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Press Release

24 June 2013

DATONG PLC

("DATONG", "the Company" or "the Group")

Interim Results

DATONG PLC (DTE.L), a leading provider of covert intelligence gathering solutions, today announces its interim results for the six-month period ended 31 March 2013.

Financial Highlights

· 

Revenue of £5.73 million (2012: £3.84 million)

· 

Operating profit £0.02 million  (2012: loss of £0.14 million)

· 

Basic earnings per ordinary share of 0.17p (2012: 1.18p)

· 

Net cash of £2.21 million (2012: £2.14 million)

- Ends -

Enquiries:

DATONG PLC

Tel: +44 (0) 113 239 5350

Mark Cook, Chief Executive Officer


Stephen Ayres, Finance Director


Nominated adviser and broker

Canaccord Genuity

Tel: +44 (0) 207 050 6500

Simon Bridges / Mark Whitmore


Media enquiries

Abchurch Communications

Tel: +44 (0) 207 398 7718

Sarah Hollins / Quincy Allan


Sarah.hollins@abchurch-group.com



Business Review

Trading performance and Outlook

DATONG's position within the defence and security market has supported a solid performance during the period in line with management expectations.  Delivered revenue for the period was £5.73 million (2012: £3.84 million) and the operating profit was £0.02 million (2012: loss of £0.14 million).  Net cash at the period end was £2.21 million (2012: £2.14 million).

Throughout the period, and in line with its previously stated strategy, the Group has continued to invest in its product portfolio and routes to market whilst also prudently controlling its cost base. 

As announced on 19 December 2012, a major UK contract win was secured worth £7.5 million over the next two years.  Of that contract £1.26 million has been recognised as revenue in the period.

Despite a strong performance from the Third Party product business segment, further territory distribution rights have been terminated during the period reflecting the commercial growth of DATONG's supply partner and which will significantly impact future financial performance.  Revenue from the Third Party product business segment in the period was £1.06 million (2012: £0.42 million).

The sales order pipeline for the second half of the financial year and in particularly the expected timings of certain opportunities is being adversely affected by the continuing uncertainty surrounding the sequestration process in the US. 

Post Balance Sheet Events

On 10 May 2013 Seven Technologies Holdings Limited ("Seven") announced its intention to make a cash offer ("Offer") to acquire the entire issued and to be issued share capital of DATONG at the offer price of 50 pence per share. The offer document containing the full terms and conditions of the Offer and the procedure for acceptance was posted to DATONG shareholders together with the related Form of Acceptance on 14 May 2013.

On 11 June 2013 Seven announced that as at 1.00 p.m. (London time) on 10 June 2013, Seven had received valid acceptances under the Offer from DATONG shareholders, in respect of 13,139,239 DATONG Shares, which in aggregate represents approximately 94.975 per cent. of the existing issued ordinary share capital of the Company and accordingly, by virtue of such acceptances, Seven declared the Offer wholly unconditional in all respects.

Having received valid acceptances under the Offer of more than 75 per cent. of the existing issued share capital of DATONG, at the request of Seven, an application has been made to the London Stock Exchange, to cancel the trading facility in the ordinary shares of the Company on AIM. In accordance with the guidance to Rule 41 of the AIM Rules for Companies, on 11 June 2013 the Company gave notice that the cancellation of the admission to trading on AIM of DATONG shares (the "Cancellation") is expected to be effective from 7.00 a.m. (London time) on 10 July 2013 and that the last day of dealings in DATONG shares will be 9 July 2013.

The Cancellation will significantly reduce the liquidity and marketability of any DATONG shares not asserted to the Offer and their value may be affected in consequence. Seven also intends to re-register the Company as a private company following the Cancellation.

Board Changes

Following the announcement on 11 June 2013 by Seven that the Offer was now wholly unconditional in all respects, the non-executive directors of the Company, namely, Paul Lever, Grant Ashley, Richard Brearley and Brian Smith resigned from their offices with immediate effect.  The Board therefore now comprises of Stephen Ayres and Mark Cook.

Paul, Grant, Richard and Brian have all played an integral role during the Company's life on AIM and on behalf of everyone involved the Board thanks them all for their significant contributions over the years.

Mark Cook

Chief Executive Officer

24 June 2013



CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 31 MARCH 2013



Six months

Six months

Twelve months



to 31 March

to 31 March

to 30 September



2013

2012

2012



Unaudited

Unaudited

Audited

Continuing operations

Note

£'000

£'000

£'000

Revenue

3

5,726

3,839

9,690

Cost of sales


(3,663)

(2,164)

(5,606)

Gross profit


2,063

1,675

4,084

Overhead costs


(2,047)

(2,113)

(4,108)

Share of post-tax result of associate


-

(3)

(8)

Exceptional litigation costs


-

300

300

Profit/(loss) from operations

3

16

(141)

268

Investment income


3

-

1

Finance costs


-

(1)

-

Profit/(loss) before taxation


19

(142)

269

Taxation


4

305

137

Profit for the period attributable
to equity holders of the Company



23


163


406

Profit per ordinary share (pence)





Basic

4

0.17

1.18

2.93

Diluted

4

0.16

1.18

2.93



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 MARCH 2013


Six months

Six months

Twelve months


to 31 March

to 31 March

to 30 September


2013

2012

2012


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Profit for the period

23

163

406

Other comprehensive income




Currency translation differences

(104)

26

47

Total comprehensive income for the
period attributable to equity holders
of the Company



(81)



189



453



CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2013



31 March

31 March

30 September



2013

2012

2012



Unaudited

Unaudited

Audited


Note

£'000

£'000

£'000

Assets





Non-current assets





Intangible assets


2,629

2,952

2.808

Property, plant and equipment


897

1,037

1,002

Investment in associates


-

9

-

Deferred tax assets


5

263

4



3,531

4,261

3,814

Current assets





Inventories


1,353

2,415

2,297

Trade and other receivables


4,063

2,483

3,039

Derivative financial instruments


-

21

-

Tax receivables


101

10

100

Cash and cash equivalents


2,212

2,144

2,480



7,729

7,073

7,916

Assets held for sale



-

-

Total assets


11,260

11,334

11,730

Liabilities





Current liabilities





Trade and other payables


(1,029)

(1,236)

(1,427)

Non-current liabilities





Deferred tax liabilities


(31)

(35)

(35)

Total liabilities


(1,060)

(1,271)

(1,462)






Net assets


10,200

10,063

10,268






Equity





Share capital


69

69

69

Share premium


4,468

4,468

4,468

Currency translation reserve


(74)

9

30

Retained earnings


5,737

5,517

5,701

Equity attributable to equity holders of the Company


10,200

10,063

10,268



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 MARCH 2013




Currency




Share

Share

translation

Retained



capital

premium

reserve

earnings

Total


£'000

£'000

£'000

£'000

£'000

Unaudited






At 1 October 2012

69

4,468

30

5,701

10,268

Total comprehensive income for the period

-

-

(104)

23

(81)

Cost of share-based incentives

-

-

-

13

13

At 31 March 2013

69

4,468

(74)

5,737

10,200

Unaudited






At 1 October 2011

69

4,468

(17)

5,352

9,872

Total comprehensive income for the period

-

-

26

163

189

Cost of share-based incentives

-

-

-

2

2

At 31 March 2012

69

4,468

9

5,517

10,063

Audited






At 1 October 2011

69

4,468

(17)

5,352

9,872

Total comprehensive income for the period

-

-

47

406

453

Cost of share-based incentives

-

-

-

(57)

(57)

At 30 September 2012

69

4,468

30

5,701

10,268









CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 MARCH 2013


Six months

Six months

Twelve months


to 31 March

to 31 March

to 30 September


2013

2012

2012


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Cash flows from operating activities




Profit/(loss)from operations

16

(141)

268

Adjustments for:




Depreciation and amortisation

760

694

1,545

Impairment of investments in associates

-

-

4

Share of post-tax result of associate

-

3

8

Loss on disposal of tangible assets

-

-

3

Cost of share-based incentives

13

2

(57)

Fair value gains on derivative
financial instruments

-

(21)


-

Decrease/(increase) in inventories

946

(385)

(272)

(Increase)/decrease in trade and
other receivables

(995)

1,578


1,025

Decrease in trade and other payables

(554)

(549)

(345)

Tax (paid)/received

(1)

184

185

Net cash generated from operating activities

185

1,365

2,364

Cash flows from investing activities




Interest received

3

-

1

Sales of property, plant and equipment

-

-

2

Purchases of property, plant and equipment

(18)

(45)

(172)

Purchase of intangible assets

(454)

(422)

(974)

Investment in associate

-

(20)

(20)

Net cash used in investing activities

(469)

(487)

(1,163)

Cash flows from financing activities




Interest paid

-

(1)

-

Net cash used in financing activities

-

(1)

-

Net (decrease)/increase in cash and
cash equivalents

(284)

877


1,201

Cash and cash equivalents at the start
of the period

2,480

1,268


1,268

Effect of foreign currency translation

16

(1)

11

Cash and cash equivalents at the end
of the period

2,212

2,144


2,480



NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2013

1. Accounting policies

Basis of Preparation

These financial statements are the unaudited interim consolidated financial statements of DATONG plc, a company incorporated in the United Kingdom, and its subsidiaries (together referred to as the "Group") for the six month period ended 31 March 2013. They have been prepared in accordance with IAS 34 'Interim Financial Reporting' and should be read in conjunction with the consolidated financial statements for the 12-month period ended 30 September 2012. They were approved for issue by the Board of Directors on 15 January 2013. The financial information contained in these financial statements does not constitute statutory accounts as defined in the Companies Act 2006.

The accounting policies used in the preparation of the interim financial statements are the same as those applied in the preparation of the financial statements for the year ended 30 September 2012.

The preparation of the interim financial statements requires the use of certain estimates and requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the interim financial statements are consistent with those disclosed in the consolidated financial statements for the year ended 30 September 2012.

The comparative figures for the year ended 30 September 2012 have been taken from but do not constitute the company's statutory financial statements for that financial year. Those financial statements have been reported on by the Company's Auditors and delivered to the Registrar of Companies. Their report was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

TAXATION

The charge for taxation is recognised based upon the estimated effective rate for the full financial year, expressed as a percentage of the expected result for the year and then applied to the interim results.

2. Segmental Information

The Group's reportable segments under IFRS 8 are Own products and Third Party products. Own products represent products developed, manufactured and distributed by the Group. Third Party products represent products bought in from a third party and distributed by the Group.

The products from both reportable segments are offered for sale in the same market sectors and consequently are managed together as one business operating from the same locations. Accordingly only directly attributable items have been allocated across the segments.

segment REVENUES AND RESULTS

The segment results for the period are as follows:


Six months

Six months

Twelve months


to 31 March

to 31 March

to 30 September


2013

2012

2012


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Segment revenue




Own products

4,665

3,423

8,099

Third Party products

1,061

416

1,591

Total

5,726

3,839

9,690

Segment profit




Own products

1,694

1,404

3,601

Third Party products

319

217

669

Total

2,013

1,621

4,270

Unallocated costs

(1,997)

(2,059)

(3,994)

Share of post-tax result of associate

-

(3)

(8)

Exceptional litigation costs

-

300

-

Investment income

3

-

1

Finance costs

-

(1)

-

Profit/(loss) before taxation

19

(142)

269

Segment revenue represents revenue generated from external customers. Inter-segment sales were not significant.

The products from both reportable segments are offered for sale in the same market sectors and consequently the reportable segments are managed together as one business operating from the same locations.  Accordingly only directly attributable items have been allocated across the segments.

An analysis of the Group's revenue by its major products and services is represented by the above analysis by reportable segment.

OTHER SEGMENT INFORMATION

The segments' assets and liabilities at the period end are as follows:


31 March

31 March

30 September


2013

2012

2012


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Segment assets




Own products

7,320

8,702

8,219

Third Party products

1,623

155

837


8,943

8,857

9,056

Unallocated

2,317

2,477

2,674


11,260

11,334

11,730

Segment liabilities




Own products

670

962

873

Third Party products

172

34

378


842

996

1,251

Unallocated

218

275

211


1,060

1,271

1,462

Geographical information

The Group's two reportable segments operate in four main geographical areas, although they are managed on a worldwide basis.


Six months

Six months

Twelve months


to 31 March

to 31 March

to 30 September


2013

2012

2012


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Revenue from external customers




United Kingdom

2,055

998

3,094

Europe

495

239

541

Americas

1,978

2,139

3,947

Rest of World

1,198

463

2,108


5,726

3,839

9,690



4. Earnings per ordinary share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all potential dilutive shares arising from outstanding share options. For this adjustment, a calculation is made to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price during the period) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of share options. The difference is added to the denominator as additional shares for no consideration. There is no adjustment made to the numerator.


Six months

Six months

Twelve months


to 31 March

to 31 March

to 30 September


2013

2012

2012


Unaudited

Unaudited

Audited


£'000

£'000

£'000

Earnings




Profit for the period attributable to equity holders
of the Company


23


163


406

Number of shares




Weighted average number of ordinary shares
in issue for basic earnings per share


13,834,375 


13,834,375 


13,834,375

Potential dilutive shares arising from share options

668,000

-

-

Weighted average number of ordinary shares
in issue for diluted earnings per share

14,502,375

13,834,375

13,834,375

- Ends -


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