Since floating last April at 110 pence per share, DRS Data & Research Services Plc’s shares have plunged to a low of 23 pence this year, which is just about where they were after the Milton Keynes, Buckinghamshire optical scanning equipment specialist reported pre-tax profits down at ú1.5m, from turnover that fell 21% to ú8.8m. The company regretted a most disappointing outcome in terms of profits and share price performance, due mainly to difficulties in its schools business, some 65% of its turnover. After a good start to the year, the company issued a profits warning in November to realign market expectations. The main reasons for the slump are delays in the installation of relevant applcations software in schools, who are also waiting for Windows-based applications, and a relaxation in the requirements of the National Curriculum which resulted in many schools reconsidering their need for DRS’s Optical Mark Reader. This was exacerbated by a number of schools choosing to build reserves in preference to expenditure. The company admits that a lucrative window of profit opportunity since flotation has now been lost and orders will be harder to win from now on, mainly because the period when grants were available for purchasing Optical Mark Readers expires at the end of this month. DRS raised about ú7m at its listing, but is now seeking permission to buy back some of those shares. The short-term outlook is one of tight trading conditions with a period of consolidation and restructuring ahead, which will be reflected in the results for 1995. Looking ahead to the medium term, retrenchment and investment is required according to the company. The board is recommending a final dividend of one penny, making a total for the year of two pence.
