Datong heading for the border in US expansion

SPY gadgets firm Datong revealed plans to expand in the United States by opening two new offices in a bid to boost growth after six months of lacklustre sales.

New chief executive Mark Cook said the Leeds-based company plans to tap into concerns about US border security by opening an office in El Paso, Texas, close to the Mexican border. It is planning a second office at an as-yet undecided location.

Including Datong’s Washington office, this will give the firm three sites in the US.

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“We are going significantly more into the US,” said Mr Cook, a defence and security expert who joined in January.

“It makes a big difference to be able to bowl up to your customers, rather than schedule timing with flights and hotels. The big plan is to increase the US presence significantly but that’s going to take a bit more time and business planning. It’s too big a market for us not to take it seriously.”

Initially, the El Paso office will focus on sales, but could be extended to technical support.

“The US has for us been growing 25 to 30 per cent year-on-year,” said finance director Stephen Ayres. “The US is about 50 to 60 per cent of the world’s spend (in Datong’s sector).”

The company yesterday reported a steep fall in revenues to £3.84m for the six months to the end of march, from £6.3m a year earlier. It slipped to a pre-tax loss of £142,000 from £762,000 profits a year earlier after a number of big orders were deferred.

But Datong said its second half should show a big improvement, after order intake during April and May totalled £3.1m.

“They (the results) don’t really reflect the business,” said Mr Cook. “There are some really good opportunities. All the new products are coming on line.”

Datong’s products help military and law enforcement agencies covertly track criminals and terrorists.

Its new generation of products have more power, plus 3G capability to allow real-time tracking over the internet. These products, which are designed for hours of continuous use in hostile environments, and allow users to track suspects remotely using satellite location, have seen “strong demand”.

Its confirmed order book ended the period at £2.36m, versus £1.1m a year earlier.

“Encouragingly, the order book has strengthened considerably,” said WH Ireland analyst Eric Burns.

“Margins are improving thanks to efficiency gains made earlier in the year whilst new products, particularly for the US market, are said to be well received.

“With outstanding litigation issues settled in January and a strong balance sheet, Datong is expected to return to some meaningful levels of growth in the second half.”