to experience dynamic growth. Since June DK’s CD-ROM titles have been bundled with Compaq Computer Corp’s Pressarios as part of a licensing deal due to expire in June 1996. The software is also being sold through self-employed distributors in the US and the UK. The business, known as DK Family Library, was started in 1991 and now has a UK turnover of ú6m and a US turnover of ú3.4m, up from ú3.4m and ú700,000 respectively last time.

Tupperware

It’s rather like selling Tupperware but you are selling CD-ROMs instead, said the group’s finance director, Peter Gill, who said that the company is now looking to expand the business into English-speaking countries such as India, South Africa and Australia where localisation of the software is not needed. The distributors mainly sell children’s titles to schools and the home market, Gill said. The company has increased its UK sales force of self-employed distributors to 7,000 from 4,000 and has increased the sales force in the US to 3,500 employees from 1,000. The five CD-ROM titles launched last year were reported to have now sold 300,000 copies. The Ultimate Visual Dictionary, The Home Decorating Book and Anne Hooper’s Ultimate Sex Guide were credited as three of some 90 published reference titles in the DK Adult division that saw revenues of ú73.3m, 15% up on last time, and accounted for 60% of group turnover. DK Children’s division saw turnover up 29.7% at ú44.1m, contributing 32% to group turnover, with 58.7% of revenues coming for US markets. DK Direct, the company’ direct mail business and DK Vision, the sector which co-produced a natural history programme with the BBC, increased turnover by 31.3% to ú8.4m, representing 6% of total revenues. The company has shifted DK Direct’s business away from selling volumes of serialised books for direct mail companies to co-publishing books and CD-ROMs, one of the first of which is The Dorling Kindersley Children’s Multimedia Dictionary on CD-ROM. It will be published this autumn and marketed by DK Multimedia in the UK and Houghton Mifflin in the US. Having historically achieved growth organically the company is now looking at acquisitions to grow the business. It has already acquired Henderson Publishing for ú1.25m in cash, an additional ú2.3m will be payable in installments from 1996 to 1998 and ú0.5m is performance related. The acquisition reduces Microsoft Corp’s stake in the company to 18%. It will give DK access to the high volume children markets in the UK and give us further product to sell overseas, Gill said. We will consider further acquisitions but will not go on a mad buying spree, Gill said. The board is recommending an interim dividend of 1.3 pence and the City liked the figures: the shares rose 14 pence to 458p.

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