Dynex Power Announces Second Quarter Results for 2008 - Record Quarter from Strong Sales and Favourable Product Mix



    Listing: TSX Venture Exchange
    Symbol: DNX

    LINCOLN, England, Aug. 7 /CNW Telbec/ - Dynex Power Inc., a leading,
independent power semiconductor company, today announced results for the
second quarter of 2008.
    Summary financial information in Canadian dollars for the three and six
months ended June 30th, 2008 is as follows:

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                        June 30,       June 30,           YTD            YTD
                           2008           2007           2008           2007
                          $'000          $'000          $'000          $'000
    -------------------------------------------------------------------------
    Revenue               9,773          6,630         17,857         13,793
    Gross Margin          3,934          1,451          6,482          2,683
    Net Earnings          2,291            189          3,461            151
    No. of Common
     Shares-average  35,375,006     33,339,043     34,327,442     33,282,216
    Earnings per
     Share in
     Dollars-diluted       0.06           0.01           0.09           0.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company's revenue in the second quarter was 47% ahead of that reported
in the corresponding quarter of last year with strong growth reported in the
Bipolar Discrete Units, Power Modules and Integrated Circuits product groups
whilst revenue for Power Electronic Assemblies declined slightly. Revenue for
the year to date is 29% ahead of the same period last year, with growth once
again in Bipolar Discrete Units, Power Modules and Integrated Circuits and a
small decrease in revenue in Power Electronic Assemblies. A favourable mix of
sales resulted in a gross margin of 40.2% in the quarter compared with 21.9%
in the same quarter last year. As a result, the business was able to report
earnings of $2.3 million in the quarter and $3.5 million for the year to date.
Last year the Company recorded earnings of $189,000 for the quarter and
$151,000 for the year to date.
    Dr Paul Taylor, President and Chief Executive Officer commented that "This
has been our best quarter to date and completes twelve months of solid
achievement. Moreover, order in-take in excess of $15 million in the quarter
and a record order book should ensure that revenues remain strong in the
second half of 2008 and well into 2009. Our outlook is for continuing growth
in the power business units, but we expect sales in Integrated Circuits to be
lower until at least the middle of 2009."
    Bob Lockwood, Chief Financial Officer, stated that "the second quarter
earnings were very strong as they were enhanced by extraordinarily high sales
of Integrated Circuits. Looking forward, the expected reduction in Integrated
Circuit revenues will lessen our gross profit margins in the second half of
2008 and the first half of 2009. In addition, the recent rise in UK energy
prices will add between $1 million and $1.5 million to our annual costs.
Nevertheless, for 2008 as a whole, revenue and earnings are expected to be
significantly better than those reported in 2007.
    David Banks, Chairman, expressed his satisfaction with the second quarter
result. He also took the opportunity to comment on progress on the discussion
with CSR Times Electric Company about their proposed acquisition of a majority
of the Company. Mr Banks said "although progress has been a little slower than
both Dynex and TEG would have liked, the discussions have developed
satisfactorily so far. The due diligence has been largely completed, the
negotiation of the documentation is nearly complete and shortly we expect to
be able to put a Plan of Arrangement along with a Circular for a Special
Meeting of Shareholders to shareholders. We continue to believe strongly that
the proposed tie-up with CSR Times Electric Company will see the start of an
exciting new period in the history of Dynex".

    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 Company's management
discussion and analysis for the quarter ended June 30th, 2008 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; the worldwide demand for and supply of silicon;
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 is one of the world's leading, independent suppliers of specialist,
high power semiconductor products. Dynex Semiconductor Ltd is its operating
business and is based in Lincoln, England in a facility housing the fully
integrated silicon wafer fabrication, assembly and test, sales, design and
development operations. Dynex designs and manufactures high power bipolar
discrete semiconductors, power modules, including insulated-gate bipolar
transistors (IGBTs), and high power electronic assemblies. Dynex products are
used world wide in power electronic applications including electric power
generation, transmission and distribution, marine and rail traction drives,
aircraft, electric vehicles, industrial automation and controls. The company
continuesto produce and sell certain high reliability integrated circuits
(ICs) for use in specialist applications led by its proven radiation hard
Silicon-on-Sapphire products for space and nuclear applications.
    Press announcements and other information about Dynex are available
www.dynexsemi.com.

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


    DYNEX POWER INC.
    Consolidated Statements of Earnings and Deficit (Unaudited)
    -----------------------------------------------------------
    Quarters and Years To Date Ended June 30th, 2008 and 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       3 months       3 months            YTD            YTD
                      June 30th      June 30th      June 30th      June 30th
                           2008           2007           2008           2007
                   ----------------------------------------------------------

    Revenue        $  9,773,194   $  6,630,330   $ 17,857,332   $ 13,792,928

    Cost of sales     5,839,609      5,179,214     11,374,942     11,110,179
    -------------------------------------------------------------------------

    Gross margin      3,933,585      1,451,116      6,482,390      2,682,749
    -------------------------------------------------------------------------

    Expenses
    General and
     administration   1,067,128        659,591      1,968,599      1,302,356
    Sales and
     marketing          269,218        253,582        493,143        579,486
    Research and
     development        206,507        157,488        418,976        302,033
    Interest
     expense            192,085        214,417        364,305        429,155
    -------------------------------------------------------------------------

                      1,734,938      1,285,078      3,245,023      2,613,030
    -------------------------------------------------------------------------
    Earnings
     before other
     income           2,198,647        166,038      3,237,367         69,719

    Other income
    Interest and
     other income        45,576         85,596         92,146        137,180
    Foreign
     exchange gain
     (loss)              46,363        (62,185)       131,964        (56,308)
    -------------------------------------------------------------------------

                         91,939         23,411        224,110         80,872
    -------------------------------------------------------------------------

    Income taxes              -              -              -              -

    NET EARNINGS      2,290,586        189,449      3,461,477        150,591

    DEFICIT,
     BEGINNING OF
     PERIOD, as
     originally
     stated         (10,559,936)   (13,941,188)   (11,730,827)   (14,098,044)

    Adjustment to
     deficit,
     beginning of
     period                   -              -              -        195,714
    -------------------------------------------------------------------------

    DEFICIT, END
     OF PERIOD     $ (8,269,350)  $(13,751,739)  $ (8,269,350)  $(13,751,739)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
    Basic          $       0.06   $       0.01   $       0.10   $       0.00
    Diluted        $       0.06   $       0.01   $       0.09   $       0.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted
     average
     number of
     shares
    Basic            35,375,006     33,339,043     34,327,442     33,282,216
    Diluted          39,965,996     33,678,595     38,680,452     33,561,126
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    DYNEX POWER INC.
    Consolidated Statements of Comprehensive Income (Unaudited)
    -----------------------------------------------------------
    Quarters and Year To Date Ended June 30th, 2008 and 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       3 months       3 months            YTD            YTD
                      June 30th      June 30th      June 30th      June 30th
                           2008           2007           2008           2007
                   ----------------------------------------------------------

    Net earnings   $  2,290,586   $    189,449   $  3,461,477   $    150,591
    -------------------------------------------------------------------------

    Other
     Comprehensive
     income (loss),
     net of tax:

    Unrealized profit
     (loss) on
     translating
     financial
     statements of
     self-sustaining
     foreign
     operations         (13,314)        27,970         98,815         22,040
    -------------------------------------------------------------------------

    OTHER
     COMPREHENSIVE
     INCOME (LOSS)      (13,314)        27,970         98,815         22,040
    -------------------------------------------------------------------------

    COMPREHENSIVE
     INCOME        $  2,277,272   $    217,419   $  3,560,292   $    172,631
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    DYNEX POWER INC.
    ----------------
    Consolidated Statements of Accumulated Other Comprehensive Loss
    (Unaudited)
    ---------------------------------------------------------------
    As At June 30th, 2008 and December 31st, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    June 30th       Dec 31st
                                                         2008           2007
                                                 ----------------------------

    Accumulated other comprehensive loss,
     beginning of period                         $   (760,787)  $   (563,234)


    Other comprehensive income (loss)                  98,815       (197,553)
    -------------------------------------------------------------------------

    ACCUMULATED OTHER COMPREHENSIVE LOSS         $   (661,972)  $   (760,787)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    DYNEX POWER INC.
    Consolidated Balance Sheets (Unaudited)
    ---------------------------------------
    As At June 30th, 2008 and December 31st, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                    June 30th       Dec 31st
                                                         2008           2007
                                                 ----------------------------

    CURRENT ASSETS
    Cash                                         $    199,969   $    140,867
    Accounts receivable                             5,835,148      5,743,050
    Inventories                                     9,366,746      7,521,573
    Prepaid expenses and deposits                     774,113        597,805
    -------------------------------------------------------------------------
                                                   16,175,976     14,003,295

    PROPERTY, PLANT AND EQUIPMENT                   2,403,841      1,083,540
    -------------------------------------------------------------------------

                                                 $ 18,579,817   $ 15,086,835
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CURRENT LIABILITIES
    Accounts payable and accrued liabilities     $  5,126,170   $  4,346,095
    Short-term loan                                 2,988,333      3,814,585
    Current portion of long-term debt                 545,553        279,768
    Current portion of deferred revenue               156,165        151,942
    -------------------------------------------------------------------------
                                                    8,816,221      8,592,390

    LONG-TERM DEBT                                  2,300,617      3,446,595
    LONG-TERM DEFERRED REVENUE                      1,366,443      1,405,465
    -------------------------------------------------------------------------
                                                   12,483,281     13,444,450


    SHAREHOLDERS' EQUITY
    Share capital                                  15,027,858     14,133,999

    Deficit                                        (8,269,350)   (11,730,827)
    Accumulated other comprehensive loss             (661,972)      (760,787)
    -------------------------------------------------------------------------
                                                   (8,931,322)   (12,491,614)
    -------------------------------------------------------------------------

                                                    6,096,536      1,642,385
    -------------------------------------------------------------------------

                                                 $ 18,579,817   $ 15,086,835
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    DYNEX POWER INC.
    Consolidated Statements of Cash Flows (Unaudited)
    -------------------------------------------------
    Quarters and Years To Date Ended June 30th, 2008 and 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       3 months       3 months            YTD            YTD
                      June 30th      June 30th      June 30th      June 30th
                           2008           2007           2008           2007
                   ----------------------------------------------------------
    OPERATING
    Net earnings   $  2,290,586   $    189,449   $  3,461,477   $    150,591

    Items not
    affecting cash
    --------------
      Amortization       75,163         52,559        119,214        124,034
      Gain on
       disposal of
       property,
       plant and
       equipment        (39,122)       (43,563)       (77,527)       (99,144)
      Shares and
       options
       issued for
       services          11,177          2,574         13,735         45,318
      Non-cash
       interest          27,047         50,313         53,530        101,705
      Non-cash
       grant
       income                 -        (14,684)        (2,355)       (28,661)
      Provision
       for
       inventory
       obsolescence     243,510        317,540        277,500        150,065
    Changes in
     non-cash
     operating
     working
     capital         (1,980,361)    (1,323,085)    (1,326,762)      (628,346)
    -------------------------------------------------------------------------
                        628,000       (768,897)     2,518,812       (184,438)
    -------------------------------------------------------------------------

    FINANCING
    Shares issued
     for cash            34,500              -         34,500              -
    Increase in
     loans from
     a director               -      1,098,138              -      1,098,138
    Increase
     (decrease)
     in short-term
     loan               535,973       (408,936)      (912,719)      (483,016)
    Decrease in
     long-term
     debt              (110,102)       (31,973)      (156,532)       (74,988)
    -------------------------------------------------------------------------
                        460,371        657,229     (1,034,751)       540,134
    -------------------------------------------------------------------------

    INVESTING
    Proceeds of
     disposal of
     property,
     plant and
     equipment              401          1,098            401         12,518
    Purchase of
     property,
     plant and
     equipment       (1,110,293)       (69,597)    (1,396,835)      (345,887)
    -------------------------------------------------------------------------
                     (1,109,892)       (68,499)    (1,396,434)      (333,369)
    -------------------------------------------------------------------------


    NET (DECREASE)
     INCREASE IN
     CASH               (21,521)      (180,167)        87,627         22,327

    Effect of
     foreign
     currency
     translation
     on cash            (34,715)         6,395        (28,525)           647

    Cash,
     beginning
     of period          256,205        553,788        140,867        357,042
    -------------------------------------------------------------------------

    CASH, END
     OF PERIOD     $    199,969   $    380,016   $    199,969   $    380,016
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    
    %SEDAR: 00010667E




For further information:

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


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