Dynex Power Announces Year End Results for 2005
Lincoln, England, May 1st, 2006 – Dynex Power Inc., a leading, high power semiconductor company, today announced results for the year ended December 31st, 2005.
Summary financial information for the twelve months ended December 31st, 2005 is as follows:
Canadian Dollars (000's)Dec. 31, 2005Dec. 31, 2004
Common shares outstanding 1 - fully diluted26,949,65022,336,696
Earnings per share - fully diluted($0.07)($0.23)
1 Weighted average for the period
The Company’s performance was significantly better during 2005. The improvement is masked by an apparent decline in revenue. On the surface, reported 2005 revenues were down by 5%. This resulted from two factors. The first and major factor was the negative impact on revenues from the serious tightness in liquidity the Company suffered from the third quarter of 2004 through the second quarter of 2005 that the Company has previously reported. This factor compressed revenue in the third and fourth quarters of 2004 and half way through the second quarter of 2005. The second factor affecting revenue was the negative impact of the foreign exchange translation of the Company’s earnings because of the strengthening Canadian dollar.
The gross margin of $2.9 million was an increase of 23% over 2004, continuing the improvement established in 2004. The Net Loss of $1.8 million was 67% lower than in 2004, again continuing a trend established in 2004. The Net Loss for the year disguises a strong and promising result, with the business reporting a lower loss in each of the first three quarters and a profit in the fourth quarter.
The key performance factor was tight liquidity, due to an unexpected revenue collapse in the third quarter of 2004 the effect of which carried over into 2005. The situation occasioned the Company’s principal financier to reduce its credit facilities and forced the Company to restructure the business. The Company’s leadership was changed, and the operational focus shifted to more responsive customer service and reducing production cycle time to get orders out quicker. Following an injection of capital and an accommodation amongst its creditors in the first and second quarters of 2005, the Company’s operations significantly improved. The strong management disciplines resulted in each quarter improving over the previous quarter. This information has been released before, but the perspective of the financial performance for the whole year puts the situation in better context.
For purposes of understanding the trends mentioned, the key results for the fourth quarter are as follows:
Canadian dollars (000’s)Three-months ending
Dec. 31, 2005Three-months ending
Dec. 31, 2004
As regards current news, the recently announced $550,000 private placement was closed on April 24th, 2006. In addition, the Company is in the advanced stages of securing the services of a new principal financier, which should enhance the Company’s commercial operations.
Dr. Paul Taylor, President and Chief Executive Officer commented, “2005 was a year of steady recovery. As our supply chain gradually recovered we were able to report revenue growth, resulting in second half revenues exceeding those of the first half by more than 30%. The increasing revenue and continued tight control of costs increased gross margin each quarter. It was particularly gratifying to be able to record a profit in the fourth quarter.”
Bob Lockwood, Chief Financial Officer commented, “we have been able to carry through the recovery plan we established in the fourth quarter of 2004. The improvement in operating performance vindicates the tough actions taken at that time. Our backlog of orders and forecast new orders remains robust and we are forecasting increased revenue in 2006. We expect to report a net profit for the year. We intend to use the platform of better performance to replace our principal lender, and our discussions with new potential lenders are in an advanced stage.”
Dr. Taylor added, “next year will again be challenging: because of the timing of major orders in our power electronic and integrated circuits businesses. Revenue and net results in the first two quarters will be below those in the second half of 2005, but we expect to see a strong performance across all business segments in the second half of the year”.
David Banks, Chairman concluded, “while we expect that 2006 will have the same profile of a stronger second half as in 2005, we expect the year-on-year performance to be better. The Company should have improved operating results. The management team justified the confidence placed in them by the board, the staff, our customers, suppliers and shareholders. Their focus and hard work produced an excellent result, not only in better performance but also better expectations for the future.”
For more information:
Dr. Paul Taylor
President and Chief Executive Officer
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: +44 1522 500 500