Danka reports record second quarter revenue.

ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Oct. 29, 1996--

Second Quarter Highlights:

- Revenue increases 54% to a record $420 million

- Danka enters Australasian market through two acquisitions

positioning the Company with a 10% market share

- Agreement to acquire sales, service and facilities

management operations of Kodak's Office Imaging business,

adding $1.8 billion in worldwide revenues -0-

                             Quarter Ended Sept. 30, 1996

                   Three        %           Six          %
                   Months       Increase    Months       Increase
                   (in thousands, except per ADS amounts)

Revenue            $ 420,528    54%         $ 822,483     57%
Earnings from
Operations            30,036    24%            58,200     29%
Net Earnings          14,397    16%            28,728     23%

Earnings per ADS   $    0.25                $    0.50


    Dan Doyle, Chief Executive, commented on the second quarter:
"This quarter has been an exciting one for Danka.  In July we entered
the Australasian market, and in September, we announced that Danka
will join forces with Eastman Kodak Company to create a worldwide
office imaging powerhouse."
-0-
    Danka Business Systems PLC (NASDAQ: DANKY) today announced
results for its second quarter ended September 30, 1996.  Revenue
increased 54% to a record $420.5 million, while earnings from
operations grew 24% to $30.0 million.  Net earnings rose 16% to
$14.4 million, or $0.25 per American Depositary Share ("ADS")
compared to $12.4 million or $0.25 per ADS last year.  For the six
months, revenue increased 57% to $822.5 million, while earnings from
operations grew 29% to $58.2 million.  Net earnings for the six
months rose 23% to $28.7 million, or $0.50 per ADS compared to
$0.47 per ADS last year.
    Dan Doyle, Chief Executive, commented on the second quarter:
"This quarter has been an exciting one for Danka.  In July we entered
the Australasian market, and in September, we announced that Danka
will join forces with Eastman Kodak Company to create a worldwide
office imaging powerhouse."
    As previously announced, Danka entered into an agreement with
Eastman Kodak Company on September 6, 1996, to acquire the sales,
marketing, and equipment service operations of Kodak's Office Imaging
business, as well as Kodak's facilities management business known as
Kodak Imaging Services.  Kodak will retain its manufacturing and
research and development functions supporting the Office Imaging
business.  In connection with a related supply agreement, Danka and
Kodak will enter into a strategic alliance whereby Kodak will provide
high volume copiers and printers to the Company, making Danka the
principal distributor of Kodak branded office copiers and printers.
    Danka will pay $684.2 million in cash at closing to acquire the
net assets of the sales, marketing, and equipment service functions
of Kodak's Office Imaging and facilities management business.  The
consideration paid by the Company is subject to adjustments following
the closing of the acquisition to the extent that the net book value
of Kodak's Office Imaging business as of the closing date differs
from the December 31, 1995 value of $802.0 million.  The transaction
will be funded exclusively with bank debt under a six-year,
$1.2 billion fully underwritten credit agreement.  Upon closing, the
new credit agreement will also be utilized to refinance the existing
bank indebtedness of the Company and for working capital and general
corporate purposes.  As previously announced, Danka expects to take a
one-time restructuring charge of $25.0 to $35.0 million in its third
fiscal quarter related to the integration of the acquired Kodak
operations with Danka's existing service and sales network.  In
addition, Danka expects to record an extraordinary charge of
approximately $1.0 million in the third quarter related to the
write-off of deferred costs associated with the Company's existing
$400.0 million credit facility which will be replaced by the new $1.2
billion facility.  The Company expects the acquisition to be
accretive to earnings in the first twelve months of operations.
    Completion of the acquisition is subject to approval by Danka
shareholders as well as certain regulatory consents.  The
transaction, which is expected to close by the end of this calendar
year, will provide Danka with global coverage in more than
700 offices in 31 countries around the world.  Approximately 90% of
Kodak's Office Imaging revenue is generated in the countries where
Danka currently operates.
    Dan Doyle commented:  "The alliance between Kodak and Danka will
enable us to become the single-source solution for office imaging
needs - offering equipment from small copiers to high volume
duplicators, fax machines and digital copiers and printers.  The
acquisition of Kodak's sales, service and facilities management
business will bring together the mutual expertise and track records
of our fine organizations."
    Also during the quarter, Danka acquired companies with annual
revenues of $105.0 million, including the businesses of Tower
Australia Pty Limited and Alcatel Datakey Pty Limited which marked
Danka's entrance into the Australasian market.  These acquisitions
provided Danka with an estimated 10% share of the Australian market
and a base for further expansion in the region.
    The Company has continued to experience higher selling, general
and administrative expenses.  These expenses increased during the
first and second quarters of this fiscal year due to the expansion of
the Company's salesforce, support personnel and infrastructure in
North America, as well as additional costs incurred to regionally
centralize certain management and administrative functions ("Market
Based Approach").  Management believes that this Market Based
Approach should ultimately result in a higher quality of customer
support, increased productivity and reduced administrative costs.
    "The Company has continued to make progress this quarter towards
reducing duplicative administrative costs and boosting the
productivity of its expanded salesforce in North America," commented
Dan Doyle.  "Additionally, our European operations continue to
perform ahead of our expectations."
    David Snell, who joined Danka in 1978 and was appointed Chief
Financial Officer and a member of the Board of Directors in 1988, was
promoted to Chief Operating Officer of the Company, effective
October 1, 1996.
    As a result of Danka's performance, the Board of Directors is
declaring a net interim dividend of 1.30 pence per Ordinary share
(approximately $0.08 per ADS).  This represents the ninth consecutive
year that the Company has increased its dividend.  The dividend will
be paid on January 22, 1997 to ADS holders of record as of
December 17, 1996.
    Special Note Regarding Forward-Looking Statements - Statements in
this release looking forward in time involve known and unknown risks
and uncertainties, which may cause the Company's actual results in
future periods to be materially different from any future performance
suggested in this release.  Such factors may include, but may not be
necessarily limited to:  (i) the Company's ability to manage and
operate Kodak's Office Imaging business, (ii) the demands that the
acquisition and integration of Kodak's Office Imaging business will
place, and the effect that such demands will have, on the Company's
resources, infrastructure and current operations, (iii) the Company's
ability to successfully operate in new international markets, (iv)
the ability of the Company to attract and retain current management
and other employees of Kodak's Office Imaging business accustomed to
different corporate culture, compensation arrangements and benefits,
(v) the Company's ability to achieve the minimum equipment purchase
commitments under the related supply agreement, (vii) the Company's
ability to obtain an alternative and acceptable source of high volume
equipment and related parts and supplies in the event the related
supply agreement is not renegotiated or Kodak equipment is not
competitive in the marketplace, (viii) increased competition, (ix)
fluctuations in foreign currency, (x) domestic and foreign political
developments and governmental regulations and policies, (xi)
technological developments, (xii) general economic and business
conditions, (xiii) future performance of Kodak's Office Imaging
business and the Company's current business, (xiv) the ability of the
Company to successfully implement its growth and business strategy,
and (xv) the ability of the Company to continue to receive acceptable
financing as required in the future.  Further, the Company operates
in an industry sector where the values of securities are highly
volatile and may be influenced by economic and other factors beyond
the Company's control.  Also, in the context of forward-looking
information provided in this release, reference is made to the
discussion of risk factors detailed in the Company's filings with the
Securities and Exchange Commission during the past 12 months.
    Danka Business Systems PLC, headquartered in St. Petersburg,
Florida, is one of the largest independent suppliers of photocopiers,
facsimiles and other automated office equipment in North America,
Europe and Australia.
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DANKA BUSINESS SYSTEMS PLC
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per American Depositary Share ("ADS")
amounts)


                                   For the three months ended
                                   September 30,   September 30,
                                       1996           1995
                                    (Unaudited)    (Unaudited)
Revenue:
Retail equipment sales            $  155,325     $  107,676
Retail service, supplies and         210,321        135,293
rentals
Wholesale                             54,882         30,844
Total revenue                        420,528        273,813

Costs and operating expenses:
Cost of retail equipment sales        95,208         64,459
Retail service, supplies and
 rental costs                        112,010         71,467
Wholesale costs of revenue            45,272         25,689
Selling, general and
 administrative expenses             133,120         85,118
Amortization of intangible assets      4,882          2,782
Total costs and operating
 expenses                            390,492        249,515

Earnings from operations              30,036         24,298
Interest expense and other, net        6,832          4,256

Earnings before income taxes          23,204         20,042
Provision for income taxes             8,807          7,595

Net earnings                       $  14,397      $  12,447
Net earnings per ADS                 $  0.25        $  0.25

Weighted average ADSs                 57,583         50,560


DANKA BUSINESS SYSTEMS PLC
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per American Depositary Share ("ADS")
amounts)


                                    For the six months ended
                                  September 30,    September 30,
                                     1996              1995
                                   (Unaudited)     (Unaudited)
Revenue:
Retail equipment sales            $  305,242     $  206,146
Retail service, supplies and
 rentals                             405,273        256,014
Wholesale                            111,968         60,667
Total revenue                        822,483        522,827

Costs and operating expenses:
Cost of retail equipment sales       187,972        125,498
Retail service, supplies and
 rental costs                        215,232        134,946
Wholesale costs of revenue            92,162         50,367
Selling, general and
 administrative expenses             259,616        161,745
Amortization of intangible assets      9,301          5,138

Total costs and operating
 expenses                            764,283        477,694
Earnings from operations              58,200         45,133
Interest expense and other, net       11,865          7,534
Earnings before income taxes          46,335         37,599
Provision for income taxes            17,607         14,295
Net earnings                       $  28,728      $  23,304
Net earnings per ADS                 $  0.50        $  0.47

Weighted average ADSs                57,664         49,892


DANKA BUSINESS SYSTEMS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

                                      September 30,      March 31,
                                         1996              1996
                                       (Unaudited        (Audited)
Assets
Current assets:
Cash and cash equivalents             $    21,842     $   38,217
Accounts receivable, net                  285,863        247,479
Inventories                               277,417        214,519
Prepaid expenses and other current
 assets                                    11,127          9,534
Total current assets                      596,249        509,749
Equipment on operating leases, net         87,165         73,303
Property and equipment, net                52,411         42,795
Intangible assets, net                    473,665        435,844
Other assets                               34,973         29,865
Total assets                       $    1,244,463  $   1,091,556

Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt
 and notes payable                    $    24,233     $   30,414
Accounts payable and accrued expenses     206,097        197,438
Deferred revenue                           74,467         64,223

Total current liabilities                 304,797        292,075
Convertible subordinated notes            200,000        200,000
Other long-term debt                      220,730        118,262
Deferred income taxes and long-term
 liabilities                               45,109         39,376
Total liabilities                         770,636        649,713

Shareholders' equity:
Ordinary shares, 1.25 pence stated
 value                                      4,721          4,585
Additional paid-in capital                299,646        297,378
Retained earnings                         178,197        148,501
Currency translation adjustment           (8,737)        (8,621)
Total shareholders' equity                473,827        441,843
Total liabilities and shareholders'
 equity                              $  1,244,463   $  1,091,556

CONTACT: Danka Business Systems

William T. Freeman, 813/576-6003

or

Paul G. Dumond, 011-44171-603-1515