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CAP-XX Limited (CPX)

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Monday 09 October, 2017

CAP-XX Limited

Audited results for the year ended 30 June 2017

RNS Number : 9990S
CAP-XX Limited
09 October 2017
 

 

 

 

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

 

 

9 October 2017

 

CAP-XX Limited

("CAP-XX" the "Company")

 

Audited results for the year ended 30 June 2017

 

CAP-XX Limited, a world leader in the design and manufacture of thin, flat supercapacitors and energy management systems, is pleased to announce its audited results for the year ended 30 June 2017.

 

Key highlights

 

·     Sales revenue of A$4.1 million (2016: A$5.0 million) and EBITDA loss of A$1.2 million (2016: A$0.7 million) in line with guidance announced on 7 June 2017

·     Royalty revenue of A$0.7 million (2016: A$0.2 million) up 177%. Q4 Murata royalty up over 50% on prior quarter, following major new product launches during the year.  Introduction of additional product ranges by AVX during the year

·     Operating expenses reduced by A$0.5 million year-on-year, with R&D and engineering spending maintained and additional R&D and Engineering staff added

·     The Board believes that the Company's IP and patent portfolio is in its strongest position ever

·     New licensing deals are under negotiation and the Board expects at least some of these to successfully close in the current financial year and remains confident that CAP-XX will continue to drive further increases in royalty receipts

·     Sales enquiries for prismatic supercapacitors, including Thinline, are at record levels.  The first large volume design win for our Thinline product range, in a wearable application for the Internet of Things (IoT) market segment, was announced in August 2017

·     Several additional large IoT design wins have already been secured and high-volume orders are expected in the current financial year

·     Three large automotive opportunities are under development, including applications for passenger vehicles and heavy vehicles

·     Three new custom designed automotive systems delivered to customers for evaluation

·     In negotiations with potential manufacturing partners to secure the necessary production capacity to fulfill these automotive opportunities

·     A full range of CAP-XX cylindrical cell supercapacitors was launched in the year. Market interest is high, with potential customers currently evaluating CAP-XX products for large volume applications

·     The Company raised £2.43 million in January 2017.  Cash reserves at the end of June 2017 were A$3.9 million (2016: A$0.3 million) with an additional A$1.5 million Australian R&D tax rebate (2016: A$1.5 million) anticipated to be received during October 2017

 

Anthony Kongats, CEO of CAP-XX said:

"This has been an exciting year in the development of CAP-XX.  We are seeing tangible traction in our target markets, as evidenced by the level of enquiries and size of initial orders.  The strong performance of our licences is a further affirmation of this trend, reflected in the sharp growth in royalty receipts.  We continue to invest in product development, adding to our portfolio of IP and are receiving an unprecedented level of enquiries from potential licensees.  This traction together with our own operating performance gives us great confidence that CAP-XX will be at the forefront of the rising trend for the adoption of supercapacitors as a mainstream source of portable energy storage."

 

Electronic copies of CAP-XX's audited annual report and accounts for the year ended 30 June 2017 will shortly be available from the Company's website: www.cap-xx.com.

 

For further information contact:

 

CAP-XX Limited

Anthony Kongats (Chief Executive Officer)                                    +61 (0) 2 9428 0139

 

Kreab (Financial PR)

Robert Speed                                                                            +44 (0) 20 7074 1800

 

Allenby Capital (Nominated Adviser and Broker

David Hart / Alex Brearley                                                           +44 (0) 20 3328 5656

 

 

More information is available at www.cap-xx.com

 

Notes to Editors:

 

CAP-XX (LSE: CPX) is a world leader in the design and manufacture of thin, flat supercapacitors and energy management systems used in portable and small-scale electronic devices, and to an increasing extent, in larger applications such as automotive and renewable energy. The unique feature of CAP-XX supercapacitors is their very high power density and high energy storage capacity in a space-efficient prismatic package. These attributes are essential in power-hungry consumer and industrial electronics, and deliver similar benefits in automotive and other transportation applications. For more information about CAP-XX, visit www.cap-xx.com

 

 

Chairman's statement

The twelve months under review has seen good progress towards the delivery of the Company's long-term growth strategy, with large volume design wins and an increased interest in the CAP-XX product range for the Internet of Things (IoT) market segment.  Revenues from royalties are continuing to increase with contributions from both AVX and Murata, whilst licensing opportunities, especially in the automotive sector, continue to gather momentum.  The Company has several opportunities in different stages of discussion and negotiation.  The operational initiatives to streamline and increase CAP-XX's manufacturing capabilities continue to deliver positive results.

 

The operating result for the year to June 2017 was a loss of A$1.7 million (2016: loss of A$1.3 million).  Cash reserves as at the end of June 2017, were A$3.9 million which was up from A$0.3 million as at in 30 June 2016, as a result of the capital raising that was completed in January 2017 (£2.43 million). The Federal Government R&D tax rebate is expected to be approximately A$1,551,000 (2016: A$1,537,000) with funds expected to be received during October 2017.  The available tax rebate for the year ended 30 June 2017 has decreased from 45% of eligible R&D spending in Australia to 43.5%.  Given the anticipated increase in product sales, license and royalty payments and the decrease in the overall cash burn, the Board remains confident that the Company's existing cash reserves will be adequate to satisfy the Company's short to medium cash requirements and to accelerate product and business development opportunities.

 

Total sales revenue for the year to 30 June 2017 was A$4.1 million (2016: A$5.0 million). Product sales were down on the previous year, principally due to the non-operation of our manufacturing plant for a period of seven weeks towards the end of the first half of the year, due to a raw material supply issue. This issue was rapidly resolved and the plant had returned to normal operations by the end of the third quarter of the financial year.

 

Interest in CAP-XX's small product range is sharply on the increase.  The IoT market is the major market which has generated significant interest in the CAP-XX small prismatic products.  In August 2017, the Company announced its first high volume design win in this market and the Board is excited by the quality, number and volume of sales opportunities.  An additional point to highlight is that these opportunities are not concentrated from one particular customer or market segment, although, the overall level of interest emanating from the wearable, health, automotive, security, metering and energy harvesting segments is on the increase. The newly released cylindrical cells have enabled CAP-XX to provide a full product range offering, and has assisted with cross-selling opportunities.  Customers are currently evaluating our cylindrical cans for large volume opportunities.

 

The Board is very encouraged by the progress of the Company's automotive offering over the last twelve months.  During the year the truckStart product was further improved and evaluation units of three new automotive modules were delivered to customers. The pipeline of sales opportunities is at the limit of our capacity to evaluate and the potential volumes that would be required far exceed our current capacity.  Our strategy remains to partner with an automotive Tier-1 or Tier-2 manufacturer for customer interface, production and sales, but as announced on 7 June 2017, progress has been slower than initially expected.  Worldwide interest still remains strong, with notable opportunities gaining momentum in Europe, the Americas and Asia. These are the markets that are demonstrating the most interest in the CAP-XX large cell technology that serves automotive, truck and military applications. Product development and manufacturing refinement has continued to ensure that the CAP-XX offering meets the customers' expectations. Internal projects have also been implemented as individual end-customer's requirements are quite specific.  CAP-XX was successful in being awarded the Society of Automotive Engineers- Australasia's, 2016 platinum award for overall engineering excellence for an automotive project.

 

AVX commenced quarterly royalty payments on 1 July 2016 as per its license agreement and also paid the first anniversary Licensee fee of £750,000 in June 2017.  Regular discussions and negotiations have been on-going with AVX, in order to determine market priorities and how CAP-XX and AVX can collaborate in order to build upon existing market penetration and co-operate to enhance both companies' offerings.  AVX has been extremely active in the supercapacitor market and has launched two new product families during the past financial year.  Murata continues to go from strength to strength. Since April 2016, when Murata and CAP-XX agreed to extend and broaden the existing license agreement, the royalty payments from Murata have continued to grow, notably in the past six months. The most recent quarterly royalty payment received from Murata in August 2017, which was for the April - June 2017 sales period, was up 51% on the previous quarterly royalty payment and up 81% relative to the same period of the previous year. 

 

It is pleasing to note that overall operational expenditure has decreased from A$5.8 million in the previous year to A$5.3 million in the year ended 30 June 2017, given the Board's commitment to continuous improvement in product development and manufacturing excellence. The Company has taken the decision to strengthen its operations team in order to accelerate improvements in manufacturing, including new products; cycle time; capacity; production efficiency and unit cost of manufacturing.  Early signs are promising, however, the full benefit will be realised in the year ending 30 June 2018.  Expenditure on general corporate overheads has been tightened from the previous year.  Expenditure associated with R&D activities has again increased year-on-year with A$3.6 million being incurred, which is up from A$3.4 million in the previous year.  A new website has been launched, which received good customer reviews and an on-line web store was also opened with good results.

 

Our major R&D focus over the past twelve months has been to concentrate on improving the current product's operating performance and the development of new products.  As a result, new intellectual property has been developed with associated patents being filed, which further strengthens the existing CAP-XX patent portfolio. Opportunities for collaborative research grants and joint ventures have been executed and others are currently being considered.

 

The Board are buoyed by the progress made over the past twelve months and remain confident of the Company's continuing success.

 

Patrick Elliott

Chairman

 

 

 

 

Business Review

Review of Operations and Activities

 

The royalties from Murata are continuing to grow, with the latest quarterly royalty payment received in August 2017 being 51% higher than the previous quarter and up 81% on the same quarter from the previous year. The Board is confident that the Murata royalties will continue to increase over the next twelve months, especially with the broadening of the Murata license which was agreed to in April 2016. In the past twelve months, AVX also commenced quarterly royalty payments and paid their first anniversary licence payment.

 

This progress with royalties is a further endorsement of our strategy to develop substantial and recurring income from our intellectual property, along with income from sales of small supercapacitors, large supercapacitors and energy storage modules incorporating our supercapacitor cells. Several other licence agreements are being negotiated.

 

During the year, CAP-XX continued to invest significant resources in redesigning products and processes to reduce manufacturing costs, to improve product performance and introduce new products. Further, an investment in operational headcount was made to strengthen the current team and to accelerate key projects. We expect that the majority of the benefits from this will be realised in the 2018 financial year.

 

 

Business Environment

 

The Board believes that CAP-XX's technology provides a competitive advantage over other supercapacitor manufacturers, such as Maxwell Technologies, Ioxus, Nippon Chemicon Corporation and other Chinese and Korean competitors. The Directors further believe that other manufacturers are unable to match the CAP-XX technology for thinness, power density, energy density and reliability. Many competitors manufacture higher-capacity, large package devices and focus on applications where the combination of thinness, energy density and power density is not an issue. In the future, as new products are introduced by CAP-XX, the Company will offer other very significant points of difference with its competition.

 

As reported last year, Internet of Things (IoT) applications, one of the fastest growing segments of the electronics market, provide one of the greatest opportunities for CAP-XX's products.  Driven by customer requests, manufacturers are constantly adding to the functions and applications available on IoT-enabled devices. This means that power management continues to be an increasingly important consideration. The other important factor is size, as devices have become smaller whilst their electrical power demands have increased. The Company was successful in winning new business from a range of markets, including our first high volume order for a wearable technology product utilising our Thinline product.

 

Historically, CAP-XX has faced competition in various markets from cheaper cylindrical supercapacitors where our thin form factor, high power and long life are not valued as highly as lower initial cost. To counter-act this, the Company released a range of cylindrical cells. To date, several large volume opportunities are being evaluated by existing customers that are currently utilising cheaper cylindrical cells. In addition, our customers' markets are constantly evolving as new products and technologies threaten the incumbents. In this environment CAP-XX needs to always remain flexible to changing business conditions.

 

Automotive applications such as truckStart, Stop-Start systems, regenerative energy capture or KERS (Kinetic Energy Recovery Systems), distributed power, hybrid electric vehicles and electric vehicles also present very attractive opportunities for supercapacitors. A number of CAP-XX's competitors are active in these markets, but the Board believes that we have significant advantages over the competition in certain applications upon which CAP-XX has focused its efforts. During the year, numerous automotive OEMs and automotive Tier-1/Tier-2 suppliers have purchased CAP-XX's products for evaluation; however because of the significant resources that each project requires, we have taken the decision to focus our resources on just a small number of key automotive projects. Progress during the year with these projects has been very pleasing. Three new automotive products were designed to the customer's specifications, manufactured, tested and evaluation units were delivered to customers including all the necessary electronic circuitry. These products include a 48V system to work with lithium ion batteries in hybrid vehicles; a 12v system for stop-start; vehicle acceleration and regenerative braking; and a 12V system for stop-start and support for the vehicle electronics. However, as previously highlighted, automotive markets have historically been slow to adopt new technology and this still remains a risk today.  The Company has also recently commenced two projects involving the development of large supercapacitors for automotive defence applications.

 

 

Opportunities

 

CAP-XX is continuing to refine the products that it offers for the IoT, portable electronics and other markets for our traditional small supercapacitors and our Thinline supercapacitors. The Thinline range of supercapacitors, which are just 0.6mm thick, were developed to address the space-constrained needs of the IoT and during the year we achieved our first design win for a large volume Thinline wearable product. The Company is actively dealing with many other similar applications, where the feedback has been very positive and the potential sales opportunities are very large. All of these markets are forecast to be very high volume opportunities.

 

As already noted, CAP-XX is concentrating on a small number of automotive opportunities for passenger vehicles and heavy vehicles. To further increase our likelihood of success, CAP-XX is looking to partner with Automotive Tier-1/Tier-2 suppliers through either a new licence agreement or a joint venture to supply the automotive markets. The Board believes that such partnerships will be beneficial for all parties involved.

 

We expect royalty sales from Murata and AVX to continue to grow significantly in the coming years, as more consumer applications adopt supercapacitor technology.

 

A significant additional benefit of the Murata and AVX licencing agreements is that they validate CAP-XX's technology leadership in the field of supercapacitors and energy storage, and the potential for supercapacitors as a mainstream consumer electronics technology. The Murata and AVX product line and sales activities are also increasing our exposure to markets and customers that were previously beyond our reach.  Association with Murata and AVX is also helping CAP-XX gain recognition, win acceptance for our supercapacitors, and reduce misconceptions about the price and performance of supercapacitors.  It is also important that Murata's and AVX's strategy is to offer product ranges targeted at certain end markets. As such, Murata and AVX will not meet the product type or size requirements of all markets and all applications, leaving room for CAP-XX to supply these markets directly using products made by its contract manufacturers.

 

 

Strategies for Growth

 

The Company is exploring opportunities in several new markets to leverage its strong intellectual property and engineering expertise through new license agreements, joint ventures and collaborative R&D partnerships. Given the increasing levels of market interest in CAP-XX's technology and our high performance supercapacitors, the Company believes that the IoT and automotive markets in particular offer significant opportunities for growth.

 

The Company continues to engage in discussions aimed at securing business with a number of global OEMs. We are strengthening relationships with these organisations and have regular engineering meetings with their design teams and manufacturing groups or contract manufacturers. We are unable to comment on specific clients, but are pleased with overall progress and are confident that the available market for supercapacitors is increasing as manufacturers become familiar with the technology.

 

The Company will continue to monitor new opportunities to increase the product offering, both through the current distributors and direct to customers. These offerings may take the form of complementary energy storage devices and modules.

 

 

Research and Development

 

CAP-XX's R&D efforts are focused on a mix of short, medium and long-term opportunities, covering further cost reductions and improved product performance. CAP-XX has a research facility in Sydney, Australia, where a team of 19 engineers and scientists work to maintain CAP-XX's leading technology position in electrodes, separators and electrolyte materials and their assembly into supercapacitor devices. During the year significant progress was made in a number of key areas including: increasing the peak voltage of our supercapacitor cells; reducing the resistance of our cells; improving the life of our cells; reducing the cost per cell and developing new electronics to optimise the performance of our modules. We have also signed numerous collaboration agreements with several leading Research and Aerospace institutions, whilst our Scientific Advisory Board provides the Company with clear direction on commercially relevant technologies for our ongoing R&D programme.

 

The markets in which the Company operates are competitive and are characterised by rapid technological change. CAP-XX has a strong competitive position in prismatic supercapacitors for all of its target markets, with its capability to produce supercapacitors with a high energy density and power density in a small conveniently sized flat package. CAP-XX's devices are also lightweight, work over a broad temperature range and have an operating lifetime measured in years.

 

The Company's success depends on its ability to protect and prevent any infringements of its intellectual property. To protect this important asset, the Company has considerable intellectual property embodied in its patents covering the design, manufacture and use of its high performance supercapacitors. The CAP-XX patent portfolio currently consists of 18 patent families with 45 granted national patents with an additional 12 applications pending in various jurisdictions. The Company's intellectual property strategy has been to build company value by focusing on opportunities to capture market share and exclude competition with an IP portfolio capable of generating licensing revenue. The Directors believe that comprehensive embodiments and interlocking patent groups, combined with a 'quick to file, quick to abandon' policy, have given the Company a strong and focused IP portfolio.

 

 

Outlook

 

The major short-term focus for CAP-XX is to drive the adoption of the Company's intellectual property and products, both large and small, into key target markets through future licence deals; joint ventures and direct product sales. Although much has been achieved in the past, the Company expects to see additional progress over the next twelve months and beyond.

 

 

 

 

CAP-XX Limited

Statement of profit or loss

For the year ended 30 June 2017 

 

 

Consolidated

 

 

 

 

 

 

2017

2016

Currency: Australian Dollars

Notes

$

$

 

 

 

 

Revenue from continuing operations

1

4,142,119

4,965,448

Cost of sales

2

(2,233,555)

(2,359,612)

Gross Profit

 

1,908,564

2,605,836

 

 

 

 

Other revenue

1

30,009

25,597

Other income

3

1,682,364

1,867,444

 

 

 

 

General and administrative expenses

 

(2,068,557)

(2,589,480)

Process and engineering expenses

 

(863,307)

(885,418)

Selling and marketing expenses

 

(713,429)

(664,239)

Research and development expenses

 

(1,511,271)

(1,548,300)

Other expenses

4

(128,622)

(103,692)

Loss before income tax

 

(1,664,249)

(1,292,252)

 

 

 

 

Income tax benefit

 

-

-

 

 

 

 

Net loss for the year

 

(1,664,249)

(1,292,252)

 

 

 

 

Loss attributable to owners of CAP-XX Limited

 

(1,664,249)

(1,292,252)

 

 

 

 

Earnings per share for loss attributable to the ordinary equity holders of the Company

 

Cents

Cents

 

Basic loss per share

5

(0.6)

(0.5)

 

Diluted loss per share

5

(0.6)

(0.5)

 

           

 

 

 

 

CAP-XX Limited

Statement of comprehensive income

For the year ended 30 June 2017

 

Consolidated

 

 

 

 

 

 

 

2016

 

Currency: Australian Dollars

Notes

$

 

Loss for the year

 

(1,292,252)

 

Other comprehensive income

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

6,551

(45,042)

 

Other comprehensive loss for the year, net of tax

 

            6,551

         (45,042)

 

Total comprehensive loss for the year attributable to owners of CAP-XX Limited

 

    (1,657,698)

    (1,337,294)

 

 

 

 

 

CAP-XX Limited

Statement of financial position

As at 30 June 2017

 

 

Consolidated

 

 

 

 

 

 

June 30, 2017

June 30, 2016

Currency: Australian Dollars

Notes

       $

$

 

 

 

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

 

3,881,792

  331,631

Receivables

 

419,146

2,078,941

Inventories

 

1,321,327

1,365,524

Other

 

1,676,618

1,700,147

Total current assets

 

7,298,883

5,476,243

 

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

 

369,779

  364,695

Other

 

236,507

236,507

Total non-current assets

 

606,286

601,202

 

 

 

 

Total assets

 

7,905,169

6,077,445

 

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Payables

 

1,013,954

642,358

Provisions

 

682,962

663,069

Secured Loans

 

-

1,000,000

Total current liabilities

 

1,696,916

2,305,427

 

 

 

 

Non-current liabilities

 

 

 

Provisions

 

91,756

65,664

Total non-current liabilities

 

91,756

65,664

 

 

 

 

Total liabilities

 

1,788,672

2,371,091

 

 

 

 

Net assets

 

6,116,497

3,706,354

 

 

 

 

 

 

 

 

EQUITY

 

 

 

Contributed equity

 

98,343,719

94,558,726

Reserves

 

4,324,973

4,035,574

Accumulated losses

 

(96,552,195)

(94,887,946)

TOTAL EQUITY

 

6,116,497

3,706,354

 

 

 

 

 

Statement of cash flows

For the year ended 30 June 2017 

 

 

Consolidated

 

 

 

 

 

 

   2017

2016

Currency: Australian Dollars

 

  $

$

 

 

 

 

Cash flows from operating activities

 

 

 

Receipts from customers (inclusive of goods and services tax)

 

6,574,124

4,167,729

Payments to suppliers and employees (inclusive of goods and services tax)

 

(7,221,745)

(8,466,934)

 

 

(647,621)

(4,299,205)

Tax credit received

 

1,546,175

  1,127,272

Interest received

 

30,009

25,597

Net cash (outflow) from operating activities

 

928,563

(3,146,336)

 

 

 

 

Cash flows from investing activities

 

 

 

Payments for property, plant and equipment

 

(169,946)

(252,788)

Net cash (outflow) from investing activities

 

(169,946)

(252,788)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issue of shares (net of costs)

 

3,784,993

132,379

Proceeds from Loan

 

(1,000,000)

1,000,000

Net cash inflow from financing activities

 

2,784,993

1,132,379

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

3,543,610

(2,266,745)

Cash and cash equivalents at the beginning of the financial year

 

331,631

2,643,418

Effects of exchange rate changes on cash and cash equivalents

 

6,551

 (45,042)

Cash and cash equivalents at the end of the financial year

 

 

3,881,792

331,631

 

 

 

Notes to the financial statements

 

Basis of preparation

The financial information included in this announcement does not constitute statutory accounts within the meaning of the Australian Corporations Act 2001.  Whilst the financial information has been computed in accordance with Australian equivalents to International Financial Reporting standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001, this announcement does not itself contain sufficient information to comply with those requirements.

 

 

Note 1       Revenue

 

Consolidated

 

 

2017

2016

 

 

$

$

Sales revenue

 

 

 

Sale of goods & services

 

4,142,119

4,965,448

 

 

4,142,119

4,965,448

 

 

 

 

Other revenue

 

 

 

Interest

 

30,009

25,597

 

 

30,009

25,597

         

 

 

Note 2         Cost of Sale of Goods

 

Consolidated

 

 

2017

2016

 

 

$

$

 

 

 

 

Direct materials and labour

 

1,732,747

1,913,692

Indirect manufacturing expenses

 

500,808

445,920

 

 

2,233,555

2,359,612

 

 

Note 3         Other income

 

Consolidated

 

 

2017

2016

 

 

$

$

Foreign Exchange Gains - (net)

R&D Tax Incentive

 

                         

130,482

1,551,483

17,907

1,537,925

Make Good provision

 

-

249,856

Miscellaneous Income

 

399

61,756

 

 

1,682,364

1,867,444

 

 

Note 4         Other Expenses

 

Consolidated

 

 

 

2017

2016

 

 

 

$

$

 

 

 

 

 

 

Provision for Withholding Tax Diminution

 

     91,277

108,159

Provision for credit notes / doubtful debts

 

         (16,762) 

5,527 

Provision for make good on premises

 

5,527

   91,277

   Provision for returns and rework

 

(9,119) 

   Interest Expense

 

48,580 

22,706 

 

 

128,622 

103,692

 

 

 

Note 5        Loss per share

 

 

 

Consolidated

 

 

 

2017

2016

 

 

 

$

$

 

 

 

 

 

 

Net loss

 

(1,664,249)

(1,292,252)

 

 

 

 

 

 

Loss per share - undiluted

 

($0.006)

($0.005)

 

 

 

 

 

 

Weighted Average Share on Issue during the year

 

282,084,311

269,048,064

 

                 

 

 

-Ends-

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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