CentreGold Plc has signed to acquire Core Design Ltd, the Derby-based developer and publisher of entertainment software for UKP5.3m. UKP2.94 will be paid in cash and the rest by the issue of 2.75m new shares to the company. CentreGold chief executive Geoff Brown said that the acquisition complements CentreGold because Core develops original games and CentreGold focuses on licensing. Core was founded in 1988 and employs 34 programmers and artists. In the year to July 31 it had sales of UKP4.7m up from UKP2.3m last time and pre-tax profits of UKP330,000, down from UKP570,000 last time. The jump in turnover came from Core’s first sales of cartridge games for Sega and the drop in profits partly reflected much higher manufacturing costs of cartridges. News of the acquisition came with the release of the CentreGold’s first full year results since its flotation on the London Stock Exchange in October last year. CentreGold is very pleased with its net profit increase of 60% to UKP2.8m for the year to July 31 on turnover that jumped 34% to UKP91.3m, which it said came about because it has a wide base of good products rather than a policy of looking for just one or two good hits a year. CentreGold’s publishing arm, which from yesterday is made up of Core as well as US Gold, saw an increase of 37% in operating profit to UKP2.8m and a 62% rise in turnover to UKP50.4m while the distribution side of business, consisting of Centresoft and PDQ, saw a 40% rise in operating profit to UKP1.2m and an 11% increase in turnover to UKP40.9m. The publishing arm faced a changing year with the compact disk market creating new opportunites. The firm is looking at the Philips CD-i and 3DO Co Multiplayer as the formats to develop games for at the moment and the Sony Corp PSX and Sega 32X and Satin format due for release in Europe and the US next year. The Birmingham-based company saw a notable growth of personal computer compact disk sales to UKP2.6m compared with just UKP86,000 last time and plans to build this growth with further concentration on the compact disk games market and away from the games cartridge arena. It says the cartridge market is showing stronger margin pressure as customers demand ever more sophisticated games technology that requires much more cartridge memory for the same price.

Silicon Dreams

The typical cost of a cartridge is UKP16 whereas it is as little as UKP3 to UKP6 for a compact disk. The two formats sell on the market for the same price because of the diference in development costs, but compact disks offers better margins. The US gross margins are down from 33.6% to 27.1% and in Europe they have dropped to 23.6%. Of the UKP11m raised at flotation, UKP1m has been invested in opening Silicon Dreams in Banbury, an in-house development group concentrating on products only for the leading edge systems, being 32-bit and compact disk. The UKP1m investment will be written off over the next three years. The firm has also set up a French office and is looking to open in Japan. Sales in the US rose to 21% of total turnover, from 11% last time. CentreGold says that trading for the first two months of the current financial year is satisfactory and at the moment it has UKP3m invested in licences and royalties. It has 40 scheduled releases for personal computer compact disk and cartridge formats, with stronger emphasis on compact disk.