RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2013

RNS Number : 0321B

Seeing Machines Limited

27 February 2014

 



Seeing Machines Limited

("Seeing Machines" or the "Company")

RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2013

Seeing Machines Limited (AIM:SEE)is pleased to announce its unaudited results for the six months ended 31 December 2013.

Highlights:

·    Total Revenue for the half year increased 17% to A$6,689,766 (2012: A$5,693,634);

·    Increase in gross profit of 15% to A$3,322,935 (2012: A$2,887,500) due primarily to growth in DSS sales;

·    Net loss increased by A$526,984 to A$844,903 (2012: loss of A$317,919). The loss was a result of tight cash flow ahead of the December capital raising which prevented the Company from paying for inventory that would otherwise have shipped in the first half;

·    Cash at 31 December 2013 increased to A$26,449,133 (30 June 2013: A$835,001) mainly as a result of the capital raising of A$26,169,417 completed in December 2013;

·    Order backlog at 31 December 2013 of over A$2,200,000 helping to secure future revenues;

·     DSS revenues increased by 17% to A$4,311,755 (2012: A$3,699,553) with significant new business growth derived from North America and South America.

Commenting on the Results, Seeing Machines CEO, Ken Kroeger said:

"Seeing Machines has continued to invest in extending its position in the mining and resource sector. This increased effort has helped us identify many new and exciting opportunities that are now turning into major DSS contracts. During the first half we have designed improved DSS technology that has successfully completed customer acceptance trials and been brought to market."

"Given the mining sector's emerging focus on output and efficiency and the role that DSS plays in improving driver alertness and safety, we are seeing a growing sales pipeline and new strategic opportunities.  This provides us increased confidence in the Company's performance for the full year and beyond."

For further information, please contact:

Enquiries:

Seeing Machines Limited	www.seeingmachines.com
Ken Kroeger, Managing Director and CEO	[phone] [e-mail]
James Walker, Finance Director and  CFO	[phone] [e-mail]
finnCap Ltd
Ed Frisby / Ben Thompson, Corporate Finance	[phone]
Simon Starr, Corporate Broking
Newgate Threadneedle, Investment Communications for Seeing Machines
Graham Herring	Tel: [phone] Mob: [phone] [e-mail]
Robyn McConnachie	Tel: [phone] Mob: [phone] [e-mail]

About Seeing Machines

Seeing Machines, (AIM: SEE), is an AIM-listed technology company that specialises in operator monitoring and intervention technologies and services. Its software and engineering services are used in products and applications that range from devices that improve driver safety and save lives to assessing trainees in simulators and simplifying the relationships between people and technology. Seeing Machines technology is used worldwide across the automotive, mining, transport and aviation industries; as well as many of the leading academic research groups and transportation authorities. Seeing Machines is headquartered in Australia and has offices in Tucson, Arizona and San Francisco, California. The Company counts Caterpillar, BHP Billiton, Freeport McMoran, MIT, Boeing and General Motors amongst its customers.

Directors' Report

Your directors submit their report for the half-year ended 31 December 2013.

Directors

The names of the Company's directors in office during the half-year and until the date of this report are as below.  Directors were in office for this entire period unless otherwise stated.

Terry Winters	Non-Executive Chairman
Ken Kroeger	Managing Director & CEO
David Gaul	Non-Executive Director
Alexander Zelinsky	Non-Executive Director	Resigned 15 January 2014
Michael Roberts	Non-Executive Director
Rudolph Burger	Non-Executive Director	Appointed 15 January 2014
James Walker	Executive Director & CFO	Appointed 15 January 2014

Review and results of operations

Review of the first half of the 2013 financial year

The Company achieved revenues of A$5,640,100 from the sale of goods and services and A$1,049,666 from other income resulting in total revenue for the half year to 31 December 2013 of A$6,689,766 (2012: A$5,693,634).

The first six months of trading in the 2014 financial year were a significant improvement over the corresponding period in the 2013 financial year.  This was primarily driven by significant growth in demand for its DSS products, evidenced by both the large increase in sales revenue realised in the period from this source, but also the increase in orders on hand at period end, amounting to more than A$2.2 million in value. 

The Company made a net loss of A$844,903 for the six months to 31 December 2013 compared to a net loss of A$317,919 for the period to 31 December 2012. The loss was a result of tight cash flow ahead of the raising which prevented the Company from paying for inventory that would otherwise have shipped in the first half.  In January, the company shipped the majority of the December backlog, delivering total revenues for the month of A$2.1 million.

Operational highlights for the half-year include:

·      >20% increase in sales, licensing and service income (A$5,640,100 compared to A$4,686,796 for 2012);

·      Continued growth of the DSS pipeline with new customers and expansion at existing sites;

·      Ongoing strong backlog of orders of A$2.2 million at end of first half to underpin next quarter revenues;

·      Significant capital raising of A$26.17 million was completed in December 2013;

·      Contracts were entering into with three Caterpillar mining dealerships to sell and maintain the DSS systems; and

·      Strategic agreement with Royal Beuk, a leading European coach fleet operator, for the deployment of automated Fatigue Monitoring Systems to ensure driver alertness and safeguard in long haul coaches.

Financial Results

The Company achieved revenues of A$5,640,100 (2012: A$4,686,796) from sale of goods and services and A$1,049,666 (2012: A$1,006,838) from other income resulting in revenue for the half year to 31 December 2013 of A$6,688,538 (2012: A$5,693,634).    Revenue for the half year for each of the three products; DSS, faceAPI and faceLAB, and Other Income compared to the same period last year is shown in the following table.

Product	31 December 2013 A$	31 December 2012 A$	Variance %
DSS	4,311,755	3,699,553	+17
faceLAB	817,647	693,870	+18
faceAPI	122,347	293,373	-58
Core technology integration services	388,351	0	n/a
Other income	1,049,666	1,006,838	+4
Total Revenue	6,689,766	5,693,634	+17

Cost of sales at A$2,317,165 (2012: A$1,799,296) was higher due to higher revenues and the proportionate cost was higher at 41% of revenue as compared to 38% of revenue for the corresponding period in 2012. This increase in cost of sales has resulted from the higher cost of the new ruggedised DSS version 3.1 product being produced in relatively small volumes via a bespoke manufacturing arrangement before the full, long-term outsourced manufacturer can commence production. Net expenditure for the half-year was A$5,217,505, up from A$4,212,257 for the period to 31 December 2012, reflecting the increased investment in research and development, and increased activity in DSS sales, distribution and marketing.   

Cash reserves at 31 December 2013 were A$26,449,133 compared to A$835,001 at 30 June 2013 and A$927,518 at 31 December 2012. The significant increase was due to the proceeds from the share issue completed in November and December 2013. 

Operational Highlights

DSS

DSS revenues were A$4,311,755 for the six months to 31 December 2013, reflecting a significant increase over A$3,699,553 achieved for the six months to 31 December 2012.  This was the result of the strong demand for the product range following a successful recognition of the product in the mining industry, and the Company's success in growing its customer base with a broader geographic spread.  Revenue was generated from:

·      sales of DSS units;

·      software licensing;

·      installation services;

·      maintenance and support fees;

·      field support services; and

·      DSSi information reporting services including event classification.

The Company is in the process of executing dealer agreements with the global mining centric Caterpillar dealerships.  The revenue generated in the half year did not include any revenue from these dealerships.

In addition, the Company is close to finalising a new outsourced manufacturing agreement that will see the current cost of DSS 3.1 units reduce significantly and deliver scalability of supply to meet expected demand. It is expected that most of the benefits from this relationship will be reflected in the 2014-15 financial year.

The Group continues to extend the DSS system to other markets.  DSS units installed in large road-legal transport trucks that operate on a combination of private mining roads and public highways in Australia is growing significantly. The Group also started its first long haul coach trial in Europe to expand the product offering into other sectors.  This represents an entry into a new market for the product from which we expect ongoing uptake.  The technology is also being modified for original equipment manufacturer (OEM) opportunities in the wider automotive market.

For the remainder of this financial year we will focus our energies on expansion of the DSS business through seeking to:

·     close a number of significant deals in our sales pipeline that are expected to further entrench the DSS as the superior product for the mining industry;

·     enter into more contracts with Caterpillar dealers around the world and assisting with sales through these channels;

·     order and hold sufficient inventories to ensure the backlog of outstanding orders is cleared;

·     further build the DSS team capability to support our customers in their use of the product; and

·     continue ongoing R&D aimed at keeping the technology ahead of its competitors. 

At 31 December 2013, Seeing Machines had 1,699 systems installed in haul trucks and other mining related vehicles.  This represents a 23.8% increase from 30 June 2013.  These systems were deployed in 77 customer sites in 16 countries.  The Company had an order backlog of over 156 systems at 31 December 2013 of which 147 systems were shipped during January.

faceLAB

faceLAB achieved revenue of A$817,647 (2012: A$693,870) for the six months to 31 December 2013, an increment of 18% over the six months to 31 December 2012.

faceAPI

faceAPI achieved revenue of A$122,347 (2012: A$293,373) for the six months to 31 December 2013, a decrease of 58% over the six months to 31 December 2012. 

Core technology team integration services

The wider adoption of the faceAPI developer and production licenses has created a market demand for our core technology team to provide integration services to third parties.  We expect this to continue and become a larger contributor of revenue going forward.  The company generated revenues of $388,351 from these services during the half year (2012: A$0). 

TrueField

We are in the process of reviewing our commercial licensing strategy for Truefield and in 2014 will announce the results from this review in due course.  The domain experts continue to believe that the product will have applicability beyond glaucoma in eye diseases such as Age Related Macular Degenerations and Diabetic Retinopathy.

We are continuing our R&D efforts on a new set of further improved eye gaze tracking algorithms that will be introduced across all of the Company's commercial offerings during 2014.

Summary

The Directors remain committed to delivering significant growth in shareholder value and expect revenue for the full year to 30 June 2014 to be in line with existing market expectations.

The additional capital raised over the past three months allows the Company to begin to accelerate investment, both capitalised and uncapitalised, in the areas targeted for growth.  The Company will seek to leverage its current competitive advantage in order to more rapidly scale revenues in future years. The acceleration of investment in the second half is expected to result in a reported loss before tax for this financial year.

The Company is currently mid way through the preparation and review of detailed sector specific business cases that will determine the order and timing of future plans and investments and accordingly the Company expects to provide the market with a detailed update before the end of this financial year.

The demand for DSS products and services by the mining and resource industry is substantial and with the successful ongoing roll out across the Caterpillar network we expect this to continue and underpin most of the Company's revenue and profit growth over the next two to three years.

The Company will continue to develop new markets in road transport, bus and segments where machine and plant operators face significant risk of fatigue and distraction.

Terry Winters Chairman 26 February 2014

Ken Kroeger Managing Director & CEO

Condensed Statement of Financial Position

			Consolidated
			31 DEC 2013	30 JUN 2013
AS AT 31 DECEMBER 2013		Note	A$	A$
ASSETS
CURRENT ASSETS
Cash and cash equivalents		6	26,449,133	835,001
Trade and other receivables		7	2,190,019	3,700,648
Inventories		8	2,433,936	859,343
Other current assets			79,126	91,637
TOTAL CURRENT ASSETS			31,152,214	5,486,629
NON-CURRENT ASSETS
Property, plant and equipment		9	493,276	382,052
Intangible assets		10	1,020,529	1,016,043
TOTAL NON-CURRENT ASSETS			1,513,805	1,398,095
TOTAL ASSETS			32,666,019	6,884,724
LIABILITIES
CURRENT LIABILITIES
Trade and other payables			2,462,349	2,499,882
Provisions			580,430	640,247
Deferred revenue			135,417	-
Interest bearing loans and borrowings			7,196	-
TOTAL CURRENT LIABILITIES			3,185,392	3,140,129
NON-CURRENT LIABILITIES
Provisions			128,251	10,432
Interest bearing loans and borrowings			47,196	-
TOTAL NON-CURRENT LIABILITIES			175,447	10,432
TOTAL LIABILITIES			3,360,839	3,150,561
NET ASSETS			29,305,180	3,734,163
EQUITY
Contributed equity			43,862,759	17,049,175
Treasury shares			(644,160)	-
Accumulated losses			(14,858,020)	(14,013,117)
Other reserves			944,601	698,105
TOTAL EQUITY			29,305,180	3,734,163

The above condensed statement of financial position should be read in conjunction with the accompanying notes.

Condensed Statement of Comprehensive Income

			Consolidated
			2013	2012
FOR THE HALF-YEAR ENDED 31 DECEMBER 2013		Note	A$	A$
Continuing operations
Sale of goods and license fees			4,934,042	4,114,298
Rendering of services			706,058	572,498
Revenue			5,640,100	4,686,796
Cost of Sales			(2,317,165)	(1,799,296)
Gross Profit			3,322,935	2,887,500
Other income		4	1,049,666	1,006,838
Research and development expenses			(1,411,854)	(774,711)
Distribution and marketing expenses			(1,456,115)	(1,460,829)
Occupancy and facilities expenses			(442,649)	(371,206)
Administration and support expenses			(1,906,886)	(1,535,572)
Other expenses		5	-	(69,939)
Loss before income tax			(844,903)	(317,919)
Income tax expense			-	-
Loss from continuing operations after income tax			(844,903)	(317,919)
Loss for the period			(844,903)	(317,919)
Loss attributable to equity holders of parent			(844,903)	(317,919)
Other comprehensive income - amounts maybe reclassified subsequently to profit and loss
Foreign currency translation			(1,913)	(3,520)
Other comprehensive income net of tax
Total comprehensive income			(846,816)	(321,439)
Total comprehensive income attributable to equity holders of parent			(846,816)	(321,439)
Earnings per share for profit attributable to the ordinary
equity holders of the company:
·        Basic earnings per share			(0.168)	(0.077)
·        Diluted earnings per share			(0.167)	(0.077)

The above condensed statement of comprehensive income should be read in conjunction with the accompanying notes.

Condensed Statement of Changes in Equity

			Contributed Equity	Treasury Shares	Accumulated Losses		Foreign Currency Translation Reserve	Employee Equity Benefits Reserve	Total Equity
FOR THE HALF-YEAR ENDED 31 DECEMBER 2013			A$	A$	A$		A$	A$	A$
At 1 July 2012			15,024,112	-	(14,567,460)		45,238	648,259	1,150,149
Loss for the half-year			-	-	(317,919)		-	-	(317,919)
Other comprehensive income			-	-	-		(3,520)	-	(3,520)
Total comprehensive income			-	-	(317,919)		(3,520)	-	(321,439)
Transaction with owner in their capacity as owner
Shares Issued			2,064,539	-	-		-	-	2,064,539
At 31 December 2012			17,088,651	-	(14,885,379)		41,718	648,259	2,893,249
At 1 July 2013			17,049,175	-	(14,013,117)		49,846	648,259	3,734,163
Loss for the half-year			-	-	(844,903)		-	-	(844,903)
Other comprehensive income			-	-	-		(1,913)	-	(1,913)
Total comprehensive income			-	-	(844,903)		(1,913)	-	(846,816)
Transaction with owner in their capacity as owner
Shares Issued			28,388,159	(644,160)	-		-	-	27,743,999
Capital Raising Costs			(1,574,575)	-	-		-	-	(1,574,575)
Employee Share Loan Plan			-	-	-		-	122,804	122,804
Share Options Issued			-	-	-		-	125,605	125,605
At 31 December 2013			43,862,759	(644,160)	(14,858,020)		47,933	896,668	29,305,180

The above condensed statement of changes in equity should be read in conjunction with the accompanying notes.

Condensed Statement of Cash Flows

					Consolidated
					2013		2012
	FOR THE HALF-YEAR ENDED 31 DECEMBER 2013			Note	A$		A$
	Cash flows from operating activities
	Receipts from customers				7,496,080		4,860,046
	Receipt of tax concession for research and development costs				1,045,089		-
	Payments to suppliers and employees				(9,883,815)		(6,171,125)
	Interest received				3,114		6,627
	Interest Paid				(1,197)		-
	Net cash flows used in operating activities				(1,340,729)		(1,304,452)
	Cash flows from investing activities
	Purchase of plant and equipment				(195,099)		(143,116)
	Payments for intangible assets				(37,717)		(16,415)
	Net cash flows used in investing activities				(232,816)		(159,531)
	Cash flows from financing activities
	Proceeds from issue of shares				27,576,080		1,832,414
	Cost of capital raising				(383,318)		(15,415)
	Repayment of borrowings				(3,171)		-
	Net cash flows from financing activities				27,189,591		1,816,999
	Net increase in cash and cash equivalents				25,616,045		353,016
	Net foreign exchange differences				(1,913)		(3,520)
	Cash and cash equivalents at beginning of period				835,001		578,022
	Cash and cash equivalents at end of period				26,449,133		927,518

The above condensed statement of cash flows should be read in conjunction with the accompanying notes.

 

END

 

 

IR QQLFLZLFEBBF