TIDMDRS
RNS Number : 2131X
DRS Data & Research Services PLC
27 August 2015
DRS Data and Research Services plc
(the "Group" or "DRS") (LSE: DRS)
Half Year Results for the Six Month Period Ended 30 June
2015
Results Summary
Six months ended Six months
30 June 2015 ended
GBP000 30 June 2014
GBP000
Education revenue 3,413 4,590
Non-education revenue 141 770
----------------- --------------
Total revenue 3,554 5,360
----------------- --------------
GBP'000 GBP'000
Loss before tax (1,907) (2,783)
Loss for the period (1,777) (2,579)
Cash and cash equivalents 2,349 3,438
Basic loss per share (5.59p) (8.13p)
Chief Executive's Statement
Results
Group revenue for the six months to 30 June 2015 was
GBP3,554,000 (2014: GBP5,360,000) which represents a decrease of
GBP1,800,000 over the previous year. Approximately GBP1,000,000 of
this reduction is the result of timing differences arising from
repeat business falling into the second half of the year with the
balance arising from the absence of census or election revenue and
the continued anticipated decline in legacy print and scanner
business.
As expected the UK examination marking market has broadly
stabilised this year as there have been no further structural
changes in UK examinations in 2015. Core electronic marking revenue
during this period has marginally declined over the same period
last year and UK Education revenue was GBP2,314,000 (2014:
GBP2,528,000), similarly shows a small decline.
Economic conditions in overseas markets, notably in Africa, have
been challenging. As expected the Group has continued to see
declining demand in its traditional scanner and print business.
International sales overall were GBP1,230,000 in the first half
(2014: GBP2,642,000) with a significant element of the reduction a
result of timing differences in recurring business between the two
periods.
The level of investment in new product development in the first
half of 2015 continued at a similar level to the same period in
2014 with the release of the new e-Marker(R) Whole Script Marking
module as scheduled in July 2015, the second in a series of planned
releases in a multi-year development programme. We are in
discussion with a number of clients about pilot programmes, the
first of which is expected to take place in the second half of the
year.
Development of the new Photoscribe(R) scanning machines
continues to progress, with manufacturing commencing in the second
half of 2015 in time for the GLA election in May 2016.
Pre-tax Operating Loss for the six months to June 2015 was
GBP1,907,000 (2014: GBP1,970,000 before exceptional item of
GBP813,000).
The Directors do not recommend the payment of an interim
dividend (2014: Nil).
The Board
Sir David Brown and John Linwood retired from the Board at the
conclusion of the AGM on 18 May 2015. Keith Bogg was appointed as
Chairman with effect from 1 July 2015, replacing Alison Reed who
acted as Chairman on an interim basis from 18 May 2015 to 1 July
2015 when she resumed her role as Senior Independent Director.
Outlook
The UK examination marking market has stabilised this year and
the revenue for the Summer Series, which will be recognised in the
second half of 2015 is expected to be broadly in line with last
year.
Conditions in the overseas markets continue to be challenging,
with Africa in particular encountering economic difficulties which
are driving a further reduction in the Company's traditional
markets for scanners and print.
Cost saving measures have been continued to better align
operating costs with the reduced activity and the Group is on
course to deliver a better performance in 2015 than in 2014.
Enquiries to:
Richard Cole
Company Secretary
Tel: 01908 666088
enquiries@drs.co.uk
DRS Data and Research Services plc
UNAUDITED RESULTS
Consolidated income statement
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
Note GBP000 GBP000 GBP000
Revenue 2 3,554 5,360 13,684
Cost of sales (3,196) (4,660) (9,810)
----------- ----------- -------------
Gross profit 358 700 3,874
Other operating income 8 23 13
Selling and marketing
costs (346) (666) (1,097)
Administrative expenses (1,890) (1,983) (3,847)
Exceptional item -
impairment of property 6 - (813) (813)
Finance costs (37) (44) (81)
----------- ----------- -------------
Loss before income
tax (1,907) (2,783) (1,951)
Tax credit 3 130 204 395
----------- ----------- -------------
Loss for the period (1,777) (2,579) (1,556)
Earnings per share
Basic loss per share 4 (5.59p) (8.13p) (4.90p)
Diluted loss per share 4 (5.59p) (8.13p) (4.90p)
Consolidated statement of comprehensive
income
Loss for the period
and total comprehensive
loss for the period (1,777) (2,579) (1,556)
Consolidated statement of financial position
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
Note GBP000 GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 5 2,053 2,291 2,152
Intangible assets 7 2,706 2,282 2,423
4,759 4,573 4,575
----------- ----------- -------------
Current assets
Inventories 509 796 629
Trade and other receivables 4,021 3,541 1,452
Current tax asset 739 408 522
Cash and cash equivalents 8 2,349 3,438 3,612
----------- ----------- -------------
7,618 8,183 6,215
----------- ----------- -------------
Total assets 12,377 12,756 10,790
----------- ----------- -------------
EQUITY
Capital and reserves attributable
to the Company's equity holders
Share capital 1,731 1,731 1,731
Share premium account 5,377 5,377 5,377
Capital redemption reserve 115 115 115
Treasury shares (1,166) (1,166) (1,166)
Own shares reserve (298) (298) (298)
Retained earnings (484) 285 1,292
----------- ----------- -------------
Total equity 5,275 6,044 7,051
----------- ----------- -------------
LIABILITIES
Non-current liabilities
Borrowings 1,167 1,392 1,280
Deferred income tax liabilities 9 496 316 409
Long-term provisions 118 104 104
1,781 1,812 1,793
----------- ----------- -------------
Current liabilities
Borrowings 226 226 226
Trade and other payables 5,095 4,674 1,720
5,321 4,900 1,946
----------- ----------- -------------
Total liabilities 7,102 6,712 3,739
----------- ----------- -------------
Total equity and liabilities 12,377 12,756 10,790
----------- ----------- -------------
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Consolidated statement of changes in equity
Share Capital Own
Share premium redemption Treasury shares Retained
capital account reserve shares reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2014 1,731 5,377 115 (1,166) (306) 2,996 8,747
Dividend - - - - - (127) (127)
Employee share based
compensation - - - - - 3 3
Own shares vesting - - - - 8 (8) -
Transactions with owners - - - - 8 (132) (124)
Loss for the period and
total comprehensive loss
for the period - - - - - (2,579) (2,579)
At 30 June 2014 1,731 5,377 115 (1,166) (298) 285 6,044
-------------------------- -------- -------- ----------- -------- -------- --------- -------
At 1 July 2014 1,731 5,377 115 (1,166) (298) 285 6,044
Employee share based
compensation - - - - - (16) (16)
Own shares vesting - - - - - - -
Transactions with owners - - - - - (16) (16)
Profit for the period
and total comprehensive
profit for the period - - - - - 1,023 1,023
At 31 December 2014 1,731 5,377 115 (1,166) (298) 1,292 7,051
-------------------------- -------- -------- ----------- -------- -------- --------- -------
At 1 January 2015 1,731 5,377 115 (1,166) (298) 1,292 7,051
Employee share based
compensation - - - - - 1 1
Own shares vesting - - - - - - -
Transactions with owners - - - - - 1 1
Loss for the period and
total comprehensive loss
for the period - - - - - (1,777) (1,777)
At 30 June 2015 1,731 5,377 115 (1,166) (298) (484) 5,275
-------------------------- -------- -------- ----------- -------- -------- --------- -------
Consolidated statement of cash flows
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Cash flows from operating activities
Loss after taxation (1,777) (2,579) (1,556)
Adjustments for:
Tax credit (130) (204) (395)
Depreciation of property, plant and
equipment 147 157 315
Impairment of property, plant and
equipment - 813 813
Amortisation of intangible assets 44 157 268
IFRS 2 charge in respect of LTIP shares 1 3 (13)
Profit/(loss) on sale of property,
plant & equipment and intangibles (6) (14) 25
Exchange losses put through income
statement 5 6 3
Investment income (2) (8) (13)
Interest expense 32 37 72
Decrease in inventories 120 178 345
(Increase)/decrease in trade and other
receivables (2,569) 515 2,604
Increase/(decrease) in trade and other
payables 3,375 1,677 (1,277)
Increase in long-term provisions 14 15 15
--------------- ------------- -------------
Cash (used in)/generated from operations (746) 753 1,206
Interest paid (32) (37) (72)
Income tax received - 264 434
--------------- ------------- -------------
Net cash (used in)/generated from
operating activities (32) 227 362
--------------- ------------- -------------
Cash flows from investing activities
Purchases of property, plant and equipment
(PPE) (48) (353) (372)
Proceeds from sale of PPE 6 14 66
Purchase of intangible assets (327) (645) (987)
Interest received 2 8 13
Net cash used in investing activities (367) (976) (1,280)
--------------- ------------- -------------
Cash flows from financing activities
Dividends paid to Group's shareholders - (127) (127)
Repayment of loan (113) (113) (226)
--------------- ------------- -------------
Net cash used in financial activities (113) (240) (353)
--------------- ------------- -------------
Net decrease in cash and cash equivalents (1,258) (236) (65)
--------------- ------------- -------------
Cash and cash equivalents at beginning
of period 3,612 3,680 3,680
Exchange decrease on cash (5) (6) (3)
--------------- ------------- -------------
Cash and cash equivalents at end of
period 2,349 3,438 3,612
--------------- ------------- -------------
Notes to the half year results
1 Nature of operations
DRS Data and Research Services plc is a public limited company
with a premium listing on the London Stock Exchange, incorporated
and domiciled in England. The address of the registered office is 1
Danbury Court, Linford Wood, Milton Keynes, MK14 6LR.
Accounting policies and basis of preparation
The financial information comprises the unaudited results for
the six months to 30 June 2015 and to 30 June 2014, together with
the audited results for the year ended 31 December 2014. The
figures and financial information for the year to 31 December 2014
do not constitute the statutory financial statements for that year.
Those financial statements have been delivered to the Registrar and
included the auditor's report which was unqualified and did not
contain a statement either under section 498(2) of the Companies
Act 2006, or section 498(3).
These unaudited half year results have been prepared on a basis
consistent with IFRS accounting policies as set out in the Report
and Accounts for the year ended 31 December 2014. Information
provided is in accordance with IAS34 interim reporting
requirements.
These half year results have not been audited or reviewed by the
auditor pursuant to the Auditing Practices Board's guidance on
financial information.
Basis of preparation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The interim financial statements have been prepared in
accordance with the accounting policies adopted in the Group's last
annual financial statements for the year ended 31 December
2014.
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
Critical accounting judgements and key sources of estimation
uncertainty
It should be noted that accounting estimates and assumptions are
used in preparation of the financial statements. Although these
estimates are based on management's best knowledge of current
events and actions, actual results may ultimately differ from those
estimates.
Critical judgements that the Directors have made:
Research and development expenditure
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-- Note 7 includes capitalised development expenditure of
GBP2,658,000 which relates to the cost of developing a new version
of e-Marker(R), the second module of which was released in Summer
2015. A live pilot is being planned with an existing customer in
the second half of 2015 which will test the effectiveness of the
software platform built to date and where improvements may need to
be made ready for commercialisation.
The project is running behind the original schedule. The
judgement is that these capitalised costs are recoverable by
reference to future cash flows. Detailed sensitivity analysis in
respect of the incremental revenues which can be achieved from the
software has been carried out recognising the delays in delivering
the software and recent changes in the education sector, which the
Directors have used to assess the carrying value of this asset.
Revenue recognition
-- Determining when to recognise revenues from services requires
an understanding of both the nature and timing of the services
provided and the customers' pattern of consumption of those
services, based on historical experience and knowledge of the
market. Recognition of services revenue requires significant
judgement in determining actual work performed. On contracts which
incorporate multiple products and services such as scanning
machines, software, printed forms and professional services it is
necessary to consider the nature of the contract with the end user,
the combination of deliverables and how transfer of responsibility
of supply is deemed to take place. The judgement is when
performance conditions are satisfied for the respective elements of
the solution to become recognised as revenue.
Deferred tax
-- the extent to which deferred tax assets can be recognised is
based on an assessment of the profitability that future taxable
income will be available against which the deductible temporary
differences and tax loss carry-forwards can be utilised.
Tax credits
-- research and development tax credits are included within the
tax charge/credit in the Income Statement. The judgement is whether
to treat this credit as a reduction in corporation tax or as other
income if it is considered to be a source of funding. Management do
not consider the research and development tax credits to be a
source of funding and have therefore made a judgement to include
this within the tax charge/credit within the Income Statement.
Areas considered to involve significant estimates:
Inventory provisions
-- Inventory provisions reflect future sales over the useful
life of the product. In the case of the high value PhotoScribe(R)
scanning machines it is necessary to estimate the expected useful
life of the product and to estimate the volume of expected machine
sales over the remaining useful life. Where there are insufficient
machines held in stock to meet expected demand, machines are
released from the inventory provision based on this estimate.
Dilapidations provision
-- There are six property leases relating to eight business
units occupied by operations. All the leases require the tenant to
address the cost of leasehold dilapidations at the end of the
lease. In order to apportion the dilapidation cost over the life of
the lease, a provision is created to reflect an estimate of the
projected dilapidation cost accruing over the life of the
leases.
Useful economic lives of depreciable assets
-- Management reviews its estimate of the useful economic lives
at each reporting date, based on the expected utility of the
assets. Uncertainties in these estimates relate to the conditions
of the property assets and technological obsolescence that may
change the utility of certain software and IT equipment.
Carrying value of the Linford Wood property
-- The carrying value of the Linford Wood property is based on
fair value less costs to sell. As a result of this the Group
recognised an impairment loss on the property in June 2014 of
GBP813,000, reducing the net book value of the property to reflect
the latest independent valuation undertaken of GBP1,600,000. See
Note 6.
2 Segment Information
The principal activities of the Group are the provision of data
capture services, the manufacture, sale and support of optical and
image scanning equipment, design and printing of documentation used
for data capture and bureau services. The Group is organised
functionally, with each function of the business specialising in
its own area of expertise. Project managers look to the functional
areas to provide the appropriate tailored mix of products and
services to fulfil each specific contract. In turn, the functional
areas are supported by indirect cost centre departments such as
Research and Development and Information Systems.
Management consider that there is only one operating segment, as
this is the lowest level at which discrete financial information is
available and is reflected by a single set of management accounts
that are used throughout the Group. However, it reviews revenue
according to various segments and the revenue split is disclosed
below.
The delivery of market-focussed solutions results in a 'many to
many' relationship between department costs and revenue streams.
The individual standard costs of each type of supply are carefully
controlled, but due to the effect sales mix has on recovery rates,
reporting the relative profitability of the revenue streams would
not be consistent with management processes within the Group.
The revenue analysis for the six months ended 30 June 2015 is as
follows:
Education revenue Non-education revenue
Examination Census &
& assessment Other Commercial elections Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- ----------- ----------- --------
Region
UK 2,139 175 8 2 2,324
Africa 1,044 1 - - 1,045
Rest of world 51 3 43 88 185
Total 3,234 179 51 90 3,554
-------------- -------- ----------- ----------- --------
Revenue arising from specific products and
related services thereon:
e--Marker(R) 2,205
e-Counting -
-------------- -------- ----------- ----------- --------
The revenue analysis for the six months ended 30 June 2014 is as
follows:
Education revenue Non-education revenue
Examination Census &
& assessment Other Commercial elections Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- ----------- ----------- --------
Region
UK 2,270 258 9 181 2,718
Africa 1,881 27 - - 1,908
Rest of world 140 14 51 529 734
Total 4,291 299 60 710 5,360
-------------- -------- ----------- ----------- --------
Revenue arising from specific products and
related services thereon:
e--Marker(R) 2,368
e-Counting 352
-------------- -------- ----------- ----------- --------
The revenue analysis for the year ended 31 December 2014 is as
follows:
Education revenue Non-education revenue
Examination Census &
& assessment Other Commercial elections Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- ----------- ----------- --------
Region
UK 9,408 464 19 1 9,892
Africa 2,906 30 2 - 2,938
Rest of world 200 19 51 584 854
Total 12,514 513 72 585 13,684
-------------- -------- ----------- ----------- --------
Revenue arising from specific products and related services
thereon:
e--Marker(R) 9,301
e-Counting 14
-------------- -------- ----------- ----------- --------
3 Income tax expense
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Current tax - domestic (207) (243) (522)
Foreign taxation - - 26
Adjustment in respect of previous
period (10) (165) (196)
----------- ----------- -------------
Total current tax (217) (408) (692)
Deferred tax current year (Note
9) 81 94 132
Deferred tax prior year (Note 9) 6 110 165
(130) (204) (395)
----------- ----------- -------------
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Domestic income tax is calculated at 20.25% (2014: 21.5%) of the
estimated assessable profit for the year.
Development expenditure has already been identified in the
current year as qualifying expenditure for research and development
repayable tax credits thereby creating the GBP217,000 credit in the
current income tax credit.
4 Earnings per share
The calculation of 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
purposes of this calculation.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted where applicable 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:
Basic earnings per share
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Earnings attributable to Ordinary
Shareholders being loss for
the period (1,777) (2,579) (1,556)
Weighted average number of
shares 31,777,071 31,731,071 31,767,482
Basic loss per Ordinary share (5.59p) (8.13p) (4.90p)
----------- ----------- -------------
Diluted earnings per share
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Earnings attributable to Ordinary
Shareholders being loss for
the period (1,777) (2,579) (1,556)
----------- ----------- -------------
Weighted average number of
shares
Basic 31,777,071 31,731,071 31,767,482
Dilutive effect of:
* options under the Enterprise Management Incentive
Scheme
-
* options under LTIP option scheme - -
----------- ----------- -------------
Diluted 31,777,071 31,731,071 31,767,482
----------- ----------- -------------
Diluted loss per Ordinary
share (5.59p) (8.13p) (4.90p)
----------- ----------- -------------
5 Property, plant and equipment
Freehold
land Computer Fixtures Plant Rental Motor
Total & buildings equipment & fittings & machinery machines vehicles
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2015
Cost 10,530 2,900 1,257 2,671 3,255 441 6
Accumulated depreciation (8,378) (1,324) (1,159) (2,396) (3,052) (441) (6)
-------- ------------- ----------- ------------ ------------- ---------- -----------
Net book amount 2,152 1,576 98 275 203 - -
-------- ------------- ----------- ------------ ------------- ---------- -----------
For the period
ended
30 June 2015
Opening net amount
at
1 January 2015 2,152 1,576 98 275 203 - -
Additions 48 - 1 7 40 - -
Depreciation charge (147) (24) (28) (48) (47) - -
Impairment charge -
-------- ------------- ----------- ------------ ------------- ---------- -----------
Closing net book
amount at
30 June 2015 2,053 1,552 71 234 196 - -
-------- ------------- ----------- ------------ ------------- ---------- -----------
At 1 January 2014
Cost 10,237 2,900 1,185 2,473 3,226 447 6
Accumulated depreciation (7,329) (454) (1,071) (2,325) (3,026) (447) (6)
-------- ------------- ----------- ------------ ------------- ---------- -----------
Net book amount 2,908 2,446 114 148 200 - -
-------- ------------- ----------- ------------ ------------- ---------- -----------
For the period
ended
30 June 2014
Opening net amount
at
1 January 2014 2,908 2,446 114 148 200 - -
Additions 353 - 82 189 82 - -
Depreciation charge (157) (33) (53) (32) (39) - -
Impairment charge
(see Note 6) (813) (813) - - - - -
Closing net book
amount at
30 June 2014 2,291 1,600 143 305 243 - -
-------- ------------- ----------- ------------ ------------- ---------- -----------
At 1 January 2014
Cost 10,237 2,900 1,185 2,473 3,226 447 6
Accumulated depreciation (7,329) (454) (1,071) (2,325) (3,026) (447) (6)
-------- ------------- ----------- ------------ ------------- ---------- -----------
Net book amount 2,908 2,446 114 148 200 - -
-------- ------------- ----------- ------------ ------------- ---------- -----------
For the period
ended
31 December 2014
Opening net amount
at
1 January 2014 2,908 2,446 114 148 200 - -
Additions 372 - 81 205 86 - -
Disposals - - - - - - -
Depreciation charge (315) (57) (97) (78) (83) - -
Impairment charge
(see Note 6) (813) (813) - - - - -
Closing net book
amount at
31 December 2014 2,152 1,576 98 275 203 - -
-------- ------------- ----------- ------------ ------------- ---------- -----------
6 Impairment of property, plant and equipment
The freehold land and buildings relate to the Linford Wood
property that was acquired by the Group in 2001. Its acquisition
was justified on the savings gained against the rental cost of
leasing. The use and justification remain the same.
During August 2014 Barclays Bank plc conducted a commercial
valuation of the property based on tenanted occupancy which
calculated the current market value at GBP1,600,000.
(MORE TO FOLLOW) Dow Jones Newswires
August 27, 2015 02:02 ET (06:02 GMT)
The impairment charge of GBP813,000 in June 2014 reflects the
general fall in the value of commercial property within the
locality and does not alter the property's condition or expected
useful life.
7 Intangible assets
Computer Development
Total software expenditure
GBP000 GBP000 GBP000
At 1 January 2015
Cost 7,378 1,387 5,991
Accumulated amortisation (4,955) (1,304) (3,651)
--------- ---------- -------------
Net book amount 2,423 83 2,340
--------- ---------- -------------
For the period ended 30 June 2015
Opening net amount at 1 January
2015 2,423 83 2,340
Additions 327 9 318
Amortisation charge (44) (44) -
--------- ---------- -------------
Closing net book amount at 30
June 2015 2,706 48 2,658
--------- ---------- -------------
Computer Development
Total software expenditure
GBP000 GBP000 GBP000
At 1 January 2014
Cost 6,481 1,381 5,100
Accumulated amortisation (4,687) (1,171) (3,516)
--------- ---------- -------------
Net book amount 1,794 210 1,584
--------- ---------- -------------
For the period ended 30 June 2014
Opening net amount at 1 January
2014 1,794 210 1,584
Additions 645 5 640
Amortisation charge (157) (67) (90)
Closing net book amount at 30
June 2014 2,282 148 2,134
--------- ---------- -------------
Computer Development
Total software expenditure
GBP000 GBP000 GBP000
At 1 January 2014
Cost 6,481 1,381 5,100
Accumulated amortisation (4,687) (1,171) (3,516)
--------- ---------- -------------
Net book amount 1,794 210 1,584
--------- ---------- -------------
For the period ended 31 December
2014
Opening net amount at 1 January
2014 1,794 210 1,584
Additions 987 6 981
Disposals (90) - (90)
Amortisation charge (268) (133) (135)
Closing net book amount at 31
December 2014 2,423 83 2,340
--------- ---------- -------------
8 Cash and cash equivalents
Six months
ended Six months Year ended
30 June ended 31 December
2015 30 June 2014 2014
GBP000 GBP000 GBP000
Cash at bank and in hand 114 180 85
Short-term bank deposits 2,235 3,258 3,527
----------- -------------- -------------
2,349 3,438 3,612
----------- -------------- -------------
The effective interest rate on short term bank deposits was
0.24% (2014: 0.24%). These deposits have an average maturity of one
day (2014: one day).
Cash at bank and in hand include the following for the purposes
of the cash flow statement:
Six months
ended Six months Year ended
30 June ended 31 December
2015 30 June 2014 2014
GBP000 GBP000 GBP000
Cash and cash equivalents 2,349 3,438 3,612
2,349 3,438 3,612
----------- -------------- -------------
The Group's approach to managing liquidity and currency risks is
set out in Note 4.1(c) and 4.1(a)(i), respectively, of the 2014
Annual Report and Accounts.
The tables below show the extent to which the Group has monetary
assets in currencies other than Sterling.
At 31 At 31
At 30 At 30 At 30 June At 30 June December December
June 2015 June 2015 2014 2014 2014 2014
US Dollars Euro US Dollars Euro US Dollars Euro
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Sterling equivalent 34 65 130 27 21 47
------------ ----------- ------------ ----------- ------------ ----------
9 Deferred income tax
Six months
ended Six months Year ended
30 June ended 31 December
2015 30 June 2014 2014
GBP000 GBP000 GBP000
Analysis for financial reporting
purposes
Deferred tax liabilities 496 316 409
496 316 409
----------- -------------- -------------
The movement in the Group's net deferred tax position was as
follows:
Six months
ended Six months Year ended
30 June ended 31 December
2015 30 June 2014 2014
GBP000 GBP000 GBP000
At the beginning of the period 409 112 112
Charge to income for the current
period 81 94 132
Charge to income for the prior
period 6 110 165
At the end of the period 496 316 409
----------- -------------- -------------
The following are the major deferred tax liabilities and assets
recognised by the company and the movements thereon during the
period:
Capital allowances
GBP000
At 1 January 2015 409
Charge to income
for the period 87
At 30 June 2015 496
-------------------
10 Dividend per share
The Directors do not recommend an interim dividend. No dividends
have been paid in 2015 in respect of the year ended 31 December
2014.
On 30 May 2014 a final dividend of GBP127,000 was declared and
subsequently paid to the Company's equity shareholders out of the
profit achieved at 31 December 2013. This represents a payment of
0.40p per share.
11 Principal risks and uncertainties
The Directors have considered the principal risks and
uncertainties relating to its future business which might affect
the financial performance of the Group in 2015. The Group continues
to be exposed to the principal risks and uncertainties as described
on page 16 of the 2014 Annual Report and Accounts. A copy of the
2014 Annual Report and Accounts is available on the Company's
website at www.drs.co.uk.
The principal risks currently facing the Group are set out below
but are not arranged in order of relative impact or
probability.
Risk Impact Mitigation
MARKET Changes to national In light of the market
Political and geographical and political policies setbacks in 2014, DRS
uncertainties or uncertainties over seeks to work even more
environmental and economic closely with its customers
stability could lead and regulatory authorities
to sudden changes in to which they are accountable
the size of the market to understand the environments
or delays in implementation in which they operate
of solutions or settlement and the changes they encounter
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of outstanding debts. in order for DRS to anticipate
the impact on the business
when preparing commercial
bids.
PRODUCT There is a risk that The approach to product
Products meet market the Group fails to develop development is to prepare
requirements its products on a timely details of the functional
basis to meet customer requirements of the product
and market expectation. being developed prior
In respect of software, to preparing an analysis
this could materially of the work for the current
impact the objective release which is broken
of rolling out the new down into milestones that
examination marking are measurable and costed.
software that could These details are monitored
lead to delay in revenue by dedicated project managers
recognition which would and reviewed regularly
inhibit justifying the by the executives as part
carrying value of assets of a critical delivery
in the balance sheet. process.
In respect of hardware, In respect of software
this could result in products, the business
the new PhotoScribe(R) looks to undertake pilots
scanner not being available with prospective customers
to meet key milestones to evaluate its performance.
in the delivery of the In respect of hardware,
Mayor of London and rigorous testing of prototypes
London Assembly elections and pre-production machines
in 2016, which could is undertaken prior to
result in financial full production.
penalties. The Group Board regularly
challenges the executives
on the delivery process
and status of these critical
projects.
STRATEGIC There is a risk that DRS looks to develop a
Over reliance on the Group's business good understanding of
key customers model of focussing on its customers' needs and
large- scale, technically thereby create a long-term
complex projects places working relationship that
over-reliance on a small leads to repeat business
number of key customers' as well as new business.
tying up the Group's An evaluation of the resource
working capital. This requirements is undertaken
could result in revenue at the start and end of
and profit volatility. each supply to identify
savings and efficient
use of working capital.
It is a core strategy
to focus on the international
education market to increase
geographical diversification
in new areas that offer
sustainable recurring
revenue growth.
STRATEGIC The risks associated The Group's strategic
Effect of complexity with providing large-scale approach takes into account
of customer environments technically complex the need to plan ahead
on working capital solutions which are to ensure capacity and
and other resources automating previously access to adequate finance
manual processes require and resources are available
comprehensive planning along with investing in
and a phased delivery the development of its
to implement effective people, products and services.
change, putting abnormal This places a high level
demands on the Group's of importance on ensuring
working capital requirements the right mix of skills
and a corresponding and knowledge is retained
delay of revenue generation. in the business. In respect
For example, the Group of significant contracts,
is a party to a significant the Group recognises the
contract to provide need to identify and work
the technology and expertise with specific third-parties
for the electronic counting that provide expertise
of ballots in London and complementary skills
for the Mayor of London to enable delivery of
and London Assembly the contractual requirements.
elections in 2016.
STRATEGIC DRS may not have sufficient DRS has adjusted its cost
Appropriate resource resources and resilience base and organisational
and resilience to be able to realign structure in line with
to meet market the business to keep the current outlook. Product
and customer requirements up with changing market development is focussed
and customer requirements, on delivering customer
or to respond to the requirements and where
failure to deliver a possible product is piloted
major software or hardware with customers to obtain
development project. user perspective. DRS
continues to focus on
key opportunities that
will enable it to achieve
its strategic objectives.
OPERATIONAL Handling large volumes The business has engaged
Data security of sensitive data is in an ongoing improvement
a fundamental part of programme to ensure the
the business and there use of up-to-date business
is a possibility that practice and appropriate
this information could hardware, infrastructure
be accessed by unauthorised and software allow security
people and its integrity measures to be applied,
compromised, maintained and controlled
resulting in loss of at a suitable level to
revenue and a potential meet the needs of both
negative impact on reputation. customer and corporate
obligations. The Company
continues to be certified
to BS ISO/IEC 27001:2013.
OPERATIONAL Any substantial business Certification of compliance
Infrastructure disruption, whatever to Business Continuity
and process resilience the cause, could significantly Management has been in
impede our ability to place since February 2012
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