Interim Management Statement

DRS Data & Research Services plc ("the Group") announces its Interim Management Statement for the period from 1 January 2009 to date.

Revenues for the ten months to 31 October

 

	10 month period ended 31 October 2009	10 months ended 31 October 2008	Change
	£’000	£’000	%
Education revenue	11,445	11,026	3.8
Non-education revenue	1,436	3,669	(60.9)
Total revenue	12,881	14,695	(12.3)

 

It was announced in the interim results released on 26 August 2009 that the Group’s performance in its education markets was strong and profitable but that the Group was underperforming in its other markets. This pattern has continued into the second half of the year and while contracts have been won in the non-education markets, most of the revenues resulting from these contracts will not be received until the next financial year. As a consequence of the continued underperformance in 2009 in the Group’s other markets the results for the year ending 31 December 2009 will be below market expectations. Stringent control of costs and cash continues to be a focus throughout the Group. Despite the trading losses incurred in the year to date, the Group’s current cash holdings are similar to the start of the year.


Education markets

The volume of examination scripts processed during the summer for the Group’s major UK customer, AQA, was 11% higher than in 2008 and was accompanied by significant year-on-year productivity improvements. Volumes for the AQA November examination series are also expected to be higher than in 2008.

In Africa, sales into the education market in the first 10 months are ahead of full-year 2008. A project to introduce e-Marker® to one African awarding body has begun and the potential for its wider use in Africa is substantial.

Meanwhile, e-Marker® pilots have commenced in the Caribbean and Asia. We remain confident about the prospects for e-Marker® and are continuing to invest in it accordingly.

Non-education markets

Notwithstanding the difficult nature of the commercial and census markets, we have been successful in winning the contract for the Pakistan census. Expectations at the half-year were that much of the work for this contract, were it to be won, would be completed this year but the current customer requirements mean that most of the revenue will not now be recognised until 2010.

The US market for DocXP™ continues to be very difficult, however Peladon Software Inc has made strategic progress by signing two significant distributor agreements which will give it access to the US healthcare market.

Outlook

The Directors still expect that the business will be profitable in the second half of 2009, not least because the majority of the full year revenue from e-Marker® was recognised in the third quarter. However, due to the underperformance and customer delays in the Group’s non-education markets, the results for the year ending 31 December 2009 will be below market expectations.

Enquiries to:

Sally Hopwood
Company Secretary
Tel: 01908 666088
enquiries@drs.co.uk

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