Final Results

CAP-XX Limited 01 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 relationships with the major mobile phone manufacturers and the integrated circuit designers, with trials of our unique supercapacitor technology underway. We have been successfully working with international equipment manufacturers to develop the required mass volume production systems. We are also encouraged by the traction our distributor network is gaining in the broader wireless and electronics market.' For further information contact: CAP-XX Anthony 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 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, such as PDAs and PCMCIA cards. Chairman's Statement The Company made good progress during the year towards its major objectives of obtaining a large-scale design commission from a mobile phone handset manufacturer and arranging a manufacturing 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 would occur from the middle of 2007. The company focused on these major objectives during the year and we are satisfied with progress towards developing credibility and relationships that we expect will result in successful outcomes during the course of this financial year. We have also actively engaged with the various suppliers and integrated circuit design houses that support the major handset manufacturers globally. These customers are expanding the array of solutions on offer using our supercapacitor 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 current markets with product shipments well up on last year. We shipped 1.4 million units in 2007, compared with 0.6 million units in 2006. Revenue at AUD$5.0 million for the 12 months to 30 June 2007 is nearly double the 2006 result of AUD$2.6 million. As expected, with a greater proportion of sales going through the enlarged distributor network and with larger size orders now being achieved, average selling prices trended down slightly as customers availed themselves of the volume discounts. As a supplier to the global electronics markets we price our products in US dollars and adverse exchange rate movements trimmed reported revenues by 6%. Our success in penetrating European markets is reflected in the sales growth for the year. Sales into the established North American and Asian markets have also grown significantly. Our overall result for the twelve months to 30 June 2007 was a loss of AUD$9.0 million (2006 loss of AUD$10.3 million). The operating loss from trading operations was AUD$9.9 million (2006 loss AUD$9.7 million) with negative EBITDA of AUD$9.2 million (2006 negative AUD$6.0 million). We have made significant investments in people, and addressing infrastructure and processes to ensure the creation of long-term shareholder value. During the year we focused on developing the production process engineering requirements to reach large-scale volume production suitable for rapid deployment to manufacturing partners. As I foreshadowed in my previous report, we also invested extensively in research and development and production to attain the exacting quality levels required by mobile phone markets. We have improved production yield rates considerably at our contract manufacturing site and further progress is expected in this area. As CAP-XX is highly dependent on its intellectual property to generate future returns, we will increase expenditure on research and development to further strengthen our competitive position. We bolstered the Company's sales and marketing capability with particular emphasis on mobile phone markets. The appointment of UK based business development staff in our new offices outside London will further facilitate the immediacy and quality of service to the major mobile phone manufacturers. As is usually the case with early stage companies, sales and marketing spend will remain high relative to revenues for this financial year as CAP-XX establishes and expands its customer base. We will continue to service the growing base of non-mobile markets of our existing direct customers as well as through our distributor network. The Company has commenced the new financial year with a firm order book from existing customers and we continue to see a good flow of new prospects and opportunities across all our target markets covering wireless, consumer and commercial applications. CAP-XX is well placed to benefit substantially from the increasing energy management demands of portable electronic devices and we look forward to a year of good progress. We continue to focus our efforts towards a mobile phone handset design win and a manufacturing agreement with an international electronics manufacturer. Michael Quinn Chairman Business Review About CAP-XX Limited CAP-XX Limited is a world leader in the design and manufacture of revolutionary thin-form supercapacitors predominately for use in small portable electronic devices. Supercapacitors can considerably extend battery run-times and supports power-hungry applications that are not possible with current battery technology. CAP-XX supercapacitors have a compact, thin-form design and store higher volumes of energy and output higher power levels than competing supercapacitor products. These attributes are critical for current and future generation electronic devices, 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 million laptops, toys, digital cameras and MP3 players. Many of these devices could benefit from supercapacitors. In 2006-2007, CAP-XX supplied supercapacitors to a number of blue chip consumer electronics companies for use in current generation wireless devices such as ruggedised PDAs (personal digital assistants) and PCMCIA cards. CAP-XX is now focusing on the camera phone market and is in discussions with leading mobile phone 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 mobile handset 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 a vital link in achieving this goal. CAP-XX is ideally placed to provide an immediate solution to the issue of power in mobile devices and is in discussions with leading mobile phone handset manufacturers for the commercial deployment of its technology for camera-phone flash applications. This includes interactions with international integrated circuit (IC) companies that are developing new chips to work with supercapacitor products 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 to redesign the power architecture of their devices based on batteries with higher energy densities. The key aim with these batteries is to increase runtime but a side effect of this benefit will be a different voltage discharge curve, which the Company believes will require the inclusion of supercapacitors for smoothing the 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 a number of global original equipment manufacturers active in mobile phone and portable consumer electronics. We hold regular engineering meetings together with their integrated circuit board providers as well as strengthening our relationships across their organizations. CAP-XX opened an office outside London where our mobile phone business development team are based. We also have an experienced technical sales team in the USA. Asia is covered from our Sydney office. We closed our Taiwan office in July 2007. Most sales to date have been achieved by direct sales. The company plans to maintain direct sales contacts with key customers. To gain broader market coverage, the Company has entered into distribution agreements with a number 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 a website, www.cap-xx.com. In addition, CAP-XX strongly supports electronic system designers by providing engineering and design services for selection and application of supercapacitors, evaluation sample kits for experimentation and development work, and application briefs and notes (including examples). Research and Development CAP-XX has a research facility at its headquarters in Lane Cove, Australia where a research and development team comprised of 11 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 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 by rapid technological change. The Company believes that it currently has a strong competitive position in all its target markets covering wireless, consumer and commercial applications with its capability to produce supercapacitors with a high 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 business focused on smaller markets. The order book for the first quarter has grown substantially. Future profitability and the long term success of the Company will depend, however, on translating this initial success into large scale opportunities in markets such as mobile phone handsets for camera flash, and general power applications. The Company made good progress during 2007 towards its objectives of a large-scale design commission from a mobile phone handset manufacturer and a manufacturing 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 and integrated circuit design houses that support the major handset manufacturers globally. 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 relationships with handset manufacturers and component manufacturers with the objective of a successful design win and manufacturing agreement during the course of this financial year. CAP-XX Limited Income statement For the year ended 30 June 2007 Consolidated 2007 2006 Currency: Australian Dollars Notes $ ' 000 $ ' 000 Revenue from sale of goods 1 4,983 2,581 Cost of sale of goods 3 (5,162) (6,751) ---------------------- Gross margin (loss) on sale of goods (179) (4,170) Other revenue 1 926 764 Other 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 Limited Balance sheets As at 30 June 2007 Consolidated 2007 2006 Currency: Australian Notes $ ' 000 $ ' 000 Dollars ASSETS Current assets Cash and cash equivalents 10,744 20,107 Receivables 958 850 Inventories 920 351 Other 94 126 ---------------------- Total current assets 12,716 21,434 ---------------------- Non-current assets Property, plant and equipment 2,779 1,678 Other 153 153 ---------------------- Total non-current assets 2,932 1,831 ---------------------- Total assets 15,648 23,265 ---------------------- LIABILITIES Current liabilities Payables 1,622 1,070 Provisions 507 449 ---------------------- Total current liabilities 2,129 1,519 ---------------------- Non-current liabilities Provisions 124 113 ---------------------- Total non-current liabilities 124 113 ---------------------- Total liabilities 2,253 1,632 ---------------------- Net assets 13,395 21,633 ====================== EQUITY Contributed equity 75,722 75,588 Reserves 1,033 414 Accumulated losses (63,360) (54,369) ---------------------- TOTAL EQUITY 13,395 21,633 ====================== CAP-XX Limited Statements of changes in equity For 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 holders in their capacity as equity holders: Employee share options 617 416 Exercise of options 134 35 Share 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 Limited Cash flow statements For the year ended 30 June 2007 Consolidated 2007 2006 Currency: Australian Dollars $ ' 000 $ ' 000 Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 4,974 1,996 Payments to suppliers and employees (inclusive of goods and services tax) (13,728) (8,814) ---------------------- (8,754) (6,818) Grants received 150 150 Interest received 926 289 ---------------------- Net cash (outflow) inflow from operating activities (7,678) (6,379) ====================== Cash flows from investing activities Payments for property, plant and equipment (1,819) (839) Proceeds from sale of property, plant and equipment - 53 Loans to related parties - - ---------------------- Net cash (outflow) inflow from investing activities (1,819) (786) ====================== Cash flows from financing activities Proceeds from issue of shares 134 41,056 Payments for issuance costs of shares - (3,606) Proceeds from issue of convertible notes - 3,783 Payments 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) 18,916 Cash and cash equivalents at the beginning of the financial year 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 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. A copy of the Company's annual report incorporating compliant financial statements for the year ended 30 June 2007 will be posted to shareholders in October 2007, and made available on the Company's website by 15 October 2007. Consolidated 2007 2006 $ ' 000 $ ' 000 Note 1 Revenue Sales revenue Sale of goods 4,983 2,581 ---------------------- Other revenue Management and other fees - 339 Interest 926 425 ---------------------- 926 764 ---------------------- Total revenue 5,909 3,345 ====================== Consolidated 2007 2006 $ ' 000 $ ' 000 Note 2 Other income Net gain on disposal of property, plant and equipment - 26 Government grants (note (a)) 150 150 ---------------------- 150 176 ---------------------- Consolidated 2007 2006 $ ' 000 $ ' 000 Note 3 Expenses Cost of sale of goods Direct materials and labour 3,498 2,008 Indirect manufacturing 1,664 4,743 expenses ---------------------- Total cost of sale of goods 5,162 6,751 ---------------------- Depreciation Plant and equipment 681 3,685 Furniture and fittings 4 4 Leasehold improvements 32 151 ---------------------- Total depreciation 717 3,840 ---------------------- Finance costs - net Convertible note issuance costs - 21 Amortisation of convertible note issuance costs - 39 Interest and finance charges payable - 872 ---------------------- - 932 Amount capitalised - (21) ---------------------- Finance costs expensed - 911 ---------------------- Other expenses Demerger costs - 602 Foreign exchange losses (refer note 6 for net gains) 205 58 Engineering 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 $ ' 000 Note 4 EBITDA EBITDA (9,200) (6,035) Demerger costs - 602 Impairment loss on goodwill - 386 Net 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 $ ' 000 Note 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

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