Strong Revenue up 27% vs Q2 2016; but weak
Gross Profit Margins
Listing:
TSX Venture Exchange
Symbol:
DNX
LINCOLN, England, Aug. 29, 2017 /CNW/ - Dynex Power Inc.
(TSXV: DNX), a leading, high power semiconductor company, today
announced its financial results for the second quarter and six
months ended June 30th, 2017.
Summary financial information for the three months and six
months ended June 30th, 2017 is as
follows:
|
|
|
|
|
Canadian Dollars
(000's)
|
June 30,
2017
|
June 30,
2016
|
YTD
2017
|
YTD 2016
|
Revenue
Gross
Profit/(Loss)
Other Income,
Expenses and Costs
Loss before
Tax
Income Tax
Recovery
Net Loss
Common shares
outstanding¹- diluted
Loss per share in
Canadian Dollars - diluted
|
11,546
998
(2,133)
(1,135)
191
(944)
80,509,047
(0.01)
|
9,123
(117)
(1,982)
(2,099)
370
(1,729)
80,509,047
(0.02)
|
23,099
3,730
(4,320)
(590)
52
(538)
80,509,047
(0.01)
|
19,395
1,071
(3,696)
(2,625)
435
(2,190)
80,509,047
(0.03)
|
|
¹ Weighted average
for the period
|
Second quarter revenue of $11.5
million was 27% higher than the corresponding quarter of
last year. This increase was despite an 8% strengthening of the
Canadian Dollar exchange rate against Sterling. In Sterling terms,
revenue increased by 38%. For the year to date, revenue was
$3.7 million or 19% higher than in
the first half of 2016 (36% higher in Sterling terms). This
reflected significant increases in bipolar sales and services,
which more than offset smaller reductions in sales of IGBT modules,
die and power assemblies.
The gross margin was 8.6% of revenue in the second quarter of
2017 compared to a negative gross margin of 1.3% of revenue in the
second quarter of 2016. For the year to date, gross margin was
16.1% compared to 5.5% in the corresponding period of last year.
The improvement in gross margin in 2017 reflects increased revenues
in a high fixed cost business; however it remains below the range
targeted by management.
The combination of other income, expenses and costs represented
18.5% of revenue in the second quarter and 18.7% of revenue for the
year to date compared to 21.7% and 19.1% in the corresponding
periods in 2016. The absolute level of such expenditure increased
by $151,000 in the second quarter and
$624,000 for the year to date
compared to the corresponding periods of last year, reflecting
changes to the management team, increased research and development
costs and the cost of a small redundancy exercise to rebalance
resources in the business.
As a consequence of these results, the Company recorded a loss
before tax of $1.1 million compared
to a loss before tax of $2.1 million
in the corresponding quarter of last year. For the year to date, a
loss before tax of $590,000 was
recorded compared to a loss before tax of $2.6 million for the corresponding period of last
year. Tax recoveries reduced the net loss for the second
quarter to $944,000 or $0.01 per share, compared with a net loss of
$1.7 million, or $0.02 per share, in the same period of last year.
For the year to date the net loss was $538,000 or $0.01
per share compared to $2.2 million or
$0.03 per share, a reduction of
75%.
Clive Vacher, President and Chief
Executive Officer commented, "We are pleased by the revenue growth.
We have demonstrated that with hard work, the revenue opportunities
are there.
"At the same time, we are not happy with the loss. The product
mix demand from our customers resulted in a low gross margin, at
8.6%. In addition, the close-out of some power assemblies projects
with budget overruns, together with higher R&D expense,
negatively impacted the quarter.
"Despite these constraints, Dynex has demonstrated strong
first-half revenue growth of 19% over 2016, which was even stronger
- a 36% increase - on a constant-currency basis, as we place more
focus on commercial results and operational execution. Losses have
been cut by over 75% in the same period. But we won't be satisfied
until we produce consistent profits.
"We are, however, happy with the progress of our turnaround
plan. We have five workstreams and each is showing improvements,
thanks to the commitment and hard work of all our employees. We
have launched some new market-leading products, with more new
products on their way in the second half of the year. Operational
and quality performance continues to improve, and the company is
aligned around a clear strategy. While there is a lot more work to
do, the direction of travel is good."
Liu Ke'an, the Chairman of Dynex,
said, "The loss in the second quarter was not what had been
expected, but the numbers show considerable improvement in the
performance of the business. The team at Dynex is strongly focused
on the goal of sustained profitability, and I am confident the
detailed plans are being executed efficiently to achieve this. I
remain fully behind the change programme at Dynex and look forward
to positive developments going forward."
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 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.
|
|
|
|
|
|
|
Interim Condensed
Consolidated Statements of Comprehensive Income (unaudited) in
Canadian Dollars
|
Quarter Ended June
30th, 2017
|
|
|
3
months
|
3
months
|
YTD
|
YTD
|
|
|
Jun
30th
|
Jun
30th
|
Jun
30th
|
Jun
30th
|
|
|
2017
|
2016
|
2017
|
2016
|
|
Note
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
Revenue
|
5, 6
|
11,546,462
|
9,122,739
|
23,099,110
|
19,395,293
|
|
|
|
|
|
|
Cost of
sales
|
|
(10,548,470)
|
(9,239,972)
|
(19,368,800)
|
(18,324,732)
|
|
|
|
|
|
|
Gross
profit/(loss)
|
|
997,992
|
(117,233)
|
3,730,310
|
1,070,561
|
|
|
|
|
|
|
Other
income
|
6
|
48,038
|
6,800
|
86,401
|
29,195
|
Sales and marketing
expenses
|
|
(391,691)
|
(391,313)
|
(697,628)
|
(718,555)
|
Administration
expenses
|
|
(839,787)
|
(918,060)
|
(2,371,437)
|
(1,978,610)
|
Research and
development expenses
|
7
|
(725,618)
|
(483,282)
|
(919,998)
|
(783,243)
|
Finance
costs
|
|
(182,738)
|
(187,961)
|
(323,332)
|
(366,577)
|
Other
(losses)/gains
|
|
(41,600)
|
(7,527)
|
(94,395)
|
122,284
|
|
|
|
|
|
|
Loss before
tax
|
7
|
(1,135,404)
|
(2,098,576)
|
(590,079)
|
(2,624,945)
|
|
|
|
|
|
|
Income tax
recovery
|
|
191,795
|
369,445
|
52,269
|
434,644
|
|
|
|
|
|
|
Net
loss
|
|
(943,609)
|
(1,729,131)
|
(537,810)
|
(2,190,301)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences
on translation of foreign operations (net of tax of
$nil)
|
|
461,726
|
(2,191,861)
|
648,136
|
(5,780,922)
|
|
|
|
|
|
|
Total
comprehensive income/(loss) for the period
|
(481,883)
|
(3,920,992)
|
110,326
|
(7,971,223)
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
Basic
|
8
|
(0.01)
|
(0.02)
|
(0.01)
|
(0.03)
|
Diluted
|
8
|
(0.01)
|
(0.02)
|
(0.01)
|
(0.03)
|
|
|
|
|
|
|
All results are
derived from continuing operations.
|
DYNEX POWER
INC.
|
|
Interim Condensed
Consolidated Statement of Financial Position (unaudited) in
Canadian Dollars
|
As at June 30th,
2017
|
|
|
|
Jun
30th
|
Dec
31st
|
|
|
|
2017
|
2016
|
|
|
Note
|
$
|
$
|
|
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
9
|
1,466,425
|
1,524,346
|
Property, plant &
equipment
|
|
9
|
31,013,993
|
31,565,940
|
Deferred tax
asset
|
|
|
1,266,374
|
1,127,322
|
|
|
|
|
|
Total non-current
assets
|
|
|
33,746,792
|
34,217,608
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
11,957,383
|
11,854,067
|
Trade
receivables
|
|
|
6,545,013
|
4,035,481
|
Amounts owing from
group undertakings
|
|
13
|
6,669,196
|
3,573,709
|
Prepayments, deposits
& other receivables
|
|
|
2,082,558
|
2,297,786
|
Tax
recoverable
|
|
|
-
|
682
|
Cash
|
|
|
2,040,453
|
898,855
|
|
|
|
|
|
Total current
assets
|
|
|
29,294,603
|
22,660,580
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
3,177,185
|
3,010,756
|
Amounts owing to
group undertakings
|
|
13
|
5,042,335
|
2,103,917
|
Other payables and
accruals
|
|
|
5,246,310
|
3,290,095
|
Borrowings
|
|
10
|
18,028,478
|
16,380,290
|
Provisions
|
|
|
887,037
|
456,773
|
|
|
|
|
|
Total current
liabilities
|
|
|
32,381,345
|
25,241,831
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
10
|
4,190,247
|
5,141,190
|
Provisions
|
|
|
50,647
|
186,337
|
|
|
|
|
|
Total non-current
liabilities
|
|
|
4,240,894
|
5,327,527
|
|
|
|
|
|
NET
ASSETS
|
|
|
26,419,156
|
26,308,830
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
11
|
37,096,192
|
37,096,192
|
Accumulated
deficit
|
|
|
(11,066,035)
|
(10,528,225)
|
Exchange fluctuation
reserve
|
|
|
388,999
|
(259,137)
|
|
|
|
|
|
TOTAL
EQUITY
|
|
|
26,419,156
|
26,308,830
|
DYNEX POWER
INC.
|
|
Interim Condensed
Consolidated Statement of Changes in Equity (unaudited) in Canadian
Dollars
|
Quarter Ended June
30th 2017
|
|
|
|
Foreign
|
|
|
|
|
Currency
|
|
|
Share
|
|
Translation
|
Total
|
|
Capital
|
Deficit
|
Reserve
|
Equity
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1st,
2016
|
37,096,192
|
(5,609,101)
|
7,019,514
|
38,506,605
|
|
|
|
|
|
Total comprehensive
loss 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
|
|
|
|
|
|
Total comprehensive
loss for the period
|
-
|
(2,728,823)
|
(1,497,729)
|
(4,226,552)
|
|
|
|
|
|
|
|
|
|
|
At December 31st,
2016
|
37,096,192
|
(10,528,225)
|
(259,137)
|
26,308,830
|
|
|
|
|
|
Total comprehensive
income/(loss) for the period
|
-
|
(537,810)
|
648,136
|
110,326
|
|
|
|
|
|
|
|
|
|
|
At June 30th,
2017
|
37,096,192
|
(11,066,035)
|
388,999
|
26,419,156
|
|
|
|
|
|
DYNEX POWER
INC.
|
|
Interim Condensed
Consolidated Statement of Cash Flows (unaudited) in Canadian
Dollars
|
Quarter Ended June
30th, 2017
|
|
|
|
YTD
|
YTD
|
|
|
|
Jun
30th
|
Jun
30th
|
|
|
|
2017
|
2016
|
|
|
Note
|
$
|
$
|
CASH FLOW FROM
OPERATING ACTIVITIES
|
|
|
|
|
Loss before
tax
|
|
|
(590,079)
|
(2,624,945)
|
Finance costs
recognised in loss before tax
|
|
|
323,332
|
366,577
|
Investment income
recognised in loss before tax
|
|
|
542
|
(844)
|
Amortization of
intangible assets
|
|
|
103,079
|
110,262
|
Depreciation of
property, plant & equipment
|
|
|
2,309,759
|
2,616,831
|
Provision for slow
moving and obsolete inventory
|
|
(3,179,780)
|
440,500
|
Non cash movement in
provisions
|
|
|
42,294
|
-
|
Movements in working
capital
|
|
12
|
3,211,927
|
(1,321,970)
|
Income taxes
paid
|
|
|
(64,859)
|
(45,069)
|
|
|
|
|
|
Net cash generated
by/(used in) operating activities
|
|
2,156,215
|
(458,658)
|
|
|
|
|
|
CASH FLOW FROM
INVESTING ACTIVITIES
|
|
|
|
|
Payments for
intangible assets
|
|
|
(9,522)
|
(18,079)
|
Payments for
property, plant & equipment
|
|
|
(1,012,384)
|
(920,488)
|
Interest
received
|
|
|
(542)
|
844
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
(1,022,448)
|
(937,723)
|
|
|
|
|
|
CASH FLOW FROM
FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from
borrowings
|
|
|
1,382,927
|
2,821,288
|
Repayments of
borrowings
|
|
|
(1,202,716)
|
(1,827,120)
|
Interest
paid
|
|
|
(148,176)
|
(164,742)
|
Payments for other
finance costs
|
|
|
(14,465)
|
-
|
|
|
|
|
|
Net cash generated
by financing activities
|
|
|
17,570
|
829,426
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN CASH
|
|
|
1,151,337
|
(566,955)
|
|
|
|
|
|
Cash at beginning of
period
|
|
|
898,855
|
1,410,547
|
Effect of foreign
currency translation on cash
|
|
|
(9,739)
|
(76,247)
|
|
|
|
|
|
CASH AT END OF
PERIOD
|
|
|
2,040,453
|
767,345
|
|
All operating cash
flows are derived from continuing operations
|
SOURCE Dynex Power Inc.