TIDMCPX
RNS Number : 5192L
CAP-XX Limited
04 October 2016
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
4(th) October 2016
CAP-XX Limited
("CAP-XX" the "Company")
Audited results for the year ended 30 June 2016
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
2016.
Key highlights
-- Sales revenue of A$5.0 million (2015: A$4.4 million) reflected a 12% year on year increase
-- Gross Margin (GM) increased to 52% (2015: 31%) on a like-for-like basis, reflecting significant progress in the
transformation of the Company
-- Good progress in monetization of intellectual property and the sale of small and large supercapacitors
-- Completed the sale of a non-exclusive licence with AVX with upfront licence fees and guaranteed royalty payments
spread over the first three years
-- AVX product launched in September 2016 and first quarterly royalty payment received
-- The Company benefitted from a sharp increase in royalties from Murata, up 117% following a 106% rise in the
previous year
-- Achieved first design win for the new Thinline product range for a smart credit card for customer delivery in
2017. A thinner 400 micron product is under development
-- Significant operational cash savings realised and the Company has identified further cost savings, which should
incrementally improve gross margin and enhance future product competiveness
-- During FY16, the company expanded its development efforts for automotive applications both in terms of new
customers and product
-- Cash reserves at the end of June were A$0.3 million. A$1.7m was received from AVX following the year end. R&D tax
rebate from the Australian Tax Office of A$1.5 million (2014: A$1.1 million) is also expected to be received in
October 2016
Anthony Kongats, CEO of CAP-XX said:
"We are pleased with the progress made in commercialising our
small and large supercapacitor products and the success of our
technology licence wins, which have seen new products launched to
market by both Murata and AVX and a consequent strengthening of
CAP-XX's licence income. We look forward to announcing more
progress in 2017."
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
This has been another year of strong progress as the Company has
continued to diversify its income base from the sales of its
traditional supercapacitor products with the sale of a non
exclusive licence to AVX; another year of plus 100% growth in
Murata royalties; expansion of our efforts in the automotive
markets and the first design win for the Thinline range of
supercapacitors.
Licensing activity for the past twelve months has been extremely
positive, with the finalisation of the AVX license and the
broadening of the Murata agreement. CAP-XX licensed its patents to
AVX on a non-exclusive basis for a range of prismatic and
cylindrical sizes of supercapacitors. Under the terms of the
licence, CAP-XX will receive annual licence fees, plus quarterly
guaranteed minimum royalty payments, over a three-year period
denominated in Sterling, reflecting the fact that CAP-XX is quoted
on AIM. Thereafter, CAP-XX will receive a 5% royalty for the life
of the patents, with the royalty being based on the volume of sales
of supercapacitors sold by AVX covered by CAP-XX patents. The
initial licence fee of GBP1 million, which has been booked as
revenue in the FY16 financial year, was paid by AVX in early July
16, with the first royalties under this licence already having been
received. For the Company, the AVX licence deal is very
significant. Not only does it provide further validation of the
strength of the CAP-XX intellectual property but it also validates
our belief that the Company can successfully monetise the value of
this intellectual property in ways other than through direct
product sales. In addition, this agreement opens up new income
streams and sales markets for CAP-XX and new possibilities for
ongoing collaboration.
In April 2016, Murata and CAP-XX reached agreement to broaden
the existing licence agreement to include battery markets and
additional supercapacitor sizes. Following this agreement, Murata
announced in late June 16 that it was launching a range of lithium
ion batteries. Murata has confirmed that mass production of the new
device commenced in June 2016 and that it plans to expand its
product line-up to meet future demand for large capacity devices.
Royalty payments from Murata continue to grow with total royalties
for the year ended June 16 totalling A$238K. This is the second
successive year that Murata's royalties have doubled from the
previous year (2015: A$108K). The Board remains confident that the
cash flow from Murata's royalty stream will continue to grow.
Total sales revenue for the year to 30 June 16 increased by
A$0.6 million to AUD$5.0 million compared to A$4.4 million in 2015.
The CAP-XX sales revenue has also seen a significant shift in mix.
While sales from licencing and royalties have increased, sales of
the traditional small supercapacitors have declined over the last
twelve months as many of CAP-XX's customers have experienced
difficult market conditions and looked to reshape their own
businesses. Some of the Company's traditionally strong markets such
as Point of Sale (POS) and handheld terminals are in a state of
transition, just as new market opportunities for CAP-XX like smart
credit cards, security cards, energy harvesting and wearables take
off. Overall, the Board remains pleased with the number of large
volume opportunities that are currently being pursued by the CAP-XX
sales team. The majority of these opportunities are in the Internet
of Things (IoT) market and may require even thinner ultrathin
supercapacitors at 0.4mm compared to our current 0.6mm Thinline
products. A 0.4 mm product is under development. The Company is
focussed on accelerating the adoption of its products into these
key target markets.
Total operational expenditure has increased on a year-on-year
basis. The Board has made a conscious decision to invest resources
in R&D, product development and manufacturing to lower the
Group's manufacturing costs and to develop products with higher
gross margins. The majority of the additional expense incurred was
eligible research and development expenditure and will be subject
to a 45% subsidy from the Australian Federal Government, with the
total tax claim for the year to June 2016 increasing to A$1,537K
(2015: A$1,127K). The Company also took advantage of an offer for a
A$1m line of credit facility to fund any delay in the payment of
this tax claim. This facility is expected to be repaid in full in
October 2016. In the financial year ended June 2016, CAP-XX also
incurred "one-off" expenses associated with the AVX and Murata
licensing agreements plus costs associated with the re-negotiation
of the Lane Cove lease. Due to the timing of these new
arrangements, the full financial benefit was not realised in the
year to 30 June 2016 but will be in the current and future
financial years.
The operating result for the year to June 2016 was a loss of
A$1.13million (2015: loss of A$1.9 million). The result for the
year to June 2016 also includes a one-off catch up in employee
share options expense, due to timing and vesting conditions with
additional expense being recognised in the early years after the
grant of the options, rather than on a straight line basis.
However, if the options are never exercised and eventually expire
there is no possibility to write back this expense and associated
reserve. Consequently, while the Board acknowledges that it has no
alternative but to comply with the accounting standards, it
strongly rejects the premise behind this accounting treatment as it
severely disadvantages technology start-ups. As a result of this
change in accounting treatment, in the year to 30 June 2016, there
was an increase in the expense related to these share based
payments of A$289K to a total of A$416K (from a total of A$127k in
FY15).
The past twelve months have seen increasing market interest in
CAP-XX's large cell products. In addition to the truckStart module
for heavy vehicles, the Company has also developed the powerModule
for passenger vehicles. Several sales of both truckStart and
powerModule products and individual cells have been made for heavy
vehicle and passenger vehicle applications globally. While these
sales are still for evaluation purposes, the results from customers
to date have been excellent and discussions are continuing with
potential partners on how best to manufacture, market and finance
these new business streams. Further design refinement and
development of the large cell supercapacitor is continuing to
ensure that our customers' expectations are realised, if not
bettered. And while the majority of interest for our large
supercapacitors is coming from international automotive markets, we
have also received interest from the grid and stationary energy
storage markets.
We are looking forward to further positive progress in the
coming year.
Patrick Elliott
Chairman 4th October 2016
Business Review
Review of Operations and Activities
The signing of the AVX licence 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.
The royalties from Murata have continued to improve with
royalties for the year to 30 June 2016 more than doubling to A$236K
(2015: A$109K) for the second successive year. The level of royalty
increase is pleasing and is consistent with the discussions held
with Murata's management regarding sales and marketing efforts and
known design wins. CAP-XX's internal sales team are also observing
that Murata's presence in the traditional supercapacitor markets is
becoming increasingly active and the Board remains confident that
the Murata royalties will continue to increase in the foreseeable
future, especially with the broadening of the Murata licence to
incorporate the Murata lithium-ion battery which was released to
the market in June 2016.
During the year, we continued to invest significant resources in
redesigning products and processes to reduce manufacturing costs
and to improve product performance as well as to reduce the number
of standard products for which we carry inventory. The results to
date are significant and we expect to see the benefits continuing
to flow through the 2017 and 2018 financial years in increased
sales.
Business Environment
The Directors believes that the CAP-XX technology provides a
competitive advantage over other supercapacitor manufacturers, such
as Maxwell Technologies, Ioxus, Nippon Chemicon Corporation and
other Chinese and Korean competitors, as they 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, new
products like CAP-XX's surface mountable supercapacitor, which is
under development, should offer additional significant reductions
in size and cost whilst providing an increase in performance.
Portable electronic devices, 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 these devices. This means that power
management continues to be an increasingly important consideration.
The other important factor is size, as devices become smaller
whilst their capabilities increase. During the year, the Company
was successful in winning new business from a range of markets
including smart credit cards; energy harvesting; mobile phones;
machine to machine (M2M) communication modules; medical products
and other products targeting the internet of things (IoT). However,
it also faced threats in these markets from cheaper cylindrical
supercapacitors where the thin form, high power and long life of
CAP-XX's products are not valued as highly as lower initial cost.
In addition, our customers' markets are constantly evolving as new
products and technologies threaten the incumbents. In this
environment, CAP-XX needs to remain flexible to changing business
conditions.
Automotive applications such as Stop-Start systems, flat battery
jump-starters, hybrid electric vehicles and electric vehicles also
present very attractive opportunities for CAP-XX's products.
Numerous automotive OEMs and automotive Tier-1 suppliers have
purchased products such as our truckStart and powerModule units for
evaluation. The feedback to date has been very pleasing. During the
year, additional plant and equipment was purchased and commissioned
to enhance our ability to produce these large supercapacitors and
to assemble them into modules suitable for use in motor vehicles.
However, automotive markets have historically been slow to adopt
new technology.
Opportunities
CAP-XX is continuing to refine the products it offers for the
IoT, portable electronics and other markets for its traditional
small and Thinline supercapacitors. The Thinline range of
supercapacitors, which are just 0.6mm thick, were developed to
address the space-constrained needs of the IoT. During the year,
CAP-XX achieved its first design win for a smart credit card. The
Company is actively pursuing many other similar applications where
the feedback has been very positive. However, we have also received
feedback that in some instances even at 0.6mm, the thickness may be
too much and that a 0.4mm product is required for certain
applications. The Company is watching these developments closely
and has put in place a product development plan to launch a 0.4mm
product. All of these markets are forecast to be very high volume
opportunities.
CAP-XX is also concentrating on a number of automotive
opportunities including heavy vehicle engine cranking with its
truckStart product and micro and mild hybrid passenger vehicles
with its powerModule product. The world wide interest in these and
other applications for large cells has markedly increased over the
past twelve months, with numerous modules being shipped to several
customers for evaluation. Results to date have been very positive
and indicate our performance is superior to the competition. Whilst
discussions continue, the Board is hopeful that some of these
opportunities will evolve into future licensing or joint venture
arrangements.
We expect licencee sales from Murata and AVX to grow
significantly in the coming years, as more consumer applications
adopt supercapacitor technology.
One of the significant additional benefits of the Murata and AVX
licencing agreements is that they validate CAP-XX's technology
leadership in the field of supercapacitor 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 its supercapacitors, and reduce misconceptions about
price and performance. 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 or joint ventures. Given the
increasing levels of market interest in the CAP-XX technology and
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 automotive and truck OEM's. 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 explore additional opportunities to
increase the product offering both through the current distributors
and direct to customers.
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 and development
facility in Sydney, Australia, where a team of 16 engineers and
scientists work to maintain CAP-XX's leading position in electrode,
separator and electrolyte materials and their assembly into
supercapacitor devices. We also have a close association with
several leading, third party research institutions, whilst our
Scientific Advisory Board provides the Company with clear direction
on commercially relevant technologies for our ongoing R&D
programme.
The market in which the Company operates is competitive and is
characterised by rapid technological change. CAP-XX has a strong
competitive position in all 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 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 22 patents. 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. The Board believes that the recent AVX agreement and the
recent expanded Murata agreement are evidence of the strength and
breadth of this portfolio and that it will be further strengthened
by R&D activities currently underway.
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. The Company expects to see
further significant progress over the next twelve months.
CAP-XX Limited
Statement of profit or loss
For the year ended 30 June 2016
Consolidated
2016 2015
Currency: Australian Notes
Dollars $ $
Revenue from continuing
operations 1 4,965,448 4,434,642
Cost of sales 2 (2,359,612) (3,080,361)
------------ -------------
Gross Profit 2,605,836 1,354,281
Other revenue 1 25,597 21,011
Other income 3 1,867,444 1,312,336
General and administrative
expenses (2,589,480) (2,046,151)
Process and engineering
expenses (885,418) (564,197)
Selling and marketing
expenses (664,239) (584,821)
Research and development
expenses (1,548,300) (1,306,971)
Other expenses 4 (103,692) (65,826)
------------ -------------
Loss before income tax (1,292,252) (1,880,338)
------------ -------------
Income tax benefit - -
Net loss for the year (1,292,252) (1,880,338)
------------ -------------
Loss attributable to
owners of CAP-XX Limited (1,292,252) (1,880,338)
============ =============
Earnings per share for
loss attributable to
the ordinary equity
holders of the Company Cents Cents
Basic loss per share 5 (0.5) (1.3)
Diluted loss per share 5 (0.5) (1.3)
CAP-XX Limited
Statement of comprehensive income
For the year ended 30 June 2016
Consolidated
2016 2015
Currency: Australian Notes
Dollars $ $
Loss for the year (1,292,252) (1,880,338)
Other comprehensive
income
Items that may be reclassified
subsequently to profit
or loss
Exchange differences
on translation of foreign
operations (45,042) (139,539)
Other comprehensive
loss for the year, net
of tax (45,042) (139,539)
Total comprehensive
loss for the year attributable
to owners of CAP-XX
Limited (1,337,294) (2,019,877)
CAP-XX Limited
Statement of financial position
As at 30 June 2016
Consolidated
June 30, June 30,
2016 2015
Currency: Australian Notes
Dollars $ $
ASSETS
Current assets
Cash and cash equivalents 331,631 2,643,418
Receivables 2,078,941 685,192
Inventories 1,365,524 1,409,463
Other 1,700,147 1,252,158
--------------- ---------------
Total current assets 5,476,243 5,990,231
--------------- ---------------
Non-current assets
Property, plant and
equipment 364,695 301,272
Other 236,507 236,507
--------------- ---------------
Total non-current assets 601,202 537,779
--------------- ---------------
Total assets 6,077,445 6,528,010
--------------- ---------------
LIABILITIES
Current liabilities
Payables 642,358 1,074,711
Provisions 663,069 915,862
Secured Loans 1,000,000 -
Total current liabilities 2,305,427 1,990,573
--------------- ---------------
Non-current liabilities
Provisions 65,664 42,487
---------------
Total non-current liabilities 65,664 42,487
--------------- ---------------
Total liabilities 2,371,091 2,033,060
--------------- ---------------
Net assets 3,706,354 4,494,950
=============== ===============
EQUITY
Contributed equity 94,558,726 94,426,347
Reserves 4,035,574 3,664,297
Accumulated losses (94,887,946) (93,595,694)
---------------
TOTAL EQUITY 3,706,354 4,494,950
=============== ===============
Statement of cash flows
For the year ended 30 June 2016
Consolidated
2016 2015
Currency: Australian
Dollars $ $
Cash flows from operating
activities
Receipts from customers
(inclusive of goods
and services tax) 4,167,729 4,716,519
Payments to suppliers
and employees (inclusive
of goods and services
tax) (8,466,934) (8,067,711)
-------------- -----------
(4,299,205) (3,351,192)
Tax credit received 1,127,272 1,172,447
Interest received 25,597 21,011
-------------- -----------
Net cash (outflow) from
operating activities (3,146,336) (2,157,734)
============== ===========
Cash flows from investing
activities
Payments for property,
plant and equipment (252,788) (92,214)
Net cash (outflow) from
investing activities (252,788) (92,214)
============== ===========
Cash flows from financing
activities
Proceeds from issue
of shares (net of costs) 132,379 4,132,508
Proceeds from Loan 1,000,000 -
Net cash inflow from
financing activities 1,132,379 4,132,508
============== ===========
Net increase/(decrease)
in cash and cash equivalents 2,266,745 1,882,560
Cash and cash equivalents
at the beginning of
the financial year 2,643,418 900,397
Effects of exchange
rate changes on cash
and cash equivalents (45,042) (139,539)
-------------- -----------
Cash and cash equivalents
at the end of the financial
year 331,631 2,643,418
============== ===========
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
2016 2015
$ $
Sales revenue
Sale of goods & services 4,965,448 4,434,642
4,965,448 4,434,642
--------- ---------
Other revenue
Interest 25,597 21,011
--------- ---------
25,597 21,011
--------- ---------
Note 2 Cost of Sale Consolidated
of Goods
2016 2015
$ $
Direct materials and
labour 1,913,692 2,613,609
Indirect manufacturing
expenses 445,920 466,752
--------- ---------
2,359,612 3,080,361
--------- ---------
Note 3 Other income Consolidated
2016 2015
$ $
Foreign Exchange Gains
- (net) 17,907 185,064
R&D Tax Incentive 1,537,925 1,127,272
Make Good provision 249,856 -
Miscellaneous Income 61,756 -
----------------------------------- ----------
1,867,444 1,312,336
----------------------------------- ----------
Note 4 Other Expenses Consolidated
2016 2015
$ $
Provision for Withholding
Tax Diminution 108,159 777
Provision for credit
notes / doubtful debts (18,054) 6,194
Provision for make
good on premises - 71,839
Provision for returns
and rework (9,119) (12,984)
Interest Expense 22,706 -
103,692 65,826
------------ -----------
Note 5 Loss per share Consolidated
2016 2015
$ $
Net loss (1,292,252) (1,880,338)
Loss per share - undiluted ($0.005) ($0.013)
Weighted Average Share
on Issue during the
year 269,048,064 146,059,771
This information is provided by RNS
The company news service from the London Stock Exchange
END
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