CAP-XX Limited

Earnings Release • Mar 20, 2017

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RNS Number : 8604Z

CAP-XX Limited

20 March 2017

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

20 March 2017

CAP-XX Limited

("CAP-XX" or the "Company")

Interim Results for the half-year ended 31 December 2016

Further strong growth in licensing and new product introductions

CAP-XX Limited, a world leader in the design and manufacture of supercapacitors, which considerably extend the performance of batteries, today announces its interim results for the half-year ended 31 December 2016.

Highlights

·      Total Revenue of A$1.35m was down 18% on the corresponding half year, largely due to a disruption of supply due to a process change at a key raw materials supplier. This issue has now been fully rectified and additional measures have been implemented at the supplier and at CAP-XX to prevent any reoccurrence.  

·      Significantly higher number of enquiries for very large volumes of small prismatic supercapacitors, including our Thinline products. The Internet of Things remains the biggest source of these new opportunities.

·      Encouraging levels of large scale sales opportunities for automotive supercapacitors, although the lead time for these opportunities to convert into sales is long. The Board is very pleased with winning the Society of Automotive Engineers - Australasia's 2016 platinum award for overall engineering excellence.

·      The Board is very excited by the recent release of CAP-XX's new range of cylindrical supercapacitors and supercapacitor modules. These are expected to expand greatly the Company's addressable market.

·      The Murata royalty contribution has continued to increase, with the 2016 final quarter payment being the largest yet. In addition, Murata has launched a number of new products, which are expected to accelerate royalties in the short term.

·      AVX has been very active with numerous new products launched, from which CAP-XX has received royalty payments. The Board expects to see an acceleration in royalties from AVX over 2017.

·      The Company's cash position, after the capital raising in January 2017, is healthy and provides the opportunity to accelerate several product and business development opportunities.

·      Licensing activity and opportunities continue to increase and are anticipated to deliver positive outcomes in the short to medium term.

·      Additional manufacturing initiatives have been identified, aimed at further reducing unit costs and increasing manufacturing capacity, to improve Gross Margin in the shorter term.

·      The Company's trading performance for the year ending 30 June 2016 should be in line with current market expectations assuming current licence and sales opportunities are realised in the time expected.

For further information contact:

CAP-XX Limited

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

Allenby Capital Limited (Nominated Adviser and Broker)

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

Kreab

Robert Speed (Financial PR)                                                                        +44 (0) 20 7074 1800

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 a range of applications including portable and small-scale electronic devices; 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

CAP-XX has again made excellent progress over the six months to 31 December 2016 and beyond in building on and refining its strategy, which is focussed on the licensing of intellectual property combined with the direct manufacturing and sale of supercapacitors. Major developments have included:-

·      The launch of CAP-XX's new range of cylindrical supercapacitors and supercapacitor modules which significantly extends CAP-XX's addressable markets to new customers, with a complete supercapacitor product offering.

·     Enquiries for large supercapacitors and modules for heavy vehicles, automotive, rail and energy storage applications continue to grow in momentum, with numerous opportunities currently under review. Whilst the level of interest in the CAP-XX technology is pleasing, the lead times associated with product development and the ability to generate sales revenue is not short.

·     CAP-XX won the Society of Automotive Engineers - Australasia's platinum award for engineering overall excellence for its automotive powerModule and truckStart projects.

·     The AVX licence relationship continues to grow. AVX commenced royalty payments in July 2016 and has subsequently launched several new products, from which CAP-XX has received royalty payments.

·     Murata's launch of a 0.4mm supercapacitor under the CAP-XX licence agreement is accelerating interest in smart credit cards and wearables, while Murata's launch of its 'UMAL' lithium ion battery range under the CAP-XX licence agreement is accelerating interest in energy harvesting applications.

CAP-XX continues to pursue new high volume opportunities in the small supercapacitor market. These developments, coupled with the increased interest in CAP-XX's technology, reinforce the Board's view that the Company's recent strategy is leading to deeper commercial relationships with key customers.

For the six months ended 31 December 2016, total sales revenue was A$1.3m (1H15: A$1.6m), with small product volumes lower on a year to year basis. In addition to customers transitioning to smaller thinner products, sales volumes were negatively impacted by supplier disruption, which resulted in CAP-XX's manufacturing line being non-operational for a period of seven weeks. This issue was addressed and the manufacturing line has since been fully operational. Additional steps have been put in place both at the supplier and at CAP-XX to ensure that there is no reoccurrence.

The Company is encouraged by the number of high volume sales opportunities (with annual volumes equal to or greater than 1 million units per year) identified and under current evaluation for our large automotive, small prismatic and Thinline supercapacitors. In line with the scale of the potential market, the majority of these opportunities are from the Internet of Things market segment and include smart cards, smart buildings, toll tags, electronic shelf labels, RFID tags, smart meters and other meters.

Consistent with the Company's strategy, the revenue contribution from royalties continues to grow strongly. AVX commenced paying royalties on 1 July 2016 and Murata's payments are building strongly relative to the strong performance from the previous half-year. Both Murata and AVX have recently announced the release of several key new products, which will likely continue to drive CAP-XX's revenue from royalties.

Reported Gross Margin decreased to A$0.2m (1H15: A$0.6m) as a result of the volume and manufacturing issues highlighted above. Our continuous manufacturing improvement programme has identified further manufacturing initiatives which are expected to be commissioned in the current calendar year, aiming to further reduce production costs, improve product quality and increase available manufacturing capacity.

The operating loss before tax was A$1.9m (1H15: loss of A$1.3m). Operating expenditure has been held steady, with headcount and associated expenditure at similar levels as the previous half-year. These levels of expenditure are being maintained to ensure that product development in both small and large footprints remains on schedule and the assessment and evaluation of new raw materials can be maintained. The modest increase in operating expenditure was due to: (i) the share based payment reserve; and (ii) movements in currencies. The change in the accounting treatment associated with the share based payment reserve, that was mentioned in the Annual Report for the year ended 30 June 2016, contributed an additional A$0.2m in expenses. It should be noted that this expense is a non-cash item. The other significant variance was linked to the movement in currencies over the six months to 31 December 2016, especially the movement between USD and GBP, and as a result, the Company reported a A$0.1m foreign exchange loss. 

As at 31 December 2016, the Company had cash reserves of A$0.3m (1H15: A$0.9m) which includes the proceeds from the receipt of a tax rebate from the Australian Taxation office of A$1.5m (1H15: A$1.1m).  The reported cash reserves exclude the proceeds from the January 2017 capital raising, which raised gross proceeds of £2.43m.

The Board remains confident that the Company's strategy is gaining traction and generating good interest from potential licensees and traditional markets. The Board is also confident that the resources currently at the Company's disposal will allow the organisation to also accelerate new business development opportunities, and as such the Board believes that the Company's trading performance for the year ending 30 June 2016 should be in line with current market expectations assuming current licence and sales opportunities are realised in the time expected.

Patrick Elliott

Chairman

20 March 2017

CAP-XX Limited

Consolidated statement of profit or loss

For the half-year ended 31 December 2016

		Consolidated
		Half-year 2016	Half-year 2015
Currency: Australian Dollars		$	$
Revenue from sale of goods and services		1,347,226	1,644,355
Cost of sale of goods and services		(1,121,004)	(1,014,929)
Gross margin (loss) on sale of goods and services		226,222	629,426
Other revenue		1,849	21,866
Other income		735,399	690,221
General and administrative expenses		(1,179,252)	(1,117,635)
Process and engineering expenses		(446,548)	(390,075)
Selling and marketing expenses		(345,207)	(344,234)
Research and development expenses		(794,698)	(779,058)
Other expenses		(129,776)	(41,349)
(Loss) before income tax		(1,932,011)	(1,330,838)
Income tax benefit/(expense)		-	-
Net loss after income tax for the half year		(1,932,011)	(1,330,838)
(Loss) attributable to members of CAP-XX Limited		(1,932,011)	(1,330,838)
Loss per share attributable to the ordinary equity holders of the company		Cents	Cents
Basic loss per share		(0.72)	(0.49)
Diluted loss per share		(0.72)	(0.49)

CAP-XX Limited

Consolidated statement of comprehensive income

For the half year ended 31 December 2016

		Consolidated
		2016	2015
Currency: Australian Dollars		$	$
Loss for the half year		(1,932,011)	(1,330,838)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		(22,323)	(52,865)
Other comprehensive loss for the half year, net of tax		(22,323)	(52,865)
Total comprehensive loss for the half year attributable to owners of CAP-XX Limited		(1,954,334)	(1,383,703)

CAP-XX Limited

Consolidated statement of financial position

As at 31 December 2016

		Consolidated
		31 December 2016	30 June 2016	31 December 2015
Currency: Australian Dollars		$	$	$
ASSETS
Current assets
Cash and cash equivalents		636,528	331,631	925,334
Receivables		280,245	2,078,941	408,832
Inventories		1,115,347	1,365,524	2,040,548
Other		835,850	1,700,147	807,198
Total current assets		2,867,970	5,476,243	4,181,912
Non-current assets
Property, plant and equipment		359,837	364,695	389,012
Other		236,507	236,507	236,507
Total non-current assets		596,344	601,202	625,519
TOTAL ASSETS		3,464,314	6,077,445	4,807,431
LIABILITIES
Current liabilities
Payables		620,159	642,358	589,767
Provisions		668,056	663,069	929,299
Secured Loans		-	1,000,000	-
Total current liabilities		1,288,215	2,305,427	1,519,066
Non-current liabilities
Provisions		82,652	65,664	55,767
Total non-current liabilities		82,652	65,664	55,767
TOTAL LIABILITIES		1,370,867	2,371,091	1,574,833
NET ASSETS		2,093,447	3,706,354	3,232,598
EQUITY
Contributed equity		94,603,260	94,558,726	94,477,373
Reserves		4,310,144	4,035,574	3,681,757
Accumulated losses		(96,819,957)	(94,887,946)	(94,926,532)
TOTAL EQUITY		2,093,447	3,706,354	3,232,598

CAP-XX Limited

Consolidated statements of changes in equity

For the half-year ended 31 December 2016

	Consolidated
		Contributed Equity $	Reserve $	Accumulated losses $	Total $
Balance at 1 July 2015		94,426,347	3,664,297	(93,595,694)	4,494,950
Loss for the period as reported in the 2016 financial statements		-		(1,292,252)	(1,292,252)
Other comprehensive loss		-	(45,042)	-	(45,042)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and  tax		132,379			132,379
Employee share options ‑ value of employee services		-	416,319	-	416,319
Balance at 30 June 2016		94,558,726	4,035,574	(94,887,946)	3,706,354
Profit for the period as reported in the 2016 interim financial statements		-	-	(1,932,011)	(1,931,702)
Other comprehensive income		-	(22,323)	-	(22,323)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax		44,534	-	-	44,534
Employee share options ‑ value of employee services		-	296,893	-	296,893
Balance at 31 December 2016		94,603,260	4,310,144	(96,819,957)	2,093,447

CAP-XX Limited

Consolidated Statement of Cash Flows

For the half-year ended 31 December 2016

		Consolidated
		Half-year  2016	Half-year  2015
Currency: Australian Dollars		$	$
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		3,371,096	2,146,905
Payments to suppliers and employees (inclusive of goods and services tax)		(3,553,937)	(4,827,785)
		(182,841)	(2,680,880)
Tax credit received		1,542,925	1,127,272
Interest received		1,849	21,866
Net cash (outflow) from operating activities		1,361,933	(1,531,742)
Cash flows from investing activities
Payments for property, plant and equipment		(79,247)	(184,503)
Net cash (outflow) from investing activities		(79,247)	(184,503)
Cash flows from financing activities
Proceeds from issue of shares		44,534	51,026
Proceeds from Loans		(1,000,000)
Net cash inflow from financing activities		(955,466)	51,026
### Net (decrease) in cash and cash equivalents		327,220	(1,665,219)
Cash and cash equivalents at the beginning of the half-year		331,631	2,643,418
Effects of exchange rate changes on cash and cash equivalents		(22,323)	(52,865)
Cash and cash equivalents at the end of the half-year		636,528	925,334

This general purpose interim financial report, for the half-year reporting period ended 31 December 2016, has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. This general purpose interim financial report, for the half-year reporting period ended 31 December 2016, is (with the exception of the figures for 30 June 2016 in the Balance Sheet) unaudited.

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