Delays to Customer Deliveries and Inventory Write-Offs
Negatively Impact 2016 Results
Listing: TSX Venture Exchange
Symbol:
DNX
LINCOLN, England, May 1, 2017 /CNW/ - Dynex Power Inc. (TSXV: DNX),
a leading, high power semiconductor company, today announced its
financial results for the year ended December 31st, 2016.
Summary financial information for the twelve months ended
December 31st, 2016 is as
follows:
|
|
|
Dollars
(000's)
|
Dec. 31,
2016
|
Dec. 31,
2015
|
Revenue
Gross
profit
Expenses
Loss/(profit) before
tax
Income tax recovery/
(expense)
Net
(loss)/profit
Common shares
outstanding ¹ - diluted
Earnings per
share - diluted
|
40,519
2,090
(8,041)
(5,951)
1,031
(4,919)
80,509,047
(0.06)
|
46,512
4,683
(4,413)
270
(104)
166
80,509,047
0.00
|
¹ Weighted average
for the period
|
Revenue for the year of $40.5
million was 13% lower than in the preceding year. Two thirds
of this decrease was a result of a strengthening of the Canadian
Dollar against Sterling. In Sterling terms revenue had fallen by
approximately 5%. The fall in Sterling revenue reflected a number
of customer orders that had been expected to be met before the year
end but which the Company had been unable to ship in December.
The Group reported a gross profit of $2.1
million for the year equivalent to 5.2% of revenue compared
to a gross profit of $4.7 million,
equivalent to 10.1% of revenue, last year. The fall in gross profit
margin reflected the failure of goods to be shipped before the year
end and an inventory write off of approximately $2 million. Write offs related to the last of the
integrated circuit inventory, where the Company does not see any
prospect of future sales, and to IGBT die types for which the
Company no longer believes there is any demand.
Expenses increased from $4.4
million in 2015 to $8.0
million in 2016. The largest element of this increase
related to net research and development costs which rose by
$ 2.1 million. Because of the cost
sharing agreement with the majority shareholder and some additional
support from the UK Government, research and development had
generated a net surplus in 2015. This was a one-off situation that
was not expected to continue. Approximately $800,000 of the increase related to additional
staff costs. Additional staff had been required to support the
implementation of a new business ERP system and additional staff
had been taken on to strengthen the sales and marketing function.
Some reductions in staff costs will take place in the
administration area following the successful go-live of the new
system early in 2017. A further $600,000 of the increase related to executive
recruitment and termination costs of senior executives.
Dynex recorded a loss before tax of $6.0
million in 2016 compared to a profit before tax of
$270,000 in 2015. The Company
accounted for a tax recovery of $1.0
million, leaving a loss after tax of $4.9 million compared to a profit after tax of
$166,000 in the preceding year.
New orders received in 2016 totalled $37.4 million resulting in a book to bill ratio
of 0.9 times. The order book rose from $13.4
million at the end of 2015 to $14.0
million at the end of 2016. The order book at the end of
2015 represented approximately 18 weeks of sales.
Clive Vacher, the newly appointed
President and Chief Executive Officer commented, "The performance
of the Company in 2016 was not where it needs to be to satisfy
stakeholders. In the three months since I joined the Company, I
have been involved with the Management Team in assessing the
strengths and weaknesses of the organisation and developing a plan
to build on those strengths and eliminate the weaknesses. The plan
initiates changes in five main areas and these changes are more
fully set out in my letter to shareholders attached to the annual
financial results. I am determined to return the Company to
profitability in 2017 and to build a platform for growth and
improved financial performance."
Bob Lockwood, Chief Financial
Officer commented, "The results for 2016 are deeply disappointing.
The failure to deliver customer orders on time, the write-off of
inventories and the increase in the net cost of research and
development all contributed to the poor result. But the continued
support from CRRC Times Electric and the recovery plan set out by
our new CEO gives me great confidence that the business will return
to profitability in 2017 and will flourish in the years to come.
"
Mr Liu Ke'an, Chairman of Dynex
and General Manager of CRRC Times Electric, commented "The recent
performance of Dynex has been unacceptable. I am delighted to have
seen the plan Clive and the Management Team have put forward to
return the business to profitability and he has the full backing of
the Board for this plan."
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
year ended December 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 and high
power electronic assemblies. 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.
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.
|
Consolidated
Statement of Profit (Loss) and Other Comprehensive Income in
Canadian Dollars
|
Year Ended
December 31st, 2016
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
$
|
$
|
|
|
|
|
|
Revenue
|
|
|
40,519,413
|
46,512,345
|
|
|
|
|
|
Cost of
Sales
|
|
|
(38,429,715)
|
(41,829,244)
|
|
|
|
|
|
Gross
Profit
|
|
|
2,089,698
|
4,683,101
|
|
|
|
|
|
Other
income
|
|
|
47,288
|
81,043
|
Sales and marketing
expenses
|
|
|
(1,429,127)
|
(1,169,003)
|
Administration
expenses
|
|
|
(4,409,051)
|
(3,270,465)
|
Research and
development (expenses)/surplus
|
|
|
(1,733,689)
|
313,235
|
Finance
costs
|
|
|
(730,669)
|
(776,920)
|
Other gains and
(losses)
|
|
|
214,933
|
408,747
|
|
|
|
|
|
Profit/(Loss)
before Tax
|
|
|
(5,950,617)
|
269,738
|
|
|
|
|
|
Income tax
recovery/(expense)
|
|
|
1,031,493
|
(103,574)
|
|
|
|
|
|
Net
Profit/(Loss)
|
|
|
(4,919,124)
|
166,164
|
|
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income
|
|
|
|
|
Items that may be
reclassified subsequently to net profit/loss
|
|
|
|
|
Exchange differences
on translation of foreign operations (net of tax of
$nil)
|
|
|
(7,278,651)
|
4,316,103
|
|
|
|
|
|
|
|
|
|
|
Total
Comprehensive Income/(Loss) for the Year
|
|
|
(12,197,775)
|
4,482,267
|
|
|
|
|
|
Profit/(Loss) per
Share
|
|
|
|
|
Basic
|
|
|
(0.06)
|
0.00
|
Diluted
|
|
|
(0.06)
|
0.00
|
DYNEX POWER
INC.
|
Consolidated
Statement of Financial Position in Canadian Dollars
|
As at December
31st, 2016
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
$
|
$
|
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
|
1,524,346
|
1,594,142
|
Property, plant and
equipment
|
|
|
31,565,940
|
43,447,376
|
Deferred tax
asset
|
|
|
1,127,322
|
57,838
|
|
|
|
|
|
Total non-current
assets
|
|
|
34,217,608
|
45,099,356
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
11,854,067
|
15,215,237
|
Trade
receivables
|
|
|
4,035,481
|
6,334,417
|
Amounts owing from
parent company
|
|
|
3,573,709
|
5,445,377
|
Prepayments, deposits
and other receivables
|
|
|
2,297,786
|
1,236,102
|
Tax
recoverable
|
|
|
682
|
3,382
|
Cash
|
|
|
898,855
|
1,410,547
|
|
|
|
|
|
Total current
assets
|
|
|
22,660,580
|
29,645,062
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
3,010,756
|
2,371,233
|
Amounts owing to
parent company
|
|
|
2,103,917
|
760,062
|
Other payables and
accruals
|
|
|
3,290,095
|
8,695,638
|
Borrowings
|
|
|
16,380,290
|
15,423,684
|
Provisions
|
|
|
456,773
|
20,599
|
Tax
payable
|
|
|
-
|
-
|
|
|
|
|
|
Total current
liabilities
|
|
|
25,241,831
|
27,271,216
|
DYNEX POWER
INC.
|
Consolidated
Statement of Financial Position in Canadian Dollars
(continued)
|
As at December
31st, 2016
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
$
|
$
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
5,141,190
|
8,904,800
|
Provisions
|
|
|
186,337
|
61,797
|
|
|
|
|
|
Total non-current
liabilities
|
|
|
5,327,527
|
8,966,597
|
|
|
|
|
|
NET
ASSETS
|
|
|
26,308,830
|
38,506,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
37,096,192
|
37,096,192
|
Accumulated
deficit
|
|
|
(10,528,225)
|
(5,609,101)
|
Foreign currency
translation reserve
|
|
|
(259,137)
|
7,019,514
|
|
|
|
|
|
TOTAL
EQUITY
|
|
|
26,308,830
|
38,506,605
|
DYNEX POWER
INC.
|
Consolidated
Statement of Changes in Equity in Canadian Dollars
|
Year Ended
December 31st, 2016
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
Retained
|
Currency
|
|
|
Share
|
Profit/
|
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 year
|
-
|
166,164
|
4,316,103
|
4,482,267
|
|
|
|
|
|
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
loss for the year
|
-
|
(4,919,124)
|
(7,278,651)
|
(12,197,775)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31st,
2016
|
37,096,192
|
(10,528,225)
|
(259,137)
|
26,308,830
|
DYNEX POWER
INC.
|
Consolidated
Statement of Cash Flows in Canadian Dollars
|
Year Ended
December 31st, 2016
|
|
|
|
|
|
|
|
|
2016
|
2015
|
|
|
|
$
|
$
|
CASH FLOW FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before
tax
|
|
|
(5,950,617)
|
269,738
|
Finance costs
recognised in loss before tax
|
|
|
730,669
|
776,920
|
Investment income
recognised in loss before tax
|
|
|
(844)
|
-
|
Amortization of
intangible assets
|
|
|
206,087
|
169,288
|
Depreciation of
property, plant and equipment
|
|
|
4,897,300
|
5,282,462
|
(Gain) Loss on
disposal of property, plant and equipment
|
|
|
(5,348)
|
(3,361)
|
Provision for slow
moving and obsolete inventory
|
|
|
1,841,951
|
(424,680)
|
Movements in working
capital
|
|
|
(2,109,223)
|
(6,742,646)
|
Income taxes
(paid)/received
|
|
|
(110,675)
|
(102,545)
|
|
|
|
|
|
Net cash
generated/(used) by operating activities
|
|
|
(500,700)
|
(774,824)
|
|
|
|
|
|
CASH FLOW FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Payments for
intangible assets
|
|
|
(437,513)
|
(443,438)
|
Payments for
property, plant & equipment
|
|
|
(1,385,381)
|
(3,558,443)
|
Interest
received
|
|
|
844
|
-
|
Proceeds from the
sale of fixed assets
|
|
|
6,656
|
5,167
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
(1,815,394)
|
(3,996,714)
|
|
|
|
|
|
CASH FLOW FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Capital
contribution
|
|
|
-
|
1,641,375
|
Proceeds from
borrowings
|
|
|
2,821,288
|
38,484,089
|
Repayments of
borrowings
|
|
|
(603,728)
|
(33,352,566)
|
Interest
paid
|
|
|
(324,668)
|
(866,577)
|
|
|
|
|
|
Net cash
generated/(used) by financing activities
|
|
|
1,892,892
|
5,906,321
|
|
|
|
|
|
NET
(DECREASE)/INCREASE IN CASH
|
|
|
(423,202)
|
1,134,783
|
|
|
|
|
|
Cash at beginning of
year
|
|
|
1,410,547
|
894,609
|
|
|
|
|
|
Effect of foreign
currency translation on cash
|
|
|
(88,490)
|
(618,845)
|
|
|
|
|
|
CASH AT END OF
YEAR
|
|
|
898,855
|
1,410,547
|
SOURCE Dynex Power Inc.