Seeing Machines Regulatory News (SEE)

19 Oct 2006 17:38

Seeing Machines Limited19 October 2006 19 October 2006 This announcement replaces the RNS announcement (reference 7196K) released at11.27am Thursday 19th October 2006 clarifying that all currency stated withinthe announcement is in Australian Dollars. SEEING MACHINES LIMITED ("SEEING MACHINES" OR "THE COMPANY") FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2006 (AUDITED) SEEING MACHINES LIMITED (AIM: SEE) TODAY ANNOUNCES ITS AUDITED FINANCIAL RESULTSFOR THE YEAR ENDED 30 JUNE 2006. Financial Highlights • Revenue from sale of goods up 70% to A$2,407,228 (2005: A$1, 414,903) • Total revenue (includes contract revenue and other income) increased 12% to A$3,092,854 (2005: A$2,768,162) • Net loss decreased 89% to A$135,077 (2005: A$1,228,908) through the increase in faceLAB(TM) sales and tight control over expenditure. • Cash increased to A$2,407,053 (2005: A$663,213) following successful December 2005 IPO (raised £1.65million/A$3.8m) and highest ever faceLAB(TM) sales figures of A$2,407,228 Operational Highlights • two versions of flagship faceLAB(TM) product released during the year; • significant progress on the glaucoma diagnostic device including completion of several scientific trials and clinical study; second clinical study commenced, prototype of production device and the software; • prestigious R&D award and Innovation award for the glaucoma project; • completion of the prototype driver monitoring system (for detection of fatigue) with Hella KGaA Heuck & Co; • first field trial of the Fatigue Detection System with Schlumberger Inc., a leading global oilfield services provider; • May 2006: US patent granted for the "facial image processing system" - the core technology underpinning many of the company's projects; • February 2006: US patent granted for "assessing neural function by sparse stimuli" - one of the core technology patents underpinning the glaucoma testing device; • new patent filed in November 2005 relating to robust tracking of subjects wearing eye glasses; • commencement of the faceAPI(TM) project which will make the company's key technologies available to third-party application developers for easy use and deployment in a wide variety of applications • first sales of the Noah Basketball System by Pillar Vision. Commenting on the results Nick Cerneaz, Chief Executive of Seeing Machines,said: "These tremendous results are testament to the hard work of all our peopleand the quality of the solutions that we provide to the market. The outstandingyear for faceLAB(TM) sales is a significant contributor along with very tightcontrol over expenditure. This was all achieved whilst we vigorously pursuedour R&D projects particularly the glaucoma testing device and we look forward tointroducing new, revenue earning products in the coming year." The Annual Report for Seeing Machines for 2005-2006 including the AuditedFinancial Statements is available for download from the Company websitewww.seeingmachines.com. The Annual Report will be mailed to all shareholderslater this month. Enquiries: Seeing Machines Limited Insinger de Beaufort Parkgreen Communications Nick Cerneaz, CEO Simon Fox Justine Howarth / Victoria Thomas +61 (0) 2 6125 6501 +44 (0) 20 7190 7018 +44 (0) 20 7493 3713 www.seeingmachines.com The Director's Review of Operations, Income Statement, Balance Sheet, Cash FlowStatement and Statement of Changes in Equity follow: Director's Review of Results & Operations Financial Results The financial results include the impact of the transition to A-IFRS in both thecurrent and prior years. Revenue from sale of goods was A$2,407,228, an increase of A$992,335 (70%) overthe previous year (A$1,414,903). This was an outstanding year for faceLABTMsales and the increase follows the release of version 4 of faceLAB(TM) in August2004, version 4.1 in January 2005, version 4.2 in August 2005 and the SceneCamera version in April 2006. Seeing Machines has shipped over 100 systemssince the release of version 4 in August 2004. Total revenue (also includingcontract revenue and other income) for the year was A$3,092,854, an increase ofA$324,691 (12%) over the previous year (A$2,768,162). Contract Income ofA$56,785 represents a decrease of A$67,925 from the prior year (A$124,710), andother income decreased to A$628,841 by A$599,709 due to a combination ofincreased interest income following the increase in cash balances as detailedbelow, offset by the deferral this year of government grant income relating todevelopment projects in line with accounting standards. Net expenditure for the year was A$3,227,930 down by A$769,140 on the prior year(A$3,997,069). Research and development continued to be the main area ofexpenditure as the company moved forward with the development of key projectsincluding the glaucoma diagnostic device, automotive applications in the areasof fatigue and distraction detection, faceLAB(TM) and the new faceAPI(TM) project which commenced during the year. Marketing costs including travelincreased during the year mainly in support of the faceLAB(TM) business. Thecost of goods sold increased in line with the increase in sales of thefaceLAB(TM) product. The company has capitalised certain of its development costs in line with theaccounting standards. The net loss for the year was A$135,077 a significant reduction (89%) on the netloss of A$1,228,908 for the year ended 30 June 2005. The reduction in the losswas achieved through the increase in faceLAB(TM) sales and tight control overexpenditure. The company had A$2,407,053 in cash at 30 June 2006 compared to A$663,213 at 30June 2005. The improvement in the company's cash position was due to thecapital raised in an Initial Public Offering (IPO) of the company completed inDecember 2005 and the increase in faceLAB(TM) sales. Net assets increased toA$3,913,237 at 30 June 2006 compared to A$442,817 at 30 June 2005. Thisincrease is due to increased cash and capitalised development costs and areduction in trade and other payables. faceLAB(TM) faceLAB(TM) was the company's first product and remains the flagship producttoday. Since the release of version 4 in August 2004 more than 100 new systemshave been shipped. Two releases - version 4.2 and the Scene Camera version -were made during the year ended 30 June 2006. A number of releases are plannedfor this financial year including version 5 - a major upgrade introducingsignificant new functionality for tracking specific facial features. During the year faceLAB(TM) was purchased by organisations such as the USNational Highway Transport Safety Administration (NHTSA), Daimler Chrysler,Ford, Toyota, Fiat, Australian Defence Science Technology Organisation (DSTO),University of Pennsylvania, John Hopkins University among others. Medical Devices - Glaucoma Project We have continued the focus on this key project throughout the year andcompleted a number of key milestones including validation of the scientificmethod underpinning the device in a number of scientific trials and the firstclinical trial at the Canberra Eye Hospital. Progress was made across the broad range of activities required to bring thedevice to market including: • scientific trials to confirm the underlying scientific method; • clinical studies to confirm the device in a real clinical environment; • industrial design including the first prototype of the production version of the device; • a number of iterations of the software for the device including the patient management software; • preparatory work required to submit an application for regulatory approval with the Food and Drug Administration (FDA) in the United States, the main market for the device; • marketing and branding including market research and trademark applications. The progress made during the year has been very pleasing. The iAwards wereanother positive given the hard work that has been put in and we have also beensuccessful in recruiting a number of very good people into the project. Ourstrong collaboration on this project with the Australian National UniversityResearch School of Biological Sciences continues and the efforts of Dr TedMaddess and Dr Andrew James have greatly assisted the progress that has beenmade. In March 2006 the company lodged an application for an Australian GovernmentCommercial Ready Grant to support the commercialization of the project. Thecompany was advised on the 8th of August 2006 that the grant had been awardedand on the 11th of September the contract for the grant was executed. The grantwill provide matching funding over 2 years of up to A$2.1 million. The companycompleted an earlier Biotechnology Innovation Fund (BIF) grant in February 2006. The company will vigorously progress all aspects of this project during thecoming year and aims to release the first production version of the device in2007. Automotive The past year has seen excellent progress in the automotive line of businesswhich is targeting the use of the company's core vision processing technologiesfor driver safety applications. The company successfully completed the prototype driver monitoring system (forthe detection of fatigue) with Tier 1 automotive industry supplier Hella KGaAHeuck & Co (Hella). The prototype was developed for a large European OriginalEquipment Manufacturer (OEM) and together with Hella a number of marketing andproduction studies are being undertaken to assess the optimal strategy todeliver the technology into the market. The collaboration with Hella continuestoday and we are looking at several opportunities with them to progress ourvision for driver safety products. In March the company commenced a fleet trial of its fatigue detection systemwith global oilfield services provider Schlumberger Inc. The trial has enabledus to test the technology in real world situations and the data and knowledgederived from this trial has been used to make a number of improvements that willfurther assist the development of the technology for the commercial vehiclemarket. The company and Schlumberger have recently agreed to an extension ofthe trial to enable evaluation of the improvements that have been implemented. A new product known as the Driver State Sensor Research version (DSS-R) is a byproduct of both these projects. The DSS-R is expected to be releasedcommercially in November 2006. The DSS-R is a feature rich version of thedriver monitoring and fatigue detection system with many additional raw datastreams to facilitate driver performance research efforts. The DSS-R istargeted at government, university and fleet manager multi-car fleet trials /research. In addition the company is pursing other projects in the automotive areaincluding: • a project with National ICT Australia (NICTA) researching new driver fatigue metrics based on head pose and head motion measurements (which should greatly enhance the quality & robustness of the fatigue metrics of the DSS products mentioned above) ; and • vision based collision avoidance applications as an R&D participant in the AutoCRC along with industry participants including Holden and Australian Arrow. In June 2006 the company successfully concluded an Australian Government R&DGrant project for the development of its key automotive technology. The goal ofthis project was to develop Seeing Machines' face and eye tracking technology toa level where production strength deployment in the automotive domain for thedetection of fatigue and distraction is feasible. faceAPI(TM) /SDK Seeing Machines commenced a project to package its core head, eye and facialtracking technology in an API/SDK for sale to third party developers and OEMs.This product will allow third party developers to include the company's computervision technology in their applications without requiring special engineeringservices from the company. This will greatly increase the range of commercialopportunities for the company's technology. The first commercial release offaceAPI(TM) will be made in 2007. Patents The company continued its strategy to protect its core intellectual propertythrough patents. In November 2005 the company filed a new patent application relating to therobust tracking of subjects wearing eye glasses. This will be a key patent forthe company as robust tracking of subjects wearing eye glasses is fundamental tohaving a successful solution for many real world applications particularly thosein the automotive industry. On the 9th of May 2006 the US Patent and Trademarks Office granted the companieskey patent "Facial Image Processing System". This patent is the foundationpatent for the company's core technology for head and face tracking. On the 28th of February 2006 the US Patent and Trademarks Office granted thepatent "Method and apparatus for assessing neural function by sparse stimuli".On the 26th of May 2006 IP Australia granted the equivalent Australian patent.This is the core technology underpinning the company's glaucoma diagnosticdevice. This patent is exclusively licensed from the Australian NationalUniversity. Chief Executive Officer The Company's Chief Executive Officer as at 30 June 2006 and at the date of thisreport is Dr Nick Cerneaz. Dr Cerneaz was appointed as Chief Executive Officerfrom the 5 September 2005. Tony Kinnear was Chief Executive Officer of SeeingMachines until 2 September 2005. Company Secretary The Company Secretary of the Company as at 30 June 2006 and at the date of thisreport is Belinda Burgess. Belinda has over 10 years experience as a CommercialManager of private and public corporations. She is currently Operations Managerof Seeing Machines. Prior to this, she was General Manager Commercial Servicesof a publicly listed technology company for four years. Staff Following the IPO the company has grown its staff numbers in order to progresskey projects and strengthen its financial management. At 30 June 2006 the company had 34 employees up on the 24 at 30 June 2005. Key recruits during the year included Lorrae Collins as Chief Financial Officerand Paul Day as Product Manager for the glaucoma project. The company has alsorecruited a number of very talented staff for key R&D projects despite thedifficult conditions in the local market for IT and other skills. The company has significantly improved its staff retention rate during the year. In recognition of the key role played by staff in the success of our project theBoard implemented a new Employee Share Options Scheme in June 2006. A largenumber of staff were granted options under this scheme in July 2006. Funding The company achieved a significant milestone in December 2005 with thesuccessful completion of its Initial Public Offering (IPO) and listing on theAlternative Investment Market (AIM) of the London Stock Exchange. The companyraised £1.65 million / A$3.8 million in funds that are be used primarily toprogress key projects described in this report. INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2006 30 June 2006 30 June 2005 Note* A$ A$ Sale of goods 2,407,228 1,414,903Contract Income 56,785 124,710Revenue 4(a) 2,464,013 1,539,613 Other income 4(b) 628,841 1,228,548 Change in inventories of finished goods and work in progress 4(c) (713,770) (483,775)Employee benefits expense 4(d) (1,548,728) (1,685,761)Depreciation and amortisation expense 4(e) (140,437) (158,674)Research costs written-off 4(f) 0 (592,459)Other expenses 4(g) (763,100) (1,037,958)Finance costs 4(h) (61,895) (38,442) Loss before income tax (135,077) (1,228,908) Income tax relating to operations 5 - - Loss after tax from operations attributable to members (135,077) (1,228,908) Loss per share (cents per share) 6• basic for loss for the year attributable to ordinary (0.059) (0.710) equity holders of the company• diluted for loss for the year attributed to ordinary (0.058) (0.707) equity holders of the company BALANCE SHEET AS AT 30 JUNE 2006 As at As at 30 June 2006 30 June 2005 Note* A$ A$ CURRENT ASSETSCash and cash equivalents 8(b) 2,407,053 663,213Trade and other receivables 9 639,373 292,396Inventories 10 129,370 99,099Other 11 39,381 485,718TOTAL CURRENT ASSETS 3,215,176 1,540,426 NON-CURRENT ASSETSProperty, plant and equipment 12 251,648 174,335Intangible assets 13 221,240 242,203Capitalised development costs 13 1,404,971 0Other 3,312 2,454TOTAL NON-CURRENT ASSETS 1,881,170 418,992TOTAL ASSETS 5,096,346 1,959,418 CURRENT LIABILITIESTrade and other payables 15 705,966 1,031,290Deferred revenue 408,450 10,454TOTAL CURRENT LIABILITIES 1,114,417 1,041,744 NON-CURRENT LIABILITIESInterest bearing loans and borrowings 0 471,526Provisions 16 68,693 3,331TOTAL NON-CURRENT LIABILITIES 68,693 474,857TOTAL LIABILITIES 1,183,109 1,516,601NET ASSETS 3,913,237 442,817 EQUITYContributed equity 6,528,748 3,394,946Accumulated losses (3,138,272) (3,003,195)Other reserves 522,761 51,066TOTAL EQUITY 3,913,237 442,817 CASHFLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2006 30 June 2006 30 June 2005 Note* A$ A$ CASH FLOWS FROM /(USED IN) OPERATING ACTIVITIESReceipts from customers 2,367,014 1,487,628Grants received 930,843 1,155,409Payments to suppliers and employees (2,561,378) (3,715,822)Interest received 59,168 20,879Finance costs paid (83,421) 0NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES 8(a) 712,226 (1,051,906) CASH FLOWS USED IN INVESTING ACTIVITIESPurchases of plant and equipment (179,057) (90,171)Payments for intangible assets 0 (91,652)Payments for research and development costs (1,444,768) 0NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (1,623,825) (181,823) CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings 0 (84,645)Exercise of options 41,769 0Issue of shares 3,848,550 1,099,799Costs of listing on AIM (1,234,880) 0NET CASH FLOWS FROM FINANCING ACTIVITIES 2,655,439 1,015,154 NET INCREASE IN CASH AND CASH EQUIVALENTS 1,743,840 (218,575)Cash and cash equivalents at beginning of period 663,213 881,788CASH AND CASH EQUIVALENTS AT END OF PERIOD 8(b) 2,407,053 663,213 Statement of Changes in Equity Issued Capital Accumulated Employee Total Equity Losses Equity Benefits Reserve A$ A$ A$ A$ At 1 July 2004 2,295,146 (1,774,287) 37,960 558,819 Loss for the year (1,228,908) (1,228,908)Issues of ordinary shares during the year Issue of share capital 1,099,800 1,099,800Cost of share based payment 13,106 13,106 At 30 June 2005 3,394,946 (3,003,195) 51,066 442,817 Loss for the year (135,077) (135,077)Exercise of options 70,131 (28,363) 41,768Issues of ordinary shares during the year Issue of share capital 3,848,550 3,848,550 Transaction costs (1,234,880) (1,234,880)Conversion of Convertible Notes 450,000 450,000Cost of share based payment 500,058 500,058 At 30 June 2006 6,528,748 (3,138,272) 522,761 3,913,237 FOR THE YEAR ENDED 30 JUNE 2006 30 June 2006 30 June 2005 A$ A$ Net income recognised directly in equity 0 0Loss for the year (135,077) (1,228,908)Total recognised income and expense for the year (135,077) (1,228,908) Attributable to equity holders of the company (135,077) (1,228,908) * Notes to the Audited Financial Statements are available for download from theCompany website www.seeingmachines.com as part of the full Statements and AnnualReport. This information is provided by RNS The company news service from the London Stock Exchange