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Datong

  • BY: Andrew Hore |
  • POSTED: 28/07/2009 |

Surveillance technology developer Datong believes that a strong first quarter order intake means that this year will be much better than last year.

Datong has taken orders worth £2.6m in the three months to June 2009. This is normally a weak quarter.

Revenues fell from £10.7m to £6.51m in the year to March 2009. There was a swing from a profit of £1.96m to a loss of £1.75m.

That includes a £300,000 provisions for costs and damages relating to litigation about third party products that Datong has sold. Datong and its third party supplier lost a patent infringement court case in March 2009. They have appealed. However, Datong has been able to start selling the products outside the UK again - orders totalled £800,000 in the first quarter.
Datong says that it is indemnified for any additional costs relating to the case.

UK sales held up but North American sales were sharply down due to the change over of power in the US delaying spending. US and European sales should recover this year.

Net cash was £2.24m at the end of March 2009. As revenues build up working capital requirements will increase but this cash figure should be maintained at the end of this year.

Datong is changing its year end from March to September. The next financial period will be 18 months to September 2010. This means that trading will not be skewed towards the year end any more.

Annualised cost savings of £300,000 were made in the first quarter at a cost of £100,000.

House broker Canaccord forecasts a profit of £200,000 on revenues of £11m in the 12 months to March 2010. The Datong share price recovered 4.25p to 31.5p, which values the company at £3.77m.

Dean Blood has moved from chief operating officer to chief executive. He says the existing premises have the potential to generate £25m of sales a year.

Datong continues to spend on research and development - it rose 30% to £1.8m in 2008-09. New product launches will begin to make an increasing contribution to the business and Datong is building up its law enforcement business. The military remains the main customer base at the moment.

Blood believes that the company’s software mapping and visualisation skills will be important to its growth all around the world.

Datong is also looking for strategic partners and acquisitions that will bring new technologies to the group. 

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