Cap-xx Regulatory News (CPX)

Chairman's statement

The first half of the current financial year has been characterised by strong sales demand. Product sales at A$1.7m are up 26% on the corresponding period last year (A$1.4m) and the order book at the end of December 2020 was 75% higher than at the same time last year. Furthermore, since the period end the order book has continued to grow and as at the end of January stood at over 100% higher than at the end of January 2020. Pleasingly, the growth in the order book is well spread, coming from all geographic regions and from different Internet of things (IoT) related market segments. Conversely, Royalty payments from AVX and Murata have stagnated. Total revenue was up 10% at A$2.1m compared to A$1.9m. The reported Net Loss for the period was A$(1.2m) including Murata project expenses of A$2.0m. This compared to a Net Loss of A$(1.0m) for the corresponding period last year. If project costs and their related R&D tax rebate, patent infringement expenses, amortisation of employee share options and AASB16 lease expenses are excluded, then the adjusted EBITDA profit was A$0.32m compared to a loss of A$(0.44m) for the corresponding period last year. Cash at the end of December 2020 was A$0.5m before the receipt of the A$3.1m R&D tax rebate in early January 2021.

Our sales and marketing focus on IoT market segments has delivered good results. The Board believes that demand for both non-cellular and cellular IoT devices is growing rapidly. Sales for automotive accessories, electronic locks and battery-less energy harvesting products have been particularly strong. At the same time, the Company achieved several new design wins in wearables, consumer, medical and automotive products. Pleasingly, the Company is seeing increasing interest in its products from global multinational companies. The Company has notably achieved a design win with a global Tier-1 automotive component supplier for passenger vehicle door locking and climate control applications and is working on a second project related to data logging with the same Tier-1 supplier as it completes the formal supplier accreditation process. This Tier-1 supplier was previously a customer of Murata. In addition, CAP-XX has been approved as a supplier by a leading global smart phone manufacturer. In the area of energy harvesting, the Company is working with Epishine of Sweden and ePeas of Belgium to introduce battery-less solutions for a range of IoT products. The three companies will be jointly hosting a training webinar for prospective customers next month. Announcements of other collaborations are expected over the coming months.

As previously reported, the global pandemic has continued to impact the Company most noticeably in our various manufacturing activities. The Company had planned and agreed to bring in a number of Japanese engineers and experts to assist it with the commissioning of the new production lines at Seven Hills. However, global travel restrictions, limited international flights and mandatory hotel quarantine requirements, made this impossible. Subsequently, the Company's engineers, with the assistance of Murata and other Japanese equipment suppliers, revised the plans for the commissioning of the production lines to continue under remote assistance and guidance from Japan. It is a credit to everyone involved that the Company was still able to complete the commissioning of the production lines and construction of the new 3,300 sq. metre facility within the original budget proposed, which was set well before the start of the pandemic.

The electrode, DMF and DMT production lines are now commissioned and operational, with product shipping to customers. The current output and key performance metrics are currently tracking in line with our expectations. As expected at this stage of production, the Company is continuing to address small incremental improvements and is hiring additional staff for the Seven Hills facility. We expect to see steady improvement over the remainder of 2021. The Board is confident that target outputs and other key performance metrics will be reached by the end of 2021 as initially planned. The commissioning of the fourth production line, the DMH line, is still planned for the latter half of 2021, with production expected to start in early 2022 as time and resources allow and subject to customer demand.

CAP-XX's Malaysian operations have also been impacted by the pandemic. Various Malaysian government mandated lockdowns have restricted the Company's ability to increase output as fast as management would have liked in response to the growing sales order book. Most noticeably, we have faced delays in recruiting additional staff and have been unable to travel from Seven Hills to Malaysia to oversee pre-production manufacturing of new products and processes. Nevertheless, CAP-XX has successfully increased output and expects output to increase further over the coming months.

R&D activities continue to progress and promising developments in new intellectual property were made to reduce supercapacitor production costs, increase cell voltage and improve product performance, using new materials.

Licensing remains an important revenue stream for CAP-XX and the Company continues to defend its intellectual property. CAP-XX continues to vigorously pursue its patent infringement action against Maxwell Technologies, now a wholly owned subsidiary of Tesla Inc. and other companies. The same Delaware court which ruled in favour of CAP-XX against Ioxus is also hearing the case against Maxwell Technologies and has issued a timetable for resolution of this matter. Court mediation is scheduled for September 2021 and if the matter is not resolved trial is scheduled for October 2022. The Board remains optimistic of the Company's prospects in this matter. CAP-XX is continuing to pursue Ioxus for the payment of the awarded damages. However, it remains unclear whether Ioxus will be capable of paying. The Company is also in discussions with other companies about licencing opportunities.

The Board is confident that the commissioning of the Murata production lines will transform the Company's revenue position with a consequential benefit to cash flow and the cash position of the Company. 

Patrick Elliott

Chairman

Consolidated

Half-year 2020

Half-year 2019

Currency: Australian Dollars

$

$

Revenue from sale of goods and services

2,126,564

1,932,591

Cost of sale of goods and services

(1,158,340)

(862,558)

Gross margin (loss) on sale of goods and services

968,224

1,070,033

Other revenue

501

9,964

Other income

2,292,781

941,678

General and administrative expenses

(944,949)

(1,205,098)

Process and engineering expenses

(229,994)

(478,521)

Selling and marketing expenses

(437,791)

(404,326)

Research and Development expenses

(740,021)

(746,771)

Project expenses

(2,017,614)

-

Share based payments

(68,192)

(173,774)

Other expenses

(67,250)

(42,127)

(Loss) before income tax

(1,244,305)

(1,028,942)

Income tax benefit/(expense)

-

-

Net loss after income tax for the half year

(1,244,305)

(1,028,942)

(Loss) attributable to members of CAP-XX Limited

(1,244,305)

(1,028,942)

Loss per share attributable to the ordinary equity holders of the company

Cents

Cents

Basic loss per share

(0.28)

(0.32)

Diluted loss per share

(0.28)

(0.32)

Consolidated

2020

2019

Currency: Australian Dollars

$

$

Loss for the half year

(1,244,305)

(1,028,942)

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Exchange differences on translation of foreign operations

102,943

(13,919)

Other comprehensive loss for the half year, net of tax

102,943

(13,919)

Total comprehensive loss for the half year attributable to owners of CAP-XX Limited

(1,141,362)

(1,042,861)

Consolidated

31 December 2020

31 December 2019

Currency: Australian Dollars

$

$

ASSETS

Current assets

Cash and cash equivalents

469,472

1,751,424

Receivables

455,454

466,152

Inventories

1,041,169

1,503,159

Other

5,698,264

1,629,358

Total current assets

7,664,359

5,350,093

Non-current assets

Property, plant and equipment

2,624,744

1,110,317

Right of Use Assets

3,059,608

-

Other

204,808

236,507

Total non-current assets

5,889,160

1,346,824

TOTAL ASSETS

13,553,519

6,696,917

LIABILITIES

Current liabilities

Payables

1,489,078

546,399

Lease Liabilities

268,051

-

Advance payments - Current

1,442,900

Provisions

1,401,354

833,431

Total current liabilities

4,601,383

1,379,830

Non-current liabilities

Lease Liabilities

2,241,620

Provisions

53,332

41,738

Total non-current liabilities

2,294,952

41,738

TOTAL LIABILITIES

6,896,335

1,421,568

NET ASSETS

6,657,184

5,275,349

EQUITY

Contributed equity

108,153,306

101,915,665

Reserves

6,461,120

6,192,848

Accumulated losses

(107,957,242)

(102,833,164)

TOTAL EQUITY

6,657,184

5,275,349

Consolidated

Contributed

Equity

$

Reserve

$

Accumulated losses

$

Total

$

Balance at 1 July 2019

101,915,665

6,032,993

(101,804,222)

6,144,436

Loss for the period as reported in the 2019 financial statements

- 

(4,908,715)

(4,908,715)

Other comprehensive loss

- 

(22,894)

-

(22,894)

Transactions with owners in their capacity as owners:

Contributions of equity, net of transaction costs and tax

6,094,441

6,094,441

Employee share options ‑ value of employee services

-

279,886

-

279,886

Balance at 30 June 2020

108,010,106

6,289,985

(106,712,937)

 7,587,154

Profit for the period as reported in the 2020 interim financial statements

- 

-

(1,244,305)

(1,244,305)

Other comprehensive income

- 

102,943

-

102,943

Transactions with owners in their capacity as owners:

Contributions of equity, net of transaction costs and tax

143,200

 -

 -

143,200

Employee share options ‑ value of employee services

-

68,192

-

68,192

Balance at 31 December 2020

108,153,306

6,461,120

 (107,957,242)

6,657,184

Consolidated

Half-year 2020

Half-year 2019

Currency: Australian Dollars

$

$

Cash flows from operating activities

Receipts from customers (inclusive of goods and services tax)

2,460,431

1,913,899

Payments to suppliers and employees (inclusive of goods and services tax)

(5,397,193)

(3,642,199)

(2,936,762)

(1,728,300)

Tax credit received

-

1,592,042

Interest received

501

9,964

Net cash (outflow) from operating activities

(2,936,261)

(126,294)

Cash flows from investing activities

Payments for property, plant and equipment

(1,178,792)

(537,519)

Net cash (outflow) from investing activities

(1,178,792)

(537,519)

Cash flows from financing activities

Proceeds from issue of shares

143,200

-

Advance payments

1,442,900

-

Net cash inflow from financing activities

1,586,100

-

Net (decrease) in cash and cash equivalents

(2,528,953)

(663,813)

Cash and cash equivalents at the beginning of the half-year

2,895,482

2,429,156

Effects of exchange rate changes on cash and cash equivalents

102,943

(13,919)

Cash and cash equivalents at the end of the half-year

469,472

1,751,424