Dynex Power Announces First Quarter Results for 2012

Strong Results Despite Tough Economic Conditions in Many Markets

Listing: TSX Venture Exchange
Symbol: DNX

LINCOLN, England, May 16, 2012 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today announced its financial results for the first quarter ended March 31st, 2012.

Summary financial information for the three months ended March 31st, 2012 is as follows:

Canadian Dollars (000's)		March 31, 2012		March 31, 2011
Revenue		10,522		7,571
Gross Profit		2,633		1,492
Other Income, Expenses and Costs		(1,600)		(1,182)
Profit before Tax		1,033		310
Income Tax Expense		(274)		(94)
Net Profit		759		216
Common shares outstanding ^1 - diluted		80,542,859		80,580,148
Earnings per share  - diluted		$0.01		$0.00
	^1  Weighted average for the period

First quarter revenue of $10.5 million was 39% higher than the corresponding quarter of last year. The increase was the result of significantly higher sales of power modules and die from the new fabrication lines and smaller increases in revenue from the sale of bipolar devices and services, partially offset by reductions in revenues from integrated circuits and power electronic assemblies.

The gross margin of 25.0% was significantly above the 19.7% reported in the corresponding quarter of last year. The margin improvement was attributable to the strong increase in revenue.

Other income, expenses and costs represented 11.2% of revenue in the 2012 period compared with 11.8% in the corresponding quarter of last year.

As a consequence of these changes, the Company generated profit before tax of $1.0 million, compared to $310,000 in the corresponding quarter of last year. A reduction in the UK tax rate resulted in an income tax rate of 26.5% of profit before tax compared to 30.3% in the corresponding quarter of last year. As a result, net profit for the period totalled $759,000, or $0.01 per share, compared with $216,000, or $0.00 per share, last year.

At the end of the first quarter, the Company's order book stood at $16.1 million, approximately 18% lower than at the end of last year. The reduction reflects the difficult markets currently being experienced in many parts of the world, as many customers appear to be delaying investment decisions for as long as possible. As a consequence, Dynex management is finding it more difficult than usual to forecast future revenues. Management remains confident that revenue in the second quarter of 2012 will be at a similar level to that reported in the first quarter, but is cautious about the outlook for the second half of the year.

Dr. Paul Taylor, President and Chief Executive Officer commented, "The Company has enjoyed a very successful first quarter in 2012 with revenues in Sterling being the highest ever recorded by the Company. Our two new IGBT lines are fully operational and yields from the new lines are continuing to improve. In addition, we are pressing ahead with our research and development work which will provide the basis for the future success of the business. The expansion of our R&D activities has meant that we are running out of office space and we look forward to moving into the new building in the summer. We are confident that we will see another good performance in the second quarter, but we need to bear in mind that these are difficult economic times in many of our markets and it is possible that the second half of this year will see a reduction in revenue and profitability, with a recovery expected in 2013."

Bob Lockwood, Chief Financial Officer commented, "The strong result reported in the first quarter and the forecast of another strong result in the second quarter are both very pleasing, but we are remaining vigilant. Most world markets remain soft and we may see some reduction in demand for our products in the second half. Looking further out, we remain positive on the medium and longer term prospects for the Company. In the meantime, we are aiming to keep our costs under control until we see a pickup in orders."

Li Donglin, the Chairman of Dynex said, "These results and the forecast for the second quarter are very encouraging and give us confidence that once the current difficulties in world markets are overcome, the future of Dynex remains very attractive."

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.
Condensed Consolidated Statement of Comprehensive Income (unaudited) in Canadian Dollars
Quarter Ended March 31st, 2012
	3 months		3 months
	Mar 31st		Mar 31st
	2012		2011
	$		$
Revenue	10,522,090		7,571,232
Cost of sales	(7,888,847)		(6,078,797)
Gross profit	2,633,243		1,492,435
Other income	22,412		18,709
Sales and marketing expenses	(230,041)		(206,657)
Administration expenses	(950,306)		(683,235)
Research and development expenses	(287,059)		(221,735)
Finance costs	(104,594)		(20,259)
Other losses	(51,142)		(69,562)
Profit before Tax	1,032,513		309,696
Income tax expense	(273,415)		(93,781)
Net Profit	759,098		215,915
Other Comprehensive Income
Exchange differences on translation of foreign operations (net of tax of $nil)	154,629		67,029
Total Comprehensive Income for the year	913,727		282,944
DYNEX POWER INC.
Condensed Consolidated Statement of Financial Position (unaudited) in Canadian Dollars
Quarter ended March 31st, 2012
	Mar 31st		Dec 31st
	2012		2011
	$		$
NON-CURRENT ASSETS
Property, plant & equipment	30,930,812		30,623,600
CURRENT ASSETS
Inventories	11,106,519		10,890,917
Trade receivables	4,372,188		4,275,915
Amounts owing from parent company	3,702,937		2,369,749
Prepayments, deposits & other receivables	1,284,877		458,665
Tax recoverable	-		298,301
Cash	1,209,025		3,028,599
Total  current assets	21,675,546		21,322,146
CURRENT LIABILITIES
Trade payables	1,494,410		1,142,246
Amounts owing to parent company	262,387		312,284
Other payables and accruals	3,025,490		3,946,048
Borrowings	811,620		514,102
Provisions	250,496		186,077
Total current liabilities	5,844,403		6,100,757
NET CURRENT ASSETS	15,831,143		15,221,389
TOTAL ASSETS LESS CURRENT LIABLIITIES	46,761,955		45,844,989
NON-CURRENT LIABILITIES
Borrowings	8,954,608		9,238,920
Provisions	213,506		212,704
Deferred tax liabilities	2,025,916		1,739,167
Total non-current liabilities	11,194,030		11,190,791
NET ASSETS	35,567,925		34,654,198
EQUITY
Share capital	37,096,192		37,096,192
Retained profit/(accumulated deficit)	234,483		(524,615)
Exchange fluctuation reserve	(1,762,750)		(1,917,379)
	35,567,925		34,654,198
DYNEX POWER INC.
Condensed Consolidated Statement of Cash Flows (unaudited) in Canadian Dollars
Quarter Ended March 31st, 2012
	3 months		3 months
	Mar 31st		Mar 31st
	2012		2011
	$		$
CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax	1,032,513		309,696
Finance costs recognised in profit or loss	104,594		20,259
Investment income recognised in profit or loss	(215)		(588)
Depreciation of property, plant & equipment	691,083		524,373
Loss/(gain) on disposal of property, plant & equipment	-		(15,646)
Provision for slow moving and obsolete inventory	(179,525)		284,125
Movements in working capital	(2,686,366)		(1,822,675)
Cash used in operating activities before income taxes	(1,037,916)		(700,456)
Income taxes received	300,512		51,893
Net cash used in operating activities	(737,404)		(648,563)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for property, plant and equipment	(939,219)		(1,097,150)
Proceeds on disposal of property, plant and equipment	-		15,646
Interest received	215		588
Net cash used in investing activities	(939,004)		(1,080,916)
CASH FLOW FROM FINANCING ACTIVITIES
Repayments of borrowings	(30,306)		(27,496)
Interest paid	(81,722)		(10,109)
Payment for other finance costs	(23,053)		(11,735)
Net cash used in financing activities	(135,081)		(49,340)
NET DECREASE IN CASH	(1,811,489)		(1,778,819)
Cash at beginning of period	3,028,599		3,094,626
Effect of foreign currency translation on cash	(8,085)		7,925
CASH AT END OF PERIOD	1,209,025		1,323,732

 

Dr. Paul Taylor     
President and Chief Executive Officer
or
Bob Lockwood
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: [phone]
Email: [email protected]