CAP-XX Regulatory News (CPX)

Chairman's statement

Much of the Company's focus for the six months ended 31 December 2019 has been involved with the preparation, completion and delivery of the previously announced acquisition of the supercapacitor production assets of Murata. The Board is pleased to report that excellent progress has been made and that this project remains on track, with project milestones and key deliverables being achieved as per the detailed project plan. A lease has been secured on a new 3,300 sq. metre facility in Western Sydney, which will house the former Murata production lines; the first shipment of equipment left Murata's factory on schedule; and three new engineers have been recruited together with a Head of Sales for North America. The process of transition of production to the new lines remains on schedule and within budget and the Board still expects that the recommissioned production lines will be in production and shipping to customers in the first quarter of the financial year to 30 June 2021.

Whilst significant resource has been dedicated to the successful relocation of the Murata equipment, focus has not been shifted from CAP-XX's existing operations and significant progress has been made on the realisation of the Company's medium-term goals. Gross margin has again improved from the previous year in both quantum and percentage terms, due to the year-on-year increase in sales revenue, changes to the sales product mix and operational cost savings. Year-on-year sales revenue performance has been buoyed by the increase in demand for CAP-XX's cylindrical can products, coupled with increased royalty receipts from both AVX and Murata.

As was highlighted in previous statements and trading updates, the sales pipeline for both prismatic and cylindrical can supercapacitors remain at historically high levels and this has resulted in the level of unfulfilled orders as at December 2019 being up significantly from the previous year. It is also one the reasons for the 21% increase in year-on-year sales performance. Certain of the Company's customers and suppliers, especially in the Asian region, have advised that the outbreak of the coronavirus is beginning to have a negative trading impact on their businesses. Some customers who have placed orders are asking for delivery dates to be extended and their contract manufacturers have decreased production activities due to the unavailability of staff and materials. To date, the impact on the Company from the outbreak of the coronavirus has been minimal. It is still too early to forecast the shorter to medium-term financial impact on the Company, although this will become evident in the next few months of trading.

Total revenue for the six months to 31 December 2019 was A$1.9 million (2018: A$1.6 million). Both product sales and revenue generated from royalties and licenses were significantly up from the previous year. For the six-month operating period ended 31 December 2019, the EBITDA loss of A$0.8 million (2018: EBITDA loss of A$1.0 million), which excludes the amortisation of share based payment expenses, improved by A$0.2 million or 21% from the previous year and is broadly in line with management's expectations. Cash reserves as at 31 December 2019 were A$1.8 million (2018: A$4.6 million), which included the proceeds from the R&D Tax Rebate which was received in December 2019, but does not include the proceeds of the capital raising associated with the Murata transaction (net £3.42 million).  Cash reserves as at the end of February 2020 stood at A$6.4 million.

The Company continues to pursue several competitor supercapacitor organisations in potential patent infringement cases. The Company announced in July 2019 that it had completed a licence agreement with Cornell-Dubilier of the USA. The Company remains in negotiations with a number of other parties and the Board remains confident that the Company's efforts in this process will bear fruit in the short to medium term. Given the overall importance of the Murata transaction, the Board and Company have agreed that a risk benefit analysis will be undertaken on the remining patent infringement targets to ensure that the Company's resources are being prioritised towards realisable gains.

Work continues on the Company's 3 Volt prismatic supercapacitor product to adapt it to the Murata production lines and on new chemistries to further improve product life and performance. The Board remains confident that its 3 Volt prismatic supercapacitors will be a significant source of revenue going forward.

The commissioning of the Murata plant and equipment will be the Company's main focus over the next six months and the Board is confident of reporting on a successful transition when the report and accounts for the full year to 30 June 2020 are released later in the current year.

Patrick Elliott

Chairman

Consolidated

Half-year 2019

Half-year 2018

Currency: Australian Dollars

$

$

Revenue from sale of goods and services

1,932,591

1,603,484

Cost of sale of goods and services

(862,558)

(735,147)

Gross margin (loss) on sale of goods and services

1,070,033

868,337

Other revenue

9,964

9,519

Other income

941,678

884,211

General and administrative expenses

(1,205,098)

(1,067,995)

Process and engineering expenses

(478,521)

(552,131)

Selling and marketing expenses

(404,326)

(339,220)

Research and Development expenses

(746,771)

(809,812)

Share based payments

(173,774)

(567,813)

Other expenses

(42,127)

(41,468)

(Loss) before income tax

(1,028,942)

(1,616,372)

Income tax benefit/(expense)

-

-

Net loss after income tax for the half year

(1,028,942)

(1,616,372)

(Loss) attributable to members of CAP-XX Limited

(1,028,942)

(1,616,372)

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

Cents

Cents

Basic loss per share

(0.32)

(0.52)

Diluted loss per share

(0.32)

(0.52)

Consolidated

2019

2018

Currency: Australian Dollars

$

$

Loss for the half year

(1,028,942)

(1,616,372)

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Exchange differences on translation of foreign operations

(13,919)

(38,496)

Other comprehensive loss for the half year, net of tax

(13,919)

(38,496)

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

(1,042,861)

(1,654,868)

Consolidated

31 December 2019

31 December 2018

Currency: Australian Dollars

$

$

ASSETS

Current assets

Cash and cash equivalents

1,751,424

4,623,238

Receivables

466,152

327,296

Inventories

1,503,159

1,998,065

Other

1,629,358

921,106

Total current assets

5,350,093

7,869,705

Non-current assets

Property, plant and equipment

1,110,317

590,138

Other

236,507

236,507

Total non-current assets

1,346,824

826,645

TOTAL ASSETS

6,696,917

8,696,350

LIABILITIES

Current liabilities

Payables

546,399

835,112

Provisions

833,431

734,425

Total current liabilities

1,379,830

1,569,537

Non-current liabilities

Provisions

41,738

125,018

Total non-current liabilities

41,738

125,018

TOTAL LIABILITIES

1,421,568

1,694,555

NET ASSETS

5,275,349

7,001,795

EQUITY

Contributed equity

101,915,665

101,867,507

Reserves

6,192,848

5,741,487

Accumulated losses

(102,833,164)

(100,607,199)

TOTAL EQUITY

5,275,349

7,001,795

Consolidated

Contributed

Equity

$

Reserve

$

Accumulated losses

$

Total

$

Balance at 1 July 2018

98,565,062

5,212,170

(98,990,827)

4,786,405

Loss for the period as reported in the 2019 financial statements

- 

(2,813,395)

(2,813,395)

Other comprehensive loss

- 

(38,660)

-

(38,660)

Transactions with owners in their capacity as owners:

Contributions of equity, net of transaction costs and tax

3,350,603

3,350,603

Employee share options ‑ value of employee services

-

859,483

-

859,483

Balance at 30 June 2019

101,915,665

6,032,993

(101,804,222)

 6,144,436

Profit for the period as reported in the 2019 interim financial statements

- 

-

(1,028,942)

(1,028,942)

Other comprehensive income

- 

(13,919)

-

(13,919)

Transactions with owners in their capacity as owners:

Contributions of equity, net of transaction costs and tax

 -

 -

 -

-

Employee share options ‑ value of employee services

-

173,774

-

173,774

Balance at 31 December 2019

101,915,665

6,192,848

 (102,833,164)

5,275,349

Consolidated

Half-year

2019

Half-year 2018

Currency: Australian Dollars

$

$

Cash flows from operating activities

Receipts from customers (inclusive of goods and services tax)

1,913,899

2,259,627

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

(3,642,199)

(4,303,597)

(1,728,300)

(2,043,970)

Tax credit received

1,592,042

1,596,547

Interest received

9,964

9,519

Net cash (outflow) from operating activities

(126,294)

(437,904)

Cash flows from investing activities

Payments for property, plant and equipment

(537,519)

(114,153)

Net cash (outflow) from investing activities

(537,519)

(114,153)

Cash flows from financing activities

Proceeds from issue of shares

-

3,302,445

Net cash inflow from financing activities

-

3,302,445

Net (decrease) in cash and cash equivalents

(663,813)

2,750,388

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

2,429,156

1,911,346

Effects of exchange rate changes on cash and cash equivalents

(13,919)

(38,496)

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

1,751,424

4,623,238