Dissemination of a Regulatory Announcement that contains inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.

26 January 2023

CAP-XX Limited

("CAP-XX" or the "Company")

Trading and Operational Update

CAP-XX Limited, a world leader in the design and manufacture of supercapacitors and energy management systems, provides the following trading and operational update in relation to the current financial year:

·      Total revenue for the half year to 31 December 2022 down 34% to A$1.6m on corresponding prior half-year (H1 2021: A$2.4m).

·    Product sales down 40% on corresponding half-year. The Company does not believe it has not lost any significant business to competitors.

·      Sales order book at 31 December 2022 was 47% higher than at beginning of July 2022 and 85% higher than at August 2022.

·    Sales order book has increased 41% since 31 December 2022.  Sales pipeline continues to increase - now in excess of US$65 million p.a.

·    Performance of Seven Hills production continues to improve with reject rates reducing by nine percentage points compared to the previous period.

·    Adjusted EBITDA* for the half year expected to be a loss of A$966k (H1 2021: Adjusted EBITDA loss A$305k).

·      Cash reserves as at 31 December 2022 were A$0.5 million with no debt. In addition, the Company has an unused line of credit of approximately A$1.7 million ensuring current funding is sufficient for the Company's expected needs.

·    The interim results will be released on 28 February 2023.

* Adjusted to exclude legal expenses for patent infringement and the amortisation of share-based payment expenses.

As foreshadowed at the time of the full year results statement and in the subsequent AGM statement, the current financial year started slower than the prior half-year due to a combination of market influences. Whilst the Board had been hopeful that the impact of these market influences would reduce, this has not occurred with a consequential impact on CAP-XX's revenues.  These market influences include: industry wide supply chain bottlenecks, especially in China, a global shortage of integrated circuits, which is affecting our customer order volumes, and increasing pessimism over the state of the global economy. The flow-on effects of factory closures in Asia led to delays in shipments of critical components and has, in turn, resulted in delayed sales of supercapacitors. Further, concerns about the ongoing war in Ukraine, rising interest rates and energy costs, and the threat of recession have also caused some customers to reduce their purchase orders as they look to reduce their inventory levels and to delay new product launches.  For CAP-XX, the greatest falls have been in the demand from the Asian/APAC region for cylindrical supercapacitors.

Our market intelligence suggests that the drop in our H1 sales is in line with the experience of our direct competitors' and other component suppliers in the same and related markets. To our knowledge, no significant business has been lost to a competitor during this period.

Following a review of the sales for the first half of the financial year and the outlook for the second half, the Board is now of the view that the revenue for the full financial year ending 30 June 2023 will be significantly below current market forecasts, and that as a result, the Company will be loss making at the adjusted EBITDA level.

Conversely, the CAP-XX sales pipeline continues to grow strongly and is currently over US$65 million.  The timing of when these opportunities will translate into meaningful sales is dependent on many factors outside of our control. On average, we are finding that sales conversion for small projects or projects for smaller companies typically takes between 12 to 18 months, while larger volume projects or larger customers are typically 24 to 36 months. In the case of automotive and medical projects, these times can stretch to over five years. Factors which drive these timescales include: the customer's anticipated outlook for end-market demand and their availability of resources, external approvals and end-customer related engineering variations. The Board is confident that the second half performance will be significantly better than the first half based on: CAP-XX's order intake over Christmas and New Year steadily increasing in what is a historically slow period for orders; some customers beginning to bring delivery dates forward; and new projects moving into production in the second half of the year. In addition, there are signs of a recovery in the cylindrical supercapacitor supply chain and improving orders for cylindrical supercapacitors.

Anthony Kongats, CEO of CAP-XX said:

"The first half of the year has been very challenging, but the Board is confident that CAP-XX will see a rebound in the second half, based on recent customer orders received and design wins. Our operational performance continues to improve and we look forward to a much stronger sales performance as projects won move into the production phase in the second half of the year against the background of a continuing tough market."

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 Joint Broker)

David Hart / Piers Shimwell (Corporate Finance)                          +44 (0) 20 3328 5656

Tony Quirke (Sales and Corporate Broking)

Cenkos Securities plc (Joint Broker)

Neil McDonald / Pete Lynch                                                        +44 (0) 13 1220 6939

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