Listing: TSX Venture Exchange
Symbol: DNX
Loss From Weak Order Book; Strong Positive
Cash Position
LINCOLN, England, May 22, 2018 /CNW/ - Dynex Power Inc. (TSXV:
DNX), a leading, high power semiconductor company, today announced
its financial results for the first quarter ended March 31, 2018.
Summary financial information for the three months ended
March 31st, 2018 is as follows:
|
|
|
Canadian Dollars
(000's)
|
March 31,
2018
|
March 31,
2017
|
Revenue
|
10,577
|
11,553
|
Gross Profit /
(Loss)
|
891
|
2,732
|
Other Income,
Expenses and Costs
|
(2,573)
|
(2,187)
|
Profit / (Loss)
before Tax
|
(1,682)
|
545
|
Income Tax (expense)
/ Recovery
|
303
|
(139)
|
Net Profit /
(Loss)
|
(1,379)
|
406
|
EBITDA
|
(186)
|
1,877
|
Operating
cash
|
2,219
|
57
|
Common shares
outstanding - diluted
|
80,509,047
|
80,509,047
|
Profit / (Loss) per
share in Canadian Dollars - diluted
|
(0.02)
|
0.01
|
First quarter revenue of $10.6
million was 8% lower than the corresponding quarter of last
year, or, 14% lower before the impact of exchange rates. Gross
margin was 8.4% of revenue, compared with a gross margin of 23.6%
in the corresponding quarter in 2017. The reduction in gross margin
in 2018 reflects lower revenues and an unfavourable product mix in
a high fixed cost business.
The combination of other income, expenses and costs represented
24.3% of revenue in the first quarter compared to 18.9% in the
corresponding period in 2017. The absolute level of such
expenditure increased by $386,000
compared to the corresponding period of last year, with
$148,000 of this being the impact of
exchange rates and $238,000
reflecting changes to the management team and increased research
and development costs.
As a consequence of these results, the Company recorded a loss
before tax of $1,682,000, compared to
a profit before tax of $545,000 in
the corresponding quarter of last year. The net loss after tax for
the quarter was $1,379,000 or
$0.02 per share, compared with a net
profit of $406,000, or $0.01 per share, in the corresponding period of
last year.
EBITDA for the quarter was negative $186,000 compared with $1,877,000 in the corresponding period last
year.
Operating cash was $2,219,000 for
the quarter compared with $57,000 in
the corresponding period of last year, and the company's cash
balance increased in the quarter from $3.6
million to $6.8 million. This
reflected tight working capital management, combined with some
significant advance payments received from the parent company for
products and services.
Clive Vacher, President and Chief
Executive Officer, commented, "I have previously explained to
shareholders the elements of my five-stream turnaround plan; the
two keys to that plan are to make our product quality and new
product development second to none, and to substantially improve
our financial performance.
"We are making tangible progress on product development and
quality plans, and we will not lessen the intensity of our focus.
We have hired a Chief Technology Officer who has started well. He
and I are dedicated to building Dynex's reputation as market leader
in cutting-edge innovation and reliability.
"This quarter was a setback to our financial improvement plans.
Despite demonstrating that the market opportunities are there, the
volumes we booked were nowhere near where we want them to be. In
addition, we have had to improve almost all business processes. The
operating deficiencies are greater than I imagined when taking on
this job. However, I remain steadfastly committed to making very
significant improvements happen.
"As regards to improved financial performance, the key to
Dynex's sustained profitability lies in securing more orders and
processing larger sales volumes through our high fixed-cost
operations. The actions to implement our turnaround plan require an
enhanced, technologically advanced new product range, greater
operational efficiency, robust and dependable quality, and a
high-performing sales team based in the regions that they serve. It
also requires more energetic marketing. We continue to make good
progress in all these aspects, including improving the quality of
our sales force.
"However, after record sales in 2017 and a diminished order book
going into 2018, we expected a tough first half of 2018 and it is
turning out to be the case. After product quality, enhanced revenue
is my highest priority. Therefore, for an interim period, I am
taking direct responsibility for the sales activity. There are some
significant contracts that we are bidding on in the second and
third quarters. If we win these contracts, we will be optimistic
for revenue in 2019 and beyond. This reflects a timing issue
between product portfolio expansion and the revenue generation from
it. I am confident we will increase the backlog to the right levels
to support growth and profitability; the challenge is how quickly
we can do it. We have an intense focus on increasing orders from
our established portfolio to bridge the gap and deliver a
respectable full-year 2018.
"While we work this challenge, we have been managing our cash
flow very carefully. Our cash balance of $6.8 million gives me great comfort that we will
be able effectively to sustain the dip in orders and come back
stronger than before. We also have the cash to invest in the
research and development activities required sustainably to be a
technology leader in the industry. These activities continue to
accelerate, and further new products will be qualified in the
coming months.
"In the meantime, our guidance is that the second quarter
financials will be similar to the first quarter, albeit with modest
cash usage."
Liu Ke'an, the Chairman of Dynex,
added, "The loss in the quarter is clearly a symptom of the order
backlog position. The team at Dynex is strongly focused on
product quality and the qualification of new products. These
products, coupled with our existing portfolio and some detailed
sales and marketing initiatives, will lead to an improvement in the
financial results. I am confident the detailed plans are being
executed efficiently to achieve this. I remain fully behind the
change programme at Dynex."
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
March 31st, 2018
|
|
|
|
|
3
months
|
3
months
|
|
Mar
31st
|
Mar
31st
|
|
2018
|
2017
|
|
$
|
$
|
|
|
|
Revenue
|
10,576,858
|
11,552,648
|
|
|
|
Cost of
sales
|
(9,685,616)
|
(8,820,330)
|
|
|
|
Gross
profit
|
891,242
|
2,732,318
|
|
|
|
Other
income
|
72,610
|
38,363
|
Sales and marketing
expenses
|
(479,278)
|
(305,937)
|
Administration
expenses
|
(1,320,209)
|
(1,531,650)
|
Research and
development expenses
|
(571,284)
|
(194,380)
|
Finance
costs
|
(211,857)
|
(140,594)
|
Other
(losses)/gains
|
(63,342)
|
(52,795)
|
|
|
|
(Loss)/profit
before tax
|
(1,682,118)
|
545,325
|
|
|
|
Income tax
recovery/(expense)
|
302,979
|
(139,526)
|
|
|
|
Net
(loss)/profit
|
(1,379,139)
|
405,799
|
|
|
|
|
|
|
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)
|
1,705,310
|
186,410
|
|
|
|
Total
comprehensive income for the period
|
326,171
|
592,209
|
|
|
|
|
|
|
(Loss)/earnings
per share
|
|
|
Basic
|
(0.02)
|
0.01
|
Diluted
|
(0.02)
|
0.01
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Financial Position (unaudited) in
Canadian Dollars
|
As at March 31st,
2018
|
|
|
|
|
Mar
31st
|
Dec
31st
|
|
2018
|
2017
|
|
$
|
$
|
|
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
Intangible
assets
|
1,468,309
|
1,475,016
|
Property, plant &
equipment
|
30,433,169
|
29,338,663
|
Deferred tax
asset
|
1,723,042
|
1,292,441
|
|
|
|
Total non-current
assets
|
33,624,520
|
32,106,120
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Inventories
|
11,736,691
|
10,961,596
|
Trade
receivables
|
5,056,515
|
4,637,011
|
Amounts owing from
group undertakings
|
5,921,676
|
8,704,381
|
Prepayments, deposits
& other receivables
|
2,751,908
|
2,138,954
|
Cash
|
6,843,061
|
3,564,624
|
|
|
|
Total current
assets
|
32,309,851
|
30,006,566
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Trade
payables
|
1,943,514
|
1,271,903
|
Amounts owing to
group undertakings
|
5,252,125
|
3,701,225
|
Other payables and
accruals
|
5,848,086
|
7,204,708
|
Borrowings
|
22,789,966
|
20,292,764
|
Provisions
|
122,730
|
173,339
|
|
|
|
Total current
liabilities
|
35,956,421
|
32,643,939
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
Borrowings
|
3,325,798
|
3,146,100
|
Provisions
|
54,266
|
50,932
|
|
|
|
Total non-current
liabilities
|
3,380,064
|
3,197,032
|
|
|
|
NET
ASSETS
|
26,597,886
|
26,271,715
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
37,096,192
|
37,096,192
|
Accumulated
deficit
|
(12,744,281)
|
(11,365,142)
|
Foreign currency
translation reserve
|
2,245,975
|
540,665
|
|
|
|
TOTAL
EQUITY
|
26,597,886
|
26,271,715
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Changes in Equity (unaudited) in Canadian
Dollars
|
Quarter Ended
March 31st, 2018
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
Currency
|
|
|
Share
|
|
Translation
|
Total
|
|
Capital
|
Deficit
|
Reserve
|
Equity
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1st,
2017
|
37,096,192
|
(10,528,225)
|
(259,137)
|
26,308,830
|
|
|
|
|
|
Total comprehensive
income for the period
|
-
|
405,799
|
186,410
|
592,209
|
|
|
|
|
|
|
|
|
|
|
At March 31st,
2017
|
37,096,192
|
(10,122,426)
|
(72,727)
|
26,901,039
|
|
|
|
|
|
Total comprehensive
(loss)/income for the period
|
-
|
(1,242,716)
|
613,392
|
(629,324)
|
|
|
|
|
|
|
|
|
|
|
At December 31st,
2017
|
37,096,192
|
(11,365,142)
|
540,665
|
26,271,715
|
|
|
|
|
|
Total comprehensive
(loss)/income for the period
|
-
|
(1,379,139)
|
1,705,310
|
326,171
|
|
|
|
|
|
|
|
|
|
|
At March 31st,
2018
|
37,096,192
|
(12,744,281)
|
2,245,975
|
26,597,886
|
DYNEX POWER
INC.
|
Interim Condensed
Consolidated Statement of Cash Flows (unaudited) in Canadian
Dollars
|
Quarter Ended
March 31st, 2018
|
|
|
|
|
3
months
|
3
months
|
|
Mar
31st
|
Mar
31st
|
|
2018
|
2017
|
|
$
|
$
|
CASH FLOW FROM
OPERATING ACTIVITIES
|
|
|
(Loss)/profit before
tax
|
(1,682,118)
|
545,325
|
Finance costs
recognised in (loss)/profit before tax
|
211,857
|
140,594
|
Investment income
recognised in (loss)/profit before tax
|
-
|
658
|
Amortization of
intangible assets
|
100,368
|
51,881
|
Depreciation of
property, plant & equipment
|
1,184,515
|
1,139,318
|
Provision for slow
moving and obsolete inventory
|
119,273
|
(1,464,406)
|
Non cash movement in
provisions
|
-
|
330,120
|
Movements in working
capital
|
2,318,593
|
(654,479)
|
Income taxes
paid
|
(33,412)
|
(32,329)
|
|
|
|
Net cash generated
by operating activities
|
2,219,076
|
56,682
|
|
|
|
CASH FLOW FROM
INVESTING ACTIVITIES
|
|
|
Payments for
property, plant & equipment
|
(381,894)
|
(511,455)
|
Interest
received
|
-
|
(658)
|
|
|
|
Net cash used in
investing activities
|
(381,894)
|
(512,113)
|
|
|
|
CASH FLOW FROM
FINANCING ACTIVITIES
|
|
|
Proceeds from
borrowings
|
2,313,327
|
1,185,202
|
Repayments of
borrowings
|
(1,202,198)
|
(969,053)
|
Interest
paid
|
(4,518)
|
(71,478)
|
Payments for other
finance costs
|
-
|
(1,236)
|
|
|
|
Net cash generated
by financing activities
|
1,106,611
|
143,435
|
|
|
|
NET
INCREASE/(DECREASE) IN CASH
|
2,943,793
|
(311,996)
|
|
|
|
Cash at beginning of
period
|
3,564,626
|
898,855
|
|
|
|
Effect of foreign
currency translation on cash
|
334,642
|
3,726
|
|
|
|
CASH AT END OF
PERIOD
|
6,843,061
|
590,585
|
SOURCE Dynex Power Inc.