Dynex Power Inc. - Second Quarter Results in Line with Expectations



    
    Strong Revenue Growth Year to Date

    Listing:  TSX Venture Exchange
    Symbol:   DNX
    

    LINCOLN, England, Aug. 10 /CNW Telbec/ - Dynex Power Inc., a leading
specialist high power semiconductor company, today announced results for the
second quarter of 2009.
    Summary financial information in Canadian dollars for the three and six
months ended June 30th, 2009 is as follows:

    
    -------------------------------------------------------------------------
                        June 30,       June 30,           YTD            YTD
                           2009           2008           2009           2008
                          $'000          $'000          $'000          $'000
    -------------------------------------------------------------------------
    Revenue               9,722          9,773         20,725         17,857
    Gross Margin          2,035          3,934          5,314          6,482
    Earnings
     before Tax             568          2,291          2,213          3,461
    Net Earnings            725          2,291          1,890          3,461
    No. of Common
     Shares-average  40,194,834     35,375,006     40,194,834     34,327,442
    Earnings per
     Share in
     Dollars-diluted       0.02           0.06           0.05           0.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Revenue remained robust in the second quarter, but the volume was
slightly lower than the corresponding quarter of last year. There were
particularly good sales of Bipolar Discrete and Power Electronic Assembly
products, while revenue from Power Modules and Integrated Circuit products
declined. Overall, revenue was in line with expectations, as well as the
Company's announcements at the Annual General Meeting and in the press release
announcing the first quarter results.
    Year to date revenue was 16% ahead of the same six-month period last
year. Once again the strong performing product groups were Bipolar Discrete
and Power Electronic Assemblies. There was a small decrease in Power Modules
revenue and a significant decrease in Integrated Circuit revenue. Overall,
management was particularly pleased with the Company's revenue performance in
the challenging economic environment.
    Dynex's product mix was less favourable than in 2008, resulting in a
gross profit margin for the second quarter of 20.9% compared to 40.2% in 2008.
The year to date gross profit margin was 25.6% compared to 36.3% last year.
The Company indicated last year that the gross profit margin in the second
quarter and first six months periods of 2008 was exceptionally high and could
not be maintained.
    Dynex reported earnings before tax of $568,000 in the quarter and $2.2
million for the year to date. That contrasted with the exceptionally high
before tax earnings of $2.3 million for the second quarter and $3.5 million
for the year to date in 2008.
    Dynex's order book remained strong, although for the first time in a long
time the amount of quarterly billings was larger than the quarterly bookings,
which was the Company's initial experience of the negative impact of the
global economic slowdown. Competitive pricing was more intense.
    Dynex successfully claimed some additional UK tax relief on its research
and development expenditure over the last two years. Nevertheless, the
Company's UK tax loss carry forwards will be fully utilised this year and the
Company will have to start providing for taxes on its earnings. The average
tax rate is estimated to be 15% this year. The Company expects the rate to
rise to nearer to the statutory UK rate of 28% in future years.
    Dr Paul Taylor, President and Chief Executive Officer commented that
"Although we are not seeing any further growth in quarterly revenue at the
moment, the order book remains strong and we still expect revenue overall in
2009 to be well ahead of last year. The Bipolar Discrete business is
performing particularly strongly. The book to bill ratio for the quarter was
below one to one for the first time for three years. However, following a good
month for bookings in July, it is above one for one for the first seven months
of the year. Our outlook is for continuing growth in the Bipolar Discrete and
Power Electronic Assemblies businesses, but we expect sales in Power Modules
and Integrated Circuits to remain depressed until at least the year end."
    Bob Lockwood, Chief Financial Officer, stated that "the second quarter
earnings were strong, although not as strong as the corresponding quarter of
last year which had been enhanced by extraordinarily high sales of Integrated
Circuits. Looking forward, revenue is expected to continue at levels similar
to those seen in the current quarter. This should enable the business to
continue reporting quarterly profits albeit that the net earnings for the year
will be lower than in 2008 as a result of a less favourable product mix and
the Company having to provide for tax on its earnings.
    Mr Lu, Chairman of Dynex and President and Executive Director of CSR
Times Electric, commented again on how well he thought Dynex was performing in
the current economic conditions. In addition, he said "I am pleased with the
work that has taken place on the expansion of Dynex's facilities. The (pnds
stlg)12 million investment in IGBT capacity announced in June will enable
Dynex to meet the demand from CSR Times Electric for IGBT silicon wafers."
    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, 2009 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 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. Its
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.

    
    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.


    DYNEX POWER INC.

    Consolidated Statements of Earnings and Deficit (Unaudited)

    Quarters Ended June 30th, 2009 and 2008
    -------------------------------------------------------------------------
                       3 months       3 months            YTD            YTD
                       Jun 30th       Jun 30th       Jun 30th       Jun 30th
                           2009           2008           2009           2008
                  -----------------------------------------------------------

    Revenue        $  9,722,367   $  9,773,194   $ 20,725,091   $ 17,857,332
    Cost of sales     7,687,471      5,839,609     15,410,635     11,374,942
    -------------------------------------------------------------------------
    Gross margin      2,034,896      3,933,585      5,314,456      6,482,390
    -------------------------------------------------------------------------
    Expenses
    General and
     administration     725,963      1,067,128      1,650,138      1,968,599
    Sales and
     marketing          225,804        269,218        518,557        493,143
    Research and
     development        234,385        206,507        490,304        418,976
    Interest expense    125,336        192,085        261,932        364,305
    -------------------------------------------------------------------------
                      1,311,488      1,734,938      2,920,931      3,245,023
    -------------------------------------------------------------------------
    Earnings before
     other income
     (expenses) and
     income taxes       723,408      2,198,647      2,393,525      3,237,367
    -------------------------------------------------------------------------
    Other income
     (expenses)
    Interest and
     other income        80,765         45,576        119,387         92,146
    Foreign exchange
     (loss) gain       (235,936)        46,363       (300,169)       131,964
    -------------------------------------------------------------------------
                       (155,171)        91,939       (180,782)       224,110
    -------------------------------------------------------------------------
    Earnings before
     income taxes       568,237      2,290,586      2,212,743      3,461,477
    Income taxes        156,997              -       (322,821)             -
    NET EARNINGS        725,234      2,290,586      1,889,922      3,461,477
    DEFICIT,
     BEGINNING OF
     PERIOD          (6,004,456)   (10,559,936)    (7,169,144)   (11,730,827)
    -------------------------------------------------------------------------
    DEFICIT, END
     OF PERIOD     $ (5,279,222)  $ (8,269,350)  $ (5,279,222)  $ (8,269,350)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statements of Comprehensive Income (Unaudited)
    Quarters Ended June 30th, 2009 and 2008
    -------------------------------------------------------------------------
                       3 months       3 months            YTD            YTD
                       Jun 30th       Jun 30th       Jun 30th       Jun 30th
                           2009           2008           2009           2008
                  -----------------------------------------------------------

    Net earnings   $    725,234   $  2,290,586   $  1,889,922   $  3,461,477
    -------------------------------------------------------------------------

    Other
     Comprehensive
     income, net
     of tax:
    Unrealized
     foreign
     exchange on
     translating
     financial
     statements of
     self-sustaining
     foreign
     operations         541,355        (13,314)       670,789         98,815
    -------------------------------------------------------------------------

    OTHER
     COMPREHENSIVE
     INCOME             541,355        (13,314)       670,789         98,815
    -------------------------------------------------------------------------

    COMPREHENSIVE
     INCOME        $  1,266,589   $  2,277,272   $  2,560,711   $  3,560,292
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.

    Consolidated Statements of Accumulated Other Comprehensive Loss and
    Deficit (Unaudited)

    As at June 30th, 2009 and December 31st, 2008
    -------------------------------------------------------------------------
                                                     Jun 30th       Dec 31st
                                                         2009           2008
                                                -----------------------------
    Accumulated other comprehensive loss,
     beginning of period                         $ (1,380,101)  $   (760,787)
    Other comprehensive income (loss)                 670,789       (619,314)
                                                -----------------------------
    Accumulated other comprehensive loss             (709,312)    (1,380,101)
    Deficit                                        (5,279,222)    (7,169,144)
                                                -----------------------------

    TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS
     AND DEFICIT                                 $ (5,988,534)  $ (8,549,245)
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Balance Sheets (Unaudited)
    As At June 30th, 2009 and December 31st, 2008
    -------------------------------------------------------------------------
                                                     Jun 30th       Dec 31st
                                                         2009           2008
                                                -----------------------------

    CURRENT ASSETS
    Cash                                         $  3,943,790   $    404,638
    Accounts receivable                             6,534,593      6,081,965
    Inventories                                     8,738,800      8,041,747
    Income tax recoverable                                  -          2,838
    Prepaid expenses and deposits                     719,157        696,625
    -------------------------------------------------------------------------
                                                   19,936,340     15,227,813
    PROPERTY, PLANT & EQUIPMENT                     8,657,045      5,433,347
    -------------------------------------------------------------------------
                                                 $ 28,593,385   $ 20,661,160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES
    Accounts payable and accrued liabilities     $  5,820,290   $  5,688,807
    Income tax payable                                150,753              -
    Amounts owing to parent company                 3,384,872              -
    Short-term loan                                 7,848,836      3,551,495
    Current portion of long-term debt                  45,542         45,610
    Obligation under capital leases                   131,510        114,146
    Current portion of deferred revenue               147,920        137,271
    -------------------------------------------------------------------------
                                                   17,529,723      9,537,329
    LONG-TERM DEBT                                      8,966      2,846,811
    LONG-TERM OBLIGATION UNDER CAPITAL LEASES         644,718        642,659
    LONG-TERM DEFERRED REVENUE                      1,146,384      1,132,483
    DEFERRED TAX                                      201,005              -
    -------------------------------------------------------------------------
                                                   19,530,796     14,159,282

    SHAREHOLDERS' EQUITY
    Share capital                                  15,051,123     15,051,123
    Deficit                                        (5,279,222)    (7,169,144)
    Accumulated other comprehensive loss             (709,312)    (1,380,101)
    -------------------------------------------------------------------------
                                                    9,062,589      6,501,878
    -------------------------------------------------------------------------
                                                 $ 28,593,385   $ 20,661,160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statements of Cash Flows (Unaudited)
    Quarters Ended June 30th, 2009 and 2008
    -------------------------------------------------------------------------
                       3 months       3 months            YTD            YTD
                       Jun 30th       Jun 30th       Jun 30th       Jun 30th
                           2009           2008           2009           2008
                  -----------------------------------------------------------

    OPERATING
    Net earnings   $    725,234   $  2,290,586   $  1,889,922   $  3,461,477
    Items not
     affecting
     cash
      Amortization      149,407         75,163        270,417        119,214
      Gain on
       disposal
       of property,
       plant and
       equipment        (35,219)       (39,122)       (69,829)       (77,527)
      Shares and
       options
       issued for
       services               -         11,177              -         13,735
      Non-cash
       interest           1,771         27,047          3,825         53,530
      Non-cash
       grant
       income                 -              -              -         (2,355)
      Provision for
       inventory
       obsolescence     422,577        243,510        478,558        277,500
    Changes in
     non-cash
     operating
     working capital
     items            1,124,949     (1,980,361)      (410,671)    (1,326,762)
    -------------------------------------------------------------------------
                      2,388,719        628,000      2,162,222      2,518,812
    -------------------------------------------------------------------------
    FINANCING
    Shares issued
     for cash                 -         34,500              -         34,500
    Increase in
     amounts owing
     to parent
     company                  -              -      2,521,141              -
    Decrease in
     amounts owing
     to parent
     company           (779,425)             -     (1,064,030)             -
    Increase
     (repayment)
     of short-term
     loan             5,251,936        535,973      4,176,400       (912,719)
    Payments on
     capital leases      (9,761)             -        (36,734)             -
    Repayment of
     long-term debt  (1,197,265)      (110,102)    (1,210,245)      (156,532)
    -------------------------------------------------------------------------
                      3,265,485        460,371      4,386,532     (1,034,751)
    -------------------------------------------------------------------------
    INVESTING
    Proceeds of
     disposal of
     property, plant
     and equipment            -            401            263            401
    Purchase of
     property, plant
     and equipment   (2,496,530)    (1,110,293)    (2,931,153)    (1,396,835)
    -------------------------------------------------------------------------
                     (2,496,530)    (1,109,892)    (2,930,890)    (1,396,434)
    -------------------------------------------------------------------------
    NET INCREASE
     (DECREASE) IN
     CASH             3,157,674        (21,521)     3,617,864         87,627
    Effect of
     foreign currency
     translation
     on cash            (97,945)       (34,715)       (78,712)       (28,525)
    Cash, beginning
     of period          884,061        256,205        404,638        140,867
    -------------------------------------------------------------------------
    CASH, END OF
     PERIOD        $  3,943,790   $    199,969   $  3,943,790   $    199,969
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00010667E




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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