SITS provider to the education, election and census sectors, DRS Data and Research Services, reported a revenue decline in H113 of 26.7% to £6.6 million. However, there was an increase of 7% for its ‘e-Marker’ education and assessment product to £3.6 million.
The main reason for the H113 decline was its ‘e-Counting’ census and elections product which represented 29% of total H112 revenue but only 1% of 1H 2013 revenue (at £63,000). Census and elections do not provide regular, stable revenue streams and the company therefore experiences peaks and troughs in this area. In H112 DRS won large election contracts for 2012 London Mayor and Assembly Elections (c£2.47 million booked). There was no contract of similar value for H113. As a result, UK revenues declined 36% in the period (though ‘education’ revenues in the UK were up 5%). The company is painfully aware of this trend and so is sensibly investing £650k in R&D for the more stable revenue-generating e-Marker software.
The UK represents the majority of the company’s revenues (61% of H113 revenue) but the balance is slowly shifting (see International expansion smoothing performance at DRS). Importantly DRS won another large census project in Myanmar planned for 2014 after a successful pilot this year; with approximately 75% of the contract to be delivered in 2013, this will positively impact H213 results.
Having identified that education and assessment products will generate long-term consistent revenues DRS will strategically focus on developing these products and services further. Gaining additional revenue streams from international markets through carefully selected partnerships will also boost the company’s reputation and increase revenues. However, both these pursuits are currently impacting the bottom line; the company reported a loss before tax of £638K (vs. £153K in H112) as it invested in its products and services as well as in the delivery of pilot e-Market projects in India and Africa.