News blog

Datong

• BY: Andrew Hore |
• POSTED: 21/12/2012 |

Trading remains tough for surveillance equipment supplier Datong but it has won a UK contract worth £7.5m over the next two years. 

The latest contract covers the development and manufacture of new products and software. Systems from other UK suppliers will be integrated into the overall system.

Datong has also received an export licence for an £800,000 contract so this order will be completed by next March.

US orders delayed by the failure to agree a US government budget and a sharp decline in European sales have hampered progress. In the year to September 2012, revenues fell from £11.8m to £9.69m, while an underlying profit of £48,000 was turned into a loss of £31,000. This does not include the release of a £300,000 provision for costs of litigation that has been settled. The order book is flat at £1.03m.

A reduction in debtors helped the cash position improve from £1.27m to £2.48m. There was £1.78m spent on R&D last year.

A strategic review is underway as the new chief executive tries to find a way of counteracting the variable performance of the business over the past few years. The plan is to develop the existing business in product and geographic terms. There are also plans to increase the range of services and develop an intelligence software system that will provide more analytical information.

In addition, Datong wants to develop and establish businesses in communication surveillance, cyber security and commercial tracking, which will take Datong into markets outside of defence and homeland security. Some of the newer areas for the business could be grown via acquisition.

At 39p a share, Datong is valued at £5.4m. The share price has risen by nearly one-third since the full year results were published.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFDecember2012_39.pdf