Cap-xx Regulatory News (CPX)

1 Oct 2007 07:01

CAP-XX Limited01 October 2007 1 October 2007 CAP-XX Limited Audited Results for the year ended 30 June 2007 • Sales for period AUD$5.0, up 93% • 1.4 million units sold, 118% up on 2006 levels • Loss before tax of AUD $9.0 million (2006 loss: AUD$10.3 million) • Year end cash balance AUD$10.7 million • Continued strong growth in existing applications for wireless consumer and commercial applications • Substantial progress achieved towards a large-scale design commission from a mobile phone handset manufacturer • Negotiations continue towards concluding manufacturing agreement with a world scale electronics component manufacturer • We remain confident of further progress in 2008 Anthony Kongats, CEO of CAP-XX said "During the year we have made significant progress in developing relationshipswith the major mobile phone manufacturers and the integrated circuit designers,with trials of our unique supercapacitor technology underway. We have beensuccessfully working with international equipment manufacturers to develop therequired mass volume production systems. We are also encouraged by the tractionour distributor network is gaining in the broader wireless and electronicsmarket." For further information contact: CAP-XXAnthony Kongats, Chief Executive Officer +44 (0) 79 1948 2484 +61 (0) 2 9428 0139 Gavin Anderson & Company (Financial PR)Robert Speed / Deborah Walter +44 (0) 20 7554 1400 Collins Stewart (Nomad)Tim Mickley +44 (0) 20 7523 8000 More information is available at www.cap-xx.com Notes to Editors: CAP-XX is a world leader in the design and manufacture of thin formsupercapacitors and energy management systems, predominantly for portableelectronic devices. The unique feature of CAP-XX's supercapacitors is their ability to store highvolumes of energy and output high power levels within a thin form design. Theseattributes will be critical for the next generation of high volume, power-hungryportable electronic devices, including mobile phones. Portable devices are one of the fastest growing segments of the electronicsmarket and provide the greatest opportunities for CAP-XX's products. CAP-XX'sproducts are already an established enabling technology for the currentgeneration of wireless devices, such as PDAs and PCMCIA cards. Chairman's Statement The Company made good progress during the year towards its major objectives ofobtaining a large-scale design commission from a mobile phone handsetmanufacturer and arranging a manufacturing agreement with a world scaleelectronics component manufacturer. At the time of the IPO we were of the viewthat one or other of these would occur from the middle of 2007. The company focused on these major objectives during the year and we aresatisfied with progress towards developing credibility and relationships that weexpect will result in successful outcomes during the course of this financialyear. We have also actively engaged with the various suppliers and integratedcircuit design houses that support the major handset manufacturers globally.These customers are expanding the array of solutions on offer using oursupercapacitor as a core technology feature. Progress on other aspects of the business has been very satisfactory. I am pleased to report we have maintained solid growth across our currentmarkets with product shipments well up on last year. We shipped 1.4 millionunits in 2007, compared with 0.6 million units in 2006. Revenue at AUD$5.0million for the 12 months to 30 June 2007 is nearly double the 2006 result ofAUD$2.6 million. As expected, with a greater proportion of sales going throughthe enlarged distributor network and with larger size orders now being achieved,average selling prices trended down slightly as customers availed themselves ofthe volume discounts. As a supplier to the global electronics markets we priceour products in US dollars and adverse exchange rate movements trimmed reportedrevenues by 6%. Our success in penetrating European markets is reflected in the sales growth forthe year. Sales into the established North American and Asian markets have alsogrown significantly. Our overall result for the twelve months to 30 June 2007 was a loss of AUD$9.0million (2006 loss of AUD$10.3 million). The operating loss from tradingoperations was AUD$9.9 million (2006 loss AUD$9.7 million) with negative EBITDAof AUD$9.2 million (2006 negative AUD$6.0 million). We have made significant investments in people, and addressing infrastructureand processes to ensure the creation of long-term shareholder value. During theyear we focused on developing the production process engineering requirements toreach large-scale volume production suitable for rapid deployment tomanufacturing partners. As I foreshadowed in my previous report, we alsoinvested extensively in research and development and production to attain theexacting quality levels required by mobile phone markets. We have improvedproduction yield rates considerably at our contract manufacturing site andfurther progress is expected in this area. As CAP-XX is highly dependent on its intellectual property to generate futurereturns, we will increase expenditure on research and development to furtherstrengthen our competitive position. We bolstered the Company's sales and marketing capability with particularemphasis on mobile phone markets. The appointment of UK based businessdevelopment staff in our new offices outside London will further facilitate theimmediacy and quality of service to the major mobile phone manufacturers. As isusually the case with early stage companies, sales and marketing spend willremain high relative to revenues for this financial year as CAP-XX establishesand expands its customer base. We will continue to service the growing base ofnon-mobile markets of our existing direct customers as well as through ourdistributor network. The Company has commenced the new financial year with a firm order book fromexisting customers and we continue to see a good flow of new prospects andopportunities across all our target markets covering wireless, consumer andcommercial applications. CAP-XX is well placed to benefit substantially from the increasing energymanagement demands of portable electronic devices and we look forward to a yearof good progress. We continue to focus our efforts towards a mobile phonehandset design win and a manufacturing agreement with an internationalelectronics manufacturer. Michael QuinnChairman Business Review About CAP-XX Limited CAP-XX Limited is a world leader in the design and manufacture of revolutionarythin-form supercapacitors predominately for use in small portable electronicdevices. Supercapacitors can considerably extend battery run-times and supportspower-hungry applications that are not possible with current battery technology. CAP-XX supercapacitors have a compact, thin-form design and store higher volumesof energy and output higher power levels than competing supercapacitor products.These attributes are critical for current and future generation electronicdevices, such as mobile phone cameras with a quality flash photography capability and high quality audio capabilities. Other potential applications include mobile phone power management, mobile phone accessories, digital still cameras, MP3 players, portable drug delivery systems, wireless sensors, uninterrupted power supplies, toll tags and location tracking devices. The Company believes that fuel cells will have a part to play in the solution to battery limitations and that the provision of peak load power management systems for fuel cells offers a significant opportunity to CAP-XX. Portable devices are a fast-growing segment of the electronics market. In 2006,well over a billion mobile phones were sold. In addition several 100 millionlaptops, toys, digital cameras and MP3 players. Many of these devices couldbenefit from supercapacitors. In 2006-2007, CAP-XX supplied supercapacitors to a number of blue chip consumerelectronics companies for use in current generation wireless devices such asruggedised PDAs (personal digital assistants) and PCMCIA cards. CAP-XX is nowfocusing on the camera phone market and is in discussions with leading mobilephone manufacturers. CAP-XX is incorporated in Australia, employing 50 staff. It has its headquarters, research and development and manufacturing facilities in Sydney, Australia. These facilities have ISO 9000 status. Under a manufacturing agreement with CAP-XX, Polar Twin Advance Sdn Bhd (PTA) operates a similar, but larger manufacturing facility, in Malaysia. Opportunities The rapidly growing camera phone market is an area of opportunity as mobilehandset providers seek to provide increasingly power hungry applications, such as quality camera flash photography. At present there is a widening gap between the power these applications require and the power current battery technology can provide. There is also a strong move towards improving the sound quality of the music played through the mobile phones and our supercapacitors can provide avital link in achieving this goal. CAP-XX is ideally placed to provide an immediate solution to the issue of powerin mobile devices and is in discussions with leading mobile phone handsetmanufacturers for the commercial deployment of its technology for camera-phoneflash applications. This includes interactions with international integratedcircuit (IC) companies that are developing new chips to work with supercapacitorproducts to provide the power required. These companies are increasingly offering attractive solutions to their markets using our supercapacitors. Trials of their products are underway with selected vendors. Discussions with the mobile phone companies are leading to additional opportunities in their accessories markets where our brite sound audio technology can provide significantly better quality sound to this market sector as a stand alone feature if not already incorporated into the phone itself. Other potential applications include digital still cameras, MP3 players, portable drug delivery systems, wireless sensors, uninterrupted power supplies, toll tags and location tracking devices. The Company believes that fuel cells will also have a part to play in the solution to battery limitations and believes that this also offers another significant opportunity to CAP-XX. Leading players in the mobile device industry are currently attempting toredesign the power architecture of their devices based on batteries with higherenergy densities. The key aim with these batteries is to increase runtime but aside effect of this benefit will be a different voltage discharge curve, whichthe Company believes will require the inclusion of supercapacitors for smoothingthe discharge from peak power. CAP-XX has identified possible resistance by applications designers and engineers to accepting a new technology to be a potential barrier to entry to new markets and has placed a strong focus on providing sample kits, and engineering and design support services to application developers to facilitate consideration and acceptance of CAP-XX products. Supplying to their accessories market adds anattractive dimension to their risk management strategies. Strategies for Growth The Company continues to have discussions aimed at securing business with anumber of global original equipment manufacturers active in mobile phone andportable consumer electronics. We hold regular engineering meetings together with their integrated circuit board providers as well as strengthening ourrelationships across their organizations. CAP-XX opened an office outside London where our mobile phone businessdevelopment team are based. We also have an experienced technical sales team inthe USA. Asia is covered from our Sydney office. We closed our Taiwan office inJuly 2007. Most sales to date have been achieved by direct sales. The companyplans to maintain direct sales contacts with key customers. To gain broadermarket coverage, the Company has entered into distribution agreements with anumber of well-qualified distributors covering Asia (inclusive of Japan, Korea and China) and Europe. Sales growth from this distributor network is encouraging and their experience in selling our product is steadily improving. CAP-XX undertakes selected marketing campaigns, attends trade shows and has awebsite, www.cap-xx.com. In addition, CAP-XX strongly supports electronic systemdesigners by providing engineering and design services for selection andapplication of supercapacitors, evaluation sample kits for experimentation anddevelopment work, and application briefs and notes (including examples). Research and Development CAP-XX has a research facility at its headquarters in Lane Cove, Australia wherea research and development team comprised of 11 engineers and scientists iscontinuing development work to maintain CAP-XX's lead position in the engineering of electrode, separator and electrolyte material in supercapacitor devices. We have a close association with leading personnel across various research institutions. Our Scientific Advisory Board provides clear direction on the commercially relevant technologies our R&D programme should address. The market in which the Company operates is competitive and is characterised byrapid technological change. The Company believes that it currently has a strongcompetitive position in all its target markets covering wireless, consumer andcommercial applications with its capability to produce supercapacitors with ahigh energy density and power density in a small conveniently sized flat package. Furthermore, the CAP-XX devices are 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 its intellectual property and to prevent any infringements by it of others' intellectual property. CAP-XX has sought to protect its intellectual property and has considerable intellectual property embodied in patents covering the design, manufacture and use of its high performance supercapacitors. The CAP-XX patent portfolio currently consists of 18 patent families, 14 granted US patents, 14 US patent applications and corresponding international patents and applications. The patents cover supercapacitive devices, components for supercapacitors, techniques for manufacturing devices and applications of the devices in electronic circuits. Outlook The Company expects to continue strong revenue growth from its current businessfocused on smaller markets. The order book for the first quarter has grownsubstantially. Future profitability and the long term success of the Company will depend,however, on translating this initial success into large scale opportunities inmarkets such as mobile phone handsets for camera flash, and general powerapplications. The Company made good progress during 2007 towards its objectives of alarge-scale design commission from a mobile phone handset manufacturer and amanufacturing agreement with a world scale electronics component manufacturer. At the time of the IPO we were of the view that one or other of these may occur from the middle of 2007. We also actively engaged with the various suppliers andintegrated circuit design houses that support the major handset manufacturersglobally. These customers are expanding the array of solutions on offer using our supercapacitor as a core technology feature. The company will continue to focus on developing credibility and relationshipswith handset manufacturers and component manufacturers with the objective of asuccessful design win and manufacturing agreement during the course of thisfinancial year. CAP-XX LimitedIncome statementFor the year ended 30 June 2007 Consolidated 2007 2006 Currency: Australian Dollars Notes $ ' 000 $ ' 000 Revenue from sale of goods 1 4,983 2,581Cost of sale of goods 3 (5,162) (6,751) ----------------------Gross margin (loss) on sale of goods (179) (4,170) Other revenue 1 926 764Other income 2 150 176 General and administrative expenses (3,968) (2,005) Process and engineering expenses (964) (410) Selling and marketing expenses (1,650) (1,217) Research and development expenses (2,840) (1,904) Finance costs 3 - (911)Other expenses 3 (466) (645) ----------------------(Loss) before income tax (8,991) (10,322) ---------------------- Income tax benefit / (expense) - - ----------------------Net (loss) for the year (8,991) (10,322) ---------------------- CAP-XX LimitedBalance sheetsAs at 30 June 2007 Consolidated 2007 2006 Currency: Australian Notes $ ' 000 $ ' 000Dollars ASSETS Current assetsCash and cash equivalents 10,744 20,107Receivables 958 850Inventories 920 351Other 94 126 ----------------------Total current assets 12,716 21,434 ---------------------- Non-current assetsProperty, plant and equipment 2,779 1,678Other 153 153 ----------------------Total non-current assets 2,932 1,831 ----------------------Total assets 15,648 23,265 ---------------------- LIABILITIESCurrent liabilitiesPayables 1,622 1,070Provisions 507 449 ----------------------Total current liabilities 2,129 1,519 ---------------------- Non-current liabilitiesProvisions 124 113 ----------------------Total non-current liabilities 124 113 ----------------------Total liabilities 2,253 1,632 ----------------------Net assets 13,395 21,633 ====================== EQUITYContributed equity 75,722 75,588Reserves 1,033 414Accumulated losses (63,360) (54,369) ----------------------TOTAL EQUITY 13,395 21,633 ====================== CAP-XX LimitedStatements of changes in equityFor the year ended 30 June 2007 Consolidated 2007 2006 Currency: Australian Dollars $ ' 000 $ ' 000 Total equity at the beginning of the financial year 21,633 (2,920) ----------------------Exchange differences on translation of foreign operations 2 (1) ----------------------Net income (loss) recognised directly in equity 2 (1)(Loss) for the year (8,991) 10,322) ----------------------Total recognised income and expenses for the year (8,989) (10,323) ----------------------Transactions with equity holdersin their capacity as equityholders:Employee share options 617 416Exercise of options 134 35Share buy-back - (2,630)Contributions of equity, net of issuance costs - 37,055 ---------------------- 751 34,876 ----------------------Total equity at the end of the financial year 13,395 21,633 ====================== CAP-XX LimitedCash flow statementsFor the year ended 30 June 2007 Consolidated 2007 2006 Currency: Australian Dollars $ ' 000 $ ' 000 Cash flows from operatingactivitiesReceipts from customers (inclusive of goods andservices tax) 4,974 1,996Payments to suppliers and employees (inclusive of goodsand services tax) (13,728) (8,814) ---------------------- (8,754) (6,818)Grants received 150 150Interest received 926 289 ----------------------Net cash (outflow) inflow from operating activities (7,678) (6,379) ====================== Cash flows from investingactivitiesPayments for property, plant and equipment (1,819) (839)Proceeds from sale of property, plant and equipment - 53Loans to related parties - - ----------------------Net cash (outflow) inflow from investing activities (1,819) (786) ====================== Cash flows from financingactivitiesProceeds from issue of shares 134 41,056Payments for issuance costs of shares - (3,606)Proceeds from issue of convertible notes - 3,783Payments for issuance costs of convertible notes - (21)Repayment of convertible notes including accrued interest - (16,671) Loans from related parties - 1,540 ----------------------Net cash inflow from financing activities 134 26,081 ====================== Net increase (decrease) in cash and cash equivalents (9,363) 18,916Cash and cash equivalents at the beginning of the financialyear 20,107 1,191 ----------------------Cash and cash equivalents at the end of the financial year 10,744 20,107 ====================== Notes to the financial statements Basis of preparation The financial information included in this announcement does not constitutestatutory accounts within the meaning of the Australian Corporations Act 2001.Whilst the financial information has been computed in accordance with Australianequivalents to International Financial Reporting Standards, other authoritativepronouncements of the Australian Accounting Standards Board, Urgent Issues GroupInterpretations and the Corporations Act 2001, this announcement does not itselfcontain sufficient information to comply with those requirements. A copy of the Company's annual report incorporating compliant financialstatements for the year ended 30 June 2007 will be posted to shareholders inOctober 2007, and made available on the Company's website by 15 October 2007. Consolidated 2007 2006 $ ' 000 $ ' 000Note 1 Revenue Sales revenueSale of goods 4,983 2,581 ----------------------Other revenueManagement and other fees - 339Interest 926 425 ---------------------- 926 764 ----------------------Total revenue 5,909 3,345 ====================== Consolidated 2007 2006 $ ' 000 $ ' 000Note 2 Other income Net gain on disposal of property, plant and equipment - 26Government grants (note (a)) 150 150 ---------------------- 150 176 ---------------------- Consolidated 2007 2006 $ ' 000 $ ' 000Note 3 Expenses Cost of sale of goodsDirect materials and labour 3,498 2,008Indirect manufacturing 1,664 4,743expenses ----------------------Total cost of sale of goods 5,162 6,751 ---------------------- DepreciationPlant and equipment 681 3,685Furniture and fittings 4 4Leasehold improvements 32 151 ----------------------Total depreciation 717 3,840 ---------------------- Finance costs - netConvertible note issuance costs - 21Amortisation of convertible note issuance costs - 39Interest and finance charges payable - 872 ---------------------- - 932Amount capitalised - (21) ----------------------Finance costs expensed - 911 ---------------------- Other expensesDemerger costs - 602Foreign exchange losses (refer note 6 for net gains) 205 58Engineering concept design fees 261 -Provision for non recovery related parties loans/(write-back) - (401)Impairment loss on goodwill - 386 ---------------------- 466 645 ---------------------- Consolidated 2007 2006 $ ' 000 $ ' 000Note 4 EBITDA EBITDA (9,200) (6,035) Demerger costs - 602Impairment loss on goodwill - 386Net gain on disposal of property, plant and equipment - (26)Provision for non recovery related parties loans/(write-back) - (401) ----------------------Adjusted EBITDA (9,200) (5,474) ---------------------- Consolidated 2007 2006 $ ' 000 $ ' 000Note 5 Loss per share Operating Loss (8,991) (10,322) Loss per share - undiluted $(0.185) $(0.311)Weighted Average Share on Issue during the year 48,731,654 33,204,782 This information is provided by RNS The company news service from the London Stock Exchange