Dynex Power Announces First Quarter Results for 2010
Good Performance in Line with Plan. Preparations for Future Growth Continue
Listing: TSX Venture Exchange
Symbol: DNX
LINCOLN, England, May 17 /CNW Telbec/ - Dynex Power Inc., a leading, high power semiconductor company, today announced results for the quarter ended March 31st, 2010.
Summary financial information for the three months ended March 31st, 2010 is as follows:
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March 31, March 31,
Dollars (000's) 2010 2009
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Revenue 10,433 11,003
Gross Margin 2,551 3,280
Expenses (1,594) (1,609)
Earnings before Other Income (Expenses) and Tax 957 1,670
Other Income (Expenses) 191 (26)
Income taxes (361) (480)
Net Earnings 786 1,165
Common shares outstanding(1) - diluted 80,567,304 40,297,238
Earnings per share - diluted $0.01 $0.03
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(1) Weighted average for the period
First quarter revenue of $10.4 million was 6% higher than the previous quarter but 5% lower than in the corresponding quarter of last year. The decline was caused by an 8% fall in the Sterling Dollar exchange rate. In Sterling terms, Dynex's first quarter revenue was the highest it had been for eight years. 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 gross margin of 24.5% was above the 23.73% reported in the previous quarter but below the 29.8% reported in the corresponding quarter of last year. The gross margin of the corresponding quarter of last year had been boosted by a particularly favourable product mix which had not been expected to be repeated.
Expenses of $1.6 million were 3% higher than the previous quarter but 1% lower than in the corresponding quarter of last year. The expense ratio of 15.3% reflects the continuing tight control being exercised in this area.
As a consequence of these changes, the Company generated earnings before other income (expenses) and income taxes of $1.0 million, 23% higher than in the previous quarter but 43% lower than the corresponding quarter of last year. A favourable foreign exchange gain resulted in earnings before tax being 45% higher than the previous quarter and 30% lower than in the corresponding quarter of last year.
An income tax charge at the statutory tax rate of 28% on UK earnings resulted in net earnings of $786,000. There had been a release of tax in the UK in the previous quarter following a reassessment of the UK tax charge for 2009. Tax had been provided at 28% on UK earnings in the corresponding quarter of last year.
Weaker economic markets saw order in-take decline to $5.8 million for the quarter giving a book to bill ratio of 0.60. Nevertheless, the Company still had a strong order book at the end of March 2010 of $25.0 million, with approximately 83% of this order book due for delivery in 2010. The strength of the order book enables management to remain confident that revenue will be maintained in the second quarter of 2010, but it is expected to decline in the second half of the year.
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. As has also been reported, 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 the second half of 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, once again, much as expected. It is pleasing to be able to report that earnings before other income (expenses) and income taxes and earnings before income taxes were both higher than in the previous quarter, although the application of a full tax charge compared to a tax release in the previous quarter meant that net earnings was slightly lower. We were pleased that the effort shown by all the members of our workforce in improving the performance of the business over the last few years was recognise in Dynex Semiconductor Limited receiving a Queen's Award for Enterprise in April 2010. This is the most prestigious award available to UK businesses and recognises the successful turnaround of the business since 2005."
Bob Lockwood, Chief Financial Officer commented, "We were delighted to be able to report another good set of results against the background of the current, difficult economic situation. We expect to be able to repeat this performance in the next quarter, although we now expect a reduction in revenue and this together with the cost of preparing for growth in 2011 means that earnings are expected to decline in the second half of the year. The expansion of our fabrication facility and our relationship with CSR Times Electric all point to an exciting future and we expect to see growth in revenue and earnings in 2011. "
Following recent changes in their roles within the China South Locomotive and Rolling Stock group, Lu Penghu resigned as Chairman and as a Director of Dynex Power Inc. and Feng JiangHua announced his resignation as a Director as of 12th May 2010. At a meeting of the Board of Directors held on the following day, the Board elected Li Donglin to be a Director and Chairman of the Company and also elected Liu Ke'an to be a director of the Company. Li Donglin was recently appointed the General Manager of Zhuzhou CSR Times Electric Co. Ltd, the owner of 75% of the shares of the Company. Liu Ke'an has recently been appointed as Chief Technology Officer of Zhuzhou CSR Times Electric.
Dr. Paul Taylor, commented, "While we are delighted with Lu Penghu's and feng JiangHua's promotions within the CSR group and wish them well, we will miss them and the management must extend our thanks to both of them for making the working relationships between Dynex and TEG so effective. At the same time, we welcome Li Donglin and Liu Ke'an. We look forward to closer working relations with them in their new roles. They bring a wealth of experience and a very effective perspective to our business in Lincoln."
Li Donglin, the new Chairman of Dynex said, "These are another good set of results for Dynex and we are pleased with the progress Dynex is making. I would to take this opportunity of thanking Lu Penghu and Feng JiangHua for the excellent work they have done as directors of Dynex over the last year and a half and I know that my fellow directors will wish to join me in thanking them and wishing them well in their new roles."
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 (Unaudited)
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Quarters Ended March 31st, 2010 and 2009
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3 months 3 months
Mar 31st Mar 31st
2010 2009
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Revenue $ 10,432,799 $ 11,002,723
Cost of sales 7,881,850 7,723,164
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Gross margin 2,550,949 3,279,559
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Expenses
General and administration 1,001,295 924,176
Sales and marketing 212,345 292,752
Research and development 331,988 255,919
Interest expense 48,103 136,595
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1,593,731 1,609,442
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Earnings before other income (expenses) and
income taxes 957,218 1,670,117
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Other income (expenses)
Interest and other income 59,741 38,622
Foreign exchange gain (loss) 130,911 (64,233)
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190,652 (25,611)
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Earnings before income taxes 1,147,870 1,644,506
Income taxes (361,629) (479,818)
NET EARNINGS 786,241 1,164,688
DEFICIT, BEGINNING OF PERIOD (3,755,471) (7,169,144)
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DEFICIT, END OF PERIOD $(2,969,230) $(6,004,456)
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Earnings per share
Basic $ 0.01 $ 0.03
Diluted $ 0.01 $ 0.03
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Weighted average number of shares
Basic 80,391,428 40,194,834
Diluted 80,567,304 40,297,238
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DYNEX POWER INC.
Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
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Quarters Ended March 31st, 2010 and 2009
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3 months 3 months
Mar 31st Mar 31st
2010 2009
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Net earnings $ 786,241 $ 1,164,688
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Other Comprehensive (loss) income, net of tax:
Unrealized foreign exchange (loss) gain on
translating financial statements of self-
sustaining foreign operations (2,626,201) 129,434
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OTHER COMPREHENSIVE (LOSS) INCOME (2,626,201) 129,434
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COMPREHENSIVE (LOSS) INCOME $(1,839,960) $ 1,294,122
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DYNEX POWER INC.
Consolidated Statements of Accumulated Other Comprehensive Loss and
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Deficit (Unaudited)
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As at March 31st, 2010 and December 31st, 2009
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Mar 31st Dec 31st
2010 2009
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Accumulated other comprehensive loss,
beginning of period $(1,853,191) $(1,380,101)
Other comprehensive loss (2,626,201) (473,090)
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Accumulated other comprehensive loss (4,479,392) (1,853,191)
Deficit (2,969,230) (3,755,471)
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TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS
AND DEFICIT $(7,448,622) $(5,608,662)
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Accumulated other comprehensive loss consists entirely of translation
adjustments.
DYNEX POWER INC.
Consolidated Balance Sheets (Unaudited)
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As At March 31st, 2010 and December 31st, 2009
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Mar 31st Dec 31st
2010 2009
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CURRENT ASSETS
Cash $ 3,611,877 $ 22,942,550
Accounts receivable 6,954,324 6,439,200
Inventories 8,207,493 8,872,155
Amounts owing from parent company 371,568 218,568
Income tax recoverable 87,643 96,413
Prepaid expenses and deposits 538,030 794,170
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19,770,935 39,363,056
PROPERTY, PLANT & EQUIPMENT 17,460,857 17,420,677
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$ 37,231,792 $ 56,783,733
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CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 4,522,458 $ 4,964,864
Short-term loan - 16,273,732
Amounts owing to parent company 522,945 955,026
Current portion of long-term debt 12,874 24,921
Current portion of obligation under capital
leases 101,282 113,602
Current portion of deferred revenue 529,270 1,174,803
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5,688,829 23,506,948
LONG-TERM DEBT - 942
LONG-TERM OBLIGATION UNDER CAPITAL LEASES 433,053 512,935
LONG-TERM DEFERRED REVENUE 833,184 949,290
FUTURE INCOME TAXES 683,824 380,756
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7,638,890 25,350,871
SHAREHOLDERS' EQUITY
Share capital 37,041,524 37,041,524
Deficit (2,969,230) (3,755,471)
Accumulated other comprehensive loss (4,479,392) (1,853,191)
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29,592,902 31,432,862
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$ 37,231,792 $ 56,783,733
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DYNEX POWER INC.
Consolidated Statements of Cash Flows (Unaudited)
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Quarters Ended March 31st, 2010 and 2009
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3 months 3 months
Mar 31st Mar 31st
2010 2009
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OPERATING
Net earnings $ 786,241 $ 1,164,688
Items not affecting cash
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Amortization 278,029 121,010
Gain on disposal of property, plant and
equipment (32,274) (34,610)
Future income taxes 360,458 -
Non-cash interest 631 2,054
Provision for inventory obsolescence 340,271 55,981
Changes in non-cash operating working capital (1,600,472) (1,535,620)
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132,884 (226,497)
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FINANCING
Cost of share issue (308,027) -
Increase in amounts owing to parent company - 2,521,141
Decrease in amounts owing to parent company (553,002) (284,605)
Decrease in short-term loans (15,790,230) (1,075,536)
Payments on capital leases (37,583) (26,973)
Decrease in long-term debt (11,985) (12,980)
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(16,700,827) 1,121,047
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INVESTING
Proceeds of disposal of property, plant and
equipment 14,280 263
Purchase of property, plant and equipment (2,184,201) (434,623)
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(2,169,921) (434,360)
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Effect of foreign currency translation on cash (592,809) 19,233
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NET (DECREASE) INCREASE IN CASH (19,330,673) 479,423
Cash, beginning of period 22,942,550 404,638
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CASH, END OF PERIOD $ 3,611,877 $ 884,061
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%SEDAR: 00010667E
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: [email protected]
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