CAP-XX Limited
ABN 47 050 845 291
Annual report 2019
Annual report 2019
Contents
Corporate directory
Chairman’s statement
Business review
Directors’ report
Independence declaration
Corporate governance statement
Financial statements
Directors’ declaration
Independent audit report to the directors
Page
3
5
6
9
16
17
26
64
65
Page 2
Corporate directory
Directors
Secretaries
Patrick Elliott
Chairman
Bruce Grey
Non-Executive Director
Anthony Kongats
Managing Director
Robert Buckingham
Michael Taylor
Notice of annual general meeting
The annual general meeting of CAP-XX Limited
will be held at:
CAP-XX Limited
Units 9 & 10, 12 Mars Road
Lane Cove NSW 2066
Australia
time: 6.00pm
date: 28th November 2019
Suite 126
117 Old Pittwater Road
Brookvale NSW 2100
Australia
Units 9 and 10
12 Mars Road
Lane Cove NSW 2066
Australia
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford
Victoria 3067
Australia
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
United Kingdom
Registered office
Principal place of business
Registrars to shares
Registrars to depositary interests
Page 3
Corporate directory (continued)
Nominated adviser and broker to the
Company
Auditor
Solicitors to the Company as to Australian
law
Solicitors to the Company as to English law
Bankers
Allenby Capital
5 St Helen’s Place
London EC3A 6AB
BDO East Coast Partnership
Level 11
1 Margaret Street
Sydney NSW 2000
Australia
Dentons
77 Castlereagh Street
Sydney
New South Wales 2000
Australia
DAC Beachcroft
100 Fetter Lane
London EC4A 1BN
United Kingdom
Commonwealth Bank of Australia
120 Pitt Street
Sydney, NSW 2000
Australia
Stock exchange listings
Shares are quoted on AIM, a market operated by London Stock
Exchange plc under the code CPX
Website address
www.cap-xx.com
Page 4
Chairman’s statement
The Company is in advanced discussions to enhance further its supercapacitor offering and has undertaken a substantial
amount of work in this regard. Whilst this process has not been concluded, the Board is hopeful of a positive outcome and the
Company will provide a further update when appropriate.
CAP-XX continues to see strong interest in its supercapacitor products and intellectual property. This has been driven by a
combination of our own direct sales activities, the activities of our established licensees and a growing market awareness of
the advantages of supercapacitor-enabled devices. Over the past twelve months, we have made good progress towards
achieving our objectives, despite strong headwinds from global uncertainty around free trade and the UK’s membership of the
European Union. We have entered the current financial year with a strong pipeline of enquiries and a strengthened portfolio of
licensing agreements.
The results for FY 2019 contain an adjustment relating to a restatement in prior periods that occurred to accurately record work
in progress costs in inventory. The understatement of work in progress costs was due to these previously being expensed
rather than capitalised as inventory. This resulted in the Cost of Goods Sold being misstated in both FY 2018 and FY 2017,
with a corrective adjustment being processed in FY 2019. The resultant impact is A$183,299 within the Cost of Goods Sold in
the FY 2019 results. A full explanation of this adjustment can be found in the Notes to the Financial Statements at Note 1 (aa).
The impact of this adjustment needs to be taken into account when analysing year-on-year financial performance.
Total sales revenue for the year to 30 June 2019 was A$3.2million (2018: A$4.9 million), which represents a 35% year-on-year
decrease. The major factor underlying this decrease was the last tranche of the “up-front” component of the AVX license being
received in FY 2018. The royalty component of the AVX license will continue for the life of the patents covered by this non-
exclusive license. The EBITDA result for the year to 30 June 2019 was a loss of A$1.8 million (2018: loss of A$1.5 million),
which excludes the amortisation of share based payment expenses and does not take into account the prior period related
Cost of Goods Sold adjustment, as highlighted above (refer to Note 7).
Royalties from licensees continue to grow with the Murata and AVX contribution increasing by a combined 6% over the
previous year, after an adjustment for an over accrual in the previous year. More recently, AVX announced the launch of its
new Prizmacap supercapacitor. This product addresses the market for prismatic supercapacitors, which are larger than those
offered by CAP-XX or Murata. During the year the Company completed two new non-exclusive license agreements with the
TDK Corporation of Japan and Cornell-Dubilier Electronics Inc. TDK is a highly respected global manufacturer of electronic
components, with sales in excess of US$13 billion and over 100,000 employees. Cornell-Dubilier is a US based privately
owned capacitor manufacturer and is the largest manufacturer of power capacitors in North America. These new licensing
agreements will further increase the Company’s royalty revenue, protect the Company’s intellectual property, and increase the
adoption of this intellectual property globally and across new markets.
The Company is having numerous other discussions regarding further licensing opportunities which are at varying stages of
progress. Because of the complex legal nature of these arrangements, it is difficult to forecast when these discussions will be
concluded. Given the ongoing progress with new licences, court actions successfully settled and the strength of the
Company’s intellectual property the Board remains confident in the Company’s licencing strategy.
We continue to see a very strong pipeline of opportunities and numerous new large sales opportunities for prismatic
supercapacitors going forward, despite prismatic product sales revenue being down 21% on the previous financial year. The
Board believes this decline is due to global economic uncertainty, which has resulted in numerous new projects, where the
Company had secured design wins, being pushed back into FY 2020. The Board is confident that the Company will see a
rebound in these sales going forward. Sales of cylindrical supercapacitors grew 34% year-on-year, off a small base and are
expected to continue growing with sales for the first quarter of FY 2020 having already exceeded the whole of the FY 2019
financial year. The new 3 Volt prismatic supercapacitor product is attracting significant interest especially for products using 3V
coin cell batteries and new Internet of Things (IoT) products and is expected to be a significant source of revenue going
forward.
While overall operational expenses fell 11%, the Company continued to increase spending on eligible (as defined by the
Australian Taxation Office) research and product development which is specifically targeted at securing immediate design
wins, enhancing the production and engineering support necessary to assist with the product development initiatives and
strengthening the Company’s intellectual property portfolio. Total Research and development spending increased by
approximately 1% on the previous year. Included in operational expenses is A$859k (2018: A$920k) of share-based expenses
associated with the granting of employee options. This expense is a non-cash expense and management still believes the
treatment of this type of expense is an impost for a small company attempting to motivate and incentivise staff in lieu of paying
cash bonuses.
The Board looks forward to a strong year ahead.
Patrick Elliott
Chairman
8 November 2019
Page 5
Business Review
Review of Operations and Activities
The adjusted EBITDA result for the year to 30 June 2019 was a loss of A$1.6 million (2018: loss of A$1.5 million). This
includes the adjustment for the restatement of prior periods highlighted in the Chairman’s Statement of A$183,299 (2018:
(A$89,424)) and excludes the amortisation of share based payment expenses (refer to Note 7). Cash reserves as at 30 June
2019 were A$2.4 million, which was up from A$1.9 million as at 30 June 2018, due to the capital raise that occurred in
November 2018. Not included in the FY 2019 cash reserves is the Federal Government R&D tax rebate which is expected to
be approximately A$1.6 million (November 2018: A$1.6 million) with these funds expected to be received before the end of the
current calendar year.
The Company has incurred a taxable profit for FY 2019 of A$23,000 (FY18:$403,000). The taxable income is derived after
deducting non-taxable deductive expenditure and also the eligible R&D expenditure which is reimbursed by the Government
via a cash rebate after the tax return is lodged. For the financial period ended 30 June 2019, the Company will still have
significant tax losses which can be utilised against future taxable income.
Total sales revenue for the year to 30 June 2019 was A$3.2 million (2018: A$4.9 million) which represents a 35% year-on-year
decrease. The two main factors causing this decrease were the receipt of the final tranche of the “up-front” licensing payment
with AVX (£750,000/ A$1,366,369) occurring in FY 2018 and products sales revenue being down 21%. The sales pipeline
remains strong and includes several new large volume opportunities, despite the production start date for several design wins
being pushed back to FY 2020 due to worldwide economic concerns.
Operational expenditure, decreased by 11% from A$6.0 million to A$5.4 million. The decrease in expenditure is attributable to
the realisation of the operational improvements highlighted in prior financial reports, which has focussed on a reduction in
operational headcount. Even though operational expenditure has decreased, R&D expenditure increased by 1%. This R&D
expenditure was targeted at: product development to secure immediate design wins, product development initiatives, an
increase in production capacity and the commissioning and streamlining of production processes. Production reject rates have
steadily improved throughout the year. There has also been an increase in overseas legal expenditure associated with
pursuing patent infringement cases, in North America, with the potential benefit to be realised via additional licensing and
royalty revenue. The Board believes that the license agreement with Cornell-Dubilier Electronics in FY 2019 demonstrates of
the merits of pursuing such cases.
During FY 2019, the Company signed new non-exclusive license agreements with the TDK Corporation of Japan (TDK) and
Cornell-Dubilier Electronics Inc of USA (CDE), which contain royalty rates in line with those agreed with Murata and AVX. The
Board believes that the addition of TDK and CDE will further increase the Company’s royalty revenue and increase the
adoption of CAP-XX’s intellectual property globally and across new markets, while providing further evidence to customers,
competitors and investors of the importance of CAP-XX’s intellectual property.
During the financial year, the major R&D and new product effort was on the 3V prismatic supercapacitor technology. The 3V
project is progressing well and the Board is optimistic that shipments will start before the end of 2019. The Company also
continued to invest significant resources in redesigning products and processes to increase sales, reduce manufacturing costs
and to improve product performance.
Business Environment
The Board believes that CAP-XX’s technology provides a competitive advantage over existing supercapacitor manufacturers,
such as Maxwell Technologies, Ioxus, Nippon Chemicon Corporation and other Chinese and Korean competitors. While the
Board has identified other possible competitors, the Board believes that these other companies are unable to match the CAP-
XX technology in terms of thinness, power density, energy density and reliability. Most of the Company’s competitors only
manufacture higher-capacity cylindrical cells used in large package modules and focus on applications where the combination
of thinness, energy density and power density are not important considerations for the customer. These competitor products
usually prove unsuitable for the Internet of Things (IoT) markets, which is one of the areas that CAP-XX is targeting.
As reported previously, IoT applications, 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 IoT enabled devices. This means that power management continues to be an
increasingly important consideration. The other important factor is size, as devices have tended to become smaller whilst their
electrical power demands have increased. The Company has been successful in winning new business from a range of these
markets, such as ABB industrial actuators, E-Ink displays, Itron smartmeters, Ingenico POS terminals, Honeywell scanners,
Thales systems, Roche wearable pumps for diabetics, Turck electronic locks, VW dashboards and Yamaha sound systems.
In the past, CAP-XX has faced competition in various markets from cheaper cylindrical supercapacitors where our thin form
factor, high power and long life are not valued as highly as lower initial cost components from competitors. To counteract this,
the Company released a range of cylindrical cells. Modest sales revenue for these products was first recorded during FY 2018.
In FY 2019, these sales grew at 34% on a year on year basis. Pleasingly, revenues for these products in the first quarter of FY
2020 have already exceeded those in the whole of FY 2019. Several large volume opportunities are still being evaluated by
existing customers that are currently utilising alternative cylindrical cells.
Page 6
Automotive applications such as truckStart, Stop-Start systems, regenerative energy capture or KERS (Kinetic Energy
Recovery Systems), distributed power, hybrid electric vehicles and electric vehicles still present substantial opportunities for
large supercapacitors. A number of CAP-XX's competitors are active in these markets, and the Board believes that the
Company has significant advantages over the competition in certain applications. However, because of the significant
resources that each project requires and the long time lag between product evaluation and mass production, the Board has
taken the decision to focus the Company’s resources on IoT applications and just a small number of key automotive projects
and take a lower risk, longer-term, more patient approach to these opportunities for large supercapacitors.
Opportunities
The Board expects royalty income from CAP-XX’s licensees to grow in the coming years, as more consumer applications
adopt supercapacitor technology.
A significant additional benefit of these licencing agreements is that they validate CAP-XX’s technology leadership in the field
of supercapacitors and energy storage, and the potential for supercapacitors as a mainstream consumer electronics
technology. Our licensees’ product lines and sales activities are also increasing our exposure to markets and customers that
were previously beyond the Company’s reach. Association with companies such as Murata, AVX and TDK is also helping
CAP-XX gain recognition, win acceptance for its supercapacitors, and reduce misconceptions about the price and performance
of supercapacitors. It is also important to note that the strategy of these companies is to offer product ranges targeted at
certain end markets. As such, none of them meet the product type or size requirements for all markets and all applications,
leaving room for CAP-XX to supply these other markets directly using products made by its contract manufacturers.
As a result of these licencing agreements, there are several additional opportunities for the Company to pursue additional
licencing arrangements. Some of these have and may require the Company to enforce its patent rights through court action.
Separately, the overall direct sales pipeline for CAP-XX supercapacitors continues to be large in quantum and varied in terms
of the targeted markets. The key target markets remain similar to the previous year, with IoT wearables, health, automotive,
security, metering and energy harvesting having the most appeal and presenting the largest volume opportunities.
Our customers’ markets are constantly evolving as new products and technologies threaten the incumbents. In this
environment, CAP-XX needs to always remain alert and be flexible to changing business conditions and market needs. This
creates opportunities to offer products that address what our markets want.
CAP-XX is continuing to refine the products that it offers for the IoT, portable electronics and other markets. The Company has
already introduced its Thinline supercapacitors to address the space-constrained needs of many IoT products. In April 2018,
the Company announced that it was developing what will be the industry’s first 3 Volt (3V) thin prismatic supercapacitor. The
development of the 3V product has been targeted to meet demand for small, inexpensive, energy efficient power solutions for
thin wearables, key FOBs and other IoT devices, especially those using 3 Volt coin cell lithium ion batteries such as the
CR2032 battery. The Company is on track for production to start in late 2019.
In the future, there is an opportunity to migrate this same 3V technology into larger prismatic supercapacitors, automotive
modules and other products for high-energy, high-power applications.
CAP-XX’s strong environmental credentials have been recognised by the London Stock Exchange which has included the
Company in its first Green Economy classification.
As already noted, CAP-XX is concentrating on a small number of automotive opportunities. To further increase the Company’s
likelihood of success, the Board may pursue a strategy of partnering with automotive and military Tier-1/Tier-2 suppliers
through either a new license agreement or a joint venture to supply the automotive markets. The Board believes that such
partnerships will be beneficial for all parties involved.
Strategies for Growth
The Company’s immediate goal is to increase licencing income (including royalty income) and product sales from IoT
applications.
The agreements with TDK and CDE and the increase in revenue from Murata and AVX are further endorsements of the
Company’s strategy to develop substantial and recurring income from its intellectual property. Several other license
agreements are at differing stages of negotiation.
It is important that the Company is able to benefit from the large investment made over many years in building its patent
portfolio. Where third parties are found to be infringing these patent rights, the Company has and will vigorously defend its
rights even if this means pursuing legal action.
Given the increasing levels of market interest in CAP-XX’s technology and its high-performance supercapacitors, the Company
believes that the IoT market, in particular, offers significant opportunities for growth and to reach the immediate strategic
objective of CAP-XX operating on a cash break-even basis.
Page 7
The Company continues to engage in discussions aimed at securing business with a significant number of global original
equipment manufacturers (OEMs). CAP-XX is strengthening its relationships with these organisations and has regular
engineering meetings with design teams, manufacturing groups and contract manufacturers. The Company is unable to
comment on specific clients, but the Board is pleased with overall progress and is confident that the available market for
supercapacitors is increasing as manufacturers become familiar with the technology.
The Company will continue to monitor new opportunities to increase its product offering, both through its current distributors
and via direct sales to customers. These offerings may take the form of complementary energy storage devices and modules.
The Company is also increasing the size of its own sales force and adding new distributors to ensure that global coverage and
penetration is maximised.
Research and Development
The markets in which the Company operates are competitive and are characterised by rapid technological change. CAP-XX
has a strong competitive position in prismatic supercapacitors in all of its target markets as a result of its capability to produce
supercapacitors with a high energy and power density in a small conveniently sized flat package. CAP-XX’s devices are also
lightweight, work over a broad temperature range and have an operating lifetime measured in years.
To stay ahead of the competition, the Company is developing a strong pipeline of new products to follow the 3V products
already discussed. CAP-XX’s R&D efforts are focused on a mix of short, medium and long-term opportunities, covering new
products, cost reductions and improved product performance. CAP-XX has a research facility in Sydney, Australia, where a
team of 18 engineers and scientists work to maintain CAP-XX’s leading technology position in electrodes, separators and
electrolyte materials and their assembly into supercapacitor devices. During 2019, significant progress has been made in a
number of key areas including: 3V technology; reducing the resistance of cells; improving the life of cells; developing new
packaging concepts; reducing the cost per cell and developing new electronics to optimise the performance of the Company’s
modules. CAP-XX has also signed numerous collaboration agreements with leading research institutions, whilst the
Company’s Scientific Advisory Board provides CAP-XX with clear direction on commercially relevant technologies for its
ongoing R&D programme.
The Company's success depends on its ability to protect and prevent any infringements of its intellectual property. To protect
this important asset, the Company has considerable intellectual property embodied in its patents covering the design,
manufacture and use of its high performance supercapacitors. The CAP-XX patent portfolio currently consists of 11 patent
families with 31 granted national patents with an additional six applications pending in various jurisdictions. The Company’s
intellectual property strategy has been to build value by focusing on opportunities to capture market share and exclude
competition with an IP portfolio capable of generating licensing revenue. The Directors believe that comprehensive
embodiments and interlocking patent groups, combined with a ‘quick to file, quick to abandon’ policy, have given the Company
a strong and focused IP portfolio.
Outlook
The major short-term focus for CAP-XX is to reach cash break-even position as soon as possible, through increased product
sales and the adoption of the Company’s intellectual property in key target markets through future license deals and joint
ventures. Although much has been achieved in the past, the Company expects to see additional progress over the next twelve
months and beyond.
Page 8
Directors’ report
Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of CAP-XX Limited
(the Company or CAP-XX) and the entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of CAP-XX Limited during the financial year and up to the date of this report:
Patrick Elliott
Bruce Grey
Anthony Kongats
Chairman
Non-Executive Director
Managing Director
Principal activities
The Group’s principal continuing activities during the financial year consisted of the development, manufacture and sale of
supercapacitors. There have been no significant changes in the nature of the Group’s activities.
Dividends
No dividends were paid, declared or recommended during the financial year or since 30 June 2019.
Review of operations
The Group experienced net losses of $2,813,395 during the year ended 30 June 2019 (2018 restated: loss of $2,532,507).
Information on the operations and financial position of the Group and its business strategies and prospects is set out on pages
6 to 8 of this Annual Report.
Significant changes in the state of affairs
There were no significant changes in the group's state of affairs during the financial year ended 30 June 2019.
Matters subsequent to the end of the financial year
The necessary paperwork associated with the receipt of the R&D Tax rebate for the 2019 financial year has been lodged with
the relevant Government authorities and the quantum expected to be received is similar to past years.
Likely developments and expected results of operations
Information on likely developments in the Group’s operations and expected results of operations have been discussed in the
Chairman’s Statement and Business Review.
Environmental regulation
The Group holds an Environment Protection licence and is subject to standard waste management environmental
regulations in respect of its research and manufacturing activities conducted at Lane Cove, Sydney, Australia. The
licence requires discharges to air and water to be below specified levels of contaminants, and solid wastes to be removed
to an appropriate disposal facility. These requirements arise under the Clean Air Act 1961, Clean Waters Act 1970,
Pollution Control Act 1970, Noise Control Act 1975 and the Waste Minimisation & Management Act 1995.
During the year there were no breaches of the regulatory requirements.
Page 9
Directors’ report (continued)
Information on directors
Patrick Elliott Non-executive director. Age 67.
Experience and qualifications
Pat is a company director specialising in the resources sector with over 40 years experience in investment and corporate
management. His early career was at Consolidated Gold Fields Australia Limited and covered investment analysis and
management, minerals marketing (copper, tin, rutile and zircon). In 1979 he went into investment banking and became
Head of Corporate Finance for Morgan Grenfell Australia Limited in 1982. Pat subsequently became Managing Director
of Natcorp Investments Ltd in 1986 which owned a number of manufacturing businesses. After its takeover he became
an active early stage venture capital investor with an emphasis on resources. He is Chairman of Argonaut Resources NL,
Tamboran Resources Limited and Variscan Mines Limited. He is also a director of Global Geoscience Limited and
Kirrama Resources Pty. Limited as well as a number of privately owned companies. Pat holds an MBA in Mineral
Economics (Macquarie University) and B Comm. (University NSW).
Specific Board responsibilities
Chairman of Audit Committee, Member of the Remuneration Committee
Interests in shares and options
6,504,044 ordinary shares in CAP-XX Limited (including shares held by Panstyn Investments Pty Limited).
3,600,000 options over ordinary shares in CAP-XX Limited (including options held by Panstyn Investments Pty Limited).
Anthony Kongats Managing Director. Age 61.
Experience and qualifications
Anthony founded the Company in 1997. Prior to CAP-XX, he was the managing director of a manufacturer of passive
components before selling the business to a competitor. Previously, Anthony worked as a management consultant with
McKinsey & Company and held various engineering positions in Australia and Europe. He has a Bachelor of Engineering
degree (honours) in engineering from the University of New South Wales, a Bachelor of Science degree from the
University of Sydney and an MBA from the Australian Graduate School of Management.
Specific Board responsibilities
Nil.
Interests in shares and options
9,660,333 ordinary shares in CAP-XX Limited (including shares held by Ducon Management Pty Limited and
Management Matters Pty Limited).
10,800,000 options over ordinary shares in CAP-XX Limited.
Page 10
Directors’ report (continued)
Bruce Grey Non-executive director. Age 73.
Experience and qualifications
Bruce most recently was Managing Director of the Advanced Manufacturing Cooperative Research Centre and previously
Managing Director of the Bishop Technology Group Limited. Since 2013 Bruce has been Chairman of Advanced Braking
Technology Limited listed on the ASX. Bruce has been an Executive Director of two Australian public companies and for
10 years until 2009, was Chairman of a German joint venture between Bishop and Mercedes-Benz Lenkungen GmbH.
Bruce has more than 20 years experience in managing industry R&D and 30 plus years experience in international
commercialisation of Australian innovation and has been directly responsible for creating new manufacturing facilities in
Germany, Thailand and South Korea and indirectly the US, all based on Australian innovation. Bruce was Group General
Manager of Clyde Industries Limited from 1985 until 1995. In 2005 Bruce was appointed Chairman of the Federal
Government’s Advanced Manufacturing Action Agenda.
Bruce is a director of the Murdoch Children’s Research Institute and is Chairman of the IP and commercialisation
committee and a member of the audit, finance and risk committee. In 2018 Bruce was appointed to the Australian Federal
Government's Clean Technology Investment Committee. Bruce is a Fellow of the Australian Academy of Technological
Sciences and Engineering.
Specific Board responsibilities
Member of the Audit Committee
Interests in shares and options
4,675,862 ordinary shares in CAP-XX Limited (including shares held by Grey Invest Pty Limited).
3,600,000 options over ordinary shares in CAP-XX Limited.
Company Secretaries
The Company Secretary is Robert Buckingham.
Robert is Managing Partner of Allan Hall Partnership, Chartered Accountants, a position he has held since 1989. He has
a Bachelor of Commerce degree (honours) from the University of New South Wales and is a member of the Institute of
Chartered Accountants in Australia and a Member of CPA Australia.
On 25 November, 2008, Michael Taylor, Chief Financial Officer, was appointed as Co- Company Secretary.
Michael graduated from Kuring-Gai College with a Bachelor of Business and from Macquarie University with a Master of
Applied Finance. He is a Member of CPA Australia.
Page 11
Directors’ report (continued)
Meetings of Directors
The number of meetings of the Company’s board of directors and of each board committee held, during the year ended
30 June 2019, and the number of meetings attended by each director were:
Patrick Elliott
Bruce Grey
Anthony Kongats
Full
Meetings of
Directors
Audit
Committee
Meetings
Remuneration
Committee
Meetings
A
7
7
7
B
7
7
7
A
2
2
-
B
2
2
-
A
2
2
-
B
2
2
-
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year
Directors’ remuneration
Details of the remuneration of each director of CAP-XX Limited, for the year ended 30 June 2019, are set out in the following
table. The cash bonuses are dependent on the satisfaction of performance conditions. All other elements of remuneration are
not directly related to performance.
Directors of CAP-XX Limited
2019
Name
Executive directors
Anthony Kongats
Non-executive directors
Patrick Elliott
Bruce Grey
Cash
salary and
accrued
fees
$
322,103
-
-
Total
322,103
Primary
Cash
bonus
$
Non-
monetary
benefits
$
Post-employment
Equity
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
-
-
-
-
-
30,600
47,379
47,379
-
-
94,758
30,600
-
-
-
-
229,262
581,965
76,421
76,421
123,800
123,800
382,104
829,565
Page 12
Directors’ report (continued)
Details of the remuneration of each director of CAP-XX Limited, for the year ended 30 June 2018, are set out in the
following table. The cash bonuses are dependent on the satisfaction of performance conditions. All other elements of
remuneration are not directly related to performance.
Directors of CAP-XX Limited
2018
Name
Executive directors
Anthony Kongats
Non-Executive directors
Patrick Elliott
Bruce Grey
Cash
salary and
accrued
fees
$
322,103
-
-
Total
322,103
Primary
Cash
bonus
$
Non-
monetary
benefits
$
Post-employment
Equity
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
-
-
-
-
-
30,600
46,325
46,325
-
-
92,650
30,600
-
-
-
-
246,001
598,704
82,219
82,219
128,544
128,544
410,439
855,792
Loans to directors and executives
The Group has no loans to directors and/or executives.
Share options granted to directors and the most highly remunerated officers
No options over unissued ordinary shares of CAP-XX have been granted during or since the end of the financial year to
any of the directors or the 5 most highly remunerated officers of the Company and Group as part of their remuneration.
Shares under option
Unissued ordinary shares of CAP-XX Limited under option at the date of this report are as follows:
Date Options Granted
Expiry Date
Issue Price of
Shares
Number
Under Option
4 December 2015
11 November 2016
11 December 2017
4 December 2020
11 November 2021
11 December 2022
£0.050
£0.035
£0.115
14,746,606
1,500,000
16,510,000
No option holder has any right under the options to participate in any other share issue of the Company or of any
other entity.
Shares issued on the exercise of options
The following ordinary shares of CAP-XX Limited were issued during the year ended 30 June 2019 on the exercise of
options granted under the CAP-XX Limited Employee Option Plan. No amounts are unpaid on any of the shares.
32,756,606
Date Options Granted
4 December 2015
Issue Price of
Shares
Number of
Shares
Issued
£0.050
3,278,386
3,278,386
Page 13
Directors’ report (continued)
Indemnification and Insurance of Officers
Indemnification
CAP-XX has agreed to indemnify the current directors and executive officers of the Group and former directors of the
Company against all liabilities to another person (other than the Company or a related body corporate) that may arise
from their position as directors of the Company and its controlled entities, except where the liability arises out of
conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any
such liabilities, including costs and expenses.
No indemnities have been given to any person who is or has been an auditor of the Group.
Proceedings on behalf of the Company
No person has applied to the court under section 237 of the Corporations Act 2001, for leave to bring proceedings on
behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group, for all or part of those proceedings.
Insurance Premiums
The directors have not included details of the nature of the liabilities covered nor the amount of the premium paid in
respect of the Directors’ and Officers’ liability insurance contracts, as such disclosure is prohibited under the terms of
the contract.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 16.
Page 14
Directors’ report (continued)
Non-audit Services
It is the Group’s policy to employ BDO East Coast Partnership on assignments additional to their statutory audit duties
where BDO East Coast Partnership's expertise and experience with the Group are important. These assignments are
principally tax advice where BDO East Coast Partnership is awarded assignments on a competitive basis. It is the
Group’s policy to seek competitive tenders for all major consulting projects.
Details of the amounts paid or payable to the auditor (BDO East Coast Partnership) for audit and non-audit services
provided, during the year, are set out in Note 21 to the financial statements.
The Directors are of the opinion that the services disclosed in Note 21 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
(a) all non-audit services have been reviewed and approved to ensure that they do not impact on the integrity and
objectivity of the auditor; and
(b) none of the services undermine the general principles relating to auditor independence set out in APES110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the Auditor's own work, acting in a management or decision-making capacity for the
Company, acting as an advocate for the Company, or jointly sharing economic risks and rewards.
Auditor
BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the directors.
Patrick Elliott
Director
Sydney
8th November, 2019
Page 15
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF CAP-XX LIMITED
As lead auditor of Cap-XX Limited for the year ended 30 June 2019, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cap-XX Limited and the entities it controlled during the period.
Martin Coyle
Partner
BDO East Coast Partnership
Sydney, 08 November 2019
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
Page 16
Corporate Governance Statement
THE QUOTED COMPANY ALLIANCE (QCA) CODE
The Directors recognise the importance of good corporate governance and have chosen to adopt and apply the 2018
Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the
QCA in consultation with a number of significant institutional small company investors, as an alternative corporate
governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of
good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial
manner for the benefit of all shareholders over the longer term”.
To determine how the Company addresses the key governance principles defined in the QCA code please refer to the
below table.
Pat Elliott, Non-executive Chairman
THE PRINCIPLES OF THE QUOTED COMPANY ALLIANCE (QCA) CODE
DELIVER GROWTH
QCA Code Principle
Application (as set out by QCA)
What we do and why
1. Establish a strategy and
business model which promote
long-term value for shareholders
The board must be able to express a
shared view of the company’s
purpose, business model and
strategy. It should go beyond the
simple description of products and
corporate structures and set out how
the company intends to deliver
shareholder value in the medium to
long-term. It should demonstrate that
the delivery of long-term growth is
underpinned by a clear set of values
aimed at protecting the company
from unnecessary risk and securing
its long-term future.
2. Seek to understand and meet
shareholder needs and
expectations
Directors must develop a good
understanding of the needs and
expectations of all elements of the
company’s shareholder base.
The board must manage
shareholders’ expectations and
should seek to understand the
motivations behind shareholder
voting decisions.
The Company’s overall business
strategic objective is to obtain at a
minimum, an operating cash
breakeven position by increasing
the adoption of the Company’s
intellectual property and products,
both large and small, into key
target markets via future license
deals; joint ventures and direct
product sales. Once this has been
achieved, the Company will
continue to further develop and
drive the adoptions of its
intellectual property so that the
Company achieves significant profit
levels.
The key challenges to the business
and how these are mitigated is
detailed on pages 6 to 8 of the
Group’s Annual Report and
Accounts for the year ended 30
June 2019 under the “Business
Review” heading.
The CAP-XX Board is aware of the
need to protect the interests of all
shareholders, balancing the
interest of minority shareholders
with those of institutional
shareholders.
The Board regards regular
communications with shareholders
as one of its key responsibilities.
CAP-XX is committed to engaging
with shareholders and this effort is
led by the Chief Executive Officer.
In order to gauge shareholder
sentiment, CAP-XX meets with key
Page 17
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
institutional shareholders typically every
six months and when necessary solicits
feedback from its larger shareholders
via its broker. CAP-XX welcomes
shareholder contact at any time and
communications should be sent in the
first instance to
mailto:investor.relations@cap-xx.com.
CAP-XX will generally exercise
discretion responding to individual
shareholders correspondence but will
update the market via regulatory and
non-regulatory announcements and via
its annual and interim financial reports.
CAP-XX holds an open Q&A session at
every Annual General Meeting and
attends investor events to engage with
retail shareholders.
This communication allows the CAP-XX
board to understand the shareholder’s
views and to ensure that the strategies
and objectives of the Company are
aligned with shareholders. In its
decision-making, the Board will have
regard to the ascertained expectations
and needs of its shareholders (as
appropriate and in accordance with its
statutory and fiduciary duties).
The Board believes the Company’s
mode of engaging with shareholders is
adequate and effective.
The Directors are aware of the
Company’s corporate social
responsibilities and the impact the
CAP-XX business activities have on
the communities in which CAP-XX’s
businesses operate.
On the basis of the Directors’
experience and their operational
knowledge of the Company, the
Directors believe that the key
resources and relationships on which
the Company relies are the
Company’s employees, partners,
suppliers, regulatory authorities and
contractors. The Company’s
operations and working
methodologies take into account the
requirement to balance the needs of
all these stakeholder groups while
maintaining focus on the Board’s
primary responsibility to promote the
success of the Company for the
benefits of its shareholders.
The executive member of the Board
holds regular staff group and
individual update meetings in order to
communicate CAP-XX’s strategy,
progress versus targets and to
receive feedback and solicit opinion.
The Company endeavours to take
Page 18
3. Take into account wider
stakeholder and social
responsibilities and their
implications for long-term success
Long-term success relies upon good
relations with a range of different
stakeholder groups both internal
(workforce) and external (suppliers,
customers, regulators and others).
The board needs to identify the
company’s stakeholders and
understand their needs, interests and
expectations.
Where matters that relate to the
company’s impact on society, the
communities within which it operates
or the environment have the potential
to affect the company’s ability to
deliver shareholder value over the
medium to long-term, then those
matters must be integrated into the
company’s strategy and business
model.
Feedback is an essential part of all
control mechanisms. Systems need
to be in place to solicit, consider and
act on feedback from all stakeholder
groups.
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
account of feedback received from
stakeholders, making necessary
amendments to working
arrangements and operational plans
where appropriate and where such
amendments are consistent with the
Company’s long-term strategy. The
CAP-XX Board considers the
feedback of relevant stakeholders in
its decision-making and in the
formulation of strategy. However, no
material changes to the Company’s
processes were required for the year
ended 30 June 2019, or more
recently, as a result of feedback that
has been received by the Company
from the stated key resources and
relationships on which the business
relies.
The Company takes due account of
any impact that its activities may have
on the environment and seeks to
minimise this impact whenever
possible. Through various procedures
and systems that the Company
operates, especially in the
manufacturing process, the Company
ensures full compliance with health
and safety and environmental
legislation relevant to its activities.
CAP-XX is certified to IOS9001:2015.
The Board has a number of
responsibilities specifically relating to
risk including: -
Monitoring the effectiveness of
CAP-XX’s risk management
systems, including compliance with
regulatory requirements;
Satisfying itself through regular
reporting and oversight that
appropriate internal and external
control mechanisms are in place
and are being implemented; and
Approving CAP-XX’s financial
statements and monitoring financial
performance against the approved
budget.
The Board has established Audit and
Remuneration Committees. Full
details of which are contained in the
Corporate Governance sections of
the Company’s website.
The Board receives regular feedback
from its external auditors on the state
of its risk management and internal
controls. The Board does not
consider it would be appropriate to
Page 19
4. Embed effective risk
management, considering both
opportunities and threats,
throughout the organisation
The board needs to ensure that the
company’s risk management
framework identifies and addresses
all relevant risks in order to execute
and deliver strategy; companies need
to consider their extended business,
including the company’s supply
chain, from key suppliers to end-
customer.
Setting strategy includes determining
the extent of exposure to the
identified risks that the company is
able to bear and willing to take (risk
tolerance and risk appetite).
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
have its own internal audit function at
the present time, given the
Company’s size and nature of its
current operations. The Group does
complete regular fraud and internal
risk questionnaires which are
completed and reviewed on a six-
monthly basis.
At present the internal audit of
financial controls form part of the
responsibilities of the Group’s finance
function.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
QCA Code Principle
Application (as set out by QCA)
What we do and why
5. Maintain the board as a
well- functioning, balanced
team led by the chair
The board members have a collective
responsibility and legal obligation to
promote the interests of the
company, and are collectively
responsible for defining corporate
governance arrangements. Ultimate
responsibility for the quality of, and
approach to, corporate governance
lies with the chair of the board.
The board (and any committees)
should be provided with high quality
information in a timely manner to
facilitate proper assessment of the
matters requiring a decision or
insight.
The board should have an
appropriate balance between
executive and non-executive
directors and should have at least
two independent non- executive
directors. Independence is a board
judgement.
The board should be supported by
committees (e.g. audit, remuneration,
nomination) that have the necessary
skills and knowledge to discharge
their duties and responsibilities
effectively.
Directors must commit the time
necessary to fulfill their roles.
The Board comprises of three
directors, two of whom are
independent non-executive
directors. Although the non-
executive directors are
shareholders of the Company,
given the size of their shareholding
and that none of the non-executive
directors have any day-to-day
involvement in the running of the
business, the Company considers
the non-executive directors to be
independent. The Chairman of the
CAP-XX Board is Mr Patrick Elliott
who was first elected to the Board
in July 2011.
All of the non-executive Directors
are subject to election by
shareholders at the first Annual
General Meeting after their
appointment to the Board and at
least one third of the Board must
retire and seek re-election at every
Annual General Meeting.
All Directors are expected to devote
the necessary time commitments
required by their position and where
possible should attend all Board
meetings. The Board meets at
regular scheduled intervals and
follows a formal agenda, papers
and reports are sent to the
Directors in a timely manner, prior
to the Board meetings. It also
meets as and when required.
During the financial year ended 30
June 2019, seven Board meetings
were held as well as two Audit
Committee meetings and two
Remuneration Committee meetings
The Company’s Corporate
Page 20
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
6. Ensure that between them
the directors have the
necessary up-to-date
experience, skills and
capabilities
The board must have an appropriate
balance of sector, financial and public
markets skills and experience, as well
as an appropriate balance of
personal qualities and capabilities.
The board should understand and
challenge its own diversity, including
gender balance, as part of its
composition.
The board should not be dominated
by one person or a group of people.
Strong personal bonds can be
important but can also divide a board.
As companies evolve, the mix of
skills and experience required on the
board will change, and board
composition will need to evolve to
reflect this change.
Governance Statement (available
on the CAP-XX website) provides
further details, including how the
Board evaluates its own
performance.
The CAP-XX Annual Report and
Accounts for the year ended June
2019 also explains the governance
framework and provides data on
the number of Board and
Committee meetings (and Director
attendance at the same)
Directors who have been appointed
to the Board have been chosen
because of the skills and
experience they offer. Full
biographical details of the directors
are included on the CAP-XX
Website (https://www.cap-
xx.com/investors/about-us/key-
personnel/ ) and also on pages 10
and 11 the CAP-XX Annual Report
and Accounts for the year ended
June 2019.
The Company encourages
continuing education of its directors
and officers where appropriate in
order to ensure that they have the
necessary skills and knowledge to
meet their respective obligations to
the Company.
As noted above the Company has
put in place an Audit Committee
and a Remuneration Committee.
The responsibilities of both
Committees are set out in the
Corporate Governance Statement
on the CAP-XX website
(https://www.cap-
xx.com/investors/about-
us/corporate-governance/) and the
terms of reference .
7. Evaluate board
performance based on clear
and relevant objectives,
seeking continuous
improvement
The board should regularly review the
effectiveness of its performance as a
unit, as well as that of its committees
and the individual directors.
The board performance review may
be carried out internally or, ideally,
externally facilitated from time to
time. The review should identify
development or mentoring needs of
individual directors or the wider
senior management team.
It is healthy for membership of the
board to be periodically refreshed.
Succession planning is a vital task for
boards. No member of the board
At the highest level, the CAP-XX
Board judges its own performance
by reference to the Company’s
progress against targets set out in
the Company’s strategic plan. The
Board formally evaluates its own
performance as a unit at least once
a year with an assessment of its
effectiveness. Areas are identified
where improvements can be made,
and active steps are taken to make
improvements accordingly. This
assessment is led by CAP-XX
Chairman.
The Board’s annual effectiveness
review was conducted and high
Page 21
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
should become indispensable.
level recommendations were
discussed and agreed. These
recommendations and the
associated improvements are
consistently being monitored at the
regular Board meetings.
The performance of the individual
Directors including the Chairman
are monitored on an ongoing basis.
On an annual basis, the
Remuneration Committee
evaluates the individual Director’s
performance as part of the review
of remuneration and share equity
grants.
Given the scale and scope of the
current operation and the risk
management framework, the
Directors are of the view that a
formal evaluation process of the
effectiveness of both the Audit and
Remuneration Committees is not
required at this stage. The need
for an evaluation process is
monitored on an on-going basis.
The Board and the Remuneration
Committee will also regularly
discuss the Board’s balance, the
Board’s current skills set and
remuneration to ensure that the
Board structure is fit for purpose
and is appropriate for the next
phase of CAP-XX’s development
and growth.
The composition of the Company’s
Board including individual directors
has not changed materially over the
previous years, on the basis that
the Board are of the view that the
above processes are appropriate
for the Company’s requirements,
given the size and nature of the
CAP-XX business.
The Board uses the results of its
evaluation process when
considering the adequacy of the
composition of the Board and any
succession planning
requirements. However, there are
no plans at present for changes or
additions to the Board and the
Directors believe that the current
Board meets the needs of the
Company’s current and medium-
term requirements.
8. Promote a corporate
culture that is based on ethical
values and behaviours
The board should embody and
promote a corporate culture that is
based on sound ethical values and
The CAP-XX Board considers that
confidence in its integrity can only be
achieved if its employees and officers
Page 22
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
behaviours and use it as an asset
and a source of competitive
advantage.
The policy set by the board should be
visible in the actions and decisions of
the chief executive and the rest of the
management team.
Corporate values should guide the
objectives and strategy of the
company.
The culture should be visible in every
aspect of the business, including
recruitment, nominations, training and
engagement. The performance and
reward system should endorse the
desired ethical behaviours across all
levels of the company.
The corporate culture should be
recognisable throughout the
disclosures in the annual report,
website and any other statements
issued by the company.
conduct themselves ethically in all of
their commercial dealings on CAP-XX’s
behalf. CAP-XX has therefore
recognised that it should actively
promote ethical conduct amongst its
employees, officers and contractors.
CAP-XX has adopted, amongst other
policies to promote ethical and
responsible decision making, a code of
conduct which applies to all directors,
officers, employees, consultants and
contractors of CAP-XX, which the
Board and Management will seek to
enforce where appropriate.
The CAP-XX Board and management
conduct themselves ethically at all
times and promote a culture that is in
line with standards set out on the
website. CAP-XX values its reputation
for ethical behaviour and has a set of
values that are at the core of its
business philosophy.
9. Maintain governance
structures and processes that
are fit for purpose and support
good decision- making by the
board
The company should maintain
governance structures and processes
in line with its corporate culture and
appropriate to its:
• size and complexity; and
• capacity, appetite and tolerance for
risk.
CAP-XX’s Corporate Governance
Statement on pages 17 to 25 of the
Company’s Annual Report for the year
ended 30 June 2019 explains the
structures which are in place at Board
and Committee level and how these
interact, including the roles which
individual Directors fulfil on the Board.
The governance structures should
evolve over time in parallel with its
objectives, strategy and business
model to reflect the development of
the company.
At present, the Board is satisfied with
the Company’s corporate governance,
given the Company’s size and the
nature of its operations, and as such
there are no specific plans for changes
to the Company’s corporate
governance arrangements in the
shorter term.
There is a clear separation of the roles
of Chief Executive Officer and Non-
executive Chairman. The Chairman has
overall responsibility for corporate
governance matters in the Company,
leadership of the board and ensuring its
effectiveness on all aspects of its role.
The Chief Executive Officer leads the
executive team and is responsible for
implementing those actions required to
deliver on the agreed strategy.
The matters reserved as the
responsibilities of the CAP-XX
board include:-
Developing, providing input into
and final approval of the
Company’s strategic plan;
Evaluating, approving and
Page 23
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
monitoring the strategic and
financial plans and
performance objectives of the
Company;
Reviewing, ratifying and
monitoring systems of risk
management and internal
compliance and control, codes of
conduct and legal compliance;
Evaluating and monitoring annual
budgets and business plans;
Ensuring appropriate resources are
available to senior management;
Approving all accounting policies,
financial reports and external
communications by the
Company;
Appointing, re-appointing or
removing CAP-XX’s external
auditors; and
Appointing, monitoring and
managing the performance and
remuneration of executive directors
and senior executives.
Details of the Company’s audit and
remuneration committees, including
their terms of reference can be
found here: https://www.cap-
xx.com/investors/about-
us/corporate-governance/
Beneath the Board there is an
operational governance framework
which facilitates the effective
management of the business by an
Executive Committee. This
organisation structure is kept under
continual review and evolves as the
needs and requirements of the
business changes as it grows and
develops.
BUILD TRUST
QCA Code Principle
Application (as set out by QCA)
What we do and why
10. Communicate how the
company is governed and is
performing by maintaining a
dialogue with shareholders
and other relevant
stakeholders.
A healthy dialogue should exist between
the board and all of its stakeholders,
including shareholders, to enable all
interested parties to come to informed
decisions about the company.
In particular, appropriate communication
and reporting structure should exist
between the board and all constituent
parts of its shareholder base. This will
assist:
The Company’s governance
structure is explained through the
Corporate Governance Statement
which is available on the CAP-XX
website and is supplemented by
the disclosures provided in this
compliance statement and
explanations set out in the
“Corporate Governance” section of
the CAP-XX Annual Report for the
year ended 30 June 2019.
the communication of shareholders’
views to the board; and
The communication and interaction
between CAP-XX and its
Page 24
Corporate Governance Statement (continued)
the shareholders’ understanding of
the unique circumstances and
constraints faced by the company.
It should be clear where these
communication practices are described
(annual report or website).
shareholders are explained in the
disclosure above (see principle 2) .
Audit and Remuneration
Committee’s membership and
responsibilities are included in the
CAP-XX Annual Report for the year
ended 30 June 2019 as well as the
full disclosure of CAP-XX Directors
remuneration.
Historical Annual and Interim
Reports with all notices, circulars
and results of resolutions since the
Company’s ordinary shares were
admitted to trading on in April 2006
can also be found on the CAP-XX
website (available here
https://www.cap-
xx.com/investors/financial-
performance/
The Company encourages two-way
communication with both its
institutional and private investors
and responds quickly to all queries
received. The Chairman talks
regularly with the Group’s major
shareholders and ensures that their
views are communicated fully to
the Board.
The Board recognizes the AGM as
an important opportunity to meet
private shareholders. The Directors
are available to listen to the views
of shareholders informally
immediately following the AGM.
Page 25
CAP-XX Limited
Financial statements - 30 June 2019
Contents
Statement of profit or loss
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Page
27
28
29
30
31
32
This financial report covers the Group consisting of CAP-XX Limited and its subsidiaries. The financial
report is presented in Australian Dollars.
CAP-XX Limited is a company limited by shares, incorporated and domiciled in Australia. Its principal place
of business is:
Units 9-10
12 Mars Road
Lane Cove NSW 2066
Its registered office is:
Suite 126
117 Old Pittwater Road
Brookvale NSW 2100
A description of the nature of the Group's operations and its principal activities is included in the Chairman’s
Statement on page 5, Business Review on pages 6 to 8 and in the directors’ report on pages 9 to 15, all of
which are not part of this financial report.
The financial report was authorised for issue by the directors on 8th November 2019. The Directors have the
power to amend and reissue the financial report.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and
available globally at minimum cost to the Group. All press releases, financial reports and other information
are available at our Investors’ Centre on our website: www.cap-xx.com.
Page 26
CAP-XX Limited
Statement of profit or loss
For the year ended 30 June 2019
Currency: Australian Dollars
Notes
Revenue from contracts with customers
Cost of sales *
Gross Profit
Other revenue
Other income
General and administrative expenses
Process and engineering expenses
Selling and marketing expenses
Research and development expenses
Share Based Payment Expense
Other expenses
Loss before income tax
Income tax benefit
Net loss for the year
5
7
5
6
7
8
Consolidated
2019
$
2018
(restated)
$
3,204,551
(1,441,927)
4,905,687
(2,059,797)
1,762,624
2,845,890
45,303
1,600,033
47,260
1,525,419
(2,084,468)
(914,543)
(743,678)
(1,547,361)
(859,483)
(71,822)
(1,915,080)
(1,768,046)
(736,663)
(1,482,894)
(920,228)
(128,165)
(2,813,395)
(2,532,507)
-
-
(2,813,395)
(2,532,507)
Loss attributable to owners of CAP-XX Limited
(2,813,395)
(2,532,507)
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Basic loss per share
Diluted loss per share
29
29
Cents
(0.9)
(0.9)
Cents
(0.8)
(0.8)
The above statement of profit or loss should be read in conjunction with the accompanying notes.
* Includes $183,299 relating to a prior year adjustment. Please see Note 1 (aa).
Page 27
CAP-XX Limited
Statement of comprehensive income
For the year ended 30 June 2019
Currency: Australian Dollars
Notes
Consolidated
2019
$
2018
(restated)
$
Loss for the year
(2,813,395)
(2,532,507)
Other comprehensive income/(loss)
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations
19
(38,660)
(33,031)
Other comprehensive income for the year,
net of tax
(38,660)
(33,031)
Total comprehensive income for the year
attributable to owners of CAP-XX Limited
(2,852,055)
(2,565,538)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Page 28
CAP-XX Limited
Statement of financial position
As at 30 June 2019
Consolidated
Currency: Australian Dollars
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Other
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
2018
(restated)
$
1,911,346
823,090
1,404,205
1,784,384
5,923,025
572,949
236,507
809,456
Notes
2019
$
2,429,156
616,219
1,940,171
1,838,662
6,824,208
679,336
236,507
915,843
9
10
11
12
13
14
15
16
17
7,740,051
6,732,481
746,082
796,695
1,542,777
52,838
52,838
1,144,289
760,491
1,904,780
41,296
41,296
1,595,615
1,946,076
6,144,436
4,786,405
18
19
19
101,915,665
6,032,993
(101,804,222)
6,144,436
98,565,062
5,212,170
(98,990,827)
4,786,405
The above statement of financial position should be read in conjunction with the accompanying notes.
Page 29
CAP-XX Limited
Statement of changes in equity
For the year ended 30 June 2019
Currency: Australian Dollars
Notes
Contributed
Equity
$
Reserves
$
Accumulated
losses
$
Total
$
Consolidated
Balance as 1 July 2017 (restated)
1(aa)
98,343,719
4,324,973
(96,458,320)
6,210,372
Loss for the year as reported in the
2018 financial statements (restated)
1(aa)
Other comprehensive income
Transactions with owners in their
capacity as owners:
Contributions of equity, net of
transaction costs and tax
-
-
-
(2,532,507)
(2,532,507)
(33,031)
-
(33,031)
18
221,343
-
-
221,343
Employee share options - value of
employee services
19
-
920,228
221,343
920,228
-
-
920,228
1,141,571
Balance at 30 June 2018 (restated)
98,565,062
5,212,170
(98,990,827)
4,786,405
Loss for the year as reported in the
2019 financial statements
Other comprehensive income
Transactions with owners in their
capacity as owners:
Contributions of equity, net of
transaction costs and tax
Employee share options - value of
employee services
18
19
-
-
-
(2,813,395)
(2,813,395)
(38,660)
-
(38,660)
3,350,603
-
-
3,350,603
-
3,350,603
859,483
859,483
-
-
859,483
4,210,086
Balance at 30 June 2019
101,915,665
6,032,993
(101,804,222)
6,144,436
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Page 30
CAP-XX Limited
Statement of cash flows
For the year ended 30 June 2019
Currency: Australian Dollars
Notes
Consolidated
2019
$
2018
$
Cash flows from operating activities
Receipts from customers (inclusive of goods and
services tax)
Payments to suppliers and employees (inclusive of
goods and services tax)
Tax credit received
Grants received
Interest received
Net cash (outflow)/inflow from operating
activities
Cash flows from investing activities
Payments for property, plant and equipment
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares (net of costs)
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of the
financial year
Effects of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at the end of the
financial year
3,429,190
4.546,491
(7,603,198)
(4,174,008)
1,596,538
50,918
45,303
(7,919,787)
(3,373,296)
1,551,483
-
47,260
26
(2,481,249)
(1,773,553)
(312,884)
(312,884)
(385,205)
(385,205)
18
3,350,603
3,350,603
221,343
221,343
556,470
(1,937,415)
1,911,346
3,881,792
(38,660)
(33,031)
2,429,156
1,911,346
The above statement of cash flows should be read in conjunction with the accompanying notes.
Page 31
CAP-XX Limited
Notes to the financial statements
30 June 2019
Contents of the notes to the financial statements
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Summary of significant accounting policies
Financial risk management
Critical accounting estimates and judgements
Segment information
Revenue
Other income
Expenses
Income tax benefit
Current assets – Cash and cash equivalents
Current assets – Receivables
Current assets – Inventories
Current assets – Other
Non-current assets – Property, plant and equipment
Non-current assets – Other
Current liabilities – Payables
Current liabilities – Provisions
Non-current liabilities – Provisions and Other liabilities
Contributed equity
Reserves and accumulated losses
Key management personnel disclosures
Remuneration of auditors
Commitments
Related party transactions
Subsidiaries
Events occurring after the balance sheet date
Reconciliation of loss after income tax to net cash inflow/(outflow) from operating activities
Share-based payments
Economic dependency
Earnings per share
Parent entity
Page
33
44
46
47
49
50
50
51
52
52
53
53
53
54
54
54
56
56
57
58
58
59
59
59
60
60
60
62
62
63
Page 32
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated. The financial
statements are for the consolidated entity consisting of CAP-XX Limited and its subsidiaries.
All amounts shown are in Australian Dollars, rounded to the nearest Dollar, unless otherwise stated.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. CAP-XX
Limited is a for-profit entity for the purpose of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of the CAP-XX Limited Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in note 3.
b)
Continuation as a going concern
During the year ended 30 June 2019, the Group incurred an operating loss before tax and net cash outflows from
operating activities as disclosed in the statement of profit or loss and the statement of cash flows, respectively. The
continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as
they fall due are dependent upon the Group being successful with respect to the following factors:
i.
ii.
The Group receiving the proceeds from the R&D Tax concession which has been lodged with the Australian
Taxation Office in October 2019. The quantum of the rebate is similar to previous years;
The ability of the Group to raise additional funds from shareholders, new investors and debt markets. The Group
has successfully conducted a number of small equity placements in recent years and therefore there is a
reasonable expectation that alternate sources of funding can be sourced;
iii. Ongoing technology license discussions with numerous existing and new customers need to be finalised to
ensure that ongoing revenue and cash flow is generated in a timely manner;
iv.
v.
Increasing opportunities from existing and emerging markets are realised into sales revenue with the Group
needing to ensure that product development and manufacturing capacity is available to satisfy the customers
product specifications and timing demands; and
Continue the close and effective monitoring of the Group's operating expenditure, including the continued
realisation of identified operating cost initiatives. The Board approves an annual budget and regularly receives
forecasts from management to monitor performance against budget and to consider longer term prospects.
As a result of the above factors, there is material uncertainty that may cast significant doubt on the Group’s ability to
continue as a going concern and therefore it may be unable to realise its assets and settle its liabilities and commitments
in the normal course of business and at the amounts stated in the financial statements.
However, the Directors believe that the Group will be successful in achieving favourable outcomes on the above matters
and that it will have sufficient funds to pay its debts and meet its commitments for at least the next 12 months from the
date of this financial report, and accordingly, have prepared the financial report on a going concern basis. At this time,
the directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is
recorded in the financial report at 30 June 2019. As such, no adjustments have been made to the financial statements
relating to the recoverability and classification of the asset carrying amounts or classification of liabilities that might be
necessary should the Group not continue as a going concern.
Page 33
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(c)
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of CAP-XX Limited
(''Company'' or “Parent Entity”) as at 30 June 2019 and the results of all subsidiaries for the year then ended. CAP-XX
Limited and its subsidiaries together are referred to in this financial report as the “Group” or the “Consolidated Entity”.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the entity is
exposed to, or has rights to, variable returns from its involvement with the entity and has the entity to affect those returns
through its power to direct the activities of the entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in
equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss
and other comprehensive income, statement of financial position and statement of changes in equity of the Group.
Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative transaction differences recognised in equity.
The Group recognises the fair value of the consideration received and the fair value of any investment retained together
with any gain or loss in profit or loss.
(d)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board.
(e)
Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is CAP-XX Limited’s functional and presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of profit or loss on a net basis within other income or other expenses.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position;
income and expenses for each statement of profit or loss are translated at average exchange rates (unless this is
not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.
Page 34
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(e)
Foreign currency translation (continued)
When a foreign operation is sold, a proportionate share of such exchange differences are recognised in the statement of
profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entities and translated at the closing rate.
(f)
Revenue recognition
The Group has adopted application of AASB 15 “Revenue from contracts with customers” from 1 July 2018, applying the
modified retrospective method of transition. With the exception of the additional disclosure requirements, the nature of
the change in accounting policy has not had a material impact on the Group’s financial statements and there have not
been any significant changes to the judgements resulting from this adoption. As such, there is no change in the financial
line items, no change to basic and diluted earnings per share and no adjustment relating to prior periods before those
presented . The core principle is that revenue should only be recognised as the client receives the benefit of the goods or
services provided under a commercial contract, in an amount that reflects the consideration to which the provider
expects to be entitled for the transfer of the goods or services. A practical expedient has been adopted whereby the
impact of significant financing components have not been considered as the Group expected, at contract inception, that
the period between the transfer of the good or service and when the customer pays for that good or service is less than
one year.
Determining the transaction price
The Group’s revenue is derived from fixed price agreements and therefore the amount of revenues to be earned from
each agreement is determined by reference to those fixed prices. There is no variable consideration with these
agreements.
Allocation of amounts to performance obligations
For most agreements, there is only one performance obligation and a fixed unit price for the good or service provided. As
such, there is no judgement involved in the allocation of amounts specific performance obligations. In those instances
where there is more than one performance obligation, the unit price is clearly defined and is allocated against the specific
performance obligation. Some goods sold by the Group include warrantees which require the Group to either replace or
mend a defective product during the warranty period if the goods fail to comply with agreed-upon specifications. In
accordance with AASB 15, such warranties are not accounted for as separate obligations and hence no revenue is
allocated to them.
Sale of goods revenue is recognised at a point in time when the Group have met all of their performance obligations
including delivery, if applicable. There is limited judgement in identifying the point control passes; once the goods have
left the warehouse or when the goods are delivered, depending on the type of good.
Royalty revenue is recognised at a point in time when the underlying goods are sold. Fixed rate royalties are recognised
over the period of the underlying agreement.
Licence revenue in relation to the contracted use of the Group’s patents or technology is recognised at a point in time
when the licence agreement is signed and the Group has the present right to payment.
(g) Government grants
Grants from the government, including the R&D Tax incentive, are recognised at their fair value where there is a
reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Income from
government grants, including the R&D tax incentive, is recognised in the statement of profit or loss when the right to
receive the payment is established.
(h)
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Page 35
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(h)
Income tax (continued)
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for
each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising
from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction
did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised directly in
equity. In this case, the tax is also recognised directly in equity.
Tax consolidation legislation
CAP-XX Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as
of 1 July 2002.
The head entity, CAP-XX Limited, and the controlled entities in the tax consolidated group continue to account for their
own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group
continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, CAP-XX Limited also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled
entities in the tax consolidated group.
Tax funding agreements are currently not in place. Amounts assumed are recognised as a contribution to (or distribution
from) wholly owned tax consolidated entities.
(i)
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the
leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of
finance charges, are included in other long term payables.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases (note 22). Payments made under operating leases are charged to the statement of profit or loss on a
straight-line basis over the period of the lease.
(j)
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets
that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets
or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at each reporting date.
Page 36
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(j)
Impairment of assets (continued)
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at amortised
cost. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period
as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is
attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit
impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's
lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the
probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original
effective interest rate.
(k) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of approximately three months that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
(l)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less any allowance
for expected credit loss. Trade receivables are generally due for settlement no more than 30 days from the date of
recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by directly reducing the carrying amount. An allowance for expected credit loss is specifically recognised when
there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor or
default payments are considered objective evidence of impairment.
To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and
aging. The expected loss rates are based on the Group’s historical credit losses experienced over the two year period
prior to the period end. The historical loss rates are then adjusted for both current and forward-looking information on
macroeconomic factors affecting the Group’s customers.
(m)
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost
comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the
latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on a
basis of first in first out. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
Raw materials held for development purposes are also stated at the lower of cost and net realisable value, hence are
generally recognised in the statement of profit or loss as an expense when received.
(n) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. The nominal value less estimated credit adjustments of trade receivables and payables are
assumed to approximate their fair values due to their short term nature.
(o)
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Page 37
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(o)
Property, plant and equipment (continued)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss during the
financial period in which they are incurred. Capital work in progress is not depreciated until the asset is installed and
ready for use.
Depreciation on assets is calculated using the straight-line method to allocate their cost amounts, net of their residual
values over their estimate useful lives as follows:
Furniture and fittings
Plant and equipment – Manufacturing
Plant and equipment – Research & Development
2-10 years
2-10 years
2-10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount (note 1(j)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
statement of profit or loss.
(p) Research & Development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the
design and testing of new or improved products) are recognised as intangible assets when it is probable that the project
will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and
its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of
materials, services, direct labour and an appropriate proportion of overheads. Other development expenditures that do
not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as
intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful
life, which varies from 3 to 5 years.
(q)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid within 55 days of recognition.
(r)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations may be small.
(s)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
(t)
Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within
12 months of the reporting date are recognised in other provisions in respect of employees' services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Page 38
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(t)
Employee benefits (continued)
Long service leave
(ii)
The liability for long service leave is recognised as part of the provision for employee benefits and measured at
the present value of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the reporting date on national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
The Group does not maintain a Group superannuation plan. The Group makes defined fixed percentage
contributions for all Australian resident employees to complying third party superannuation funds. The Group’s
legal or constructive obligation is limited to these contributions.
Contributions to the defined contribution complying third party superannuation funds are recognised as an
expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash
refund or a reduction in the future payments is available.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via the CAP-XX Limited Share Option Exchange
Plan and the CAP-XX Limited Employee Share Option Plan. Information relating to these schemes is set out in
note 27.
The fair value of options granted under the CAP-XX Limited Share Option Exchange Plan and the CAP-XX
Limited Employee Share Option Plan is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the period during which the
employees become unconditionally entitled to the options.
The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the non-tradeable nature of the option, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free
interest rate for the term of the option.
Non marketing vesting conditions are included in assumptions about the number of options that are expected to
vest. The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of
options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
The 2006 Share Option Exchange Plan and the CAP-XX Limited Employee Share Option Plan are both
administered by the Board of Directors of CAP-XX Limited. When options are exercised, the entity transfers the
appropriate amount of shares to the employee. The proceeds received net of any directly attributable transactions
costs are credited directly to equity.
(v) Bonus plans
The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past
practice that has created a constructive obligation.
(u)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where such ordinary shares are subsequently re-issues, any consideration received, net of any directly attributable
incremental transactions costs and the related income tax effects, is included in equity attributable to the owners of
Group.
Page 39
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(v)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation
to dilutive potential ordinary shares.
(w) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
(x) New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The Group has adopted application of AASB 9 “Financial Instruments” from 1 July 2018, applying the modified
retrospective method of transition. The standard has replaced IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduced new classification and measurement models for financial assets. A financial asset is
measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument
assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on
initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the
entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge
accounting requirements more closely align the accounting treatment with the risk management activities of the entity.
New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is
measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since
initial recognition in which case the lifetime ECL method is adopted.
With the exception of the additional disclosure requirements, the most significant impact on the Group’s accounting
policies was the application of the expected credit loss model when calculating impairment losses on its financial assets
measured at amortised costs (such as trade and other receivables).
Page 40
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(x)
New, revised or amending Accounting Standards and Interpretations adopted (continued)
AASB 9 Financial Instruments (continued)
In applying AASB 9 the group considered the probability of a default occurring over the contractual life of its trade
receivables balances on initial recognition of those assets.
The impact of the adoption of the expected credit loss model did not have a material impact on the historical method of
provisioning for impairment of financial assets. As such, there is no change in the financial line items, no change to basic
and diluted earnings per share and no adjustment relating to prior periods before those presented.
AASB 15 Revenue from Contracts with Customers
The Group has adopted application of AASB 15 “Revenue from contracts with customers” from 1 July 2018, applying the
modified retrospective method of transition. The standard provides a single standard for revenue recognition. The core
principle of the standard is that an entity recognises revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The standard requires: contracts (either written, verbal or implied) to be identified, together with the
separate performance obligations within the contract; determine the transaction price, adjusted for the time value of
money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of
relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices
exist; and recognition of revenue when each performance obligation is satisfied. Credit risk is presented separately as an
expense rather than adjusted to revenue. For goods, the performance obligation is satisfied when the customer obtains
control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically
for promises to transfer services to customers.
With the exception of the additional disclosure requirements, the nature of the change in accounting policy has not had a
material impact on the Group’s financial statements and there have not been any significant changes to the judgements
resulting from this adoption. As such, there is no change in the financial line items, no change to basic and diluted
earnings per share and no adjustment relating to prior periods before those presented.
A practical expedient has been adopted whereby the impact of significant financing components have not been
considered as the Group expected, at contract inception, that the period between the transfer of the good or service and
when the customer pays for that good or service is less than one year.
(y) New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2019.
The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations,
most relevant to the consolidated entity, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. To the extent that the
entity, as lessee, has significant operating leases outstanding at the date of initial application, right-of-use assets will be
recognised for the amount of the unamortised portion of the useful life, and lease liabilities will be recognised at the
present value of the outstanding lease payments. Thereafter, earnings before interest, depreciation, amortisation and
tax (‘EBITDA’) will increase because operating lease expenses currently included in EBITDA will be recognised instead
as amortisation of the right-of-use asset, and interest expense on the lease liability. However, there will be an overall
reduction in net profit before tax in the early years of a lease because the amortisation and interest charges will exceed
the current straight-line expense incurred under AASB 117 Leases. This trend will reverse in the later years. There will
be no change to the accounting treatment for short-term leases less than 12 months and leases of low value items,
which will continue to be expensed on a straight-line basis.
An initial assessment suggests that the main impact of the adoption of the new standard is that the operating leases of
12 months or longer will be recognised on the balance sheet and depreciated as such. The consolidated entity will adopt
this standard from 1 July 2019. On adoption of the standard, the present value of operating lease commitments
disclosed in Note 22 will be recognised as a lease liability, with a corresponding right of use asset. The impact on the
statement of profit and loss will be a reduction in operating expenses, with an increase in depreciation and finance costs.
Management’s initial assessment has concluded that the impact may be material to the net assets of the Group.
Page 41
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(z) Parent entity financial information
The financial information for the parent entity, CAP-XX Limited, disclosed in note 30 has been prepared on the same
basis as the consolidated financial statements, except as set out below:
Investments in subsidiaries
(i)
Investments in subsidiaries are accounted for at cost in the financial statements of CAP-XX Limited.
(aa)
Restatement / reclassification of comparatives
During the preparation of the current year annual report the following error and reclassification was identified:
Understatement of inventories
An adjustment has been made to the value of the Group’s inventory balances recorded in previous periods due to an
understatement of work in progress costs which were incorrectly expensed rather than capitalised as inventories. This
resulted in the cost of sales expense being overstated by $89,424 in the year ended 30 June 2018 and overstated by
$93,875 in the year ended 30 June 2017. The closing balance of inventories was misstated in both years by the
equivalent amount.
This error has been corrected by restating each of the affected financial statement line items for the prior period as
detailed below.
Reclassification of eligible research and development expenditure from cost of sales to operating expenses
A reclassification of the prior period cost of sales expense and process and engineering expenses has been processed
in the current period financial statements in order to more accurately reflect raw materials used for research and
development purposes rather than sales to customers in the ordinary course of business.
The reclassifications above had no impact on the reported results or the financial position of the Group but the impact of
reclassifying the affected financial statement line items for the prior period are detailed below.
Extracts, being only those line items affected, are disclosed below:
Consolidated Statement of profit or loss
Consolidated
2018
2018
Extract
Expenses
Cost of Sales
Reported Adjustment Restated
$
$
$
(2,704,077)
644,280
(2,059,797)
Process and engineering expenses
(1,213,190)
(554,856)
(1,768,046)
Loss before income tax
(2,621,931)
89,424
(2,532,507)
Income tax benefit
Net loss for the year
-
-
-
(2,621,931)
89,424
(2,532,507)
Loss attributable to the owners of CAP-XX Limited
(2,621,931)
89,424
(2,532,507)
Cents
Reported
Adjustment
Cents
Restated
Earnings per share for (loss) attributable to the
ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
(0.9)
(0.9)
0.1
0.1
(0.8)
(0.8)
Page 42
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(aa)
Restatement / reclassification of comparatives (continued)
Consolidated Statement of comprehensive income
Extract
2018
Reported
$
Consolidated
Adjustment
$
2018
Restated
$
Loss for the year
(2,621,931)
89,424
(2,532,507)
Total comprehensive income for the year attributable to owners of
CAP-XX Limited
(2,654,962)
89,424
(2,565,538)
Consolidated Statement of financial position at the beginning of the earliest comparative period – 1 July 2017
Extract
Current assets
Inventories
Total current assets
Total assets
Net assets
Equity
Accumulated losses
Total equity
1/07/2017
Reported
$
Consolidated
Adjustment
$
1/07/2017
Restated
$
1,321,327
93,875
1,415,202
7,298,883
93,875
7,392,758
7,905,169
93,875
7,999,044
6,116,497
93,875
6,210,372
(96,552,195)
6,116,497
93,875
93,875
(96,458,320)
6,210,372
Consolidated Statement of financial position at the end of the earliest comparative period – 30 June 2018
Extract
Current assets
Inventories
30/06/2018
Reported
$
Consolidated
Adjustment
$
30/06/2018
Restated
$
1,220,906
183,299
1,404,205
Total current assets
5,739,726
183,299
5,923,025
Total assets
6,549,182
183,299
6,732,481
Net assets
Equity
Accumulated losses
Total equity
4,603,106
183,299
4,786,405
(99,174,126)
183,299
(98,990,827)
4,603,106
183,299
4,786,405
Page 43
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 1 Summary of significant accounting policies (continued)
(aa)
Restatement / reclassification of comparatives (continued)
Expenses
Loss before income tax includes the following specific expenses:
Cost of sales of goods
Direct materials and labour
Indirect manufacturing expenses
2018
Reported
$
2,163,484
540,593
Consolidated
Adjustment
$
(644,280)
-
2018
Restated
$
1,519,204
540,593
Total cost of sale of goods
2,704,077
(644,280)
2,059,797
Current assets – Inventories (as restated and correctly reported in note 11 of these financial statements)
2018
Reported
$
Consolidated
Adjustment
$
2018
Restated
$
Raw materials and stores – net realisable value
Work in progress – net realisable value
Finished goods – net realisable value
698,042
-
522,864
-
183,299
-
698,042
183,299
522,864
1,220,906
183,299
1,404,205
Note 2
Financial risk management
The Group's activities expose it to a variety of financial risks; market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
(a) Market risk
Consolidated
2019
$
2018
$
2,429,156
2,085,218
4,514,374
1,911,346
2,451,596
4,362,942
746,082
746,082
1,144,289
1,144,289
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk arising particularly from currency
exposures to the US dollar. The Group sells most of its products and services in US dollars, buys the majority of
its raw materials and pays its contract tolling fees in US dollars. Its USA operations are financed out of the net
proceeds.
Page 44
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 2
Financial risk management (continued)
(a) Market risk (continued)
Sensitivity analysis
The Group’s after tax loss and equity for the year would have been $36,485 lower/ $40,133 higher (2018: $65,333
lower/$79,851 higher) had the Australian dollar strengthened/weakened by 10% against the US dollar,
mainly as a result of foreign exchange gains/losses on the translation of US dollar denominated sales and
purchases of goods and services.
The Group's exposure to foreign currency risk at the end of the reporting period, was as follows:
USD
$
453,353
288,830
161,685
2019
GBP
£
Euro
€
2018
USD
$
GBP
£
4,045
-
2,458
1,636
-
6,939
452,981
532,540
291,579
15,602
-
14,712
Other
$
6.974
-
-
Cash and cash
equivalents
Trade receivables
Trade payables
(b)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The Group has some concentration of credit risk. The Group has policies in place to ensure that
sales of products are made to customers with an appropriate credit history. The maximum exposure to credit risk at the
reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets,
as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not
hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and
forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year. These indicators also suggest whether there has been an increase in credit
risk.
Cash and cash equivalents are placed in financial institutions with good credit ratings.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, to ensure debts are paid as and when they fall
due. The Group has experienced recurring operating losses and operating cash outflows since inception to 30 June 2019
as the Group is transitioning from development stage. Due to the negative cash flow position the Group has not
committed to any credit facilities and rather has relied upon equity financing through private and public equity investors.
(d)
Interest rate risk
The Group’s interest-rate risk mainly arises from interest bearing assets, with the Group’s income and operating cash
flows exposed to changes in market interest rates. The interest bearing assets have been predominantly deposited at
short term fixed rates exposing the Group to cash flow interest-rate risk.
The Group’s exposure to interest-rate risk is immaterial in terms of the possible impact on profit or loss or equity. It has
therefore not been included in the sensitivity analysis.
(e)
Fair value estimation
The carrying amount of financial assets and liabilities recorded in the financial statements represents their respective net
fair value unless otherwise noted, determined in accordance with the accounting policies disclosed in note 1.
Page 45
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 3
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
(a)
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. Apart from the going concern assumption as discussed in note 1(b),
the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.
(b)
Critical judgements in applying the entity’s accounting policies
(i)
Impairment loss on plant and equipment
The Group has continued to use the Sydney, Australia manufacturing site for the production of electrode material
and selected supercapacitor product lines, whilst the larger volume supercapacitor product lines are outsourced.
In assessing the carrying value of its plant and equipment, the Group considers whether previous impairment
write downs remain adequate and the current depreciation rates fairly reflect the carrying value of such assets.
(ii)
Fair value of share options
Share-based compensation benefits are provided to employees via the 2006 Share Option Exchange Plan and
the CAP-XX Limited Employee Share Option Plan. The fair value of options granted under the 2006 Share
Option Exchange Plan and the CAP-XX Limited Employee Share Option Plan is recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised
over the period during which the employees become unconditionally entitled to the options. The fair value at
grant date is determined using the Black-Scholes option pricing model. The key inputs and assumptions used in
the model is set out in note 27.
(iii)
Inventory provision
The Group makes estimates and assumptions concerning the future saleability of inventory for amounts in excess
of cost. The provision for inventory obsolescence is based on management’s expectation of the future price of
inventory, taking into account the age and condition and demand of the inventory and management’s assessment
of future demand for the inventory.
(iv) Lease make good provision
A provision has been made for the present value of anticipated costs for the future restoration of leased premises.
The provision includes future cost estimates associated with departing the premise at the termination of the
current lease period and requires assumptions regarding the cost estimates and departure dates. The provision
recognised is periodically reviewed and updated based on the facts and circumstances available at the time.
v) Warranty provision
In determining the level of provision required for warranties, the Group has made judgements in respect of he
expected performance of the products, the number and frequency of customers who will actually claim under the
stated warranty and the costs of fulfilling the conditions of the warranty. The provision is based on estimates
generated from historical warranty data associated with similar products and services.
Page 46
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 4
Segment information
(a)
Description of segments
Management has determined the operating segment based on the reports reviewed by the Board that are used to make
strategic decisions. Management has identified one reportable segment which is the development, manufacture and
sale of supercapacitors.
Although the Group is managed on a global basis, it generates revenue in 3 main geographical areas being Asia Pacific,
North America and Europe. Segment revenues are allocated based on the country in which the user is located. Cost of
sales are allocated based on the country in which the production of supercapacitors occur.
30 June 2019
Revenue
Cost of sales
Gross (Loss)/Profit
Interest revenue
Other income
General and administrative expenses
Process and engineering expenses
Selling and marketing expenses
Research and development expenses
Share Based Payment expenses
Other expenses
Geographical Segments
Asia Pacific
Europe
$
1,407,016
(1,441,927)
(34,911)
45,303
1,600,033
(2,084,468)
(914,543)
(743,678)
(1,547,361)
(859,483)
(71,822)
$
881,730
-
881,730
-
-
-
-
-
-
-
North
America
$
915,805
-
915,805
-
-
-
-
-
-
-
Total
$
3,204,551
(1,441,927)
1,762,624
45,303
1,600,033
(2,084,468)
(914,543)
(743,678)
(1,547,361)
(859,483)
(71,822)
(Loss)/Profit before income tax
(4,610,930)
881,730
915,805
(2,813,395)
Net (loss)/profit for the year
(4,610,930)
881,730
915,805
(2,813,395)
Other comprehensive income
Exchange differences arising in translation of
foreign operations
Total comprehensive income, net of tax
Total assets
Total liabilities
(Loss)/Profit before income tax includes the
following specific expenses:
Depreciation
Share based payments
(38,660)
(4,649,590)
-
881,730
-
915,805
(38,660)
(2,852,055)
7,740,051
1,595,615
206,497
859,483
-
-
-
-
-
-
-
-
7,740,051
1,595,615
206,497
859,483
Page 47
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 4
Segment information (continued)
30 June 2018 (restated)
Revenue
Cost of sales
Gross (Loss)/Profit
Interest revenue
Other income
General and administrative expenses
Process and engineering expenses
Selling and marketing expenses
Research and development expenses
Share Based Payment expenses
Other expenses
Geographical Segments
Europe
$
878,780
-
878,780
North
America
$
2,634,433
-
2,634,433
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Asia Pacific
$
1,392,474
(2,059,797)
(667,323)
47,260
1,525,419
(1,915,080)
(1,768,046)
(736,663)
(1,482,894)
(920,228)
(128,165)
Total
$
4,905,687
(2,059,797)
2,845,890
47,260
1,525,419
(1,915,080)
(1,768,046)
(736,663)
(1,482,894)
(920,228)
(128,165)
(Loss)/Profit before income tax
(6,045,720)
878,780
2,634,433
(2,532,507)
Net (loss)/profit for the year
(6,045,720)
878,780
2,634,433
(2,532,507)
Other comprehensive income
Exchange differences arising in translation of
foreign operations
Total comprehensive income, net of tax
Total assets
Total liabilities
(Loss)/Profit before income tax includes the
following specific expenses:
(33,031)
(6,078,751)
-
878,780
-
2,634,433
(33,031)
(2,565,538)
6,732,481
1,946,076
-
-
-
-
6,743,481
1,946,076
Depreciation
Share based payments
182,035
920,228
-
-
-
-
182,035
920,228
Page 48
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 5
Revenue
Sales revenue
Sale of goods (recognised at a point in time)
Licence Fees & Royalties (recognised at a point in
time)
Other revenue
Interest
Disaggregation of Revenue
Consolidated
2019
$
2018
$
2,127,926
2,690,617
1,076,625
3,204,551
2,215,070
4,905,687
45,303
47,260
The Group has disaggregated revenue into various categories in the following table which is intended to
- Depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic date; and
- Enable users to understand the relationship with revenue segment information provided in Note 4.
Consolidated - 2019
Geographical regions
Asia Pacific
Europe
Americas
Consolidated – 2018
Geographical regions
Asia Pacific
Europe
Americas
Supercapacitors
Licence
Fees and
Royalties
Total
886,835
881,730
359,361
520,181
-
556,444
1,407,016
881,730
915,805
2,127,926
1,076,625
3,204,551
Supercapacitors
Licence
Fees and
Royalties
Total
1,005,864
878,780
805,973
386,610
-
1,828,460
1,392,474
878,780
2,634,433
2,690,617
2,215,070
4,905,687
Page 49
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 6
Other income
Consolidated
Foreign Exchange Gains – (net)
R&D Tax Incentive
Government Grants
Note 7
Expenses
Loss before income tax includes the following specific expenses:
Cost of sale of goods
Direct materials and labour*
Indirect manufacturing expenses
Total cost of sale of goods
Depreciation
Plant and equipment
Furniture and fittings
Leasehold improvements
Total depreciation
Other expenses – movement in provisions
Allowance for expected credit loss
Provision for make good on premises
Provision for Withholding Tax Diminution
Foreign Exchange Loss
2019
$
8,995
1,540,119
50,919
1,600,033
2018
$
-
1,525,419
-
1,525,419
Consolidated
2019
$
2018
$
1,261,360
180,567
1,441,927
1,519,204
540,593
2,059,797
196,811
50
9,636
206,497
17,567
5,807
48,448
-
71,822
175,508
143
6,384
182,035
-
5,665
110,755
11,745
128,165
Rental expense relating to operating leases
Minimum lease payments
387,162
219,328
Employee benefits expense
3,194,355
3,356,519
Share based payments
859,483
920,228
* Includes $183,299 relating to a prior year adjustment. Please see Note 1 (aa).
Page 50
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 8
Income tax benefit
(a)
Numerical reconciliation of income tax
benefit to prima facie tax benefit
Loss before tax
Tax at the Australian tax rate of 27.5%
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Share based payments
(Non-assessable) / non-deductible items
R&D additional claims
Deferred income tax (revenue)/expense not
recognised
Benefit arising from tax losses not recognised
Income tax benefit
(b)
Tax losses
Consolidated
2019
$
2018
(restated)
$
(2,813,395)
(2,532,507)
(773,684)
(696,439)
236,358
537,326
-
773,684
-
-
-
253,063
-
(587,236)
(1,030,612)
-
1,030,612
-
Unused tax losses for which no deferred tax asset has
been recognised
Potential tax benefit @ 27.5%
92,622,157
25,471,093
92,622,157
25,471,093
No additional tax losses were generated during the financial year by the offset created by the R&D tax benefit and the
foreign withholding tax benefit.
All unused tax losses were incurred by Australian entities. The deferred tax assets in relation to the tax losses will only
be obtained if:
i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised, and
the Group continues to comply with the conditions for deductibility imposed by tax legislation, and
no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.
ii)
iii)
(c) Deferred Tax Assets - not recognised
The balance comprised temporary differences
attributable to employee benefits & other provisions
Set- off of deferred tax liabilities
Net deferred tax assets
(d) Unrecognised temporary differences
348,972
(47,961)
308,483
(51,266)
301,011
257,217
Temporary differences for which no deferred tax asset
has been recognised
Potential tax benefit @ 27.5%
1,268,987
348,972
1,121,758
308,483
CAP-XX Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as
of 1 July 2002. The accounting policy in relation to this legislation is set out in note 1(h). CAP-XX Limited has not
recognised any tax consolidation distribution from or to wholly tax consolidated entities.
Page 51
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 9
Current assets – Cash and cash
equivalents
Cash at bank and on hand
Cash on deposit
Consolidated
2019
$
453,279
1,975,877
2,429,156
2018
$
202,112
1,709,234
1,911,346
Note 10 Current assets – Receivables
Consolidated
Trade receivables
Other receivables
2019
$
413,186
413,186
203,033
616,219
2018
$
733,110
733,110
89,980
823,090
Movements in the provision for impairment of receivables are as follows:
Consolidated
2019
$
-
17,567
17,567
2018
$
-
-
-
Opening balance
Allowance for expected credit loss
Closing balance
(b) Past due but not impaired
There were no trade receivables at 30 June 2019 that were past due but not impaired (2018: Nil).
(c)
Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. The
current receivables are non-interest bearing. Further information relating to amounts due from related parties is set out in
note 23. There is some concentration of credit risk with respect to current receivables, as the Group has a limited number
of customers, internationally dispersed. The total amount outstanding is comprised of 12 customers with the top 6
making up over 90% of the total balance.
(d)
Foreign exchange and interest rate risk
Information about the Group's exposure to foreign currency risk and interest rate risk in relation to trade and other
receivables is provided in note 2.
Page 52
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 11 Current assets – Inventories
Consolidated
Raw materials and stores - net realisable value
Work in progress – net realisable value
Finished goods - net realisable value
2019
$
811,769
-
1,128,402
1,940,171
2018
(restated)
$
698,042
183,299
522,864
1,404,205
Note 12 Current assets – Other
Consolidated
Research & Development - Tax Credit
Prepayments
Other Receivables
2019
$
1,469,000
358,489
11,173
1,838,662
2018
$
1,525,419
155,660
103,305
1,784,384
Note 13 Non-current assets – Property, plant
Consolidated
and equipment
Plant and equipment at cost
Accumulated depreciation
Capital Works in Progress
Net book amount
Furniture and fittings at cost
Accumulated depreciation
Net book amount
Leasehold improvements at cost
Accumulated depreciation
Net book amount
Total property, plant and equipment
Total accumulated depreciation
Total net book amount
2019
$
2018
$
17,083,858
(16,602,852)
188,498
669,504
16,962,903
(16,507,539)
98,067
553,431
66,779
(66,591)
188
470,099
(460,455)
9,644
66,779
(66,541)
238
470,099
(450,819)
19,280
17,809,235
(17,129,899)
679,336
17,597,848
(17,024,899)
572,949
Page 53
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 13 Non-current assets – Property,
plant and equipment (continued)
Movement in classes of assets:
Consolidated
Plant and
equipment
$
Leasehold
improvements
$
Furniture and
fittings
$
Year ended 2019
Opening net book amount
Additions
Retirements
Depreciation
Closing net book amount
553,431
312,884
-
(196,811)
669,504
19,280
-
-
(9,636)
9,644
238
-
-
(50)
188
Movement in classes of assets:
Consolidated
Plant and
equipment
$
Leasehold
improvements
$
Furniture and
fittings
$
Year ended 2018
Opening net book amount
Additions
Retirements
Depreciation
Closing net book amount
365,823
363,116
-
(175,508)
553,431
3,575
22,089
-
(6,384)
19,280
381
-
-
(143)
238
Total
$
572,949
312,884
-
(206,497)
679,336
Total
$
369,779
385,205
-
(182,035)
572,949
Note 14 Non-current assets – Other
Consolidated
Rental bond
2019
$
2018
$
236,507
236,507
A term of the current lease agreement for the Lane Cove premises is a requirement for the Group to have a bank
guarantee in place as security for the landlord against loss or damage from any event of default. The rental bond of
$236,507 represents the current value of this bank guarantee.
Note 15 Current liabilities – Payables
Trade payables
Other payables and accrued expenses
Consolidated
2019
$
501,011
245,071
746,082
2018
$
792,931
351,358
1,144,289
The carrying amount of trade and other payables are assumed to approximate their fair values due to their short term
nature.
Note 16 Current liabilities – Provisions
Consolidated
Employee benefits – annual leave and long service leave
Product returns and warranties
Make good provision
2019
$
551,489
7,130
238,076
796,695
2018
$
519,004
9,218
232,269
760,491
Page 54
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 16 Current liabilities – Provisions (continued)
(a) Make good provision
The Group is required to restore the leased premises of its office/warehouse to their original condition at the end of the
respective lease term. A provision has been recognised for the present value of the estimated expenditure required to
remove any leasehold improvements.
(b) Amounts not expected to be settled within the next 12 months
Provision for employee benefits includes accruals for annual leave. The entire obligation is presented as current, since the
Group does not have an unconditional right to defer settlement. However, based on past experience, the Group does not
expect all employees to take the full amount of accrued leave within the next 12 months. The following amounts reflect leave
that is not expected to be taken within the next 12 months:
Annual leave obligation not expected to be
settled after 12 months
(c)
Risk exposure
Consolidated
2019
$
2018
$
86,939
105,152
Information about the Group's exposure to foreign exchange risk is provided in note 2.
(d)
Product returns and warranties
Provision is made for estimated product returns and warranty claims in respect of products sold. The Group provides a one
year warranty on products sold to customers.
(e) Movements in provisions
Movements in the product returns and warranties provision during the financial years are set out below:
Carrying amount at start of year
Charged to profit or loss
- provision adjustment
Carrying amount at end of year
Consolidated
2019
$
9,218
(2,088)
7,130
2018
$
9,218
-
9,218
Movements in the make good on premises provision during the financial year are set out below:
Carrying amount at start of year
Charged to profit or loss
- additional provisions recognised
Carrying amount at end of year
Consolidated
2019
$
2018
$
232,269
226,604
5,807
238,076
5,665
232,269
Page 55
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 17 Non-current liabilities – Provisions
and Other liabilities
Employee benefits – long service leave
Note 18 Contributed equity
(a)
Share capital
2019
$
52,838
52,838
2018
$
41,296
41,296
Consolidated
2019
Shares
2018
Shares
Fully paid ordinary shares (no par value)
324,514,775
299,886,087
(b) Movement in ordinary share capital:
Date
Details
1 July 2017
19 December 2017
04 May 2018
27 June 2018
27 June 2018
30 June 2018
1 July 2018
23 July 2018
26 October 2018
09 November 2018
31 December 2018
28 June 2019
30 June 2019
Balance
Issue of Shares
Issue of Shares
Issue of Shares
Issue of Shares
Balance
Balance
Issue of Shares
Issue of Shares
Issue of Shares
Issue of Shares
Issue of Shares
Balance
(c)
Ordinary shares
Number of
shares
298,006,055
206,010
387,508
1,042,196
244,318
299,886,087
299,886,087
937,500
2,340,886
20,588,236
263,132
498,934
324,514,775
Issue price
$
$0.22
$0.09
$0.09
$0.19
$0.09
$0.09
$0.14
$0.18
$0.10
98,343,719
45,761
35,964
92,818
46,800
98,565,062
98,565,062
82,608
202,241
2,970,995
46,602
48,157
101,915,665
At 30 June 2019, there were 324,514,775 (2018: 299,886,087) issued ordinary shares which were fully paid, with no par
value. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote,
and upon a poll each share is entitled to one vote.
(d) Options
Information relating to the CAP-XX Limited Share Option Exchange and CAP-XX Limited Employee Share Option Plan,
including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of
the financial year, is set out in note 27.
Page 56
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 18 Contributed equity (continued)
(e) Capital management plan
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern that
it can provide returns for shareholders and benefits to other stakeholders and to maintain an optimum structure to reduce
the cost of capital.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was value
adding value relative to the current company's share price at the time of the investment. The consolidated entity would
actively pursue additional investments in the short term as it continues to integrate and grow its existing business in order
to maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given pricing capital
market decisions. There have been no events of default on the financing arrangements in the financial year.
The capital risk management policy remains unchanged from the 2018 Annual report.
Note 19 Reserves and accumulated losses
(a)
Reserves
Foreign currency translation reserve
Share-based payments reserve
Movements:
Foreign currency translation reserve
Balance 1 July
Currency translation differences arising during the year
Balance 30 June
Share-based payments reserve
Balance 1 July
Option expense
Balance 30 June
(b)
Accumulated losses
Movements in accumulated losses were as follows:
Balance 1 July
Net (loss) for the year
Balance 30 June
(c)
Nature and purpose of reserves
Consolidated
2019
$
2018
$
(294,096)
6,327,089
6,032,993
(255,436)
5,467,606
5,212,170
(255,436)
(38,660)
(294,096)
5,467,606
859,483
6,327,089
(222,405)
(33,031)
(255,436)
4,547,378
920,228
5,467,606
Consolidated
2019
$
(98,990,827)
(2,813,395)
(101,804,222)
2018
(restated)
$
(96,458,320)
(2,532,507)
(98,990,827)
(i) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency
translation reserve, as described in note 1(e). The reserve is recognised in profit and loss when the net
investment is disposed of.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
Page 57
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 20 Key management personnel disclosures
(a)
Directors
The names of the directors who have held office during the financial year are as follows:
Executive director
Anthony Kongats (Managing Director)
Non-executive directors
Patrick Elliott (Non-Executive Chairman)
Bruce Grey (Non-Executive Director)
(b)
Key management personnel compensation
Key management personnel compensation is set out below. The key management personnel include
all the directors of the Company and those executives that report directly to the Managing Director.
The following were key management personnel up to the date of the report unless otherwise stated:-
Alex Bilyk, VP Research
Mark Hulme, VP Operations Song Au Lau, VP Sales & Marketing Asia (resigned June 2018)
Song Hee Lau, General Manager Sales & Marketing Asia Pacific
Jean Pierre Mars, VP Applications Engineering
Michael Taylor, Chief Financial Officer/Chief Operating Officer
Dan Trujic, General Manager Sales & Marketing Europe and America
Short-term benefits
Post-employment benefits
Share-based payments
Total
Consolidated
2019
$
2018
$
1,309,242
124,378
766,360
2,199,980
1,529,171
145,271
777,026
2,451,468
(c)
Other transactions with key management personnel or entities related to them
There were no other transactions with key management personnel.
Note 21 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group, its related practices
and non-related audit firms:
BDO East Coast Partnership
Audit services
Audit of financial statements
Total remuneration for audit services
Consolidated
2019
$
2018
$
61,500
61,500
61,500
61,500
Taxation services
Tax compliance services, including review of company
income tax returns, employee share scheme and R&D Tax
concession
Total remuneration of BDO East Coast Partnership
36,500
98,000
36,600
98,100
Page 58
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 21 Remuneration of auditors (continued)
It is the Group’s policy to employ BDO East Coast Partnership on assignments additional to their statutory audit duties
where BDO East Coast Partnership's expertise and experience with the Group are important. These assignments are
principally tax advice, or where BDO East Coast Partnership is awarded assignments on a competitive basis. It is the
Group’s policy to seek competitive tenders for all major consulting projects.
Note 22 Commitments
(a)
Lease commitments: Group / company as lessee
The Group leases factory space with an office and warehouse under a non-cancellable operating lease which
commenced on the 1st July 2016 and was due to expire on 30th June 2017. The lease has been extended by a further 48
months to 30th June, 2020.
The Group also leases office equipment under cancellable operating leases. The Group is required to give 3 months
notice for termination of these leases.
Commitments for minimum lease payments in relation to
operating leases are payable as follows:
Within one year
Later than one year but not later than 5 years
Consolidated
2019
$
2018
$
378,772
27,337
406,109
368,230
379,433
747,663
Note 23 Related party transactions
(a)
Parent entity
The ultimate parent entity within the Group is CAP-XX Limited.
(b)
Subsidiaries
Interests in subsidiaries are set out in note 24.
(c)
Key management personnel
Disclosures relating to key management personnel are set out in note 20.
Note 24 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(c):
Name of entity
Country of
incorporation
Class of
shares
Equity holding *
30 June 2019
%
30 June 2018
%
CAP-XX (Australia) Pty Ltd
CAP-XX Research Pty Ltd
CAP-XX USA, Inc
Australia
Australia
United States
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
*
The proportion of ownership interest is equal to the proportion of voting power held.
Page 59
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 25 Events occurring after the balance sheet date
The necessary paperwork associated with the receipt of the R&D Tax rebate for the 2019 financial year has been lodged
with the relevant Government authorities and the quantum expected to be received is similar to past years.
No other matters or circumstances have arisen since 30 June 2019 that has significantly affected, or may significantly
affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Note 26 Reconciliation of loss after tax to net cash outflow from operating activities
Consolidated
2019
$
2018
(restated)
$
(2,813,395)
(2,532,507)
206,497
859,483
182,035
920,228
206,870
(535,966)
(125,913)
(326,571)
47,746
(2,481,249)
(375,963)
10,997
(135,746)
130,334
27,069
(1,773,553)
Net loss
Depreciation and amortisation
Non-cash employee benefit expense – share based
payments
Changes in assets and liabilities:
Decrease / (Increase) in receivables
(Increase)/Decrease in inventories
Increase in other assets
(Decrease)/Increase in payables
Increase in provisions
Net cash outflow from operating activities
Note 27 Share-based payments
(a) CAP-XX Limited Employee Share Option Plan
The CAP-XX Limited Employee Share Option Plan (the “CAP-XX Limited Plan”), provides for the grant of share options
for the purchase of ordinary shares of the Group by officers, employees, consultants, advisors and directors of the Group
or a related body corporate. The Board is responsible for administration of the CAP-XX Limited Plan. The Board
determines the term of each option, the option exercise price, and the number of shares for which each option is granted
and the rate at which each option is exercisable. Unless otherwise determined by the Board an offer of Options must not
provide for an exercise price that is less than the volume weighted average sale price of a share traded on AIM over a
defined period.
Set out below is a summary of options granted under the CAP-XX Limited Plan:
Grant Date
Expiry date
Consolidated – 2019
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Forfeited &
expired
during the
year
Balance at
end of the
year
Exercisable
at end of the
year
$
Number
Number
Number
Number
Number
Number
04 December 2015 04 December 2020
11 November 2016 11 November 2021
£0.057 18,587,492
£0.035 1,500,000
-
-
(3,278,386)
-
(562,500) 14,746,606 13,181,042
988,456
1,500,000
-
11 December 2017 11 December 2022
£0.115 17,710,000
-
-
(1,200,000) 16,510,000
6,411,760
Weighted Average Exercise Price
37,797,492
$0.15
- (3,278,386) (1,762,500)
32,756,606 20,581,258
$0.10
$0.17
$0.15
$0.13
Options granted prior to April 2008 used Australian dollars as the measurement basis, whilst options granted after April
2008 used British pounds. This date corresponds with the listing of CAP-XX Limited on the Alternative Investment Market
(AIM) in 2008.
Page 60
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 27 Share-based payments (continued)
Fair value of options granted
There were nil share options issued for the year ended 30 June 2019 (2018: 17,935,000).
Grant Date
Expiry date
Consolidated – 2018
25 February 2008
25 February 2019
09 October 2013
09 October 2019
21 April 2014
21 April 2019
04 December 2015 04 December 2020
11 November 2016 11 November 2021
11 December 2017 11 December 2022
Exercise
price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Forfeited &
expired
during the
year
Balance at
end of the
year
Exercisable
at end of the
year
$
Number
Number
Number
Number
Number
Number
$0.71
£0.085
£0.057
£0.057
£0.035
£0.0115
160,000
2,960,000
100,000
20,150,000
1,500,000
-
-
-
-
-
- 17,935,000
-
(160,000)
- (2,960,000)
-
-
-
-
(100,000)
(1,329,704)
-
-
(232,804) 18,587,492 11,644,515
-
-
-
- 1,500,000
(225,000) 17,710,000
613,356
-
Weighted Average Exercise Price
$0.11
$0.20
$0.10
$0.17
$0.15
$0.10
24,870,000
17,935,000 (1,429,704) (3,577,804) 37,797,492 12,257,871
Options granted prior to April 2008 used Australian dollars as the measurement basis, whilst options granted after April
2008 used British pounds. This date corresponds with the listing of CAP-XX Limited on the Alternative Investment Market
(AIM) in 2008.
The assessed fair value at grant date of options granted, during the year ended 30 June 2018, under the CAP-XX
Limited Plan was A$0.13 on 11 December 2017. The fair value at grant date is determined using a Black-Scholes option
pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the
impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk-free interest rate for the term of the option
The model inputs for options granted included:
(a)
options are granted for nil consideration, have a:
o
o
4 -10 year life and 25% vest 12 months after the Vesting Commencement Date, and 1/48 of Total Option
shall vest on each monthly anniversary of the Vesting Commencement Date thereafter;
specific vesting criteria in some minor instances.
(b)
exercise price: refer tables above
(c)
grant date: refer tables above
(d)
expiry date: refer tables above
(e)
share price at grant date
(f)
expected price volatility of the Group’s shares: 84% which was determined based on the historical share price
movement over a one year period prior to the grant date.
(g)
no expected dividend yield
(h)
risk-free interest rate: 0.99%
Page 61
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 27 Share-based payments (continued)
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were as follows:
Options issued under CAP-XX Limited Employee Share
Option Plan
Note 28
Economic dependency
Consolidated
2019
$
2018
$
859,483
859,483
920,228
920,228
The Group is highly dependent upon a small number of customers and potential customers. Alternative sources of
revenue are being sought to reduce future dependency on any particular entity.
The Group is also dependent upon Malaysian contract manufacturers to fulfil a large proportion of sales orders and
external shareholders due to the capital raising activities during the year.
Note 29 Earnings per share
Earnings per share for (loss) attributable to the ordinary equity holders of the Group.
Basic earnings per share
(a)
(Loss) attributable to the ordinary equity holders of the Company
Diluted earnings per share
(b)
(Loss) attributable to the ordinary equity holders of the Company
(c) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
Consolidated
2019
Cents
(0.9)
(0.9)
2018
(restated)
Cents
(0.8)
(0.8)
Consolidated
2019
Number
2018
Number
315,691,940
298,191,206
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
315,691,940
298,191,206
Options are considered to be potential ordinary shares. The options are not included in the calculation of diluted earnings
per share because they are anti-dilutive. These options could potentially dilute basic earnings per share in the future.
Page 62
CAP-XX Limited
Notes to the financial statements
30 June 2019
Note 30 Parent Entity
(a)
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Shareholders’ equity
Issued capital
Reserves
Share-based payments
Retained earnings (i)
2019
$
2018
$
3,836,079
3,836,079
291,925
291,925
3,425,232
3,425,232
121,628
121,628
3,544,154
3,303,604
101,915,664
98,565,062
6,327,089
(104,698,599)
5,467,606
(100,729,004)
Loss for the year
(3,969,595)
(2,936,488)
Total comprehensive income
(3,969,595)
(2,936,488)
(i) Reconciliation to prior year retained earnings
Balance at beginning of period 1/07/2018
Net loss for the year
Balance at end of period 30/06/2019
(100,729,004)
(3,969,595)
(104,698,599)
Contingent Liabilities
The parent had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments - Property, plant and equipment
The parent had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1.
Page 63
CAP-XX Limited
Directors’ declaration
30 June 2019
Directors’ declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 26 to 63 are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and mandatory
professional reporting requirements; and
giving a true and fair view of the Company’s and Group’s financial position as at 30 June 2019 and of
their performance, as represented by the results of their operations, changes in equity and their cash
flows, for the financial year ended on that date; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer in the form
contained in section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Patrick Elliott
Director
Sydney
8 November 2019
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Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Cap-XX Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cap-XX Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated
statement of profit or loss, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial report, including a summary of significant accounting policies and the
directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
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Material uncertainty related to going concern
We draw attention to Note 1 (b) in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
Group’s ability to continue as a going concern and therefore the Group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our opinion is not modified in
respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Share-based payments
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 27 and the Directors’ report,
the Group has issued numerous traches of shares
options to directors, management and employees
pursuant to the Group’s Employee Share Option
Plan which are subject to vesting conditions.
These share-based payment arrangements are a
complex accounting area which include
assumptions utilised in the fair value calculation
and estimation regarding the number of options
that are ultimately expected to vest.
Due to these factors, we considered this area a
key audit matter.
To determine whether share-based payment
arrangements had been appropriately accounted
for and disclosed, we undertook, amongst
others, the following audit procedures:
• Considered whether the Group used an
appropriate model in valuing the options.
• Reconciled to underlying share based
payment valuation reports and calculations.
• Assessed the reasonableness of employee
retention rates by reviewing historical
employee terminations by employee
category.
•
•
Evaluated management’s assumptions used
in the calculation being interest rate,
volatility, the expected vesting period, the
probability of achievement and the number
of options expected to vest.
Evaluated the adequacy and accuracy of the
disclosure of the share-based payment
arrangements within the financial report
including disclosures comprising key
management personnel remuneration.
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Prior period inventory restatement
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 1 (aa), the Group identified a
prior period restatement in relation to the
accounting treatment for work in progress
inventory.
To determine whether the restatement of
inventory had been appropriately accounted for
and disclosed, we undertook, amongst others,
the following audit procedures:
Due to the amount of additional disclosure
requirements within the financial statements and
the extent of auditor effort performed in
substantiating the restatement, we considered
this area to be a key audit matter.
• Obtained reports from an external third
party of the estimated work in progress
inventory at the end of each impacted
reporting period, recalculating the
respective values to ensure the balances
reported in the current year financial
statements were materially correct.
• Critically evaluated the requirements of
Australian Accounting Standard AASB 102
Inventories, as well as the accounting policy
described in Note 1 to ensure that the
accounting treatment for work in progress
inventories was reasonable.
• Considered the requirements of Australian
Accounting Standard AASB 108 Accounting
Policies, Changes in Accounting Estimates
and Errors, to ensure that disclosures of the
prior period restatement were compliant
with the requirements of the accounting
standards.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
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Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
BDO East Coast Partnership
Martin Coyle
Partner
Sydney, 8 November 2019
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