Dynex Power Announces Year End Results for 2010
Lincoln, England, April 11th, 2011 – Dynex Power Inc., a leading, high power semiconductor company, today announced results for the year ended December 31st, 2010.
Summary financial information for the twelve months ended December 31st, 2010 is as follows:
As has been previously reported, Dynex’s priority for 2010 was the construction and commissioning of two new 6 inch IGBT wafer fabrication lines, which are replacing the old 4-inch line. The project will result in a tenfold increase in IGBT die capacity and will lay the foundation for the next phase of Dynex’s development. Good progress has been made on this project. The first line was installed and commissioned prior to the year-end and the second line is being ramped up with full capacity expected to be available this month. Revenue from the new lines is anticipated to be generated from late in the second quarter of 2011.
The decline in revenue of 9% in 2010 was attributable to the strength of the Canadian dollar. In Sterling terms, the UK operating business recorded 1% growth in revenue. Management were pleased with this modest level of growth in a year when there was disruption to production from the construction involved in the expansion programme as well as weaker economic conditions in Dynex’s high power semiconductor sector. The Bipolar Discrete Group, with growth of 4% in Sterling terms and the Power Electronic Assemblies, with growth of 33% in Sterling terms, both recorded all time record revenues in Sterling. Revenue for the Power Modules Product Group declined by 18% in Sterling terms compared to 2009 as a result of the disruption caused by the IGBT wafer fabrication expansion. The Integrated Circuits Product Group saw revenue fall by approximately two-thirds from last year. As has previously been announced, management no longer regard this as a core business.
The 2010 gross margin of 19.1% was below the 23.9% reported last year, with the decline primarily attributable to the impact of the IGBT wafer expansion programme. As had been predicted, the depreciation charge incurred during the year on the new lines and the costs of developing and proving the new 6 inch processes added over $1.1 million of costs to the business, before taking account of the disruption to other production processes caused by the construction work.
The Company reduced expenses by 15% compared to 2009. Approximately two thirds of this reduction was a result of the strength of the Canadian dollar, with the rest of the reduction coming from lower borrowing costs following the rights issue. Expenses now represent 13.6% of revenue, the lowest level ever for the Company.
As a result of these changes, the Company generated earnings before other income and income taxes of $1.96 million. This was a little over half the figure reported last year, with the decline in large part the result of the impact of the IGBT expansion project.
Despite the reduction in earnings before income tax, the Company incurred a higher tax charge in 2010 than in 2009. In 2009, brought forward tax losses had resulted in a reduced tax charge, but such tax losses were fully exhausted in 2009. As a result, net earnings declined from $3.41 million in 2009 to $1.47 million in 2010.
Weaker economic markets saw order in-take decline from $34.7 million last year to $23.3 million this year, resulting in a book to bill ratio of 0.64. As a result, the order book has fallen from $31.4 million at the end of 2009 to $16.8 million at the end of 2010. This represented 24 weeks of sales at the current revenue levels. The book to bill ratio has returned to above 1.0 for each of the first three months of 2011 and management believes this may represent the start of a return to a more robust market. As previously reported, management expects to see a return to growth in both revenue and net earnings in 2011.
Dr. Paul Taylor, President and Chief Executive Officer commented, “We predicted that 2010 would be a challenging year for us with a more difficult external market and the disruption and additional costs coming from installing two new 6 inch IGBT wafer fabrication lines, particularly as revenue would not be flowing from the new lines until 2011: and so it has proven. Against this background, it is pleasing to be able to report growth, albeit very modest, in Sterling revenue. The decline in gross margin and net earnings had both been expected. But in retrospect, I think 2010 will be remembered for the progress we have made on installing and commissioning the new lines and the platform this provides for the development of the business in the coming years. In the circumstances, we are pleased with the results we have achieved. We have also been able to work more closely with CSR Times Electric during 2010 to the mutual benefit of both parties. In particular, it is worth celebrating the new R&D funding agreement that was concluded with CSR Times Electric in 2010. This agreement sees Lincoln become the centre for all high power semiconductor research with a fivefold increase in spending on such research without any additional cost to Dynex.”
Bob Lockwood, Chief Financial Officer commented, “In the context of the current environment, our financial results were very solid. The strength of our order book at the end of 2009 meant that we were able to grow our Sterling revenue despite a softer market for our products and the priority given to the IGBT wafer expansion project. We are hopeful that we have started to see an upturn in orders. The platform created by the expansion project that Paul Taylor has referred to above and our relationship with CSR Times Electric lead us to believe we are well placed to grow strongly over the next few years.”
Mr Li, Chairman of Dynex and General Manager of CSR Times Electric, concluded, “CSR Times Electric remains very pleased with the progress that Dynex made in the last year. The foundations have been laid for growth in the Company’s business over the next few years and for Dynex to become a key part of the CSR Times Electric supply chain. The management of Dynex has delivered an excellent set of results in 2010, given the challenging operating environment. We look forward to seeing growth in revenue and net earnings starting in 2011.”
For more information:
Dr. Paul Taylor
President and Chief Executive Officer
Finance Director and Chief Financial Officer
Dynex Power Inc.
Tel: UK +44 1522 500 500