Dynex Power Announces Second Quarter Results for 2007 - Return to Profit Underlines Continuing Recovery



    Listing: TSX Venture Exchange
    Symbol: DNX

    LINCOLN, England, Aug. 17 /CNW Telbec/ - Dynex Power Inc., a leading,
independent power semiconductor company, today announced results for the
second quarter of 2007.
    Summary financial information in Canadian dollars for the three and
six months ended June 30th, 2007 is as follows:

    
    -------------------------------------------------------------------------
                           June 30,      June 30,
                              2007          2006      YTD 2007      YTD 2006
                             $'000         $'000         $'000         $'000
    -------------------------------------------------------------------------
    Revenue                  6,630         5,253        13,793        11,335

    Gross Margin             1,451           803         2,683         1,917

    Net Earnings/(Loss)        189          (629)          151          (563)

    No. of Common
     Shares-average     33,339,043    30,107,131    33,282,216    29,454,560

    Earnings/(Loss)
     per Share in
     Dollars-diluted          0.01         (0.02)         0.00         (0.02)
    -------------------------------------------------------------------------

    The Company's revenue in the second quarter was 26% ahead of that reported
in the corresponding quarter of last year with growth reported in all four
product groups. Revenue for the year to date is 22% ahead of the same period
last year, once again with growth in all four product groups. A favourable mix
of sales, together with continuing careful control of costs and efficiency
improvements, resulted in a gross margin of 21.9% in the quarter compared with
15.3% in the same quarter last year. As a result, the business was able to
report a profit of $189,000 in the quarter and $151,000 for the year to date.
Last year the Company recorded losses both for the quarter and the year to
date.
    Further revenue growth is expected in the second half of the year,
particularly in the Integrated Circuits, Power Electronic Assemblies and Power
Modules groups, with the Bipolar Discrete group remaining steady. Management
expects a profit in the third and fourth quarters, ahead of the level reported
in this quarter and ahead of the expectations issued at the time of the AGM.
    Dr Paul Taylor, President and Chief Executive Officer commented that "it
is pleasing to be able to report a return to profitability for the quarter and
the year to date. These results confirm that our recovery is well established.
Given the strength of our order book, we can see increased revenues and a
further improvement in profitability taking place in the second half of the
year. We are now giving more attention to raising the finance to reduce debt
and fund the capital expenditure programme needed to increase our capacity and
improve our efficiency."
    Bob Lockwood, Chief Financial Officer, stated that "the return to
profitability one quarter sooner than expected was welcome. Even more welcome
is the increase in the order book, which at the end of June stood at
$25.2 million, its highest level in many years. The amount that customers want
delivered from our order book during the rest of this financial year is
sufficient to justify our forecast of increased revenues in the second half of
2007."
    In its press release of the 15th June, 2007 the Company announced that it
had entered into discussions with an unnamed non-financial party on the
desirability of that industry participant acquiring a substantial but not
majority interest in the Company by means of a private placement of treasury
shares. Those discussions are progressing although no assurance can be given
that the discussions will lead to a definitive agreement or the consummation
of any transaction. Should it be consummated, the proceeds from such a
placement of shares would be used to repay long term debt and to finance a
capital expenditure programme.
    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 Company's management
discussion and analysis for the quarter ended June 30th, 2007 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 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 is one of the world's leading, independent suppliers of specialist,
high power semiconductor products. Dynex Semiconductor Ltd is its operating
business and is based in Lincoln, England in a facility housing the fully
integrated silicon wafer fabrication, assembly and test, sales, design and
development operations. Dynex designs and manufactures high power bipolar
discrete semiconductors, power modules, including insulated-gate bipolar
transistors (IGBTs), and high power electronic assemblies. Dynex products are
used world wide in power electronic applications including electric power
generation, transmission and distribution, marine and rail traction drives,
aircraft, electric vehicles, industrial automation and controls. The company
continues to produce and sell certain high reliability integrated circuits
(ICs) for use in specialist applications led by its proven radiation hard
Silicon-on-Sapphire products for space and nuclear applications.

    Press announcements and other information about Dynex are available on the
World Wide Web at http://www.dynexsemi.com.

    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 Balance Sheets (Unaudited)
    Quarter Ended June 30th, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      Jun 30th      Dec 31st
                                                          2007          2006
                                                  ---------------------------
    CURRENT ASSETS

    Cash                                          $    380,016  $    357,042
    Accounts receivable                              3,864,879     4,936,028
    Inventories                                      7,858,329     7,198,306
    Prepaid expenses and deposits                      367,611       715,935
    -------------------------------------------------------------------------
                                                    12,470,835    13,207,311
    CAPITAL ASSETS                                     623,415       444,715
    -------------------------------------------------------------------------

                                                  $ 13,094,250  $ 13,652,026
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES

    Accounts payable and accrued liabilities      $  3,907,641  $  4,592,004
    Short-term loan                                  2,354,876     3,013,654
    Due to directors                                 1,063,700             -
    Current portion of long-term debt                1,607,051     1,269,994
    Current portion of deferred revenue                164,533       175,832
    -------------------------------------------------------------------------
                                                     9,097,801     9,051,484

    LONG-TERM DEBT                                   2,558,291     3,570,847

    LONG-TERM DEFERRED REVENUE                       1,604,198     1,802,283
    -------------------------------------------------------------------------
                                                    13,260,290    14,424,614

    CONTINGENCIES                                            -             -

    SHAREHOLDERS' DEFICIENCY

    Share capital                                   14,126,893    13,888,690
    Deficit                                        (13,751,739)  (14,098,044)
    Accumulated other comprehensive loss              (541,194)     (563,234)
    -------------------------------------------------------------------------
                                                      (166,040)     (772,588)
    -------------------------------------------------------------------------

                                                  $ 13,094,250  $ 13,652,026
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    DYNEX POWER INC.
    Consolidated Statement of Earnings (Losses) and Deficits (Unaudited)
    Quarter Ended June 30th, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                          3 months      3 months           YTD           YTD
                          Jun 30th      Jun 30th      Jun 30th      Jun 30th
                              2007          2006          2007          2006
                      -------------------------------------------------------

    Revenue           $  6,630,330  $  5,252,868  $ 13,792,928  $ 11,335,167
    Cost of sales        5,179,214     4,449,732    11,110,179     9,417,274
    -------------------------------------------------------------------------
    Gross margin         1,451,116       803,136     2,682,749     1,917,893
    -------------------------------------------------------------------------
    Expenses

    General and
     administration        659,591       743,924     1,302,356     1,350,082
    Sales and
     marketing             253,582       276,568       579,486       479,718
    Research and
     development           157,488       209,036       302,033       359,307
    Interest expense       214,417       202,564       429,155       384,956
    -------------------------------------------------------------------------
                         1,285,078     1,432,092     2,613,030     2,574,063
    -------------------------------------------------------------------------
    Earnings (loss)
     before other
     income and
     income taxes          166,038      (628,956)       69,719      (656,170)
    -------------------------------------------------------------------------
    Other income

    Interest and
     other income           85,596        51,154       137,180       124,500
    Foreign exchange
     loss                  (62,185)      (51,645)      (56,308)      (31,811)
    -------------------------------------------------------------------------
                            23,411          (491)       80,872        92,689
    -------------------------------------------------------------------------
    Income taxes                 -             -             -             -

    NET EARNINGS (LOSS)    189,449      (629,447)      150,591      (563,481)

    DEFICIT, BEGINNING
     OF PERIOD         (13,941,188)  (13,758,629)  (14,098,044)  (13,824,595)

    Adjustment to
     deficit,
     beginning of
     period                       -            -       195,714             -
    -------------------------------------------------------------------------

    DEFICIT, END
     OF PERIOD        $(13,751,739) $(14,388,076) $(13,751,739) $(14,388,076)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (Loss)
     per share

    Basic             $       0.01  $      (0.02) $       0.00  $      (0.02)
    Diluted           $       0.01  $      (0.02) $       0.00  $      (0.02)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of shares

    Basic               33,339,043    30,107,131    33,282,216    29,454,560
    Diluted             33,678,595    30,107,131    33,561,126    29,454,560
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statement of Comprehensive Income (Loss) (Unaudited)
    Quarter Ended June 30th, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                          3 months      3 months           YTD           YTD
                          Jun 30th      Jun 30th      Jun 30th      Jun 30th
                              2007          2006          2007          2006
                      -------------------------------------------------------
    Net earnings
     (loss)           $    189,449  $   (629,447) $    150,591  $   (563,481)
    -------------------------------------------------------------------------
    Other
     Comprehensive
     income (loss),
     net of tax:

    Unrealized income
     (loss) on
     translating
     financial
     statements of
     self-sustaining
     foreign
     operations              27,970       (2,037)       22,040       (17,414)
    -------------------------------------------------------------------------

    OTHER
     COMPREHENSIVE
     INCOME (LOSS)           27,970       (2,037)       22,040       (17,414)
    -------------------------------------------------------------------------

    COMPREHENSIVE
     INCOME (LOSS)    $     217,419  $  (631,484)  $   172,631  $   (580,895)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    DYNEX POWER INC.
    Consolidated Statement of Accumulated Other Comprehensive Loss
    (Unaudited)
    Quarter Ended June 30th, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      Jun 30th      Dec 31st
                                                          2007          2006
                                                   --------------------------
    Accumulated other comprehensive loss,
     beginning of period                           $  (563,234) $          -

    Adjustment to accumulated other comprehensive
     loss, beginning of period

      Cumulative adjustment on translation of
       financial statements of self-sustaining
       foreign operations                                    -      (415,092)
    -------------------------------------------------------------------------

    Accumulated other comprehensive loss,
     beginning of period                              (563,234)     (415,092)

    Other comprehensive income (loss)                   22,040      (148,142)
    -------------------------------------------------------------------------

    ACCUMULATED OTHER COMPREHENSIVE LOSS           $  (541,194) $   (563,234)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    DYNEX POWER INC.
    Consolidated Statement of Cash Flows (Unaudited)
    Quarter Ended June 30th, 2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                          3 months      3 months           YTD           YTD
                          Jun 30th      Jun 30th      Jun 30th      Jun 30th
                              2007          2006          2007          2006
                      -------------------------------------------------------
    OPERATING

    Net earnings
     (loss)           $    189,449  $   (629,447)  $   150,591  $   (563,481)

    Items not
     affecting cash
    ---------------

      Amortization          52,559        56,005       124,034       109,692
      Gain on disposal
       of capital
       assets              (43,563)      (39,355)      (99,144)      (78,543)
      Shares and
       options issued
       for services          2,574       117,608        45,318       174,718
      Non cash interest     50,313             -       101,705             -
      Non cash grant
       income              (14,684)            -       (28,661)            -
    Changes in non-cash
     operating working
     capital            (1,005,545)     (322,783)     (478,281)    1,040,045
    -------------------------------------------------------------------------
                          (768,897)     (817,972)     (184,438)      682,431
    -------------------------------------------------------------------------

    FINANCING

    Shares issued
     for cash                    -       550,000             -       550,000
    Decrease in
     short-term debt      (408,935)     (416,340)     (483,016)   (1,110,924)
    Increase in loans
     from a director     1,098,138             -     1,098,138             -
    Decrease in
     long-term debt        (31,973)      (32,573)      (74,987)      (63,494)
    -------------------------------------------------------------------------
                           657,229       101,087       540,134      (624,418)
    -------------------------------------------------------------------------

    INVESTING

    Proceeds of disposal
     of capital assets       1,098             -        12,518             -
    Purchase of capital
     assets                (69,597)      (51,415)     (345,887)      (84,906)
    -------------------------------------------------------------------------
                           (68,499)      (51,415)     (333,369)      (84,906)
    -------------------------------------------------------------------------

    NET (DECREASE)
     INCREASE IN CASH     (180,167)     (768,300)       22,327       (26,893)

    Effect of foreign
     currency translation
     on cash flow            6,395         4,847           647         4,416
    Cash, beginning
     of period             553,788     1,072,873       357,042       331,897
    -------------------------------------------------------------------------

    CASH, END OF
     PERIOD           $    380,016  $    309,420  $    380,016  $    309,420
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary
     Information:

    Interest paid
     during period    $    155,986  $    152,624  $    316,006  $    354,950
    Income taxes paid
     during period               -             -             -             -
    
    %SEDAR: 00010667E




For further information:

For further information: Dr. Paul Taylor, President and Chief Executive
Officer; Bob Lockwood, Finance Director and Chief Financial Officer, Dynex
Power Inc., +44 1522 500 500, investorrelations@dynexsemi.com


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