Cost cutting pays off for Dynex profitability

Dynex Power has revealed its results for the fiscal year ending 31st December 2002.

Dynex Power has revealed its results for the fiscal year ending 31st December 2002.

Revenues of $38.4 million for the year ending 31st December 2002 were down 12.7% from revenues of $43.9 million in FY2001.

Earnings before tax for the year were $455,291 or $0.02 per share.

Both were in line with expectations.

The fourth quarter revenue dipped by 2% from the previous quarter, but gross profit margins reached 29% because of the cost reduction initiatives implemented earlier in the year.

The gross profit margins of 22.3% for the year were significantly improved over the 4.2% result for 2001.

Operating costs were similarly improved.

"Once again I am pleased with our results as I have been for each of the past three quarters.

After a difficult start to the year the company performed well in very difficult markets with revenues under pressure every month.

In the end we are reporting profits and positive cash flow for the year, unlike many of our competitors", said Michael LeGoff, President and Chief Executive Officer.

"Compounding the problems with the difficult markets was our lack of liquidity.

We had inadequate cash resources to take advantage of what opportunities there were in the gradually improving power semiconductor market.

The negative effect of the constrained liquidity severely limited the company's ability to exploit the growing interest in our products and made it difficult to make money last year.

The lack of liquidity is the principal reason for the significant contraction of revenues we've sustained in January and February of 2003".

On 19th March 2003 Dynex announced a strong vote of confidence from the Board of Directors in the form of a $1.9 million unsecured, subordinated loans from the Board and one major shareholder.

Then on 26th March 2003 Dynex announced the completion of the centrepiece of its financial restructuring programme through a sale and leaseback of the company's land and buildings in Lincoln, England.

The transaction raised $8.9 million and facilitated the elimination of the company's long-term and mezzanine debt.

LeGoff concluded, "The refinancing provides the cash resources to improve the efficiency of our manufacturing processes and to take advantage of revenue opportunities.

The restructure of our balance sheet along with the provision of liquidity has substantially reduced Dynex's financial and credit risk.

The net result permits us to concentrate our full energies on growing revenue in our core business.

We believe the market will continue to improve and I am excited about our prospect for the remainder of 2003.

Last year we established we could endure in a difficult market.

Now, with improved liquidity we will demonstrate that Dynex can prosper".

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