Difficulties in New Product Development Impacting Results
Listing: TSX Venture Exchange
LINCOLN, England, Jan. 22, 2014 /CNW/ - Dynex Power Inc., a leading,
high power semiconductor company, today provided commentary on current
difficulties in new product development and provided guidance on the
adverse impact it will have on financial performance in the fourth
quarter of 2013.
During the fourth quarter of 2013, Dynex further tightened the selection
specifications on the die being supplied to its parent company, Zhuzhou
CSR Times Electric Co., Ltd, for use in China's railway market. This
caused yields to fall below the standard rate expected and in the
short-term has increased cost. In recognition of this, the Company will
record in its fourth quarter results a stock write off and stock
provision totalling $1.4 million. In addition, the Company agreed to
credit CSR Times Electric approximately $170,000 for die that had
previously been delivered to them so as to avoid any potential problems
materialising with customers. Management believes that these actions
demonstrate its commitment to its customers and will benefit the
business in the longer term.
In its 2013 third quarter Management's Analysis and Discussion, Dynex
reported that it expected revenue in the fourth quarter to be
significantly higher than the $9.5 million reported in quarter three,
with a return to profitability. The Company now expects to report
revenue of $12.9 million in the fourth quarter and would have been
reporting a modest quarterly profit but for the write off and provision
referred to above.
Dr. Paul Taylor, President and Chief Executive Officer commented, "The
whole management team at Dynex is disappointed by the problems we are
reporting today. The development of new and improved die is always a
complex and trying exercise and hiccups along the way are part and
parcel of that process. We have been here before. And whilst there is
no simple solution in cases like this, we are familiar with the
processes necessary to rectify the problems affecting the yield of
these new products. We are working closely with and receiving strong
support from CSR Times Electric on these challenges and will resolve
these problems as soon as possible. Despite this difficulty, we are
continuing to produce product that meets the required specification and
expect to see a full recovery over the next 90 days."
Bob Lockwood, Chief Financial Officer commented, "The write off and
provision hides what had otherwise been a strong quarter's revenue and
a return to operating profit in the quarter. As a result of these
charges, the Company expects to report a net loss in the fourth quarter
of approximately $1 million."
Li Donglin, the Chairman of Dynex said, "Like all Dynex shareholders, we
at CSR Times Electric are disappointed with the financial results of
Dynex in 2013. We are working very hard in conjunction with the staff
at Dynex to address the manufacturing issue as quickly as possible and
we are confident that the business will soon be reporting strong growth
and a return to profitability."
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
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.
SOURCE: DYNEX POWER INC.
For further information:
Dr. Paul Taylor
President and Chief Executive Officer
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: +44 1522 500 500