Listing: TSX Venture
Exchange
Symbol: DNX
Record Quarterly Revenues; Break-Even; Strong
Operational Cash Flow
LINCOLN, England, Nov. 14, 2017 /CNW/ - Dynex Power Inc. (TSXV:
DNX), a leading, high power semiconductor company, today announces
its financial results for the third quarter and nine months ended
September 30, 2017.
Summary financial information for these periods is as
follows:
|
|
|
|
|
Canadian Dollars
(000's)
|
September
30, 2017
|
September 30,
2016
|
YTD
2017
|
YTD 2016
|
Revenue
|
13,119
|
11,079
|
36,218
|
30,474
|
Gross
Profit/(Loss)
|
1,534
|
2,071
|
5,263
|
3,141
|
Other Income,
Expenses and Costs
|
(1,503)
|
(1,719)
|
(5,822)
|
(5,413)
|
Profit / (Loss)
before Tax
|
31
|
352
|
(559)
|
(2,273)
|
Income Tax (expense)
/ Recovery
|
(20)
|
(116)
|
32
|
318
|
Net Profit /
(Loss)
|
11
|
236
|
(527)
|
(1,955)
|
Common shares
outstanding¹-diluted
|
80,509,047
|
80,509,047
|
80,509,047
|
80,509,047
|
Profit (Loss) per
share in Canadian Dollars - diluted
|
0.00
|
0.00
|
(0.01)
|
(0.02)
|
|
|
|
|
|
|
|
¹ Weighted
average for the period
|
|
|
|
|
Third quarter revenue of $13.1
million was 18% higher than the corresponding quarter of
last year, and represents the highest quarterly revenue in the
history of the company. This increase was despite a 4%
strengthening of the Canadian Dollar exchange rate against
Sterling. In Sterling terms, revenue increased by 23%. For the year
to date, revenue was $5.7 million or
19% higher than in the first nine months of 2016 (32% higher on a
constant currency basis). This reflected significant increases in
bipolar sales and services which more than offset smaller
reductions in sales of power assemblies. IGBT sales are
similar to last year.
Operating cash flow for the first 9 months of 2017 was strong.
The company generated positive operating cash of $3.3 million in this period, versus negative cash
of $0.4 million in the equivalent
period in 2016. This represents significantly improved income
performance, together with improved management of working capital,
consistent with the overall business turnaround plan.
The gross margin was 11.6% of revenue in the third quarter of
2017, compared to a gross margin of 18.7% of revenue in the third
quarter of 2016. For the year to date, gross margin was 14.5%,
compared to 10.3% 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, in part due to the closeout this year of a
number of loss-making contracts, particularly in the Power
Assemblies business unit. Going forward, the development of a core
competence in program management will ensure a more efficient
execution of contracts; this, coupled with a review of our bidding
and pricing strategy, will largely eliminate loss-making and
low-margin business.
The combination of other income, expenses and costs represented
11.5% of revenue in the third quarter and 16.1% of revenue for the
year to date compared to 15.5% and 17.8% in the corresponding
periods in 2016. The absolute level of such expenditure
decreased by $215,000 in the third
quarter and increased by $409,000 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
quarter 3 profit before tax of $31,000 compared to a profit before tax of
$352,000 in the corresponding quarter
of last year. For the year to date, a loss before tax of
$559,000 was recorded compared to a
loss before tax of $2.3 million for
the corresponding period of last year. The net profit after tax for
the third quarter was $11,000 or
$0.00 per share, compared with a net
profit of $236,000, or $0.00 per share, in the corresponding period of
last year. For the year to date the net loss was $527,000 or $0.01
per share compared to $2.0 million or
$0.02 per share, a loss reduction of
73%.
Clive Vacher, President and Chief
Executive Officer, commented, "The record quarterly revenue has
contributed to greater than 30% increase in year-to-date revenue
versus 2016, on a constant-currency basis. This, coupled with
a year-to-date reduction in losses of 73%, and strong positive
operating cash flow of $3.3 million,
are encouraging signs that the business turnaround plan is yielding
positive results.
"We have a considerable amount of work still to do, however, to
improve margins and show an acceptable return to our shareholders.
The underlying margin performance in the 3rd quarter
2017 (just the right side of break-even) is, in fact, considerably
better than the equivalent period last year, as quarters 3 and 4
2016 showed some positive one-time items. We continue to work a
number of initiatives to improve our return on sales, including
improved yields, more targeted R&D spend, a review of pricing
strategy leading to an increase in higher-margin work, and greater
control of costs.
"Looking ahead to the fourth quarter, our target is to make up
the year-to-date loss, to show a modest profit for the year. Based
on the current order backlog, there is some risk to achieving this.
However, we are confident to predict fourth quarter revenues in the
$10.5-12.5 million range at current
exchange rates, bringing full-year predicted revenues to between
$46.7-$48.7 million."
Liu Ke'an, the Chairman of Dynex,
added, "I am pleased to see that the revenues, margins and cash
generation at Dynex in 2017 represent a step-change in performance
versus recent prior years, demonstrating that the actions taken by
the leadership team are, indeed, turning the business around. The
goal of sustained profitability remains challenging and will take
some further time to realise. The team has my full support to
continue the improvements, as we bring the year to a close."
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 September 30th , 2017
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
September 30th, 2017
|
|
|
3
months
|
3
months
|
YTD
|
YTD
|
|
Sept
30th
|
Sept
30th
|
Sept
30th
|
Sept
30th
|
|
2017
|
2016
|
2017
|
2016
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Revenue
|
13,119,281
|
11,079,036
|
36,218,391
|
30,474,329
|
|
|
|
|
|
Cost of
sales
|
(11,585,733)
|
(9,008,230)
|
(30,954,533)
|
(27,332,962)
|
|
|
|
|
|
Gross
profit
|
1,533,548
|
2,070,806
|
5,263,858
|
3,141,367
|
|
|
|
|
|
Other
income
|
526,425
|
9,759
|
612,826
|
38,954
|
Sales and marketing
expenses
|
(370,911)
|
(365,794)
|
(1,068,538)
|
(1,084,349)
|
Administration
expenses
|
(885,946)
|
(967,489)
|
(3,257,383)
|
(2,946,099)
|
Research and
development expenses
|
(496,741)
|
(265,680)
|
(1,416,739)
|
(1,048,923)
|
Finance
costs
|
(150,189)
|
(188,567)
|
(473,521)
|
(555,144)
|
Other
(losses)/gains
|
(125,161)
|
59,358
|
(219,556)
|
181,642
|
|
|
|
|
|
Profit/(loss)
before tax
|
31,025
|
352,393
|
(559,053)
|
(2,272,552)
|
|
|
|
|
|
Income tax
(expense)/recovery
|
(20,394)
|
(116,559)
|
31,875
|
318,085
|
|
|
|
|
|
Net
profit/(loss)
|
10,631
|
235,834
|
(527,178)
|
(1,954,467)
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss)/income
|
|
|
|
|
|
|
|
|
|
Exchange differences
on translation of foreign operations (net of tax of
$nil)
|
(191,189)
|
(629,240)
|
456,947
|
(6,410,162)
|
|
|
|
|
|
Total
comprehensive (loss)/income for the period
|
(180,558)
|
(393,406)
|
(70,231)
|
(8,364,629)
|
|
|
|
|
|
Earnings/(loss)
per share
|
|
|
|
|
Basic
|
0.00
|
0.00
|
(0.01)
|
(0.02)
|
Diluted
|
0.00
|
0.00
|
(0.01)
|
(0.02)
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Financial Position (unaudited) in
Canadian Dollars
|
As at September
30th, 2017
|
|
|
Sept
30th
|
Dec
31st
|
|
2017
|
2016
|
|
$
|
$
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
Intangible
assets
|
1,413,600
|
1,524,346
|
Property, plant &
equipment
|
29,999,091
|
31,565,940
|
Deferred tax
asset
|
1,268,363
|
1,127,322
|
|
|
|
Total non-current
assets
|
32,681,054
|
34,217,608
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Inventories
|
10,854,828
|
11,854,067
|
Trade
receivables
|
6,672,398
|
4,035,481
|
Amounts owing from
group undertakings
|
7,148,246
|
3,573,709
|
Prepayments, deposits
& other receivables
|
1,767,081
|
2,297,786
|
Tax
recoverable
|
-
|
682
|
Cash
|
2,291,570
|
898,855
|
|
|
|
Total current
assets
|
28,734,123
|
22,660,580
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Trade
payables
|
2,141,737
|
3,010,756
|
Amounts owing to
group undertakings
|
6,719,660
|
2,103,917
|
Other payables and
accruals
|
3,725,905
|
3,290,095
|
Borrowings
|
17,415,156
|
16,380,290
|
Provisions
|
988,151
|
456,773
|
|
|
|
Total current
liabilities
|
30,990,609
|
25,241,831
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Financial Position (Unaudited) in
Canadian Dollars (continued)
|
As at September
30th, 2017
|
|
|
Sep
30th
|
Dec
31st
|
|
2017
|
2016
|
|
$
|
$
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
Borrowings
|
4,135,690
|
5,141,190
|
Provisions
|
50,280
|
186,337
|
|
|
|
Total non-current
liabilities
|
4,185,970
|
5,327,527
|
|
|
|
NET
ASSETS
|
26,238,598
|
26,308,830
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
37,096,192
|
37,096,192
|
Accumulated
deficit
|
(11,055,404)
|
(10,528,225)
|
Exchange fluctuation
reserve
|
197,810
|
(259,137)
|
|
|
|
TOTAL
EQUITY
|
26,238,598
|
26,308,830
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Changes in Equity (unaudited) in Canadian
Dollars
|
Quarter Ended
September 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
|
-
|
(1,954,467)
|
(6,410,162)
|
(8,364,629)
|
|
|
|
|
|
|
|
|
|
|
At September 30th,
2016
|
37,096,192
|
(7,563,568)
|
609,352
|
30,141,976
|
|
|
|
|
|
Total comprehensive
loss for the period
|
-
|
(2,964,657)
|
(868,489)
|
(3,833,146)
|
|
|
|
|
|
|
|
|
|
|
At December 31st,
2016
|
37,096,192
|
(10,528,225)
|
(259,137)
|
26,308,830
|
|
|
|
|
|
Total comprehensive
income/(loss) for the period
|
-
|
(527,179)
|
456,947
|
(70,232)
|
|
|
|
|
|
|
|
|
|
|
At September 30th,
2017
|
37,096,192
|
(11,055,404)
|
197,810
|
26,238,598
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Cash Flows (unaudited) in Canadian
Dollars
|
Quarter Ended
September 30th, 2017
|
|
|
YTD
|
YTD
|
|
Sept
30th
|
Sept
30th
|
|
2017
|
2016
|
|
$
|
$
|
CASH FLOW FROM
OPERATING ACTIVITIES
|
|
|
Loss before
tax
|
(559,054)
|
(2,272,552)
|
Finance costs
recognised in loss before tax
|
473,521
|
555,144
|
Investment income
recognised in loss before tax
|
518
|
(844)
|
Amortization of
intangible assets
|
144,677
|
157,886
|
Depreciation of
property, plant & equipment
|
3,428,972
|
3,773,372
|
Provision for slow
moving and obsolete inventory
|
(3,188,558)
|
440,500
|
Non cash movement in
provisions
|
42,294
|
-
|
Movements in working
capital
|
3,067,615
|
(2,995,584)
|
Income taxes
paid
|
(96,228)
|
(66,545)
|
|
|
|
Net cash generated
by/(used in) operating activities
|
3,313,757
|
(408,623)
|
|
|
|
CASH FLOW FROM
INVESTING ACTIVITIES
|
|
|
Payments for
intangible assets
|
(9,522)
|
(54,685)
|
Payments for
property, plant & equipment
|
(1,352,617)
|
(1,350,943)
|
Interest
received
|
(518)
|
844
|
|
|
|
Net cash used in
investing activities
|
(1,362,657)
|
(1,404,784)
|
|
|
|
CASH FLOW FROM
FINANCING ACTIVITIES
|
|
|
Proceeds from
borrowings
|
1,382,927
|
2,821,288
|
Repayments of
borrowings
|
(1,702,462)
|
(1,573,144)
|
Interest
paid
|
(206,399)
|
(260,445)
|
Payments for other
finance costs
|
(14,465)
|
-
|
|
|
|
Net cash generated
by financing activities
|
(540,399)
|
987,699
|
|
|
|
NET
INCREASE/(DECREASE) IN CASH
|
1,410,701
|
(825,708)
|
|
|
|
Cash at beginning of
period
|
898,855
|
1,410,547
|
Effect of foreign
currency translation on cash
|
(17,986)
|
(79,422)
|
|
|
|
CASH AT END OF
PERIOD
|
2,291,570
|
505,417
|
SOURCE Dynex Power Inc.