Seeing Machines Regulatory News (SEE)

Seeing Machines Limited

("Seeing Machines" or the "Company")

RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2012

Seeing Machines Limited (AIM:SEE) is pleased to announce its unaudited results for the six months ended 31 December 2012.

Seeing Machines creates face and eye tracking products that help machines understand people. As a world leader in the development of computer vision related technology, our products improve driver safety, diagnose ophthalmic health issues, and power next-gen products.

Highlights:

·; Total Revenue for the half year increased 50% to A$5,693,634 (December half 2011: A$3,794,960);

o DSS revenues increased by 87% to $3,699,553 (December half 2011: $1,981,396) with significant new business growth derived from North America, South America and Africa.

o Order backlog at 31 December 2012 of over $3,000,000 helping to secure future revenues

·; Increase in gross profit of 57% to A$2,887,500 (December half 2011: A$1,839,243) due primarily to growth in DSS sales;

·; Net loss decreased by A$623,010 to A$317,919 (December half 2011: loss of A$936,801);

·; Cash at 31 December 2012 increased to A$927,518 (30 June 2012: A$578,022) mainly as a result of the capital raising of $1,962,664 completed in October 2012.

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 will be brought to market in the first quarter of 2013-14.

"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 with increased confidence in the company's performance for the full year and beyond."

For further information, please contact:

Directors' Report

Your directors submit their report for the half-year ended 31 December 2012.

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.

Review and results of Operations

Review of the first half of the 2013 financial year

The company achieved revenues of A$4,686,796 from the sale of goods and services and A$1,006,838 from other income resulting in total revenue for the half year to 31 December 2012 of A$5,693,634 (2011: A$3,794,960).

The first six months of trading in the 2013 financial year were a significant improvement over the corresponding period in the 2012 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 $3 million in value.

The company made a net loss of A$317,919 for the six months to 31 December 2012 compared to a net loss of A$936,801 for the period to 31 December 2011. This result represents a significant improvement in operational outcomes.

Operational highlights for the half-year include:

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

·; Strong backlog of orders at end of first half to underpin next quarter revenues;

·; Next generation of DSS prototypes built and delivering very good field test results;

·; New partnership opportunities for the DSS which will increase global channels to market;

·; Development of new services offerings for the DSS enhancing our overall DSS offering and diversifying revenue opportunities;

·; >87% increase in DSS revenues (A$3,699,553 compared to A$1,981,396 for the corresponding period in 2011);

·; Development of next generation Eye Tracking technology to enhance all areas of product commercialisation;

·; TrueField progress and potential for JV or licensing in 2013.

Financial Results

The company achieved revenues of A$4,686,796 (2011: A$3,048,410) from sale of goods and services and A$1,006,838 (2011: A$746,550) from other income resulting in total revenue for the half year to 31 December 2012 of A$5,693,634 (2011: A$3,794,960).

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.

The high value of the Australian dollar against the US, Euro and Great Britain currencies has had a negative impact on revenue earned from those regions over the period. Cost of sales at A$1,799,296 (2011: A$1,209,167) was up due to higher revenues whilst the proportionate cost was relatively static at 38% of revenue as opposed to 39% of revenue for the corresponding period in 2011. Net expenditure for the half-year was A$4,212,257, up from A$3,522,594 for the period to 31 December 2011, reflecting the increased investment in the period targeted toward additional Research and Development, and increased activity in DSS sales, distribution and marketing.

The Net Loss for the six months to 31 December 2012 was better than budget at A$317,919, and a significant decrease of $618,882 compared to the net loss of A$936,801 for the period to 31 December 2011. Post half-year report balance sheet date, in February 2013, the accrued R&D Tax Offset of $1,000,211 with respect to the 2012 Income Tax Return of the company was received. This was treated as other income and recognised in the first half of the current 2013 financial year.

Cash at 31 December 2012 was A$927,518 compared to A$578,022 at 30 June 2012 and A$1,070,433 at 31 December 2011.

In October 2012, the company completed a capital raising of A$1,962,664.

Operational Highlights

DSS

DSS revenues were A$3,699,553 for the six months to 31 December 2012, reflecting a substantial increase over A$1,981,396 achieved for the six months to 31 December 2011. This was the result of the strong demand for the product range following an extended period of mine site trials that are now converting into sales, 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.

Customer locations now include North and South America, Africa, Australia, Mongolia and Indonesia. Notably there was a significant expansion in sales to locations outside Australia and the United States.

To accommodate growth and access to customers, the company has commenced the relocation of the DSS sales and services arms of the business to larger premises in Tucson Arizona. This will allow the organisation to offer a full service, inventory storage and maintenance for the DSS platform across the Americas.

A number of opportunities to extend the DSS to market are also being pursued. Over 80 DSS units have been installed in large road-legal transport trucks that operate on a combination of private mining roads and public highways in Australia. This represents an entry into a new market for the product from which we expect ongoing uptake. The technology is being modified for original equipment manufacturer (OEM) opportunities in the wider automotive market.

In terms of R&D, the focus remains aimed at improvements in hardware ruggedisation and reliability, new software features and the development of a real-time situational risk awareness reporting system that will further support the mitigation of fatigue related operator risk.

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

·; closing a number of significant deals in the sales pipeline that will further entrench the DSS as the superior product for the mining industry;

·; addressing the backlog of outstanding orders ;

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

·; improving our logistics and business systems to streamline quotations, orders and fulfilment

·; furthering R&D aimed at keeping the technology ahead of its competitors,

·; incorporating feedback and features that our existing customers need; and

·; progressing the partnership opportunities that will expand our routes to market.

faceAPI

faceAPI achieved revenue of A$293,373 (2011: A$205,317) for the six months to 31 December 2012.

The Company has started offering integration services for our core technology, known as faceAPI. This is expected to lead to ongoing engineering revenue and to additional production license sales and royalties.

faceLAB

faceLAB achieved revenue of A$693,870 (2011: A$861,697) for the six months to 31 December 2012, a reduction of 19% over the six months to 31 December 2011.

The drop in revenue can be attributed to aging of this product, which will be addressed through the planned near-term release of new product versions incorporating next-generation precision eye-tracking technology. This exciting new technology will also support existing and future products across the range of Seeing Machines' product platforms.

TrueField

The Glaucoma-related laboratory trials performed by our technology partners at the Australian National University (ANU) have recently been completed. In response to the positive results, we will initiate an independent to validate performance in lead up to the next commercialisation steps.

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.

Summary

The Directors remain committed to delivering significant growth in shareholder value and expect results for the full year to 30 June 2013 to be in line with existing market expectations.

The demand for DSS products and services by the mining and resource industry is substantial and is expected to continue to underpin most of the company's revenue and profit growth over the next two to three years.

During this time the company will be developing new markets in road transport, bus and segments where machine and plant operators face significant risk of fatigue and distraction.

Statement of Financial Position

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

Statement of Comprehensive Income

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

Statement of Changes in Equity

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

Statement of Cash Flows

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