Dynex Power Announces First Quarter Results

Profitable First Quarter

Listing: TSX Venture Exchange
Symbol: DNX

LINCOLN, England, May 23, 2017 /CNW/ - Dynex Power Inc. (TSXV: DNX), a leading, high power semiconductor company, today announced its financial results for the first quarter ended March 31st, 2017.

Summary financial information for the three months ended March 31st, 2017 is as follows:




Canadian Dollars (000's)

March 31, 2017

March 31, 2016

Revenue

Gross Profit

Other Income, Expenses and Costs

Profit/(Loss) before Tax

Income Tax (Expense)/Recovery

Net Profit/(Loss)

Number of Common shares outstanding ¹ - diluted

Profit/(Loss) per share in Canadian Dollars  - diluted

11,553

2,732

(2,187)

545

(139)

406

80,509,047

$0.01

10,273

1,188

(1,714)

(526)

65

(461)

80,509,047

$(0.01)

 ¹ Weighted average for the period



                     

First quarter revenue of $11.6million was 12% higher than the corresponding quarter of last year. This increase was despite a 16% strengthening of the Canadian Dollar exchange rate against Sterling. In Sterling terms, revenue had increased by 34%.

The gross margin of $2.7 million was equivalent to 23.7% of revenue. In the corresponding quarter of last year a gross profit of $1.2 million had been reported equivalent to 11.6% of revenue. The improvement in gross margin is primarily the result of increased revenues in a high fixed cost business. The gross margin reported is within the range targeted by management for the first time since the fourth quarter of 2015.  

The combination of other income, expenses and costs increased by $473,000 to $2.2 million despite the 16% strengthening of the Canadian Dollar against Sterling. The increase was mainly as a result of a provision to cover the costs of a small redundancy exercise that has been carried out. The redundancy exercise was designed to rebalance resources in the business.

As a consequence of these results, the Company recorded a profit before tax of $545,000, compared to a loss before tax of $526,000 in the corresponding quarter of last year. A $139,000 tax expense reduced the net profit for the period to $406,000 or $0.01 per share, compared with a net loss of $461,000, or $0.01 per share, in the corresponding period of last year.

Management is also forecasting a profitable second quarter for Dynex, with revenue guidance in the C$ 10.5 -12.5 million range at current exchange rates.  The outlook for the second half of the year remains somewhat less certain. The industry increasingly works on shorter lead times than in the past, so the majority of revenue for the second half of the year has yet to be backed by firm orders. Management, however, expects that the Group will be able to report a profit for the full year.

Clive Vacher, President and Chief Executive Officer commented, "I am pleased to report a strong increase in revenue for the first quarter. Indeed, this was the highest quarterly revenue reported for four years. This positive performance is partly a result of business backlog built-up from 2016 that was scheduled for delivery in 2016 and partly a result of a first quarter emphasis on marketing. I am also pleased to see the Group return to profitability and the Dynex team is determined to maintain this improvement as going forward."

Bob Lockwood, Chief Financial Officer commented, "Given the high fixed cost nature of the business, a strong increase in revenue always has a big impact on the net profit and we have seen that influence once again. We have the order cover for the second quarter to show another profit and we believe the year as a whole will also be profitable."

Liu Ke'an, the Chairman of Dynex said, "We are delighted that Clive agreed to join the business as our new chief executive at the start of the year. I have reviewed the improvement plans that he is implementing with the Dynex leadership team. I believe that these will drive exciting developments for the Group over the coming periods. I am pleased we are off to a good start and Clive has our full support for this change programme."

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.

Interim Condensed Consolidated Statements of Comprehensive Income (unaudited) in Canadian Dollars

Quarter Ended March 31st, 2017




 3 months 

 3 months 



 Mar 31st 

 Mar 31st 



2017

2016



$

$





Revenue


11,552,648

10,272,554





Cost of sales


(8,820,330)

(9,084,760)





Gross profit


2,732,318

1,187,794





Other income


38,363

22,395

Sales and marketing expenses


(305,937)

(327,242)

Administration expenses


(1,531,650)

(1,060,550)

Research and development expenses


(194,380)

(299,961)

Finance costs


(140,594)

(178,616)

Other (losses)/gains


(52,795)

129,811





Profit/(loss) before tax


545,325

(526,369)





Income tax (expense)/recovery


(139,526)

65,199





Net profit/(loss)


405,799

(461,170)









Other comprehensive income/(loss)








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


186,410

(3,589,061)





Total comprehensive income/(loss) for the period


592,209

(4,050,231)





Earnings/(loss) per share




Basic


0.01

(0.01)

Diluted


0.01

(0.01)

 

DYNEX POWER INC.

Interim Condensed Consolidated Statement of Financial Position (unaudited) in Canadian Dollars

As at March 31st, 2017





 Mar 31st 

 Dec 31st 




2017

2016




$

$






NON-CURRENT ASSETS










Intangible assets



1,482,784

1,524,346

Property, plant & equipment



31,154,449

31,565,940

Deferred tax asset



1,028,031

1,127,322






Total non-current assets



33,665,264

34,217,608






CURRENT ASSETS










Inventories



11,898,099

11,854,067

Trade receivables



5,909,141

4,035,481

Amounts owing from group undertakings



3,945,018

3,573,709

Prepayments, deposits & other receivables



2,537,504

2,297,786

Tax recoverable



-

682

Cash 



590,585

898,855






Total  current assets



24,880,347

22,660,580






CURRENT LIABILITIES










Trade payables



3,928,673

3,010,756

Amounts owing to group undertakings



2,167,640

2,103,917

Other payables and accruals



2,679,549

3,290,095

Borrowings



16,770,545

16,380,290

Provisions



929,880

456,773






Total current liabilities



26,476,287

25,241,831






NON-CURRENT LIABILITIES










Borrowings



5,118,470

5,141,190

Provisions



49,815

186,337






Total non-current liabilities



5,168,285

5,327,527






NET ASSETS



26,901,039

26,308,830
















EQUITY 










Share capital



37,096,192

37,096,192

Accumulated deficit



(10,122,426)

(10,528,225)

Exchange fluctuation reserve



(72,727)

(259,137)






TOTAL EQUITY



26,901,039

26,308,830


 

DYNEX POWER INC.

Interim Condensed Consolidated Statement of Changes in Equity (unaudited) in Canadian Dollars

Quarter Ended March 31st 2017





 Foreign 





 Currency 



 Share 


 Translation 

 Total 


 Capital 

 Deficit 

 Reserve 

 Equity 


$

$

$

$
















At January 1st, 2016

37,096,192

(5,609,101)

7,019,514

38,506,605






Total comprehensive income for the period

-

(2,717,380)

3,667,858

950,478











At March 31st, 2016

37,096,192

(8,326,481)

10,687,372

39,457,083






Total comprehensive income for the period

-

(2,201,744)

(10,946,509)

(13,148,253)











At December 31st, 2016

37,096,192

(10,528,225)

(259,137)

26,308,830






Total comprehensive income for the period

-

405,799

186,410

592,209











At March 31st, 2017

37,096,192

(10,122,426)

(72,727)

26,901,039

 

DYNEX POWER INC.

Interim Condensed Consolidated Statement of Cash Flows (unaudited) in Canadian Dollars

Quarter Ended March 31st, 2017





 3 months 

 3 months 




 Mar 31st 

 Mar 31st 




2017

2016




$

$

CASH FLOW FROM OPERATING ACTIVITIES





Profit before tax



545,325

(526,369)

Finance costs recognised in profit before tax



140,594

178,616

Investment income recognised in profit before tax



658

-

Amortization of intangible assets



51,881

57,063

Depreciation of property, plant & equipment



1,139,318

1,343,479

Provision for slow moving and obsolete inventory



(1,464,406)

-

Non cash movement in provisions



330,120

-

Movements in working capital



(654,479)

(1,236,870)

Income taxes (paid)/received



(32,329)

-






Net cash generated by/(used in) operating activities



56,682

(184,081)






CASH FLOW FROM INVESTING ACTIVITIES





Payments for intangible assets



-

(2,188)

Payments for property, plant & equipment



(511,455)

(406,934)

Interest received



(658)

-






Net cash used in investing activities



(512,113)

(409,122)






CASH FLOW FROM FINANCING ACTIVITIES





Proceeds from borrowings



1,185,202

949,988

Repayments of borrowings



(969,053)

(113,142)

Interest paid



(71,478)

(77,209)

Payments for other finance costs



(1,236)

-






Net cash generated by financing activities



143,435

759,637






NET (DECREASE)/INCREASE IN CASH



(311,996)

166,434






Cash at beginning of period



898,855

1,410,547






Effect of foreign currency translation on cash 



3,726

(57,278)






CASH AT END OF PERIOD



590,585

1,519,703

 

SOURCE Dynex Power Inc.

For further information: Clive Vacher, President and Chief Executive Officer or Bob Lockwood, 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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