Dynex Power Announces Year End Results for 2009

Continuing Good Performance Whilst Preparing for Future Growth

Listing: TSX Venture Exchange

Symbol: DNX

LINCOLN, England, April 19 /CNW Telbec/ - Dynex Power Inc., a leading, high power semiconductor company, today announced results for the year ended December 31st, 2009.

Summary financial information for the twelve months ended December 31st, 2009 is as follows:

    
    -------------------------------------------------------------------------
    Dollars (000's)                                   Dec. 31,       Dec. 31,
                                                         2009           2008
    -------------------------------------------------------------------------
    Revenue                                            39,884         37,017
    Gross Margin                                        9,534         10,457
    Expenses                                           (5,784)        (6,644)
    Earnings before Other Income (Expenses) and Tax     3,750          3,813
    Other Income (Expenses)                                77            751
    Income taxes                                         (414)            (2)
    Net Earnings                                        3,414          4,562
    Common shares outstanding(1) - diluted         40,673,893     37,250,602
    Earnings per share - diluted                        $0.08          $0.12
    -------------------------------------------------------------------------
    (1) Weighted average for the period
    

Revenue growth of 8% in 2009 was achieved against a difficult economic climate in many of the world's major economies. The growth reflected continued strong demand in the market place for Dynex bipolar discrete products and power electronic assemblies, offset in part by a weaker market for power modules and integrated circuits.

The 2009 gross margin of 23.9% was below the 28.3% reported last year. The 2008 level had been boosted by a particularly favourable product mix in the first half of the year which had not been expected to be repeated. The 2009 gross margin percentage was ahead of the levels reported in the years prior to 2008.

The Company reduced expenses by 13% compared to 2008. There had been significant one-off costs in 2008 associated with the acquisition of a majority stake in the Company by CSR Times Electric. Nevertheless, expenses have now fallen to 14.5% of revenue, the lowest ratio ever achieved and less than half what it had been five years previously.

As a result of these improvements in efficiency, the Company generated earnings before other income (expenses) and income taxes of $3.75 million, which was less than 2% below the figure reported in 2008, despite a much more challenging external environment.

An income tax charge of $0.4 million, following the exhaustion of UK tax losses, resulted in net earnings of $3.4 million.

Weaker economic markets saw order in-take decline from $49.0 million last year to $33.9 million this year, giving a book to bill ratio of 0.85. Nevertheless, the Company still had a strong order book at the end of 2009 of $31.4 million which represents 41 weeks of sales at the current revenue level. The decline reflected not only the softer market now being experienced but also the cancellation of over-bookings last year by some customers and the strength of the Dollar against Sterling, the Euro and the US Dollar in which all bookings are recorded. The strength of the order book enables management to remain confident that modest growth in revenue can be achieved in 2010.

As has previously been reported, Dynex is currently undertaking a major expansion of its facilities to enable it to benefit from the strong demand for power modules in China. The project will continue throughout 2010. The dislocation caused by this expansion, together with the impact of the additional costs of establishing the line before it can generate revenue, means that net earnings are expected to decline in 2010. However, strong growth in both revenue and net earnings is expected to result from the expansion, beginning in early 2011.

Dr. Paul Taylor, President and Chief Executive Officer commented, "The Company's results were much as expected. It is pleasing to be able to report that the business maintained the level of earnings before other income (expenses) and income taxes at a time when the external environment was providing many challenges to business. We were particularly pleased with the expense to revenue ratio achieved in 2009, although it is always disappointing to have to report a reduction in net earnings. We therefore consider our first full year as part of the CSR Group to have been very successful and we continue to see many new opportunities within the Group and in China generally from which we can benefit. We have completed the installation of a 6 inch bipolar fabrication facility and made significant progress on the expansion of our IGBT facility. The first of the two new lines is now being commissioned and we are starting on the installation of the second new line. The next year will be very challenging with a more difficult external market and with the costs of the new lines and preparing for major growth but with the extra revenue from that growth only coming through in 2011."

Bob Lockwood, Chief Financial Officer commented, "In the current environment, this is another outstanding set of results. The strength of our order book means that we expect revenue in 2010 to be similar to that reported in 2009 despite a softer market. The expansion plans that Paul Taylor has referred to and our relationship with CSR Times Electric all point to an exciting future. The next year will be one of preparing for the expected growth in 2011 and beyond. The cost of that preparation and the move to a full tax charge in the UK means that our net earnings will be reduced. However, it is important to note that because we can defer this tax charge, it will not affect our cash flow."

Mr Lu, Chairman of Dynex and Vice General Manager of CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd, the parent of CSR Times Electric, concluded, "CSR Times Electric is delighted with the progress that Dynex has achieved in the last year. We continue to identify exciting new opportunities for both CSR Times Electric and Dynex from our new relationship. The management of Dynex has delivered another set of excellent results and together we are laying the foundations for strong growth from 2011 onwards."

Conference Call

A conference call for analysts and interested listeners will be held Monday, April 19 at 11:00 a.m. (ET). The call-in numbers for participants are 888 231 8191 and 647 427 7450.

A replay of the call will be available on Monday, April 19 until Monday, April 26, 2010. To access the replay, call 416 849 0833 or 800 642 1687 enter pass code number 69345284, and then press the pound # key.

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 are available 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.
    Consolidated Statements of Earnings and Deficit
    Years Ended December 31st, 2009 and 2008
    -------------------------------------------------------------------------
                                                         2009           2008
                                                -----------------------------

    Revenue                                      $ 39,883,801  $  37,016,731

    Cost of sales                                  30,349,403     26,559,302
    -------------------------------------------------------------------------

    Gross margin                                    9,534,398     10,457,429
    -------------------------------------------------------------------------

    Expenses
    General and administration                      3,168,185      4,077,965
    Sales and marketing                               949,287      1,010,798
    Research and development                        1,171,970        796,414
    Interest expense                                  494,955        759,128
    -------------------------------------------------------------------------

                                                    5,784,397      6,644,305
    -------------------------------------------------------------------------

    Earnings before other income (expenses)
     and income taxes                               3,750,001      3,813,124
    -------------------------------------------------------------------------

    Other income (expenses)
    Interest and other income                         229,163        297,254
    Foreign exchange (loss) gain                     (151,714)       453,603
    -------------------------------------------------------------------------

                                                       77,449        750,857
    -------------------------------------------------------------------------

    Earnings before income taxes                    3,827,450      4,563,981

    Income taxes                                     (413,777)        (2,298)

    NET EARNINGS                                    3,413,673      4,561,683

    DEFICIT, BEGINNING OF YEAR                     (7,169,144)   (11,730,827)

    -------------------------------------------------------------------------
    DEFICIT, END OF YEAR                         $ (3,755,471) $  (7,169,144)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statements of Comprehensive Income
    Years Ended December 31st, 2009 and 2008
    -------------------------------------------------------------------------
                                                         2009           2008
                                                -----------------------------

    Net earnings                                 $  3,413,673  $   4,561,683
    -------------------------------------------------------------------------

    Other Comprehensive loss, net of tax:

    Unrealized foreign exchange loss on
     translating financial statements of
     self-sustaining foreign operations              (473,090)      (619,314)
    -------------------------------------------------------------------------

    OTHER COMPREHENSIVE LOSS                         (473,090)      (619,314)
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME                         $  2,940,583  $   3,942,369
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statements of Accumulated Other Comprehensive Loss and
    Deficit
    As at December 31st, 2009 and 2008
    -------------------------------------------------------------------------
                                                         2009           2008
                                                -----------------------------

    Accumulated other comprehensive loss,
     beginning of year                           $ (1,380,101) $    (760,787)

    Other comprehensive loss                         (473,090)      (619,314)
    -------------------------------------------------------------------------

    Accumulated other comprehensive loss           (1,853,191)    (1,380,101)

    Deficit                                        (3,755,471)    (7,169,144)
    -------------------------------------------------------------------------

    TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS
     AND DEFICIT                                 $ (5,608,662) $  (8,549,245)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Balance Sheets
    As At December 31st, 2009 and 2008
    -------------------------------------------------------------------------
                                                         2009           2008
                                                -----------------------------
    CURRENT ASSETS
    Cash                                         $ 22,942,550  $     404,638
    Accounts receivable                             6,439,200      6,081,965
    Inventories                                     8,872,155      8,041,747
    Amounts owing from parent company                 218,568              -
    Income tax recoverable                             96,413          2,838
    Prepaid expenses and deposits                     794,170        696,625
    -------------------------------------------------------------------------
                                                   39,363,056     15,227,813

    PROPERTY, PLANT & EQUIPMENT                    17,420,677      5,433,347

    -------------------------------------------------------------------------

                                                 $ 56,783,733  $  20,661,160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CURRENT LIABILITIES
    Accounts payable and accrued liabilities     $  4,964,864  $   5,688,807
    Short-term loan                                16,273,732      3,551,495
    Amounts owing to parent company                   955,026              -
    Current portion of long-term debt                  24,921         45,610
    Obligation under capital leases                   113,602        114,146
    Current portion of deferred revenue             1,174,803        137,271
    -------------------------------------------------------------------------
                                                   23,506,948      9,537,329
    LONG-TERM DEBT                                        942      2,846,811
    LONG-TERM OBLIGATION UNDER CAPITAL LEASES         512,935        642,659
    LONG-TERM DEFERRED REVENUE                        949,290      1,132,483
    FUTURE INCOME TAXES                               380,756              -

    -------------------------------------------------------------------------
                                                   25,350,871     14,159,282
    SHAREHOLDERS' EQUITY
    Share capital                                  37,041,524     15,051,123
    Deficit                                        (3,755,471)    (7,169,144)
    Accumulated other comprehensive loss           (1,853,191)    (1,380,101)
    -------------------------------------------------------------------------

                                                   31,432,862      6,501,878
    -------------------------------------------------------------------------


                                                 $ 56,783,733  $  20,661,160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statements of Cash Flows
    Years Ended December 31st, 2009 and 2008
    -------------------------------------------------------------------------
                                                         2009           2008
                                                -----------------------------
    OPERATING
    Net earnings                                 $  3,413,673  $   4,561,683
    Items not affecting cash
    ------------------------
      Amortization                                    693,984        310,446
      Gain on disposal of property, plant and
       equipment                                     (137,672)      (101,245)
      Future income taxes                             399,541              -
      Shares and options issued for services                -         37,000
      Non-cash interest                                 6,248        183,226
      Non-cash grant income                                 -         (2,355)
      Provision for inventory obsolescence          1,823,084      1,149,172
    Changes in non-cash operating working capital  (4,223,368)    (1,799,184)
    -------------------------------------------------------------------------
                                                    1,975,490      4,338,743
    -------------------------------------------------------------------------

    FINANCING
    Shares issued for cash                         22,509,671         34,500
    Cost of share issue                               (35,943)             -
    Increase in amounts owing to parent company     2,521,141              -
    Decrease in amounts owing to parent company    (4,650,459)             -
    Increase in short-term loans                   13,619,037         62,836
    Payments on capital leases                        (99,832)       (79,743)
    Increase (decrease) in long-term debt             (45,779)       126,489
    -------------------------------------------------------------------------
                                                   33,817,836        144,082
    -------------------------------------------------------------------------

    INVESTING
    Proceeds of disposal of property, plant and
     equipment                                            263          4,374
    Purchase of property, plant and equipment     (13,121,302)    (4,333,637)
    -------------------------------------------------------------------------
                                                  (13,121,039)    (4,329,263)
    -------------------------------------------------------------------------

    Effect of foreign currency translation on
     cash                                            (134,375)       110,209

    NET INCREASE IN CASH                           22,537,912        263,771

    Cash, beginning of year                           404,638        140,867
    -------------------------------------------------------------------------

    CASH, END OF YEAR                            $ 22,942,550  $     404,638
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00010667E

SOURCE Dynex Power Inc.

For further information: 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


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