Dynex Power Announces Third Quarter Financial Results

Third Quarter Sees Return to Profitability

Listing: TSX Venture Exchange
Symbol: DNX

LINCOLN, England, Nov. 23, 2015 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today announced its financial results for the third quarter and nine months ended September 30th, 2015.

Summary financial information for the three and nine months ended September 30th, 2015 is as follows:

 






Canadian Dollars (000's)

Sept 30, 2015

Sept 30, 2014

YTD 2015

YTD 2014

Revenue

12,254

10,410

33,794

32,038

Gross Profit

934

1,174

166

3,625

Other Income, Expenses and Costs

(331)

(1,435)

(3,460)

(4,906)

Profit/(Loss) before Tax

603

(261)

(3,294)

(1,281)

Income Tax (Expense)/ Recovery

(120)

39

577

236

Net Profit/(Loss )

483

(222)

(2,717)

(1,045)

Common shares outstanding ¹ - diluted

80,509,047

80,509,047

80,509,047

80,509,047

Earnings per share - diluted

0.01

(0.00)

(0.03)

(0.01)







¹ Weighted average for the period





 

Revenue in the third quarter of 2015 was $1.8 million or 17.7% higher than in the corresponding quarter of last year. Two thirds of this increase was a result of an 11% weakening of the Canadian Dollar against Sterling over the last twelve months. The rest of the increase reflected stronger revenue from sales of IGBT products and technical services. For the year to date, revenue was $1.8 million or 5% higher than in the first nine months of 2014. The increase matched the 5% weakening in the average rate of the Canadian Dollar against Sterling over the intervening year.

The gross margin of 7.6% in the third quarter of 2015 was lower than the 11.3% reported in the corresponding quarter of last year. The gross margin was below the range targeted by management and reflected the competitive marketplace currently being faced by the Group. For the year to date, the gross margin was 0.5% compared to 11.3% in the corresponding period last year. This is significantly below the range being targeted by management and again reflects the lower level of revenue being reported compared to management's expectations and additional manufacturing costs due to unexpected technical issues as well as the cost of redundancies in the first quarter.

Sales and marketing and administration expenses represented 10.9% of revenue in the third quarter and 11.8% of revenue for the year to date compared to 12.0% and 11.6% in the corresponding 2014 periods. These costs have been on a steadily reducing percentage for a number of years. The small increases in the year to date figure reflected the poor level of revenue reported in the first half of 2015. Dynex continues to expect these ratios to improve in the longer term.

There was no net cost to R&D expenditure in the quarter or the year to date. There had been no net cost in the corresponding quarter of the preceding year but there had been a cost equivalent to 1.6% of revenue in the first nine months of 2014. However, gross expenditure on research and development (which is calculated before taking account of the contribution received from CSR Times Electric and the grants from Government bodies) is higher than last year both in the current quarter and the year to date and the reduction in net expenditure reflects the Group's success in attracting grants and funding for this work together with additional tax relief available to the Group for research and development which, following changes in the way this relief operates,  is now accounted for as a reduction in R&D costs rather than as part of the tax charge. Gross expenditure is currently running at 18.0% of revenue in the year to date.

As a consequence of these changes, Dynex reported a profit before tax in the quarter of $603,000, compared to a loss before tax of $261,000 in the corresponding quarter of last year. For the year to date, a loss before tax of $3.3 million was recorded compared to a loss before tax of $1.3 million in the corresponding period of last year. The decline in year to date performance reflects the weaker than expected revenue and additional manufacturing costs due to unexpected technical issues that had been experienced in the first half of 2015.

At the end of the third quarter, the Company's order book stood at $17.0 million, approximately 17% higher than at the end of the second quarter.

Revenue is expected to be at a similar level in the fourth quarter to that reported in the third quarter and the Company expects to record another profit in the fourth quarter.

Dr. Paul Taylor, President and Chief Executive Officer commented, "We are delighted to be able to report our first quarterly profit for over two years. Our manufacturing performance was much improved in the quarter with greater efficiency and fewer technical issues. These improvements reflected the on-going continuous improvement activities taking place in our manufacturing areas. It is also pleasing to report a further increase in our gross R&D investment, based on the increasing support we are receiving from our parent company and our governments."

Bob Lockwood, Chief Financial Officer commented, "Whilst it is pleasing to be able to report a return to profitability, we still need to see a significant improvement in the profitability of the business. However, we are moving in the right direction".

Li Donglin, the Chairman of Dynex said, "Whilst being pleased to see the improvement in Dynex's results, we, like all shareholders, need to see this improvement being repeated in forthcoming quarters. We remain pleased that through these difficult last few quarters, the Group has continued to invest heavily in the development of new products and improved production processes".

About the Company

Dynex designs and manufactures high power bipolar semiconductors, high power insulated gate bipolar transistor (IGBT) modules, 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. Our 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.  Dynex is majority owned by Zhuzhou CSR Times Electric Co., Ltd.

Zhuzhou CSR 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. CSR 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, CSR 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 Power Inc are available at www.dynexpower.com

Information about Dynex Semiconductor Ltd and its products can be found at www.dynexsemi.com

Further information on CSR 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 September 30th, 2015




 3 months 

3 months

 YTD 

 YTD 



 Sept 30th 

Sept 30th

 Sept 30th 

 Sept 30th 



2015

2014

2015

2014



$

$

$

$







Revenue


12,254,372

10,410,336

33,794,045

32,037,895







Cost of sales


(11,320,599)

(9,236,578)

(33,627,584)

(28,412,871)







Gross profit/(loss)


933,773

1,173,758

166,461

3,625,024







Other income


29,873

12,212

73,393

100,561

Sales and marketing expenses


(267,635)

(319,061)

(853,485)

(868,032)

Administration expenses


(975,607)

(926,825)

(3,050,017)

(2,842,585)

Research and development expenses


686,791

265,117

588,454

(501,343)

Finance costs


(187,137)

(193,227)

(532,426)

(531,158)

Other gains and (losses)


383,231

(272,554)

313,405

(263,632)







Profit/(loss) before tax


603,289

(260,580)

(3,294,215)

(1,281,165)







Income tax income


(120,185)

38,507

576,835

235,797







Net profit/( loss)


483,104

(222,073)

(2,717,380)

(1,045,368)













Other comprehensive income/(loss)











Items that may be reclassified subsequently to net profit/(loss):










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


1,420,660

(239,405)

3,667,858

988,824







Total comprehensive income/(loss) for the year

1,903,764

(461,478)

950,478

(56,544)







Loss per share






Basic


0.01

0.00

(0.03)

(0.01)

Diluted


0.01

0.00

(0.03)

(0.01)

 


DYNEX POWER INC.

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

As at September 30th, 2015





 Sep 30th 

 Dec 31st 




2015

2014




$

$






NON-CURRENT ASSETS










Intangible assets



1,301,629

1,150,380

Property, plant & equipment



43,473,110

39,883,946

Deferred Tax Asset



635,302

-






Total non-current assets



45,410,041

41,034,326






CURRENT ASSETS










Inventories



13,380,350

14,428,876

Trade receivables



6,686,606

9,048,235

Amounts owing from parent company



3,010,823

2,764,112

Prepayments, deposits & other receivables



1,541,342

1,096,467

Tax recoverable



3,336

2,965

Derivative financial instruments



-

43,624

Cash 



680,547

894,609






Total  current assets



25,303,004

28,278,888






CURRENT LIABILITIES










Trade payables



1,514,017

7,073,579

Amounts owing to parent company



1,014,564

667,817

Other payables and accruals



8,359,435

10,156,372

Borrowings



13,234,599

4,171,108

Provisions



685,441

1,824,060






Total current liabilities



24,808,056

23,892,936






NON-CURRENT LIABILITIES










Borrowings



12,510,595

12,983,135

Provisions



60,951

54,180

Derivative financial instruments



-

-

Deferred tax liabilities



-

-






Total non-current liabilities



12,571,546

13,037,315






NET ASSETS



33,333,441

32,382,963





















EQUITY 










Share capital



37,096,192

37,096,192

(Accumulated deficit)/retained profit



(10,134,020)

(7,416,640)

Exchange fluctuation reserve



6,371,269

2,703,411









33,333,441

32,382,963

 

DYNEX POWER INC.
Interim Condensed Consolidated Statement of Changes in Equity (unaudited) in Canadian Dollars
Quarter Ended September 30th, 2015





 Foreign 




 Retained 

 Currency 



 Share 

 Profit/ 

 Translation 

 Total 


 Capital 

 (Deficit) 

 Reserve 

 Equity 


$

$

$

$
















At January 1st, 2014

37,096,192

(1,868,823)

1,820,588

37,047,957






Total comprehensive income for the period

-

(1,045,368)

988,824

(56,544)











At September 30th, 2014

37,096,192

(2,914,191)

2,809,412

36,991,413






Total comprehensive income for the period

-

(4,502,449)

(106,001)

(4,608,450)











At December 31st, 2014

37,096,192

(7,416,640)

2,703,411

32,382,963






Total comprehensive income for the period

-

(2,717,380)

3,667,858

950,478











At September 30th, 2015

37,096,192

(10,134,020)

6,371,269

33,333,441

 

DYNEX POWER INC.

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

Quarter Ended September 30th, 2015





 YTD 

 YTD 




 Sept 30th 

 Sept 30th 




2015

2014

CASH FLOW FROM OPERATING ACTIVITIES


$

$






Loss before tax



(3,294,215)

(1,281,165)

Finance costs recognised in loss before tax



442,303

531,158

Investment income recognised in loss before tax



-

(2,443)

Amortization of intangible assets



121,162

83,229

Depreciation of property, plant & equipment



3,919,520

3,222,741

Loss on disposal of property, plant & equipment



-

3,964

Provision for slow moving and obsolete inventory



58,308

700,872

Non cash movement in provisions



-

35,705

Movements in working capital



(4,231,389)

2,211,825

Income taxes received/(paid)



201

107,941

Net cash generated by/(used in) operating activities


(2,984,110)

5,613,827






CASH FLOW FROM INVESTING ACTIVITIES









Payments for intangible assets



(127,878)

(383,699)

Payments for property, plant & equipment



(2,795,671)

(7,223,624)

Interest received



-

2,443

Net cash used in investing activities



(2,923,549)

(7,604,880)






CASH FLOW FROM FINANCING ACTIVITIES










Proceeds from borrowings



38,687,049

10,950,723

Repayments of borrowings



(31,807,568)

(7,339,987)

Interest paid



(560,075)

(524,230)

Payments for other finance costs



-

(40,824)

Net cash generated by financing activities



6,319,406

3,045,682






NET INCREASE/(DECREASE) IN CASH



411,747

1,054,629






Cash at beginning of period



894,609

775,071






Effect of foreign currency translation on cash 



(626,174)

568






CASH AT END OF PERIOD



680,182

1,830,268

 

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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