Strong Q4 Returns Dynex to Profitability for the Year

May 22, 2016 by Jeff Shepard

Dynex Power Inc. announced revenue for the year ended December 31, 2015, of $46.5 million; 10% higher than in the preceding year. The increase was mainly as a result of a weakening of the Canadian Dollar against Sterling. In Sterling terms revenue had risen by approximately 3%. For the year, there was a strong increase in Sterling revenues from bipolar devices and services, but these increases were partially offset by the reduction in power assemblies and integrated circuit revenues.

The Group reported a gross profit of $4.7 million for the year equivalent to 10.1% of revenue compared to a gross loss 0f $441,000 last year following a contract cancellation and product return at the end of last year.

Expenses fell from $6.1 million in 2014 to $4.4 million in 2015. The decrease was mainly accounted for by increased support from CSR Times Electric and continuing strong support from the UK Government for research and development work and a switch from a foreign exchange loss of in 2014 to a foreign exchange gain in 2015. More modest savings were reported in sales and marketing and administrative costs.

Dynex recorded a profit before tax of $270,000 in 2015 compared to a loss before tax of $6.5 million in 2014 following the contract cancellation and product return at the end of last year. Without the contract cancellation, the Company would have reported a small profit before tax in 2014.

The Company provided $104,000 for tax, leaving a profit after tax of $166,000 compared to a loss after tax of $5.5 million in the preceding year. New orders received in 2015 totaled $39.2 million resulting in a book to bill ratio of 0.8 times. The order book fell from $16.2 million at the end of 2014 to $13.4 million at the end of 2015. The order book at the end of 2015 represented approximately 16 weeks of sales.

As disclosed on May 1, 2016, the Company is late in filing its financial statements, related management's discussion and Certificates of Filing for 2015. The delay occurred as a result of the Company facing increased demands for information and documentation from the auditor at a time when it is preparing to implement a new ERP system. There was also on-going discussion with the auditor on the valuation of certain assets. The Company has now provided the information and documents requested. The discussion on the valuation of certain assets has also been completed without there being a need for any change in asset values.

Dr. Paul Taylor, President and Chief Executive Officer commented, "This year has been a year of improvement for Dynex. The start of the year was affected by the adverse impact of the product cancellation late in the previous year and by certain technical issues with new products. Management took action to adjust Dynex's cost base by a redundancy exercise at the start of 2015 and quickly followed this by an adjustment in management organization and processes to give greater focus on quality, yield improvement and continuous improvement".

Bob Lockwood, Chief Financial Officer commented, "The cancellation of a major order for delivery in 2015, the technical issues with new products and the redundancy exercise referred to above by Paul Taylor had a major adverse impact on the first quarter of 2015. The Company was able to report a much reduced loss in the second quarter and a return to a modest profit in the third quarter. With continuing strong support from CSR Times Electric, the Company was able to make a much better profit in the fourth quarter which allowed us to return to profitability for the year. "

Mr Li, Chairman of Dynex and recently appointed General Manager of the CRRC Zhuzhou Institute Co., Ltd, the immediate parent company of CRRC Times Electric, commented "We are pleased to see this return to profitability for Dynex. Although the level of profit reported is very modest, it is clearly a move in the right direction and we look forward to further improvement in the level of profitability going forward."