Return to Profitability Expected in Second
Half
Listing: TSX Venture Exchange
Symbol: DNX
LINCOLN, England, May 27, 2016 /CNW/ - Dynex Power Inc. (TSXV:
DNX), a leading, high power semiconductor company, today announced
its financial results for the first quarter ended March 31st, 2016.
Summary financial information for the three months ended
March 31st, 2016 is as follows:
|
|
|
Canadian Dollars
(000's)
|
March 31,
2016
|
March 31,
2015
|
Revenue
|
10,273
|
9,546
|
Gross Profit/
(Loss)
|
1,188
|
(1,523)
|
Other Income,
Expenses and Costs
|
(1,714)
|
(1,855)
|
Loss before
Tax
|
(526)
|
(3,378)
|
Income Tax
Recovery
|
65
|
597
|
Net Loss
|
(461)
|
(2,781)
|
Common shares
outstanding ¹ - diluted
|
80,509,047
|
80,509,047
|
Loss per share
- diluted
|
$(0.01)
|
$(0.03)
|
¹ Weighted average
for the period
|
First quarter revenue of $10.3
million was 8% higher than the corresponding quarter of last
year. Approximately two thirds of the increase was accounted for by
the weakness of the Canadian Dollar in 2016 compared to 2015. The
rest of the increase came from stronger sales of power assemblies
and modules partially offset by weaker bipolar revenue.
The gross margin of $1.2 million
was equivalent to 11.6% of revenue. In the corresponding quarter of
last year a gross loss of $1.5
million had been reported arising from weak revenue in the
quarter following a contract cancellation and the cost of a
redundancy exercise.
The combination of other income, expenses and costs decreased by
$141,000 to $1.7 million despite a 5% weakening of the
Canadian Dollar against Sterling. The decrease was brought about by
a shift from a foreign exchange loss in 2015 to a foreign exchange
gain in 2016. Because of the foreign exchange gain and the higher
revenue figure in the period, other income, expenses and costs
represented 16.7% of revenue in the 2016 period compared with 19.4%
in the corresponding quarter of last year.
As a consequence of these results, the Company recorded a loss
before tax of $526,000, compared to a
loss before tax of $3.4 million in
the corresponding quarter of last year. A $65,000 recovery of UK tax reduced the net loss
for the period to $461,000 or
$0.01 per share, compared with a net
loss of $2.8 million, or $0.03 per share, in the corresponding period of
last year.
Revenue and net loss for the second quarter is forecast to be
similar to that reported in the first. Revenue is expected to
increase in the second half of the year and management is still
targeting a small profit for the year.
Dr. Paul Taylor, President and
Chief Executive Officer commented, "The level of revenue in the
first quarter of 2016 was disappointing but it reflects the very
tough market conditions we are facing at the moment. Although we
remain confident of the long term growth in our target markets,
customers are being slow to place orders at the current time and
this has a direct impact on our results. We are seeing some very
early signs of a pick-up in our order in-take and we are hopeful
this will turn into stronger revenue in the second half of 2016 and
a return to profitability."
Dr Taylor also said that he would like "to thank our current
Chairman, Li Donglin, for his support and encouragement over the
last six years. Li Donglin has recently been promoted to become
General Manager of CRRC Zhuzhou Institute, the majority shareholder
of CRRC Times Electric, and would not be standing for re-election
to the Board of Dynex at this year's annual general meeting".
Bob Lockwood, Chief Financial
Officer commented, "As I have commented before, high power
semiconductor manufacturing is a high fixed cost business, so a
small weakening in orders always has a big impact on profitability.
But we are sensing the start of a recovery in our in-take of orders
and that gives us a belief that revenues will rise in the second
half of this year which will allow us to return to
profitability".
Li Donglin, the Chairman of Dynex said, "Having recently changed
roles within the CRRC Group in China, I will not be standing for re-election
to the Board of Dynex at this year's annual general meeting. I have
thoroughly enjoyed my time as Chairman of the company and will
continue to follow its progress in the years to come. Whilst I am
disappointed with the recent financial results of the company, I
believe the company is well placed to move forward in the future
and I believe and hope it will achieve great success in the coming
years. "
Forward-looking Statements
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 March 31st, 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 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.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.
DYNEX POWER INC.
Condensed Consolidated Statement
of Profit (Loss) and Other Comprehensive Income (unaudited) in
Canadian Dollars
Quarter Ended March 31st, 2016
|
|
3
months
|
3
months
|
|
|
Mar
31st
|
Mar
31st
|
|
|
2016
|
2015
|
|
|
$
|
$
|
|
|
|
|
Revenue
|
|
10,272,554
|
9,545,535
|
|
|
|
|
Cost of
sales
|
|
(9,084,760)
|
(11,068,923)
|
|
|
|
|
Gross
(loss)/profit
|
|
1,187,794
|
(1,523,388)
|
|
|
|
|
Other
income
|
|
22,395
|
37,251
|
Sales and marketing
expenses
|
|
(327,242)
|
(255,285)
|
Administration
expenses
|
|
(1,060,550)
|
(999,109)
|
Research and
development expenses
|
|
(299,961)
|
(99,848)
|
Finance
costs
|
|
(178,616)
|
(207,308)
|
Other
(losses)/gains
|
|
129,811
|
(329,985)
|
|
|
|
|
Loss before
tax
|
|
(526,369)
|
(3,377,672)
|
|
|
|
|
Income tax
recovery
|
|
65,199
|
596,678
|
|
|
|
|
Net
loss
|
|
(461,170)
|
(2,780,994)
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
Exchange differences
on translation of foreign operations (net of tax of
$nil)
|
|
(3,589,061)
|
807,170
|
|
|
|
|
|
|
|
Total
comprehensive (loss)/income for the period
|
(4,050,231)
|
(1,973,824)
|
|
|
|
|
Loss per
share
|
|
|
|
Basic
|
|
(0.01)
|
(0.03)
|
Diluted
|
|
(0.01)
|
(0.03)
|
DYNEX POWER INC.
Condensed Consolidated Statement
of Financial Position (unaudited) in Canadian Dollars
As
at March 31st, 2016
|
|
Mar
31st
|
Dec
31st
|
|
|
2016
|
2015
|
|
|
$
|
$
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
Intangible
assets
|
|
1,389,714
|
1,594,142
|
Property, plant &
equipment
|
|
38,406,862
|
43,447,376
|
Deferred tax
asset
|
|
114,243
|
57,838
|
|
|
|
|
|
|
|
|
Total non-current
assets
|
|
39,910,819
|
45,099,356
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
Inventories
|
|
14,238,783
|
15,215,237
|
Trade
receivables
|
|
6,568,739
|
6,334,417
|
Amounts owing from
parent company
|
|
1,745,082
|
5,445,377
|
Prepayments, deposits
& other receivables
|
|
1,832,554
|
1,236,102
|
Tax
recoverable
|
|
3,059
|
3,382
|
Cash
|
|
1,519,703
|
1,410,547
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
25,907,920
|
29,645,062
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Trade
payables
|
|
2,351,695
|
2,371,233
|
Amounts owing to
parent company
|
|
919,664
|
760,062
|
Other payables and
accruals
|
|
5,211,329
|
8,695,638
|
Borrowings
|
|
14,810,404
|
15,423,684
|
Provisions
|
|
18,631
|
20,599
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
23,311,723
|
27,271,216
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Borrowings
|
|
7,994,749
|
8,904,800
|
Provisions
|
|
55,893
|
61,797
|
|
|
|
|
Total non-current
liabilities
|
|
8,050,642
|
8,966,597
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
34,456,374
|
38,506,605
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
Share
capital
|
|
37,096,192
|
37,096,192
|
Accumulated
deficit
|
|
(6,070,271)
|
(5,609,101)
|
Exchange fluctuation
reserve
|
|
3,430,453
|
7,019,514
|
|
|
|
|
|
|
|
|
TOTAL
EQUITY
|
|
34,456,374
|
38,506,605
|
DYNEX POWER INC.
Condensed Consolidated Statement
of Changes in Equity (unaudited) in Canadian Dollars
Quarter Ended March 31st,
2016
|
|
|
Foreign
|
|
|
|
|
Currency
|
|
|
Share
|
|
Translation
|
Total
|
|
Capital
|
Deficit
|
Reserve
|
Equity
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1st,
2015
|
37,096,192
|
(7,416,640)
|
2,703,411
|
32,382,963
|
|
|
|
|
|
Total comprehensive
income for the period
|
-
|
(2,780,994)
|
807,170
|
(1,973,824)
|
|
|
|
|
|
|
|
|
|
|
At March 31st,
2015
|
37,096,192
|
(10,197,634)
|
3,510,581
|
30,409,139
|
|
|
|
|
|
Total comprehensive
income for the period
|
-
|
2,947,158
|
3,508,933
|
6,456,091
|
|
|
|
|
|
Capital
contribution
|
|
1,641,375
|
|
1,641,375
|
|
|
|
|
|
|
|
|
|
|
At December 31st,
2015
|
37,096,192
|
(5,609,101)
|
7,019,514
|
38,506,605
|
|
|
|
|
|
Total comprehensive
income for the period
|
-
|
(461,170)
|
(3,589,061)
|
(4,050,231)
|
|
|
|
|
|
|
|
|
|
|
At March 31st,
2016
|
37,096,192
|
(6,070,271)
|
3,430,453
|
34,456,374
|
DYNEX POWER INC.
Condensed Consolidated Statement
of Cash Flows (unaudited) in Canadian Dollars
Quarter
Ended March 31st, 2016
|
|
3
months
|
3
months
|
|
|
Mar
31st
|
Mar
31st
|
|
|
2016
|
2015
|
|
|
$
|
$
|
CASH FLOW FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Loss before
tax
|
|
(526,369)
|
(3,377,672)
|
Finance costs
recognised in loss before tax
|
|
178,616
|
207,308
|
Amortization of
intangible assets
|
|
57,063
|
39,286
|
Depreciation of
property, plant & equipment
|
|
1,343,479
|
1,284,525
|
Provision for slow
moving and obsolete inventory
|
-
|
57,189
|
Movements in working
capital
|
|
(1,034,054)
|
(398,194)
|
Income taxes
received/(paid)
|
|
-
|
2
|
|
|
|
|
Net cash
generated/(used) used in operating activities
|
18,735
|
(2,187,556)
|
|
|
|
|
CASH FLOW FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Payments for
intangible assets
|
|
(2,188)
|
(18,320)
|
Payments for
property, plant & equipment
|
|
(406,934)
|
(627,677)
|
|
|
|
|
Net cash used in
investing activities
|
|
(409,122)
|
(645,997)
|
|
|
|
|
CASH FLOW FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from
borrowings
|
|
949,988
|
7,936,782
|
Repayments of
borrowings
|
|
(113,142)
|
(5,354,906)
|
Interest
paid
|
|
(280,025)
|
(236,518)
|
|
|
|
|
Net cash generated by
financing activities
|
|
556,821
|
2,345,358
|
|
|
|
|
NET
INCREASE/(DECREASE) IN CASH
|
|
166,434
|
(488,195)
|
|
|
|
|
Cash at beginning of
period
|
|
1,410,547
|
894,609
|
|
|
|
|
Effect of foreign
currency translation on cash
|
|
(57,278)
|
(142,777)
|
|
|
|
|
|
|
|
|
CASH AT END OF
PERIOD
|
|
1,519,703
|
263,637
|
SOURCE Dynex Power Inc.