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September 20, 1995


By CBR Staff Writer

Milton Keynes, Buckinghamshire-based optical scanning equipment specialist, DRS Data & Research Services Plc’s financial woes have continued with pre-tax profits slumping 64.3% in the half year to ú512,000 on turnover off 25.8%. The firm admits that its expectations when it floated in April 1994 (CI No 2,405) that it could fund investment from its core business of selling optical mark readers to UK schools, are now no longer attainable, due to the virtual collapse of this market. Vendors into this field, where DRS still predominates, were dealt a further blow this year with the conclusion in March of government grants to purchase optical mark readers. Nevertheless, the market took DRS’s predicament in its stride and the share price stayed static, albeit at only 24 pence. DRS does not believe the schools market will recover until at least after the next UK general election, probably in 1997, although it does believe that there is a fairly substantial market out there yet to be tapped. However, it is now faced with a situation where it knows that, in the short term, revenues from areas of growth will be insufficient to counter the schools’ decline and so must do something about it. The board believes there are opportunities to grow by expanding and extending the application of its core skills, namely scanning data from forms into computer. It’s a narrower than intended technical range, but given the firm’s financial situation it does not believe that in the short term it should stray too far from its basic skills. The plan is to invest in very specific technical and commercial areas related to optical scanning, and DRS said it would be looking at vertical integration of products to enable it to branch into other markets, which it thinks offers the best risk-reward ratio. DRS’s bad luck stretches overseas to Nigeria, which has been plagued with political uncertainties. There it is guarding against a government-funded body, with which it has dealt for some years, running up a significant debt. But there have been some successes: its equipment is being used in the Norwegian general election and the Australian census. Its Reform imaging software was successfully installed at its first customer site, its bureau business is growing and in a diminishing health sector, DRS has maintained sales.

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