CAP-XX Limited
ABN 47 050 845 291
Annual report 2023
Annual report 2023
Contents
Corporate directory
Chief Executive review
Chairman’s report
Business review
Directors’ report
Independence declaration
Corporate governance statement
Financial statements
Directors’ declaration
Independent audit report to the members
Page
3
5
6
8
12
19
20
29
67
68
Page 2
Corporate directory
Directors
Secretaries
Patrick Elliott
Chairman
Bruce Grey
Non-Executive Director
Steen Feldskov
Non-Executive Director
Lars Stegmann
Chief Executive Officer
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: 7.00pm
date: 3rd November 2023
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 joint broker to the
Company
Joint 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
Cavendish Securities plc
6 7 8 Tokenhouse Yard
London EC2R 7AS
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
Chief Executive’s review
There is no denying that these have been tough times for our organisation, and I want to acknowledge the hard work and
dedication of our entire team in the face of adversity. The past few months have been marked by a volatile market, economic
uncertainties and unprecedented challenges. We've seen our revenues decline, and our bottom line has been hit hard. It's not
easy to stand before you and admit that we've faced difficulties, but it's important to recognise the reality of our situation.
However, I want to emphasise that even in these trying times, there is a silver lining. The challenges encountered have provided
us with invaluable lessons and opportunities for growth. As a company, we've demonstrated resilience and adaptability in the
face of adversity. Our team has come together, demonstrating an unwavering commitment to our mission and values.
While our results for the past few months may not be what we had hoped for, I want to assure you that we are well-positioned
for a brighter future. We have a strategic plan in place that will help us navigate these turbulent waters and emerge stronger on
the other side.
First and foremost, our commitment to innovation remains steadfast. We have a pipeline of exciting new products and services
that are set to launch in the coming months. These innovations will not only meet the changing needs of our customers but also
give us a competitive edge in the market.
Additionally, we are taking proactive measures to streamline our operations and optimise efficiency. This includes cost-saving
initiatives that will help us weather the current economic challenges and position us for sustained profitability in the future.
Furthermore, we are actively diversifying our revenue streams and exploring new markets. We understand the importance of not
relying solely on one segment of the market, especially in volatile times. Our expansion into new territories and industries is a
strategic move that will mitigate risks and open up new growth opportunities.
One of our greatest assets is our dedicated and talented team. Our employees have shown incredible commitment and
adaptability during these challenging times. We will continue to invest in their development and well-being, ensuring that we
have the best talent driving our success.
In times like these, maintaining strong relationships with our partners, suppliers and customers is paramount. We are working
closely with them to navigate the current market conditions, and these collaborations are critical to our future success. Together,
we will find innovative solutions to the challenges we face.
While we cannot predict the exact timeline for a market recovery, we are confident that the positive trends we see on the horizon
will lead to improved results in the coming months. We have a clear vision for the future, and we remain unwavering in our
commitment to achieving our long-term goals.
In conclusion, I want to express my gratitude to all of our employees, shareholders, customers and partners, for your continued
support and dedication. These are undoubtedly difficult times, but they are also times of great opportunity for growth and
transformation. Together, we will emerge from this challenging period stronger, more resilient and better positioned for success,
and we look forward to achieving great things together in the months and years ahead.
Lars Stegmann
Chief Executive Officer
Page 5
Chairman’s Report
The past year for CAP-XX has been one of major change and developments, which has established the company for short to
medium term success. The major change is in the executive leadership of the Company with the appointment of Lars Stegmann
as CEO, replacing CAP-XX’s founder Anthony Kongats.
Lars brings to CAP-XX an extensive results and customer focussed background in power electronics and international sales and
marketing. He has joined CAP-XX as we drive the expansion of our sales and distribution channels. This is the next step as the
commissioning of the Seven Hills, Sydney manufacturing facility is largely completed and the plant operating efficiently, albeit
with room for further improvement. The need now is to drive volumes to get the full benefit of this expansion and achieve profitable
operations after many years of painful losses.
Another significant development was the completion of a capital raising of approximately £2.7 million, via a combination of a
placing, subscription and retail offer. The fundraising was completed in two tranches and the final tranche completed in the first
week of June 2023, the proceeds to be used for expansion of the current product range, increasing the sales and marketing
footprint, litigation expenses, capital expenditure (predominately production equipment) and general working capital. We are
grateful for the support of our shareholders through the provision of the necessary capital.
I am pleased to report that the development and broadening of the CAP-XX product range remains broadly on track, with the
commissioning of the DMH production line at Seven Hills expected to deliver samples before the end of the current calendar
year. We expect volumes to ramp up by early in the next calendar year. Several customers are in the latter stages of sampling
these products for potentially high-volume applications, and feedback on customer evaluation is encouraging. The DMH product
is a very thin (0.4 mm) supercapacitor suitable for numerous applications in IoT, Medical, Telecommunications and Industrial
sectors.
In addition, the long-awaited 3V supercapacitor product is able to be produced in volume and is currently being evaluated by
several potential large volume customers. These are anticipated to be realised in the second half of the current financial year.
Finally, the development work on the cylindrical surface mount device (SMD) is nearing completion with production trials
underway. The SMD device offers customers supercapacitor performance in a form factor that is more suitable for many
automated manufacturing assembly lines. These new products are expected to deliver significant sales gains as we achieve
design wins over the coming year.
To ensure that we maximise the benefits of our existing product range and new products, we have also expanded our distribution
network. Digikey was brought on as a distributor in April 2023 and to date has processed over 50 customer enquiries and sales.
Numerous other Tier 1 and Tier 2 distributors are also in negotiation to stock the CAP-XX product range. To avoid further delays,
we will continue to discuss with Tier 3 and Tier 4 distributors to expand our network and services.
As an integral part of our new distribution strategy, we are ensuring that the customer and their specific requirements are the
core focus. The CAP-XX direct sales force is being expanded to ensure that a greater geographic reach is in place while CAP-
XX representatives will have smaller regional territories, with a consummate increase in customer communication. To ensure
that cash reserves are conserved, the additional sales representatives are being engaged on a commission basis. This has
already resulted in driving short-term sales growth and early results are promising. New sales representatives are currently in
place in the US (three), Europe, India and South Africa. Negotiations are in the final stages with several other representative
organisations which will further expand the sales base.
Seven Hills production is currently operating on a single shift basis, which is matched with current demand and has the capacity
to rapidly ramp production to meet the expected increase in demand. The successful commissioning of the new manufacturing
lines has resulted in a lower cost of in-house production. An evaluation is underway to determine when the current Seven Hills
product range can be expanded in order to reduce the risk of reliance on the contract manufacturer in Penang. During the year
delayed COVID issues continued to impact the performance and output of the contract manufacturer in Penang. However, as
the travel bans were lifted in the second half of the financial year, our engineers were again able to travel to support this facility.
I am pleased to report that output continues to increase, although there is still more remedial work to be done to have this facility
performing at historical levels.
CAP-XX continues to pursue a patent infringement action against Maxwell Technologies, a wholly owned subsidiary of Tesla
Inc. As previously announced, due to the unavailability of expert witnesses for Maxwell, the trial date was deferred from July
2023 to December 2023. In September 2023, CAP-XX was advised that Tesla had lodged a patent infringement claim against
CAP-XX for patent infringement in a Texas court. On the data and evidence lodged to date, CAP-XX is of the opinion that the
claim is baseless and that it will be vigorously defended. CAP-XX remains in dispute with AVX over AVX’s contractual
performance in relation to the licence agreement granted by CAP-XX to AVX. The Company remains confident that positive
outcomes will be reached in both cases in the current financial year.
Page 6
Total Company sales revenue for the year to 30 June 2023 decreased by 35% to A$3.6 million (2022: A$5.6 million). The largest
drop in sales revenue by product category was cylindrical cans which bore the full brunt of the supply chain issues during late
2022 and early 2023, while Seven Hills manufactured products were on par in both volume and dollars compared with the
previous year. As reported at the half year, sales were being negatively impacted due mainly to worldwide supply chain issues
and customers/distributors being over-stocked. It was also highlighted that it was too early to determine when the recovery would
occur although the second half revenue was expected to be higher than the first. This was achieved, albeit at a lower rate than
what was initially expected. Conversely, the fourth quarter revenue of FY23 was by far the best performing quarter of FY23 in
terms of sales revenue and, as highlighted earlier, orders are continuing to increase, notably into the first quarter of FY24.
Despite the sharp decrease in top line sales revenue, the reported gross margin decreased by 2.1 percentage points from 45.4%
to 43.3% due to the relatively resilient performance of the proprietary prismatic product lines.
The EBITDA loss for the year to 30 June 2023 was a loss of A$3.9 million (2022: loss of A$2.8 million), with the main variances
being the gross margin shortfall (A$1.0 million) due to the lower than estimated revenue and the costs associated with the
changeover of CEO (A$0.9 million), which was offset by lower legal expenses (A$1.5 million). When adjusted for these one-off
factors, the like for like comparison is an adjusted EBITDA loss of A$1.3 million (2022: loss of A$0.5 million). These results reflect
the past and we believe that CAP-XX is through the worst and recovering from the revenue shortfall experienced during 2022/23.
Whilst our FY2023 results are disappointing, we have numerous reasons to believe that CAP-XX is turning around under Lars
Stegmann’s leadership. Paramount in this is the strong team of employees we have who have embraced and are contributing to
the changes that are needed to enable CAP-XX to perform well for its customers and shareholders while meeting or exceeding
the necessary standards of ESG. We are indebted to all of our staff.
The Board is confident that with the increased focus on the customer, new distribution strategy and appointment of new sales
representatives, will drive the increase in sales required for the Company to achieve its positive EBITDA goal in the shortest
possible time frame.
Patrick Elliott
Chairman
29 September 2023
Page 7
Business Review
Review of Operations and Activities
The reported EBITDA loss for the year to 30 June 2023 was a loss of A$3.9 million (2022: loss of A$2.8 million), with the main
variances being the gross margin shortfall (A$1.0 million) due to the lower than estimated revenue and the costs associated with
the changeover of CEO ($0.9 million), which was offset by lower legal expenses (A$1.5m). When adjusted for these one-off
factors, the like for like comparison is an adjusted EBITDA loss of A$1.3 million (2022: loss of A$0.5 million).
Cash reserves as at 30 June 2023 were A$2.6 million, up from A$1.6 million as at 30 June 2022. The increase in cash reserves
is the direct result of the £2.7 million gross proceeds of the capital raise that was completed in early June 2023. In addition, the
Board anticipates that the Company will be in receipt of a Federal Government R&D tax rebate of approximately A$2.1 million,
with these funds expected to be received before the end of the current calendar year, of which A$1.0 million has been drawn
down against a revolving line of credit secured by the R&D tax rebate.
The Company is undertaking a full evaluation of the way it analyses and reports its sales pipeline in order to ensure that all
nominated opportunities are rigorously evaluated and to ensure a realistic probability of conversion of the orderbook to firm
schedules within the short to medium term. This process will be completed before the end of the current calendar year. The
current level of committed orders outstanding totals US$1.4 million, which is up 75% on the same time last year. Historically,
CAP-XX received blanket orders, which covered the customer’s next 12 months scheduled demand. Over the past two years,
customers ordering patterns have changed, mainly as a result of overstocking and overall supply chain issues. Today, customers
are typically only willing to provide firm orders which cover the following three months, and it is now uncommon to receive orders
which cover a full 12 months. As a result, the orders outstanding are predominately for customer delivery during the period
ending December 2023. Sales representatives are reporting that the overstocking issue in the supercapacitor markets are
easing, and there is increasing confidence that demand and market confidence is beginning to return.
Total product sales revenue for the year to 30 June 2023 was A$3.3 million (2022: A$5.1 million) which represents a 35% year-
on-year decrease. This follows a 44% increase in year-on-year product sales in the previous year. The contributing factors
underlying this decrease, as highlighted previously, include the worldwide supply chain issues in the capacitor market,
overstocking from previous years by distributors and customers, and a lack of short-term confidence in the electronic component
market.
Operational expenditure, excluding the legal costs for patent infringement and direct costs of the Murata project, increased by
15% from A$6.3 million to A$7.2 million. The increase in expenditure is primarily attributable to the costs associated with the
change in CEO.
Business Environment
The Board believes that CAP-XX’s technology provides a significant competitive advantage over existing supercapacitor
manufacturers such as TDK Corporation, Skeleton, Eaton, LSMitron, 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 continues to be 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 handheld terminals, medical wearables, automotive
dashcams and communication systems.
Page 8
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.
Since then, sales have continued to grow strongly, with the Company being successful in winning a number of large volume
orders, with large volume opportunities currently being evaluated by customers.
As previously reported, 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. Consistent with this strategy the Board
took the opportunity to sign an exclusive distribution agreement with an established external partner who have a suite of qualified
automotive products ready to market. These products are private label of CAP-XX and are known as CAPMOD and TruckStart.
CAPMOD is a range of large high voltage modules intended to support a multitude of large automotive, transportation and
renewable energy applications such as wind farms, solar installations. TruckStart is a relaunched version of our previous truck-
start product.
During the year we also launched a new range of Lithium-ion supercapacitors which are a hybrid device part lithium ion and part
supercapacitor, that have excellent cycle life and very low leakage current. This make these products an attractive alternative to
lithium ion batteries are used where high power and long life are needed.
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 applications and other markets. The Company has
introduced its DMF and DMT thin prismatic supercapacitors to address the space-constrained and/or power-hungry needs of
many IoT products. These products are already being shipped from the Company’s Seven Hills factory. The Company plans to
commission and commence shipments of the very thin DMH supercapacitor around Q4 2023. At only 400 microns in thickness,
the Board believes that this is the best performing supercapacitor in its class. Customers are already evaluating these parts with
pleasing results and large volume orders are expected in the forthcoming months.
The Company also plans to use its 3 Volt chemistry in the DMF products made at Seven Hills. The Company had previously
planned to produce 3 Volt products in Malaysia but the ongoing disruptions and travel restrictions caused by COVID made this
impractical. The first 3 Volt products from Seven Hills have been sent to customers for evaluation. 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 is investigating 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.
The Company intends to continue using its intellectual property to develop additional substantial and recurring income. A
significant 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 scope for CAP-XX to supply these other markets directly using products made by CAP-XX and its contract manufacturers.
Strategies for Growth
Given the high level 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
Page 9
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, handheld 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 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.
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 DMH and 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 within its Seven Hills site in
Sydney, Australia, where a team of six 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 11 engineers. During 2023,
significant progress has been made in a number of key areas including improvements on the former coating, DMF and DMT
lines, 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 seven patent
families, with seven granted national patents with an additional two 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 be to become profitable and cashflow positive as soon as possible. This will be
achieved by increasing product sales from the newly installed facilities at Seven Hills, through an increased focus on the
customer, new distribution strategy and expansion of the sales force, supplemented by the newly launched product families and
the intellectual property which the Company is continuously developing.
Page 10
A reconciliation of EBITDA from operations to the reported loss attributable to owners of CAP-XX Limited in the consolidated
statement of profit or loss is tabled below:
EBITDA and Adjusted EBITDA Calculation
Loss attributable to owners of CAP-XX Limited
Depreciation
Interest Expense
Share Based payments
Interest Income
EBITDA
CEO transition costs
Legal costs
Bad debts
Adjusted EBITDA
Consolidated
2023
2022
$
(5,559,127)
741,552
328,207
613,980
$
(4,938,860)
726,155
294,444
1,133,399
(664)
(3,894)
(3,876,052)
(2,788,756)
872,122
1,472,664
189,491
-
2,338,322
-
(1,341,775)
(450,434)
Certain financial information in the Chairman's Report and Business Review reference Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) and adjusted EBITDA have been derived from the audited financial statements. EBITDA
and adjusted EBITDA positions are non-IFRS financial information used by Directors and Management to assess the underlying
performance of the business and as such have not been reviewed in accordance with Australian Auditing Standards.
Page 11
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 2023.
Directors
The following persons were directors of CAP-XX Limited during the financial year and up to the date of this report:
Chairman
Patrick Elliott
Bruce Grey
Non-Executive Director
Steen Feldskov Non-Executive Director
Chief Executive Officer (appointed on 9th June, 2023)
Lars Stegmann
Anthony Kongats Chief Executive Officer (resigned on 16th May, 2023)
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 2023.
Review of operations
The Group experienced net losses of $5,559,127 during the year ended 30 June 2023 (2022: loss of $4,938,860). Information
on the operations and financial position of the Group and its business strategies and prospects is set out on pages 7 to 9 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 2023.
Matters subsequent to the end of the financial year
The necessary paperwork associated with the receipt of the R&D Tax rebate for the 2023 financial year is in the final stages of
being lodged with the relevant Government authorities and is expected to be received before the end of the current calendar
year. The rebate is expected to be approximately AUD $2.1 million.
There were no other matters or circumstances that have arisen since 30 June 2023 that have 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.
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 Seven Hills, 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 12
Directors’ report (continued)
Information on directors
Patrick Elliott Non-executive director. Age 71.
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 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
12,973,298 ordinary shares in CAP-XX Limited (including shares held by Panstyn Investments Pty Limited).
2,300,000 options over ordinary shares in CAP-XX Limited.
Lars Stegmann Chief Executive Officer. Age 53.
Experience and qualifications
Lars has spent more than two decades in international sales, project, and management roles. Lars has considerable experience in
the field of power electronics, electronic components and systems, as well as extensive sales and marketing background in the
automotive, automation, industrial, marine and medical technology industries. Prior to joining CAP-XX, Lars worked as Vice
President and General Manager of C&K, the electronics switch and component manufacturer which is now part of Littelfuse Inc.
Lars holds an engineering degree (Dipl. Ing.) in power electronics and an MBA from Zurich International Business School. He is
based in Hamburg Germany.
Specific Board responsibilities
Nil.
Interests in shares and options
Nil ordinary shares in CAP-XX Limited.
20,000,000 options over ordinary shares in CAP-XX Limited.
Page 13
Directors’ report (continued)
Bruce Grey Non-executive director. Age 77.
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 is currently Chairman of the Industry Advisory Network for the University of NSW, Faculty of Engineering, School of
Manufacturing Engineering. He is also currently Senior Consultant for Cavendish Associates.
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
9,689,987 ordinary shares in CAP-XX Limited (including shares held by Grey Invest Pty Limited).
2,300,000 options over ordinary shares in CAP-XX Limited.
Steen Feldskov Non-executive director. Age 65.
Experience and qualifications
Steen joins the CAP-XX board with nearly 40 years of experience working in the electronics industry, with approximately half of
that time involved in the sale and marketing of electronic components and the remainder in senior management roles for
electronics companies. He is currently the Country Manager for the Danish office of Hamamatsu Photonics Deutschland GmbH,
a subsidiary of the Tokyo-listed Hamamatsu Photonics K.K. the Japanese manufacturer of optical sensors, electric light sources,
and other optical devices.
Steen received a Bachelor of Science degree in Electrical Engineering from the University of Southern Denmark and a Bachelor
of Commerce degree in Marketing from the Copenhagen Business School, Denmark. Steen is also a Member of the Danish
Management Society.
Specific Board responsibilities
Member of the Audit Committee
Member of the Remuneration Committee
Interests in shares and options
400,000 ordinary shares in CAP-XX Limited
2,300,000 options over ordinary shares in CAP-XX Limited.
Page 14
Anthony Kongats Managing Director. Age 65.
Resigned May 16th, 2023
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
14,609,051 ordinary shares in CAP-XX Limited (including shares held by Ducon Management Pty Limited and Management
Matters Pty Limited).
11,800,000 options over ordinary shares in CAP-XX Limited.
Company Secretaries
The Company Secretary is Robert Buckingham.
Robert was appointed Company Secretary on 20 April 2006 and 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 Chartered Accountants Australia & New Zealand 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 15
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 2023, and the number of meetings attended by each director were:
Patrick Elliott
Bruce Grey
Steen Feldskov
Anthony Kongats (resigned 16th May 2023)
Lars Stegmann (appointed 9 June 2023)
Full
Meetings of
Directors
Audit
Committee
Meetings
Remuneration
Committee
Meetings
A
9
9
9
8
1
B
9
9
9
8
1
A
2
2
2
-
-
B
2
2
2
-
-
A
2
2
2
-
-
B
2
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 2023, 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
2023
Name
Executive directors
Anthony Kongats
Lars Stegmann
Non-executive directors
Patrick Elliott
Bruce Grey
Steen Feldskov
Cash
salary and
accrued
fees
$
541,933
74,477
-
-
-
Total
616,410
Primary
Cash
bonus
$
Non-
monetary
benefits
$
Post-employment
Equity
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
-
-
-
-
-
-
-
59,104
7,448
322,103
-
109,326
15,117
1,032,466
97,042
48,998
48,998
48,998
-
-
-
-
-
-
35,921
35,921
57,464
84,919
84,919
106,462
146,994
66,552
322,103
253,749
1,405,808
Details of the remuneration of each director of CAP-XX Limited, for the year ended 30 June 2022, 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
2022
Name
Executive directors
Anthony Kongats
Non-Executive directors
Patrick Elliott
Bruce Grey
Steen Feldskov
Cash
salary and
accrued
fees
$
326,863
-
-
-
Total
326,863
Primary
Cash
bonus
$
Non-
monetary
benefits
$
Post-employment
Equity
Super-
annuation
$
Retirement
benefits
$
Options
$
Total
$
-
-
-
-
-
-
27,450
49,660
49,660
11,380
-
-
-
110,700
27,450
-
-
-
-
-
224,242
578,555
73,693
73,693
26,245
123,353
123,353
37,625
397,873
862,886
Page 16
Directors’ report (continued)
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 since the end of the financial year to any of
the directors or the five most highly remunerated officers of the Company and Group as part of their remuneration.
Refer to Note 30 to the financial statements for details on options issued during the year.
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
14 October 2021
12 April 2022
13 May 2023
14 October 2026
12 April 2027
13 May 2028
£0.0595
£0.0560
£0.0131
34,440,000
2,300,000
20,000,000
No option holder has any right under the options to participate in any other share issue of the Company or of any
other entity.
56,740,000
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 17.
Page 17
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 24 to the financial statements.
The Directors are of the opinion that the services disclosed in Note 24 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.
This report is made in accordance with a resolution of the directors.
Patrick Elliott
Director
Sydney
29th September 2023
Page 18
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
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 2023, 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
29 September 2023
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 2023 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 20
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 21
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 2023, or more
recently, as a result of feedback that
has been received by the Company
from the stated key resources and
relationships on which the business
relies.
The Company takes due account of
any impact that its activities may have
on the environment and seeks to
minimise this impact whenever
possible. Through various procedures
and systems that the Company
operates, especially in the
manufacturing process, the Company
ensures full compliance with health
and safety and environmental
legislation relevant to its activities.
CAP-XX is certified to IOS9001:2015.
The Board has a number of
responsibilities specifically relating to
risk including: -
Monitoring the effectiveness of
CAP-XX’s risk management
systems, including compliance with
regulatory requirements;
Satisfying itself through regular
reporting and oversight that
appropriate internal and external
control mechanisms are in place
and are being implemented; and
Approving CAP-XX’s financial
statements and monitoring financial
performance against the approved
budget.
The Board has established Audit and
Remuneration Committees. Full
details of which are contained in the
Corporate Governance sections of
the Company’s website.
The Board receives regular feedback
from its external auditors on the state
of its risk management and internal
controls. The Board does not
consider it would be appropriate to
Page 22
4. Embed effective risk
management, considering both
opportunities and threats,
throughout the organisation
The board needs to ensure that the
company’s risk management
framework identifies and addresses
all relevant risks in order to execute
and deliver strategy; companies need
to consider their extended business,
including the company’s supply
chain, from key suppliers to end-
customer.
Setting strategy includes determining
the extent of exposure to the
identified risks that the company is
able to bear and willing to take (risk
tolerance and risk appetite).
Corporate Governance Statement (continued)
QCA Code Principle
Application (as set out by QCA)
What we do and why
have its own internal audit function at
the present time, given the
Company’s size and nature of its
current operations. The Group does
complete regular fraud and internal
risk questionnaires which are
completed and reviewed on a six-
monthly basis.
At present the internal audit of
financial controls form part of the
responsibilities of the Group’s finance
function.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
QCA Code Principle
Application (as set out by QCA)
What we do and why
5. Maintain the board as a
well- functioning, balanced
team led by the chair
The board members have a collective
responsibility and legal obligation to
promote the interests of the
company, and are collectively
responsible for defining corporate
governance arrangements. Ultimate
responsibility for the quality of, and
approach to, corporate governance
lies with the chair of the board.
The board (and any committees)
should be provided with high quality
information in a timely manner to
facilitate proper assessment of the
matters requiring a decision or
insight.
The board should have an
appropriate balance between
executive and non-executive
directors and should have at least
two independent non- executive
directors. Independence is a board
judgement.
The board should be supported by
committees (e.g. audit, remuneration,
nomination) that have the necessary
skills and knowledge to discharge
their duties and responsibilities
effectively.
Directors must commit the time
necessary to fulfill their roles.
The Board comprises of four
directors, three 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 2023, nine Board meetings
were held as well as two Audit
Committee meetings and two
Remuneration Committee meetings
Page 23
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 30
June 2023 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 of the CAP-XX
Annual Report and Accounts for the
year ended 30 June 2023.
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 24
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 changed in the past twelve
months due to the change in Chief
Executive Officer in May 2023. The
Board are still 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 25
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 18 to 26 of the
Company’s Annual Report for the year
ended 30 June 2023 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 26
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 2023.
The communication and interaction
between CAP-XX and its
shareholders are explained in the
disclosure above (see principle 2) .
Page 27
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 is
included in the CAP-XX Annual
Report for the year ended 30 June
2023 as well as the full disclosure
of CAP-XX Directors remuneration.
Responsibilities of both the Audit
and Remuneration Committee’s
responsibilities can be found on the
CAP-XX website (available here
https://www.cap-xx.com/aim-rule-
26/)
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 28
CAP-XX Limited
Financial statements - 30 June 2023
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
30
31
32
33
34
35
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 29th September 2023. 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 29
CAP-XX Limited
Consolidated statement of profit or loss
For the year ended 30 June 2023
Currency: Australian Dollars
Notes
Revenue from contracts with customers
Cost of sales
Gross Profit
Other revenue
Other income
General and administrative expenses
Process and engineering expenses
Selling and marketing expenses
Research and development expenses
Share based payment expense
Other expenses
Loss before income tax
Income tax benefit
Net loss for the year
5
7
5
6
7
8
Consolidated
2023
$
2022
$
3,631,690
(2,060,527)
5,557,260
(3,032,921)
1,571,163
2,524,339
664
2,165,429
3,894
2,272,442
(4,264,901)
(1,357,516)
(846,536)
(1,677,478)
(613,980)
(535,972)
(4,478,616)
(1,222,409)
(886,494)
(1,572,421)
(1,133,399)
(446,196)
(5,559,127)
(4,938,860)
-
-
(5,559,127)
(4,938,860)
Loss attributable to owners of CAP-XX Limited
(5,559,127)
(4,938,860)
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Basic loss per share
Diluted loss per share
32
32
Cents
(1.1)
(1.1)
Cents
(1.0)
(1.0)
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
Page 30
CAP-XX Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2023
Currency: Australian Dollars
Notes
Consolidated
2023
$
2022
$
Loss for the year
(5,559,127)
(4,938,860)
Other comprehensive income/(loss)
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations
22
(27,433)
(53,490)
Other comprehensive income for the year,
net of tax
(27,433)
(53,490)
Total comprehensive (loss)/income for the
year attributable to owners of CAP-XX
Limited
(5,586,560)
(4,992,350)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Page 31
CAP-XX Limited
Consolidated statement of financial position
As at 30 June 2023
Currency: Australian Dollars
Notes
2023
$
2022
$
Consolidated
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
Interest bearing liabilities
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
9
10
11
12
13
14
15
16
17
18
19
17
20
2,643,810
959,515
2,201,906
2,429,946
8,235,177
2,428,233
2,193,777
204,808
4,826,818
1,614,714
1,116,902
1,836,148
2,143,011
6,710,775
2,696,120
2,549,276
204,808
5,450,204
13,061,995
12,160,979
1,833,557
194,888
632,655
1,038,054
3,699,154
2,024,584
803,910
2,828,494
1,281,367
193,261
868,096
-
2,342,724
2,218,062
757,245
2,975,307
6,527,648
5,318,031
6,534,347
6,842,948
21
22
22
119,175,769
8,100,320
(120,741,742)
6,534,347
114,511,790
7,513,773
(115,182,615)
6,842,948
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Page 32
CAP-XX Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Currency: Australian Dollars
Notes
Contributed
Equity
$
Reserves
$
Accumulated
losses
$
Total
$
Consolidated
Balance as 1 July 2021
108,766,530
6,433,864
(110,243,755)
4,956,639
Loss for the year
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
21
22
-
-
-
(4,938,860)
(4,938,860)
(53,490)
-
(53,490)
5,745,260
-
-
1,133,399
-
-
5,745,260
1,133,399
Balance at 30 June 2022
114,511,790
7,513,773
(115,182,615)
6,842,948
Loss for the year
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
21
22
-
-
-
(5,559,127)
(5,559,127)
(27,433)
-
(27,433)
4,663,979
-
-
613,980
-
-
4,663,979
613,980
Balance at 30 June 2023
119,175,769
8,100,320
(120,741,742)
6,534,347
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
Page 33
CAP-XX Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
Currency: Australian Dollars
Notes
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
Interest paid on lease liabilities
Interest received
Net cash (outflow) from operating activities
29
13
21
21
19
Cash flows from investing activities
Payments for property, plant and equipment
Contribution from lessor
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Costs associated with the issue of shares
Proceeds from / (repayment of) borrowings
Principal repayments 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
Consolidated
2023
$
2022
$
3,806,845
5122,173
(9,976,681)
(6,169,836)
2,043,384
(207,787)
664
(4,333,575)
(10,604,235)
(5.482,062)
3,200,660
(290,873)
3,894
(2,568,381)
(118,166)
-
(118,166)
5,074,950
(410,971)
1,038,054
(193,763)
5,508,270
(189,902)
163,000
(26,902)
6,106,584
(456,053)
(1,400,000)
(169,175)
4,081,356
1,056,529
1,486,073
1,614,714
182,601
(27,433)
(53,960)
9
2,643,810
1,614,714
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page 34
CAP-XX Limited
Notes to the financial statements
30 June 2023
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
33
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
Current liabilities – Lease liabilities
Current liabilities – Provisions
Current liabilities – Interest bearing liabilities
Non-current liabilities – Provisions
Contributed equity
Reserves and accumulated losses
Key management personnel disclosures
Remuneration of auditors
Key commitments and contingencies
Related party transactions
Subsidiaries
Events occurring after the balance sheet date
Reconciliation of loss after income tax to net cash outflow from operating activities
Share-based payments
Economic dependency
Earnings per share
Parent entity
Page
36
44
45
47
49
50
50
51
52
52
53
53
53
54
55
55
55
56
57
57
58
59
60
61
61
61
61
62
62
63
65
66
66
Page 35
CAP-XX Limited
Notes to the financial statements
30 June 2023
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 2023, 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. Due to
these operating losses and net cash outflows 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.
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 is in the final stages of being lodged with
the Australian Taxation Office in September 2023. CAP-XX has a proven track record with R&D rebate
submissions over several years and this years return is consistent with previous years and has been reviewed
and submitted by BDO, A portion of the R&D rebate will be used to repay the short term loan;
The number and size of several business development opportunities from existing and emerging markets are
converted 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 for existing and new
products;
iii. Ongoing technology license and contractual disputes with several existing and new customers need to be
finalised to ensure that ongoing revenue and cash flow is generated in a timely manner and associated legal
expenditure is minimised;
iv.
v.
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; and
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.
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
Page 36
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1
Summary of significant accounting policies (continued)
recorded in the financial report at 30 June 2023. 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.
(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 2023 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
Page 37
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1 Summary of significant accounting policies (continued)
all resulting exchange differences are recognised in other comprehensive income.
(e)
Foreign currency translation
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 applies the principles outlined within AASB 15 “Revenue from contracts with customers” . 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 within 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 to 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 agreements are in place, whereby customers are required to pay the Group a portion of sales revenue, in return
for the use of patented software. 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.
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
Page 38
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1 Summary of significant accounting policies (continued)
(h)
Income tax (continued)
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)
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.
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.
Page 39
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1 Summary of significant accounting policies (continued)
(j)
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.
(k)
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.
(l)
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.
(m) 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.
(n)
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.
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(i)).
Page 40
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1 Summary of significant accounting policies (continued)
(n)
Property, plant and equipment (continued)
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
statement of profit or loss.
(o) 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.
(p) Research & Development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the
design and testing of new or improved products) are recognised as intangible assets when it is probable that the project
will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and
its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of
materials, services, direct labour and an appropriate proportion of overheads. Other development expenditures that do
not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as
intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful
life, which varies from 3 to 5 years.
(q)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which
are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are
unsecured and are usually paid within 55 days of recognition.
(r)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations may be small.
(s)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
(t)
Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within
12 months of the reporting date are recognised in other provisions in respect of employees' services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Page 41
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1 Summary of significant accounting policies (continued)
(t)
Employee benefits (continued)
Long service leave
(ii)
The liability for long service leave is recognised as part of the provision for employee benefits and measured at
the present value of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the reporting date on national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
(iii) Retirement benefit obligations
The Group does not maintain a Group superannuation plan. The Group makes defined fixed percentage
contributions for all Australian resident employees to complying third party superannuation funds. The Group’s
legal or constructive obligation is limited to these contributions.
Contributions to the defined contribution complying third party superannuation funds are recognised as an
expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash
refund or a reduction in the future payments is available.
(iv) Share-based payments
Share-based compensation benefits are provided to employees via the CAP-XX Limited Share Option Exchange
Plan and the CAP-XX Limited Employee Share Option Plan. Information relating to these schemes is set out in
note 30.
The fair value of options granted under the CAP-XX Limited Share Option Exchange Plan and the CAP-XX
Limited Employee Share Option Plan is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the period during which the
employees become unconditionally entitled to the options.
The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the non-tradeable nature of the option, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free
interest rate for the term of the option.
Non marketing vesting conditions are included in assumptions about the number of options that are expected to
vest. The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of
options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
The 2006 Share Option Exchange Plan and the CAP-XX Limited Employee Share Option Plan are both
administered by the Board of Directors of CAP-XX Limited. When options are exercised, the entity transfers the
appropriate amount of shares to the employee. The proceeds received net of any directly attributable transactions
costs are credited directly to equity.
(v) Bonus plans
The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past
practice that has created a constructive obligation.
(u)
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 Group’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.
Page 42
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 1 Summary of significant accounting policies (continued)
(v)
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-issued, 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.
(w)
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.
(x)
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.
(y) New, revised or amending Accounting Standards and Interpretations adopted
The Group 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. These new or
amended Accounting Standards and Interpretations have not had a material effect on the financial statements for the
year ended 30 June 2023.
(aa)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Any revised or amending Accounting Standards or Interpretations that are not yet mandatory for the year ended 30 June
2023 have not been early adopted.
(ab) Parent entity financial information
The financial information for the parent entity, CAP-XX Limited, disclosed in note 33 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 43
CAP-XX Limited
Notes to the financial statements
30 June 2023
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:
Consolidated
2023
$
2022
$
Financial assets
Cash and cash equivalents
2,643,810
1,614,714
Trade and other receivables
959,515
1,116,902
Financial liabilities
Trade and other payables
Interest bearing liabilities
Lease liabilities
(a) Market risk
3,603,325
2,731,616
1,833,557
1,038,054
2,219,472
1,281,367
-
2,411,323
5,091,083
3,692,690
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 $52,630 lower/ $57,893 higher (2022: $50,032
lower/$55,035 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
$
170,579
608,158
496,798
2023
GBP
£
Euro
€
2022
USD
$
GBP
£
Euro
€
859,228
-
38,073
16,219
-
73,924
280,818
501,467
316,857
15,452
-
1,113
16,662
-
21,450
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.
Page 44
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 2 Financial risk management (continued)
(b)
Credit risk (continued)
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and
forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year. These indicators also suggest whether there has been an increase in credit
risk.
Cash and cash equivalents are placed in financial institutions with good credit ratings.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, to ensure debts are paid as and when they fall
due. The Group has experienced recurring operating losses and operating cash outflows since inception to 30 June 2023
as the Group is transitioning from development stage. Historically the Group has not committed to any credit facilities and
rather has relied upon equity financing through private and public equity investors. Recently, the Group has entered into
a credit facility with a finance provider which uses the R&D rebate as collateral. Once the R&D rebate is received the
finance provider is paid the amount drawn down at this date. Details of the current status of this facility can be found in
note 19.
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.
Page 45
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 3
Critical accounting estimates and judgements (continued)
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 30.
(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)
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.
(vii)
Research and development incentive
Judgement is required in determining the amount of grant revenue relating to the research and development
incentive claim. There are certain transactions and calculations undertake during the ordinary course of business
for which the ultimate tax determination may be subject to change. The Group calculates its research and
development claim based on the Group’s understanding of the tax law. Where the final outcome of these matters
is different from the amounts that were initially recorded, such differences will impact the profit or loss in the year
in which such determination is made.
Note 4
Segment information
Page 46
CAP-XX Limited
Notes to the financial statements
30 June 2023
(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 2023
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
North
America
Total
$
$
880,877 1,967,154
(2,060,527)
-
(1,179,650) 1,967,154
$
783,659
-
783,659
$
3,631,690
(2,060,527)
1,571,163
664
2,165,429
(4,264,901)
(1,357,516)
(846,536)
(1,677,478)
-
(613,980)
(535,972)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
664
2,165,429
(4,264,901)
(1,357,516)
(846,536)
(1,677,478)
-
(613,980)
(535,972)
(Loss)/Profit before income tax
(8,309,940) 1,967,154
783,659
(5,559,127)
Net (loss)/profit for the year
(8,309,940) 1,967,154
783,659
(5,559,127)
Other comprehensive income
Exchange differences arising in translation of
foreign operations
Total comprehensive income/(loss), net of tax
Total assets
Total liabilities
(Loss)/Profit before income tax includes the
following specific expenses:
Depreciation and amortisation
Share based payments
(27,433)
-
(8,337,373) 1,967,154
-
783,659
(27,433)
(5,586,560)
13,061,995
6,527,648
741,552
613,980
-
-
-
-
-
-
-
-
13,061,995
6,527,648
741,552
613,980
Page 47
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 4
Segment information (continued)
30 June 2022
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
Asia Pacific
Geographical Segments
North
America
Europe
$
2,375,794
(3,032,921)
$
2,207,081
-
$
974,385
-
Total
$
5,557,260
(3,032,921)
(657,127)
2,207,081
974,385
2,524,339
3,894
2,272,442
(4,478,616)
(1,222,409)
(886,494)
(1,572,421)
(1,133,399)
(446,196)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,894
2,272,442
(4,478,616)
(1,222,409)
(886,494)
(1,572,421)
(1,133,399)
(446,196)
(Loss)/Profit before income tax
(8,120,326)
2,207,081
974,385
(4,938,860)
Net (loss)/profit for the year
(8,120,326)
2,207,081
974,385
(4,938,860)
Other comprehensive income
Exchange differences arising in translation
of foreign operations
Total comprehensive income/(loss), net of tax
(53,490)
(8,173,816)
-
2,207,081
-
974,385
(53,490)
(4,992,350)
Total assets
Total liabilities
12,160,979
5,318,031
(Loss)/Profit before income tax includes the
following specific expenses:
Depreciation and amortisation
Share based payments
726,155
1,133,399
-
-
-
-
-
-
-
-
12,160,979
5,318,031
726,155
1,133,399
Page 48
CAP-XX Limited
Notes to the financial statements
30 June 2023
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
2023
$
2022
$
3,288,692
5,069,186
342,998
3,631,690
488,074
5,557,260
664
3,894
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 – 2023
Geographical regions
Asia Pacific
Europe
Americas
Consolidated – 2022
Geographical regions
Asia Pacific
Europe
Americas
Supercapacitors
Licence
Fees and
Royalties
Total
880,877
1,967,154
440,661
-
-
342,998
880,877
1,967,154
783,659
3,288,692
342,998
3,631,690
Supercapacitors
Licence
Fees and
Royalties
Total
2,375,794
2,207,081
486,311
-
-
488,074
2,375,794
2,207,081
974,385
5,069,186
488,074
5,557,260
Page 49
CAP-XX Limited
Notes to the financial statements
30 June 2023
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 Withholding Tax Diminution
Interest - lease liabilities
Interest – make good
Interest – R&D Advance
Employee benefits expense
Superannuation expense
Share based payments
2023
$
22,045
2,143,384
-
2,165,429
2022
$
199,308
2,073,134
-
2,272,442
Consolidated
2023
$
2022
$
1,786,716
273,811
2,060,527
2,685,204
347,717
3,032,921
384,635
294
1,124
355,499
741,552
189,491
18,274
206,663
40,999
80,545
366,930
113
1,915
357,197
726,155
120,484
31,268
225,151
-
69,293
535,972
446,196
4,161,394
3,282,855
397,130
309,077
613,980
1,133,399
Page 50
CAP-XX Limited
Notes to the financial statements
30 June 2023
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 25% (2022: 25%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Share based payments
(Non-assessable) / non-deductible items
Benefit arising from temporary differences and tax
losses not recognised
Income tax benefit
(b)
Tax losses
Consolidated
2023
$
2022
$
(5,559,127)
(4,938,860)
(1,389,782)
(1,234,715)
153,245
773,126
(463,411)
283,350
645,696
(305,669)
463,411
-
305,669
-
Unused tax losses for which no deferred tax asset has
been recognised
Potential tax benefit @ 25% (2022: 25%)
96,618,330
24,154,582
94,281,067
23,570,267
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) Unrecognised temporary differences
Temporary differences for which no deferred tax asset
has been recognised
Potential tax benefit @ 25% (2022: 25%)
3,092,505
773,126
2,925,099
731,275
CAP-XX Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation as
of 1 July 2002. The accounting policy in relation to this legislation is set out in note 1(h). CAP-XX Limited has not
recognised any tax consolidation distribution from or to wholly tax consolidated entities.
Page 51
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 9
Current assets – Cash and cash
equivalents
Cash at bank and on hand
Cash on deposit
Consolidated
2023
$
402,636
2,241,174
2,643,810
2022
$
173,183
1,441,531
1,614,714
Note 10 Current assets – Receivables
Consolidated
Trade receivables
Other receivables
Provision for expected credit losses
2023
$
919,459
581,079
(541,023)
959,515
2022
$
929,986
538,448
(351,532)
1,116,902
Movements in the provision for expected credit losses are as follows:
Consolidated
2023
$
351,532
189,491
541,023
2022
$
231,048
120,484
351,532
Opening balance
Allowance for expected credit loss
Closing balance
(b) Past due but not impaired
There were no trade receivables at 30 June 2023 that were past due but not impaired (2022: 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.
(d)
Foreign exchange and interest rate risk
Information about the Group's exposure to foreign currency risk and interest rate risk in relation to trade and other
receivables is provided in note 2.
Page 52
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 11 Current assets – Inventories
Consolidated
Raw materials and stores
Work in progress
Finished goods
Obsolescence provision
2023
$
1,052,509
77,764
1,249,911
(178,278)
2,201,906
2022
$
1,102,421
23,713
907,325
(197,311)
1,836,148
Note 12 Current assets – Other
Consolidated
Research & Development - Tax Credit
Prepayments
Other Receivables
2023
$
2,070,000
348,128
11,818
2,429,946
2022
$
1,970,000
161,637
11,374
2,143,011
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
2023
$
2022
$
20,146,977
(17,740,516)
12,203
2,418,664
20,041,635
(17,355,881)
-
2,685,754
69,394
(67,130)
2,264
478,470
(471,165)
7,305
68,773
(66,836)
1,937
478,470
(470,041)
8,429
20,707,044
(18,278,811)
2,428,233
20,588,878
(17,892,758)
2,696,120
Page 53
CAP-XX Limited
Notes to the financial statements
30 June 2023
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 2023
Opening net book amount
Additions
Depreciation
2,685,754
117,545
(384,635)
Closing net book amount
2,418,664
8,429
-
(1,124)
7,305
Total
$
2,696,120
118,166
(386,053)
1,937
621
(294)
2,264
2,428,233
Movement in classes of assets:
Consolidated
Year ended 2022
Opening net book amount
Additions
Contributions from Lessor
Depreciation
Closing net book amount
Plant and
equipment
$
3,034,197
181,487
(163,000)
(366,930)
2,685,754
Leasehold
improvements
$
Furniture and
fittings
$
3,923
6,421
-
(1,915)
8,429
56
1,994
-
(113)
1,937
Total
$
3,038,176
189,902
(163,000)
(369,990)
2,696,120
Note 14 Non-current assets – Right-of use
Consolidated
Leased Assets
Right-of-use Leased assets at cost
Accumulated depreciation
Net book amount
2023
$
2022
$
3,407,991
(1,214,214)
2,193,777
3,407,991
(858,715)
2,549,276
Movement in classes of assets:
Consolidated
Office Premises
& Warehouse
$
Office Equipment
Total
$
$
Year ended 2023
Opening book amount
Additions
Depreciation
Closing net book amount
2,505,857
-
(330,581)
2,175,276
43,419
-
(24,918)
18,501
2,549,276
-
(355,499)
2,193,777
Movement in classes of assets:
Consolidated
Office Premises
& Warehouse
Office Equipment
Total
Year ended 2022
Opening Book Amount
Additions
Depreciation
Closing net book amount
2,837,470
-
(331,613)
2,505,857
69,003
-
(25,584)
43,419
2,906,473
-
(357,197)
2,549,276
Page 54
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 15 Non-current assets - Other
Consolidated
Rental bond
2023
$
2022
$
204,808
204,808
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
$204,808 represents the current value of this bank guarantee.
Note 16 Current liabilities – Payables
Trade payables
Other payables and accrued expenses
Consolidated
2023
$
2022
$
1,677,270
156,287
1,833,557
1,131,501
149,866
1,281,367
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
2023
$
2022
$
194,888
2,024,584
2,219,472
193,261
2,218,062
2,411,323
The Group holds a 10 year lease for property in Seven Hills, Sydney, NSW. This lease agreement includes an option to
extend for 2 additional periods of 5 years. As at 30 June 2023, the Group have not included this option to extend within
the lease liability, with such an extension not considered to be reasonably certain.
Reconciliation of lease liabilities at the beginning and end of the financial year are set out below:
Balance from previous Year
Additions
Interest on lease liabilities
Repayments on lease liabilities
Balance as at 30 June 2023
2023
$
2022
2,411,323 2,580,498
- -
206,663 225,151
(398,514) (394,326)
2,219,472 2,411,323
Page 55
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 17 Lease Liabilities (continued)
The following are the remaining contractual maturities for the Group’s lease liabilities:
Year ended 2023
Lease liabilities
Less than 1
year
$
2-5 years
$
Over 5 years
$
Contractual
cash flows
$
Carrying
Amount
$
399,774
1,797,581
770,573
2,967,928
2,219,472
Year ended 2022
Lease liabilities
Less than 1
year
$
2-5 years
$
Over 5 years
$
Contractual
cash flows
$
Carrying
Amount
$
401,551
1,727,843
1,240,085
3,369,479
2,411,323
Note 18 Current liabilities – Provisions
Consolidated
Employee benefits – annual leave and long service leave
2023
$
632,655
632,655
2022
$
868,096
868,096
(a)
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
(b)
Risk exposure
Consolidated
2023
$
2022
$
198,799
268,315
Information about the Group’s exposure to foreign exchange risk is provided in note 2.
(c) 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. There is no warranty provision as at 30 June 2023 (2022: nil).
Page 56
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 19 Current liabilities – Interest bearing
liabilities
Consolidated
Short term borrowings
2023
$
1,038,054
1,038,054
2022
$
-
-
During the year the Group entered into a borrowing facility in order to provide short term liquidity and general working
capital. The balance was borrowed against the expected Research and Development grant (refer to Note 12) and will be
repaid upon receipt of this grant in calendar year 2023. The facility attracted a monthly interest rate of 1.25%.
Movements in interest bearing liabilities
Movements in interest bearing liabilities during the financial years are set out below:
Carrying amount at start of year
Borrowings drawn down
Repayments
Interest expense
Carrying amount at end of year
Note 20 Non-current liabilities – Provisions
Employee benefits – long service leave
Make good provision
(a) Make good provision
Consolidated
2023
$
-
957,509
-
80,545
1,038,054
2022
$
1,400,000
-
(1,400,000)
-
-
2023
$
70,133
733,777
803,910
2022
$
64,467
692,778
757,245
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.
Page 57
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 20 - Non-current liabilities – Provisions (continued)
(b) Movements in provisions
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 21 Contributed equity
Consolidated
2023
$
2022
$
692,778
-
40,999
-
733,777
687,350
-
5,428
-
692,778
Consolidated
2023
Shares
2022
Shares
(a)
Share capital
Fully paid ordinary shares (no par value)
716,014,958
509,173,491
(b) Movement in ordinary share capital:
Date
Details
1 July 2021
4 August 2021
4 August 2021
4 August 2021
24 November 2021
30 June 2022
1 July 2022
12 July 2022
12 May 2023
6 June 2023
6 June 2023
Balance
Issue of Shares
Issue of Shares
Issue of Shares – Costs
Issue of Shares
Balance
Balance
Issue of Shares
Issue of Shares
Issue of Shares
Issue of Shares – Costs
30 June 2023
Balance
(c)
Ordinary shares
Number of
shares
456,804,083
51,629,100
-
740,308
509,173,491
509,173,491
1,062,343
76,535,370
129,243,754
-
716,014,958
Issue price
$
$0.10
$0.09
$0.13
$0.10
$0.02
$0.02
108,766,530
5,416,958
689,626
(456,053)
94,729
114,511,790
114,511,790
103,427
1,860,322
3,111,201
(410,971)
119,175,769
At 30 June 2023, there were 716,014,958 (2022: 509,173,491) 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.
Page 58
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 21 Contributed equity (continued)
(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 30.
(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 relative to the company's current 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 capital risk management policy remains unchanged from the 2022 Annual report.
Note 22 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
Consolidated
2023
$
2022
$
(359,147)
8,459,467
8,100,320
(331,714)
7,845,487
7,513,773
(331,714)
(27,433)
(359,147)
7,845,487
613,980
8,459,467
(278,224)
(53,490)
(331,714)
6,712,088
1,133,399
7,845,487
Movements in accumulated losses were as follows:
Balance 1 July
Net (loss) for the year
Balance 30 June
Consolidated
2023
2022
$
(115,182,615)
(5,559,127)
(120,741,742)
$
(110,243,755)
(4,938,860)
(115,182,615)
(c)
Nature and purpose of reserves
(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 59
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 23 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) – resigned 16th May 2023
Lars Stegmann (Chief Executive Officer) – appointed 9th June 2023
Non-executive directors
Patrick Elliott (Non-Executive Chairman)
Bruce Grey (Non-Executive Director)
Steen Feldskov (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 – Resigned 31 May 2023
Song Hee Lau, General Manager Sales & Marketing Asia Pacific
Jean Pierre Mars, Retired 28/7/2022
Michael Taylor, Chief Financial Officer
Dallas Garratt, VP Operations
Catherine Wang, General Manager Quality
Henry Huang – Manager, Applications Engineering
Short-term benefits
Post-employment benefits
Share-based payments
Total
Consolidated
2023
$
2022
$
2,030,943
525,223
513,790
3,069,956
1,758,726
166,965
922,731
2,848,422
(c)
Other transactions with key management personnel or entities related to them
The following directors of the Company, and therefore each a related party as defined in the AIM Rules for Companies,
participated in a subscription of new ordinary shares in the Company on 4 May 2023 (the “Subscription”):
Patrick Elliot, the Company’s Chairman, subscribed for 3,846,154 new ordinary shares in the Subscription,
which represented an amount of £50,000 at the Subscription’s issue price of 1.3 pence per new ordinary share
(the “Issue Price”).
Bruce Grey, one of the Company’s Non-Executive Directors, subscribed for 2,307,692 new ordinary shares in
the Subscription, which represented an amount of £30,000 at the Issue Price.
Anthony Kongats, the Company’s previous CEO, subscribed for 4,615,385 new ordinary shares in the
Subscription, which represented an amount of £60,000 at the Issue Price.
Page 60
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 24 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
2023
$
2022
$
BDO
Audit services
Audit of financial statements
Total remuneration for audit services
69,996
69,996
69,350
69,350
Taxation services
Tax compliance services, including review of company
income tax returns, employee share scheme and R&D Tax
concession
Total remuneration of BDO
77,785
147,781
58,199
127,549
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 25 Commitments and contingencies
CAP-XX continues to pursue a patent infringement action against Maxwell Technologies, a wholly owned subsidiary of
Tesla Inc. As previously announced, due to the unavailability of expert witnesses for Maxwell, the trial date was deferred
from July 2023 to December 2023. In September 2023, CAP-XX was advised that Tesla had lodged a patent
infringement claim against CAP-XX for patent infringement in a Texas court. On the data and evidence lodged to date,
CAP-XX is of the opinion that the claim is baseless and that it will be vigorously defended.
Note 26 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 27.
(c)
Key management personnel
Disclosures relating to key management personnel are set out in note 23.
(d) Other
Canaccord Genuity Asset Management Limited, a substantial shareholder of the Company and therefore a related party
as defined in the AIM Rules for Companies, subscribed for 53,846,160 new ordinary shares in a placing of new ordinary
shares on 4 May 2023, which represented an amount of £700,000.03 at the issue price of 1.3 pence per new ordinary
share.
Page 61
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 27 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 2023
%
30 June 2022
%
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.
Note 28 Events occurring after the balance sheet date
The necessary paperwork associated with the receipt of the R&D Tax rebate for the 2023 financial year is in the final
stages of being lodged with the relevant Government authorities and is expected to be received before the end of the
current calendar year. The rebate is expected to be approximately AUD $2.1 million.
There were no other matters or circumstances that have arisen since 30 June 2023 that have 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 29 Reconciliation of loss after tax to net cash outflow from operating activities
Net loss
Depreciation and amortisation
Expected credit loss expense
Interest charged on financial liability
Non-cash employee benefit expense – share based
payments
Changes in assets and liabilities:
(Increase) in receivables
(Increase) in inventories
(Increase)/Decrease in other assets
Increase in payables
(Decrease)/Increase in provisions
Net cash outflow from operating activities
Consolidated
2023
$
2022
$
(5,559,127)
(4,938,860)
741,552
189,491
80,545
613,980
726,155
120,484
-
1,133,399
(32,105)
(365,758)
(286,935)
665,409
(380,627)
(4,333,575)
(314,603)
(769,883)
1,053,965
300,659
120,303
(2,568,381)
Page 62
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 30 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 – 2023
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
11 December 2017 11 December 2022
14 October 2021
14 October 2026
£0.1150 14,695,000
£0.0595 34,490,000
-
-
12 April 2022
12 April 2027
11 May 2023
11 May 2028
£0.0560 2,300,000
-
£0.0131
-
20,000,000
-
-
-
(14,695,000)
-
(50,000) 34,440,000 17,655,200
-
- 2,300,000
20,000,000
1,012,000
-
Weighted Average Exercise Price
$0.10
$0.02
$0.10
$0.08
$0.11
51,485,000 20,000,000
-
(14,745,000) 56,740,000 15,465,582
Fair value of options granted
There were 20,000,000 share options issued for the year ended 30 June 2023.
The assessed fair value at grant date of options granted, during the year ended 30 June 2023, under the CAP-XX
Limited Plan was A$0.02 on 11 May 2023. The fair value at grant date is determined using a Black-Scholes option
pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the
impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
The model inputs for options granted included:
(a)
options are granted for nil consideration, have a:
o
o
4 -10 year life and 25% vest 24 months after the Vesting Commencement Date, and 6.25% of Total Option
shall vest on each subsequent quarterly anniversary of the Vesting Commencement Date thereafter;
specific vesting criteria in some minor instances.
(b)
exercise price: refer tables above
(c)
grant date: refer tables above
(d)
expiry date: refer tables above
(e)
share price at grant date
(f)
expected volatility of share price over option life of 79.6%
(g)
risk free rate of 2.75%
Page 63
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 30 Share-based payments (continued)
Exercise
price
$
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited &
expired
during the
year
Number
Balance at
end of the
year
Number
Exercisable
at end of the
year
Number
£0.1150 14,775,000
£0.0595
-
- 34,665,000
- 2,300,000
14,775,000
36,965,000
$0.20
$0.10
-
-
-
-
-
(80,000) 14,695,000 14,695,000
(175,000) 34,490,000 11,063,573
-
2,300,000
-
(255,000) 51,485,000 25,758,573
$0.10
$0.10
$0.16
Grant Date
Expiry date
Consolidated – 2022
11 December 2017 11 December 2022
14 October 2021
14 October 2026
12 April 2022
12 April 2027
£0.0560
Weighted Average Exercise Price
Fair value of options granted
There were 36,965,000 share options issued for the year ended 30 June 2022 (2021: Nil).
The assessed fair value at grant date of options granted, during the year ended 30 June 2023, under the CAP-XX
Limited Plan was A$0.13 on 14 October 2021 and A$0.13 on 10 April 2022. The fair value at grant date is determined
using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting
and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of
the option.
The model inputs for options granted included:
(a)
options are granted for nil consideration, have a:
o
o
4 -10 year life and 25% vest 6 months after the Vesting Commencement Date, and 1/42 of Total Option shall
vest on each monthly anniversary of the Vesting Commencement Date thereafter;
specific vesting criteria in some minor instances.
(b)
exercise price: refer tables above
(c)
grant date: refer tables above
(d)
expiry date: refer tables above
(e)
share price at grant date
(f)
expected volatility of share price over option life of 80%
(g)
risk free rate of 0.3%
Page 64
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 30 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 31
Economic dependency
Consolidated
2023
$
2022
$
613,980
613,980
1,133,399
1,133,399
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 32 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
2023
Cents
(1.1)
(1.1)
2022
Cents
(1.0)
(1.0)
Consolidated
2023
Number
2022
Number
529,010,650
503,924,604
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
529,010,650
503,924,604
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 65
CAP-XX Limited
Notes to the financial statements
30 June 2023
Note 33 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
Accumulated losses (i)
2023
$
2022
$
5,062,879
5,062,879
1,965,685
1,965,685
3,097,194
3,944,564
3,944,564
417,745
417,745
3,526,819
119,175,769
114,511,790
8,459,467
(124,538,042)
7,845,487
(118,830,458)
Loss for the year
Total comprehensive income/(loss)
(i) Reconciliation to prior year accumulated losses
Balance at beginning of period 1/07/2022
Net loss for the year
Balance at end of period 30/06/2023
(5,707,584)
(5,707,584)
(118,830,458)
(5,707,584)
(124,538,042)
(5,385,078)
(5,385,078)
Contingent Assets
The parent had no material contingent assets as at 30 June 2023 and 30 June 2022.
Contingent Liabilities
The parent had no material contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The parent had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1.
Page 66
CAP-XX Limited
Directors’ declaration
30 June 2023
Directors’ declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 29 to 66 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 Group’s financial position as at 30 June 2023 and of its performance, as
represented by the results of its operations, changes in equity and 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
29 September 2023
Page 67
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret Street
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 2023, 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 2023 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.
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.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
Key audit matters
Except for the matter described in the material uncertainty related to going concern section, we have
determined that there are no other key audit matters to communicate in our report.
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 2023, 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.
2
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, 29 September 2023
3