Dynex Power Announces Stronger Second Quarter Results

Second Half of 2013 Expected to Remain Challenging with Growth Expectation Delayed

Listing:  TSX Venture Exchange
Symbol: DNX

LINCOLN, England, Aug. 21, 2013 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today announced its financial results for the second quarter and six months ended June 30th, 2013.

Summary financial information for the three and six months ended June 30th, 2013 is as follows:

Canadian Dollars (000's)		June 30, 2013		June 30, 2012		YTD 2013		YTD 2012
Revenue		9,959		9,856		16,836		20,378
Gross Profit		1,934		1,569		1,569		4,202
Other Income, Expenses and Costs		(1,328)		(1,343)		(2,365)		(2,944)
Profit before Tax		608		226		(796)		1,258
Income Tax Expense		(81)		(84)		219		(357)
Net Profit		527		142		(577)		901
Common shares outstanding ¹ - diluted		80,509,047		80,533,826		80,509,047		80,539,148
Earnings per share  - diluted		$0.01		$0.00		$(0.01)		$0.01

¹

Weighted average for the period

In the press release accompanying the first quarter results in 2013, management forecast a significant increase in revenue in the second quarter and a return to profitability, which has proven to be the case. Revenue increased by 45% over that reported in the first quarter of 2013, with net profit reaching $0.5 million.

Second quarter revenue of $10.0 million was 1% higher than the corresponding quarter of last year. The increase was the result of significantly higher sales of power assemblies and integrated circuits, offset by a reduction in sales of power modules and die.

As a consequence of the weak sales in the first quarter, year to date revenue of $16.8 million was 17% lower than in the same six-month period last year. The reduction reflected a major decline in sales of power modules and die and a smaller decrease in bipolar sales, partially offset by increased sales of integrated circuits, power assemblies and services.

The gross margin of 19.4% in the second quarter of 2013 was higher than the 15.9% reported in the corresponding quarter of last year. This increase in margin reflected a good product mix in the quarter. For the year to date, the gross margin was 10.0% compared to 20.6% in the corresponding period last year. The year-over-year reduction reflects the gross margin loss reported in the first quarter.

Other income, expenses and costs represented 13.3% of revenue in the second quarter of 2013 and 14.7% for the year to date compared with 13.6% and 14.4% in the corresponding periods of last year.

As a consequence of these changes, Dynex generated profit before tax in the quarter of $608,000, compared to $226,000 in the corresponding quarter of last year and net profit in the quarter of $527,000 compared with $142,000 in the corresponding quarter of last year. For the year to date, a loss before tax of $796,000 was recorded, with a net loss of $527,000. This compares with a profit before tax of $1.3 million and a net profit of $901,000 in the corresponding period of last year. The decline in year to date performance reflects the weak results in the first quarter. The Company had earnings per share in the second quarter of 2013 of $0.01 but for the year to date a loss per share of $0.01, compared with earnings per share of $0.01 in the first six months of last year.

At the end of the second quarter, the Company's order book stood at $22.4 million, approximately 10% lower than at the end of the first quarter, although still well ahead of where it stood at the end of last year. The slowdown in orders received in the second quarter has led management to be more cautious about prospects for the rest of the year. Revenue is expected to remain at about the level seen in the second quarter although the product mix may be less favourable. Whilst the business is expected to remain profitable in the coming quarters, management can no longer be confident that revenue and profits for the year will exceed those achieved in 2012.

Dr. Paul Taylor, President and Chief Executive Officer commented, "Dynex's second quarter results show a dramatic improvement over the first quarter. Whilst we are pleased with the improvement, we are not yet seeing the magnitude of growth that we expected in 2013. We continue to believe that this strong growth will be achieved but are cautious about the timing. One large order was deferred into 2014 and the effect was material enough to elevate the caution we already felt."

Bob Lockwood, Chief Financial Officer commented, "The markets in which we operate remain challenging. We continue to see customers delaying placing orders and, indeed, pushing back existing orders by three or six months. Such delays severely disrupt our planning and require us to revise our revenue forecasts. They are a clear indication of the difficult markets in which are customers are operating. We continue to believe that these problems and delays will abate as our customers' experience an improved operating environment."

Li Donglin, the Chairman of Dynex said, "Like, I am sure, other shareholders in Dynex, the Board of Directors is disappointed with the current financial performance of the Company. We understand the difficulties currently being faced and we remain confident in management's ability to overcome these problems and demonstrate a period of sustained growth."

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 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 June 30th, 2013

		3 months		3 months		YTD		YTD
		Jun 30th		Jun 30th		Jun 30th		Jun 30th
		2013		2012		2013		2012
		$		$		$		$
Revenue		9,959,051		9,855,892		16,836,150		20,377,982
Cost of sales		(8,025,326)		(8,286,754)		(15,151,238)		(16,175,601)
Gross profit		1,933,725		1,569,138		1,684,912		4,202,381
Other income		32,016		9,280		57,634		31,692
Sales and marketing expenses		(244,129)		(205,628)		(452,458)		(435,669)
Administration expenses		(672,924)		(738,153)		(1,382,373)		(1,688,459)
Research and development expenses		(293,645)		(321,269)		(550,977)		(608,328)
Finance costs		(177,333)		(68,844)		(279,865)		(173,438)
Other gains and (losses)		30,231		(18,942)		126,748		(70,084)
Profit/(Loss) before Tax		607,941		225,582		(796,379)		1,258,095
Income tax (expense)/recovery		(80,991)		(83,799)		219,877		(357,214)
Net Profit/(Loss)		526,950		141,783		(576,502)		900,881
Other Comprehensive Income/(Loss)
Exchange differences on translation of foreign operations (net of tax of $nil)		1,236,593		284,675		(294,118)		439,304
Total Comprehensive Income/(Loss) for the year		1,763,543		426,458		(870,620)		1,340,185
Earnings/(Loss) per share
Basic		0.01		-		(0.01)		0.01
Diluted		0.01		-		(0.01)		0.01

DYNEX POWER INC.
Condensed Consolidated Statement of Financial Position (unaudited) in Canadian Dollars
As at June 30th, 2013

		Jun 30th		Dec 31st
		2013		2012
		$		$
NON-CURRENT ASSETS
Property, plant & equipment		33,072,034		33,706,294
Derivative financial instruments		65,044		2,228
Total non-current assets		33,137,078		33,708,522
CURRENT ASSETS
Inventories		12,480,995		10,954,012
Trade receivables		6,439,854		5,297,728
Amounts owing from parent company		2,703,435		2,776,110
Prepayments, deposits & other receivables		789,558		255,847
Tax recoverable		124,236		124,292
Cash		1,314,154		2,206,430
Total  current assets		23,852,232		21,614,419
CURRENT LIABILITIES
Trade payables		2,811,487		1,151,054
Amounts owing to parent company		607,183		267,349
Other payables and accruals		2,308,298		3,171,809
Borrowings		4,358,953		6,547,631
Provisions		83,260		237,548
Total current liabilities		10,169,181		11,375,391
NET CURRENT ASSETS		13,683,051		10,239,028
TOTAL ASSETS LESS CURRENT LIABILITIES		46,820,129		43,947,550
NON-CURRENT LIABILITIES
Borrowings		9,490,234		5,512,391
Provisions		218,370		212,804
Deferred tax liabilities		1,699,641		1,939,851
Total non-current liabilities		11,408,245		7,665,046
NET ASSETS		35,411,884		36,282,504
EQUITY
Share capital		37,096,192		37,096,192
(Accumulated deficit)/retained profit		(35,581)		540,921
Exchange fluctuation reserve		(1,648,727)		(1,354,609)
		35,411,884		36,282,504

DYNEX POWER INC.
Condensed Consolidated Statement of Changes in Equity (unaudited) in Canadian Dollars
Quarter Ended June 30th, 2013

				Retained		Exchange
		Share		Profit/		Fluctuation		Total
		Capital		(Deficit)		Reserve		Equity
		$		$		$		$
At January 1st, 2012		37,096,192		(524,615)		(1,917,379)		34,654,198
Total comprehensive income for the period		-		900,881		439,304		1,340,185
At June 30th, 2012		37,096,192		376,266		(1,478,075)		35,994,383
Total comprehensive income for the period		-		164,655		123,466		288,121
At December 31st, 2012		37,096,192		540,921		(1,354,609)		36,282,504
Total comprehensive income for the period		-		(576,502)		(294,118)		(870,620)
At June 30th, 2013		37,096,192		(35,581)		(1,648,727)		35,411,884

DYNEX POWER INC.
Condensed Consolidated Statement of Cash Flows (unaudited) in Canadian Dollars
Quarter Ended June 30th, 2013

		YTD		YTD
		Jun 30th		Jun 30th
		2013		2012
		$		$
CASH FLOW FROM OPERATING ACTIVITIES
(Loss)/profit before tax		(796,379)		1,258,095
Finance costs recognised in (loss)/profit before tax		279,865		173,438
Investment income recognised in (loss)/profit before tax		(174)		(341)
Depreciation of property, plant & equipment		1,678,619		1,412,365
Loss on disposal of property, plant & equipment		1,506		-
Provision for slow moving and obsolete inventory		265,564		(357,958)
Movements in working capital		(3,041,807)		(2,061,141)
Cash used in operating activities before income taxes		(1,612,806)		424,458
Income taxes (paid)/received		(1,929)		300,512
Net cash (used in)/generated by operating activities		(1,614,735)		724,970
CASH FLOW FROM INVESTING ACTIVITIES
Payments for property, plant & equipment		(800,897)		(2,693,358)
Interest received		174		341
Net cash used in investing activities		(800,723)		(2,693,017)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowings		7,501,074		614,189
Repayments of borrowings		(5,703,538)		(61,917)
Interest paid		(163,888)		(146,122)
Payments for other finance costs		(94,167)		(27,754)
Net cash generated by financing activities		1,539,481		378,396
NET DECREASE IN CASH		(875,977)		(1,589,651)
Cash at beginning of period		2,206,430		3,028,599
Effect of foreign currency translation on cash		(16,299)		(11,014)
CASH AT END OF PERIOD		1,314,154		1,427,934

 

SOURCE: DYNEX POWER INC.

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]