RNS Number:9130I
DRS Data & Research Services PLC
19 March 2003
18 March 2003
NEWS RELEASE
DRS Data & Research Services plc
Preliminary Announcement
Year ended 31 December 2002
- Operating Profit #1,727,000 (2001: #538,000) - Increase of 221%
- Basic earnings per share 3.74p (2001: 1.37p) - Increase of 173%
- The Directors recommend the payment of a final dividend of 1.25p per ordinary
share (2001: 0.5p) - Increase of 150%.
Financial Results
The profit for the year before taxation amounted to #1,776,000 (2001: #665,000).
Earnings per share were 3.74p (2001: 1.37p). The Directors recommend the payment
of a final dividend of 1.25p per ordinary share payable on 23rd May 2003 to
those shareholders on the register of the company on 25th April 2003. The
dividend is covered 3.0 times by basic earnings.
The balance sheet remains strong. Cash, term deposits and current investments at
31 December 2002 stood at #5.9 million (2001: #4.1 million).
Extract from the Chairman's Statement
A year ago, when reporting on the company's performance for 2001. I stated that
I was looking forward to announcing even better results for the year ahead. My
confidence at that time was well founded and I am delighted to be able to report
that operating profits for the twelve months ending 31st December 2002 more than
tripled the level achieved last year.
This result has been achieved by strong revenue growth, up 27% on last year,
derived from both expansion of existing markets and the development of new
products and services. The routine use of better cost control procedures,
developed last year, has ensured that improved turnover translated into improved
profits.
Turnover for the calendar year 2002 was #12.8m with pre-tax profits of #1.8m,
compared with #10.1m and #0.7m respectively for 2001.
Operating profit margin expressed as a percentage of sales rose from 5.4% in
2001 to 13.5%, with basic earnings per share increasing by 173% from 1.37p to
3.74p.
Based upon the excellent full-year results, the Board is pleased to recommend a
final dividend payment of 1.25p per share (2001: 0.5p).
By October 2002, on the basis of a healthy cash position, the Company had repaid
#1m of a #2m loan taken out in the first half of 2001 to fund the purchase of
our head office freehold land and buildings. We also carried out a number of
major improvements to the building, thereby enhancing the value of the property
and creating a better working environment for staff. Despite this expenditure,
cash and current investments remain strong at #5.9m compared with #4.1m at the
end of 2001.
The processes and techniques of high volume data capture in which we specialise
have relevance in several markets, including survey research, census work,
educational assessment and elections. The last two offer particularly good
growth opportunities in the short to medium term.
Over several years we have succeeded in winning progressively bigger educational
projects, from a growing number of important customers, and covering a wider
range of processes.
Success during the year was helped by the use of a new internet service and a
new examination marking system, both developed by DRS. Further benefits are
anticipated from another new product called "e-marker". This represents our
contribution to the increasing automation of large-scale examination projects.
The introduction of a trade-in programme for schools to upgrade their existing
equipment has helped to increase profits.
We were made aware last year that a competing company owned five patents which
they claimed were infringed by some aspects of the e-marking process. After
taking legal advice we do not believe that any of the patents are validly
registered, nor do we believe that the current e-marking process infringes any
of the patents. As a consequence, the Board has taken the decision to commence
proceedings in the High Court in London to revoke all of the patents and to seek
a declaration from the Court that the e-marking process does not infringe any of
them. We are confident in the successful outcome of the proceedings.
The desire of the UK government, and others around the world, to modernise
elections and allow people to vote using new methods is increasing our potential
market in many countries. New election products and services were introduced in
2002 and more are planned this year. We are already recognised as a world leader
in the elections arena and there is much more on the horizon.
Our strategy involves significant growth and change but I believe the work
undertaken over the past two years has given us the experience to meet the needs
of the future with confidence. The current DRS team is strong and the potential
for new business and market growth is high.
Extracts from the Operating and Financial Review
2002 showed excellent overall revenue growth of 27% with growth in all areas of
the business. Education in the UK remains the single largest market sector,
representing some 55% of sales. Sales in education worldwide represent
approximately 76% of our business.
Our UK non-education business grew strongly, primarily as a result of winning a
government contract to provide e-counting services for the May 2002 local
elections.
Exports increased by over 45% and now represent one third of total sales.
International business was also recognised by the Queen's Award for Enterprise
in International Trade.
Key parts of the business are:
* UK schools, Further and Higher Education - where we sell our specialist
optical mark readers (dedicated scanners) and associated forms used in
attendance, pupil profiling, course registration and other administrative
applications.
* UK examinations and assessment - providing integrated services to a range of
public and private examination and assessment organisations. This includes pre
and post examination services and the provision of automated and computer
assisted marking.
* UK election and other public sector areas - supplying machine readable ballot
papers, e-counting and e-voting products and services. We also supply scanning
products, custom data entry forms and software services for widely differing
customer applications.
* International examinations, voter registration and census - where our products
and services are used in more than twenty countries for national examinations.
We have also been undertaking major voter registration and census projects since
1996.
Highlights of the year
* A product trade-in programme enabling UK schools to replace their older
optical mark readers with a new model. Market interest was high and we were able
to offer a range of options including upgrade and rental.
* Continuing high levels of sales of the new PS880 OMR/Image scanners. These
scanners bring many advantages, particularly in examination and electoral
applications. We have re-equipped our bureau operation with them, used them for
the UK local elections and sold a significant number for examination
registration overseas.
* The introduction of secure image-based web services providing on-line data
retrieval for a major UK awarding body. Some one million forms were processed
this way in the summer of 2002 and at its peak the website was receiving over
10,000 'hits' per day.
* A successful trial for on-line marking of imaged examination scripts.
* E-counting in two of the local elections in May 2002 - for the City of
Westminster and Rugby Borough Council. The total electorate was over 200,000 and
both sites completed the count in record time.
* The Tanzanian census - providing 18 million census forms, scanners, software
and on-site support. The scanning was completed in six weeks, probably a world
record for census data entry. This was our third national census.
* National voter registration in Namibia and Kenya - Namibia became the ninth
country to use our products and services for such an application.
Current Trading and Outlook
In the UK, sales to schools and further and higher education have started the
year well. There are a number of marketing and product development programmes
that will take place during the year.
The New Business Group, an initiative started two years ago, is providing a
valuable approach to the development of new business. Many projects start as
pilots and are developed in this small, multi-disciplined environment until they
are sufficiently mature to be passed to our main production and bureau
facilities.
In examinations and assessment we continue to expand into more sophisticated
image and computer-assisted marking services. We aim to play a significant role
in the modernisation of UK examination processes and to this end we are already
working with a number of major organisations.
Having successfully completed the UK election pilots in 2002 we are expecting to
take part in two more in May 2003, including a new approach to postal balloting.
Also in the elections market, we are delighted to have recently been selected as
the preferred supplier to the Greater London Authority for the 2004 London Mayor
and Assembly elections. This is likely to be larger and even more complex than
the London elections we carried out in 2000. It will be the largest election
project of its type in the UK.
We are pleased to have won an order for our 4th national census, this time in
Cameroon. This will take place in the first half of the year.
Following on from the outstanding 2002 financial year, I am optimistic about the
current year. Many new and exciting projects have already started and more are
imminent. We have every reason to believe that continued growth can be achieved
throughout 2003.
DRS Data & Research Services plc
Profit and Loss account for the year ended 31 December 2002
2002 2001
#'000 #'000
Turnover 12,782 10,054
Change in stocks of finished goods and work in progress 122 (199)
Own work capitalised 55 39
12,959 9,894
Operating charges (11,232) (9,356)
Operating profit 1,727 538
Net interest 49 127
Profit on ordinary activities before taxation 1,776 665
Tax on profit on ordinary activities (524) (208)
Profit for financial year 1,252 457
Dividends (422) (167)
Profit transferred to reserves 830 290
Earnings per share (Note 1)
- basic 3.74p 1.37p
- diluted 3.68p 1.36p
Balance Sheet at 31 December 2002
2002 2001
#'000 #'000
Fixed assets
Tangible assets 5,313 4,924
Investments 147 188
5,460 5,112
Current assets
Stocks 1,055 1,037
Debtors 2,015 2,375
Investments 3,780 315
Cash at bank and in hand 2,141 3,767
8,991 7,494
Creditors: amounts falling due within one year (4,604) (2,953)
Net current assets 4,387 4,541
Total assets less current liabilities 9,847 9,653
Creditors: amount falling due after more than one year (1,000) (1,700)
Provisions for liabilities and charges (128) (64)
8,719 7,889
Capital and reserves
Called up share capital 1,731 1,731
Shares premium account 5,377 5,377
Capital redemption reserve 115 115
Profit and loss account 1,496 666
Shareholders'funds 8,719 7,889
Cash Flow Statement for the year ended 31 December 2002
2002 2001
#'000 #'000
Net cash flow from operating activities 4,125 2,036
Returns on Investments and servicing of finance
Interest received 172 193
Interest paid (123) (66)
Net cash flow for returns on investment and servicing
of finance 49 127
Taxation paid (170) (188)
Capital expenditure and financial investment
Payments to acquire tangible assets (1,135) (3,717)
Receipts from sales of fixed assets 37 1
Net cash flow for capital expenditure (1,098) (3,716)
Equity dividends paid (167) -
Cash flow before use of liquid resources 2,739 (1,741)
Management of liquid resources
Sale of term deposits 1,943 112
Purchase of current asset investments (3,465) (315)
Net cash flow from management of liquid resources (1,522) (203)
Financing
Receipt of loan - 2,000
Repayment of loan (900) (100)
Net cash flow from financing (900) 1,900
Increase/decrease)in cash in the year 317 (44)
NOTES
1. Earnings per Share
Calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the year. Shares held in employee share trusts are
treated as cancelled for the purpose of this calculation.
The calculation of diluted earnings per share is based on the basic earnings per
share, adjusted to allow for the issue of shares and the post-tax effect of
dividends and/or interest, on the assumed conversion of all dilutive options and
other dilutive potential ordinary shares.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below:
Earnings Weighted average 2002 Earnings Weighted average 2001
number of shares number of shares
# Per share # Per share
Basic earnings per share:
Earnings attributable to ordinary 1,252,000 33,440,543 3.74p 457,000 33,349,355 1.37p
shareholders
Dilutive effect of shares in restricted 529,754 198,466
share scheme
Dilutive effect of options under unapproved 21,497 -
share option scheme
Diluted earnings per share 1,252,000 33,991,794 3.68p 457,000 33,547,821 1.36p
2. Statutory Information
The preliminary statement which has been agreed with the auditors and approved
by the Board on 18 March 2003 is not the Company's statutory accounts. The
statutory accounts for each of the two years to 31 December 2001 and 31 December
2002 received audit reports which were unqualified and did not contain
statements under section 237 (2) or (3) of the Companies Act 1985. The 2001
accounts have been filed with the Registrar of Companies but the 2002 accounts
are not yet filed.
Enquiries should be addressed to:
Mark Tebbutt,
Company Secretary
(01908)666 088
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR NKCKPFBKKBND