Delays to Customer Deliveries and Inventory and Asset Write-Offs Impact on 2016 Results
Listing: TSX Venture Exchange
LINCOLN, England, Feb. 2, 2017 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today provides commentary on delays to customer deliveries and inventory and asset write-offs and provides guidance on the adverse impact these items will have on financial performance in the fourth quarter of 2016.
Nearly $3 million of sales that the Company expected to be shipped during December were unable to be shipped to customers before the year end. As a result, these sales will be reported as part of 2017 revenue rather than 2016. Approximately $2.1 million of this total relates to projects that overran their forecast completion date. A further $850,000 was booked on flights out of the UK on 29th and 30th December but the freight company rebooked them on to flights in early January without the Company's knowledge.
The Company has also taken an inventory and asset write-off of approximately $2.2 million. These write offs relate mainly to the last of the integrated circuit inventory, where the Company does not see any prospect of making future sales, and to IGBT die types for which the Company no longer believes there is any demand.
Clive Vacher, the new President and Chief Executive Officer commented, "The failure of the Company to complete $3 million of sales that were forecasted to be completed in 2016 is disappointing and underscores the need for improvements in the Company's processes and management control. I see my role as the new CEO to address these issues so as to return the Company to profitability and growth in 2017. The inventory and asset write-off reflect the end of some product lines and the need to concentrate our efforts in future on the products that will give us growth and better profitability."
Bob Lockwood, Chief Financial Officer commented, "The loss of $3 million of revenue out of 2016 has a huge impact on our results for the year. Together with the inventory and asset write-off and the Company bearing a higher R&D cost in the year, we are looking at a net loss for the year of around $4.7 million."
Liu Ke'an, the Chairman of Dynex said, "These results are clearly unacceptable and the business cannot be allowed to continue performing in this way. Clive Vacher has joined the Company with a mandate to change the processes and management control and to return the Company to profitability and growth. It is a big task and CRRC Times Electric will be giving him every support it can to make the necessary changes."
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 Management's Discussion and Analysis for the quarter ended September 30th , 2016 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; and fluctuations in exchange rates between Canadian Dollars, 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 designs and manufactures high power bipolar semiconductors, high power insulated gate bipolar transistor (IGBT) modules and die, 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. The Company's 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. In 2008, a majority of the shares of Dynex were acquired by Zhuzhou CSR Times Electric Co., Ltd. In April 2016 this company changed its name to Zhuzhou CRRC Times Electric Co., Ltd.
Zhuzhou CRRC 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. CRRC 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, CRRC Times Electric is also engaged in the design, manufacturing and sale 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.dynexpower.com.
Further information on CRRC 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.
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For further information: Clive Vacher, 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]