Dynex Power Announces Third Quarter Results for 2008 - Sales and Order Book Remain Strong

LINCOLN, England, Nov. 20, 2008 (Canada NewsWire via COMTEX) -- DNXWF | Quote | Chart | News | PowerRating -- Listing: TSX Venture Exchange

Symbol: DNX

Dynex Power Inc., a leading specialist high power semiconductor company, today announced results for the third quarter of 2008.

Summary financial information in Canadian dollars for the three and nine months ended September 30th, 2008 is as follows:

<< ------------------------------------------------------------------------- ------------------------------------------------------------------------- Sept 30, Sept 30, YTD YTD 2008 2007 2008 2007 $'000 $'000 $'000 $'000 ------------------------------------------------------------------------- Revenue 9,349 8,706 27,206 22,499 Gross Margin 2,146 2,220 8,628 4,903 Net Earnings 395 915 3,857 1,066 No. of Common Shares-average 39,748,782 33,343,908 36,147,746 33,303,066 Earnings per Share in Dollars-diluted 0.01 0.03 0.10 0.03 ------------------------------------------------------------------------- ------------------------------------------------------------------------- The Company's revenue in the third quarter was 7% ahead of that reported in the corresponding quarter of last year with strong growth reported in the Power Modules, Power Electronic Assemblies and Bipolar Discrete Units product groups whilst revenue for Integrated Circuits declined steeply from the high figure reported last year. Revenue for the year to date is 21% ahead of the same period last year, with growth in all four product groups. As expected, the less favourable mix of sales resulted in a gross margin of 23.0% in the quarter compared with 25.5% in the same quarter last year. The business reported earnings of $395,000 in the quarter and $3.9 million for the year to date. Last year the Company recorded earnings of $915,000 for the quarter and $1.1 million for the year to date. Dr Paul Taylor, President and Chief Executive Officer commented that "As we expected, our gross margins and net profits are lower in the third quarter than they were in the first two quarters of the year. Our order book remains at a record level and the outlook is for continuing growth in the power business units, but we expect sales in Integrated Circuits to be lower until at least the middle of 2009". Commenting on the recent corporate transaction, Dr Taylor added "The acquisition of 75% of the Company's equity by Zhuzhou CSR Times Electric Co., Ltd., which was completed at the end of October, opens a new chapter in the Company's history. We look forward to the opportunities this will give us to strengthen our business, particularly in power modules, and to co-operate with CSR Times Electric." Bob Lockwood, Chief Financial Officer, stated that "The reduction in sales of Integrated Circuits has led to a lower gross profit margin in the third quarter and this is expected to continue until new Integrated Circuit die stocks become available sometime in the middle of next year. In addition, one-off costs related to the recently completed acquisition of 75% of the Company's equity by CSR Times Electric have increased our overhead costs substantially in the quarter. Despite these changes, and the steep increase in electricity costs which will impact on the fourth quarter results, we remain on track and confident that revenue and earnings for 2008 will be significantly better than those reported in 2007." Mr Lu Penghu, the President of CSR Times Electric and the newly appointed Chairman of Dynex said "It is clear that Dynex has been growing its position in the world market and strengthening its financial performance over recent years. We are delighted to have completed our acquisition of 75% of Dynex's common shares at such a point in its history and I look forward to working with Dynex's existing directors and employees to ensure that the Company continues to grow and fulfil its potential." 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 Company's management discussion and analysis for the quarter ended September 30th, 2008 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 the leading train-borne electrical system provider and integrator for the railway industry in China. It is engaged in developing, manufacturing and selling train power converters, auxiliary power supply equipment and control systems for trains for urban rail systems. In addition, CSR Times Electric designs, manufactures and sells electrical components including power semiconductor devices. 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. DYNEX POWER INC. Consolidated Statements of Earnings and Deficit (Unaudited) ----------------------------------------------------------- Quarters and Years To Date Ended September 30th, 2008 and 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 3 months 3 months YTD YTD Sept 30th Sept 30th Sept 30th Sept 30th 2008 2007 2008 2007 -------------------------------------------------------- Revenue $ 9,348,952 $ 8,706,374 $ 27,206,284 $ 22,499,302 Cost of sales 7,203,244 6,486,247 18,578,186 17,596,426 ------------------------------------------------------------------------- Gross margin 2,145,708 2,220,127 8,628,098 4,902,876 ------------------------------------------------------------------------- Expenses General and administration 1,261,504 797,642 3,230,102 2,099,998 Sales and marketing 230,918 211,082 724,061 790,568 Research and development 216,176 175,062 635,152 477,095 Interest expense 135,587 218,611 499,892 647,766 ------------------------------------------------------------------------- 1,844,185 1,402,397 5,089,207 4,015,427 ------------------------------------------------------------------------- Earnings before other income 301,523 817,730 3,538,891 887,449 ------------------------------------------------------------------------- Other income Interest and other income 86,470 94,041 178,615 231,221 Foreign exchange gain (loss) 7,116 3,478 139,080 (52,830) ------------------------------------------------------------------------- 93,586 97,519 317,695 178,391 ------------------------------------------------------------------------- Income taxes - - - - NET EARNINGS 395,109 915,249 3,856,586 1,065,840 DEFICIT, BEGINNING OF PERIOD, as originally stated (8,269,350) (13,751,739) (11,730,827) (14,098,044) Adjustment to deficit, beginning of period - - - 195,714 ------------------------------------------------------------------------- DEFICIT, END OF PERIOD $ (7,874,241) $(12,836,490) $ (7,874,241) $(12,836,490) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share Basic $ 0.01 $ 0.03 $ 0.11 $ 0.03 Diluted $ 0.01 $ 0.03 $ 0.10 $ 0.03 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares Basic 39,748,782 33,343,908 36,147,746 33,303,066 Diluted 44,271,047 33,778,444 40,553,647 33,676,678 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Statements of Comprehensive Income (Unaudited) ----------------------------------------------------------- Quarters and Year To Date Ended September 30th, 2008 and 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 3 months 3 months YTD YTD Sept 30th Sept 30th Sept 30th Sept 30th 2008 2007 2008 2007 -------------------------------------------------------- Net earnings $ 395,109 $ 915,249 $ 3,856,586 $ 1,065,840 ------------------------------------------------------------------------- Other Comprehensive loss, net of tax: Unrealized loss on translating financial statements of self-sustaining foreign operations (390,137) (45,271) (291,322) (23,231) ------------------------------------------------------------------------- OTHER COMPREHENSIVE LOSS (390,137) (45,271) (291,322) (23,231) ------------------------------------------------------------------------- COMPREHENSIVE INCOME $ 4,972 $ 869,978 $ 3,565,264 $ 1,042,609 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Accumulated Other Comprehensive Loss (Unaudited) --------------------------------------------------------------- As At September 30th, 2008 and December 31st, 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Sept 30th Dec 31st 2008 2007 --------------------------- Accumulated other comprehensive loss, beginning of period $ (760,787) $ (563,234) Other comprehensive loss (291,322) (197,553) ------------------------------------------------------------------------- ACCUMULATED OTHER COMPREHENSIVE LOSS $ (1,052,109) $ (760,787) ------------------------------------------------------------------------- ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Balance Sheets (Unaudited) --------------------------------------- As At September 30th, 2008 and December 31st, 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Sept 30th Dec 31st 2008 2007 --------------------------- CURRENT ASSETS Cash $ 199,975 $ 140,867 Accounts receivable 5,644,404 5,743,050 Inventories 8,364,120 7,521,573 Prepaid expenses and deposits 636,307 597,805 ------------------------------------------------------------------------- 14,844,806 14,003,295 PROPERTY, PLANT AND EQUIPMENT 3,358,733 1,083,540 ------------------------------------------------------------------------- $ 18,203,539 $ 15,086,835 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable and accrued liabilities $ 5,565,768 $ 4,346,095 Short-term loan 2,554,202 3,814,585 Current portion of long-term debt 640,236 279,768 Current portion of deferred revenue 146,567 151,942 ------------------------------------------------------------------------- 8,906,773 8,592,390 LONG-TERM DEBT 1,942,548 3,446,595 LONG-TERM DEFERRED REVENUE 1,245,820 1,405,465 ------------------------------------------------------------------------- 12,095,141 13,444,450 SHAREHOLDERS' EQUITY Share capital 15,034,748 14,133,999 Deficit (7,874,241) (11,730,827) Accumulated other comprehensive loss (1,052,109) (760,787) ------------------------------------------------------------------------- (8,926,350) (12,491,614) ------------------------------------------------------------------------- 6,108,398 1,642,385 ------------------------------------------------------------------------- $ 18,203,539 $ 15,086,835 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DYNEX POWER INC. Consolidated Statements of Cash Flows (Unaudited) ------------------------------------------------- Quarters and Years To Date Ended September 30th, 2008 and 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 3 months 3 months YTD YTD Sept 30th Sept 30th Sept 30th Sept 30th 2008 2007 2008 2007 -------------------------------------------------------- OPERATING Net earnings $ 395,109 $ 915,249 $ 3,856,586 $ 1,065,840 Items not affecting cash --------------- Amortization 87,832 30,583 207,046 154,617 Gain on disposal of property, plant and equipment (37,895) (40,778) (115,422) (139,922) Shares and options issued for services 6,890 2,453 20,625 47,771 Non-cash interest 17,454 44,143 70,984 145,848 Non-cash grant income - - (2,355) (28,660) Provision for inventory obsolescence 186,287 354,628 463,787 504,693 Changes in non- cash operating working capital 909,840 (1,930,854) (416,922) (2,559,201) ------------------------------------------------------------------------- 1,565,517 (624,576) 4,084,329 (809,014) ------------------------------------------------------------------------- FINANCING Shares issued for cash - 762 34,500 762 Increase in loans from a director - (1,098,138) - - (Decrease) increase in short-term loan (259,035) 1,844,404 (1,171,755) 1,361,387 Decrease in long-term debt (108,941) (108,900) (265,473) (183,887) ------------------------------------------------------------------------- (367,976) 638,128 (1,402,728) 1,178,262 ------------------------------------------------------------------------- INVESTING Proceeds of disposal of property, plant and equipment - - 401 12,518 Purchase of property, plant and equipment (1,228,181) (128,633) (2,625,016) (474,519) ------------------------------------------------------------------------- (1,228,181) (128,633) (2,624,615) (462,001) ------------------------------------------------------------------------- NET (DECREASE) INCREASE IN CASH (30,640) (115,081) 56,986 (92,753) Effect of foreign currency translation on cash 30,646 39,937 2,122 40,583 Cash, beginning of period 199,969 380,016 140,867 357,042 ------------------------------------------------------------------------- CASH, END OF PERIOD $ 199,975 $ 304,872 $ 199,975 $ 304,872 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>

%SEDAR: 00010667E

SOURCE: DYNEX POWER INC.

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

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