Dynex Power Announces First Quarter Results

Return to Profitability Expected in Second Half

Listing: TSX Venture Exchange
Symbol: DNX

LINCOLN, England, May 27, 2016 /CNW/ - Dynex Power Inc. (TSXV: DNX), a leading, high power semiconductor company, today announced its financial results for the first quarter ended March 31st, 2016.

Summary financial information for the three months ended March 31st, 2016 is as follows:

 




Canadian Dollars (000's)

March 31, 2016

March 31, 2015

Revenue

10,273

9,546

Gross Profit/ (Loss)

1,188

(1,523)

Other Income, Expenses and Costs

(1,714)

(1,855)

Loss before Tax

(526)

(3,378)

Income Tax Recovery

65

597

Net Loss

(461)

(2,781)

Common shares outstanding ¹ - diluted

80,509,047

80,509,047

Loss per share  - diluted

$(0.01)

$(0.03)

¹ Weighted average for the period

 

First quarter revenue of $10.3 million was 8% higher than the corresponding quarter of last year. Approximately two thirds of the increase was accounted for by the weakness of the Canadian Dollar in 2016 compared to 2015. The rest of the increase came from stronger sales of power assemblies and modules partially offset by weaker bipolar revenue.

The gross margin of $1.2 million was equivalent to 11.6% of revenue. In the corresponding quarter of last year a gross loss of $1.5 million had been reported arising from weak revenue in the quarter following a contract cancellation and the cost of a redundancy exercise.

The combination of other income, expenses and costs decreased by $141,000 to $1.7 million despite a 5% weakening of the Canadian Dollar against Sterling. The decrease was brought about by a shift from a foreign exchange loss in 2015 to a foreign exchange gain in 2016. Because of the foreign exchange gain and the higher revenue figure in the period, other income, expenses and costs represented 16.7% of revenue in the 2016 period compared with 19.4% in the corresponding quarter of last year.

As a consequence of these results, the Company recorded a loss before tax of $526,000, compared to a loss before tax of $3.4 million in the corresponding quarter of last year. A $65,000 recovery of UK tax reduced the net loss for the period to $461,000 or $0.01 per share, compared with a net loss of $2.8 million, or $0.03 per share, in the corresponding period of last year.

Revenue and net loss for the second quarter is forecast to be similar to that reported in the first. Revenue is expected to increase in the second half of the year and management is still targeting a small profit for the year.

Dr. Paul Taylor, President and Chief Executive Officer commented, "The level of revenue in the first quarter of 2016 was disappointing but it reflects the very tough market conditions we are facing at the moment. Although we remain confident of the long term growth in our target markets, customers are being slow to place orders at the current time and this has a direct impact on our results. We are seeing some very early signs of a pick-up in our order in-take and we are hopeful this will turn into stronger revenue in the second half of 2016 and a return to profitability."

Dr Taylor also said that he would like "to thank our current Chairman, Li Donglin, for his support and encouragement over the last six years. Li Donglin has recently been promoted to become General Manager of CRRC Zhuzhou Institute, the majority shareholder of CRRC Times Electric, and would not be standing for re-election to the Board of Dynex at this year's annual general meeting".

Bob Lockwood, Chief Financial Officer commented, "As I have commented before, high power semiconductor manufacturing is a high fixed cost business, so a small weakening in orders always has a big impact on profitability. But we are sensing the start of a recovery in our in-take of orders and that gives us a belief that revenues will rise in the second half of this year which will allow us to return to profitability".

Li Donglin, the Chairman of Dynex said, "Having recently changed roles within the CRRC Group in China, I will not be standing for re-election to the Board of Dynex at this year's annual general meeting. I have thoroughly enjoyed my time as Chairman of the company and will continue to follow its progress in the years to come. Whilst I am disappointed with the recent financial results of the company, I believe the company is well placed to move forward in the future and I believe and hope it will achieve great success in the coming years. "

Forward-looking Statements
In commenting on its expectations, the Company cautioned existing and potential shareholders about relying on the Company's expectations in that the Company's expectations contain forward looking statements and assumptions which are subject to the risks and uncertainties of the markets and the future, which could cause actual results to differ materially from expectations, and which are each difficult and subjective to forecast. Certain of those risks and uncertainties are discussed in the Management's Discussion and Analysis for the quarter ended March 31st, 2016 and include, among other things, risks and uncertainties relating to: the level of worldwide demand for power semiconductors and power semiconductor assemblies; the level of investment in power electronic equipment, electrification of transport systems, alternative power generation and high quality power transmission and distribution; and fluctuations in exchange rates between Canadian Dollars, Sterling, US dollars and Euros. As a consequence of these and other risks and uncertainties, shareholders and potential investors must make their own independent judgments about the accuracy and reliability of the Company's expectations. Dynex disclaims any intention or obligation to update or revise any forward looking statement whether as a result of new information, future events or otherwise.

About the Company
Dynex designs and manufactures high power bipolar semiconductors, high power insulated gate bipolar transistor (IGBT) modules and die, high power electronic assemblies and radiation hard silicon-on-sapphire integrated circuits (SOS IC's). The company's power products are used worldwide in power electronic applications including electric power transmission and distribution, renewable and distributed energy, marine and rail traction motor drives, aerospace, electric vehicles, industrial automation and controls and power supplies. The Company's IC products are used in demanding applications in the aerospace industry. Dynex Semiconductor Ltd is its only operating business and is based in Lincoln, England in a facility housing the fully integrated silicon fabrication, assembly and test, sales, design and development operations. In 2008, a majority of the shares of Dynex were acquired by Zhuzhou CSR Times Electric Co., Ltd. In April 2016 this company changed its name to Zhuzhou CRRC Times Electric Co., Ltd.

Zhuzhou CRRC Times Electric Co., Ltd. is based in Hunan Province in the People's Republic of China. It is listed on the Hong Kong Stock Exchange. CRRC Times Electric is mainly engaged in the research, development, manufacture and sales of locomotive train power converters, control systems and other train-borne electrical systems, as well as the development, manufacturing and sales of urban railway train electrical systems. In addition, CRRC Times Electric is also engaged in the design, manufacturing and sales of electric components including power semiconductor devices for the railway industry, urban railway industry and non-railway purposes.

Press announcements and other information about Dynex are available at www.dynexpower.com.

Further information on CRRC Times Electric can be found at www.timeselectric.cn/en

All monetary values expressed in this release are in Canadian Dollars unless stated otherwise.

The TSX Venture Exchange has neither approved nor disapproved of the information in this press release.

DYNEX POWER INC.
Condensed Consolidated Statement of Profit (Loss) and Other Comprehensive Income (unaudited) in Canadian Dollars
Quarter Ended March 31st, 2016

 




3 months 

 3 months 



 Mar 31st 

 Mar 31st 



2016

2015



$

$





Revenue


10,272,554

9,545,535





Cost of sales


(9,084,760)

(11,068,923)





Gross (loss)/profit


1,187,794

(1,523,388)





Other income


22,395

37,251

Sales and marketing expenses


(327,242)

(255,285)

Administration expenses


(1,060,550)

(999,109)

Research and development expenses


(299,961)

(99,848)

Finance costs


(178,616)

(207,308)

Other (losses)/gains


129,811

(329,985)





Loss before tax


(526,369)

(3,377,672)





Income tax recovery


65,199

596,678





Net loss


(461,170)

(2,780,994)





Other comprehensive income








Exchange differences on translation of foreign operations (net of tax of $nil)


(3,589,061)

807,170








Total comprehensive (loss)/income for the period

(4,050,231)

(1,973,824)





Loss per share




Basic


(0.01)

(0.03)

Diluted


(0.01)

(0.03)

 

DYNEX POWER INC.
Condensed Consolidated Statement of Financial Position (unaudited) in Canadian Dollars
As at March 31st, 2016

 



 Mar 31st 

 Dec 31st 



2016

2015



$

$





NON-CURRENT ASSETS








Intangible assets


1,389,714

1,594,142

Property, plant & equipment


38,406,862

43,447,376

Deferred tax asset


114,243

57,838









Total non-current assets


39,910,819

45,099,356





CURRENT ASSETS








Inventories


14,238,783

15,215,237

Trade receivables


6,568,739

6,334,417

Amounts owing from parent company


1,745,082

5,445,377

Prepayments, deposits & other receivables


1,832,554

1,236,102

Tax recoverable


3,059

3,382

Cash 


1,519,703

1,410,547









Total  current assets


25,907,920

29,645,062





CURRENT LIABILITIES








Trade payables


2,351,695

2,371,233

Amounts owing to parent company


919,664

760,062

Other payables and accruals


5,211,329

8,695,638

Borrowings


14,810,404

15,423,684

Provisions


18,631

20,599









Total current liabilities


23,311,723

27,271,216





NON-CURRENT LIABILITIES








Borrowings


7,994,749

8,904,800

Provisions


55,893

61,797





Total non-current liabilities


8,050,642

8,966,597









NET ASSETS


34,456,374

38,506,605













EQUITY 








Share capital


37,096,192

37,096,192

Accumulated deficit 


(6,070,271)

(5,609,101)

Exchange fluctuation reserve


3,430,453

7,019,514









TOTAL EQUITY


34,456,374

38,506,605

 

DYNEX POWER INC.
Condensed Consolidated Statement of Changes in Equity (unaudited) in Canadian Dollars
Quarter Ended March 31st, 2016

 




 Foreign 





 Currency 



 Share 


 Translation 

 Total 


 Capital 

 Deficit 

 Reserve 

 Equity 


$

$

$

$
















At January 1st, 2015

37,096,192

(7,416,640)

2,703,411

32,382,963






Total comprehensive income for the period

-

(2,780,994)

807,170

(1,973,824)











At March 31st, 2015

37,096,192

(10,197,634)

3,510,581

30,409,139






Total comprehensive income for the period

-

2,947,158

3,508,933

6,456,091






Capital contribution


1,641,375


1,641,375











At December 31st, 2015

37,096,192

(5,609,101)

7,019,514

38,506,605






Total comprehensive income for the period

-

(461,170)

(3,589,061)

(4,050,231)











At March 31st, 2016

37,096,192

(6,070,271)

3,430,453

34,456,374

 

DYNEX POWER INC.
Condensed Consolidated Statement of Cash Flows (unaudited) in Canadian Dollars
Quarter Ended March 31st, 2016

 



 3 months 

 3 months 



 Mar 31st 

 Mar 31st 



2016

2015



$

$

CASH FLOW FROM OPERATING ACTIVITIES








Loss before tax


(526,369)

(3,377,672)

Finance costs recognised in loss before tax


178,616

207,308

Amortization of intangible assets


57,063

39,286

Depreciation of property, plant & equipment


1,343,479

1,284,525

Provision for slow moving and obsolete inventory

-

57,189

Movements in working capital


(1,034,054)

(398,194)

Income taxes received/(paid)


-

2





Net cash generated/(used) used in operating activities

18,735

(2,187,556)





CASH FLOW FROM INVESTING ACTIVITIES








Payments for intangible assets


(2,188)

(18,320)

Payments for property, plant & equipment


(406,934)

(627,677)





Net cash used in investing activities


(409,122)

(645,997)





CASH FLOW FROM FINANCING ACTIVITIES








Proceeds from borrowings


949,988

7,936,782

Repayments of borrowings


(113,142)

(5,354,906)

Interest paid


(280,025)

(236,518)





Net cash generated by financing activities


556,821

2,345,358





NET INCREASE/(DECREASE) IN CASH


166,434

(488,195)





Cash at beginning of period


1,410,547

894,609





Effect of foreign currency translation on cash 


(57,278)

(142,777)









CASH AT END OF PERIOD


1,519,703

263,637

 

SOURCE Dynex Power Inc.

For further information: Dr. Paul Taylor, President and Chief Executive Officer; or, Bob Lockwood, Finance Director and Chief Financial Officer, Dynex Power Inc., Tel: +44 1522 500 500, Email: investorrelations@dynexsemi.com

RELATED LINKS
http://www.dynexsemi.com

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