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Third Quarter Results Impacted by Continuing Uncertainty in World Markets

Monday, November 12, 2012 4:01 PM

Management Remains Confident about Medium and Long Term Prospects

Listing: TSX Venture Exchange
Symbol: DNX

LINCOLN, England, Nov. 12, 2012 /CNW/ - Dynex Power Inc., a leading, high power semiconductor company, today announced its financial results for the third quarter and nine months ended September 30th, 2012.

Summary financial information for the three and nine months ended September 30th, 2012 is as follows:

Canadian Dollars (000's)   Sept 30, 2012   Sept 30, 2011   YTD 2012   YTD 2011
Revenue   9,307   9,860   29,685   26,449
Gross Profit   1,462   2,976   5,665   6,407
Other Income, Expenses and Costs   (1,296)   (1,312)   (4,240)   (3,677)
Profit before Tax   166   1,665   1,425   2,729
Income Tax Expense   (57)   (436)   (415)   (744)
Net Profit   109   1,229   1,010   1,985
Common shares outstanding ¹ - diluted   80,509,047   80,576,081   80,509,047   80,579,756
Earnings per share - diluted   $0.00   $0.02   $0.01   $0.02
¹ Weighted average for the period                

The results were in line with management's expectations, as outlined in the Company's August 14th, 2012 announcement of its second quarter results. Management expected the second half of the year to be challenging, with revenue growth unlikely and stated that emphasis would be placed on controlling costs whilst preparing for revenue to rebound in 2013. Third quarter results have borne out this caution.

In line with this expectation, third quarter revenue of $9.3 million was 6% lower than the corresponding quarter of last year. The decrease was the result of significantly lower sales of power electronic assemblies and a small decrease in the sales of integrated circuits, partially offset by small increases in sales of bipolar discrete, IGBT modules and die products and service revenue.

On a year to date basis, revenue of $29.7 million was 12% higher than in the same nine-month period last year. The change comprised a significant increase in sales of power modules and die and smaller increases in bipolar discrete and services revenue partially offset by reductions in revenue for integrated circuits and power electronic assemblies.

The third quarter gross margin of 15.7% was lower than the 30.2% reported in the corresponding quarter of last year. The gross margin in the corresponding quarter of last year included a one-off credit without which gross margin would have been around 24.3%. For the year to date, the gross margin was 19.1% compared to 24.2% in the corresponding period last year.

Other income, expenses and costs represented 13.9% of revenue in the third quarter of 2012 and 14.3% for the year to date compared with 13.3% and 13.9% respectively in the corresponding periods of last year.

As a consequence of these changes, the Company generated profit before tax in the third quarter of 2012 of $166,000, compared to $1.7 million in the corresponding quarter of last year and net profit in the quarter of $109,000 compared with $1.2 million in the corresponding quarter of last year. For the year to date, profit before tax was $1.4 million with net profit of $1.0 million compared to $2.7 million and $2.0 million in the corresponding period of last year. Earnings per share for the year to date of $0.01 were below the $0.02 in the first nine months of last year.

At the end of the third quarter, the Company's order book stood at $19.7 million, approximately 1% lower than at the end of the second quarter. This was the same level as it had been at the end of 2011. Management is cautious about the outlook for the fourth quarter of 2012 and the first quarter of 2013 but remains confident that there will be growth in revenue in 2013 compared with 2012.

Dr. Paul Taylor, President and Chief Executive Officer commented, "Our financial performance continues to be heavily impacted by the ongoing troubled markets around the world, which is causing our customers to exercise extreme caution in their buying programs. European markets particularly have been constrained and the China rail expansion is only slowly regaining its growth. Our long term future remains strong. However, until the global economy becomes more settled, our customers will continue to operate cautiously."

Dr. Taylor continued, "We are fortunate to have the support from CSR Times Electric that enables us to continue with the investment that will ensure we are well placed to take advantage when these markets do recover."

Bob Lockwood, Chief Financial Officer commented, "While we expected the third quarter to be constrained, we are not at all pleased with the result. We remain cautious about the fourth quarter of this year and the first quarter of next year. We are unlikely to see revenue growth in the short term. As promised, we have kept our expenditure under control and we remain positive on the medium and longer term prospects for the Company."

Li Donglin, the Chairman of Dynex said, "These results reflect the difficult marketplace in which Dynex currently operates. We have no doubt that Dynex is well positioned for future growth in China and other global markets once the current difficulties in world markets are overcome. The future of Dynex remains very attractive."

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.

Condensed Consolidated Statement of Comprehensive Income (unaudited) in Canadian Dollars
Quarter Ended September 30th, 2012

    3 months   3 months   YTD   YTD
    Sept 30th   Sept 30th   Sept 30th   Sept 30th
    2012   2011   2012   2011
    $   $   $   $
Revenue   9,306,519   9,859,538   29,684,501   26,448,856
Cost of sales   (7,844,341)   (6,883,060)   (24,019,942)   (20,042,294)
Gross profit   1,462,178   2,976,478   5,664,559   6,406,562
Other income   28,320   19,708   60,012   63,450
Sales and marketing expenses   (218,153)   (224,986)   (653,822)   (666,708)
Administration expenses   (677,611)   (524,298)   (2,366,070)   (1,933,757)
Research and development expenses   (206,158)   (495,608)   (814,486)   (939,661)
Finance costs   (80,055)   (110,920)   (253,493)   (149,464)
Other gains and (losses)   (142,046)   24,562   (212,130)   (51,045)
Profit before Tax   166,475   1,664,936   1,424,570   2,729,377
Income tax expense   (57,299)   (435,648)   (414,513)   (744,263)
Net Profit   109,176   1,229,288   1,010,057   1,985,114
Other Comprehensive Income/ (Loss)                
Exchange differences on translation of foreign operations (net of tax of $nil)   (203,786)   1,474,646   235,518   1,342,870
Total Comprehensive Income/(Loss) for the period   (94,610)   2,703,934   1,245,575   3,327,984
Earnings per share                
Basic   0.00   0.02   0.01   0.02
Diluted   0.00   0.02   0.01   0.02


Condensed Consolidated Statement of Financial Position (unaudited) in Canadian Dollars
Quarter ended September 30th, 2012

    Sept 30th   Dec 31st
    2012   2011
    $   $
Property, plant & equipment   33,476,262   30,623,600
Inventories   11,774,219   10,890,917
Trade receivables   4,361,603   4,275,915
Amounts owing from parent company   4,156,331   2,369,749
Prepayments, deposits & other receivables   1,090,954   458,665
Tax recoverable   -   298,301
Cash    915,614   3,028,599
Total current assets   22,298,721   21,322,146
Trade payables   1,565,569   1,142,246
Amounts owing to parent company   329,627   312,284
Other payables and accruals   3,460,331   3,946,048
Borrowings   5,891,487   514,102
Provisions   251,094   186,077
Total current liabilities   11,498,108   6,100,757
NET CURRENT ASSETS   10,800,613   15,221,389
Borrowings   6,125,396   9,238,920
Provisions   206,003   212,704
Deferred tax liabilities   2,045,703   1,739,167
Total non-current liabilities   8,377,102   11,190,791
NET ASSETS   35,899,773   34,654,198
Share capital   37,096,192   37,096,192
Retained profit/(accumulated deficit)   485,442   (524,615)
Exchange fluctuation reserve   (1,681,861)   (1,917,379)
    35,899,773   34,654,198


Condensed Consolidated Statement of Changes in Equity (unaudited) in Canadian Dollars
Quarter Ended September 30th, 2012

    Share   Retained   Currency   Total
    Capital   Profit/    Translation   Equity
        (Deficit)   Reserve    
    $   $   $   $
At January 1st, 2011   37,096,192   (3,234,161)   (2,419,387)   31,442,644
Total comprehensive income for the period   -   1,985,114   1,342,870   3,327,984
At September 30th, 2011   37,096,192   (1,249,047)   (1,076,517)   34,770,628
Total comprehensive income for the period   -   724,432   (840,862)   (116,430)
At December 31st, 2011   37,096,192   (524,615)   (1,917,379)   34,654,198
Total comprehensive income for the period   -   1,010,057   235,518   1,245,575
At September 30th, 2012   37,096,192   485,442   (1,681,861)   35,899,773


Condensed Consolidated Statement of Cash Flows (unaudited) in Canadian Dollars
Quarter Ended September 30th, 2012

    YTD   YTD
    Sept 30th   Sept 30th
    2012   2011
    $   $
Profit before tax   1,424,570   2,729,377
Finance costs recognised in profit or loss   253,493   149,464
Investment income recognised in profit or loss   (373)   (682)
Depreciation of property, plant & equipment   2,157,369   1,706,464
(Gain)/loss on disposal of property, plant & equipment   24,070   (25,460)
Provision for slow moving and obsolete inventory   (350,143)   (486,605)
Movements in working capital   (2,903,101)   (5,635,838)
Cash generated by/(used in) operating activities before income taxes   605,885   (1,563,280)
Income taxes received/(paid)   174,868   (74,938)
Net cash generated by/(used in) operating activities   780,753   (1,638,218)
Payments for property, plant & equipment   (4,822,781)   (9,563,705)
Proceeds on disposal of property, plant & equipment   -   25,460
Interest received   373   682
Net cash used in investing activities   (4,822,408)   (9,537,563)
Proceeds from borrowings   2,858,323   10,032,524
Repayments of borrowings   (665,316)   (741,017)
Interest paid   (222,455)   (55,026)
Payments for other finance costs   (30,359)   (71,744)
Net cash generated by financing activities   1,940,193   9,164,737
NET DECREASE IN CASH   (2,101,462)   (2,011,044)
Cash at beginning of period   3,028,599   3,094,626
Effect of foreign currency translation on cash    (11,523)   (25,570)
CASH AT END OF PERIOD   915,614   1,058,012



Dr. Paul Taylor     
President and Chief Executive Officer
Bob Lockwood
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: +44 1522 500 500
Email: investorrelations@dynexsemi.com

(Source: CNW )
(Source: Quotemedia)


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