Last checked at 17 Oct 2011 07:00
17 October 2011
CAP-XX Limited
Audited Results for the year ended 30 June 2011
CAP-XX Limited, a world leader in the design and manufacture of revolutionary thin-form supercapacitors, which considerably extend the performance of current battery technology in small portable devices, announces its results for the year ended 30 June 2011.
Key highlights
·; Total revenue of AUD$ 3.8 million (2010: AUD$5.9 million) comprised of AUD$3.1 million (2010: AUD$2.2 million) of product sales and AUD$0.7 million (2010: AUD$3.6 million) of service revenue. The 39% increase in product sales was generated in CAP-XX's traditional markets of handheld and portable devices whilst the anticipated decline in service revenue reflects the timing of Murata payments.
·; Operating loss of AUD$3.3 million (2010: AUD$2.5 million) includes the first R&D tax rebate from the Australian Tax Office. The rebate is due by December 2011 and will be available on an on-going annual basis, due to a change in government legislation.
·; Successful completion of a £1.5m capital raising in June with 9.073 million shares issued at 16p per share.
·; First Murata royalty payments received anticipated ramp-up over the next 12 months.
·; Collaborative SMD R&D agreement with Murata completed negotiations for an additional license pending.
·; Nationgate successfully commissioned a second assembly line which will significantly increase capacity.
Anthony Kongats, CEO of CAP-XX said:
The past financial year has seen us build upon our manufacturing agreement with Murata, with initial royalty payments received as Murata moved from initial product licensing to the manufacture of supercapacitors for end customer delivery. Our own direct sales have increased 39% over the prior year as adoption of this exciting technology gained pace. Following the successful completion of our R&D collaboration for Surface Mount Devices our focus is to complete a licensing agreement and to secure our distribution channels for this device. Meanwhile, new market opportunities are being actively pursued in the automotive / electric vehicle market. With the anticipated ramp-up in production from Murata and our manufacturing partners, we are confident of the outlook for the new financial year.
For further information contact:
CAP-XX
Anthony Kongats, Chief Executive Officer +61 (0) 2 9428 0139
Kreab Gavin Anderson & Company (Financial PR)
Robert Speed / Deborah Walter / Anthony Hughes +44 (0) 20 7074 1800
Seymour Pierce Ltd (Nominated Adviser and Broker)
Nandita Sahgal /Catherine Leftley (Corporate Finance) +44 (0) 20 7107 8000
David Banks (Corporate Broking)
More information is available at www.cap-xx.com
Notes to Editors:
CAP-XX is a world leader in the design and manufacture of this form supercapacitors and energy management systems, predominantly for portable electronic devices.
The unique feature of CAP-XX's supercapacitors is their ability to store high volumes of energy and output high power levels within a thin form design. These attributes will be critical for the next generation of high volume, power hungry portable electronic devices, including mobile phones.
Portable devices are one of the fastest growing segments of the electronics market and provide the greatest opportunities for CAP-XX's products. CAP-XX's products are already an established enabling technology for the current generation of wireless devices and portable devices.
Chairman's statement
Fiscal 2011 highlights were dominated by the Company's markedly improved product sales and manufacturing performance, a capital raising to boost cash reserves and impressive results generated by the technological team which have the potential to greatly increase the attractiveness of the current and next generation products.
The financial results for the year ended 30 June 2011 were noteworthy for the 56% volume increase in product sales. Volumes from traditional markets such as hand held and portable devices rebounded strongly with unit sales in the second half, being over 90% higher than the first six months of the year. Given the challenging world- wide economic conditions and increased competitive pressure, it is pleasing to note that the Average Selling Price was maintained at US$ 3.44, on par with the price that was realised twelve months earlier. Given that the Company invoices in US Dollars, the strengthening AUD did have a negative impact on turnover. Taking the above factors into account, total product sales increased by 39% over the prior year.
The Company also reported receipt of its first royalty payments, from Murata for sales of CAP-XX supercapacitors with the first sales being generated in January 2011. Although both the volumes and quantum of the royalty payments were small, Murata continues to actively market the product and sales are expected to grow. For the fiscal year ended 30 June 2011, the Company reported total revenue of AUD $4.0 million (2010: AUD $ 5.9 million) The year to year decline being due to the reduction and timing of technical service payments, R&D feasibility programs and collaborative R&D agreement fees from Murata. For the current financial year the only payments received from Murata were the final two payments associated with the R&D Agreement (2011: A$0.7m) and the royalty payments as highlighted above. The net loss for the twelve months to 30 June 2011 was AUD $3.3 million (2010: loss of AUD $2.5 million) with again the reduction in the total Murata contribution being the primary factor to the increased year to year loss. Headcount remains steady. The 2011 result does include an accrued tax rebate from the Australian Taxation Office related to eligible Research & Development expenditure. It is anticipated that the Company will receive this rebate in the next three months and given the recent change in Federal legislation such a rebate will become available on an annual basis.
During the past twelve months, Nationgate has increased its production capacity with the installation and commissioning of a second line which will significantly lift its available capacity. Polar Twin Advance, with the assistance of CAP-XX, has also improved the yield, quality and volume of its output. Sales for the first quarter of the 2012 financial year are still growing and in the first quarter were up significantly on the previous year's volumes. The growth continues to come from CAP-XX's hand-held and portable device customers.
In June 2011, the final report associated with the collaborative Research & Development Agreement with Murata was delivered. Murata are currently in the process of reproducing the results prior to opening discussions on a possible license. The Company is pleased with the outcome of the study with the results meeting or exceeding targeted outcomes. The new technology will provide the foundation for next generation products but may also lead to improved performance of current products and open additional market opportunities. All of these initiatives are being actively explored.
In order to strengthen the balance sheet and increase the available cash reserves, the Company undertook a capital raising with 9.073m shares being issued at a £0.16p share price. This transaction occurred in May 2011 with the funds received in early June. The majority of the shares issued were acquired by current institutional investors. The additional funds will allow the Company to further develop the technology that was derived from the Murata Agreement and to explore additional markets as highlighted above. The Company is also seeking to broaden its current technology license agreements across different markets and is presently exploring opportunities with several automotive and other interested parties.
Although the world wide economic conditions have been difficult, the CAP-XX management team and staff, together with our contract manufacturers and distributors have done a sterling job achieving difficult targets especially in regard to technical development, manufacturing and sales. The Board is looking forward to another year of similar solid progress.
Michael Quinn
Chairman
14 October, 2011
Business Review |
Review of Operations and Activities |
Since CAP-XX, launched its first supercapacitor in 2003, approximately 8 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 from Murata. These will become more prevalent as the anticipated royalty stream from Murata increases in the 2011/12 financial year.
Total revenue for the 12 months to 30 June 2011, decreased by AUD$2.04 million to AUD$3.84 million compared to AUD$5.89 million in 2010. This decrease is due to the decrease in revenue from services from AUD$3.65 million to AUD$0.72 million, due to the end of the amortisation of the initial licence fee from Murata, received in 2008, and completed during the following two financial years.
Product sales increased by 39% from AUD$2.24m to AUD$3.13m, and unit sales increased 56% from 0.6 million to 0.9 million. Product sales during the year showed a steady pick up with the second half of the year stronger than the first half. The operating result for the twelve months to 30 June 2011, was a loss of AUD$3.3 million (2010: loss of AUD$2.5 million). The major reasons for the negative variances being the reduction in the revenue from services discussed above and the higher average AUD$/US$ exchange rate, partially offset by the higher product sales.
|
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 is an increasingly important consideration. The other important factor is size, as devices are becoming smaller whilst their capabilities increase. Automotive applications such as Start-Stop systems, hybrid electric vehicles and electric vehicles are also a very attractive opportunity for CAP-XX's products.
CAP-XX technology provides a competitive advantage over other supercapacitor manufacturers, such as AVX, Maxwell Technologies and NEC/Tokin Corporation. Other manufacturers are unable to match the CAP-XX technology for thinness, energy density and power density. 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 CAP-XX's surface mount capability will offer another very significant point of difference with the competition.
|
Opportunities |
Video cameras, digital cameras and mobile phones remain a very large and attractive market for CAP-XX and its partners, as evidenced by Sony launching a range of video cameras using supercapacitors supplied by CAP-XX's licencee Murata. Royalties received by CAP-XX from Murata were AUD$6.1K for the March 2011 Quarter and AUD$10.9K for the June Quarter. CAP-XX expects sales to these markets to continue to grow significantly through the next 12 months and beyond.
During the year the level of enquiries for automotive solutions from CAP-XX has increased. CAP-XX is now working on a number of automotive applications including stop-start systems and hybrid electric vehicle systems.
Other applications include SSDs, energy harvesting, portable drug delivery systems, e-books, wireless sensors, uninterrupted power supplies, toll tags and location tracking devices.
Additional benefits of the Murata manufacturing agreement is that it has enabled validation of the CAP-XX supercapacitor as a mainstream consumer electronics technology and it will increase exposure to markets and customers that were previously not targeted due to the Company's limited resources. Association with Murata is helping gain recognition for and acceptance of the capabilities of the CAP-XX supercapacitor products to support high-power functions, and reduces misconceptions about their price and performance.
Murata will not be able to meet the product type or size requirements of all markets. Murata will refer non-core customers to CAP-XX and CAP-XX will supply these markets directly using products made by its contract manufacturers. |
Strategies for Growth
|
The Company continues to have discussions aimed at securing business with a number of global original equipment manufacturers active in portable consumer electronics. We are strengthening our relationships with these organisations and we have regular engineering meetings together with sub-assembly providers. 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 increasingly familiar with the technology.
As mentioned in the past, CAP-XX is gaining broader market coverage, by increasing its number of well-qualified distributors covering Asia (inclusive of Japan, Korea and China) US, Europe and South Africa while maintaining direct sales contacts with key customers. Sales growth from this distributor network is encouraging and distributors experience in selling our product is steadily improving. Additional distributors are currently being interviewed to take advantage of significant emerging markets such as India. It is expected that CAP-XX will appoint further distributors over the next twelve months.
The Company will explore additional opportunities to increase the product offering both through the current distributors and direct to customers. These offerings may take the form of complimentary energy storage devices and modules.
Separately, the Company is exploring the opportunities to leverage its strong intellectual property and engineering expertise through new license agreements or joint ventures. The Company believes the automotive market in particular may offer significant new opportunities for growth.
|
Research and Development |
CAP-XX has a research facility at its headquarters in Lane Cove, Australia where a research and development team comprised of 12 engineers and scientists is continuing development work to maintain CAP-XX's lead position in the engineering of electrode, separator and electrolyte material in supercapacitor devices. We also have a close association with leading research institutions, whilst our Scientific Advisory Board provides clear direction on commercially relevant technologies for our 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 it 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 19 patent families with 34 granted national patents (14 USA, 7 US continuations and 13 in Europe) with an additional 36 applications pending in various jurisdictions,. The patents cover supercapacitor devices, components for supercapacitors, techniques for manufacturing devices and applications of the devices in electronic circuits.
|
Outlook
|
The Company had recognised that several successful and reliable large scale contract manufacturers needed to be identified in order to pursue the mobile phone market and other opportunities for small supercapacitors. With the recent addition of Murata and Nationgate, CAP-XX's long term supply strategy, for these markets, is now in place. Access to capacity for the longer term is also in place to meet the expected increase in demand for the CAP-XX supercapacitor.
Murata is well recognised as a worldwide components manufacturer and already supplies to large mobile handset manufacturers. Murata's worldwide distribution expertise will also assist with the sales and marketing of the CAP-XX supercapacitor. Murata have commissioned its production plant and have commenced sales, which it forecasts to be higher in the current financial year. Polar Twin Advance and Nationgate are also well known in South East Asia as contract manufacturers of choice and have been operating successfully for more than 10 years. Both have impressive lists of customers.
Separately CAP-XX is in the process of identifying other potential partners who have the necessary manufacturing experience and scale to successfully partner with CAP-XX for the automotive market opportunity.
As previously reported, Murata via its already well established supply chain interaction with the mobile handset manufacturers, has assumed the business development role in acquiring a mobile design win which would incorporate the CAP-XX supercapacitor. Although progress has been impacted by the global slowdown in the electronics market, expectations remain high. Murata has advised that it commenced shipping supercapacitors in the 12 months ended 30th June and it is promoting supercapacitors strongly to mobile phone manufacturers and other applications. It is planning for strong growth in volumes in the 12 months ended 30th June 2012 and the year after. In parallel, Murata is working closely with CAP-XX in developing next generation supercapacitor solutions.
CAP-XX continues to pursue other business opportunities in addition to mobile handset manufacturers and good progress has been made in a number of other markets. Sales volumes in the second half of the 2010/11 financial year were strong. Early indicators of an increase in customer forward orders and new enquiry levels suggest that the electronics manufacturing market is in a state of recovery and the Company remains confident of growth in the newly identified CAP-XX markets.
The major short term focus for CAP-XX is to: complete the licencing of its new surface mountable supercapacitor, ensuring that distributors are in place to capture the demand from the emerging markets, securing a partner for the automotive market which can provide the necessary manufacturing and sales assets and ensuring the new business opportunities identified above are aggressively pursued.
|
CAP-XX Limited
Income statement
For the year ended 30 June 2011
Consolidated | |||
2011 | 2010 | ||
Currency: Australian Dollars | Notes | $ | $ |
Revenue from continuing operations | 1 | 3,844,296 | 5,889,531 |
Cost of sale of goods & services | 2 | (3,237,993) | (3,567,381) |
Gross margin on sale of goods & services | 606,303 | 2,322,150 | |
|
| ||
Other revenue | 1 | 110,471 | 54,610 |
Other income | 3 | 14,281 | 148,617 |
|
| ||
General and administrative expenses | (2,231,798) | (2,107,262) | |
Process and engineering expenses | (386,547) | (592,194) | |
Selling and marketing expenses | (432,807) | (385,664) | |
Research and development expenses | (1,522,909) | (1,577,420) | |
Other expenses | 4 | (117,301) | (375,170) |
Loss before income tax | (3,960,307) | (2,512,333) | |
|
| ||
Income tax benefit | 675,000 | - | |
Net loss for the year | (3,285,307) | (2,512,333) | |
Loss attributable to members of CAP-XX Limited | (3,285,307) | (2,512,333) | |
Earnings per share for loss attributable to the ordinary equity holders of the Company | Cents | Cents | |
Basic loss per share | 5 | (4.8) | (4.0) |
Diluted loss per share | 5 | (4.8) | (4.0) |
The above income statement should be read in conjunction with the accompanying notes.
CAP-XX Limited
Balance sheet
As at 30 June 2011
Consolidated | |||
2011 | 2010 | ||
Currency: Australian Dollars | Notes | $ | $ |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 3,073,481 | 4,113,970 | |
Receivables | 1,272,221 | 368,906 | |
Inventories | 1,466,257 | 1,031,873 | |
Other | 59,260 | 58,448 | |
Total current assets | 5,871,219 | 5,573,197 | |
|
| ||
Non-current assets |
|
| |
Property, plant and equipment | 755,111 | 981,230 | |
Other | 208,233 | 208,233 | |
Total non-current assets | 963,344 | 1,189,463 | |
|
| ||
Total assets | 6,834,563 | 6,762,660 | |
|
| ||
LIABILITIES |
|
| |
Current liabilities |
|
| |
Payables | 1,247,073 | 1,157,646 | |
Provisions | 516,226 | 531,949 | |
Other | 1,742,212 | 1,149,653 | |
Total current liabilities | 3,505,511 | 2,839,248 | |
|
| ||
Non-current liabilities | |||
Provisions | 164,264 | 119,441 | |
Total non-current liabilities | 164,264 | 119,441 | |
Total liabilities | 3,669,775 | 2,958,689 | |
|
| ||
Net assets | 3,164,788 | 3,803,971 | |
|
| ||
|
| ||
EQUITY |
|
| |
Contributed equity | 83,979,118 | 81,878,750 | |
Reserves | 3,037,500 | 2,491,744 | |
Accumulated losses | (83,851,830) | (80,566,523) | |
TOTAL EQUITY |
3,164,788 |
3,803,971 | |
CAP-XX Limited
Statement of changes in equity
For the year ended 30 June 2011
Consolidated | ||||||
Contributed Equity $ | Reserves $ | Accumulated losses $ | Total $ | |||
Notes |
| |||||
Balance at 1 July 2009 | 78,906,340 |
2,244,733 | (78,054,190) | 3,096,883 |
| |
Total comprehensive income for the year as reported in the 2010 financial statements | - | 26,146 | (2,512,333) | (2,486,187) |
| |
Transactions with owners in their capacity as owners: |
| |||||
Contributions of equity, net of transaction costs | 2,972,410 | - | - | 2,972,410 |
| |
Employee share options ‑ value of employee services | - | 220,865 | - | 220,865 |
| |
2,972,410 | 220,865 | - | 3,193,274 |
| ||
| ||||||
Balance at 30 June 2010 | 81,878,750 | 2,491,744 | (80,566,523) | 3,803,971 |
| |
Total comprehensive income for the year | - | 113,214 | (3,285,307) | (3,172,093) |
| |
Transactions with owners in their capacity as owners: |
| |||||
Contributions of equity, net of transaction costs and tax | 2,100,368 | - | - | 2,100,368 |
| |
Employee share options ‑ value of employee services | - | 432,542 | - | 432,542 |
| |
2,100,368 | 432,542 | - | 2,532,910 |
| ||
| ||||||
Balance at 30 June 2011 | 83,979,118 | 3,037,500 | (83,851,830) | 3,164,788 |
| |
CAP-XX Limited
Cash flow statement
For the year ended 30 June 2011
Consolidated |
| |||
2011 | 2010 |
| ||
| ||||
Currency: Australian Dollars | Notes | $ | $ |
|
| ||||
Cash flows from operating activities |
| |||
Receipts from customers (inclusive of goods and services tax) | 5,101,183 | 6,456,817 | ||
Payments to suppliers and employees (inclusive of goods and services tax) | (8,293,212) | (9,554,890) | ||
(3,192,029) | (3,098,073) | |||
Grants received | 14,281 | 148,617 | ||
Interest received | 110,471 | 54,610 | ||
Net cash (outflow) from operating activities | (3,067,277) | (2,894,846) | ||
|
| |||
Cash flows from investing activities |
|
| ||
Payments for property, plant and equipment | (73,580) | (23,835) | ||
Proceeds from sale of property, plant and equipment | - | - | ||
Net cash (outflow) from investing activities | (73,580) | (23,835) | ||
Cash flows from financing activities | ||||
Proceeds from issue of shares (net of costs) | 2,100,368 | 2,972,410 | ||
Net cash inflow from financing activities | 2,100,368 | 2,972,410 | ||
|
| |||
Net increase in cash and cash equivalents | (1,040,489) | 53,729 | ||
Cash and cash equivalents at the beginning of the financial year | 4,113,970 | 4,060,241 | ||
Cash and cash equivalents at the end of the financial year |
| 3,073,481 | 4,113,970 | |
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.
| Consolidated | |||||
2011 | 2010 | |||||
$ | $ | |||||
Note 1 Revenue | ||||||
Sales revenue | ||||||
Sale of goods | 3,127,197 | 2,242,879 | ||||
Sale of services | 717,099 | 3,646,652 | ||||
3,844,296 | 5,889,531 | |||||
Other revenue | ||||||
Interest | 110,471 | 54,610 | ||||
110,471 | 54,610 | |||||
Total revenue | 3,954,767 | 5,944,141 | ||||
| Consolidated | ||||||||||
2011 | 2010 | ||||||||||
$ | $ | ||||||||||
Note 2 Cost of Sale of Goods | |||||||||||
Direct materials and labour | 2,035,332 | 2,190,954 | |||||||||
Indirect manufacturing expenses | 1,202,661 | 1,376,427 | |||||||||
3,237,993 | 3,567,381 | ||||||||||
|
|
|
| ||||||||
| |||||||||||
Consolidated |
| ||||||||||
2011 | 2010 |
| |||||||||
$ | $ |
| |||||||||
Note 3 Other income |
| ||||||||||
| |||||||||||
| |||||||||||
Government grants | 14,281 | 148,617 |
| ||||||||
14,281 | 148,617 |
| |||||||||
Consolidated | |||||||||||
2011 | 2010 | ||||||||||
$ | $ | ||||||||||
Note 4 Other Expenses | |||||||||||
Foreign Exchange losses | 279,384 | 324,470 | |||||||||
Net loss on disposal of plant and equipment | - | 882 | |||||||||
Provision for credit notes / doubtful debts | (12,462) | (6,183) | |||||||||
Provision for make good on premises | 40,000 | 40,000 | |||||||||
Provision for returns and rework | (32,621) | 16,001 | |||||||||
Reversal of impairment on plant and equipment | (157,000) | - | |||||||||
117,301 | 375,170 | ||||||||||
Consolidated | |||||||||||
2011 | 2010 |
|
| ||||||||
$ | $ | ||||||||||
Note 5 Loss per share
Net loss | (3,285,307) | (2,512,333) | |
Loss per share - undiluted | ($0.048) | ($0.040) | |
Weighted Average Share on Issue during the year | 68,704,995 | 63,638,644 |