Last checked at 8 Sep 2014 07:00
8th September 2014
CAP-XX Limited
(CAP-XX" or the "Company")
Audited Results for the year ended 30 June 2014
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 2014.
Key highlights
· Sales revenue of AUD$4.0 million (2013: AUD$3.6 million) reflected an 11% year on year increase.
· Product Gross Margin (GM) was 13.6% (2013: 8.5%) on a like for like basis, after adjusting for the amortisation benefit of the Nationgate transaction.
· The majority of actions to realise cost savings have been put into place and the forecast savings are higher than initially estimated.
· Following the successful in launch of a prototype of its first automotive product and commencement of low volume sales for third party evaluation, CAP-XX's supercapacitor technology for automotive applications is now at an advanced stage, with detailed negotiations currently underway. The Board expects these to result in the securing of licensing revenues during the current financial year.
· Continue focus on current and new product development as well as improved production processes.
· Cash reserves at the end of June were AUD$0.9 million. A R&D tax rebate from the Australian Tax Office of AUD$1.2 million (2013: AUD$1.0 million) is expected to be received in September 2014.
Anthony Kongats, CEO of CAP-XX said:
Our order book remains strong and currently stands above historical average levels for this time of the year. Significant projects from both traditional and new markets are being addressed which should further boost both the order book and product revenue for the 2015 financial year. The progress on the delivery of operational cost savings is pleasing and the impact is already being seen in an improving product gross margin and a significant reduction in the cash burn. In addition to the encouraging launch of our automotive product, our partner, Murata, has become more active in the supercapacitor market securing several notable design wins and we are confident that the royalties received in the coming 12 months will begin to increase substantially.
For further information contact:
CAP-XX Limited
Anthony Kongats (Chief Executive Officer) +61 (0) 2 9428 0139
Kreab Gavin Anderson & Company (Financial PR)
Robert Speed +44 (0) 20 7074 1800
Cenkos Securities plc (Nominated Adviser and Broker)
Stephen Keys / Callum Davidson (Corporate Finance) +44 (0) 20 7397 1949
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.
Chairman's statement
The Company has made satisfactory progress during the year towards its major objectives realising operational cost savings, whilst further developing the automotive modules for a licensing deal and capitalising upon the increased commercial interest in CAP-XX supercapacitors to secure additional design wins.
Sales revenue for the 12 months to 30 June 2014 increased by AUD$0.4 million to AUD$4.0 million compared to AUD$3.6 million in 2013. This 11% increase is primarily due to the impact of the strengthening USD dollar over the past twelve months (11%), plus a volume increase of 2% whilst the average selling price reduced by 2%. More importantly, the actual gross margin on a like for like basis improved by AUD$238k. Year on year comparatives of gross margin and EBIT are after adjustment for the one-off benefit associated with the amortisation of the Nationgate benefit. To recap, when the plant and equipment was on sold to Nationgate in 2010, a book profit of $2.1 m was recognised and amortised over three years. The amortisation was reflected as a reduction in cost of goods sold in the Profit and Loss account. For the June 2014 accounts, the amortisation benefit was $194k (2013: $774k). Therefore, prior to the one-off Nationgate adjustment, delivered gross margin has improved by $234k from $304k (2013) to $538k. With volumes being steady year to year, the majority of this improvement is attributable to the operational cost initiatives which began to be realised in the 2012/13 financial year. The primary contributors to the operational cost savings to date have been a reduction in slitting expenditure, lower raw materials costs and a general improvement in process and manufacturing productivity at both Lane Cove and the Company's contract manufacturing sites. CAP-XX was also able to increase its sales headcount during the year to ensure that the increased interest in supercapacitor based applications was being addressed, especially for the Asian market. The Company has also maintained its focus on current and new product development as well as improved production processes with the Research and Development claim increasing to $1,172k (2013: $1,003k). The operating result for the twelve months to 30 June 2014 was a loss of AUD$2.5 million (2013: loss of AUD$2.3 million). On a like for like basis, with the above mentioned Nationgate amortisation impact taken into account, the operating loss was AUD$ 2.7 million (2013: AUD$ 3.1 million).
The Company was successful in launching a prototype of its first automotive product and commenced sales in very low volumes for the purposes of third party evaluation. This action has assisted the Company in responding to the increasing interest in the use of CAP-XX technology in the automotive market sector with interest being led by both OEM' s and tier 1 suppliers. In launching the prototype, CAP-XX's capability and performance is able to be tested and reviewed against competitor's products and we are pleased to report that the results are encouraging. As a direct result of these actions we can report that discussions on licensing of CAP-XX's supercapacitor technology for automotive applications are now at an advanced stage with detailed negotiations currently underway. The Board expects these to result in the securing of licensing revenues during the current financial year. Also during the year, the Company successfully completed the development work associated with the packaging of the SMD product.
As highlighted in earlier announcements, the Company is realising cost savings from its operations with the main focus on improving throughput and efficiencies at the Company's and contract manufacturers' plant and to reduce the cost of raw materials and processes. The majority of the actions to realise the cost savings have already been put into place and the savings realised are higher than initially forecast. The cost savings will assist in driving the Company towards a cash break-even position as well as making the CAP-XX product cost competitive and increasingly attractive to several new and emerging markets. With the increased focus on process improvement, both contract manufacturers are currently producing at increased levels of throughput and a significant reduction in reject rates.
Trading in the first few months of the new financial year has been promising with sales revenue above budget due to the deferral of shipments of the Company's small prismatic supercapacitor products because of raw material quality issues which were experienced during the 2014 financial year. The order book remains strong and is larger than has been historically recorded at the same time of the year. Significant projects from both traditional and new markets are being addressed which should boost both the order book and product revenue for the 2015 financial year. Cash reserves as at the end of June 14 were $0.9m with the monthly cash burn being significantly reduced due to the realisation of the operational cash savings and the increase in product revenue.
Murata's royalties continue to be less than expectated with revenue of $53k being recorded for the financial year 2014 (2013: $50k). Over the past twelve months, Murata has become more active in the supercapacitor market and have won several notable designs. Based on this market activity, coupled with sales and marketing discussions with Murata, the Board remain confident that the royalties received in the coming 12 months will begin to substantially increase.
The Company will continue to focus on the delivery of the identified initiatives, namely the continued reduction in operational expenditure, increased market demand leading to an increase in sales revenue, and the securing of an additional licensing opportunity which will enable the business to meet its short term goal of transitioning to a cash break-even business.
Patrick Elliott
Chairman
4 September 2014
Business Review
Review of Operations and Activities
Since CAP-XX launched its first supercapacitor in 2002, in excess of 10 million units have been sold. Since 2008, CAP-XX has established a new revenue stream with the commencement of license fees and other related payments including royalties from Murata. Whilst these payments have so far been modest, after further discussions with Murata, the Directors anticipate that they will increase substantially in the future.
During the year, significant effort was made to redesign products and processes to reduce manufacturing costs and to improve product performance. Results to date are encouraging and we expect to see the benefits continuing to flow through the 2015 financial year.
Business Environment
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 becomes smaller their capabilities increase.
Automotive applications such as Stop-Start systems, flat battery jump-starters, hybrid electric vehicles and electric vehicles present very attractive opportunities for CAP-XX's products. Numerous automotive OEMs and battery manufacturers have purchased samples and are currently evaluating CAP-XX's automotive products. The feedback to date has been 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.
CAP-XX technology provides a competitive advantage over other supercapacitor manufacturers, such as AVX, Maxwell Technologies and Nippon Chemicon Corporation. The Directors believe that other manufacturers are unable to match the CAP-XX technology for thinness, energy density and power density. Many competitors manufacture higher-capacity, larger package devices and focus on applications where the combination of thinness, energy density and power density is not an issue. In the future, CAP-XX's surface mount capability will offer another very significant point of difference with the competition.
Strategies for Growth
The Company continues to engage in discussions aimed at securing business with a number of global OEM's active in portable consumer electronics. We are strengthening relationships with these organisations and have regular engineering meetings together with their integrated board providers and design teams. 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. During the year new business was won in markets such as: security products; metering systems; flow control systems; location tracking; military products and mobile phone accessories.
The Company will continue to explore additional 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.
Separately, the Company is exploring the 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 CAP-XX technology and high performance supercapacitors, the Company believes that the automotive market in particular offers significant opportunities for growth.
Outlook
The major short term focus for CAP-XX is to drive the business to cash break-even through the product cost reduction strategies already underway; licensing of its automotive and SMD technologies to both end users and contract manufacturer partners; ensuring that the increase in sales enquiries and associated demand are followed up and lead to a strong increase in sales volumes from current and emerging markets; ensuring that distributors are in place to support the increase in world-wide demand for supercapacitor technology; and ensuring that the new business opportunities identified above are aggressively pursued.
CAP-XX Limited
Statement of profit or loss
For the year ended 30 June 2014
Consolidated | |||
2014 | 2013 | ||
Currency: Australian Dollars | Notes | $ | $ |
Revenue from continuing operations | 1 | 3,970,181 | 3,569,833 |
Cost of sale of goods & services | 2 | (3,236,009) | (2,492,111) |
Gross margin on sale of goods & services | 734,172 | 1,077,722 | |
Other revenue | 1 | 53,569 | 97,232 |
Other income | 3 | 1,208,337 | 1,084,932 |
General and administrative expenses | (2,115,193) | (2,205,774) | |
Process and engineering expenses | (429,233) | (441,692) | |
Selling and marketing expenses | (485,341) | (397,479) | |
Research and development expenses | (1,471,297) | (1,476,151) | |
Other expenses | 4 | (38,074) | (59,814) |
Loss before income tax | (2,543,060) | (2,321,024) | |
Income tax benefit | - | - | |
Net loss for the year | (2,543,060) | (2,321,024) | |
Loss attributable to owners of CAP-XX Limited | (2,543,060) | (2,321,024) | |
Earnings per share for (loss) attributable to the ordinary equity holders of the Company | Cents | Cents | |
Basic earnings/(loss) per share | 5 | (2.3) | (2.7) |
Diluted earnings/(loss) per share | 5 | (2.3) | (2.7) |
The above income statement should be read in conjunction with the accompanying notes.
CAP-XX Limited
Statement of comprehensive income
For the year ended 30 June 2014
Consolidated | |||||||
2014 | 2013 |
| |||||
Currency: Australian Dollars | Notes | $ | $ |
| |||
Loss for the year | (2,543,060) | (2,321,024) |
| ||||
Other comprehensive income |
| ||||||
Items that may be reclassified to equity
|
| ||||||
Exchange differences on translation of foreign operations | 9,271 | (57,501) |
| ||||
Other comprehensive income for the year, net of tax | 9,271 | (57,501) |
| ||||
Total comprehensive income for the year attributable to owners of CAP-XX Limited | (2,533,789) | (2,378,525) |
| ||||
CAP-XX Limited
Statement of financial position
As at 30 June 2014
Consolidated | ||||
June 30, 2014 | June 30, 2013 | July 1, 2012 | ||
Currency: Australian Dollars | Notes | $ | $ | $ |
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | 900,397 | 1,105,523 | 3,816,979 | |
Receivables | 558,805 | 488,528 | 616,946 | |
Inventories | 770,626 | 996,739 | 758,027 | |
Other | 1,244,045 | 1,075,415 | 1,174,121 | |
Total current assets | 3,473,873 | 3,666,205 | 6,366,073 | |
Non-current assets | ||||
Property, plant and equipment | 377,163 | 501,968 | 515,716 | |
Other | 236,507 | 236,507 | 236,507 | |
Total non-current assets | 613,670 | 738,475 | 752,223 | |
Total assets | 4,087,543 | 4,404,680 | 7,118,296 | |
LIABILITIES | ||||
Current liabilities | ||||
Payables | 829,188 | 1,024,628 | 900,264 | |
Provisions | 963,246 | 928,859 | 827,005 | |
Other | - | 193,579 | 772,650 | |
Total current liabilities | 1,792,434 | 2,147,066 | 2,499,919 | |
Non-current liabilities | ||||
Provisions | 39,847 | 35,926 | 230,612 | |
Total non-current liabilities | 39,847 | 35,926 | 230,612 | |
Total liabilities | 1,832,281 | 2,182,992 | 2,730,531 | |
Net assets | 2,255,262 | 2,221,688 | 4,387,765 | |
EQUITY | ||||
Contributed equity | 90,293,839 | 87,932,560 | 87,932,560 | |
Reserves | 3,676,779 | 3,461,424 | 3,306,477 | |
Accumulated losses | (91,715,356) | (89,172,296) | (86,851,272) | |
TOTAL EQUITY | 2,255,262 | 2,221,688 | 4,387,765 | |
CAP-XX Limited
Statement of changes in equity
For the year ended 30 June 2014
Consolidated | |||||
Contributed Equity $ | Reserves $ | Accumulated losses $ | Total $ | ||
Currency: Australian Dollars | Notes |
| |||
Balance at 1 July 2012 | 87,932,560 | 3,306,477 | (86,764,649) | 4,474,388 | |
Adjustment for correction of error | (86,623) | (86,623) | |||
Balance as 1 July 2012 | 87,932,560 | 3,306,477 | (86,851,272) | 4,387,765 | |
Profit for the period as reported in the 2013 financial statements | (2,321,024) | (2,321,024) | |||
Other comprehensive income | - | (57,501) | - | (57,501) | |
Transactions with owners in their capacity as owners: | |||||
Contributions of equity, net of transaction costs | - | - | - | - | |
Employee share options ‑ value of employee services | - | 212,448 | - | 212,448 | |
- | 212,448 | - | 212,448 | ||
Balance at 30 June 2013 | 87,932,560 | 3,461,424 | (89,172,296) | 2,221,688 | |
Profit for the period as reported in the 2014 financial statements | (2,543,060) | (2,543,060) | |||
Other comprehensive income | - | 9,271 | - | 9,271 | |
Transactions with owners in their capacity as owners: | |||||
Contributions of equity, net of transaction costs and tax | 2,361,279 | - | - | 2,361,279 | |
Employee share options ‑ value of employee services | - | 206,084 | - | 206,084 | |
2,361,279 | 206,084 | - | 2,567,363 | ||
Balance at 30 June 2014 | 90,293,839 | 3,676,779 | (91,715,356) | 2,255,262 | |
CAP-XX Limited
Statement of cash flows
For the year ended 30 June 2014
Consolidated | |||
2014 | 2013 | ||
Currency: Australian Dollars | Notes | $ | $ |
Cash flows from operating activities | |||
Receipts from customers (inclusive of goods and services tax) | 4,296,922 | 4,055,235 | |
Payments to suppliers and employees (inclusive of goods and services tax) | (7,853,287) | (7,555,968) | |
(3,556,365) | (3,500,733) | ||
Tax credit received | 1,003,523 | 1,065,552 | |
Grants received | 8,733 | 12,500 | |
Interest received | 53,569 | 97,232 | |
Net cash (outflow) from operating activities | (2,490,540) | (2,325,449) | |
Cash flows from investing activities | |||
Payments for property, plant and equipment | (85,136) | (328,506) | |
Net cash (outflow) from investing activities | (85,136) | (328,506) | |
Cash flows from financing activities | |||
Proceeds from issue of shares (net of costs) | 2,361,279 | - | |
Net cash inflow from financing activities | 2,361,279 | - | |
Net increase in cash and cash equivalents | (214,397) | (2,653,955) | |
Cash and cash equivalents at the beginning of the financial year | 1,105,523 | 3,816.979 | |
Effects of exchange rate changes on cash and cash equivalents | 9,271 | (57,501) | |
Cash and cash equivalents at the end of the financial year |
| 900,397 | 1,105,523 |
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 | ||
2014 | 2013 | ||
$ | $ | ||
Sales revenue | |||
Sale of goods | 3,970,181 | 3,569,833 | |
3,970,181 | 3,569,833 | ||
Other revenue | |||
Interest | 53,569 | 97,232 | |
53,569 | 97,232 | ||
Note 2 Cost of Sale of Goods | Consolidated | ||
2014 | 2013 | ||
$ | $ | ||
Direct materials and labour | 2,565,517 | 1,656,201 | |
Indirect manufacturing expenses | 670,492 | 835,910 | |
3,236,009 | 2,492,111 | ||
Note 3 Other income | Consolidated | ||
2014 | 2013 | ||
$ | $ | ||
Foreign Exchange Gains - (net) | 27,157 | 95,801 | |
Government grants R&D Tax Incentive | - 1,172,447 | 12,500 976,631 | |
Miscellaneous Income | 8,733 | - | |
1,208,337 | 1,084,932 | ||
Note 4 Other Expenses | Consolidated | ||
2014 | 2013 | ||
$ | $ | ||
Provision for credit notes / doubtful debts | (5,275) | 3,881 | |
Provision for make good on premises | 60,879 | 51,592 | |
Provision for Withholding Tax Diminution | 2,788 | 2,701 | |
Provision for returns and rework | (20,319) | 1,640 | |
38,073 | 59,814 | ||
Note 5 Loss per share | Consolidated | ||
2014 | 2013 | ||
$ | $ | ||
Net loss | (2,543,060) | (2,321,024) | |
Loss per share - undiluted | ($0.023) | ($0.027) | |
Weighted Average Share on Issue during the year | 109,749,411 | 86,277,430 | |