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3.45p -0.1  -2.8%

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Sector
Technology
Size
Micro Cap
Market Cap £15.6m
Enterprise Value £14.7m
Revenue £1.93m
Position in Universe 1438th / 1816

CAP-XX Limited - Audited results for the year ended 30 June 2019

Fri 8th November, 2019 7:00am
RNS Number : 7664S
CAP-XX Limited
08 November 2019
 

 

 

 

 

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

 

 

8 November 2019

 

CAP-XX Limited

("CAP-XX" the "Company")

 

Audited results for the year ended 30 June 2019

 

CAP-XX Limited, a world leader in the design and manufacture of supercapacitors and energy management systems, is pleased to announce its audited results for the year ended 30 June 2019.

 

Key highlights

 

·   Sales revenue of A$3.2 million (2018: A$4.9 million).

·  Reported numbers include additional A$0.2 million in FY 2019 Cost of Goods Sold relating to prior year adjustment. Please refer to Note 1 for further details.

·  EBITDA loss of A$1.8 million (2018: loss of A$1.5 million). After exclusion of prior year adjustment, EBITDA loss was A$1.6 million (2018: loss of A$1.6 million).*

· Operational expenditure of A$5.4 million (2018: A$6.0 million) is down year-on-year due to realisation of operational initiatives and efficiencies.

·  CAP-XX's R&D expenditure, defined as eligible research and development expenditure for Australian Taxation office purposes of A$3.7 million (2018: A$3.7 million) associated with development and continuous process improvement, consistent with prior year.

·   New non-exclusive license agreements signed with TDK Corporation and Cornell Dubilier Electronics Corporation for the use of certain of CAP-XX's patents. The license payments were received in FY 2019. Additional licensing deals remain in various stages of negotiation.

·   Cylindrical cell supercapacitor revenue continues to grow, with first quarter sales in FY 2020 exceeding the result for the FY 2019 full year.

·   Cash reserves at 30 June 2019 were A$2.4 million (2018: A$1.9 million)  before receipt of R&D credit.

* All EBITDA presentations exclude amortisation of employee share options.

 

Anthony Kongats, CEO of CAP-XX said:

"It has been a very busy year, and ultimately a successful year for the Company. We look forward to making further announcements regarding the Company's progress in due course."

 

Electronic copies of CAP-XX's audited annual report and accounts for the year ended 30 June 2019 will shortly be available from the Company's website: www.cap-xx.com.

 

For further information contact:

 

CAP-XX Limited

Anthony Kongats (Chief Executive Officer)                                 +61 (0) 2 9428 0139

 

Kreab (Financial PR)

Robert Speed                                                                            +44 (0) 20 7074 1800

 

Allenby Capital (Nominated Adviser and Broker

David Hart / Alex Brearley                                                         +44 (0) 20 3328 5656

 

 

More information is available at www.cap-xx.com

 

Notes to Editors:

 

CAP-XX (LSE: CPX) is a world leader in the design and manufacture of thin, flat supercapacitors and energy management systems used in portable and small-scale electronic devices, and to an increasing extent, in larger applications such as automotive and renewable energy. The unique feature of CAP-XX supercapacitors is their very high power density and high energy storage capacity in a space-efficient prismatic package. These attributes are essential in power-hungry consumer and industrial electronics, and deliver similar benefits in automotive and other transportation applications. For more information about CAP-XX, visit www.cap-xx.com

 

 

 

 

Chairman's statement

The Company is in advanced discussions to enhance further its supercapacitor offering and has undertaken a substantial amount of work in this regard. Whilst this process has not been concluded, the Board is hopeful of a positive outcome and the Company will provide a further update when appropriate.

 

CAP-XX continues to see strong interest in its supercapacitor products and intellectual property.  This has been driven by a combination of our own direct sales activities, the activities of our established licensees and a growing market awareness of the advantages of supercapacitor-enabled devices. Over the past twelve months, we have made good progress towards achieving our objectives, despite strong headwinds from global uncertainty around free trade and the UK's membership of the European Union. We have entered the current financial year with a strong pipeline of enquiries and a strengthened portfolio of licensing agreements.

 

The results for FY 2019 contain an adjustment relating to a restatement in prior periods that occurred to accurately record work in progress costs in inventory. The understatement of work in progress costs was due to these previously being expensed rather than capitalised as inventory. This resulted in the Cost of Goods Sold being misstated in both FY 2018 and FY 2017, with a corrective adjustment being processed in FY 2019. The resultant impact is A$183,299 within the Cost of Goods Sold in the FY 2019 results. A full explanation of this adjustment can be found in the Notes to the Financial Statements at Note 1 (aa). The impact of this adjustment needs to be taken into account when analysing year-on-year financial performance.

 

Total sales revenue for the year to 30 June 2019 was A$3.2million (2018: A$4.9 million), which represents a 35% year-on-year decrease. The major factor underlying this decrease was the last tranche of the "up-front" component of the AVX license being received in FY 2018. The royalty component of the AVX license will continue for the life of the patents covered by this non-exclusive license. The EBITDA result for the year to 30 June 2019 was a loss of A$1.8 million (2018: loss of A$1.5 million), which excludes the amortisation of share based payment expenses and does not take into account the prior period related Cost of Goods Sold adjustment, as highlighted above (refer to Note 7).

 

Royalties from licensees continue to grow with the Murata and AVX contribution increasing by a combined 6% over the previous year, after an adjustment for an over accrual in the previous year. More recently, AVX announced the launch of its new Prizmacap supercapacitor. This product addresses the market for prismatic supercapacitors, which are larger than those offered by CAP-XX or Murata. During the year the Company completed two new non-exclusive license agreements with the TDK Corporation of Japan and Cornell-Dubilier Electronics Inc. TDK is a highly respected global manufacturer of electronic components, with sales in excess of US$13 billion and over 100,000 employees. Cornell-Dubilier is a US based privately owned capacitor manufacturer and is the largest manufacturer of power capacitors in North America. These new licensing agreements will further increase the Company's royalty revenue, protect the Company's intellectual property, and increase the adoption of this intellectual property globally and across new markets.

 

The Company is having numerous other discussions regarding further licensing opportunities which are at varying stages of progress.  Because of the complex legal nature of these arrangements it is difficult to forecast when these discussions will be concluded.   Given the ongoing progress with new licences, court actions successfully settled and the strength of the Company's intellectual property the Board remains confident in the Company's licencing strategy.

 

We continue to see a very strong pipeline of opportunities and numerous new large sales opportunities for prismatic supercapacitors going forward, despite prismatic product sales revenue being down 21% on the previous financial year. The Board believes this decline is due to global economic uncertainty, which has resulted in numerous new projects, where the Company had secured design wins, being pushed back into FY 2020. The Board is confident that the Company will see a rebound in these sales going forward. Sales of cylindrical supercapacitors grew 34% year-on-year, off a small base and are expected to continue growing with sales for the first quarter of FY 2020 having already exceeded the whole of the FY 2019 financial year. The new 3 Volt prismatic supercapacitor product is attracting significant interest especially for products using 3V coin cell batteries and new Internet of Things (IoT) products and is expected to be a significant source of revenue going forward.

 

While overall operational expenses fell 11%, the Company continued to increase spending on eligible (as defined by the Australian Taxation Office) research and product development which is specifically targeted at securing immediate design wins, enhancing the production and engineering support necessary to assist with the product development initiatives and strengthening the Company's intellectual property portfolio. Total Research and development spending increased by approximately 1% on the previous year. Included in operational expenses is A$859k (2018: A$920k) of share-based expenses associated with the granting of employee options. This expense is a non cash expense and management still believes the treatment of this type of expense is an impost for a small company attempting to motivate and incentivise staff in lieu of paying cash bonuses.

 

The Board looks forward to a strong year ahead.

 

 

  

Patrick Elliott

Chairman

 

8 November 2019

 

 

Business Review

Review of Operations and Activities

 

The adjusted EBITDA result for the year to 30 June 2019 was a loss of A$1.6 million (2018: loss of A$1.5 million).  This includes the adjustment for the restatement of prior periods highlighted in the Chairman's Statement of A$183,299 (2018: (A$89,424)) and excludes the amortisation of share based payment expenses (refer to Note 7).  Cash reserves as at 30 June 2019 were A$2.4 million which was up from A$1.9 million as at 30 June 2018, due to the capital raise that occurred in November 2018.  Not included in the FY 2019 cash reserves is the Federal Government R&D tax rebate which is expected to be approximately A$1.6 million (November 2018: A$1.6 million) with these funds expected to be received before the end of the current calendar year. 

 

The Company has incurred a taxable profit for FY 2019 of A$23,000 (FY18:$403,000). The taxable income is derived after deducting non-taxable deductive expenditure and also the eligible R&D expenditure which is reimbursed by the Government via a cash rebate after the tax return is lodged. For the financial period ended 30 June 2019, the Company will still have significant tax losses which can be utilised against future taxable income.

 

Total sales revenue for the year to 30 June 2019 was A$3.2 million (2018: A$4.9 million) which represents a 35% year-on-year decrease. The two main factors causing this decrease were the receipt of the final tranche of the "up-front" licensing payment with AVX (£750,000/ A$1,366,369) occurring in FY 2018 and products sales revenue being down 21%.  The sales pipeline remains strong and includes several new large volume opportunities, despite the production start date for several design wins being pushed back to FY 2020 due to worldwide economic concerns.

 

Operational expenditure,  decreased by 11% from A$6.0 million to A$5.4 million. The decrease in expenditure is attributable to the realisation of the operational improvements highlighted in prior financial reports, which has focussed on a reduction in operational headcount. Even though operational expenditure has decreased, R&D expenditure increased by 1%. This R&D expenditure was targeted at: product development to secure immediate design wins, product development initiatives, an increase in production capacity and the commissioning and streamlining of production processes. Production reject rates have steadily improved throughout the year. There has also been an increase in overseas legal expenditure associated with pursuing patent infringement cases, in North America, with the potential benefit to be realised via additional licensing and royalty revenue. The Board believes that the license agreement with Cornell-Dubilier Electronics in FY 2019 demonstrates of the merits of pursuing such cases. 

 

During FY 2019, the Company signed new non-exclusive license agreements with the TDK Corporation of Japan (TDK) and Cornell-Dubilier Electronics Inc of USA (CDE), which contain royalty rates in line with those agreed with Murata and AVX. The Board believes that the addition of TDK and CDE will further increase the Company's royalty revenue and increase the adoption of CAP-XX's intellectual property globally and across new markets, while providing further evidence to customers, competitors and investors of the importance of CAP-XX's intellectual property.

 

During the financial year, the major R&D and new product effort was on the 3V prismatic supercapacitor technology. The 3V project is progressing well and the Board is optimistic that shipments will start before the end of 2019. The Company also continued to invest significant resources in redesigning products and processes to increase sales, reduce manufacturing costs and to improve product performance.

 

Business Environment

 

The Board believes that CAP-XX's technology provides a competitive advantage over existing supercapacitor manufacturers, such as Maxwell Technologies, Ioxus, Nippon Chemicon Corporation and other Chinese and Korean competitors. While the Board has identified other possible competitors, the Board believes that these other companies are unable to match the CAP-XX technology in terms of thinness, power density, energy density and reliability. Most of the Company's competitors only manufacture higher-capacity cylindrical cells used in large package modules and focus on applications where the combination of thinness, energy density and power density are not important considerations for the customer. These competitor products usually prove unsuitable for the Internet of Things (IoT) markets, which is one of the areas that CAP-XX is targeting.

 

As reported previously, IoT applications, one of the fastest growing segments of the electronics market, provide one of the greatest opportunities for CAP-XX's products.  Driven by customer requests, manufacturers are constantly adding to the functions and applications available on IoT enabled devices. This means that power management continues to be an increasingly important consideration. The other important factor is size, as devices have tended to become smaller whilst their electrical power demands have increased. The Company has been successful in winning new business from a range of these markets, such as ABB industrial actuators, E-Ink displays, Itron smartmeters, Ingenico POS terminals, Honeywell scanners, Thales systems, Roche wearable pumps for diabetics, Turck electronic locks, VW dashboards and Yamaha sound systems.

 

In the past, CAP-XX has faced competition in various markets from cheaper cylindrical supercapacitors where our thin form factor, high power and long life are not valued as highly as lower initial cost components from competitors. To counteract this, the Company released a range of cylindrical cells. Modest sales revenue for these products was first recorded during FY 2018. In FY 2019 these sales grew at 34% on a year on year basis. Pleasingly, revenues for these products in the first quarter of FY 2020 have already exceeded those in the whole of FY 2019. Several large volume opportunities are still being evaluated by existing customers that are currently utilising alternative cylindrical cells.

 

Automotive applications such as truckStart, Stop-Start systems, regenerative energy capture or KERS (Kinetic Energy Recovery Systems), distributed power, hybrid electric vehicles and electric vehicles still present substantial opportunities for large supercapacitors. A number of CAP-XX's competitors are active in these markets, and the Board believes that the Company has significant advantages over the competition in certain applications. However, because of the significant resources that each project requires and the long time lag between product evaluation and mass production, the Board has taken the decision to focus the Company's resources on IoT applications and just a small number of key automotive projects and take a lower risk, longer-term, more patient approach to these opportunities for large supercapacitors.

 

 

Opportunities

 

The Board expects royalty income from CAP-XX's licensees to grow in the coming years, as more consumer applications adopt supercapacitor technology.

 

A significant additional benefit of these licencing agreements is that they validate CAP-XX's technology leadership in the field of supercapacitors and energy storage, and the potential for supercapacitors as a mainstream consumer electronics technology. Our licensees' product lines and sales activities are also increasing our exposure to markets and customers that were previously beyond the Company's reach.  Association with companies such as Murata, AVX and TDK is also helping CAP-XX gain recognition, win acceptance for its supercapacitors, and reduce misconceptions about the price and performance of supercapacitors.  It is also important to note that the strategy of these companies is to offer product ranges targeted at certain end markets. As such, none of them meet the product type or size requirements for all markets and all applications, leaving room for CAP-XX to supply these other markets directly using products made by its contract manufacturers.

 

As a result of these licencing agreements, there are several additional opportunities for the Company to pursue additional licencing arrangements. Some of these have and may require the Company to enforce its patent rights through court action.

 

Separately, the overall direct sales pipeline for CAP-XX supercapacitors continues to be large in quantum and varied in terms of the targeted markets. The key target markets remain similar to the previous year, with IoT wearables, health, automotive, security, metering and energy harvesting having the most appeal and presenting the largest volume opportunities.

 

Our customers' markets are constantly evolving as new products and technologies threaten the incumbents. In this environment, CAP-XX needs to always remain alert and be flexible to changing business conditions and market needs. This creates opportunities to offer products that address what our markets want.

 

CAP-XX is continuing to refine the products that it offers for the IoT, portable electronics and other markets. The Company has already introduced its Thinline supercapacitors to address the space-constrained needs of many IoT products. In April 2018, the Company announced that it was developing what will be the industry's first 3 Volt (3V) thin prismatic supercapacitor. The development of the 3V product has been targeted to meet demand for small, inexpensive, energy efficient power solutions for thin wearables, key FOBs and other IoT devices, especially those using 3 Volt coin cell lithium ion batteries such as the CR2032 battery. The Company is on track for production to start in late 2019.

 

In the future, there is an opportunity to migrate this same 3V technology into larger prismatic supercapacitors, automotive modules and other products for high-energy, high-power applications.

 

CAP-XX's strong environmental credentials have been recognised by the London Stock Exchange which has included the Company in its first Green Economy classification. 

 

As already noted, CAP-XX is concentrating on a small number of automotive opportunities. To further increase the Company's likelihood of success, the Board may pursue a strategy of partnering with automotive and military Tier-1/Tier-2 suppliers through either a new license agreement or a joint venture to supply the automotive markets. The Board believes that such partnerships will be beneficial for all parties involved.

  

Strategies for Growth

  

The Company's immediate goal is to increase licencing income (including royalty income) and product sales from IoT applications.

 

The agreements with TDK and CDE and the increase in revenue from Murata and AVX are further endorsements of the Company's strategy to develop substantial and recurring income from its intellectual property. Several other license agreements are at differing stages of negotiation

 

It is important that the Company is able to benefit from the large investment made over many years in building its patent portfolio. Where third parties are found to be infringing these patent rights, the Company has and will vigorously defend its rights even if this means pursuing legal action. 

 

Given the increasing levels of market interest in CAP-XX's technology and its high-performance supercapacitors, the Company believes that the IoT market, in particular, offers significant opportunities for growth and to reach the immediate strategic objective of CAP-XX operating on a cash break-even basis.

 

The Company continues to engage in discussions aimed at securing business with a significant number of global original equipment manufacturers (OEMs). CAP-XX is strengthening its relationships with these organisations and has regular engineering meetings with design teams, manufacturing groups and contract manufacturers. The Company is unable to comment on specific clients, but the Board is pleased with overall progress and is confident that the available market for supercapacitors is increasing as manufacturers become familiar with the technology.

 

The Company will continue to monitor new opportunities to increase its product offering, both through its current distributors and via direct sales to customers. These offerings may take the form of complementary energy storage devices and modules. The Company is also increasing the size of its own sales force and adding new distributors to ensure that global coverage and penetration is maximised.

 

 

Research and Development

 

The markets in which the Company operates are competitive and are characterised by rapid technological change. CAP-XX has a strong competitive position in prismatic supercapacitors in all of its target markets as a result of its capability to produce supercapacitors with a high energy and power density in a small conveniently sized flat package. CAP-XX's devices are also lightweight, work over a broad temperature range and have an operating lifetime measured in years.

 

To stay ahead of the competition, the Company is developing a strong pipeline of new products to follow the 3V products already discussed. CAP-XX's R&D efforts are focused on a mix of short, medium and long-term opportunities, covering new products, cost reductions and improved product performance. CAP-XX has a research facility in Sydney, Australia, where a team of 18 engineers and scientists work to maintain CAP-XX's leading technology position in electrodes, separators and electrolyte materials and their assembly into supercapacitor devices. During 2019, significant progress has been made in a number of key areas including: 3V technology; reducing the resistance of cells; improving the life of cells; developing new packaging concepts; reducing the cost per cell and developing new electronics to optimise the performance of the Company's modules. CAP-XX has also signed numerous collaboration agreements with leading research institutions, whilst the Company's Scientific Advisory Board provides CAP-XX with clear direction on commercially relevant technologies for its ongoing R&D programme.

 

The Company's success depends on its ability to protect and prevent any infringements of its intellectual property. To protect this important asset, the Company has considerable intellectual property embodied in its patents covering the design, manufacture and use of its high performance supercapacitors. The CAP-XX patent portfolio currently consists of 11 patent families with 31 granted national patents with an additional six applications pending in various jurisdictions. The Company's intellectual property strategy has been to build value by focusing on opportunities to capture market share and exclude competition with an IP portfolio capable of generating licensing revenue. The Directors believe that comprehensive embodiments and interlocking patent groups, combined with a 'quick to file, quick to abandon' policy, have given the Company a strong and focused IP portfolio.

 

Outlook

 

The major short-term focus for CAP-XX is to reach cash break-even position as soon as possible, through increased product sales and the adoption of the Company's intellectual property in key target markets through future license deals and joint ventures. Although much has been achieved in the past, the Company expects to see additional progress over the next twelve months and beyond.

        

 

 

 

 

CAP-XX Limited

Statement of profit or loss

For the year ended 30 June 2019

 

 

Consolidated

 

 

 

 

 

 

2019

 

         2018

         (restated)

Currency: Australian Dollars

Notes

$

          $

 

 

 

 

Revenue from continuing operations

2

3,204,551

4,905,687

Cost of sales *

3

(1,441,927)

(2,059,797)

Gross Profit

 

1,762,624

2,845,890

 

 

 

 

Other revenue

2

45,303

47,260

Other income

4

1,600,033

1,525,419

 

 

 

 

General and administrative expenses

 

(2,084,468)

(1,915,080)

Process and engineering expenses

 

(914,543)

(1,768,046)

Selling and marketing expenses

 

(743,678)

(736,663)

Research and development expenses

 

(1,547,361)

(1,482,894)

Share based payments expense

 

(859,483)

(920,228)

Other expenses

5

(71,822)

(128,165)

Loss before income tax

 

(2,813,395)

(2,532,507)

 

 

 

 

Income tax benefit

 

-

-

 

 

 

 

Net loss for the year

 

(2,813,395)

(2,532,507)

 

 

 

 

Loss attributable to owners of CAP-XX Limited

 

(2,813,395)

(2,532,507)

 

 

 

 

Earnings per share for loss attributable to the ordinary equity holders of the Company

 

Cents

Cents

 

Basic loss per share

6

(0.9)

(0.8)

 

Diluted loss per share

6

(0.9)

(0.8)

 

           

 

*FY19 includes A$183,299 relating to an adjustment in previous periods. Please see Note 1

 

 


CAP-XX Limited

Statement of comprehensive income

For the year ended 30 June 2019

 

 

Consolidated

 

 

 

 

 

 

 

 

2019

 

2018

(restated)

 

Currency: Australian Dollars

Notes

$

$

 

Loss for the year

 

(2,813,395)

(2,532,507)

 

Other comprehensive income

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

(38,660)

(33,031)

 

Other comprehensive loss for the year, net of tax

 

         (38,660)

         (33,031)

 

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

 

    (2,852,055)

    (2,565,538)

 

 

 

 

CAP-XX Limited

Statement of financial position

As at 30 June 2019

 

 

Consolidated

 

 

 

 

 

 

June 30, 2019

 

 

June 30, 2018

(restated)

 

Currency: Australian Dollars

Notes

       $

$

 

 

 

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

 

2,429,156

1,911,346

Receivables

 

616,219

   823,090

Inventories

1

1,940,171

1,404,205

Other

 

1,838,662

1,784,384

Total current assets

 

6,824,208

5,923,025

 

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

 

679,336

  369,779

Other

 

236,507

236,507

Total non-current assets

 

915,843

606,286

 

 

 

 

Total assets

 

7,740,051

6,732,481

 

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Payables

 

746,082

1,144,289

Provisions

 

796,695

760,491

Total current liabilities

 

1,542,777

1,904,780

 

 

 

 

Non-current liabilities

 

 

 

Provisions

 

52,838

41,296

Total non-current liabilities

 

52,838

41,296

 

 

 

 

Total liabilities

 

1,595,615

1,946,076

 

 

 

 

Net assets

 

6,144,436

4,786,405

 

 

 

 

 

 

 

 

EQUITY

 

 

 

Contributed equity

 

 101,915,665

98,556,062

Reserves

  

     6,032,993

5,212,170

Accumulated losses

 

(101,804,222)

(98,990,827)

TOTAL EQUITY

 

     6,144,436

4,786,405

 

 

 

 

Statement of cash flows

For the year ended 30 June 2019

 

 

 

Consolidated

 

 

 

 

 

 

   2019

2018

Currency: Australian Dollars

 

  $

$

 

 

 

 

Cash flows from operating activities

 

 

 

Receipts from customers (inclusive of goods and services tax)

 

3,429,190

4,546,491

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

 

(7,603,198)

(7,919,787)

 

 

(4,174,008)

(3,373,296)

Tax credit received

 

1,596,538

  1,551,483

Grants Received

 

50,918

-

Interest received

 

45,303

47,260

Net cash (outflow) from operating activities

 

(2,481,249)

(1,773,553)

 

 

 

 

Cash flows from investing activities

 

 

 

Payments for property, plant and equipment

 

(312,884)

(385,205)

Net cash (outflow) from investing activities

 

(312,884)

(385,205)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issue of shares (net of costs)

 

3,350,603

221,343

Net cash inflow from financing activities

 

3,350,603

221,343

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

556,470

(1,937,415)

Cash and cash equivalents at the beginning of the financial year

 

1,911,346

3,881,792

Effects of exchange rate changes on cash and cash equivalents

 

(38,660)

 (33,031)

Cash and cash equivalents at the end of the financial year

 

 

2,429,156

1,911,346

 

 

Notes to the financial statements

 

Basis of preparation

The financial information included in this announcement does not constitute statutory accounts within the meaning of the Australian Corporations Act 2001.  Whilst the financial information has been computed in accordance with Australian equivalents to International Financial Reporting standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001, this announcement does not itself contain sufficient information to comply with those requirements.

 

 

Note 1

 

During the preparation of the current year annual report the following error and reclassification was identified:

 

Understatement of inventories

An adjustment has been made to the value of the Group's inventory balances recorded in previous periods due to an understatement of work in progress costs which were incorrectly expensed rather than capitalised as inventories. This resulted in the cost of sales expense being misstated by $89,424 in the year ended 30 June 2018 and misstated by $93,875 in the year ended 30 June 2017. The closing balance of inventories was misstated in both years by the equivalent amount.

 

This error has been corrected by restating each of the affected financial statement line items for the prior period as detailed below.

 

Reclassification of eligible research and development expenditure from cost of sales to operating expenses   

A reclassification of the prior period cost of sales expense and process and engineering expenses has been processed in the current period financial statements in order to more accurately reflect raw materials used for research and development purposes rather than sales to customers in the ordinary course of business.

 

The reclassifications above had no impact on the reported results or the financial position of the Group but the impact of reclassifying the affected financial statement line items for the prior period are detailed below.

 

Extracts, being only those line items affected, are disclosed below:

 

Consolidated Statement of profit or loss

 

 

Consolidated

 

 

 

2018

 

 

 

2018

 

Extract

 

Reported

 

Adjustment

 

Restated

 

 

 

$

 

       $

 

  $

 

Expenses

 

 

 

 

 

 

 

 

Cost of Sales

 

(2,704,077)

 

644,280

 

(2,059,797)

 

Process and engineering expenses

 

(1,213,190)

 

(554,856)

 

               (1,768,046)  

 

Loss before income tax

 

 

(2,621,931)

 

89,424

 

(2,532,507)

 

 

 

 

 

 

 

 

 

Income tax benefit

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

Net loss for the year

 

(2,621,931)

 

89,424

 

(2,532,507)

 

 

 

 

 

 

 

 

 

Loss attributable to the owners of CAP-XX Limited

 

(2,621,931)

 

89,424

 

(2,532,507)

 

 

 

 

 

 

 

 

 

 

 

Cents Reported

 

Adjustment

 

Cents

Restated

 

 

 

 

 

 

 

Earnings per share for (loss) attributable to the ordinary equity holders of the Company

 

 

 

 

 

 

Basic earnings per share

 

(0.9)

 

0.1

 

(0.8)

Diluted earnings per share

 

(0.9)

 

0.1

 

(0.8)

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of comprehensive income

 

 

Consolidated

 

 

2018

 

 

 

2018

Extract

 

Reported

 

Adjustment

 

Restated

 

 

$

 

       $

 

 $

Loss for the year

 

 

(2,621,931)

 

89,424

 

(2,532,507)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(2,654,962)

 

89,424

 

(2,565,538)

 

 

 

 

 

 

 

 

 

Consolidated Statement of financial position at the beginning of the earliest comparative period - 1 July 2017          

 

 

Consolidated

Extract

   1/07/2017

    Reported

Adjustment

1/07/2017

Restated

Current assets

$

        $

   $

Total current assets

7,298,883

93,875

7,392,758

 

 

 

 

Total assets

7,905,169

93,875

7,999,044

 

 

 

 

Net assets

6,116,497

93,875

6,210,372

 

 

 

 

Equity

 

 

 

Accumulated losses

(96,552,195)

93,875

(96,458,320)

Total equity

6,116,497

93,875

6,210,372

 

 

Consolidated Statement of financial position at the end of the earliest comparative period - 30 June 2018

               

 

Consolidated

Extract

30/06/2018

Reported

Adjustment

30/06/2018

Restated

Current assets

     $

         $

    $

Total current assets

      5,739,726

183,299

          5,923,025

 

 

 

 

Total assets

      6,549,182

183,299

      6,732,481

 

 

 

 

 

 

Net assets

     4,603,106

183,299

       4,786,405

 

 

 

 

Equity

 

 

 

Accumulated losses

(99,174,126)

183,299

   (98,990,827)

Total equity

      4,603,106

183,299

      4,786,405

 

  

Expenses

Loss before income tax includes the following specific expenses:

 

Consolidated

 

2018

Reported

Adjustment

2018

Restated

Cost of sales of goods

$

$

$

Direct materials and labour

2,163,484

(644,280)

1,519,204

Indirect manufacturing expenses

   540,593

-

   540,593

 

Total cost of sale of goods

 

2,704,077

 

(644,280)

 

2,059,797

 

Current assets - Inventories (as restated and correctly reported in note 11 of the annual report and accounts for the year ended 30 June 2019)          

 

 

Consolidated

 

2018

Reported

        $

Adjustment

 

           $

2018

Restated

       $

Raw materials and stores - net realisable value

698,042

-

698,042

Work in progress - net realisable value

-

183,299

183,299

Finished goods - net realisable value

522,864

-

522,864

 

                         

1,220,906

 

183,299

 

1,404,205

 

 

 

 

 

 

Note 2       Revenue

 

Consolidated

 

 

2019

2018

 

 

$

$

 

 

 

 

Sale of Goods

  

2,127,926

2,690,617

License Fees & Royalties

 

1,076,625

2,215,070

 

 

3,204,551

4,905,687

 

 

 

 

Other revenue

 

 

 

Interest

 

45,303

47,260

 

 

45,303

47,260

         

 

 

Note 3     Cost of Sale of Goods

 

 

 

 

 

 

 

2019

 

2018

(restated)

 

 

$

$

 

 

 

 

Direct materials and labour *

  

1,262,460

1,519,204

Indirect manufacturing expenses

 

180,567

540,591

 

 

1,441,927

2,059,797

* FY19 includes $183,299 relating to a prior year adjustment

 

 

 

 

 

 

 

             

 

 

Note 4         Other income

 

Consolidated

 

 

2019

2018

 

 

$

$

Foreign Exchange Gains - (net)

R&D Tax Incentive

 

                         

8,995

1,540,119

-

1,525,419

Miscellaneous Income

 

50,919

-

 

 

1,600,033

1,525,419

 

Note 5         Other Expenses

 

 

 

 

2019

2018

 

 

 

$

$

 

 

 

 

 

 

Provision for Withholding Tax Diminution

 

48,448

110,755

Provision for expected credit loss

 

         17,567

-

Provision for make good on premises

 

5,807

   5,665

   Foreign Exchange Loss

 

-

11,745

 

 

71,822

128,165

Note 6        Loss per share

 

 

 

 

Consolidated

 

 

 

2019

 

2018

(restated)

 

 

 

$

$

 

 

 

 

 

 

Net loss

 

(2,813,395)

(2,532,507)

 

 

 

 

 

 

Loss per share - undiluted

 

($0.009)

($0.008)

 

 

 

 

 

 

Weighted Average Share on Issue during the year

 

315,691,940

298,191,206

 

                 

 

 

Note 7     EBITDA Calculation

 

 

 

 

2019

 

2018

(restated)

 

 

 

$

$

 

 

 

 

 

 

Net loss

 

(2,813,395)

(2,532,507)

Depreciation

 

         206,497

182,035

Share based payments

 

859,483

   920,228

   Interest Income

 

(45,303)

 

(47,260)

 

Reported EBITDA

 

Prior year Adjustment

 

Adjusted EBITDA

 

(1,792,718)

 

183,299

 

(1,609,419)

(1,477,504)

 

(89,424)

 

(1,566,928)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                 

 


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