REG - CAP-XX Limited - Interim Results
28/02/2023 07:00
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RNS Number : 2197R CAP-XX Limited 28 February 2023
Dissemination of a Regulatory Announcement that contains inside information
for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310
28 February 2023
CAP-XX Limited
("CAP-XX" or the "Company")
Interim Results for the half-year ended 31 December 2022
CAP-XX Limited, a world leader in the design and manufacture of thin, flat
supercapacitors and energy management systems, announces its interim results
for the half-year ended 31 December 2022.
Key highlights
· Total revenue down 34% on corresponding half-year to A$1.6m
· Product sales down 40% on corresponding half-year to A$1.4m. To our
knowledge the Company has not lost any significant business to competitors
· Sales order book at 31/12/22 was 47% higher than at beginning of July
2022 and 85% higher than at August 2022
· Sales pipeline continues to increase - now in excess of US$65
million p.a.
· Continuing to add new distributors to broaden sales channels
· Performance of Seven Hills manufacturing facility continues to
improve
· A$187k in royalty/ licence income recognised in period (corresponding
half-year A$0)
· Adjusted EBITDA was a loss ofA$966k (2021: Adjusted EBITDA loss
ofA$305k)
· CAP-XX court case against Maxwell for patent infringement
postponed by the judge to 24 July 2023, due to judge's case load.
Notwithstanding the delay, the Board remains confident of success in this
action
· The Board has now formed the view that it is unlikely the Company
can obtain litigation funding on acceptable terms
· Cash reserves as at 31 December 2022 were A$0.5 million with no debt.
In addition, the Company has an unused line of credit of approximately A$1.7m.
* Adjusted EBITDA excludes patent infringement costs
Anthony Kongats, CEO of CAP-XX said:
"We are disappointed by the large drop in product sales for the first half of
this financial year however the Board is confident the Company will see a
rebound in the second half of this financial year. Its optimism is based on
recent customer orders received, recent design wins and feedback from the
market. The performance of our Seven Hills facility continues to improve where
reject rates over the past six months improved by nine percentage points on
the previous six months. We expect to see further improvements moving forward
which will in turn improve gross margins. We look forward to a much stronger
sales performance in the second half of the year."
Electronic copies of CAP-XX's interim results for the half-year ended 31
December 2022 will shortly be available from the Company's website:
www.cap-xx.com (http://www.cap-xx.com) .
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 Joint Broker)
David Hart / Alex Brearley (Corporate Finance)
+44 (0) 20 3328 5656
Tony Quirke (Sales and Corporate Broking)
Cenkos Securities plc (Joint Broker)
Neil McDonald / Pearl Kellie
+44 (0) 13 1220 6939
More information is available at www.cap-xx.com (http://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 (http://www.cap-xx.com/)
Chairman's statement
As foreshadowed in the FY2021/22 results and at the AGM, the current financial
year has started slower than expected. This was due to several influences
including: industry wide supply chain bottlenecks, especially in China, a
global shortage of integrated circuits affecting customer order volumes and
increasing pessimism over the state of the global economy. The flow on effects
of factory closures in Asia which lead to delays in shipments of critical
components has resulted in delayed sales of supercapacitors. Concerns about
the ongoing war in Europe and a possible recession have also caused some
customers to reduce or defer their purchase orders as they look to reduce
their inventory levels and delay new product launches. The greatest falls were
in the Asian region which are believed to be due to two main factors. First,
some customers which saw a boom in demand during COVID are now seeing demand
falling as customer demand flattens. It is currently unclear whether this is a
short-term correction or if it will take longer for demand to recover. Second,
several customers had placed larger and longer time frame orders during COVID
while components were in critical shortage. Now that component availability is
returning to pre-COVID levels, customers are reducing their inventory levels
before reordering. Based on anecdotal evidence, we believe that the drop in
our H1 sales is similar to that which our competitors and other component
players in similar markets have experienced. To our knowledge, no significant
business has been lost to a competitor.
Total revenue was A$1.61 million down 34% on the same period in the prior year
(A$2.4 million). Total product sales for the half year were A$1.4 million down
40% on the same period in the prior year (A$2.6 million). The EBITDA loss for
the six months ended 31 December 2022 was A$966k. This compared to an EBITDA
loss of A$305k for the corresponding period last year. During the period,
A$187k in royalty income was received (A$0 in the corresponding half year).
Gross margin increased from 34% overall to 37%. Operating expenses increased
by 10% due to increased patent filing costs and resumption of overseas travel.
As at 31 December 2022, cash reserves were A$495k with no debt and before the
Company utilised its existing line of credit.
Despite the slower than expected start to the year, the Board remains
optimistic about the short and long-term growth prospects of the Company. The
order book is improving and at 31 December 2022 was 47% higher than at the
start of the current financial year and 85% higher than its low point at the
end of August 2022, with a significant portion of the increase coming from
those customers whose sales in the first six months were less than expected.
Furthermore, the sales pipeline has increased by 30% to more than US$65
million compared to 12 months ago. The growth in the sales pipeline continues
to be well spread across a number of different Internet of things "IoT")
related market segments. At the same time, the Company achieved several new
design wins in energy harvesting, smart meters and industrial products. The
Board believes that demand for both non-cellular and cellular IoT devices will
continue to grow rapidly. Based on past experience, these new design wins can
take between six months and five years to move into mass production with an
average being around two years.
During the first half, the Company launched three new product families: the
Ioxus modules; the 5mm ultra-thin cylindrical supercapacitor and coin cell
supercapacitors for Real Time Clock (RTC) applications. The Company has
already made its first sales of Ioxus modules and coin cell supercapacitors.
Over the next 12 months, we expect sales of these new products to grow
substantially.
Simultaneously, as part of its stated strategy, the Company has continued to
add new broadline and speciality distributors to broaden our sales access to
different application and geographic markets.
Production at Seven Hills continues to improve. Reject rates of products made
at Seven Hills decreased by a further nine percentage points from the
previous six months. Reject rates are expected to decrease further as
production runs increases. The current output is exceeding customer demand and
key performance metrics are tracking in line with our expectations. As
expected at this stage of production, the Company is continuing to address
small incremental improvements and is hiring additional staff for the Seven
Hills facility. We expect to see steady improvement over the remainder of
2023. The Board is confident that target outputs and other key performance
metrics will be reached as expected. The Company continues to make good
progress in readying production for Continental and its design wins due to
start in 2024. The commissioning of the fourth production line, the DMH line,
is expected to be completed around the end of 2023, with production expected
to start in the fourth quarter of 2023 or early 2024 as time and resources
allow and subject to customer demand.
After several years of development, the Board expects several new products to
be released in 2023. The first of these is the DMV 3V single cell
supercapacitor which was launched in February 2023. The DMV is targeted at
applications using 3V coin cell batteries and energy harvesting applications
that do not use a battery at all. Several new patents are also expected to be
filed covering new market applications. In addition to these activities,
CAP-XX R&D continues to make progress in ways to reduce supercapacitor
production costs, increase cell voltage and improve product performance
through the use of new materials. The Company is continuing discussions with
other companies regarding licencing and partnering opportunities.
Licensing remains an important revenue stream for CAP-XX and the Company
continues to defend its intellectual property. CAP-XX continues to vigorously
pursue its patent infringement action against Maxwell Technologies, now a
wholly owned subsidiary of Tesla Inc. and other companies. Due to his case
load, the judge in the Maxwell case has moved the trial date to 24(th) July
2023. The effect of this is that the Company's current level of legal
expenses has greatly reduced while also delaying the receipt of any future
settlement. The Board remains optimistic of the Company's prospects in this
matter. However, while the Board had previously reported that it expected to
secure litigation funding for the Maxwell case, the Board now believes that it
is no longer able to secure such funding on acceptable terms to the Company.
As such, the Board is reviewing options for how to continue funding this
litigation alongside the Company ongoing cash requirements.
The Board is confident that the short-term fall in sales will be reversed over
the next six months and the longer-term growth of sales for IoT devices and
the new Seven Hills production lines will transform the Company's revenue
position with a consequential benefit to cash flow and the cash position of
the Company. Subject to the issues already discussed, the Board continues to
strive for the Company to be EBITDA and cashflow positive in the next
financial year.
Patrick Elliott
Chairman
CAP-XX Limited
Consolidated statement of profit or loss
For the half-year ended 31 December 2022
Consolidated
Half-year 2022 Half-year 2021
Currency: Australian Dollars $ $
Revenue from sale of goods and services 1,613,684 2,428,416
Cost of sale of goods and services (1,015,774) (1,604,829)
Gross margin (loss) on sale of goods and services 597,910 823,587
Other revenue 456 3,120
Other income 1,169,442
1,103,384
General and administrative expenses (1,791,515) (1,484,788)
Process and engineering expenses (676,629) (490,505)
Selling and marketing expenses (407,085) (392,564)
Research and Development expenses (900,223) (729,501)
Share based payments (387,326) (435,053)
Other expenses (111,800) (200,186)
(Loss) before income tax (2,572,828) (1,736,448)
Income tax benefit/(expense) - -
Net loss after income tax for the half year (2,572,828) (1,736,448)
(Loss) attributable to members of CAP-XX Limited (2,572,828) (1,736,448)
Loss per share attributable to the ordinary equity holders of the company Cents Cents
Basic loss per share (0.57) (0.35)
Diluted loss per share (0.57) (0.35)
CAP-XX Limited
Consolidated statement of comprehensive income
For the half year ended 31 December 2022
Consolidated
2022 2021
Currency: Australian Dollars $ $
Loss for the half year (2,572,828) (1,736,448)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (5,108) (33,476)
Other comprehensive loss for the half year, net of tax (5,108) (33,476)
Total comprehensive loss for the half year attributable to owners of CAP-XX (2,577,936) (1,769,924)
Limited
CAP-XX Limited
Consolidated statement of financial position
As at 31 December 2022
Consolidated
31 December 2022 31 December 2021
Currency: Australian Dollars $ $
ASSETS
Current assets
Cash and cash equivalents 494,839 5,055,747
Receivables 567,760 1,123,331
Inventories 2,300,272 1,076,799
Other 1,097,305 1,203,308
Total current assets 4,460,176 8,459,185
Non-current assets
Property, plant and equipment 2,626,643 2,872,517
Right of Use Assets 2,372,360 2,727,890
Other 204,808 397,063
Total non-current assets 5,203,811 5,997,470
TOTAL ASSETS 9,663,987 14,456,655
LIABILITIES
Current liabilities
Payables 1,035,285 1,050,141
Lease Liabilities 205,128 134,546
Provisions 801,016 795,164
Total current liabilities 2,041,429 1,979,851
Non-current liabilities
Lease Liabilities 2,095,836 2,348,248
Provisions 770,957 761,529
Total non-current liabilities 2,866,793 3,109,777
TOTAL LIABILITIES 4,908,222 5,089,628
NET ASSETS 4,755,765 9,367,027
EQUITY
Contributed equity 114,615,217 114,511,789
Reserves 7,895,991 6,835,441
Accumulated losses (117,755,443) (111,980,203)
TOTAL EQUITY 4,755,765 9,367,027
CAP-XX Limited
Consolidated statements of changes in equity
For the half-year ended 31 December 2022
Consolidated
Contributed Reserve Accumulated losses Total
Equity $ $ $
$
Balance at 1 July 2021 108,766,530 6,433,864 (110,243,755) 4,956,639
Loss for the period as reported in the 2021 financial statements - (4,938,860) (4,938,860)
- (53,490) -
Other comprehensive loss (53,490)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax 5,745,259 5,745,259
Employee share options - value of employee services - 1,133,399 - 1,133,399
Balance at 30 June 2022 114,511,789 7,513,773 (115,182,615) 6,842,948
- - (2,572,828) (2,572,828)
Profit for the period as reported in the 2022 interim financial statements
Other comprehensive income - (5,108) -
(5,108)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax 103,428 - - 103,428
Employee share options - value of employee services - 387,326 - 387,326
Balance at 31 December 2022 114,615,217 7,895,991 (117,755,443) 4,755,765
CAP-XX Limited
Consolidated Statement of Cash Flows
For the half-year ended 31 December 2022
Consolidated
Half-year 2022 Half-year 2021
Currency: Australian Dollars $ $
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax) 2,180,265 2,565,957
Payments to suppliers and employees (inclusive of goods and services tax) (5,322,963) (5,191,497)
(3,142,698) (2,625,540)
Tax credit received 2,043,384 3,211,314
Interest received 456 3,121
Net cash (outflow)/ inflow from operating activities (1,098,858) 588,895
Cash flows from investing activities
Payments for property, plant and equipment (119,337) (27,532)
Net cash (outflow) from investing activities (119,337) (27,532)
Cash flows from financing activities
Proceeds from issue of shares 103,428 5,745,259
Advance payments - (1,400,000)
Net cash inflow from financing activities 103,428 4,345,259
Net (decrease)/ increase in cash and cash equivalents (1,114,767) 4,906,622
Cash and cash equivalents at the beginning of the half-year 1,614,714 182,601
Effects of exchange rate changes on cash and cash equivalents (5,108) (33,476)
Cash and cash equivalents at the end of the half-year 494,839 5,055,747
This general purpose interim financial report, for the half-year reporting
period ended 31 December 2022, 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 2022, is unaudited.
-ENDS-
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