Loss Reported for Second Quarter but Company Expects to
Return to Profitability in the Third Quarter
Listing:
|
TSX Venture
Exchange
|
Symbol:
|
DNX
|
LINCOLN, England, Aug. 18th, 2016 /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, 2016.
Summary financial information for the three and six months ended
June 30th, 2016 is as follows:
|
|
|
|
|
Canadian Dollars
(000's)
|
June 30,
2016
|
June 30,
2015
|
YTD
2016
|
YTD 2015
|
Revenue
|
9,123
|
11,994
|
19,395
|
21,540
|
Gross
Profit/(Loss)
|
(117)
|
756
|
1,071
|
(767)
|
Other Income,
Expenses and Costs
|
(1,982)
|
(1,276)
|
(3,696)
|
(3,130)
|
Loss before
Tax
|
(2,099)
|
(520)
|
(2,625)
|
(3,897)
|
Income Tax
Recovery
|
370
|
100
|
435
|
697
|
Net Loss
|
(1,729)
|
(419)
|
(2,190)
|
(3,200)
|
Common shares
outstanding¹-diluted
|
80,509,047
|
80,509,047
|
80,509,047
|
80,509,047
|
Earnings per share -
diluted
|
(0.02)
|
(0.01)
|
(0.03)
|
(0.04)
|
¹ Weighted average for the period
Revenue in the second quarter of 2016 was $2.9 million or 24.1% lower than in the
corresponding quarter of last year. The reduction reflected lower
sales of bipolar, IGBT die and modules and power assemblies. For
the year to date, revenue was $2.1
million or 10% lower than in the first half of 2015. The
reduction reflected a significant drop in bipolar sales with much
smaller reductions in sales of IGBT modules and dies and power
assemblies.
The negative gross margin of 1.3% in the second quarter of 2016
compared to a gross margin of 6.3% in the second quarter of 2015.
The negative gross margin reflected a lower volume of revenue for
the quarter and the high level of fixed costs inherent in
manufacturing semiconductors. For the year to date, the gross
margin was 5.5% compared to a negative gross margin for the
corresponding period of last year of 3.6%. The gross margin in
2016, though substantially improved compared to 2015, is still
below the level targeted by management and again reflects the lower
level of revenue for the period.
Sales and marketing and administration expenses represented
14.4% of revenue in the second quarter and 13.9% of revenue for the
year to date compared to 13.9% and 12.4% in the corresponding
periods in 2015. The absolute level of such expenditure had fallen
in the quarter but not sufficiently enough to offset the decline in
revenue. The absolute level had risen by just over 1% for the year
to date.
The net expenditure on research and development for the second
quarter of 2016 was $483,000. In the
corresponding quarter of last year, there had been a small surplus
from research and development. For the year to date, net
expenditure was $783,000 compared to
$98,000 in the corresponding period
of last year. The increase reflected a significant increase in
research and development expenditure and a reduction in the funding
being accounted for from the UK government.
As a consequence of these changes, Dynex reported a loss before
tax in the quarter of $2.1 million
compared to a loss before tax of $520,000 in the corresponding quarter of last
year. For the year to date, a loss before tax of $2.6 million was recorded compared to a loss
before tax of $3.9 million in the
corresponding period of last year.
At the end of the second quarter, the Company's order book stood
at $14.1 million, approximately 6%
higher than at the end of the first quarter. At the end of 2015,
the order book had stood at $15.2
million but the reduction since then is more than accounted
for by the strengthening of the Canadian Dollar against
Sterling.
Revenue is expected to be higher in the second half of the year
compared to the first half and the management expects to return to
profit in the second half of the year.
Dr. Paul Taylor, President and
Chief Executive Officer commented, "Market conditions for our IGBT
and bipolar products have remained weak. Global uncertainty has
meant that our customers are being cautious and this has affected
our order book for the first half of this year, resulting in low
sales revenue. Our current outlook for the third quarter is for
increased revenue and a return to profitability. "
Dr Taylor also took the opportunity to thank Li Donglin for his
wise counsel and support over the last six years as Chairman of the
company. Li Donglin resigned from this role at the recent Annual
General Meeting following his promotion in China. Liu
Ke'an, who has also been a director of the Company for the
last six years, has now replaced Li Donglin as Chairman.
Bob Lockwood, Chief Financial
Officer commented, "Second quarter results are disappointing, but
we look forward to a return to profitability in the third quarter
and are still hopeful of reporting a small profit for the full
year".
Liu Ke'an, the new Chairman of
Dynex said, "I am delighted to become Chairman of Dynex. It is
disappointing to be reporting a loss in my first quarter as
Chairman of the Company. CRRC Times Electric remains strongly
supportive of Dynex and we will work closely with management to
help the Company return to profitability."
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 June 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.
DYNEX POWER
INC.
|
Condensed
Consolidated Statement of Profit (Loss) and Other Comprehensive
Income (unaudited) in Canadian Dollars
|
Quarter Ended June
30th, 2016
|
|
|
3
months
|
3
months
|
YTD
|
YTD
|
|
|
Jun
30th
|
Jun
30th
|
Jun
30th
|
Jun
30th
|
|
|
2016
|
2015
|
2016
|
2015
|
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
Revenue
|
|
9,122,739
|
11,994,138
|
19,395,293
|
21,539,673
|
|
|
|
|
|
|
Cost of
sales
|
|
(9,239,972)
|
(11,238,062)
|
(18,324,732)
|
(22,306,985)
|
|
|
|
|
|
|
Gross
(loss)/profit
|
|
(117,233)
|
756,076
|
1,070,561
|
(767,312)
|
|
|
|
|
|
|
Other
income
|
|
6,800
|
6,269
|
29,195
|
43,520
|
Sales and marketing
expenses
|
|
(391,313)
|
(330,565)
|
(718,555)
|
(585,850)
|
Administration
expenses
|
|
(918,060)
|
(1,075,301)
|
(1,978,610)
|
(2,074,410)
|
Research and
development (expense)/recovery
|
|
(483,282)
|
1,511
|
(783,243)
|
(98,337)
|
Finance
costs
|
|
(187,961)
|
(137,981)
|
(366,577)
|
(345,289)
|
Other
(losses)/gains
|
|
(7,527)
|
260,159
|
122,284
|
(69,826)
|
|
|
|
|
|
|
Loss before
tax
|
|
(2,098,576)
|
(519,832)
|
(2,624,945)
|
(3,897,504)
|
|
|
|
|
|
|
Income tax
recovery
|
|
369,445
|
100,342
|
434,644
|
697,020
|
|
|
|
|
|
|
Net
loss
|
|
(1,729,131)
|
(419,490)
|
(2,190,301)
|
(3,200,484)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences
on translation of foreign
operations (net of tax of $nil)
|
|
(2,191,861)
|
1,440,028
|
(5,780,922)
|
2,247,198
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive (loss)/income for the year
|
(3,920,992)
|
1,020,538
|
(7,971,223)
|
(953,286)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
Basic
|
|
(0.02)
|
(0.01)
|
(0.03)
|
(0.04)
|
Diluted
|
|
(0.02)
|
(0.01)
|
(0.03)
|
(0.04)
|
|
|
|
|
|
|
DYNEX POWER
INC.
|
Condensed
Consolidated Statement of Financial Position (unaudited) in
Canadian Dollars
|
As at June 30th,
2016
|
|
|
Jun
30th
|
Dec
31st
|
|
|
2016
|
2015
|
|
|
$
|
$
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
Intangible
assets
|
|
1,260,370
|
1,594,142
|
Property, plant &
equipment
|
|
35,083,918
|
43,447,376
|
Deferred tax
asset
|
|
493,155
|
57,838
|
|
|
|
|
Total non-current
assets
|
|
36,837,443
|
45,099,356
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
Inventories
|
|
13,374,407
|
15,215,237
|
Trade
receivables
|
|
5,351,771
|
5,760,619
|
Amounts owing from
group undertakings
|
|
3,025,231
|
6,019,175
|
Prepayments, deposits
& other receivables
|
|
1,770,543
|
1,236,102
|
Tax
recoverable
|
|
717
|
3,382
|
Cash
|
|
767,345
|
1,410,547
|
|
|
|
|
Total current
assets
|
|
24,290,014
|
29,645,062
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Trade
payables
|
|
2,211,543
|
2,371,233
|
Amounts owing to
group undertakings
|
|
1,351,894
|
760,062
|
Other payables and
accruals
|
|
5,568,281
|
8,695,638
|
Borrowings
|
|
15,048,457
|
15,423,684
|
Provisions
|
|
17,361
|
20,599
|
|
|
|
|
Total current
liabilities
|
|
24,197,536
|
27,271,216
|
DYNEX POWER
INC.
|
Condensed
Consolidated Statement of Financial Position (Unaudited) in
Canadian Dollars
(continued)
|
As at June 30th,
2016
|
|
|
Jun
30th
|
Dec
31st
|
|
|
2016
|
2015
|
|
|
$
|
$
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Borrowings
|
|
6,342,456
|
8,904,800
|
Provisions
|
|
52,083
|
61,797
|
|
|
|
|
Total non-current
liabilities
|
|
6,394,539
|
8,966,597
|
|
|
|
|
NET
ASSETS
|
|
30,535,382
|
38,506,605
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
Share
capital
|
|
37,096,192
|
37,096,192
|
Accumulated
deficit
|
|
(7,799,402)
|
(5,609,101)
|
Exchange fluctuation
reserve
|
|
1,238,592
|
7,019,514
|
|
|
|
|
TOTAL
EQUITY
|
|
30,535,382
|
38,506,605
|
DYNEX POWER
INC.
|
Condensed
Consolidated Statement of Changes in Equity (unaudited) in Canadian
Dollars
|
Quarter Ended June
30th, 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
|
|
-
|
(3,200,484)
|
2,247,198
|
(953,286)
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30th,
2015
|
|
37,096,192
|
(10,617,124)
|
4,950,609
|
31,429,677
|
|
|
|
|
|
|
Total comprehensive
income for the period
|
|
-
|
3,366,648
|
2,068,905
|
5,435,553
|
|
|
|
|
|
|
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
|
|
-
|
(2,190,301)
|
(5,780,922)
|
(7,971,223)
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30th,
2016
|
|
37,096,192
|
(7,799,402)
|
1,238,592
|
30,535,382
|
DYNEX POWER
INC.
|
Condensed
Consolidated Statement of Cash Flows (unaudited) in Canadian
Dollars
|
Quarter Ended June
30th, 2016
|
|
|
YTD
|
YTD
|
|
|
Jun
30th
|
Jun
30th
|
|
|
2016
|
2015
|
|
|
$
|
$
|
CASH FLOW FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Loss before
tax
|
|
(2,624,945)
|
(3,897,504)
|
Finance costs
recognised in loss before tax
|
|
366,577
|
345,289
|
Investment income
recognised in loss before tax
|
|
(844)
|
-
|
Amortization of
intangible assets
|
|
110,262
|
78,885
|
Depreciation of
property, plant & equipment
|
|
2,616,831
|
2,568,733
|
Provision for slow
moving and obsolete inventory
|
|
440,500
|
80,828
|
Movements in working
capital
|
|
(1,119,154)
|
1,324,768
|
Income taxes
paid
|
|
(45,069)
|
-
|
Net cash (used
in)/generated by operating activities
|
|
(255,842)
|
500,999
|
|
|
|
|
CASH FLOW FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Payments for
intangible assets
|
|
(18,079)
|
(97,083)
|
Payments for
property, plant & equipment
|
|
(920,488)
|
(1,573,862)
|
Interest
received
|
|
844
|
-
|
Net cash used in
investing activities
|
|
(937,723)
|
(1,670,945)
|
|
|
|
|
CASH FLOW FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from
borrowings
|
|
2,821,288
|
17,570,499
|
Repayments of
borrowings
|
|
(1,827,120)
|
(14,387,173)
|
Interest
paid
|
|
(367,558)
|
(334,910)
|
Payments for other
finance costs
|
|
-
|
-
|
Net cash generated
by financing activities
|
|
626,610
|
2,848,416
|
|
|
|
|
NET
(DECREASE)/INCREASE IN CASH
|
|
(566,955)
|
1,678,470
|
|
|
|
|
Cash at beginning of
period
|
|
1,410,547
|
894,609
|
|
|
|
|
Effect of foreign
currency translation on cash
|
|
(76,247)
|
(431,461)
|
|
|
|
|
CASH AT END OF
PERIOD
|
|
767,345
|
2,141,618
|
SOURCE Dynex Power Inc.