Datong optimistic that ‘blip’ is behind it

SURVEILLANCE firm Datong has said that its fall into loss last year was a “blip” caused by Barack Obama’s arrival at the White House, the deepening recession and the loss of a court case.

However new chief executive Dean Blood believes the Leeds-based group will return to profitability this year as it sees US orders return and the growth of sales to European countries looking to monitor key drug routes from Eastern Europe.

Datong, which designs and makes equipment used by international security organisations to track drug dealers and terrorist suspects, saw pre-tax losses of £1.75m in the 12 months to March 31 compared to a profit of £1.96m the year before.

Revenue fell to £6.52m from £10.72m previously but Datong said the new financial year had started well with record first quarter orders of £2.6m.

Brian Smith, who has moved from CEO to executive deputy chairman, said that budget delays by US government departments had been caused by the change in administration last November when Barack Obama won the US presidential race.

“We misjudged the timing involved in the process of changing administrations in the US. It’s not just the politicians that change but the civil servants as well,” said Mr Smith.

The group said that there were encouraging signs in the US that budgets are starting to be released again and it has gained US orders of £1.1m in the first quarter of its new year.

Datong, which has suspended its dividend this year, has put aside £300,000 to cover the legal costs of appealing against the High Court decision over patent infringement on the sale of third party products.

While it suspended the sale of the products, it has now received confirmation that it can sell them abroad and the legal case only affects sales in the UK.

Mr Blood, formerly at Rolls-Royce where he led supply chain growth strategies in its global marine and civil sector supply chain operations, said: “2009 was a challenging year for Datong, an extremely difficult trading environment coupled with an unexpected court case outcome that clearly impacted our financial performance.

“However, our customer base remains loyal, and we are encouraged by our record first quarter 2010 order intake as well as visible opportunities to increase sales in markets Datong has entered recently.”

Datong said it was approaching the rest of the year with “cautious optimism”.