Dynex Power Announces Second Quarter Financial Results

Loss Reported for Second Quarter but Company Expects to Return to Profitability in the Third Quarter

Listing:

TSX Venture Exchange

Symbol:

DNX

 

LINCOLN, England, Aug. 18th, 2016 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today announced its financial results for the second quarter and six months ended June 30th, 2016.

Summary financial information for the three and six months ended June 30th, 2016 is as follows:






Canadian Dollars (000's)

June 30, 2016

June 30, 2015

YTD 2016

YTD 2015

Revenue

9,123

11,994

19,395

21,540

Gross Profit/(Loss)

(117)

756

1,071

(767)

Other Income, Expenses and Costs

(1,982)

(1,276)

(3,696)

(3,130)

Loss before Tax

(2,099)

(520)

(2,625)

(3,897)

Income Tax Recovery

370

100

435

697

Net Loss

(1,729)

(419)

(2,190)

(3,200)

Common shares outstanding¹-diluted

80,509,047

80,509,047

80,509,047

80,509,047

Earnings per share - diluted

(0.02)

(0.01)

(0.03)

(0.04)

¹ Weighted average for the period

Revenue in the second quarter of 2016 was $2.9 million or 24.1% lower than in the corresponding quarter of last year. The reduction reflected lower sales of bipolar, IGBT die and modules and power assemblies. For the year to date, revenue was $2.1 million or 10% lower than in the first half of 2015. The reduction reflected a significant drop in bipolar sales with much smaller reductions in sales of IGBT modules and dies and power assemblies.

The negative gross margin of 1.3% in the second quarter of 2016 compared to a gross margin of 6.3% in the second quarter of 2015. The negative gross margin reflected a lower volume of revenue for the quarter and the high level of fixed costs inherent in manufacturing semiconductors. For the year to date, the gross margin was 5.5% compared to a negative gross margin for the corresponding period of last year of 3.6%. The gross margin in 2016, though substantially improved compared to 2015, is still below the level targeted by management and again reflects the lower level of revenue for the period.

Sales and marketing and administration expenses represented 14.4% of revenue in the second quarter and 13.9% of revenue for the year to date compared to 13.9% and 12.4% in the corresponding periods in 2015. The absolute level of such expenditure had fallen in the quarter but not sufficiently enough to offset the decline in revenue. The absolute level had risen by just over 1% for the year to date.

The net expenditure on research and development for the second quarter of 2016 was $483,000. In the corresponding quarter of last year, there had been a small surplus from research and development. For the year to date, net expenditure was $783,000 compared to $98,000 in the corresponding period of last year. The increase reflected a significant increase in research and development expenditure and a reduction in the funding being accounted for from the UK government.

As a consequence of these changes, Dynex reported a loss before tax in the quarter of $2.1 million compared to a loss before tax of $520,000 in the corresponding quarter of last year. For the year to date, a loss before tax of $2.6 million was recorded compared to a loss before tax of $3.9 million in the corresponding period of last year.

At the end of the second quarter, the Company's order book stood at $14.1 million, approximately 6% higher than at the end of the first quarter. At the end of 2015, the order book had stood at $15.2 million but the reduction since then is more than accounted for by the strengthening of the Canadian Dollar against Sterling.

Revenue is expected to be higher in the second half of the year compared to the first half and the management expects to return to profit in the second half of the year.

Dr. Paul Taylor, President and Chief Executive Officer commented, "Market conditions for our IGBT and bipolar products have remained weak. Global uncertainty has meant that our customers are being cautious and this has affected our order book for the first half of this year, resulting in low sales revenue. Our current outlook for the third quarter is for increased revenue and a return to profitability. "

Dr Taylor also took the opportunity to thank Li Donglin for his wise counsel and support over the last six years as Chairman of the company. Li Donglin resigned from this role at the recent Annual General Meeting following his promotion in China. Liu Ke'an, who has also been a director of the Company for the last six years, has now replaced Li Donglin as Chairman.

Bob Lockwood, Chief Financial Officer commented, "Second quarter results are disappointing, but we look forward to a return to profitability in the third quarter and are still hopeful of reporting a small profit for the full year".

Liu Ke'an, the new Chairman of Dynex said, "I am delighted to become Chairman of Dynex. It is disappointing to be reporting a loss in my first quarter as Chairman of the Company. CRRC Times Electric remains strongly supportive of Dynex and we will work closely with management to help the Company return to profitability."

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 June 30th , 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 sale 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 June 30th, 2016



 3 months 

 3 months 

 YTD 

 YTD 



 Jun 30th 

 Jun 30th 

 Jun 30th 

 Jun 30th 



2016

2015

2016

2015



$

$

$

$







Revenue


9,122,739

11,994,138

19,395,293

21,539,673







Cost of sales


(9,239,972)

(11,238,062)

(18,324,732)

(22,306,985)







Gross (loss)/profit


(117,233)

756,076

1,070,561

(767,312)







Other income


6,800

6,269

29,195

43,520

Sales and marketing expenses


(391,313)

(330,565)

(718,555)

(585,850)

Administration expenses


(918,060)

(1,075,301)

(1,978,610)

(2,074,410)

Research and development (expense)/recovery


(483,282)

1,511

(783,243)

(98,337)

Finance costs


(187,961)

(137,981)

(366,577)

(345,289)

Other (losses)/gains


(7,527)

260,159

122,284

(69,826)







Loss before tax


(2,098,576)

(519,832)

(2,624,945)

(3,897,504)







Income tax recovery


369,445

100,342

434,644

697,020







Net loss


(1,729,131)

(419,490)

(2,190,301)

(3,200,484)













Other comprehensive income












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


(2,191,861)

1,440,028

(5,780,922)

2,247,198













Total comprehensive (loss)/income for the year

(3,920,992)

1,020,538

(7,971,223)

(953,286)













Loss per share






Basic


(0.02)

(0.01)

(0.03)

(0.04)

Diluted


(0.02)

(0.01)

(0.03)

(0.04)







 

 

DYNEX POWER INC.

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

As at June 30th, 2016



 Jun 30th 

 Dec 31st 



2016

2015



$

$





NON-CURRENT ASSETS








Intangible assets


1,260,370

1,594,142

Property, plant & equipment


35,083,918

43,447,376

Deferred tax asset


493,155

57,838





Total non-current assets


36,837,443

45,099,356





CURRENT ASSETS








Inventories


13,374,407

15,215,237

Trade receivables


5,351,771

5,760,619

Amounts owing from group undertakings


3,025,231

6,019,175

Prepayments, deposits & other receivables


1,770,543

1,236,102

Tax recoverable


717

3,382

Cash 


767,345

1,410,547





Total  current assets


24,290,014

29,645,062





CURRENT LIABILITIES








Trade payables


2,211,543

2,371,233

Amounts owing to group undertakings


1,351,894

760,062

Other payables and accruals


5,568,281

8,695,638

Borrowings


15,048,457

15,423,684

Provisions


17,361

20,599





Total current liabilities


24,197,536

27,271,216

 

 

DYNEX POWER INC.

Condensed Consolidated Statement of Financial Position (Unaudited) in Canadian Dollars
(continued)

As at June 30th, 2016



 Jun 30th 

 Dec 31st 



2016

2015



$

$





NON-CURRENT LIABILITIES








Borrowings


6,342,456

8,904,800

Provisions


52,083

61,797





Total non-current liabilities


6,394,539

8,966,597





NET ASSETS


30,535,382

38,506,605





EQUITY 








Share capital


37,096,192

37,096,192

Accumulated deficit


(7,799,402)

(5,609,101)

Exchange fluctuation reserve


1,238,592

7,019,514





TOTAL EQUITY


30,535,382

38,506,605

 

DYNEX POWER INC.

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

Quarter Ended June 30th, 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


-

(3,200,484)

2,247,198

(953,286)













At June 30th, 2015


37,096,192

(10,617,124)

4,950,609

31,429,677







Total comprehensive income for the period


-

3,366,648

2,068,905

5,435,553







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


-

(2,190,301)

(5,780,922)

(7,971,223)













At June 30th, 2016


37,096,192

(7,799,402)

1,238,592

30,535,382

 

DYNEX POWER INC.

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

Quarter Ended June 30th, 2016



 YTD 

 YTD 



 Jun 30th 

 Jun 30th 



2016

2015



$

$

CASH FLOW FROM OPERATING ACTIVITIES








Loss before tax


(2,624,945)

(3,897,504)

Finance costs recognised in loss before tax


366,577

345,289

Investment income recognised in loss before tax


(844)

-

Amortization of intangible assets


110,262

78,885

Depreciation of property, plant & equipment


2,616,831

2,568,733

Provision for slow moving and obsolete inventory


440,500

80,828

Movements in working capital


(1,119,154)

1,324,768

Income taxes paid


(45,069)

-

Net cash (used in)/generated by operating activities


(255,842)

500,999





CASH FLOW FROM INVESTING ACTIVITIES








Payments for intangible assets


(18,079)

(97,083)

Payments for property, plant & equipment


(920,488)

(1,573,862)

Interest received


844

-

Net cash used in investing activities


(937,723)

(1,670,945)





CASH FLOW FROM FINANCING ACTIVITIES








Proceeds from borrowings


2,821,288

17,570,499

Repayments of borrowings


(1,827,120)

(14,387,173)

Interest paid


(367,558)

(334,910)

Payments for other finance costs


-

-

Net cash generated by financing activities


626,610

2,848,416





NET (DECREASE)/INCREASE IN CASH


(566,955)

1,678,470





Cash at beginning of period


1,410,547

894,609





Effect of foreign currency translation on cash 


(76,247)

(431,461)





CASH AT END OF PERIOD


767,345

2,141,618

 

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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