14.05.03

14.5.2003: Meldung: Dynetek Industries: First quarter results

Dynetek Industries Ltd. (TSX:DNK - News) today released its report to shareholders on its financial and operating results for the three months ended March 31, 2003. All amounts are reported in Canadian dollars.

2003 First Quarter Highlights
(tabular amounts in thousands of Canadian dollars,
except share capital and per share data)
2003 2002

REVENUE
Cylinder and system sales 3,278 2,458
Research and development income 1,531 621
Investment and other income 117 130
-------------------------------------------------------------------------
4,926 3,209

Net loss (1,092) (415)
Net loss per common share (0.05) (0.02)
Capital expenditures 913 756
Cash and cash equivalents 17,040 28,954
Long-term debt 1,632 1,519
Common shares outstanding 20,120,395 20,120,395
Weighted average common shares outstanding 20,120,395 20,120,395
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Operations Update

"Dynetek is pleased to report a strong first quarter performance with
record revenues, increased gross contribution and positive cash flow from the
research and development programs," said Robb Thompson, President and Chief
Executive Officer.
Cylinder and system sales were $3.3 million for the three months ended
March 31, 2003, up 33% from $2.5 million for the same period in 2002. The net
loss for the first quarter was $(1.1) million or $(0.05) per share, compared
to a net loss of $(0.4) million or $(0.02) per share for the same period in
2002. There were three main factors which attributed to the net loss for the
three months ended March 31, 2003. Firstly, the Company incurred a foreign
exchange loss of $(0.5) million as the Canadian dollar strengthened against
the U.S. dollar. The Canadian cylinder operations would have incurred net
income of $0.1 million before the effects of the foreign exchange loss.
Secondly, the German operations, created in 2001 to service the European
compressed natural gas (CNG) market, realized a loss of $(0.4) million due to
delays in first quarter sales in the European market. Finally, the newly
created valve division, which is still in the research and development phase,
incurred a small loss of $(0.1) million.
Dynetek increased its overall gross margin to $0.7 million, or 20% of
sales compared to $0.6 million or 25% of sales in 2002. The reduction in gross
margin as a percentage of sales can be attributed to a different product mix
between the first quarter of 2003 and 2002. In order to increase market
penetration and revenues, the Company has focused on complete system sales
having lower gross margin as a percentage of sales, compared to cylinder sales
only.

Achievements to date in 2003

In January 2003, Dynetek supplied the stationary compressed hydrogen
storage system to Stuart Energy which was part of the patented Stuart Energy
intelligent hydrogen fueling station sold to Toyota Motor Sales U.S.A.
Also in January 2003, Dynetek announced its participation in a new
$8.0 million hybrid fuel cell bus project. Natural Resources Canada (NRCan) is
committing $3.0 million of the total project over a three-year period. The
project - led by Hydrogenics Corporation along with other industrial
partners - focuses on the development of new hybrid fuel-cell bus technology.
Dynetek is developing the complete fuel storage solution using its certified
hydrogen fuel storage system.
In February 2003, Dynetek announced its selection by Deere & Company
(John Deere) to supply its 5000psi (350bar) hydrogen storage system for a
technology demonstrator fuel cell-powered commercial work vehicle (CWV). The
demonstrator will be a modified John Deere Pro-Gator(TM) utility vehicle.

Management"s Discussion and Analysis

Management"s discussion and analysis ("MD&A") should be read in
conjunction with the unaudited consolidated financial statements for the three
months ended March 31, 2003 and the audited consolidated financial statements
and MD&A for the year ended December 31, 2002.

REVENUE
(thousands of Canadian dollars)
Three months ended March 31
2003 2002
-------------------------------------------------------------------------
Cylinder and system sales 3,278 2,458
Research and development income 1,531 621
Investment and other income 117 130
-------------------------------------------------------------------------
4,926 3,209
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Cylinder and system sales for the three months ended March 31, 2003 were
$3.3 million or 33% higher than the same period in 2002. During the first
quarter of 2003, a selection of customers who purchased the DyneCell fuel
storage systems for CNG were: Marubeni Metals Corp. (Japan), Elgin Sweeper
Company (United States), and Thomas Built Buses (United States). A selection
of customers who purchased hydrogen fuel storage systems were: General
Hydrogen (Canada), Stuart Energy (Canada), Daimler Chrysler (Germany), Ford
Motor Company (United States), Kokan Drum (Japan) and Ballard Power (Canada).
Research and development income for the first quarter of 2003 was
$1.5 million or 147% higher than the same period in 2002. During 2003, Dynetek
was involved with NRCan and nine OEMs on 16 confidential development programs.
The revenues, which Dynetek receives from the OEMs regarding these projects,
are based on completion of the project and therefore timing differences occur
between when costs are incurred and funding is received. Funding received from
NRCan is recorded as a loan, repayable as a royalty percentage from future
sales of products developed.
Investment and other income for the three months ended March 31, 2003 was
$0.1 million which was comparable to the same period in 2002. Dynetek had
$17.0 million in cash invested in AAA rated securities for less than 90-day
terms at March 31, 2003.
Cost of goods sold was $2.6 million for the three months ended March 31,
2003 compared to $1.8 million for the same period in 2002. Correspondingly,
gross margins were $0.7 million, or 20% of sales compared to $0.6 million or
25% of sales in 2002. The reduction in gross margin as a percentage of sales
can be attributed to a different product mix between the first quarter of 2003
and 2002. In order to increase market penetration and revenues, the Company
has focused on complete system sales having lower gross margin as a percentage
of sales, compared to cylinder sales only.
General and administrative expense for the three months ended March 31,
2003 was $0.9 million compared to $0.6 million for 2002. The increase in
general and administrative expense can be attributed to an increase in
insurance premiums, additional infrastructure costs incurred relating to the
European operations and an increase in the number of employees (85 versus 68
as at March 31, 2002).
Research and product development expense for the three months ended March
31, 2003 was $1.3 million compared to $0.7 million for the same period in
2002. During 2003, Dynetek increased activity on a number of existing research
projects, especially cylinder, regulator and valve development for higher
pressure solutions.
The majority of Dynetek"s research and development programs are co-funded
with major OEMs and government grants (NRCan). The funding, which Dynetek
receives from the OEMs regarding these projects, are based on completion of
the project and therefore timing differences occur between when costs are
incurred and funding is received. The funding from the OEMs is recorded as
research and development revenue when received and the government funding is
recorded as a loan.
Marketing expense for the three months ended March 31, 2003 was
$0.3 million compared to $0.2 million in 2002. The increase is directly
associated with additional marketing costs related to the valve division and
European operations, including additional sales personnel and resources
focused solely on the exposure of these business units in the global
marketplace.
Amortization for the three months ended March 31, 2003 was $0.1 million
compared to $0.2 million in 2002. Items included in amortization expense
include process and development costs, patents and deferred start-up costs.
Depreciation for the three months ended March 31, 2003 was $0.3 million
compared to $0.2 million in 2002. As a significant number of assets
constructed in early 2002 were deployed into commercial production in the
fourth quarter of 2002, the depreciation expense for the current period is
higher than that incurred in the first quarter of 2002. Until assets are
available for use in the production process they are considered assets under
construction and are not depreciated.
Foreign exchange for the three months ended March 31, 2003 was a loss of
$(0.5) million in 2003 compared to a gain of $0.1 million in 2002. This loss
is the direct result of the substantial strengthening of the Canadian dollar
against the U.S. dollar during the first quarter of 2003. The loss arises
primarily because the Canadian dollar is the functional currency and the
majority of accounts receivable and a portion of the cash is held in U.S.
dollars. The company"s exposure to the US dollar has been increased with
increased research and development income received in US dollars with related
costs being incurred in Canadian dollars.
Net loss for the three months ended March 31, 2003 was $(1.1) million or
$(0.05) per common share compared to $(0.4) million or $(0.02) per common
share for 2002. There were three main factors which attributed to the net loss
for the three months ended March 31, 2003. Firstly, the Company incurred a
foreign exchange loss of $(0.5) million as the Canadian dollar strengthened
against the U.S. dollar. Without the foreign exchange loss, the Canadian
cylinder operations would have incurred net income of $0.1 million. Secondly,
the German operations, created in 2001 to service the European compressed
natural gas (CNG) market, realized a loss of $(0.4) million due to a delay in
first quarter sales in the European market. Finally, the newly created valve
division, which is still in the research and development phase, incurred a
small loss of $(0.1) million.

VALVE DIVISION

In late 2002 Dynetek formed a valve division. The division is focused on
the compressed hydrogen market. The formation of this division was the result
of customers and partners requiring a regulator and valve solution operating
at higher pressures. The division currently has prototype valves and
regulators being tested under normal everyday driving conditions by third
parties to provide quality data and validation documentation.
As this division is currently in its startup phase of operations and
focused entirely on research and development activities, these expenditures
are included in the research and development expense. No revenue has been
recorded to date and as a result the division experienced negative cash flow
of $(0.1) million for the first quarter. Feedback on these products to date
has been positive, and the development timeline is on schedule for
commercialization in early 2004.

GERMAN OPERATIONS

The Company"s wholly-owned German subsidiary, Dynetek Europe GmbH, was
formed in 2001 to enable Dynetek to serve its European customers.
The subsidiary has progressed considerably since it"s inception by
obtaining cylinder and production certification, developing infrastructure and
marketing the DyneCell throughout Europe, Australia and the Middle East.
During the first quarter of 2003 the subsidiary incurred a loss of
$(0.4) million, however the Company expects this loss to narrow on a quarter
by quarter basis in 2003 with positive cash flow expected in the first quarter
of 2004.

INTANGIBLE ASSETS AND DEFERRED COSTS
(thousands of Canadian dollars)
Three months ended March 31
2003 2002
-------------------------------------------------------------------------

Patents 12 22
Deferred Costs - 474
-------------------------------------------------------------------------
12 496
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Intangible asset expenditures for the three months ended March 31, 2003
were minimal compared to $0.5 million for the same period in 2002. In 2002,
the expenditures related to amounts incurred and deferred on the set up of the
German subsidiary prior to the certification by regulatory authorities which
was necessary to commence commercial operations.

CAPITAL EXPENDITURES
(thousands of Canadian dollars)
Three months ended March 31
2003 2002
-------------------------------------------------------------------------

Building and leaseholds 15 9
Manufacturing equipment 306 297
Office furniture and other equipment 26 19
Computer hardware and software 30 72
Manufacturing equipment under construction 536 359
-------------------------------------------------------------------------
913 756
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Capital expenditures for the three months ended March 31, 2003 were
$0.9 million compared to $0.8 million for the same period in 2002. During the
first quarter of 2003 the Company invested $0.3 million in manufacturing
equipment and $0.5 million on construction of assets not currently being used
in commercial production. The Company is concentrating on creating
efficiencies and higher production capabilities for the current manufacturing
process which will attribute directly to cost reductions and higher production
output.

FINANCIAL RESOURCES AND LIQUIDITY

As at March 31, 2003 Dynetek had cash and cash equivalents of
$17.0 million compared to $29.0 million at March 31, 2002. This decrease in
cash and cash equivalents is attributable to purchasing manufacturing
equipment, financing working capital levels, and funding research and
development activities. The Company"s actual funding requirements will vary
depending on a number of factors, including the increase of CNG system sales
on a global basis, the progress of research and development projects and the
development of additional relationships with strategic partners. Dynetek
remains committed to enhancing its technological leadership position and
continuing to be a market leader in the industrial gas fuel storage industry,
including CNG and hydrogen.
The Company"s accounts receivable position at March 31, 2003 was
$5.2 million compared to $4.8 million at March 31, 2002. This difference
relates to the increase in sales orders from 2002 to 2003. Accounts payable at
March 31, 2003 was $2.8 million compared to $2.5 million as at March 31, 2002.
The loans of $1.6 million relate to research and development funding
supplied by NRCan. These agreements allow Dynetek to retain the intellectual
property and to receive long-term funding. The debt is repayable in the form
of royalties based on specific related commercial product sales. The Company
to date has received an additional $0.1 million of this debt and $0.1 million
is due in the current year. The Company believes that additional dollars are
expected to be available for future research and development projects from
governments and OEMs.

OUTLOOK

Our company is unlike others in the alternative energy market. We have a
product, we design and manufacture and we sell commercially into the CNG
market. Our strategy is to continue to increase our CNG and other compressed
gas sales to keep our net outflow of cash related to operation and general and
administrative expense at negligible levels compared to peers in our industry
while at the same time continuing to invest in the hydrogen economy.
As recognized market leaders in gas storage, we are also expanding our
market focus in compressed gas sales and solutions. We recognize the
tremendous opportunities to complement our CNG and hydrogen markets by
expanding to other gases, including helium, nitrogen and oxygen. These gases
are being stored and transported today. Dynetek can be a part of this sizable
market.

Forward-Looking Statements

In addition to historical information, this review of financial results
contains forward-looking statements. Forward-looking statements are based upon
current assumptions, expectations and estimates that involve a number of risks
and uncertainties and actual results could differ materially from those
discussed in the forward-looking statements. Investors are encouraged to
review the section in the Management"s Discussion and Analysis titled
"Business Risks" contained in the 2002 Annual Report for a discussion of
factors that could effect Dynetek"s future operations and financial results.
Forward-looking statements are based upon management"s assumptions,
expectations and estimates at the time that the statements are made. Dynetek
does not update forward-looking statements should circumstances or
management"s assumptions, expectations or estimates change.

Dynetek Industries Ltd. is a leading international company engaged in the
design, production and marketing of Advanced Lightweight Fuel Storage Systems,
fueling systems and high pressure components including valves and regulators.
The key component of the storage system is the DyneCell cylinder, capable of
storing high pressures gases including compressed natural gas (CNG), hydrogen,
and various industrial gases. Dynetek"s DyneCell(R) cylinder, and fuel storage
systems applications include but are no limited to; the transportation
industry, including passenger automobiles, light and heavy-duty trucks,
transit and school buses; the bulk hauling of compressed gases; and stationary
storage or ground storage refueling applications.



CONSOLIDATED BALANCE SHEETS

(thousands of Canadian dollars)
March 31 December 31
2003 2002
-------------------------------------------------------------------------
(unaudited) (audited)
ASSETS
Current assets
Cash and cash equivalents 17,040 20,453
Accounts receivable 5,155 3,843
Inventory 4,734 4,381
Prepaid expenses 929 691
-------------------------------------------------------------------------
27,858 29,368

Intangible assets and deferred costs 4,000 4,081

Capital assets 14,003 13,417

Future income tax asset 2,505 2,505
-------------------------------------------------------------------------

48,366 49,371
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 2,800 2,833
Current portion of long-term debt 55 55
-------------------------------------------------------------------------
2,855 2,888

Long-term debt 1,577 1,457

Shareholders" Equity
Share capital 52,249 52,249
Deficit (8,315) (7,223)
-------------------------------------------------------------------------
43,934 45,026

48,366 49,371
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes to the consolidated financial statements



CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(thousands of Canadian dollars except share capital and per share
amounts)
(unaudited)

Three months ended March 31
2003 2002
-------------------------------------------------------------------------
(unaudited) (unaudited)
REVENUE
Cylinder and system sales 3,278 2,458
Research and development income 1,531 621
Investment and other income 117 130
-------------------------------------------------------------------------
4,926 3,209
EXPENSES
Cost of goods sold 2,622 1,833
General and administrative 872 645
Research and product development 1,269 659
Marketing 280 203
Depreciation 327 163
Amortization of intangible assets
and deferred costs 93 184
Foreign exchange loss (gain) 535 (85)
-------------------------------------------------------------------------
5,998 3,602
-------------------------------------------------------------------------
Loss before income taxes (1,072) (393)
-------------------------------------------------------------------------

PROVISION FOR TAXES
Large corporations tax 20 22
-------------------------------------------------------------------------
20 22

-------------------------------------------------------------------------
NET LOSS (1,092) (415)
Deficit, beginning of period (7,223) (2,290)
-------------------------------------------------------------------------
DEFICIT, END OF PERIOD (8,315) (2,705)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Per Share Information
Net loss per share (basic and diluted) (0.05) (0.02)
Weighted average number of common
shares outstanding 20,120,395 20,120,395
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes to the consolidated financial statements



CONSOLIDATED STATEMENT OF CASH FLOWS
(thousands of Canadian dollars)
(unaudited)
Three months ended March 31
2003 2002
------------------------------------------------------------------------

Cash flows provided by (used for)
operating activities
NET LOSS (1,092) (415)
Items not involving cash
Depreciation 327 163
Amortization of intangible assets and
deferred costs 93 184
------------------------------------------------------------------------
(672) (68)
Changes in non-cash working capital
Accounts receivable (1,312) (1,484)
Inventory (353) (716)
Prepaid expenses (238) (19)
Accounts payable and accrued liabilities (33) (2)
------------------------------------------------------------------------
Cash flow from operations (deficiency) (2,608) (2,289)

INVESTING ACTIVITIES
Additions to intangible assets and
deferred costs (12) (496)
Additions to capital assets (913) (756)
------------------------------------------------------------------------
(925) (1,252)
FINANCING ACTIVITIES
Advances, long-term debt 120 423
------------------------------------------------------------------------
120 423

------------------------------------------------------------------------
Decrease in cash and cash equivalents (3,413) (3,118)

Cash and cash equivalents, beginning of period 20,453 32,072
------------------------------------------------------------------------

Cash and cash equivalents, end of period 17,040 28,954
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash and cash equivalents includes a reduction for outstanding cheques.
Interest income received during the three months ended March 31, 2003
was $0.1 million and $0.1 million for same period in 2002.

See accompanying notes to the consolidated financial statements



SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2003 and 2002
(tabular amounts in thousands of Canadian dollars,
except share capital amounts)


1. BASIS OF PRESENTATION

The unaudited interim consolidated financial statements of Dynetek
Industries Ltd. ("Dynetek" or "the Company") have been prepared by
management in accordance with Canadian generally accounting
principles. The unaudited interim consolidated financial statements
have been prepared following the same accounting policies and methods
of computation as the most recent annual audited consolidated
financial statements for the year ended December 31, 2002. The
unaudited interim consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
the notes thereto in the Company"s Annual Report for the year ended
December 31, 2002 except as noted below.


2. SIGNIFICANT ACCOUNTING POLICIES

a) Revenue recognition
Cylinder and system revenue is recognized when finished goods are
shipped and invoiced to the customer. Research and development
revenue is generated by projects co-funded with the original
equipment manufacturers (OEMs). This revenue is recognized when
invoiced. Invoicing occurs when contractual deliverables and
milestones are met. Timing differences can occur between when
costs are incurred and when revenue is invoiced and earned.

b) Research and development costs
Research and development costs are expensed as incurred.


3. SHARE CAPITAL

The issued and outstanding common shares of the Company along with
securities convertible into common shares are as follows:

March 31, December 31,
2003 2002
---------------------------------------------------------------------
---------------------------------------------------------------------
Issued and outstanding:
Common shares 20,120,395 20,120,395

Securities convertible into common shares:
Employee stock options 1,982,000 1,942,000
Warrants 2,374,294 2,374,294
---------------------------------------------------------------------
---------------------------------------------------------------------


Effective January 1, 2002, Dynetek adopted, on a prospective basis,
the Canadian Institute of Chartered Accountants recommendations for
accounting for stock-based compensation. The standard requires the
Company to account for direct share awards and grants of options to
non-employees using the fair value method of accounting for stock-
based compensation. Options granted to employees and directors will
be accounted for using the settlement date method of accounting for
stock-based compensation. Accordingly, no compensation cost has been
recognized for such grants as the exercise price is equal to or
greater than the market price of the stock on the date of grant.

If the compensation cost for the employee"s stock option plans had
been determined using the fair value method of accounting for
stock-based compensation, the Company would increase the 2003 loss by
($0.1) million or $(0.01) per share for the three months ended
March 31, 2003.

The fair values of the stock options were determined using the
Black-Scholes valuation model assuming an average option life of five
years, no dividends, expected volatilities ranging from 85% to 122%
and a risk-free interest rate ranging from 2.86% to 2.93%.


4. SEGMENTED INFORMATION

The Company currently operates in one operating segment, which
involves the manufacture and sale of lightweight fuel storage
systems. The majority of the Company"s operations and assets relating
to commercial production were located in Canada at March 31, 2003.
Revenues attributed to foreign countries are based on the location of
the customer.

Three months ended March 31
2003 2002
---------------------------------------------------------------------
---------------------------------------------------------------------
Revenue
Canada 997 395
United States 967 1,583
Japan 1,127 185
Europe 187 285
Other Foreign countries - 10
---------------------------------------------------------------------
3,278 2,458
---------------------------------------------------------------------
---------------------------------------------------------------------

Corporate Information

Board of Directors Officers and Management Bankers
Bank of Nova Scotia
Heinz O. Portmann(x) Heinz O. Portmann Calgary, Alberta
Chairman of the Board Chairman of the Board
Dynetek Industries Ltd. Auditors
Calgary, Alberta Robb D. Thompson Deloitte & Touche LLP
President and Chief Calgary, Canada
Andrew T.B. Stuart(xxx) Executive Officer
Vice Chairman Legal Counsel
Stuart Energy Systems Michael D. Portmann Gowling Lafleur
Corporation Vice President and Henderson LLP
Mississauga, Ontario General Manager Calgary, Alberta

Peter A. Leus(x)(xx) Ulrich Imhof Transfer Agent and
Director Vice President, Registrar
Starlaw Holdings Ltd. Engineering CIBC Mellon Trust
Montreal, Quebec Company
Dr. Christian Rasche with offices in
Michael J. Lang(x)(xx) Managing Director Toronto, Montreal and
Chairman Dynetek Europe GmbH Calgary
Stonebridge Merchant
Capital Corp. Karen Y. Minton Stock Listing
Calgary, Alberta Vice President, Finance Toronto Stock
and Administration Exchange
Larry A. Wright(xxx) Trading Symbol: DNK
Executive Vice Tim A. Richard
President Vice President, Sales Investor Relations
Multimatic Inc. and Marketing To obtain additional
Markham, Ontario information about
Norman E. Hall Dynetek or to be
Robb D. Thompson Corporate Secretary placed on our
President and Chief supplemental mailing
Executive Officer Corporate Head Office list for quarterly
Dynetek Industries Ltd. 4410 - 46th Avenue SE reports please
Calgary, Alberta Calgary, Alberta, Canada contact:
T2B 3N7 Robb D. Thompson
Tel (403) 720 0262 Dynetek
Fax (403) 720 0263 Industries Ltd.
Web site: Investor Relations
http://www.dynetek.com 4410 - 46th Avenue SE
Calgary, Alberta,
Subsidiary Canada
Dynetek Europe GmbH T2B 3N7
Breitscheider Weg 117a Tel (403) 720 0262
D-40885 Ratingen Fax (403) 720 0263
Germany Email:
invest(at)dynetek.com


(x) Audit Committee member
(xx) Compensation Committee member
(xxx) Corporate Governance Committee member

For further information
please contact: Heinz Portmann, Chairman of the Board
Robb Thompson, President and Chief Executive Officer, Dynetek Industries Ltd., 4410-46th Avenue S.E., Calgary, Alberta, T2B 3N7, Tel: (403) 720-0262, Toll-free: 1-888-396-3835, Fax: (403) 720-0263, Web: www.dynetek.com
Nach oben scrollen
ECOreporter Journalistenpreise
Anmelden
x