Order delivery delays set to push Datong group to a full-year loss

However, in a trading update, Leeds-based Datong said markets had been "resilient" despite the poor state of the economy.

The company operates in the twilight world of covert security, where clients don't want anyone to know how they hunt terrorists, criminals and drug traffickers.

The company, which designs, makes and sells tracking devices used by law enforcement agencies and security forces around the world, said it had seen strong demand in the European and UK markets.

Datong had previously suffered from falling sales to the US as the change in administration meant budgets were capped and orders postponed.

Yesterday it said it had seen "significant successes" in new geographical regions since the end of its last financial period to September 30.

This has meant a "record level of order intake for the period" so far.

A small number of orders had seen delays in delivery time because of the need to follow a formal export control approval process.

Datong is not experiencing any other significant problems obtaining the formal approvals, the company said.

Datong won an 800,000 order from a new market within the "rest of world" region in July. It has reapplied for an export license application which was initially declined.

The board said it expected the matter to be resolved by the end of this month.

Datong had previously hoped the matter might be resolved during February.

Delivery delays should mean revenues are about 15 per cent lower than expected for the period to March 31 2010, it added.

In a statement, the board said: "This lower level of revenue will lead to a financial loss for the 12-month period; however the group has seen a substantial improvement in trading on last year, has traded profitably and has a record order book which leaves the group in a strong position going forward.

"The board remains confident that the combination of new product development and expanding geographical coverage, leveraging off an established installed base, is a sound foundation for continued recovery."

Dean Blood, the company's chief executive, said the company had suffered a setback, but would recover from it.

In August last year, Datong won its first UK order for a portable tracking device since a ban on selling it was lifted by the High Court.

The device, which is sold on behalf of a third party, allows law enforcement agencies to track mobile phones.

Datong also revealed yesterday that it will host a company showcase, intended for institutional investors.

Mr Blood and his team will host a business overview, outlook, product demonstration, new "product roadmap" and question and answer session.

The event will take place at the offices of Canaccord Adams in Cardinal Place, 80 Victoria Street, London, at 12.30pm tomorrow.

The financial year end has been changed to September 30, to help improve the reliability of its year-end forecasting processes, the company said.

Datong was founded in 1974 by David Arthur Tong – hence the name – an amateur radio enthusiast and Leeds University lecturer who started making accessories for fellow radio buffs.

Tuning in to security and defence markets

Formed in 1974, Leeds-based Datong initially specialised in the development of radio frequency technology for use by amateur radio enthusiasts. By 1982, Datong had developed its first radio frequency direction finding product.

As concerns grew about terrorist activity in the UK, Datong moved into the security and defence markets.

The growing global demand for Datong's technology in these markets has led to rapid growth, particularly over the last five years.

The company floated on AIM (Alternative Investment Market) in October 2005.

Chief executive Dean Blood joined Datong in September 2008 as chief operating officer. He became chief executive in July 2009.

He was formerly at Rolls-Royce, where he led lean supply chain growth strategies in global marine and civil sector chain operations. His early career included engineering and operations based positions at Smith Industries, BTR and Chloride.

Louis Quijas, the president of Datong Electronics, the company's US subsidiary, was assistant director at the Federal Bureau of Investigation (FBI), heading the Office of Law Enforcement Coordination in Washington DC.