CAP-XX Limited
ABN 47 050 845 291
Annual report 2020
Annual report 2020
Contents
Corporate directory
Chairman’s statement
Business review
Directors’ report
Independence declaration
Corporate governance statement
Financial statements
Directors’ declaration
Independent audit report to the members
Page
3
5
6
9
16
17
27
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
Unit 1
13A Stanton Road
Seven Hills NSW 2147
Australia
time: 6.00pm
date: 25th November 2020
Suite 126
117 Old Pittwater Road
Brookvale NSW 2100
Australia
Unit 1
13A Stanton Road
Seven Hills NSW 2147
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
Allenby Capital
5 St Helen’s Place
London EC3A 6AB
BDO
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
Bankers
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
Chairman’s Report
The Company has been working hard to ensure that the Murata production lines, purchased in November 2019, are
recommissioned in Sydney on time and under budget. I am therefore pleased to report that this large and complex project has
progressed well, despite the challenges posed by COVID-19 related issues. I am also pleased to report that the Board now
forecasts the actual Total Project Costs to be slightly less than the A$5.3m estimate given in November 2019.
This project comprised many facets. Four production lines comprising over 40 containers of equipment have been successfully
moved from Fukui in Western Japan to Seven Hills in western Sydney without any significant damage. New premises to
accommodate this additional equipment were secured, with the Company moving to its new site at Seven Hills, where a new 10-
year lease, with two five-year extension options, was secured. These premises offer substantially more floor space and electrical
power at a similar cost to Lane Cove. However, before the Murata equipment could be installed an extensive fit out was required.
This necessitated building a factory inside a factory, with clean room type facilities, new air treatment facilities, utilities and fire
services. Commissioning and factory acceptance testing for these new facilities are now in their final stages and the Board
remains confident that the first manufactured supercapacitor products will be available for shipment to customers before the end
of the current calendar year.
Once the four Murata production lines are fully commissioned, the Board believes that the positive impact on the Company’s
sales and profitability will be transformational. At full capacity, the lines will be able to produce around 4.8 million DMF or DMT
products per year and more than 2.4 million DMH products per year, all at a much lower unit cost than the prismatic parts which
the Company currently manufactures in Malaysia. While full production capacity loading is not expected to be reached
immediately the Board is very pleased with the demand expressed by both pre-existing Murata customers and new customers.
The aggregate level of these enquiries, some of which are more advanced than others, exceeds the full capacity of these
production lines with the top 10 prospects exceeding 9 million units per annum. The Board expects that in the initial phase the
key markets served will be the Company’s traditionally strong markets in smart meters, security products and medical devices,
together with new business in consumer products and Internet of Things (IoT) sensors. As demand builds, the Board will look at
how to best grow sales, potentially by adding new capacity and/or new product lines.
Like most businesses, the Company has experienced impacts due to COVID-19. Some pre-existing Murata customers have
advised the Company that, due to the combination of a short term reduction in demand for their products, coupled with large
final purchases made from Murata before the production lines were closed for transfer, they have sufficient inventory of products
for the next six to nine months. The Company has also seen royalty payments from AVX and Murata stagnate. Production
efficiency and output from Malaysia has been impacted by the ban on CAP-XX engineers travelling to Malaysia. As previously
announced, the project itself was delayed by about three months, due to various COVID-19 related delays, which have included:
cancelled and delayed ships from Japan to Sydney; the inability of Japanese engineers to assist with on-site commissioning in
Sydney; and delays in procuring some equipment and raw materials. Nevertheless, the Board believes that the Company has
weathered these impacts relatively well. Meanwhile, revenue is 12% up on the previous year, with the sales order book as at 30
June 2020 being more than double the value at the same time in the previous year.
Licensing is also an important revenue stream for CAP-XX and the Company continues to vigorously defend its intellectual
property. During this calendar year, CAP-XX was successful in its US Court proceedings against Ioxus, Inc ("Ioxus"). The
Delaware District Court found that Ioxus was liable for infringing CAP-XX’s patents and awarded CAP-XX damages of US$4.95m
plus legal fees. CAP-XX is pursuing Ioxus for the payment of the awarded damages. However, it remains unclear whether Ioxus
will be able to pay. CAP-XX continues to pursue a similar patent infringement action against Maxwell Technologies, now a wholly
owned subsidiary of Tesla Inc. with the initial discussions in front of the Court scheduled during November 2020.
Total Company sales revenue for the year to 30 June 2020 increased by 12% to A$3.6 million (2019: A$3.2 million). Pleasingly,
product sales were up 27% from FY 2019, which is a direct result of the strong pipeline of opportunities which have been
commented upon in prior year reports and recent trading updates. Licensing and royalty revenue was in line with the previous
year, despite the Murata plant being decommissioned in February 2020 and AVX’s sales being negatively impacted by COVID-
19. The Reported Net Loss for the year to 30 June 2020 was a loss of A$4.9 million (2019: loss of A$2.8 million), which includes
the amortisation of share-based payment expenses. This loss also includes A$3.73 million of Murata project expenses (a net
figure of A$2.11 million after the expected incremental R&D tax rebate) (2019: nil); A$0.667 million in legal expenses for patent
infringement; and A$0.088 million necessitated by a new treatment of lease expenses under AASB 16. When adjusted for these
one-off factors, the like for like comparison is an adjusted Net Loss of A$2.0 million (2019: loss of A$2.8 million).
The Board is confident that the Company has sufficient cash to complete the Murata project as planned and that the
commissioning of the Murata production lines will transform the Company’s sales and cash flow position.
Patrick Elliott
Chairman
3 November 2020
Page 5
Business Review
Review of Operations and Activities
The Reported Net Loss for the year to 30 June 2020 was a loss of A$4.9 million (2019: loss of A$2.8 million), which includes the
amortisation of share-based payment expenses. This loss also includes A$3.73 million in Murata project expenses (a net figure
of A$2.11 million after the expected incremental R&D tax rebate) (2019: nil); A$0.667 million in legal expenses for patent
infringement; and A$0.088 million necessitated by a new treatment of lease expenses under AASB 16. When adjusted for these
one-off factors the like for like comparison is an adjusted Net Loss of A$2.0 million (2019: loss of A$2.8 million).
Cash reserves as at 30 June 2020 were A$2.9 million, which was up from A$2.4 million as at 30 June 2019. Not included in the
FY 2020 cash reserves is the Federal Government R&D tax rebate which is expected to be approximately A$3.2 million
(November 2019: A$1.6 million), with these funds expected to be received before the end of the current calendar year.
As noted in the Chairman’s statement, two accounting adjustments need to be taken into account when analysing the financial
results for FY 2020. The first relates to the Company adopting AASB 16 from 1 July 2019. This standard replaces AASB 117
and for lessees eliminates the classifications of operating leases and finance leases. Straight-line operating lease expense
recognition has been replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest
expense on the recognised lease liabilities (included in finance costs). A full explanation of this adjustment can be found in the
Notes to the Financial Statements at Note 1 (v). The second adjustment relates to the year on year increase in Research and
Development expenditure, which is a direct result of the costs incurred in the relocation and commissioning of the acquired
Murata plant and equipment. A material percentage of the expenditure incurred can be claimed as eligible Research and
Development expenditure under the current Australian Taxation Office guidelines and is subject to a rebate. The amount of
eligible Research and Development expenditure for FY 2020 totalled A$7.4 million (2019: A$3.7 million) which will generate an
expected Government rebate of A$3.2 million (2019: A$1.6 million) which is anticipated to be received before the end of the
current calendar year.
The Company’s sales pipeline is robust with many of the opportunities being converted to sales orders, with the outstanding
order balance as at 30 June 2020 being more than double the level at the same time in the previous year. This is despite several
material sales opportunities being pushed back to FY 2022 due to delays in product development by customers due to COVID-
19 related issues. Total sales revenue for the year to 30 June 2020 was A$3.6 million (2019: A$3.2 million) which represents a
12% year-on-year increase. The contributing factors underlying this increase were the year on year increase in CAP-XX’s product
range and sales of cylindrical can supercapacitors, with the cylindrical can increase being generated from a modest total in the
previous year. Sales of Murata products manufactured by Murata were also generated in the financial year. These increases
offset the contribution from Licensing was which was down from the previous year, with consolidated royalties being on par with
the previous year and no new licensing deals being completed in FY 2020.
Operational expenditure excluding direct project expenditure, increased by 10% from A$6.1 million to A$6.7 million. The increase
in expenditure is attributable to CAP-XX’s patent infringement cases in the United States (A$0.667 million) which resulted in the
award of damages against Ioxus plus the pending Maxwell Technologies case. In addition, operational expenditure increased
as a result of the appointment of a dedicated sales representative in the United States which has already increased CAP-XX’s
presence in this market and increased the pipeline of opportunities.
Research and Development expenditure has been held steady in FY 2020, with the focus being the development of new
materials and chemistries which can be integrated into the Murata product lines.
Business Environment
The Board believes that CAP-XX’s technology provides a competitive advantage over existing supercapacitor manufacturers,
such as Maxwell Technologies, Skeleton, Eaton, LSMtron, Nippon Chemicon Corporation and other Chinese and Korean
competitors. The Board believes that these 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 various markets
collectively labelled the Internet of Things (IoT) market, which is the key area that CAP-XX is targeting with the former Murata
products and CAP-XX’s existing prismatic products.
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 moving to new
wireless protocols and adding to the functions and applications available on IoT enabled devices. Some of these new functions
require high electrical power within the actual IoT device. Examples are e-locks; drug dispensing; facial recognition; and haptic
feedback. Other devices are powered by energy harvesting and are battery-less. Others use low power batteries such as 3 Volt
coin cell batteries. All of 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 industrial actuators, e-locks,
agricultural sensors, wireless displays, smart-meters, payment and hand held terminals, medical wearables, automotive
dashcams and communication systems.
Page 6
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 2019.
In FY 2020, these sales grew significantly on a year on year basis. Pleasingly, the revenues from these products in the first
quarter of FY 2021 are close to the whole of FY 2020. Several new large volume opportunities are still being evaluated by
customers that are currently utilising alternative cylindrical cells.
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 the opportunities for large supercapacitors.
Opportunities
The overall direct sales pipeline for CAP-XX’s supercapacitors continues to be large in quantum and varied in terms of the
targeted markets. The key IoT target markets remain similar to the previous year, with IoT wearables, health, automotive,
security, smart-metering, energy harvesting and consumer products 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 various IoT and other markets. The Company is introducing the
Murata range of thin prismatic supercapacitors to address the space-constrained and/or power hungry needs of many IoT
products. The Board expects the first Murata products to ship from the Company’s new Seven Hills factory by the end of 2020.
At a later stage, the Company plans to release the very thin DMH supercapacitor. At only 400 microns in thickness, the Board
believes that this is the best performing supercapacitor in its class. The Company also plans to use its 3 Volt chemistry in all of
the former Murata products. The development of the 3 Volt 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.
In the future, there is an opportunity to migrate this same 3 Volt technology into larger prismatic supercapacitors, automotive
modules and other products for high-energy, high-power applications. 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.
CAP-XX’s existing licence agreements 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. A significant
additional benefit of the existing 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. It is also important to note that the strategy of our licensees 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 CAP-XX and its contract manufacturers.
There remain 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, as already noted.
Strategies for Growth
Given the increasing levels of market interest in CAP-XX’s technology and its high-performance supercapacitors, the Company
believes that the IoT markets, in particular, offer significant opportunities for growth and to reach the key strategic objective of
CAP-XX achieving profitability and positive cashflow.
The Company continues to engage in discussions aimed at securing business in the IoT space 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 the overall progress and is confident that the available market for
supercapacitors is increasing as manufacturers become more familiar with the technology.
Over the last year the Company has aligned its marketing activities to specifically focus on a number of different IoT markets,
such as asset tracking, automotive; e-locks, medical devices, hand held terminals, smart meters, wearables and wireless
sensors. The efforts to date have produced a significant increase in visits to the Company’s webpages and sales enquiries. The
Board expects for this growth to continue. CAP-XX’s strong environmental credentials, which have been recognised by the
London Stock Exchange providing the Company with its Green Economy Mark, are consistent with this strategy
Page 7
The Company will continue to monitor new opportunities to increase its sales, through its current distributors, via direct sales to
customers and new product offerings. 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.
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 continue to vigorously defend its
rights, even if this means pursuing legal action as it did successfully against Ioxus.
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 3 Volt 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 seven scientists work to maintain CAP-XX’s leading technology position in electrodes, separators and electrolyte materials
and their assembly into supercapacitor devices. This team is supported by 16 engineers. During 2020, significant progress has
been made in a number of key areas including: new cell chemistries; 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 nine patent
families, with 21 granted national patents with an additional four patent 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 focus for CAP-XX continues to become profitable and cashflow positive as soon as possible by leveraging the
successful commissioning of the newly installed Murata production equipment to facilitate increased product sales.
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 2020.
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 2020.
Review of operations
The Group experienced net losses of $4,908,715 during the year ended 30 June 2020 (2019: loss of $2,813,395). 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 2020.
Matters subsequent to the end of the financial year
The impact of the COVID-19 outbreak continues to evolve at the date of this report and therefore the impact of the pandemic
on the Group’s future financial results remains uncertain and will depend on future developments such as the duration and
severity of the outbreak and government policies. Whilst the Group acknowledges the unpredictability of the evolving COVID-
19 situation, Management are taking measures to limit the future financial impact on the Group. These measures include,
reduction in discretionary spend, deferment of non-essential capital and robust controls to manage working capital and
accessing JobKeeper and other Government support programmes where eligible.
In August 2020, the Delaware District Court made a judgement in favour of CAP-XX against Ioxus, Inc, (“Ioxus”). The Court
found that Ioxus is liable for infringing the patents-in-suit and awarded CAP-XX compensatory damages of US$1,237,717 and
enhanced damages of US$3,713,152 and also awarded CAP-XX its attorney’s fees. CAP-XX intends to vigorously pursue the
recovery of these awards, though it is unclear at this time whether this will be successful.
The necessary paperwork associated with the receipt of the R&D Tax rebate for the 2020 financial year has been lodged with
the relevant Government authorities and is expected to be received before the end of the current calendar year.
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 68.
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 and Tamboran
Resources Limited. He is also a director of ioneer Limited, Rockfire Resources PLC 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
7,280,425 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.
Anthony Kongats Managing Director. Age 62.
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
9,993,666 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 74.
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. Bruce was Chairman of Advanced Braking Technology Limited
listed on the ASX from 2013 to 2018. 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 25 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 was a director of the Murdoch Children’s Research Institute and Chairman of the IP and commercialisation committee
and a member of the audit, finance and risk committee from 2011 to 2018. In 2012 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
Member of the Remuneration Committee
Interests in shares and options
6,285,576 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 2020, 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
10
10
10
B
10
10
10
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 2020, 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
2020
Name
Primary
Cash
bonus
$
Non-
monetary
benefits
$
Cash
salary and
accrued
fees
$
Post-employment
Equity
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
Executive directors
Anthony Kongats
Non-executive directors
Patrick Elliott
Bruce Grey
322,103
100,000
-
40,100
-
-
-
-
49,372
49,372
-
-
Total
322,103
100,000
98,744
40,100
-
-
-
-
74,562
536,765
24,854
24,854
74,226
74,226
124,270
685,217
Page 12
Directors’ report (continued)
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
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 December 2017
4 December 2020
11 December 2022
£0.050
£0.115
14,746,606
15,310,000
No option holder has any right under the options to participate in any other share issue of the Company or of any
other entity.
30,056,606
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 on assignments additional to their statutory audit duties where BDO's expertise
and experience with the Group are important. These assignments are principally tax advice where BDO 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) for audit and non-audit services provided, during the year,
are set out in Note 23 to the financial statements.
The Directors are of the opinion that the services disclosed in Note 23 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 resigned from office in accordance with section 329(5) of the Corporations Act 2001 on 24 June
2020. BDO Audit Pty Ltd was appointed the Company’s Auditor by resolution of the Board on 30 March 2020. In accordance
with section 327C of the Act, a resolution will be proposed at the 2020 Annual General Meeting to confirm the appointment of
the Company’s auditor.
This report is made in accordance with a resolution of the directors.
Patrick Elliott
Director
Sydney
3rd November, 2020
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 2020, 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
Director
BDO Audit Pty Ltd
Sydney, 3 November 2020
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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.
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 2020 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.
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
The Company endeavours to take
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 2020, 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
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
consider it would be appropriate to
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 2020, seven Board meetings
were held as well as two Audit
Committee meetings and two
Remuneration Committee meetings
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.
The Company’s Corporate
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
2020 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/key-personnel/ ) and also
on pages 10 and 11 the CAP-XX
Annual Report and Accounts for the
year ended June 2020.
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/the-
company/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
should become indispensable.
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
level recommendations were
Page 21
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
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
behaviours and use it as an asset
The CAP-XX Board considers that
confidence in its integrity can only be
achieved if its employees and officers
conduct themselves ethically in all of
Page 22
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
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.
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 2020 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
monitoring the strategic and
Page 23
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
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/aim-rule-26/
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 communication of shareholders’
•
views to the board; and
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 2020.
The communication and interaction
between CAP-XX and its
shareholders are explained in the
disclosure above (see principle 2) .
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).
Audit and Remuneration
Committee’s membership and
responsibilities are included in the
CAP-XX Annual Report for the year
ended 30 June 2020 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 2020
Contents
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated 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:
Unit1
13 A Stanton Road
Seven Hills NSW 2147
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 3rd November 2020. 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
Consolidated statement of profit or loss
For the year ended 30 June 2020
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
Project 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
2020
$
2019
$
3,587,957
(1,721,152)
3,204,551
(1,441,927)
1,866,805
1,762,624
24,075
3,692,290
45,303
1,600,033
(2,819,282)
(906,693)
(884,646)
(1,496,001)
(3,728,633)
(279,886)
(376,744)
(2,084,468)
(914,543)
(743,678)
(1,547,361)
-
(859,483)
(71,822)
(4,908,715)
(2,813,395)
-
-
(4,908,715)
(2,813,395)
Loss attributable to owners of CAP-XX Limited
(4,908,715)
(2,813,395)
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Basic loss per share
Diluted loss per share
31
31
Cents
(1.3)
(1.3)
Cents
(0.9)
(0.9)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Page 27
CAP-XX Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2020
Currency: Australian Dollars
Notes
Consolidated
2020
$
2019
$
Loss for the year
(4,908,715)
(2,813,395)
Other comprehensive income/(loss)
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations
21
(22,894)
(38,660)
Other comprehensive income for the year,
net of tax
Total comprehensive (loss)/income for the
year attributable to owners of CAP-XX
Limited
(22,894)
(38,660)
(4,931,609)
(2,852,055)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Page 28
CAP-XX Limited
Consolidated statement of financial position
As at 30 June 2020
Currency: Australian Dollars
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Other
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
Notes
2020
$
2019
$
9
10
11
12
13
14
15
16
17
18
17
19
2,895,482
576,665
1,290,248
3,613,230
8,375,625
1,557,015
3,198,340
204,808
4,960,163
2,429,156
616,219
1,940,171
1,838,662
6,824,208
679,336
-
236,507
915,843
13,335,788
7,740,051
1,720,179
135,272
1,323,050
3,178,501
2,524,557
45,576
2,570,133
746,082
-
796,695
1,542,777
-
52,838
52,838
5,748,634
1,595,615
7,587,154
6,144,436
20
21
21
108,010,106
6,289,985
(106,712,937)
7,587,154
101,915,665
6,032,993
(101,804,222)
6,144,436
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page 29
CAP-XX Limited
Consolidated statement of changes in equity
For the year ended 30 June 2020
Currency: Australian Dollars
Notes
Contributed
Equity
$
Reserves
$
Accumulated
losses
$
Total
$
Consolidated
Balance as 1 July 2018
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
20
21
-
-
-
(2,813,395)
(2,813,395)
(38,660)
-
(38,660)
3,350,603
-
-
859,483
3,350,603
859,483
-
-
-
3,350,603
859,483
4,210,086
Balance at 30 June 2019
101,915,665
6,032,993
(101,804,222)
6,144,436
Loss for the year as reported in the
2020 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
20
21
-
-
-
(4,908,715)
(4,908,715)
(22,894)
-
(22,894)
6,094,441
-
-
6,094,441
279,886
279,886
-
-
-
6,094,441
279,886
6,374,327
Balance at 30 June 2020
108,010,106
6,289,985
(106,712,937)
7,587,154
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
Page 30
CAP-XX Limited
Consolidated statement of cash flows
For the year ended 30 June 2020
Currency: Australian Dollars
Notes
Consolidated
2020
$
2019
$
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 paid on lease liabilities
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)
Payments for lease liabilities
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
3,645,279
3,429,190
(9,822,550)
(6,177,271)
1,590,983
207,904
(102,220)
24,075
(7,603,198)
(4,174,008)
1,596,538
50,918
-
45,303
28
(4,456,529)
(2,481,249)
(1,083,862)
(1,083,862)
(312,884)
(312,884)
20
6,094,441
(64,830)
6,029,611
3,350,603
-
3,350,603
489,220
556,470
2,429,156
1,911,346
(22,894)
(38,660)
2,895,482
2,429,156
The above consolidated 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 2020
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
31
32
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 – Right-of-use assets
Non-current assets – Other
Current liabilities – Payables
Lease liabilities
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
42
43
45
47
48
48
49
50
50
51
51
51
52
53
53
53
54
55
56
57
58
58
59
59
59
59
60
60
62
62
63
Page 32
CAP-XX Limited
Notes to the financial statements
30 June 2020
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 2020, 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 November 2020. The quantum of the rebate has increased substantially compared to the
previous years due to the project costs in respect to the Murata transaction;
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 2020. 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 2020
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 2020 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 2020
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 adopted AASB 15 “Revenue from contracts with customers” from 1 July 2019. The core principle of AASB 15
is that revenue should only be recognised as the entity receives the benefit of the goods or services provided under a
commercial contract, in an amount that reflects the consideration to which the entity 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 assurance 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 2020
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.
(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 2020
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 2020
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) Right of use Asset
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where
included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased
asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to
impairment or adjusted for any remeasurement of lease liabilities.
(q) 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.
(r)
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.
(s)
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.
Page 38
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 1 Summary of significant accounting policies (continued)
(t)
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.
(u)
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.
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 29.
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.
Page 39
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 1 Summary of significant accounting policies (continued)
(v)
Lease liability
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Lease payments
comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a
rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the
exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used;
residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is
remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of
the right-of-use asset is fully written down.
(w) 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.
(x)
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.
(y)
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.
(z) New, revised or amending Accounting Standards and Interpretations adopted
The Company has adopted all new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended
Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following
Accounting Standards and Interpretations are most relevant to the Company:
Page 40
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 1 Summary of significant accounting policies (continued)
(z)
New, revised or amending Accounting Standards and Interpretations adopted (continued)
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees
eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-
value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position.
Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets
(included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the
earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to
lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)
results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For
classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal
portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does
not substantially change how a lessor accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such comparatives have not been restated.
The impact of adoption of AASB 16 as at 1 July 2019 was as follows:
Operating lease commitments as at 30 June 2019 (AASB 117)
Effect of discounting lease commitments using incremental borrowing rate
Effect of exemptions for short-term leases and low-value leases (under AASB 16)
Right-of-use assets (AASB 16) at 1st July 2019
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Total
1 July
2019
$
406,109
(8,134)
(352,268)
45,707
13,865
31,842
45,707
The impact on the adoption of AASB 16 on profit or loss for the period was an increase in finance costs of $102,220 and
deprecation charges of $153,160, offset by a reduction in operating rental expenses of $167,050. The impact on the
statement of cash flows was a $167,050 increase in operating cash inflows relating to the principal component of lease
payments now disclosed in financing cash flows.
(aa)
New Accounting Standards and Interpretations not yet mandatory or early adopted
The following Australian Accounting Standards and Interpretations 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 2020.
This list is not complete, however, it represents the key standards applicable to the consolidated entity.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and
early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new
guidance on measurement that affects several Accounting Standards. Where the consolidated entity has relied on the
existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise
dealt with under the Australian Accounting Standards, the consolidated entity may need to review such policies under the
revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact
on the consolidated entity's financial statements.
(ab) Parent entity financial information
The financial information for the parent entity, CAP-XX Limited, disclosed in note 32 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.
Page 41
CAP-XX Limited
Notes to the financial statements
30 June 2020
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
Lease liabilities
(a) Market risk
Consolidated
2020
$
2019
$
2,895,482
3,883,408
6,778,890
2,429,156
2,085,218
4,514,374
1,720,179
2,659,829
4,380,008
746,082
-
746,082
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.
Sensitivity analysis
The Group’s after tax loss and equity for the year would have been $179,966 lower/ $197,962 higher (2019:
$36,485 lower/$40,133 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
$
410,923
386,501
45,711
2020
GBP
£
Euro
2019
USD
$
GBP
£
277,383
-
11,633
14,992
-
21,412
453,353
288,830
161,685
4,045
-
2,458
Other
$
1,636
-
-
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.
Page 42
€
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 2 Financial risk management (continued)
(b)
Credit risk (continued)
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 2020
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.
Details of the liquidity risk associated with the Group’s lease liabilities are outlined in note 17.
(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.
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 29.
Page 43
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 3
Critical accounting estimates and judgements (continued)
(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.
vi) Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had,
or may have, on the consolidated entity based on known information. This consideration extends to the nature of
the products and services offered, customers, supply chain, staffing and geographic regions in which the
consolidated entity operates. Other than as addressed in specific notes and note 1(b), there does not currently
appear to be either any significant impact upon the financial statements or any significant uncertainties with
respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
vii) Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or
purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when
ascertaining the periods to be included in the lease term. In determining the lease term, all facts and
circumstances that create an economical incentive to exercise an extension option, or not to exercise a
termination option, are considered at the lease commencement date. Factors considered may include the
importance of the asset to the consolidated entity's operations; comparison of terms and conditions to prevailing
market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs
and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant
change in circumstances.
viii)
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is
estimated to discount future lease payments to measure the present value of the lease liability at the lease
commencement date. Such a rate is based on what the consolidated entity estimates it would have to pay a third
party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar
terms, security and economic environment.
Page 44
CAP-XX Limited
Notes to the financial statements
30 June 2020
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 2020
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
Project Expenses
Share Based Payment expenses
Other expenses
Geographical Segments
Asia Pacific
Europe
$
2,015,184
(1,721,152)
294,032
24,075
3,692,290
(2,819,282)
(906,693)
(884,646)
(1,496,001)
(3,728,633)
(279,886)
(376,744)
$
813,916
-
813,916
-
-
-
-
-
-
-
North
America
$
758,857
-
758,857
-
-
-
-
-
-
-
Total
$
3,587,957
(1,721,152)
1,866,805
24,075
3,692,290
(2,819,282)
(906,693)
(884,646)
(1,496,001)
(3,728,633)
(279,886)
(376,744)
(Loss)/Profit before income tax
(6,481,488)
813,916
758,857
(4,908,715)
Net (loss)/profit for the year
(6,481,488)
813,916
758,857
(4,908,715)
Other comprehensive income
Exchange differences arising in translation of
foreign operations
Total comprehensive (loss)/income, net of tax
Total assets
Total liabilities
(Loss)/Profit before income tax includes the
following specific expenses:
Depreciation
Share based payments
(22,894)
(6,504,382)
-
813,916
-
758,857
(22,894)
(4,931,609)
13,335,788
5,748,634
359,343
279,886
-
-
-
-
-
-
-
-
13,335,788
5,748,634
359,343
279,886
Page 45
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 4
Segment information (continued)
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
$
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)
Europe
$
881,730
-
881,730
North
America
$
Total
$
915,805
-
915,805
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 (loss)/income, net of tax
Total assets
Total liabilities
(Loss)/Profit before income tax includes the
following specific expenses:
(38,660)
(4,649,590)
-
881,730
-
915,805
(38,660)
(2,852,055)
7,740,051
1,595,615
-
-
-
-
7,740,051
1,595,615
Depreciation
Share based payments
206,497
859,483
-
-
-
-
206,497
859,483
Page 46
CAP-XX Limited
Notes to the financial statements
30 June 2020
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
2020
$
2019
$
2,708,697
2,127,926
879,260
3,587,957
1,076,625
3,204,551
24,075
45,303
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 - 2020
Geographical regions
Asia Pacific
Europe
Americas
Consolidated – 2019
Geographical regions
Asia Pacific
Europe
Americas
Supercapacitors
Licence
Fees and
Royalties
Total
1,608,382
813,916
286,399
406,802
-
472,458
2,015,184
813,916
758,857
2,708,697
879,260
3,587,957
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
Page 47
CAP-XX Limited
Notes to the financial statements
30 June 2020
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
Right of Use Assets
Total depreciation
Other expenses – movement in provisions
Allowance for expected credit loss
Provision for make good on premises
Provision for Withholding Tax Diminution
Interest - lease liabilities
Rental expense relating to leases
Short term lease payments
2020
$
161,809
3,324,481
206,000
3,692,290
2019
$
8,995
1,540,119
50,919
1,600,033
Consolidated
2020
$
2019
$
1,575,024
146,128
1,721,152
1,261,360
180,567
1,441,927
201,140
50
4,993
153,160
359,343
109,817
116,613
48,094
102,220
196,811
50
9,636
-
206,497
17,567
5,807
48,448
-
376,744
71,822
308,926
387,162
Employee benefits expense
3,389,941
3,194,355
Share based payments
279,886
859,483
Page 48
CAP-XX Limited
Notes to the financial statements
30 June 2020
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
2020
$
2019
$
(4,908,715)
(2,813,395)
(1,349,897)
(773,684)
76,969
1,272,928
-
1,349,897
-
-
-
236,358
537,326
-
773,684
-
-
-
Unused tax losses for which no deferred tax asset has
been recognised
Potential tax benefit @ 27.5%
92,939,554
25,558,377
92,622,157
25,471,093
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
697,217
(5,930)
348,972
(47,961)
691,827
301,011
Temporary differences for which no deferred tax asset
has been recognised
Potential tax benefit @ 27.5%
2,535,333
697,217
1,268,987
348,972
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 49
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 9
Current assets – Cash and cash
equivalents
Cash at bank and on hand
Cash on deposit
Consolidated
2020
$
636,511
2,258,971
2,895,482
2019
$
453,279
1,975,877
2,429,156
Note 10 Current assets – Receivables
Consolidated
Trade receivables
Other receivables
2020
$
462,666
462,666
113,999
576,665
2019
$
413,186
413,186
203,033
616,219
Movements in the provision for impairment of receivables are as follows:
Consolidated
2020
$
17,567
109,817
127,384
2019
$
-
17,567
17,567
Opening balance
Allowance for expected credit loss
Closing balance
(b) Past due but not impaired
There were no trade receivables at 30 June 2020 that were past due but not impaired (2019: 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. 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 18 customers with the top 10 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 50
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 11 Current assets – Inventories
Consolidated
Raw materials and stores - net realisable value
Work in progress – net realisable value
Finished goods - net realisable value
2020
$
636,415
134,478
519,355
1,290,248
2019
$
811,769
-
1,128,402
1,940,171
Note 12 Current assets – Other
Consolidated
Research & Development - Tax Credit
Prepayments
Rental Bond
Other Receivables
2020
$
3,202,557
162,749
236,507
11,417
3,613,230
2019
$
1,469,000
358,489
-
11,173
1,838,662
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. As the lease term on this premises expires on June 30,
2020, the bank guarantee is expected to be released within the next 3 months.
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
2020
$
2019
$
17,118,860
(16,801,370)
1,234,736
1,552,226
17,083,858
(16,602,852)
188,498
669,504
66,779
(66,641)
138
470,099
(465,448)
4,651
66,779
(66,591)
188
470,099
(460,455)
9,644
18,890,474
(17,333,459)
1,557,015
17,809,235
(17,129,899)
679,336
Page 51
CAP-XX Limited
Notes to the financial statements
30 June 2020
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 2020
Opening net book amount
Additions
Retirements
Depreciation
669,504
1,083,862
-
(201,140)
Closing net book amount
1,552,226
9,644
-
-
(4,993)
4,651
188
-
-
(50)
138
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
Total
$
679,336
1,083,862
-
(206,183)
1,557,015
Total
$
572,949
312,884
-
(206,497)
679,336
Note 14 Non-current assets – Right-of use
Consolidated
Leased Assets
Right-of-use Leased assets at cost
Accumulated depreciation
Net book amount
2020
$
3,351,500
(153,160)
3,198,340
2019
$
-
-
-
Movement in classes of assets:
Consolidated
Year ended 2020
Adoption of AASB 16 at 1st July 2019
Additions
Retirements
Depreciation
Closing net book amount
Office Premises Office Equipment
Total
$
$
$
-
3,305,793
-
(137,742)
3,168,051
45,707
-
-
(15,418)
30,289
45,707
3,305,793
-
(153,160)
3,198,340
The Group has adopted AASB16 Leases in the current financial year, consistent with the mandatory adoption date, 1
July 2019. Refer to Note 1 (z) for additional information
A new 10-year lease was signed during the current year at Seven Hills, Sydney. The lease has an option to extend for an
additional two periods of 5 years at the conclusion of the initial term.
Page 52
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 15 Non-current assets - Other
Consolidated
Rental bond
2020
$
2019
$
204,808
236,507
A term of the current lease agreement for the Seven Hills 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
$204,798 represents the current value of this bank guarantee.
Note 16 Current liabilities – Payables
Consolidated
Trade payables
Other payables and accrued expenses
2020
$
1,636,232
83,947
1,720,179
2019
$
501,011
245,071
746,082
The carrying amount of trade and other payables are assumed to approximate their fair values due to their short term
nature.
Note 17 Lease liabilities
Lease Liabilities - current
Lease liabilities – non current
2020
$
2019
$
135,272
2,524,557
2,659,829
-
-
-
Reconciliation of lease liabilities at the beginning and end of the financial year are set out below:
Adoption of AASB16 as at July 2019
Additions
Disposals
Interest on lease liabilities
Repayments on lease liabilities
Balance as at 30 June 2020
2020
$
45,707
2,678,952
-
102,220
(167,050)
2,659,829
The Group has adopted AASB16 Leases in the current financial year, consistent with the mandatory adoption date, 1
July 2019. Refer to Note 1 (z) for additional information.
The following are the remaining contractual maturities for the Group’s lease liabilities:
Year ended 2020
Lease liabilities
Less than 1
year
$
2-5 years
$
Over 5 years
$
Contractual
cash flows
$
Carrying
Amount
$
366,695
1,560,612
2,138,484
4,065,791
2,659,829
Page 53
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 18 Current liabilities – Provisions
Consolidated
Employee benefits – annual leave and long service leave
Product returns and warranties
Make good provision
2020
$
641,358
-
681,692
1,323,050
2019
$
551,489
7,130
238,076
796,695
(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
2020
$
2019
$
134,760
86,939
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
2020
$
7,130
(7,130)
-
2019
$
9,218
(2,088)
7,130
Page 54
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 18 Current liabilities - Provisions (continued)
Movements in the make good on premises provision during the financial year are set out below:
Carrying amount at start of year
Additions – new leased premises
Charged to profit or loss
- additional provisions recognised/(reversed)
Carrying amount at end of year
Note 19 Non-current liabilities – Provisions
and Other liabilities
Employee benefits – long service leave
Consolidated
2020
$
2019
$
238,076
657,003
(213,387)
681,692
232,269
5,807
238,076
2020
$
45,576
45,576
2019
$
52,838
52,838
Page 55
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 20 Contributed equity
Consolidated
2020
Shares
2019
Shares
(a)
Share capital
Fully paid ordinary shares (no par value)
439,929,199
324,514,775
(b) Movement in ordinary share capital:
Date
Details
1 July 2018
23 July 2018
26 October 2018
09 November 2018
31 December 2018
28 June 2019
30 June 2019
1 July 2019
3 January 2020
3 January 2020
30 June 2020
30 June 2020
Balance
Issue of Shares
Issue of Shares
Issue of Shares
Issue of Shares
Issue of Shares
Balance
Balance
Issue of Shares
Issue of Shares - Costs
Issue of Shares
Balance
(c)
Ordinary shares
Number of
shares
299,886,087
937,500
2,340,886
20,588,236
263,132
498,934
324,514,775
324,514,775
113,861,662
-
1,552,762
439,929,199
Issue price
$
$0.09
$0.09
$0.14
$0.18
$0.10
$0.05
$0.06
98,565,062
82,608
202,241
2,970,995
46,602
48,157
101,915,665
101,915,665
6,402,257
(406,553)
98,737
108,010,106
At 30 June 2020, there were 439,929,199 (2019: 324,514,775) 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 29.
(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 2019 Annual report.
Page 56
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 21 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
2020
$
2019
$
(316,990)
6,606,975
6,289,985
(294,096)
6,327,089
6,032,993
(294,096)
(22,894)
(316,990)
6,327,089
279,886
6,606,975
(255,436)
(38,660)
(294,096)
5,467,606
859,483
6,327,089
Consolidated
2020
2019
$
(101,804,222)
(4,908,715)
(106,712,937)
$
(98,990,827)
(2,813,395)
(101,804,222)
(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 2020
Note 22 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
Jeff Colton – Vice President, Sales and Marketing America’s (Appointed 12th January, 2020)
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 (Resigned November 2019)
Short-term benefits
Post-employment benefits
Share-based payments
Total
Consolidated
2020
$
2019
$
1,550,020
135,472
218,743
1,904,235
1,309,242
124,378
766,360
2,199,980
(c)
Other transactions with key management personnel or entities related to them
There were no other transactions with key management personnel.
Note 23 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:
Consolidated
2020
$
2019
$
BDO
Audit services
Audit of financial statements
Total remuneration for audit services
66,700
66,700
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
38,650
105,350
36,500
98,000
Page 58
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 23 Remuneration of auditors (continued)
The BDO entity performing the audit of the Group transitioned from BDO East Coast Partnership to BDO Audit Pty Ltd on
24 June 2020. The disclosures include amounts received or due to be receivable by BDO East Coast Partnership, BDO
Audit Pty Ltd and their respective related entities.
It is the Group’s policy to employ BDO on assignments additional to their statutory audit duties where BDO’s expertise
and experience with the Group are important. These assignments are principally tax advice, or where BDO is awarded
assignments on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.
Note 24 Commitments
(a)
Lease commitments: Group / company as lessee
The Group has adopted AASB16 from the 1st July 2019, with the associated liability relating to future lease payments
being disclosed in Note 17.
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
2020
$
2019
$
-
-
-
378,772
27,337
406,109
Note 25 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 26.
(c)
Key management personnel
Disclosures relating to key management personnel are set out in note 22.
Note 26 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 2020
%
30 June 2019
%
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 2020
Note 27 Events occurring after the balance sheet date
The impact of the COVID-19 outbreak continues to evolve at the date of this report and therefore the impact of the
pandemic on the Group’s future financial results remains uncertain and will depend on future developments such as the
duration and severity of the outbreak and government policies. Whilst the Group acknowledges the unpredictability of the
evolving COVID-19 situation, Management are taking measures to limit the future financial impact on the Group. These
measures include, reduction in discretionary spend, deferment of non-essential capital and robust controls to manage
working capital and accessing JobKeeper and other Government support programmes where eligible.
In August 2020, the Delaware District Court made a judgement in favour of CAP-XX against Ioxus, Inc, (“Ioxus”). The
Court found that Ioxus is liable for infringing the patents-in-suit and awarded CAP-XX compensatory damages of
US$1,237,717 and enhanced damages of US$3,713,152 and also awarded CAP-XX its attorney’s fees. CAP-XX intends
to vigorously pursue the recovery of these awards, though it is unclear at this time whether this will be successful.
The necessary paperwork associated with the receipt of the R&D Tax rebate for the 2020 financial year has been lodged
with the relevant Government authorities and is expected to be received before the end of the current calendar year.
No other matters or circumstances have arisen since 30 June 2020 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 28 Reconciliation of loss after tax to net cash outflow from operating activities
Net loss
Depreciation and amortisation
Non-cash employee benefit expense – share based
payments
Changes in assets and liabilities:
Decrease in receivables
Decrease/(Increase) in inventories
(Increase) in other assets
Increase/(Decrease) in payables
(Decrease)/Increase in provisions
Net cash outflow from operating activities
Consolidated
2020
$
2019
$
(4,908,715)
(2,813,395)
359,343
279,886
204,497
859,483
39,554
649,923
(1,742,869)
974,097
(107,748)
(4,456,529)
206,870
(535,966)
(125,913)
(326,571)
47,746
(2,481,249)
Page 60
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 29 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 – 2020
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 14,746,606
£0.035 1,500,000
-
-
11 December 2017 11 December 2022
£0.115 16,510,000
-
Weighted Average Exercise Price
32,756,606
$0.15
-
-
-
-
-
-
(1,500,000)
- 14,746,606 14,746,606
-
-
(1,200,000) 15,310,000 10,550,568
(2,700,000) 30,056,606 25,297,174
$0.12
$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.
Fair value of options granted
There were nil share options issued for the year ended 30 June 2020 (2019: Nil).
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
£0.057
18,587,492
11 November 2016 11 November 2021
11 December 2017 11 December 2022
1,500,000
£0.035
£0.0115 17,710,000
-
-
-
(3,278,386)
(562,500) 14,746,606 13,181,042
- 1,500,000
-
- (1,200,000) 16,510,000
988,456
6,411,760
Weighted Average Exercise Price
$0.15
$0.10
$0.17
$0.15
$0.13
37,797,492
-
(3,278,386) (1,762,500) 32,756,606 20,581,258
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.
There were nil share options issued for the year ended 30 June 2020.
Page 61
CAP-XX Limited
Notes to the financial statements
30 June 2020
Note 29 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 30
Economic dependency
Consolidated
2020
$
2019
$
279,886
279,886
859,483
859,483
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 31 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
2020
Cents
(1.3)
(1.3)
2019
Cents
(0.9)
(0.9)
Consolidated
2020
Number
2019
Number
381,242,863
315,691,940
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
381,242,863
315,691,940
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 2020
Note 32 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)
2020
$
2019
$
5,789,267
5,789,267
177,812
177,812
3,836,079
3,836,079
291,925
291,925
5,612,085
3,544,154
108,010,106
101,915,664
6,606,924
(109,004,945)
6,327,089
(104,698,599)
Loss for the year
(4,306,346)
(3,969,595)
Total comprehensive income
(4,306,346)
(3,969,595)
(i) Reconciliation to prior year retained earnings
Balance at beginning of period 1/07/2019
Net loss for the year
Balance at end of period 30/06/2020
(104,698,599)
(4,306,346)
(109,004,945)
Contingent Assets
The parent has not booked the potential Ioxus Intellectual Property judgment claim (refer Note 27 Events occurring after
the balance sheet date). The recovery of the damages handed down in the court decision is continuing however the full
and successful recovery remains uncertain.
Contingent Liabilities
The parent had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
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 2020
Directors’ declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 27 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 2020 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
3 November 2020
Page 64
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 2020, 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 2020 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 (including Independence Standards) (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.
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.
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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.
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.
Purchase of assets from Murata Manufacturing Co. Ltd.
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 13 and the Chairman’s
Report, the Group acquired plant and equipment
from Murata Manufacturing Co. Ltd. (an entity
incorporated in Japan). Upon acquisition of these
assets, the Sydney manufacturing facility was
relocated in order to adequately support the
future operations of the Group.
The audit of the accounting treatment applied to
this transaction was a key audit matter due to
the significance of the transaction to the
financial statements and the complexity involved
in assessing the allocation of the related costs
between those capitalised in plant and
equipment, recouped through government grants
and those expense to the statement of profit or
loss.
To determine whether the Murata transaction
and related expenditure had been appropriately
accounted for and disclosed, we undertook,
amongst others, the following audit procedures:
• Reviewed the purchase contract to
ascertain the assets being acquired, the
key terms of the agreement, and the
consideration required to be paid.
• On a sample basis, agreed related
expenditure to external invoices,
ensuring appropriate treatment of these
costs under the requirements of AASB
116 Property, Plant and Equipment.
•
In conjunction with internal experts,
assessed the appropriateness of
expenditure claimed through the
Australian Government Research and
Development Tax Incentive.
• Assessed the accounting treatment of
the capitalised expenditure to be
recouped through government grants,
ensuring compliance with AASB 120
Accounting for Government Grants and
Disclosure of Government Assistance.
• Assessed the appropriateness of the
Group’s disclosures in respect to the
transaction in accordance with
Australian 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 2020, 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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
BDO Audit Pty Ltd
Martin Coyle
Director
Sydney, 3 November 2020