Year Characterized by Slow Start and Difficulties in New Product Development Strong Order Book Supports 2014 Forecast of Revenue Growth and Return to Profitability
Listing: TSX Venture Exchange
Symbol: DNX
LINCOLN, England, April 28, 2014 /CNW/ - Dynex Power Inc. (TSXV: DNX), a leading, high power semiconductor company, today announced its financial results for the year ended December 31st, 2013.
Summary financial information for the twelve months ended December 31st, 2013 is as follows:
Dollars (000's) | Dec. 31, 2013 | Dec. 31, 2012 |
Revenue Gross profit Expenses Profit before tax Income tax recovery/(expense) Net profit Common shares outstanding ¹ - diluted Earnings per share - diluted |
39,234 1,945 (5,339) (3,394) 984 (2,410) 80,509,047 $(0.03) |
39,615 6,732 (5,499) 1,233 (167) 1,066 80,526,550 $0.01 |
¹ Weighted average for the period
Revenue for the year of $39.2 million was 1% lower than in the preceding year. Significant increases in revenue from power assemblies and integrated circuits and smaller increases in bipolar discrete products and services were offset by a reduction in power module revenue. Revenue for the Bipolar Discrete Product Group, the Company's largest single product group, grew by 5%, and accounted for 49% of total revenue. Revenue for the Power Module Product Group decreased by 45% from the record level recorded last year. This product group accounted for 21% of total revenues. Revenue for the Power Assemblies Product Group increased by 92%, establishing a new record for this product group, and accounted for 20% of total revenue. Revenue for Integrated Circuits increased nearly fourfold over the preceding year and accounted for 5% of total revenue; but with few remaining stocks of the main products, this level of revenue will not be maintained in the future. Revenue from Services, which relates to advice and assistance provided primarily to CSR Times Electric, increased by 18% and accounted for 5% of total revenue.
The gross margin in 2013 was 5.0%, compared to 17.0% last year. This figure includes the non-cash inventory write off and provision taken in the fourth quarter, relating to a fall-off in yields on new products. Excluding this charge, the gross margin would have been approximately 10.7%. This is below the range of gross profit that management normally expects and reflects the low level of IGBT sales, which is a high fixed cost business, delays in timing of orders from European bipolar customers and the very competitive market conditions.
Expenses were kept under tight control for the year, declining from $5.5 million last year to $5.3 million in 2013. Expenses in 2013 represented 13.9% of revenue, compared to 13.6% last year. Excluding the cost of research and development, which management regards as investment in the future of the business, expenses fell from 10.7% of revenue in 2012 to 10.3% in 2013.
Dynex recorded a 2013 loss before tax of $3.4 million, compared to a profit before tax of $1.2 million in 2012. The reduction reflected the reduction in gross profit referred to above, in part attributable to the Q4 write off and provision. As a result of the loss before tax and a reduction in UK statutory tax rates, the Company was able to release $984,000 from its tax provision, leaving a loss after tax of $2.4 million compared to a profit after tax of $1.1 million in the preceding year.
New orders received in 2013 totalled $45.3 million, resulting in a book to bill ratio of 1.2 times. The order book rose 50% from $20.4 million at the end of 2012 to $30.5 million at the end of 2013. Approximately one quarter of this increase results from a weakening in the value of the Canadian Dollar against Sterling. The order book at the end of 2013 represented 32 weeks of sales in a normalized market environment.
Dr. Paul Taylor, President and Chief Executive Officer commented, "The past year proved to be a challenging one, resulting in weak financial performance. Revenue was similar to the preceding year, but profits were adversely affected by the one-off costs associated with the ramp up of new IGBT products for Chinese rail applications, by customer reschedules and price erosion in the aftermath of six years of European economic uncertainty and by the inventory write off and provision in the fourth quarter. However, management remains confident in the medium and long term future of the business, attributable in part to our strong order book and pent-up demand in Europe for our products. CSR Times Electric continues to provide tangible support to the Company. Specifically, since the year-end, CSR Times Electric has provided a $5.5 million loan to the Company, enabling Dynex to purchase new manufacturing equipment that will provide better process control capability and increased capacity in power modules. CSR Times Electric has also signed a new R&D contract with Dynex to provide continuing support to its R&D activities, and a Technical Support Agreement that will provide Dynex with a continuing revenue stream. Both agreements included advance payments to Dynex".
Bob Lockwood, Chief Financial Officer commented, "Dynex's financial performance in 2013 was extremely disappointing: a shortage of orders and push back in delivery schedules by customers in the first part of the year followed by a fall in yields and an inventory write off and provision in the last quarter resulted in a loss for the year. January of 2014 remained weak, but since then stronger orders from our parent company and a recovery in yields has supported a return to break-even in February and March. Management expects revenue growth and a return to profitability for the year as a whole. Subsequent to year-end, Dynex's UK subsidiary has secured support of approximately $1.8 million from the UK Government's Regional Growth Fund, linked to safeguarding existing jobs and creating 27 new positions over the next five years at the Company's R&D Centre in Lincoln, England."
Mr Li, Chairman of Dynex and General Manager of CSR Times Electric concluded, "2013 has not been a good year for the shareholders of Dynex. But I have confidence that through their efforts our management team will return our business back to normal in 2014 and I remain confident in the medium and long term future of the business."
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, 2012 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; the worldwide demand for and supply of silicon; 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, 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. Our 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. Dynex is majority owned by Zhuzhou CSR Times Electric Co., Ltd.
Zhuzhou CSR 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. CSR 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, CSR 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.dynexsemi.com.
Further information on CSR 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 Comprehensive Income in Canadian Dollars
Year Ended December 31st, 2013
2013 | 2012 | |
$ | $ | |
Revenue | 39,233,990 | 39,614,604 |
Cost of sales | (37,288,693) | (32,882,715) |
Gross profit | 1,945,297 | 6,731,889 |
Other income | 72,003 | 78,918 |
Sales and marketing expenses | (920,737) | (850,212) |
Administration expenses | (2,798,394) | (2,963,990) |
Research and development expenses | (1,293,518) | (1,274,940) |
Finance costs | (515,515) | (357,959) |
Other gains and (losses) | 116,893 | (131,084) |
Profit/(loss) before tax | (3,393,971) | 1,232,622 |
Income tax income/(expense) | 984,227 | (167,086) |
Net profit/(loss) | (2,409,744) | 1,065,536 |
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) | 3,175,197 | 562,770 |
Total Comprehensive Income for the year | 765,453 | 1,628,306 |
Earnings/(loss) per share | ||
Basic | (0.03) | 0.01 |
Diluted | (0.03) | 0.01 |
DYNEX POWER INC.
Consolidated Statement of Financial Position in Canadian Dollars
Year Ended December 31st, 2013
2013 | 2012 | |||
$ | $ | |||
NON-CURRENT ASSETS | ||||
Intangible assets | 671,297 | - | ||
Property, plant and equipment | 35,489,047 | 33,706,294 | ||
Derivative financial instruments | - | 2,228 | ||
Total non-current assets | 36,160,344 | 33,708,522 | ||
CURRENT ASSETS | ||||
Inventories | 12,285,323 | 10,954,012 | ||
Trade receivables | 10,239,680 | 5,297,728 | ||
Amounts owing from parent company | 2,487,898 | 2,776,110 | ||
Prepayments, deposits and other receivables | 589,109 | 255,847 | ||
Tax recoverable | 139,320 | 124,292 | ||
Cash | 775,071 | 2,206,430 | ||
Total current assets | 26,516,401 | 21,614,419 | ||
CURRENT LIABILITIES | ||||
Trade payables | 2,788,598 | 1,151,054 | ||
Amounts owing to parent company | 1,504,288 | 267,349 | ||
Other payables and accruals | 2,384,332 | 3,171,809 | ||
Borrowings | 10,450,622 | 6,547,631 | ||
Provisions | 17,620 | 237,548 | ||
Total current liabilities | 17,145,460 | 11,375,391 | ||
NON-CURRENT LIABILITIES | ||||
Borrowings | 7,160,584 | 5,512,391 | ||
Provisions | 236,970 | 212,804 | ||
Derivative financial instruments | 23,288 | - | ||
Deferred tax liabilities | 1,062,486 | 1,939,851 | ||
Total non-current liabilities | 8,483,328 | 7,665,046 | ||
NET ASSETS | 37,047,957 | 36,282,504 | ||
EQUITY | ||||
Share capital | 37,096,192 | 37,096,192 | ||
(Accumulated deficit)/retained profit | (1,868,823) | 540,921 | ||
Exchange fluctuation reserve | 1,820,588 | (1,354,609) | ||
TOTAL EQUITY | 37,047,957 | 36,282,504 |
DYNEX POWER INC.
Consolidated Statement of Changes in Equity in Canadian Dollars
Year Ended December 31st, 2013
Foreign | ||||
Share | Retained | Currency | Total | |
Capital | Profit/ | Translation | Equity | |
(Deficit) | Reserve | |||
$ | $ | $ | $ | |
At January 1st, 2012 | 37,096,192 | (524,615) | (1,917,379) | 34,654,198 |
Total comprehensive income for the period | - | 1,065,536 | 562,770 | 1,628,306 |
At December 31st, 2012 | 37,096,192 | 540,921 | (1,354,609) | 36,282,504 |
Total comprehensive income for the period | - | (2,409,744) | 3,175,197 | 765,453 |
At December 31st, 2013 | 37,096,192 | (1,868,823) | 1,820,588 | 37,047,957 |
DYNEX POWER INC.
Consolidated Statement of Cash Flows in Canadian Dollars
Year Ended December 31st, 2013
2013 | 2012 | |||
$ | $ | |||
CASH FLOW FROM OPERATING ACTIVITIES | ||||
(Loss)/profit before tax | (3,393,971) | 1,232,622 | ||
Finance costs recognised in profit before tax | 515,515 | 357,959 | ||
Investment income recognised in profit before tax | (174) | (1,091) | ||
Non cash interest on derivative financial instrument | - | (4,850) | ||
Amortization of intangible assets | 12,361 | - | ||
Depreciation of property, plant and equipment | 3,515,541 | 2,968,982 | ||
Loss on disposal of property, plant and equipment | 19,955 | 24,070 | ||
Provision for slow moving and obsolete inventory | 947,311 | (272,587) | ||
Non cash movement in provisions | (51,258) | - | ||
Movements in working capital | (3,640,327) | (1,625,179) | ||
Income taxes (paid)/received | (3,919) | 174,208 | ||
Net cash generated by operating activities | (2,078,966) | 2,854,134 | ||
CASH FLOW FROM INVESTING ACTIVITIES | ||||
Payments for property, plant & equipment | (2,872,469) | (5,440,790) | ||
Interest received | 174 | 1,091 | ||
Net cash used in investing activities | (2,872,295) | (5,439,699) | ||
CASH FLOW FROM FINANCING ACTIVITIES | ||||
Proceeds from issue of equity shares | - | |||
Payment for share issue costs | - | |||
Proceeds from borrowings | 10,965,878 | 2,244,134 | ||
Repayments of borrowings | (6,901,437) | (123,673) | ||
Interest paid | (379,640) | (317,679) | ||
Payments for other finance costs | (96,833) | (30,359) | ||
Net cash generated by financing activities | 3,587,968 | 1,772,423 | ||
NET DECREASE IN CASH | (1,363,293) | (813,142) | ||
Cash at beginning of year | 2,206,430 | 3,028,599 | ||
Effect of foreign currency translation on cash | (68,066) | (9,027) | ||
CASH AT END OF YEAR | 775,071 | 2,206,430 |
SOURCE: Dynex Power Inc.
Dr. Paul Taylor,
President and Chief Executive Officer
or
Bob Lockwood
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: +44 1522 500 500
Email: [email protected]
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