Annual Report
2016
Seeing Machines
ABN 34 093 877 331
This annual report covers Seeing Machines Limited as a consolidated entity.
The Group’s functional and presentation currency is AUD($).
A description of the Group’s operations and its principal activities is included in
the review of operations and activities in the directors’ report commencing on page
9. The directors’ report is not part of the financial report.
Directors
Terry Winters
Ken Kroeger
Peter Housden
Les Carmichael
Rudolph Burger
James A Walker
Yong Kang NG
Non-Executive Chairman
Managing Director and CEO
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
Andrew Neilson
Solicitors
Clayton UTZ Lawyers
Level 18, 333 Collins Street
Melbourne, VIC 3000, Australia
Field Fisher LLP
Riverbank House,
2 Swan Lane
London, EC4R 3TT, United Kingdom
HSBC Commercial Bank
580 George Street
Sydney NSW 2000, Australia
Ernst & Young
121 Marcus Clarke Street
Canberra, ACT 2600, Australia
Bankers
Auditors
Registered Office
Level 1, 11 Lonsdale Street
Braddon ACT 2612, Australia
Principal Place of
Business
Level 1, 11 Lonsdale Street
Braddon ACT 2612, Australia
Share Register
Australia
Computershare Investor Services Pty Limited
GPO Box 2975, Melbourne, Victoria, 3001, Australia
Phone 1800 850 505 or +61 (0)3 9415 4000
Email web.queries@computershare.com.au
Web www.computershare.com
United Kingdom
Computershare Investor Services PLC
The Pavilions, Bridgwater Road,
Bristol BS99 6ZY, United Kingdom
Phone +44 (0)870 702 0000
Email web.queries@computershare.co.uk
Web www.computershare.com
Seeing Machines Limited shares are listed on the
London Stock Exchange AIM market (code: SEE).
Contents
Highlights
Chairman and CEO Letter
Letter from Remuneration Committee Chairman
Directors' Report
Auditor's Independence Declaration
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report to the Members of Seeing Machines Ltd.
2
4
7
9
31
32
33
34
35
36
89
90
1
Highlights
Record full year revenue for year ended 30 June 2016; 161% growth.
$33.6 million
1600+ units
150,000+
Record number of units shipped for year ended 30 June 2016; 172% growth.
Total fatigue events detected and intervened since July 2015.
2
In 2016, Seeing Machines
has further anchored its
position at the preeminent
intelligent sensing
technology player in global
transport markets.
— Ken Kroeger, CEO
3
Chairman and CEO Letter
Terry Winters, Chairman
Ken Kroeger, CEO
2016 has been one of the most important
in the history of Seeing Machines; the year
that we were able to realise the benefits
from the company’s aggressive investment
in research & development over the last
3 years and move closer to the founding
vision of the company – to help transform
the interaction between humans and
machines into a simpler, smarter and more
seamless experience.
The advances made to our core technology
have catapulted us to the forefront of
the sectors we’re pursuing and strongly
cemented the company as one of the
world leaders in face and eye-tracking.
Algorithmic performance has substantially
improved, enabling us to service
the automotive market with real-life
operational tracking percentages above
99%. Our technology is able to operate
across all real-world light levels with a
fidelity that our competitors can only
emulate in controlled, indoor situations.
A pivotal achievement for Seeing Machines
has been the development of its System in
Package (SiP) – an unprecedented low-
cost, flexible processor platform available
for mass-market applications that extend
far beyond our current focus-sectors.
We successfully licensed Seeing Machines’
DSS mining product to Caterpillar –
resulting in a significant one-off revenue
boost for the company in the year ended
30 June 2016. Initial royalty revenues from
CAT’s first 6 months validate the choice
of CAT as the best channel to market for
mining and rugged off-road applications.
Strong investment in our fleet-focused
product, branded Guardian, is beginning
to gain traction, with revenue growth of
29% for the business unit over FY2015. As
a result of significant marketing and sales
efforts globally, Q1 FY2017 will deliver
more units sold than the full FY2016. A
key feature of this business unit is its
Safety as a Service (SaaS) recurring
(annuity-type) revenue and the multiplier
effect this will generate for the company
in future years. Our direct sales are being
supplemented by our global value-added
reseller (VAR) strategy to leverage local
sales, distribution and relationships.
The Company has cemented itself as
the market pioneer and leader of driver
monitoring system (DMS) technology by
securing follow-on orders from a major US
automotive OEM, and has received strong
levels of interest for developing programs
with several major European automotive
OEMs as they seek to adopt DMS for their
semi-autonomous capable vehicles.
4
Chairman and CEO Letter
Seeing Machines expertise
and R&D in computer vision
technology, accelerated by
machine learning is enabling us
to bridge technologies to human
experience – as we deliver
increasingly sophisticated
artificial intelligence capability,
making for smarter, more
personalised applications that
understand, analyse and help
humans in an intuitive way.”
— Terry Winters, Chairman
Seeing Machines has matured as a
business with several key business
systems being implemented in 2016.
ISO 9001 Quality Accreditation, financial
processes, HR and performance
management systems, marketing
automation and customer relationships
management integration have all been
established to enable the company to cost
effectively scale the business at rates not
possible before. The quality and output
from our R&D team has been multiplied
with investments in machine learning
and data truthing teams within a human
factors-led framework.
We delivered revenue growth on our 2015
results of 161% to A$37.3 million (excluding
foreign exchange gains). Our deliberate
planned investment in operational costs
to build our future capability and capacity
to execute our business plans in several
industry sectors, led to the Company
making a net loss of A$1.6 million for the
2016 financial year, compared to a net loss
of A$10.2 million for the previous year.
Your Company ended the financial year
with a strong balance sheet, a significant
pipeline of opportunities and increased
ability to execute that are expected to lead
to significant growth in the 2017 financial
year and beyond.
5
We intend to create and
maintain a remuneration
framework that is simple,
transparent and fair to
both shareholders and
our employees.
— Nicole Makin, SVP People and Culture
6
Letter from Remuneration
Committee Chairman
Jim Walker, Chairman of the People,
Culture and Remuneration Committee
Dear Shareholder,
As Chairman of Seeing Machines’ People,
Culture & Remuneration Committee I am
pleased to provide the following update.
From a remuneration perspective It
has been a year of consolidation. Our
remuneration framework has been in
place for 18 months and is being used
effectively for remuneration reviews
as well as bringing new talent into the
organization. The salary bands which
underpin the framework are updated
on an annual basis and are able to be
benchmarked in each location where we
have employees.
A new addition to our remuneration
approach has been the introduction of
a long term performance rights plan
for those employees who are viewed as
important to the longer term success
of the organization. This is a very small
group of employees who receive 20% of
their remuneration as shares under a
performance rights plan, granted after
a 2 and 3 year period, provided they
are still employed with the company and
have strong performance. This initiative
was well received by the Executive as
a retention tool and by the individuals
as recognition of their value to the
organization.
Our vision is to create and maintain a
remuneration framework that is simple,
transparent and fair to both shareholders
and employees. This year of consolidation
has given a sense of process and
structure to our remuneration approach
which is appreciated by employees.
The Committee has also taken an interest
in the major People & Culture initiatives
for the year. We are pleased to see that
the ePerformance Management system
has been effectively used by the whole
organization and that adjustments have
been made to ensure its easy integration
into the performance cycle. We have
had regular reports on Work Health &
Safety activity and were pleased with the
introduction of an Employee Assistance
Programme which had been a gap for
Australian employees. The Employee
Engagement Survey whilst indicating
a highly engaged team also pin pointed
areas of attention which we were pleased
to see quickly acted on.
The Committee is pleased to see the
continuing maturation of the People &
Culture activities within the organisation.
7
Letter of Remuneration
8
Very few of the
publicly listed
companies offer the
prospect of changing
the world in the way
that Seeing Machines
could.
— Loren Daniel, finCapp
Directors’
Report
Your directors submit their report
for the year ended 30 June 2016.
9
Directors
The names of the Company’s directors in office during the year and until
the date of this report are listed below. All directors were in office for this
entire period covered by the report unless otherwise stated.
Terry Winters
Ken Kroeger
Rudolph Burger
James A Walker
Les Carmichael
Yong Kang (YK) Ng
Peter Housden
David Gaul
Michael Roberts
James D Walker
Non-Executive Chairman
Managing Director and CEO
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Appointed 1 February 2016
Appointed 22 March 2016
Appointed 31 March 2016
Resigned 22 March 2016
Resigned 31 March 2016
Resigned 1 March 2016
10
Review of Operations
Financial Results
The Company’s total revenue from continuing
operations for the financial year (excluding foreign
exchange gains and finance income) was A$33.6
million, an increase of A$20.8 million, or 161%, over
the 2015 revenue of A$12.8 million.
These revenue figures exclude revenue from our
joint-venture (JV) company in Chile which we sold
back to our original distribution partners, as part
of the transition of the DSS business to Caterpillar.
The results of these operations are required to be
excluded from results from continued operations
under Accounting Standards. For details of the
share sale and the results of the discontinued
operation refer to note 8.
These revenue figures also exclude the research
and development tax incentive received from the
Australian government which is reported in ‘Other
income’. This incentive - which is received as a cash
refund based on eligible R&D expenditure - totalled
A$2.3 million for FY16 (FY15 A$2.2 million).
This full year revenue is the largest revenue year
ever achieved by the Company. The revenue was
earned from the sale of goods and services and
license fees. Included in the license fees is an
amount of A$21.8 million from Caterpillar Inc. on
signing a global product development, licensing and
distribution agreement.
This was a year of transition for the Group as
- during September 2015 - the Company signed
a global product development, licensing and
distribution agreement with Caterpillar Inc. At
that point, Caterpillar took over responsibility
for manufacturing, marketing and sales of
Seeing Machines’ existing DSS rugged off-road
product and have distribution rights for Seeing
Machines’ Guardian fleet product, exclusively
within agreed industries (mining, construction,
quarry, aggregates, cement, marine, forestry).
Responsibility for servicing current DSS
customers also transitioned to Caterpillar from 1
January 2016. Consequently, revenue from DSS
product dropped compared to the prior year by
29%. Instead, the company received ongoing
royalties on sales of the DSS ruggedized product
by Caterpillar as well as the one-off license fee of
$21.8 million. This license fee is to be received in
instalments with US$9 million received during FY16
and balance to be received in future years with the
last instalment of US$1.5 million due on 1 January
2019).
Revenue from sales of the Guardian product
totalled $3.3 million for the year – up 29% on
the prior year. Revenue from core technology
integration services totalled $1.1 million up 11% on
the prior year figure of $980,000.
Revenue for the year for the Company’s product
lines, as well as Other Income compared to the last
financial year, is shown in the following table:
PRODUCT
DSS™
Guardian
Core technology integration services
Caterpillar license fee
Caterpillar royalties
Other income
Foreign exchange gains
Finance income
TOTAL REVENUE
Variance
(29%)
29%
11%
∞
∞
161%
FY16
A$’000
6,580
3,315
9,895
1,089
21,850
728
33,562
2,546
(182)
1,371
3,735
37,297
FY15
A$’000
9,303
2,575
11,878
980
–
–
12,858
2,218
3,060
251
5,529
18,387
11
Other income was primarily due to the receipt of
the R&D tax incentive grant from the Australian
Government. Finance income has increased as the
Caterpillar receivable was initially measured at its
present value with the discount unwinding over
time and being recognised as finance income.
Cost of Goods Sold (COGS) decreased A$0.9 million
(12%) to A$6.3 million (2015: A$7.1 million) due to
lower product sales but was also affected by a
change in the mix of sales to include the Guardian
product which has a lower margin than the DSS
product.
Indirect expenditure for the year was
A$32.6million, up from A$23.3million for the year
to 30 June 2015. The increase was mainly due to
the increased investment in automotive research
and development. Also included in this expense is
an amount of $5.2 million for the revaluation of the
Guardian inventories to the net realisable value;
this revaluation is based on Guardian sales to date
together with the Board’s assessment of the likely
unit sale price across our target markets in the
short and medium term.
The Company made a net loss from continuing
operations of A$1.6 million for the 2016 financial
year, compared to a net loss from continuing
operations of A$12.0 million for the previous year.
The significantly improved result is due to the one-
off Caterpillar license fee of $21.8 million offset
in part by the increased spend on research and
development. This net loss was better than market
expectations.
During this year we invested significantly in our
capability and resources to commercialise our
technology in our global target industries: mining;
commercial fleets; road vehicles; rail; consumer
electronics; and aviation and simulators. This
investment is reflected in increased expenses for
R&D, sales and marketing and corporate activities.
During the financial year the Company raised
A$12.8 million from a placing with a new strategic
investor, V S Industry Berhad (VSI) through its
wholly owned subsidiary V S International Venture
Pte. Ltd. (VSIV), a leading integrated electronics
manufacturing services provider. A total of
129,654,000 new ordinary shares in the Company
were placed with VSIV, at an issue price of 5.199
pence per share, which was a premium of 20% to
the Company’s 30-day volume-weighted average
market price ended 16 March 2016. VSIV’s
interest in 129,654,000 shares represents a stake
of 12% in the Company’s issued share capital.
Cash reserves at 30 June 2016 were A$16.9 million
compared to A$14.2 million at 30 June 2015.
Operational highlights during the 2016 financial
year the Company continued to execute the
multi-sector strategy with increasing focus on
the transportation sectors of mining (rugged
off-road) industries, commercial road vehicles,
automotive, rail and aerospace. Investing heavily in
the core intellectual property and capabilities that
define Seeing Machines, the Company is positioned
to capture significant value from all of these
sectors and has pioneered the industry of driver
12
Strategy Analytics
estimates that the
market for Driver
Monitoring Systems
(DMS) will grow
from US$0.6B to
US$13.3B by 2022.
13
Mining & Caterpillar Industries
In September 2015 the Company signed a global
product development, licensing and distribution
agreement with Caterpillar. In return for exclusive
rights to Seeing Machines’ DSS product in their
fields, Caterpillar pays Seeing Machines a license
fee of A$21.85 million over four years, plus ongoing
royalties on sales. This licence fee from Caterpillar
– all of which has been recognised as revenue in
the 2016 financial year – is larger than any of the
Company’s previous annual revenue results.
“ruggedized” product business to Caterpillar, for
Caterpillar to manage the supply chain for this
product and take over full responsibility for sales
and after sales support. During the second half of
the year the Company started to receive royalties
based on Caterpillar’s sale of these products and
services – with over 170 units sold and multiple
assessments underway or completed, Caterpillar
is developing a healthy pipeline for DSS as central
to their safety service offering.
Seeing Machines’ DSS rugged off-road product,
under license to Caterpillar, will be available
exclusively through Cat® Dealers across
Caterpillar’s broader industries; including
mining, construction, quarry, aggregates, cement,
and forestry.
During the second half of the financial year the
Company completed the transition of its
Caterpillar are investing in their own product
improvement. They are seeking to incorporate the
latest algorithmic improvements into their product
as well as seeking to reduce the manufacturing
cost of the product, while maintaining the exacting
specifications that the CAT brand has become
synonymous with.
14
The companies investing in
the power to see, mitigate and
manage fatigue and distraction
risk, are reducing waste,
maximizing pro tability without
increasing risk.
— Tim Crane, CAT Safety Services
15
16
Commercial Fleets
In 2015 the Company launched a new lower-
cost product for the commercial fleet market to
bring driver fatigue and distraction detection to
truck drivers. Throughout FY2016, the Company
invested in sales, marketing, operations and
product development. Rebranding the product
to Guardian by Seeing Machines, introducing
an integrated forward-facing camera, and
developing a healthy sales pipeline with significant
distribution agreements were the most significant
achievements of FY2016.
Seeing Machines appointed Technologica
Information Technology, LLC (Technologica) as
its exclusive distributor for Guardian in the UAE
and Gulf States. Technologica brings a wealth
of expertise in integrating technology solutions
into client environments, particularly in the UAE.
Technologica is representing Seeing Machines in
two large opportunities; Dubai Taxi Company and
the Public Transport Authority. Both opportunities
are subject to the outcomes of a tender evaluation
process.
Sales for FY2016 were 1,666 units. The Company
has focussed on building a solid pipeline and
engaging with Enterprise Level accounts
(Companies with over 1000 vehicles). At the close
of the FY the Company has in place 34 assessments
in 10 countries, addressing a total potential fleet
size in excess of 100,000 vehicles. Additional
Sales resources have been hired in North America
bringing in specialised fleet and telematics
expertise to the team.
In June 2016 the Company appointed Guardian
South East Asia Pte. Ltd. (Guardian SEA) as a
non-exclusive distributor to market, sell and
service the Seeing Machines’ Guardian solution in
Singapore and Malaysia. As part of the agreement,
Guardian SEA purchased 1,000 Guardian units, the
Company’s single largest sale of Guardian units to
date. Guardian SEA is wholly owned by VS Industry
Berhad (VSI), a leading integrated electronics
manufacturing services provider, and a strategic
investor in Seeing Machines. Guardian SEA and VSI
bring extensive regional knowledge and industry
relationships to accelerate market penetration of
Seeing Machines’ Guardian solution into the South-
East Asian region.
In 2014 the Company entered into a collaboration
with Chilean company GTD Ingenieria de Sistemas
to form Seeing Machines Latin America, in order
to provide local support for mining customers
and Caterpillar dealers. During the 2016 financial
year, as part of the transition of the DSS business
to Caterpillar, the Company sold its 55% stake in
Seeing Machines Latin America back to our original
distribution partners. We continue to work with
our partners in Chile under a revised distribution
agreement for our Guardian fleet product.
In March 2016 the Company launched an enhanced
product rebranded as Guardian by Seeing Machines
which includes an integrated Forward-Facing
Camera. Unlike competitors’ products, which purely
record events for later analysis, the Guardian
solution combines the activity in front of the vehicle
with the state of the driver at the time of a critical
event. Seeing Machines is also progressing with
the next generation Guardian product which will
enable ready integration with telematics products.
During the year the Company engaged with multiple
fleet telematics providers to develop an integrated
driver monitoring and safety product, combining
Seeing Machines’ technology and partner
telematics features. These active discussions and
commercial negotiations continued after the end of
the financial year.
17
OEM Automotive Market
The automotive industry is going through massive
technological change driven by powerful dynamics
of disruption. The global adoption of ride-sharing
platforms is changing the economics of car
ownership and the advancements in autonomous
vehicle capability is fundamentally altering the act
of driving. These various stages of autonomy were
highlighted by Seeing Machines’ co-founder and
CTO, Tim Edwards, in last years’ annual report. The
opportunity for Seeing Machines’ core technology
in semi-autonomous vehicles as part of Advanced
Driver Assistance Systems (ADAS) is staggering.
Strategy Analytics estimates that the market for
Driver Monitoring Systems (DMS) will grow from
US$0.6B to US$13.3B by 2022.
In 2014 the Company signed a mutually exclusive
strategic alliance with TK Holdings Inc., the
Americas subsidiary of Takata Corporation, a Tier
1 supplier of automotive safety systems to major
global automotive manufacturers. Through Takata,
in 2014 the Company secured a contract to develop
driver monitoring systems (DMS) for a global car
maker.
In March 2016 the Company and Takata secured
a major follow-on order for their 2nd-Generation
DMS from the same automotive manufacturer. This
second order is expected to see the companies’
DMS technologies integrated into more than
fifteen, higher-volume, 2018 and 2019 vehicle
models. This second program expands the DMS
offering across a number of the manufacturer’s
international car brands as DMS become part of
the brands’ ADAS offering.
During the financial year the Company continued
to engage closely with over 13 of the world’s car
manufacturers, including by supplying a PC-based
variant of its automotive technology that allows
the automotive manufacturer to easily map DMS
capability to their ADAS and autonomous vehicle
technology road maps and to input into their
technology packaging strategy for new vehicles,
model range interiors and dashboards. All the
major OEMs are targeting semi-autonomous
vehicles on their roadmaps with several automotive
analysts predicting that DMS technology will be
mandated within 5-10 years.
The Company continues to work on strategic
and commercial options to maximise the value
of this substantial market opportunity, with the
aim of capturing more automotive business more
quickly to maximise returns for the Company’s
shareholders.
The Company announced the signing of a non-
binding term sheet with a US-based investment
firm to focus on commercialising Seeing Machines’
technology in the automotive market. The Company
and its advisors continue to work to capitalise the
automotive business opportunity and drive value
for shareholders.
Post year end the Company completed development
and launched a proprietary automotive hardware
module containing the Company’s driver monitoring
engine software, with the intention of selling this
hardware module to automotive customers and
embedding in future products. The Board and
Management believe this will enable the Company to
capture a greater share of the revenue and margin
in the automotive and commercial fleet markets.
In September 2016 the Company announced the
appointment of Mike McAuliffe as CEO of our
automotive business, now named FOVIO.
18
19
The usability and precision of the
eye-tracking solution provided by
SeeingMachines have demonstrated
the potential to provide the next
breakthrough in the aviation
industry.
— Human Factors Lead, Major Global Airline
20
Aerospace
Over the last 12 months the Seeing Machines
Aviation Group has continued to increase Seeing
Machines’ market presence in the global aviation
industry; represented by the validation of market
demand in core sectors, and in advances of early
stage product development with major aviation
customers and partner engagements, including
the following:
·
Engagement with a major freight carrier –
globally recognised as a leader in Fatigue Risk
Management – a successfully delivered a proof-
of-concept for a solution to objectively measure
pilot attention and alertness during critical
phases of flight;
· Maturation through technical readiness levels
with a major Aircraft Manufacturer to develop
an Aircrew Training Tool using eye (gaze)
tracking as a key measurement of situational
awareness and effective instrument scanning;
·
·
Advanced technical and commercial
relationship with another major Aircraft
Manufacturer to evaluate a flight-deck
installation into an operational wide-body
aircraft to support the measurement and
identification of pilot incapacitation;
Commenced a new engagement with a
leading Air Navigation Service Provider
(ANSP) to develop a multi-sensory solution to
understand and monitor the operational state
of air traffic controllers;
·
Undertaking an installation of eye-tracking
technology into another ANSP training facility to
enhance their training and debriefing function,
and supply air traffic control instructors with
an objective insight into their trainee situational
awareness and scan patterns;
· Working closely with multiple carriers to
leverage our capability to understand and
address the global requirements for training
of pilots in Upset Prevention and Recovery
Training (UPRT);
·
Finalising an initial engagement with an Air
Force to support and supplement ab-initio
(initial) pilot training, and to provide evidence
based training data through eye tracking to
support more effective streaming decisions .
Seeing Machines offers the aviation industry best-
in-class sensors and data to ensure their aircrew
and air traffic controller personnel are trained
to the highest standards based on evidence,
and are enabled to perform and maintain
vigilance and alertness in demanding and complex
operational environments.
21
Rail & Consumer Electronics
During the 2016 financial year the Company and
EMD conducted trials of the Company’s technology
with three major rail customers in North America.
The trial results were positive and the Company
continues to work with EMD to develop the specific
product development and marketing program for
the rail sector. During the year EMD responded to
a request for tender from a major urban transit
authority, with the Seeing Machines’ fatigue
and distraction capability as part of the EMD
solution. The outcome of this tender process will
be announced during the 2017 financial year. This
work was undertaken as part of the initial three-
year exclusive agreement with Electro-Motive
Diesel, Inc. (EMD), a Caterpillar company signed in
September 2014.
Also in September 2014, the Company signed
a Memorandum of Understanding (MOU) with
Samsung Electro-Mechanics Corporation (SEMCo)
to facilitate joint development of face and eye
tracking technology for the consumer electronics
industry. For the Consumer Electronics Show (CES)
2016 in Las Vegas, Seeing Machines worked with
Samsung to develop and demonstrate the world’s
first eye-tracking enabled heads-up-display (HUD)
on a car windshield.
22
23
Position Holders During the Period
Chief Executive Officer
The Company’s Chief Executive Officer for the full
financial year to 30 June 2016 and at the date of
this report is Ken Kroeger.
Company Secretary
The Company Secretary for the full financial year
to 30 June 2016 and at the date of this report is
Andrew Neilson.
Employee Numbers
At 30 June 2016 the Group had 110 full-time
employees (125 employees at 30 June 2015 which
includes 21 employees in our Chile JV which was
sold during FY16).
Directors
The names and particulars of the directors of
the Company are set out in the following table.
The directors were in office for the entire period
unless otherwise stated.
24
Terry Winters, FAICD
Non-Executive Chairman, member of the Risk,
Audit & Finance Committee and member of the People,
Culture & Remuneration Committee
Terry is widely known as a strategic leader having served as chairman
and director of several Australian and international listed and private
companies and charities. He has led companies from start-up to
successful realisation events and is currently chairman of Converge
International Pty Ltd and Intelledox Pty Ltd and is a director of Redflex
Holdings Limited (ASX:RDF), Future Fibre Technologies Limited (ASX:FFT),
Australian Home Care Services and Many Rivers Microfinance.
Terry led the team that created Optus Communications, Australia’s
second telecommunications carrier. Prior to this he was a senior
executive at Motorola for 11 years following which he founded Link
Telecommunications, a business that grew to over $200 million in revenues
with over 1,000 employees.
Ken Kroeger
Managing Director and CEO
Ken comes from a long technology and commercialisation background
with exposure to a wide variety of industry sectors. He was the founder
of international simulation & training business Catalyst Interactive; with
offices in three countries and over 100 employees. The organisation was
highly recognised for innovation & high customer service levels and was
sold to Halliburton subsidiary, Kellogg, Brown and Root in 2008. Ken has
held multiple board directorships, and enjoys mentoring a number of start-
up entrepreneurs.
25
Dr Rudolph Burger
Non-Executive director and member of the Risk,
Audit & Finance Committee
Over the past twenty-five years, Rudy has founded five digital media
technology companies in the US, run a European public company, and
served as a senior executive for two global 500 companies. He is widely
recognised as an effective, dynamic leader with a proven track record
in management, strategic planning, business development, and M&A. Dr
Burger is currently Founder and Managing Partner of an investment bank
headquartered in California. He also serves as a Board Member of another
technology company based in Cambridge, UK. Rudy has a BSc and MSc
from Yale University and a PhD from Cambridge University.
James (Jim) Allan Walker, GAICD
Non-Executive director and Chair of the People,
Culture & Remuneration Committee
Over the past 45 years, Jim has been involved with heavy equipment
dealerships, having retired from WesTrac (Caterpillar dealer for Western
Australia, New South Wales/Australian Capital Territory and North East
China) after 13 years as CEO.
Jim is also Chairman of Macmahon Holdings Limited (ASX:MAH) and
State Training Board (WA) and Non-Executive Director of Programmed
Maintenance Services Group Limited (ASX:PRG), RACWA Holdings Pty Ltd
and Austin Engineering Limited (ASX:ANG).
Les Carmichael
Non-Executive director and member of the People,
Culture & Remuneration Committee
Appointed as a Director on 1 February 2016
Mr Carmichael, based in Dallas, is a veteran of the North American
transportation and logistics sectors, where he has spent over 40 years
of his professional career. Holding numerous senior management and
operational positions, he has experience in all aspects of fleet logistics;
sales, marketing, operations, business development, and turnaround
management. After a proven track record as Vice-President and General
Manager of Dedicated Services at Swift Transportation Corporation,
Les became CEO of Taylor Companies, the largest independent crude oil
transportation company in the US. After retiring as an executive in 2015,
Mr Carmichael serves on the board of directors of GlobalTranz, Inc., a
venture capital funded, technology focussed, freight forwarding company
operating in the US.
26
Yong Kang (YK) Ng
Non-Executive director and member of the Risk,
Audit & Finance Committee
Appointed as a Director on 22 March 2016
Mr Ng has extensive engineering and operations experience in the
manufacturing sector with multinational corporations. Based in Johor,
Malaysia, Mr Ng has been managing the manufacturing operations of V S
Industry Berhad (VSI) since 2002 and was appointed as executive director
in 2005. VSI is a leading integrated electronics manufacturing services
provider and a strategic investor in Seeing Machines Limited. Mr Ng has
a Bachelor of Science in Mechanical Engineering from the National Taiwan
University and a MBA from Heriot-Watt University in Edinburgh, UK.
Peter Housden
Non-Executive director and Chairman of the Risk,
Audit & Finance Committee
Appointed as a Director on 31 March 2016
Mr Housden, based in Sydney, has more than 40 years’ accounting and
finance experience in major organisations and is an experienced non-
executive Director of listed, private and government organisations. He
has held executive finance roles with global listed companies and non-
executive Director roles for approximately 10 ASX-listed companies. Mr
Housden has a B.Com (Hons) from Newcastle University, Australia, and is a
Fellow of CPA Australia and the Australian Institute of Company Directors.
Mr Housden is Non-Executive director of GrainCorp Limited (ASX:GNC),
Alliance Aviation Group Limited (ASX:AQZ), Royal Wolf Holdings Limited
(ASX:RWH) and is Chair of the Audit & Risk Committee for Sydney Trains, a
NSW Government agency.
Andrew Neilson, GAICD
Company Secretary
Andrew is an experienced legal and commercial executive. He has eight
years' experience as a commercial lawyer, with one of Australia’s largest
law firms as well as two NYSE-listed global information technology firms.
He also has eight years' management experience as Group General
Manager Commercial (and Company Secretary) for an Australian clean
energy company listed on the AIM market. Andrew has experience
in commercialising technology, managing intellectual property and
structuring and negotiating deals with global partners, as well as capital
raising, investor & public relations, corporate governance and ASX & AIM
market practice. He has a Bachelor of Laws (Honours) and a Bachelor of
Commerce from the University of Melbourne.
27
Principal Activities
The Company’s principal activities during the
year were:
·
·
·
·
Developing, selling and licensing products,
services and technology to detect and manage
driver fatigue and distraction, including
continued market development to secure
sustainable channels to market for the
product;
Developing driver-monitoring technology to be
incorporated into passenger cars;
Entering commercial agreements with
partners for the development, manufacturing
and sale of products into key target markets;
Research and development of the Company’s
core vision processing technologies to support
the development and refinement of the
Company’s products.
Environmental
Regulations
The Company holds no licenses issued by
relevant Environmental Protection Authorities
and there have been no known breaches of any
environmental regulations.
Changes in State
of Affairs
During the financial year there was no significant
change in the state of affairs of the Company other
than those referred to below and in the financial
statements or notes thereto.
Subsequent
Events after the
Balance Date
There have been no significant events after
balance date.
Dividends
No dividends or distributions have been made to
members during the year ended 30 June 2016
and no dividends or distributions have been
recommended or declared by the Directors in
respect of the year ended 30 June 2016.
28
Share Options
Unissued Shares
(i) Share options granted during or
since the end of the year
During the year nil (2015: 4,684,232) options were
granted under the share loan plan. Replacing the
share loan plan is the performance rights scheme.
During the year, 5,965,559 (2015: nil) options were
granted under the new scheme. The terms and
conditions of these options are disclosed in note
31 to the financial report.
(ii) Shares Issued as a Result of the
Exercise of Options
During the year 847,281 (2015: nil) options vested
and were transferred under the share loan plan.
Since the end of the financial year there have
been no shares issued by the Board as a result
of the exercise of options under the Employee
Share Plan.
During the year conditions have been met and
rights to 2,803,125 shares have been granted.
These shares were still held in trust at 30
June 2016.
Indemnification
of Directors
and Officers
During the financial year, the Company paid
a premium in respect of a contract insuring
the Directors of Seeing Machines Limited (and
its wholly owned subsidiaries), the Company
Secretary, and all executive officers of those
companies against a liability incurred as such a
Director, secretary, or executive officer to the
extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure
of the nature of the liability and the amount of
the premium.
Directors’ Meetings
During the 2016 financial year, 13 Board meetings were held (not counting circular resolutions passed
outside regular meetings). The following table sets out the number of Board and Committee meetings each
Director attended and the number they were eligible to attend.
Risk, Audit
& Finance Committee
People, Culture &
Remuneration Committee
4/4
*
*
4/4
4/4
*
*
*
1/1
1/1
3/3
*
2/2
*
*
3/3
*
1/1
*
*
Director
Terry Winters
Ken Kroeger
David Gaul
Michael Roberts
Rudolph Burger
James A Walker
James D Walker
Les Carmichael
YK Ng
Peter Housden
Board
12/13
13/13
8/11
11/11
10/13
13/13
13/13
5/5
2/2
2/2
* Not a member of the committee.
29
Non-Audit Services
Ernst & Young rendered consulting services in
connection with the taxation affairs of Seeing
Machines Limited as disclosed at note 34.
Indemnification
of Auditors
To the extent permitted by law, the Company has
agreed to indemnify its auditors, Ernst & Young,
as part of the terms of its audit engagement
agreement against claims by third parties arising
from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst &
Young during or since the financial year.
Auditor’s Independence
Declaration
We have obtained an independence declaration
from our auditors, Ernst & Young. The signed
declaration is included after this report.
Signed at Canberra this 30th day of September 2016 in accordance with a resolution
of the Directors made pursuant to section 298(2) of the Corporations Act 2001.
Terry Winters
Chairman
Ken Kroeger
Managing Director
30
Ernst & Young
121 Marcus Clarke Street
Canberra ACT 2600 Australia
GPO Box 281 Canberra ACT 2601
Tel: +61 2 6267 3888
Fax: +61 2 6246 1500
ey.com/au
Auditor’s Independence Declaration to the Directors of Seeing Machines
Limited
As lead auditor for the audit of Seeing Machines Limited for the financial year ended 30 June 2016, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Seeing Machines Limited and the entities it controlled during the financial
year.
Ernst & Young
Anthony Ewan
Partner
30 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
31
Statement of Financial Position
AS AT 30 JUNE 2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Current financial assets
Deferred Taxation
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Non-current financial assets
Trade and other receivables
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Deferred revenue
Income tax payable
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Treasury shares
Accumulated losses
Other reserves
Equity attributable to the owners of the parent
Non-controlling interest
TOTAL EQUITY
Consolidated
Note
2016
A$
2015
A$
15
16
17
21
11
18
19
20
21
16
22
23
24
26
26
16,948,300
6,786,046
8,420,350
241,159
85,581
663,615
33,145,051
691,961
4,404,268
140,191
6,284,468
11,520,888
44,665,939
1,801,771
1,591,987
728,959
85,581
4,208,298
33,324
33,324
4,241,622
14,221,615
7,154,077
10,182,633
238,462
-
224,910
32,021,697
863,214
3,011,560
140,191
166,489
4,181,454
36,203,151
4,075,472
1,409,955
196,429
366,620
6,048,476
20,389
20,389
6,068,865
40,424,317
30,134,286
70,592,134
(1,226,938)
(29,737,234)
796,355
40,424,317
-
40,424,317
57,490,870
(1,301,823)
(27,997,987)
767,710
28,958,770
1,175,516
30,134,286
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
32
Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2015
Continuing operations
Sale of goods and licence fees
Rendering of services
Revenue
Cost of Sales
Gross Profit
Other income
Net gain/(loss) on foreign exchange
Finance income
Research and development expenses
Customer support and marketing expenses
Occupancy and facilities expenses
Corporate services expenses
Other expenses
Loss from continuing operations before income tax
Income tax expense
Loss from continuing operations after income tax
(Loss)/profit from discontinued operations after income tax
Loss for the year after tax
Loss for the year attributable to:
Equity holders of parent
Non-controlling interests
Other comprehensive income – to be reclassified to profit
and loss in subsequent periods
Exchange differences on translation of foreign operations
Other comprehensive income net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Equity holders of parent
Non-controlling interests
Total comprehensive income for the year
Earnings per share for profit/loss attributable to the
ordinary
equity holders of the parent:
Basic earnings per share
Diluted earnings per share
9
10
11
8
13
Consolidated
2016
A$
2015
A$
30,949,453
2,612,390
33,561,843
(6,259,566)
27,302,277
2,545,986
(181,652)
1,370,973
(9,767,194)
(10,501,039)
(2,289,188)
(4,835,127)
(5,243,002)
(1,597,966)
(23,810)
(1,621,776)
(20,485)
(1,642,261)
9,789,929
3,068,382
12,858,311
(7,135,063)
5,723,248
2,217,944
3,060,252
251,359
(6,571,092)
(9,045,745)
(2,104,950)
(5,414,727)
(146,555)
(12,030,266)
(41,643)
(12,071,909)
1,436,748
(10,635,161)
(1,739,248)
96,987
(1,642,261)
(11,281,698)
646,537
(10,635,161)
(220,372)
(220,372)
(613,466)
(613,466)
(1,862,633)
(11,248,627)
(1,959,620)
96,987
(1,862,633)
(11,872,774)
624,147
(11,248,627)
(0.0018)
(0.0018)
(0.0130)
(0.0130)
33
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Statement of Changes in Equity
Contributed
Equity
Treasury
Shares
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Employee
Equity
Benefits
& Other
Reserve
A$
A$
A$
A$
A$
Non-
Controlling
Interest
Total Equity
A$
A$
Total
A$
45,776,174
(707,110)
(16,716,289)
46,638
1,007,251
29,406,664
-
29,406,664
-
-
-
-
-
-
(11,281,698)
-
-
(591,076)
(11,281,698)
(591,076)
(11,281,698)
646,537
(10,635,161)
(591,076)
(22,390)
(613,466)
(11,872,774)
624,147 (11,248,627)
FOR THE YEAR ENDED
30 JUNE 2016
At 1 July 2014
Loss for the year
Other comprehensive income
Total comprehensive income
Transaction with owner in
their capacity as owner
Shares Issued
12,301,678
(594,713)
Capital Raising Costs
(586,982)
Employee Share Loan Plan
Share Options Issued
At 30 June 2015
-
-
-
-
-
-
-
-
-
-
11,706,965
(586,982)
304,897
304,897
-
-
-
11,706,965
(586,982)
304,897
-
-
551,369
551,369
57,490,870
(1,301,823)
(27,997,987)
(544,438)
1,312,148
28,958,770
1,175,516
30,134,286
-
At 1 July 2015
57,490,870
(1,301,823)
(27,997,987)
(544,438)
1,312,148
28,958,770
1,175,516
30,134,286
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive income
-
-
-
Transaction with owner in
their capacity as owner
Shares issued
Capital raising costs
Treasury Shares
Employee Share Loan Plan
Derecognition of Non-
controlling interest
AT 30 JUNE 2016
13,136,529
(2,736)
(32,529)
74,885
-
-
-
-
(1,739,248)
-
-
(220,372)
(1,739,248)
(220,372)
-
-
-
-
-
-
-
-
-
-
(1,739,248)
96,987
(1,642,261)
(220,372)
-
(220,372)
(1,959,620)
96,987
(1,862,633)
13,136,529
(2,736)
42,356
249,018
249,018
-
-
-
-
13,136,529
(2,736)
42,356
249,018
-
-
(1,272,503)
(1,272,503)
70,592,134 (1,226,938)
(29,737,235)
(764,810)
1,561,166
40,424,317
-
40,424,317
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
34
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2016
Note
Operating activities
Receipts from customers
Payment to suppliers and employees
Interest received
Interest paid
Income tax paid
Payments received for research and development costs
Net operating cash flow from discontinued operations
Net cash flows used in operating activities
28
Investing activities
Proceeds from sale of plant and equipment
Purchase of plant and equipment
Purchase of held-to-maturity financial assets
Payments for intangible assets
Proceeds from sale of subsidiary
Cash derecognised on sale of subsidiary
Net cash flows used in investing activities
Financing activities
Proceeds from issue of shares
Proceeds from sale of treasury shares
Costs of capital raising
Repayment of borrowings
Net cash flows from financing activities
Net (increase) / decrease in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
15
Consolidated
2016
A$
2015
A$
29,420,077
(38,845,703)
1,370,973
-
(44,186)
2,764,224
260,095
(5,074,520)
1,052
(527,496)
(2,697)
(1,998,870)
1,299,264
(2,445,969)
(3,674,716)
13,136,529
42,356
(2,736)
-
13,176,149
4,426,913
(1,700,228)
14,221,615
16,948,300
11,486,346
(34,575,733)
251,359
(1,659)
(6,098)
2,202,534
2,023,643
(18,619,608)
-
(748,905)
(238,462)
(1,934,686)
-
-
(2,922,053)
11,433,559
-
(586,982)
(50,851)
10,795,726
(10,745,935)
2,202,776
22,764,774
14,221,615
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
35
Notes to the Financial Statements
1. Corporate Information
The consolidated financial report of Seeing
Machines Limited and its subsidiaries (collectively,
the Group) for the year ended 30 June 2016
was authorised for issue in accordance with a
resolution of the Directors on 30 September 2016.
Seeing Machines Limited (the parent) is a for-
profit company limited by shares incorporated in
Australia whose shares are publicly traded on the
AIM of the London Stock Exchange.
The Group provides operator monitoring and
intervention sensing technologies and services
for the automotive, mining, transport and aviation
industries.
3. Summary of Significant
Accounting Policies
a) Basis of preparation
The financial report is a general-purpose financial
report, which has been prepared in accordance
with the requirements of the Corporations Act
2001, Australian Accounting Standards as issued
by the Australian Accounting Standards Board
and other authoritative pronouncements of the
Australian Accounting Standards Board. The
financial report has also been prepared on a
historical cost basis.
The financial report is presented in Australian
dollars and all values are rounded to the nearest
dollar.
2. Going Concern Basis of Accounting
b) Compliance with IFRS
The financial report complies with International
Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
c) New accounting standards and interpretations
There were two amendments to existing
accounting standards that were applicable to the
Group for the first time this year as follows:
The financial report has been prepared on the
going concern basis. The Group has made a
loss for the year of A$1,642,261 (2015: Loss of
A$10,635,161). The Group has Accumulated Losses
of A$29,737,234 (2015: Accumulated Losses of
A$27,997,987). The balance of cash and cash
equivalents at 30 June 2016 is A$16,948,300
(2015: Cash and cash equivalents A$14,221,615).
The Group has prepared cash flow forecasts for
the next twelve months that show that the Group
will be able to meet its debts as and when they fall
due. The directors are of the opinion that with the
significant cash holdings the going concern basis of
accounting is justified.
Reference
Title
AASB 2013-9
Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments
The Standard contains three main parts and makes amendments to a number of Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also
makes minor editorial amendments to various other standards.
Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge
Accounting into AASB 9 Financial Instruments.
AASB 2015-3
Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting
Standards.
These amendments have been adopted but resulted in no material change to past or current results or restatement of balance sheet
amounts.
(Section continues on next page)
36
3. Summary of Significant Accounting Policies (continued)
c) New accounting Standards and interpretations (continued)
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2016.
These are outlined in the table below.
Application
date of
Standard
Application
date for
Group
1 January
2018
1 July 2018
Impact on the Group
The Group currently does not
have any hedge contracts nor
any financial assets carried at
fair value through profit or loss.
The application of this Standard
will not have a material impact
on the Group’s financial position
or performance.
Reference
Title
AASB 9
Financial Instruments
AASB 9 (December 2014) is a new Principal standard
which replaces AASB 139. This new Principal version
supersedes AASB 9 issued in December 2009 (as
amended) and AASB 9 (issued in December 2010) and
includes a model for classification and measurement,
a single, forward-looking ‘expected loss’ impairment
model and a substantially-reformed approach to hedge
accounting.
AASB 9 is effective for annual periods beginning on or
after 1 January 2018. However, the Standard is available
for early application. The own credit changes can be
early applied in isolation without otherwise changing the
accounting for financial instruments.
The final version of AASB 9 introduces a new expected-
loss impairment model that will require more timely
recognition of expected credit losses. Specifically, the
new Standard requires entities to account for expected
credit losses from when financial instruments are first
recognised and to recognise full lifetime expected losses
on a more timely basis.
Amendments to AASB 9 (December 2009 & 2010 editions
and AASB 2013-9) issued in December 2013 included
the new hedge accounting requirements, including
changes to hedge effectiveness testing, treatment of
hedging costs, risk components that can be hedged and
disclosures. AASB 9 includes requirements for a simpler
approach for classification and measurement of financial
assets compared with the requirements of AASB 139.
The application of these
amendments will not have
a material impact on the
Group’s financial position or
performance.
AASB
2014-3
Amendments to Australian Accounting Standards
– Accounting for Acquisitions of Interests in Joint
Operations
1 January
2016
1 July 2016
AASB 2014-3 amends AASB 11 to provide guidance
on the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business.
The amendments require:
(a) the acquirer of an interest in a joint operation in
which the activity constitutes a business, as defined
in AASB 3 Business Combinations, to apply all of the
principles on business combinations accounting in AASB
3 and other Australian Accounting Standards except for
those principles that conflict with the guidance in AASB
11; and
(b) the acquirer to disclose the information required by
AASB 3 and other Australian Accounting Standards for
business combinations.
This Standard also makes an editorial correction to
AASB 11
37
3. Summary of Significant Accounting Policies (continued)
c) New accounting Standards and interpretations (continued)
Application
date of
Standard
Application
date for
Group
1 January
2018
1 July 2018
Impact on the Group
The application of this Standard
may impact on the measurement
of revenue for the Group. The
Group is currently evaluating
the impact of the new standard.
Reference
Title
AASB 15
Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15 Revenue from
Contracts with Customers, which replaces IAS 11
Construction Contracts, IAS 18 Revenue and related
Interpretations (IFRIC 13 Customer Loyalty Programs,
IFRIC 15 Agreements for the Construction of Real Estate,
IFRIC 18 Transfers of Assets from Customers and SIC-
31 Revenue—Barter Transactions Involving Advertising
Services).
The core principle of IFRS 15 is that an entity recognises
revenue to depict the transfer of promised goods
or services to customers in an amount that reflects
the consideration to which the entity expects to be
entitled in exchange for those goods or services. An
entity recognises revenue in accordance with that core
principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the
contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the
performance obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
Early application of this standard is permitted.
AASB 2014-5 incorporates the consequential
amendments to a number Australian Accounting
Standards (including Interpretations) arising from the
issuance of AASB 15.
AASB
2015-1
Amendments to Australian Accounting Standards
– Annual Improvements to Australian Accounting
Standards 2012–2014 Cycle
The subjects of the principal amendments to the
Standards are set out below: AASB 5 Non-current
Assets Held for Sale and Discontinued Operations:
• Changes in methods of disposal – where an entity
reclassifies an asset (or disposal group) directly from
being held for distribution to being held for sale (or
vice versa), an entity shall not follow the guidance in
paragraphs 27–29 to account for this change.
AASB 7 Financial Instruments: Disclosures:
•Servicing contracts - clarifies how an entity should
apply the guidance in paragraph 42C of AASB 7 to
a servicing contract to decide whether a servicing
contract is ‘continuing involvement’ for the purposes
of applying the disclosure requirements in paragraphs
42E–42H of AASB 7.
• Applicability of the amendments to AASB 7 to
condensed interim financial statements - clarify that
the additional disclosure required by the amendments
to AASB 7 Disclosure–Offsetting Financial Assets and
Financial Liabilities is not specifically required for all
interim periods. However, the additional disclosure
is required to be given in condensed interim financial
statements that are prepared in accordance with
AASB 134 Interim Financial Reporting when its
inclusion would be required by the requirements of
AASB 134.
38
3. Summary of Significant Accounting Policies (continued)
c) New accounting Standards and interpretations (continued)
Reference
Title
Application
date of
Standard
Application
date for
Group
Impact on the Group
AASB 119 Employee Benefits:
• Discount rate: regional market issue - clarifies that
the high quality corporate bonds used to estimate
the discount rate for post-employment benefit
obligations should be denominated in the same
currency as the liability. Further it clarifies that
the depth of the market for high quality corporate
bonds should be assessed at the currency level.
AASB 134 Interim Financial Reporting:
• Disclosure of information ‘elsewhere in the interim
financial report’ -amends AASB 134 to clarify the
meaning of disclosure of information ‘elsewhere
in the interim financial report’ and to require the
inclusion of a cross-reference from the interim
financial statements to the location of this
information.
AASB 2015-2
Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 101
1 January
2016
1 July 2016
The application of this
amendment would impact on
the disclosure requirements in
the financial statements for the
Group.
The Standard makes amendments to AASB 101
Presentation of Financial Statements arising
from the IASB’s Disclosure Initiative project. The
amendments are designed to further encourage
companies to apply professional judgment in
determining what information to disclose in the
financial statements. For example, the amendments
make clear that materiality applies to the whole
of financial statements and that the inclusion of
immaterial information can inhibit the usefulness of
financial disclosures. The amendments also clarify
that companies should use professional judgment in
determining where and in what order information is
presented in the financial disclosures.
AASB 16
Leases – AASB 16 key features:
As a lessee, the Group will need to account as
follows:
• Required to recognise assets and liabilities
for all leases with a term of more than 12
months, unless the underlying asset is of low
value.
• Measure right-of-use assets similarly to
other non-financial assets and lease liabilities
similarly to other financial liabilities.
• Assets and liabilities arising from a lease are
initially measured on a present value basis.
The measurement includes non-cancellable
lease payments (including inflation linked
payments), and also includes payments to
be made in optional periods if the lessee is
reasonably certain to exercise an option to
extend the lease, or not to exercise an option
to terminate the lease.
• AASB 16 contains disclosure requirements
for lessees.
1 January
2019
1 July 2019
The effect on the Group will
be that material operating
leases would come ‘on
balance sheet’.
39
3. Summary of Significant Accounting Policies (continued)
c) New accounting Standards and interpretations (continued)
Reference
Title
2016-1
2016-2
Amendments to Australian Accounting
Standards – Recognition of Deferred Tax
Assets for Unrealised Losses
Amends AASB 112 Income Taxes (July 2004)
and AASB 112 Income Taxes (August 2015)
to clarify the requirement on recognition of
deferred tax assets for unrealised losses on
debt instruments measured at fair value.
Amendments to Australian Accounting
Standards – Disclosure Initiative: Amendments
to AASB 107
This Standard amends AASB 107 Statement of
Cash Flows (August 2015) to require entities
preparing financial statements in accordance
with Tier 1 reporting requirements to provide
disclosures that enable users of financial
statements to evaluate changes in liabilities
arising from financing activities, including both
changes arising from cash flows and non-cash
changes.
Application
date of
Standard
Application
date for
Group
1 January
2017
1 July 2017
Impact on the Group
The application of these
amendments will not have
a material impact on the
Group’s financial position and
performance.
1 January
2017
1 July 2017
The application of this
amendment would impact on
the disclosure requirements
in the financial statements
for the Group.
The application of this
amendment would impact on
the disclosure requirements
in the financial statements
for the Group.
IFRS 2
(Amendments)
Classification and Measurement of Share-
based Payment Transactions
1 January
2018
1 July 2018
This standard amends to IFRS 2 Share-based
Payment, clarifying how to account for certain
types of share-based payment transactions.
The amendments provide requirements on the
accounting for:
• The effects of vesting and non-vesting
conditions on the measurement of cash-
settled share-based payments
• Share-based payment transactions with a
net settlement feature for withholding tax
obligations
A modification to the terms and conditions
of a share-based payment that changes the
classification of the transaction from cash-
settled to equity-settled
40
3. Summary of Significant Accounting Policies
(continued)
d) Basis of consolidation
The consolidated financial statements comprise the
financial statements of Seeing Machines Limited
and its subsidiaries (as outlined in note 29) as at 30
June each year (the Group).
Control is achieved when the Group is exposed, or
has rights, to variable returns from its involvement
with the investee and has the ability to affect
those returns through its power over the investee.
Specifically, the Group controls an investee if and
only if the Group has:
·
·
·
Power over the investee (i.e. existing rights
that give it the current ability to direct the
relevant activities of the investee)
Exposure, or rights, to variable returns from
its involvement with the investee, and
The ability to use its power over the investee to
affect its returns
When the Group has less than a majority of the
voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in
assessing whether it has power over an investee
including:
·
·
·
The contractual arrangement with the other
vote holders of the investee
Rights arising from other contractual
arrangements
The Group’s voting rights and potential voting
rights
The Group re-assesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary
begins when the Group obtains control over the
subsidiary and ceases when the Group loses
control of the subsidiary. Assets, liabilities, income
and expenses of a subsidiary acquired or disposed
of during the year are included in the statement
of comprehensive income from the date the Group
gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to
the equity holders of the parent of the Group.
When necessary, adjustments are made to the
financial statements of subsidiaries to bring
their accounting policies into line with the Group’s
accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows
relating to transactions between members of the
Group are eliminated in full on consolidation.
e) Business combinations and goodwill
Business combinations are accounted for using
the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration
transferred measured at acquisition date fair value
and the amount of any non-controlling interests
in the acquiree. For each business combination,
the Group elects whether to measure the non-
controlling interests in the acquiree at fair value
or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related
costs are expensed as incurred and included in
administrative expenses.
When the Group acquires a business, it assesses
the financial assets and liabilities assumed for
appropriate classification and designation in
accordance with the contractual terms, economic
circumstances and pertinent conditions as at the
acquisition date. This includes the separation of
embedded derivatives in host contracts by the
acquiree.
If the business combination is achieved in stages,
any previously held equity interest is re-measured
at its acquisition date fair value and any resulting
gain or loss is recognised in profit or loss.
Any contingent consideration to be transferred
by the acquirer will be recognised at fair value
at the acquisition date. Contingent consideration
classified as an asset or liability that is a
financial instrument and within the scope of
AASB 139 Financial Instruments: Recognition
and Measurement, is measured at fair value
with changes in fair value recognised either in
either profit or loss or as a change to OCI. If the
contingent consideration is not within the scope
of AASB 139, it is measured in accordance with
the appropriate AASB. Contingent consideration
that is classified as equity is not re-measured and
subsequent settlement is accounted for within
equity.
41
3. Summary of Significant Accounting Policies
(continued)
e) Business combinations and goodwill
(continued)
Or
·
Goodwill is initially measured at cost, being the
excess of the aggregate of the consideration
transferred and the amount recognised for non-
controlling interests, and any previous interest
held, over the net identifiable assets acquired
and liabilities assumed. If the fair value of the net
assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses
whether it has correctly identified all of the
assets acquired and all of the liabilities assumed
and reviews the procedures used to measure the
amounts to be recognised at the acquisition date.
If the reassessment still results in an excess of
the fair value of net assets acquired over the
aggregate consideration transferred, then the gain
is recognised in profit or loss.
After initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s
cash-generating units that are expected to benefit
from the combination, irrespective of whether
other assets or liabilities of the acquiree are
assigned to those units. Where goodwill has been
allocated to a cash-generating unit and part of
the operation within that unit is disposed of, the
goodwill associated with the disposed operation is
included in the carrying amount of the operation
when determining the gain or loss on disposal.
Goodwill disposed in these circumstances is
measured based on the relative values of the
disposed operation and the portion of the cash-
generating unit retained.
f) Current versus non-current classification
i) The Group presents assets and liabilities in the
statement of financial position based on current/
noncurrent classification. An asset is current
when it is:
Expected to be realised or intended to sold or
consumed in the Group’s normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months
·
·
·
42
after the reporting period
Cash or a cash equivalent unless restricted
from being exchanged or used to settle a
liability for at least twelve months after the
reporting period
The Group classifies all other assets as non-
current.
A liability is current when:
·
·
·
Or
·
It is expected to be settled in the Group’s
normal operating cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months
after the reporting period
There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period. The Group
classifies all other liabilities as non-current.
g) Segment Information – refer note 6
An operating segment is a component of the entity
that engages in business activities from which it
may earn revenues and incur expenses, whose
operating results are regularly reviewed by the
entity’s chief operating decision makers to make
decisions about resources to be allocated to the
segment and assess its performance and for
which discrete financial information is available.
Management will also consider other factors in
determining operating segments such as the level
of segment information presented to the board of
directors.
Operating segments that meet the qualitative
criteria as prescribed by AASB 8 are reported
separately. However an operating segment that
does not meet the qualitative criteria is still
reported separately where information about the
segment would be useful to users of the financial
statements.
A geographical segment is a distinguishable
component of the entity that is engaged in
providing products or services within a particular
economic environment and is subject to risks and
returns that are different than those of segments
operating in other economic environments.
reporting date and their statements of profit or
loss are translated at exchange rates prevailing
at the dates of the transactions. The exchange
differences arising on translation for consolidation
are recognised in other comprehensive income. On
disposal of a foreign operation, the component of
the other comprehensive income relating to that
particular foreign operations is recognised in the
profit and loss.
i) Cash and cash equivalents – refer note 15
Cash and cash equivalents in the Statement of
Financial Position comprise cash at bank and in
hand and short-term deposits with an original
maturity of three months or less that are readily
convertible to known amounts of cash and which
are subject to an insignificant risk of changes in
value.
For the purposes of the Consolidated Statement of
Cash Flows, cash and cash equivalents consist of
cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
j) Inventories - refer note 17
Inventories including raw materials, work in
progress and finished goods are valued at the
lower of cost and net realisable value.
Costs incurred in bringing each product to its
present location and condition are accounted for
as follows:
Raw materials, work in progress and finished
goods – purchase cost on a first-in, first-out basis.
The cost of purchase comprises the purchase
price, import duties and other taxes (other than
those subsequently recoverable by the entity from
the taxing authorities), transport, handling and
other costs directly attributable to the acquisition
of raw materials. Volume discounts and rebates
are included in determining the cost of purchase.
Net realisable value is the estimated selling price
in the ordinary course of business, less estimated
costs of completion and the estimated costs
necessary to make the sale.
3. Summary of Significant Accounting Policies
(continued)
h) Foreign currency translation
(i) Functional and presentation currency
The Group’s consolidated financial statements
are presented in Australian dollars, which is also
the Parent’s functional currency. For each entity,
the Group determines the functional currency
and items included in the financial statements of
each entity are measured using that functional
currency. The Group uses the direct method
of consolidation and on disposal of a foreign
operation, the gain or loss that is reclassified to
profit or loss reflects the amount that arises from
using this method.
(ii) Transactions and balances
Transactions in foreign currencies are initially
recorded by the group entities in the functional
currency by applying the exchange rates ruling at
the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the
reporting date.
Differences arising on settlement or translation
of monetary items are recognised in profit or loss
with the exception of monetary items that are
designated as part of the hedge of the Group’s
net investment of a foreign operation. These are
recognised in other comprehensive income until
the net investment is disposed of, at which time,
the cumulative amount is reclassified to profit
or loss. Tax charges and credits attributable to
exchange differences on those monetary items are
also recorded in other comprehensive income.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial
transaction. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value was
determined.
(iii) Group Companies
On consolidation, the assets and liabilities of
foreign operations are translated into Australian
dollars at the rate of exchange prevailing at the
43
3. Summary of Significant Accounting Policies
(continued)
k) Property, plant and equipment – refer note 19
Plant and equipment is stated at cost less
accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of
replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred.
Similarly, when each major inspection is performed,
its cost is recognised in the carrying amount of
the plant and equipment as a replacement only if it
is eligible for capitalisation. All other repairs and
maintenance are recognised in profit or loss as
incurred.
Depending upon the sub-classification of the asset,
the depreciation is calculated on the diminishing
value or straight line basis using the following
depreciation rates of the specific asset as follows:
·
·
Office furniture, fittings and equipment -
11.25% to 40%
Research and development software and
equipment - 33.3%
The assets’ residual values, useful lives and
amortisation methods are reviewed, and adjusted
if appropriate, at each financial year end.
Derecognition
An item of property, plant and equipment is
derecognised upon disposal or when no further
future economic benefits are expected from its
use or disposal.
l) Leases
The determination of whether an arrangement
is or contains a lease is based on the substance
of the arrangement and requires an assessment
of whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the
asset.
(i) Group as a lessee
Finance leases, which transfer to the Group
substantially all the risks and benefits incidental
to ownership of the leased item, are capitalised
at the inception of the lease at the fair value of
44
the leased asset or, if lower, at the present value
of the minimum lease payments. Lease payments
are apportioned between the finance charges and
reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance
of the liability. Finance charges are recognised as
an expense in profit or loss.
Capitalised leased assets are depreciated over
the shorter of the estimated useful life of the
asset and the lease term if there is no reasonable
certainty that the Group will obtain ownership by
the end of the lease term.
Operating lease payments are recognised as
an expense in the statement of comprehensive
income on a straight-line basis over the lease term.
Operating lease incentives are recognised as a
liability when received and subsequently reduced
by allocating lease payments between rental
expense and reduction of the liability.
m) Impairment of non-financial assets
The Group assesses, at each reporting date,
whether there is an indication that an asset may
be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Group estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of
an asset’s fair value less costs of disposal and its
value in use. Recoverable amount is determined
for an individual asset, unless the asset does not
generate cash inflows that are largely independent
of those from other assets or groups of assets.
When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is
considered impaired and is written down to its
recoverable amount.
In assessing value in use, the Group conducts an
annual internal review of asset values, which is
used as a source of information to assess for any
indicators of impairment. External factors, such as
changes in expected future processes, technology
and economic conditions, are also monitored
to assess for indicators of impairment. If any
indication of impairment exists, an estimate of the
asset’s recoverable amount is calculated.
Impairment losses of continuing operations,
including impairment on inventories are recognised
in the statement of profit or loss in expense
categories consistent with the functions of the
3. Summary of Significant Accounting Policies
(continued)
m) Impairment of non-financial assets (continued)
impaired asset, except for the assets previously
revalued with the revaluation taken to OCI. For such
assets, the impairment is recognised in OCI up to
the amount of any previous revaluation.
For assets excluding goodwill, an assessment
is made at each reporting date to determine
whether there is an indication that previously
recognised impairment losses no longer exist
or have decreased. If such indication exists, the
Group estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment loss
is reversed only if there has been a change in
the assumptions used to determine the asset’s
recoverable amount since the last impairment
loss was recognised. The reversal is limited so
that the carrying amount of the asset does not
exceed its recoverable amount, nor exceed the
carrying amount that would have been determined,
net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such
reversal is recognised in the statement of profit
or loss unless the asset is carried at a revalued
amount, in which case, the reversal is treated as a
revaluation increase.
n) Intangibles – refer note 20
Intangible assets acquired separately or in a
business combination are initially measured at
cost. The cost of an intangible asset acquired in
a business combination is its fair value as at the
date of acquisition. Following initial recognition,
intangible assets are carried at cost less any
accumulated amortisation and any accumulated
impairment losses. Internally generated intangible
assets, excluding capitalised development costs,
are not capitalised and expenditure is recognised
in profit or loss in the year in which the expenditure
is incurred.
The useful lives of intangible assets are assessed
to be either finite or indefinite. Intangible assets
with finite lives are amortised over the useful
life and tested for impairment whenever there
is an indication that the intangible asset may be
impaired.
The amortisation period and the amortisation
method for an intangible asset with a finite
useful life are reviewed at least at each financial
year-end. Changes in the expected useful life or
the expected pattern of consumption of future
economic benefits embodied in the asset are
accounted for prospectively by changing the
amortisation period or method, as appropriate,
which is a change in accounting estimate. The
amortisation expense on intangible assets with
finite lives is recognised in profit or loss in the
expense category consistent with the function of
the intangible asset.
Intangible assets with indefinite useful lives are
tested for impairment annually either individually
or at the cash-generating unit level. Impairment
is determined by assessing the recoverable
amount of the cash-generating unit (group of cash
generating units), to which the intangible relates.
Such intangibles are not amortised.
The useful life of an intangible asset with an
indefinite life is reviewed at each reporting period
to determine whether indefinite life assessment
continues to be supportable. If not, the change
in the useful life assessment from indefinite
to finite is accounted for as a change in an
accounting estimate and is thus accounted for on a
prospective basis.
Patents, Trademarks and Licenses
The Group made upfront payments to purchase
patents and licences. The patents have been
granted for a period of 15-20 years, depending
on the patent, by the relevant government agency
with the option of renewal at the end of this period.
Licences for the use of intellectual property are
granted for periods ranging between 3 and 20
years depending on the specific licences.
Research and development costs
Research costs are expensed as incurred.
An intangible asset arising from development
expenditure on an internal project is recognised
only when the Group can demonstrate the technical
feasibility of completing the intangible asset so
that it will be available for use or sale, its intention
to complete and its ability to use or sell the asset,
how the asset will generate future economic
benefits, the availability of resources to complete
the development and the ability to measure reliably
the expenditure attributable to the intangible
asset during its development. Following the initial
recognition of the development expenditure, the
cost model is applied requiring the asset to be
carried at cost less any accumulated amortisation
45
3. Summary of Significant Accounting Policies (continued)
n) Intangibles (continued) – refer note 20
and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefit from the
related project.
The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the
asset is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.
Customer contracts
The Group acquired the customer contracts as a part of the establishment of Seeing Machines Latin America SpA, which
included the transfer of the assets from GTD (the existing distributor). The values of these contract was based on the future
revenue to be generated.
A summary of the policies applied to the company’s intangible assets is as follows:
Patents &
Trademarks
Licences
Development Costs of
assets in use
Customer Contracts
Useful lives
Finite
Finite
Finite
Finite
Amortisation method
used
15-20 years - Straight
line
4-20 years - Straight
line
3-5 years - Straight
line
Life of the contract
Internally generated /
acquired
Acquired
Acquired
Internally generated
Acquired
Impairment test /
Recoverable amount
testing.
When an indicator of
impairment exists.
When an indicator of
impairment exists.
When an indicator of
impairment exists.
Amortisation method
reviewed at each
financial year-end;
Reviewed annually
for indicators of
impairment.
Gains or losses arising from derecognition of intangible assets are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the
asset is derecognised.
All financial assets are recognised initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset. The Group does
not have financial assets at fair value through
profit and loss.
o) Financial instruments - initial recognition and
subsequent measurement
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial
recognition, as financial assets at fair value
through profit or loss, loans and receivables,
held-to-maturity investments, available-for-sale
financial assets, or as derivatives designated as
hedging instruments in an effective hedge, as
appropriate.
46
3. Summary of Significant Accounting Policies
(continued)
o) Financial instruments - initial recognition and
subsequent measurement (continued)
Subsequent measurements
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments
that are not quoted in an active market. After
initial measurement, such financial assets are
subsequently measured at amortised cost using
the effective interest rate (EIR) method, less
impairment. Amortised cost is calculated by
taking into account any discount or premium on
acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in
finance income in the statement of profit or loss.
The losses arising from impairment are recognised
in the statement of profit or loss in finance costs
for loans and in cost of sales or other operating
expenses for receivables.
Held-to-maturity investments
Non-derivative financial assets with fixed or
determinable payments and fixed maturities are
classified as held-to-maturity when the Group
has the positive intention and ability to hold them
to maturity. After initial measurement, held-to-
maturity investments are measured at amortised
cost using the EIR, less impairment. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation
is included as finance income in the statement of
profit or loss. The losses arising from impairment
are recognised in the statement of profit or loss as
finance costs
Available-for-sale (AFS) financial assets
AFS financial assets include equity investments
and debt securities. Equity investments classified
as AFS are those that are neither classified as held
for trading nor designated at fair value through
profit or loss. Debt securities in this category are
those that are intended to be held for an indefinite
period of time and that may be sold in response to
needs for liquidity or in response to changes in the
market conditions.
After initial measurement, AFS financial assets
are subsequently measured at fair value with
unrealised gains or losses recognised as OCI and
credited in the AFS reserve until the investment
is derecognised, at which time the cumulative gain
or loss is recognised in other operating income in
the statement of profit or loss, or the investment
is determined to be impaired when the cumulative
loss is reclassified from the AFS reserve to
the statement of profit or loss in finance costs.
Interest earned while holding AFS financial assets
is reported as interest income using the EIR
method in the statement of profit or loss.
The Group evaluates whether the ability and
intention to sell its AFS financial assets in the
near term is still appropriate. When, in rare
circumstances, the Group is unable to trade these
financial assets due to inactive markets, the Group
may elect to reclassify these financial assets if
management has the ability and intention to hold
the assets for the foreseeable future or until
maturity.
For a financial asset reclassified from the AFS
category, the fair value carrying amount at the
date of reclassification becomes its new amortised
cost and any previous gain or loss on the asset
that has been recognised in equity is amortised
to profit or loss over the remaining life of the
investment using the EIR. Any difference between
the new amortised cost and the maturity amount
is also amortised over the remaining life of the
asset using the EIR. If the asset is subsequently
determined to be impaired, then the amount
recorded in equity is reclassified to the Statement
of Comprehensive Income.
De-recognition
A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
financial assets) is primarily de-recognised (i.e.
removed from the group’s consolidated statement
of financial position) when:
·
·
The rights to receive cash flows from the asset
have expired; or
The Group has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under
a ”pass-through” arrangement; and either (a)
the Group has transferred substantially all
the risks and rewards of the asset, or (b) the
Group has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.
47
3. Summary of Significant Accounting Policies
(continued)
o) Financial instruments - initial recognition and
subsequent measurement (continued)
When the Group has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither
transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the Group continues to
recognise the transferred asset to the extent of
the Group’s continuing involvement. In that case,
the Group also recognises an associated liability.
The transferred asset and the associated liability
are measured on a basis that reflects the rights
and obligations that the Group has retained.
Impairment of financial assets
The Group assesses, at each reporting date,
whether there is objective evidence that a financial
asset or a group of financial assets is impaired. An
impairment exists if one or more events that has
occurred since the initial recognition of the asset
(an incurred
‘loss event’) has an impact on the estimated future
cash flows of the financial asset or the group of
financial assets that can be reliably estimated.
Evidence of impairment may include indications
that the debtors or a group of debtors is
experiencing significant financial difficulty, default
or delinquency in interest or principal payments,
the probability that they will enter bankruptcy or
other financial reorganisation and observable data
indicating that there is a measurable decrease in
the estimated future cash flows, such as changes
in arrears or economic conditions that correlate
with defaults.
Financial assets carried at amortised costs
For financial assets carried at amortised cost,
the Group first assesses whether impairment
exists individually for financial assets that are
individually significant, or collectively for financial
assets that are not individually significant. If the
Group determines that no objective evidence of
impairment exists for an individually assessed
financial asset, whether significant or not, it
includes the asset in a group of financial assets
with similar credit risk characteristics and
collectively assesses them for impairment. Assets
48
that are individually assessed for impairment
and for which an impairment loss is, or continues
to be, recognised are not included in a collective
assessment of impairment.
The amount of any impairment loss identified
is measured as the difference between the
asset’s carrying amount and the present value
of estimated future cash flows (excluding future
expected credit losses that have not yet been
incurred). The present value of the estimated
future cash flows is discounted at the financial
asset’s original EIR.
Available-for-sale (AFS) financial assets
For AFS financial assets, the Group assesses at
each reporting date whether there is objective
evidence that an investment or a group of
investments is impaired.
In the case of equity investments classified as AFS,
objective evidence would include a significant or
prolonged decline in the fair value of the investment
below its cost. ’Significant’ is evaluated against
the original cost of the investment and ’prolonged’
against the period in which the fair value has been
below its original cost. When there is evidence of
impairment, the cumulative loss – measured as
the difference between the acquisition cost and
the current fair value, less any impairment loss
on that investment previously recognised in the
statement of profit or loss – is removed from OCI
and recognised in the statement of profit or loss.
Impairment losses on equity investments are not
reversed through the statement of profit or loss;
increases in their fair value after impairment are
recognised directly in OCI.
The determination of what is ‘significant’ or
‘prolonged’ requires judgement. In making this
judgement, the Group evaluates, among other
factors, the duration or extent to which the fair
value of an investment is less than its cost.
In the case of debt instruments classified as
AFS, the impairment is assessed based on the
same criteria as financial assets carried at
amortised cost. However, the amount recorded for
impairment is the cumulative loss measured as the
difference between the amortised cost and the
current fair value, less any impairment loss on that
investment previously recognised in the Statement
of Comprehensive Income.
3. Summary of Significant Accounting Policies
(continued)
o) Financial instruments - initial recognition and
subsequent measurement (continued)
Future interest income continues to be accrued
based on the reduced carrying amount of
the asset, using the rate of interest used to
discount the future cash flows for the purpose
of measuring the impairment loss. The interest
income is recorded as part of finance income.
If, in a subsequent year, the fair value of a debt
instrument increases and the increase can be
objectively related to an event occurring after the
impairment loss was recognised in the Statement
of Comprehensive Income, the impairment loss is
reversed through the Statement of Comprehensive
Income.
(ii) Financial Liabilities
Initial Recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction
costs.
The Group’s financial liabilities include trade and
other payables, loans and borrowings.
Subsequent measurement
The measurement of financial liabilities depends on
their classification, as described below:
Loans and Borrowings
After initial recognition, interest bearing loans
and borrowings are subsequently measured at
amortised cost using the Effective Interest Rate
(EIR) method. Gains and losses are recognised
in the income statement when the liabilities
are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The
amortisation is included in finance costs in the
Statement of Comprehensive Income.
De-recognition
A financial liability is de-recognised when the
obligation under the liability is discharged or
cancelled, or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as the de-recognition of the original liability
and the recognition of a new liability. The difference
in the respective carrying amounts is recognised in
the statement or profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the consolidated
statement of financial position if there is a
currently enforceable legal right to offset the
recognised amounts and there is an intention to
settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
p) Provisions – refer notes 23, 24 and 25
Provisions are recognised when the Group has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of the
obligation.
49
and periods of service. Expected future payments
are discounted using market yields at the reporting
date on Corporate bonds with terms to maturity
and currencies that match, as closely as possible,
the estimated future cash outflows.
(iii) Warranty Provision
A provision is recognised for expected warranty
claims on products sold during the last 12 months,
based on past experience of the level of repairs
and returns. It is expected that most of these
costs will be incurred in the next financial year.
Assumptions used to calculate the provision for
warranties was based on the current information
available about returns based on the one year
warranty period for all products sold.
(q) Share-based payment transactions – refer
note 31
The Group provides benefits to employees
(including KMP and directors in the form of share-
based payment transactions, whereby employees
render services in exchange for shares or rights
over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with
employees is measured by reference to the fair
value at the date at which they are granted. The
fair value is determined by using the Monte Carlo
Method using a Trinomial model.
In valuing equity-settled transactions, no account
is taken of any vesting conditions, other than
conditions linked to the price of the shares of
Seeing Machines Limited (market conditions).The
cost of equity–settled transactions is recognised,
together with a corresponding increase in
equity, over the period in which the performance
conditions and/or service conditions are fulfilled
(the vesting period) ending on the date on which
the relevant employees become fully-entitled to the
award (the vesting date).
3. Summary of Significant Accounting Policies
(continued)
p) Provisions (continued) – refer notes 23, 24 and
25
When the Group expects some or all of a provision
to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a
separate asset but only when the reimbursement
is virtually certain. The expense relating to
any provision is presented in the statement of
comprehensive income net of any reimbursement.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
reporting date using a discounted cash flow
methodology. The risks specific to the provision are
factored into the cash flows and as such a risk-
free government bond rate relative to the expected
life of the provision is used as a discount rate. If
the effect of the time value of money is material,
provisions are discounted using a current pre-tax
rate that reflects the time value of money and the
risks specific to the liability. The increase in the
provision resulting from the passage of time is
recognised in finance costs.
(i) Short-term employee benefits
Liabilities for wages and salaries, including non-
monetary benefits and annual leave expected to
be settled within 12 months of the reporting date
are recognised in respect of employees’ services
up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are
settled. Expenses for non-accumulating sick leave
are recognised when the leave is taken and are
measured at the rates paid or payable.
(ii) Other long-term employee benefits
The liability for annual leave and long service leave
not expected to be settled within 12 months of
the reporting date are recognised in non-current
liabilities, provided there is an unconditional right
to defer settlement of the liability. The liability
is measured as the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting
date using the projected unit credit method.
Consideration is given to expected future wage and
salary levels, experience of employee departures,
50
3. Summary of Significant Accounting Policies
(continued)
(q) Share-based payment transactions
(continued) – refer note 31
At each subsequent reporting date until vesting,
the cumulative charge to the statement of
comprehensive income is the product of:
(i) The grant date fair value of the award.
(ii) The current best estimate of the number of
awards that will vest, taking into account such
factors as the likelihood of employee turnover
during the vesting period and the likelihood of non-
market performance conditions being met.
(iii) The expired portion of the vesting period.
The charge to the statement of comprehensive
income for the period is the cumulative amount as
calculated above less the amounts already charged
in previous periods. There is a corresponding entry
to equity.
If the terms of an equity-settled award are
modified, as a minimum an expense is recognised
as if the terms had not been modified. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment arrangement, or if otherwise beneficial
to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and
any expense not yet recognised for the award
is recognised immediately. However, if a new
award is substituted for the cancelled award, and
designated as a replacement award on the date
that it is granted, the cancelled and new award
are treated as if they were a modification of
the original award, as described in the previous
paragraph. The Employee share option scheme was
replaced on 1 July 2013 with an Employee Share
Loan Plan (ESLP). Refer to Note 30 for further
details on ESLP.
The dilutive effect, if any, of outstanding options
is reflected as additional share dilution in the
computation of earnings per share (see note 12).
(r) Contributed equity – refer note 26
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(s) Treasury Shares
Own instruments that are reacquired (treasury
shares) are recognised at cost and deducted
from equity. No gain or loss is recognised in
the Statement of Comprehensive Income on the
purchase, sale, issue or cancellation of the Group’s
own equity instruments. Voting rights related to
treasury shares are nullified for the Group and no
dividends are allocated to them.
(t) Revenue recognition
Revenue is recognised and measured at the fair
value of the consideration received or receivable
to the extent it is probable that the economic
benefits will flow to the Group and the revenue
can be reliably measured. The following specific
recognition criteria must also be met before
revenue is recognised:
(i) Sale of goods
Revenue from the sale of goods is recognised when
there is persuasive evidence, usually in the form
of an executed sales agreement at the time of
delivery of the goods to customer, indicating that
there has been a transfer of risks and rewards
to the customer, no further work or processing is
required, the quantity and quality of the goods has
been determined, the price is fixed and generally
title has passed (for shipped goods this is the bill of
lading date).
(ii) Licence fees
Revenue from licence fees is recognised when
there is persuasive evidence, usually in the form of
a licence agreement at the time of delivery of the
goods to customer, indicating that there has been
a transfer of risks and rewards to the customer.
Licences granted to customers are perpetual
licences for use of intellectual property (usually
in the form of software) with no further work or
processing required by the Group.
51
Notes to the Financial Statements
3. Summary of Significant Accounting Policies
(continued)
(t) Revenue recognition (continued)
(iii) Rendering of services
Revenue from the support and consultancy is
recognised by reference to the stage of completion
of a contract or contracts in progress at reporting
date or at the time of completion of the contract
and billing to the customer. Stage of completion is
measured by reference to labour hours incurred
to date as a percentage of total estimated labour
hours for each contract which is determined by a
set quotation with the customer. As the contracts
are reasonably short, there is only a small amount
outstanding at reporting date, as such the level of
judgement required is minimal. When the contract
outcome cannot be estimated reliably, revenue
is recognised only to the extent of the expenses
recognised that are recoverable.
(iv) Interest revenue
Revenue is recognised as interest accrues using
the effective interest method. This is a method
of calculating the amortised cost of a financial
asset and allocating the interest income over the
relevant period using the effective interest rate,
which is the rate that exactly discounts estimated
future cash receipts through the expected life of
the financial asset to the net carrying amount of
the financial asset.
(v) Research and development refundable tax
offset
Refundable tax offset received under the
government’s research and development scheme
is recognised as revenue on receipt to the extent
those costs have been expensed in the financial
year. Refundable tax offset related to research and
development costs capitalised in the financial year
is deferred and recognised in the relevant year,
per the matching principle, proportionate to the
amortisation of these costs.
(u) Income taxes and other taxes – refer note 11
Current tax assets and liabilities for the current
and prior periods are measured at the amount
expected to be recovered from or paid to the
taxation authorities based on the current period's
taxable income. The tax rates and tax laws used
to compute the amount are those that are enacted
52
or substantively enacted at the reporting date
in the countries where the group operates and
generates the taxable income. Current income tax
relating to the items recognised directly in equity
is recognised in equity and not in the statement of
comprehensive income.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax
bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for
all taxable temporary differences except:
· when the deferred income tax liability arises
from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a
business combination and that, at the time of
the transaction, affects neither the accounting
profit nor taxable profit or loss; or
·
when the taxable temporary difference is
associated with investments in subsidiaries,
and the timing of the reversal of the temporary
difference can be controlled and it is probable
that the temporary difference will not reverse
in the foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward
of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences and the carry-forward of unused tax
credits and unused tax losses can be utilised,
except:
· when the deferred income tax asset relating
to the deductible temporary difference arises
from the initial recognition of an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor
taxable profit or loss.
· when the deductible temporary difference is
associated with investments in subsidiaries,
in which case a deferred tax asset is only
recognised to the extent that it is probable
that the temporary difference will reverse
in the foreseeable future and taxable profit
will be available against which the temporary
difference can be utilised.
3. Summary of Significant Accounting Policies
(continued)
(u) Income taxes and other taxes (continued) –
refer note 11
The carrying amount of deferred income tax
assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset
to be utilised.
Unrecognised deferred income tax assets are
reassessed at each reporting date and are
recognised to the extent that it has become
probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to
apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at
the reporting date.
Deferred tax assets and deferred tax liabilities
are offset only if a legally enforceable right exists
to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities
relate to the same taxable entity and the same
taxation authority.
Tax consolidation legislation
Seeing Machines Limited and its wholly-owned
Australian controlled entities implemented the tax
consolidation legislation as of 1 July 2015. The head
entity, Seeing Machines Limited and the controlled
entities in the tax consolidated group continue
to account for their own current and deferred
tax amounts. The Group has applied the Group
allocation approach in determining the appropriate
amount of current taxes and deferred taxes
to allocate to members of the tax consolidated
group. In addition to its own current and deferred
tax amounts, Seeing Machines Limited also
recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused
tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as amounts receivable from or
payable to other entities in the Group. Details
of the tax funding agreement are disclosed in
note 10. Any difference between the amounts
assumed and amounts receivable or payable under
the tax funding agreement are recognised as a
contribution to (or distribution from) wholly-owned
tax consolidated entities.
Goods and service tax
Revenues, expenses and assets are recognised net
of the amount of GST except:
· when the GST incurred on a purchase of goods
and services is not recoverable from the
taxation authority, in which case the GST is
recognised as part of the cost of acquisition
of the asset or as part of the expense item as
applicable; and
·
receivables and payables, which are stated with
the amount of GST included.
The net amount of GST recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the statement of
financial position.
Cash flows are included in the Cash Flow Statement
on a gross basis and the GST component of
cash flows arising from investing and financing
activities, which is recoverable from, or payable
to, the taxation authority is classified as part of
operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable
to, the taxation authority.
(v) Government grants
Government grants are recognised in the
statement of financial position as a liability when
the grant is received.
When the grant relates to an expense item, it is
recognised as income over the periods necessary
to match the grant on a systematic basis to the
costs that it is intended to compensate. They are
not credited directly to shareholders’ equity.
When the grant relates to an asset (development
expenditure), the fair value is credited to
deferred income and is released to the statement
of comprehensive income over the expected
useful life of the relevant asset by equal annual
instalments.
53
3. Summary of Significant Accounting Policies
(continued)
economic best interest.
A fair value measurement of a non-financial asset
takes into account a market participant’s ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.
The Group uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest
level input that is significant to the fair value
measurement as a whole:
·
·
·
Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable
Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognised in
the financial statements on a recurring basis,
the Group determines whether transfers have
occurred between Levels in the hierarchy by re-
assessing categorisation (based on the lowest
level input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.
(y) Comparatives
Where necessary, comparatives have been
reclassified to ensure consistency with current
year disclosures. Totals relating to discontinued
operations in 2016 have been reclassified in 2015
comparative Statement of Comprehensive Income
and Statement of Cash Flows to show the relevant
items as a single line item relating to discontinued
operations.
(w) Earnings per share - refer note 13
Basic earnings per share is calculated as net profit
attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than
dividends) and preference share dividends, divided
by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net
profit attributable to members of the parent,
adjusted for:
·
·
·
Costs of servicing equity (other than dividends)
and preference share dividends;
The after tax effect of dividends and interest
associated with dilutive potential ordinary
shares that have been recognised as expenses;
and
Other non-discretionary changes in revenues
or expenses during the period that would result
from the dilution of potential ordinary shares;
divided by the weighted average number of
ordinary shares and dilutive potential ordinary
shares, adjusted for any bonus element.
(x) Fair value measurements
The Group measures financial instruments
and non-financial assets at fair value at each
balance sheet date. Also, fair values of financial
instruments measured at amortised cost are
disclosed in Note 4. Fair value is the price that
would be received to sell an asset or paid to
transfer a liability in an orderly transaction
between market participants at the measurement
date. The fair value measurement is based on the
presumption that the transaction to sell the asset
or transfer the liability takes place either:
·
·
In the principal market for the asset or liability,
or
In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market
must be accessible to by the Group.
The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
54
4. Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise cash and short-term deposits. The Group has
various other financial assets and liabilities such as trade receivables and trade payables, which arise
directly from its operations.
The Group manages its exposure to key financial risks, including interest rate and currency risk in
accordance with the Group’s financial risk management policy. The objective of this policy is to support
the delivery of the Group’s financial targets whilst protecting future financial security.
Primary responsibility for identification and control of risk rests with the Board. The Board reviews and
agrees policies for managing each of its risks identified below, including, credit allowances and future
cash flow forecast projections.
Risk Exposures and Responses
Interest rate risk
The Group’s exposure to market interest rates relates to the Group’s short-term cash holdings. The Group
did not enter into any forward contracts during the 30 June 2016 financial year.
The Group’s exposure to interest rate risk is minimal. At reporting date, the Group had the following mix
of financial assets exposed to variable interest rates at the designated variable interest rate and are not
designated in cash flow hedges:
FOR THE YEAR ENDED 30 JUNE 2016
Financial Assets
Cash and cash equivalents:
Exposed to Australian variable interest rate risk
Exposed to United States of America variable interest rate risk
Exposed to United Kingdom variable interest rate risk
Exposed to Chile variable interest rate risk
Consolidated
2016
A$
2015
A$
6,652,348
8,025,450
2,270,502
-
5,619,427
2,164,013
4,277,686
2,160,489
Total cash and cash equivalents
16,948,300
14,221,615
In addition to the above, the group had held to maturity financial assets totalling $241,159 (2015: $238,462) that were subject
to short term fixed interest rates.
Interest rate risk sensitivity
The Group’s policy is to not hedge against interest rate movements as funds held are in cash and short-term deposits.
At 30 June, 2016, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post-tax
profit would have been affected as follows:
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated
+ 1% (100 basis points)
- .5% (50 basis points)
The movement in Profit is due to interest rate changes on cash balances.
Post Tax Profit – Higher / (Lower)
2015
2016
A$
A$
142,953
(71,477)
189,821
(94,911)
55
4. Financial Risk Management Objectives and Policies (continued)
Foreign currency risk
As a result of significant sales in North America, South America and Europe (denominated in those currencies), staffing
costs and significant purchases of inventory denominated in United States dollars, the Group’s statement of financial
position can be affected by movement in exchange rates generally and the US$/A$ exchange rate in particular. The Group
seeks to mitigate the effect of its foreign currency exposure by operating US Dollar bank accounts. Approximately 53% of
the Group’s sales are denominated in currencies other than the functional currency of the operating entity making the sale,
whilst approximately 34% of costs are denominated in the functional currency.
The Group requires that on specific contracts with a value greater than A$200,000, the contract may be hedged to
any level within the amount of the contract. Group policy is that forward exchange contracts are limited to a total of
A$2,000,000.
It is the Group’s policy not to enter into forward contracts until a firm commitment is in place and to negotiate the terms
of the hedge derivative to exactly match the terms of the hedged item to maximize hedge effectiveness. The Group did not
enter into any forward contracts during the 30 June 2016 financial year. Further, for the purpose of settlement of accounts
that will likely occur within three months, funds received may be held in a currency other than the functional currency to
settle such amounts.
At 30 June 2015 the Group had the following exposure to foreign currency that is not designated in cash flow hedges:
Consolidated
2016
A$
2015
A$
8,025,450
2,270,502
-
13,575,595
-
8,876
5,893
23,886,316
(250,038)
(34,042)
(3,770)
-
(287,850)
23,598,466
2,164,013
4,277,686
2,160,489
6,262,538
-
5,511
-
14,870,237
(1,301,237)
(5,709)
(3,221)
(4,094)
(1,314,261)
13,555,976
FOR THE YEAR ENDED 30 JUNE 2016
Financial Assets
Cash and cash equivalents (US$)
Cash and cash equivalents (GB£)
Cash and cash equivalents (CLP)
Trade and other receivables (US$)
Trade and other receivables (CLP)
Trade and other receivables (NZD)
Trade and other receivables (ZAR)
Total
Financial Liabilities
Trade and other payables (US$)
Trade and other payables (EUR)
Trade and other payables (GBP)
Trade and Other Payables (CLP)
Total
Net exposure
56
4. Financial Risk Management Objectives and Policies (continued)
Foreign currency risk (continued)
The following sensitivity is based on the foreign currency risk exposures in existence at the reporting date:
Had the Australian dollar moved against major trading currencies, as illustrated in the table below, with all other
variables held constant, post tax profit and equity would have been affected as follows:
FOR THE YEAR ENDED 30 JUNE 2016
Post Tax Profit
Higher / (Lower)
2016
A$
2015
A$
Equity
Higher / (Lower)
2016
A$
2015
A$
Consolidated
Change in USD rate
AUD / foreign currency +10%
AUD / foreign currency -5%
Change in GBP rate
AUD / foreign currency +10%
AUD / foreign currency -5%
Change in CLP rate
AUD / foreign currency +10%
AUD / foreign currency -5%
Change in EUR rate
AUD / foreign currency +10%
AUD / foreign currency -5%
Change in NZD rate
AUD / foreign currency +10%
AUD / foreign currency -5%
Change in ZAR rate
AUD / foreign currency +10%
AUD / foreign currency -5%
(2,045,803)
1,184,412
(647,756)
375,017
(2,045,803)
1,184,412
(647,756)
375,017
(206,067)
119,302
(388,588)
224,972
(206,067)
119,302
(388,588)
224,972
-
-
(196,537)
113,785
-
-
(196,537)
113,785
3,095
(1,792)
519
(300)
3,095
(1,792)
519
(300)
(807)
467
(536)
310
-
-
-
-
(807)
467
(536)
310
-
-
-
-
57
Management believes the reporting date risk exposures are representative of the risk exposure inherent
in financial instruments.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents,
trade and other receivables and derivative instruments. The Group’s exposure to credit risk arises from
potential default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments. Exposure at reporting date is addressed in each particular note. The Group does not hold any
credit derivatives to offset its credit exposure.
4. Financial Risk Management Objectives and Policies (continued)
Trade receivables
The Group trades only with recognized, creditworthy third parties, and as such collateral is not requested
nor is it the Group’s policy to securitise its trade and other receivables.
It is the Group’s policy that all customers who wish to trade are subject to credit verification procedures.
In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s
exposure to bad debts is not significant.
Customer credit risk is managed in line with Group’s established policy, procedures and control relating
to customer credit risk management. The assessment of each customer is done on the payment history
and the reputation and size of the customer. Outstanding customer receivables are regularly monitored
and followed up. An impairment analysis is performed at each reporting date on an individual basis for all
customers.
Capital management and liquidity risk
The Group’s objective is to raise finance as and when needed by share placement. Since the significant
capital raise in March 2016, the group has significant cashflow to manage the risks associated with
liquidity and the directors continue to monitor the cashflow forecasts for liquidity.
The Group manages its capital structure and makes adjustments to it in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may undertake future capital raising by
way of issue of new shares. No changes were made in the objectives, policies or process for managing
capital during the years ended 30 June 2016 and 2015.
The following table reflects all contractually fixed pay-offs and receivables for settlement, repayments
and interest resulting from recognized financial assets and liabilities, including derivative financial
instruments as of 30 June 2016. For derivative financial instruments the market value is presented,
whereas for the other obligations the respective undiscounted cash flows for the respective upcoming
fiscal years are presented. Cash flows for financial assets and liabilities without fixed amount or timing
are based on the conditions existing at 30 June 2016.
Maturity analysis of financial assets and liabilities based on management’s expectation.
The risk implied from the table below reflects a balanced view of cash inflows and outflows. Trade
payables and other financial liabilities mainly originate from the financing of assets used in our ongoing
operations such as plant, equipment and investments in working capital (e.g. inventories and trade
receivables). To monitor existing financial assets and liabilities as well as to enable an effective
controlling of future risks, Seeing Machines Limited has established risk reporting systems that reflects
expectations of management of expected settlement of financial assets and liabilities.
58
4. Financial Risk Management Objectives and Policies (continued)
FOR THE YEAR ENDED 30 JUNE 2016
≤ = 6 months
A$
6 - 12 months
A$
> 1 year
A$
Total
A$
Consolidated Financial Assets
Cash and cash equivalents
Trade and other receivables
Held to maturity financial assets
Consolidated Financial liabilities
Trade and other payables
Net inflow
16,948,300
6,728,906
-
23,677,206
1,801,771
1,801,771
21,875,435
-
57,140
241,159
298,299
-
-
298,299
-
6,284,468
-
6,284,468
-
-
6,284,468
16,948,300
13,070,514
241,159
30,259,973
1,801,771
1,801,771
28,458,202
FOR THE YEAR ENDED 30 JUNE 2015
≤ = 6 months
A$
6 - 12 months
A$
> 1 year
A$
Total
A$
Consolidated Financial Assets
Cash and cash equivalents
Trade and other receivables
Held to maturity financial asset
Consolidated Financial liabilities
Trade and other payables
Net inflow
14,221,615
7,070,833
-
21,292,448
4,075,472
4,075,472
17,216,976
-
83,244
238,462
321,706
-
-
321,706
-
166,489
-
166,489
-
-
166,489
14,221,615
7,320,566
238,462
21,780,643
4,075,472
4,075,472
17,705,171
The group monitors rolling forecasts of liquidity reserves on the basis of expected cash flows.
Fair values
As at 30 June 2016, the carrying values of the financial instruments approximate their fair value.
59
5. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements and estimates on historical experience and on other various
factors it believes to be reasonable under the circumstances, the result of which form the basis of the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgements,
estimates and assumptions are made. Actual results may differ from these estimates under different
assumptions and conditions and may materially affect financial results or the financial position reported in
future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to
the financial statements.
a) Significant accounting judgments
Capitalised development costs
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an
internal project is recognised only when the Group can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use
or sell the asset, how the asset will generate future economic benefits, the availability of resources to
complete the development and the ability to measure reliably the expenditure attributable to the intangible
asset during its development.
Taxation
The Group's accounting policy for taxation requires management's judgement as to the types of
arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also
required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised
on the statement of financial position. Deferred tax assets, including those arising from unrecouped tax
losses, capital losses and temporary differences, are recognised only where it is considered more likely
than not that they will be recovered, which is dependent on the generation of sufficient future taxable
profits.
Assumptions about the generation of future taxable profits and repatriation of retained earnings depend
on management's estimates of future cash flows. These depend on estimates of future production
and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital
management transactions. Judgements are also required about the application of income tax legislation.
These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that
changes in circumstances will alter expectations, which may impact the amount of deferred tax assets
and deferred tax liabilities recognised on the statement of financial position and the amount of other
tax losses and temporary differences not yet recognised. In such circumstances, some or all of the
carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a
corresponding credit or charge to the statement of comprehensive income.
b) Significant accounting estimates and assumptions
Impairment of non-financial assets
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific
to the Group and to the particular asset that may lead to impairment. These include product and
manufacturing performance, technology, economic and political environments and future product
expectations. If an impairment trigger exists the recoverable amount of the asset is determined (higher of
fair value less cost of disposal and its value in use).
60
5. Significant Accounting Judgments, Estimates and Assumptions (continued)
Impairment of intangible assets and capitalised development costs
The Group determines whether intangible assets and capitalised development costs are impaired at least
on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units,
using a value in use discounted cash flow methodology, to which the intangibles with indefinite useful lives
are allocated.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined using the Hull
White method using a trinomial model, with the assumptions detailed in note 29. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting period but may impact expenses and
equity.
Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical experience as well as
manufacturers’ warranties (for plant and equipment). In addition, the condition of the assets is assessed
at least once per year and considered against the remaining useful life. Adjustments to useful lives are
made when considered necessary.
6. Business combinations and acquisition of non-controlling interests
No new business combinations or acquisitions of new controlling interests have occured throughout
the period ending 30 June 2016.
Formation of subsidiary
On 8th August 2014, Seeing Machines Limited incorporated a new entity Seeing Machines Latin America
SpA registered in Chile with its existing distributor GTD. The total capital invested in the new entity was
US$1,036,364 (A$1,120,877). Seeing Machines Limited acquired 55% shares in the new entity by investing
in the form of cash and inventory. The following table represents fair value of net assets contributed for
the shares in Seeing Machines Latin America SpA:
NET ASSETS CONTRIBUTED
US$
A$
Inventory
Cash
Customer Contracts
Fixed Assets
Business know how
Total identifiable net assets
Non-controlling interest
Purchase consideration transferred
420,000
150,000
190,000
93,364
183,000
1,036,364
466,364
570,000
The Group has elected to measure the non-controlling interest in Seeing Machines Latin America SpA at
carrying value which in this case is represented by their share of the net assets in the entity.
From the date of incorporation, Seeing Machines Latin America SpA contributed $6,183,231 of revenue
and $1,864,031 to profit before income tax from continuing operations of the Group. The Business know
how (Goodwill) of $197,923 comprises the fair value of expected synergies arising from the acquisition.
454,250
162,232
205,494
100,978
197,923
1,120,877
504,395
616,482
61
7. Segment Information
An operating segment is a component of the entity that engages in business activities from which it may
earn revenues and ncur expenses, whose operating results are regularly reviewed by the entity’s chief
operating decision makers to make decisions about resources to be allocated to the segment and asses
its performance and for which discrete financial information is available. Management will also consider
other factors in determining operating segments such as the level of segment information presented to
the board of directors.
Operating segments that meet the qualitative criteria as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the qualitative criteria is still reported separately
where information about the segment would be useful to users of the financial statements.
A geographical segment is a distinguishable component of the entity that is engaged in providing products
or services within a particular economic environment and is subject to risks and returns that are different
than those of segments operating in other economic environments.
a) Business segments
FOR THE YEAR ENDED 30 JUNE 2016
A$
A$
DSS (Mining)
Guardian (Fleet)
Other
A$
Total
A$
Revenue
Sales to external customers
Income/ (Expenses)
Net finance income/(expenses)
Depreciation and amortization
Impairment of inventories
Segment profit/(loss)
Current assets as at 30 June 2016
Non-current assets as at 30 June 2016
Total Assets as at 30 June 2016
Total Liabilities as at 30 June 2016
Other Segment Information
Capital expenditure
29,158,440
3,315,416
1,087,987
33,561,843
1,340,457
-
-
26,555,036
4,112,470
6,149,260
10,261,730
-
-
103
-
(5,242,981)
(14,023,689)
10,918,024
135,208
11,053,232
(84,316)
30,413
892,116
-
(14,129,313)
18,114,557
5,236,420
23,350,977
(4,157,306)
1,370,973
892,116
(5,242,981)
(1,597,966)
33,145,051
11,520,888
44,665,939
(4,241,622)
-
2,526,366
2,526,366
62
7. Segment Information (continued)
FOR THE YEAR ENDED 30 JUNE 2015
A$
A$
DSS (Mining)
Guardian (Fleet)
Other
A$
Total
A$
Revenue
Sales to external customers
Income/ (Expenses)
Net finance income/(expenses)
Depreciation and amortization
Impairment of inventories
Segment profit/(loss)
Current assets as at 30 June 2015
Non-current assets as at 30 June 2015
Total Assets as at 30 June 2015
Total Liabilities as at 30 June 2015
Other Segment Information
Capital expenditure
b) Geographic information
FOR THE YEAR ENDED 30 JUNE 2016
Revenue from external customers
Australia
North America
South America
Other geographical regions
9,303,412
2,575,226
979,673
12,858,311
-
-
-
-
-
-
251,359
923,485
(146,555)
251,359
923,485
(146,555)
3,223,900
(846,101)
(14,408,065)
(12,030,266)
17,336,710
-
17,336,710
(343,867)
445,200
-
-
-
-
-
14,684,987
4,181,454
18,866,441
(5,724,998)
32,021,697
4,181,454
36,203,151
(6,068,865)
2,841,412
3,286,612
2016
A$
2015
A$
5,155,247
27,660,571
-
746,025
4,495,220
4,783,004
448,457
3,131,630
Total revenue from external customers
33,561,843
12,858,311
Non-current assets
Australia
North America
South America
Other geographical regions
11,470,539
50,349
-
-
4,117,862
63,592
-
-
Total non-current assets
11,520,888
4,181,454
63
8. Discontinued Operations
a) Details of discontinued operations
During the year, the Board agreed to sell the shares in Seeing Machines Latin America SpA (SMLA), a
majority owned subsidiary, engaged in DSS mining operations, with 55% holding, to the non-controlling
shareholders of the subsidiary. The terms of the sale had been agreed at 31 December 2015, at which
point the subsidiary was reclassified as an Asset Held for Sale. The sale was finalised on 13th of April. A
loss on disposal was recorded. The decision was made after the Parent company entered into a licensing
agreement with Caterpillar Inc. for the sale and distribution of all DSS mining products and services.
Subsequent to the sale of the SMLA shares, the owners of the entity have been granted distribution rights
for the Fleet business for designated countries/regions within South America.
b) Analysis of the profit for the year from discontinued operations
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Other Gains
Expenses
Net Profit
Attributable income tax expense
Loss on disposal
(Loss)/profit from the discontinued operations
2016
A$
2015
A$
2,546,749
6,183,231
164,524
-
(2,397,320)
(4,319,200)
313,953
(78,698)
235,255
(255,740)
(20,485)
1,864,031
(427,282)
1,436,749
-
1,436,749
Space intentionally left blank.
64
8. Discontinued Operations (continued)
c) Assets and liabilities of discontinued operations
The assets and liabilities of the discontinued operations at the effective date of sale
were as follows:
Assets
Cash
Inventories
Trade and other receivables
Property plant and equipment
Other assets
Liabilities
Trade payables
Current tax liabilities
2016
A$
2015
A$
2,445,969
479,331
432,793
109,440
29,074
3,496,607
(542,317)
(126,783)
(669,100)
2,185,876
454,165
977,850
411,734
-
4,029,625
(1,382,671)
(34,697)
(1,417,368)
Net assets at date of sale
2,827,507
2,612,257
The loss on disposal of the discontinued operation is reconciled as follows:
Net assets of SMLA at date of sale
Non-controlling equity interests
Net cash consideration received
Net loss on disposal
2,827,507
(1,272,503)
(1,299,264)
255,740
Space intentionally left blank.
65
8. Discontinued Operations (continued)
d) Cash Flow information of discontinued operations
The net cash flows of SMLA are as follows:
2016
A$
2015
A$
Operating activities
260,095
1,990,565
Cash outflow on disposal
Cash consideration received
Cash and cash equivalents disposed of
Aggregate details of the disposal are as follows:
Disposal price
Cash consideration
Assets and liabilities held at disposal date:
Cash
Inventories
Trade & Other Receivables
Property Plant & Equipment
Other Current Assets
Trade Payables
Current Tax Liabilities
Non-controlling equity interests
Net Loss on disposal
Net cash received
9. Other Income
R&D grant recognised
Marketing Rebate
Other
1,299,264
(2,445,969)
1,299,264
1,299,264
2,445,969
479,331
432,793
109,440
29,074
(542,317)
(126,783)
(1,272,503)
(255,740)
1,299,264
Consolidated
2016
A$
2015
A$
2,294,986
261,137
(10,137)
2,545,986
2,206,117
-
11,827
2,217,944
A total of $2,294,986 relating to Research and Development refundable tax offsets received from the Australian Taxation
Office were recognised during the year (2015: $2,206,117). These are included in Other Income, and result from Research and
Development expenditure in the previous financial year. There are no conditions attached to this income.
66
10. Expenses
a. Depreciation, impairment, and amortisation expense
Depreciation expense
Amortisation expense
Total
b. Employee benefits expense
Wages and salaries
Share-based payment expense
Wages and salaries capitalised to development costs
Total
c. Other expenses
Inventory write down
Impairment of intangibles
Other
Total
Consolidated
2016
A$
2015
A$
577,900
314,217
892,117
20,976,068
476,711
(1,589,204)
19,863,575
5,242,981
-
21
5,243,002
406,698
370,232
776,930
17,997,587
417,939
(1,792,331)
16,623,195
-
146,555
-
146,555
Space intentionally left blank.
67
11. Income Tax
FOR THE YEAR ENDED 30 JUNE 2016
a) Income tax expense
The major components of income tax expense are:
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Taxation loss not recognised
Tax loss utilised – not previously recognised
Deferred income tax
Relating to the origination and reversal of timing differences
Temporary differences not recognised
Total
Consolidated
2016
A$
2015
A$
169,066
4,975
(80,480)
(69,751)
896,710
(896,710)
23,810
(2,931,861)
-
2,973,506
-
964,942
(964,942)
41,645
b) Numerical reconciliation between aggregate tax expense recognised in the
statement of comprehensive income
A reconciliation between tax expense and the product of the accounting profit be-
fore income tax multiplied by the Group’s applicable income tax rate is as follows:
Total accounting profit / (loss) before income tax
(1,597,967)
(12,030,266)
At the parents entity's statutory income tax rate of 30% (2015: 30%)
Share based payments (equity settled)
Entertainment
Research and development costs claimed
Research and development – R&D Income
Controlled foreign company Australian tax attribution
Legal fees
Research and development – R&D tax credit
Origination and reversal of temporary differences
Capitalised R&D costs
Capitalised patent costs
Temporary differences recognised
Temporary differences not recognised
Adjustments in respect of current income tax of previous years
Taxation loss not recognised
Tax loss utilised – not previously recognised
Tax payable on capital gain from sale of subsidiary
Effect of foreign tax rates
Total
68
(479,390)
76,865
4,343
-
-
-
5,778
(688,496)
-
(94,588)
42,582
896,710
4,975
165,742
(69,751)
135,230
23,810
23,810
(3,609,080)
91,469
4,309
1,820,859
(171,584)
436,719
29,637
(661,835)
(435,792)
(144,614)
204,068
(964,942)
-
2,973,506
-
-
468,925
41,645
11. Income Tax (continued)
FOR THE YEAR ENDED 30 JUNE 2016
c) Deferred income tax at 30 June relates to the following:
i) Deferred tax liabilities
Accelerated depreciation: plant and equipment
Intangible assets
Unrealised FX
Interest receivable
Gross deferred tax liabilities
Set-off deferred tax assets
Net deferred tax liabilities
(ii) Deferred tax assets
Provision for Doubtful Debts
Accrued expenses
Provisions:
Annual leave
Long service leave
Warranties
S. 40-880 Deduction
Unrealised FX
Unearned revenue
Depreciation: plant and equipment
Gross deferred tax assets
Set-off deferred tax liabilities
Net deferred tax balance not brought to account
Tax losses
Losses not recognized
Net deferred tax asset
Consolidated
Statement of Financial Position
2015
2016
A$
A$
-
(816,208)
-
-
(816,208)
816,208
-
21,428
112,316
367,092
95,781
24,721
298,424
424,211
-
-
1,343,973
(816,208)
527,765
5,697,533
(5,611,952)
85,581
-
(838,250)
(822,783)
-
(1,661,033)
1,661,033
-
96,754
268,903
302,468
82,404
44,231
438,399
-
58,929
-
1,292,088
(1,661,033)
(368,945)
5,671,946
(5,671,946)
-
69
11. Income Tax (continued)
d) Unrecognised temporary differences
At 30 June 2016, Seeing Machines Limited (consolidated) has unrecognised temporary differences in
relation to unbooked tax losses of $18,706,506 (DTA of $5,611,952) for which no deferred tax asset has
been recognised on the statement of financial position (2015: Unrecognised tax losses of $18,906,485
and DTA of $5,671,946). These losses are available for recoupment subject to satisfaction of relevant
statutory tests. As at 30 June 2016 there are net unrecognised deductible temporary differences of
$75,643 (DTA of $22,693) for which no deferred tax liabilities has been recognised on the statement of
financial position (2015: net unrecognised assessable temporary differences of $1,229,816 and DTL of
$368,945).
e) Tax consolidation
(i) Members of the tax consolidated group and the tax sharing arrangement
Seeing Machines Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated
group with effect from 1 July 2015. Seeing Machines Limited is the head entity of the tax consolidated
group. Members of the tax consolidated group have entered into a tax sharing agreement that provides
for the allocation of income tax liabilities between the entities should the head entity default on its tax
payment obligations. No amounts have been recognised in the financial statements in respect of this
agreement on the basis that the possibility of default is remote.
(ii) Tax effect accounting by members of the tax consolidated group
Measurement method adopted under AASB Interpretation 1052 Tax Consolidation Accounting
The head entity and the controlled entities in the tax consolidated group continue to account for their own
current and deferred tax amounts. The Group has applied the group allocation approach in determining the
appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated
group. The current and deferred tax amounts are measured in a systematic manner that is consistent
with the broad principles in AASB 112 Income Taxes. The nature of the tax funding agreement is discussed
further below. In addition to its own current and deferred tax amounts, the head entity also recognises
current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused
tax credits assumed from controlled entities in the tax consolidated group.
Nature of the tax funding agreement
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding
agreement requires payments to/from the head entity to be recognised via an inter-entity receivable
(payable) which is at call. To the extent that there is a difference between the amount charged under
the tax funding agreement and the allocation under AASB Interpretation 1052, the head entity accounts
for these as equity transactions with the subsidiaries. The amounts receivable or payable under the
tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued
as soon as practicable after the end of each financial year. The head entity may also require payment of
interim funding amounts to assist with its obligations to pay tax instalments.
12. Dividends Paid and Proposed
No dividends or distributions have been made to members during the year ended 30 June 2016 (2015: nil)
and no dividends or distributions have been recommended or declared by the directors in respect of the
year ended 30 June 2016 (2015: nil).
70
13. Earnings Per Share
Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders
of the Parent by the weighted average number of ordinary shares outstanding during the year. Diluted EPS
amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent (after
adjusting for interest on the convertible preference shares) by the sum of the weighted average number
of ordinary shares outstanding during the year and the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income used in the basic and diluted earnings per share computations:
a) Earnings used in calculating earnings per share
Consolidated
2016
A$
2015
A$
For basic and diluted earnings per share:
Net Profit / (loss)
Net Profit / (loss) attributable to ordinary equity holders of the company
(1,739,248)
(1,739,248)
(11,281,698)
(11,281,698)
b) Weighted average number of shares
2016
Number
2015
Number
Weighted average number of ordinary shares for basic earnings per share
Weighted average number of ordinary shares adjusted for effect of dilution
981,738,163
981,738,163
870,187,109
870,187,109
There are no instruments (e.g. share options) excluded from the calculation of diluted earnings per share
that could potentially dilute basic earnings per share in the future because they are un-dilutive for either
of the periods presented.
There have been no transactions involving ordinary shares or potential ordinary shares outstanding
between the reporting date and the date of completion of these financial statements.
c) Information on the classification of securities
Options granted to employees (including KMP) as well as in the form of capital raising cost as described
in note 31 are considered to be potential ordinary shares and have been included in the determination of
diluted earnings per share to the extent that they are dilutive. These shares have not been included in the
determination of basic earnings per share.
71
14. Parent Entity Information
INFORMATION RELATING TO SEEING MACHINES LIMITED
2016
A$
2015
A$
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Share based payment reserve
Total shareholders’ equity
Profit (Loss) of the parent entity
Total comprehensive income of the parent entity
Significant accounting policies
33,804,979
45,859,656
4,377,363
4,994,527
69,365,196
(30,061,230)
1,561,163
40,865,129
(1,097,631)
(1,097,631)
27,809,062
32,177,928
4,410,158
4,430,547
56,189,047
(29,753,815)
1,312,149
27,747,381
(12,948,806)
(12,948,806)
The accounting policies of the parent entity are consistent with those of the consolidated entity, as
disclosed in Note 3, except, investments in subsidiaries are accounted for at cost, less any impairment, in
the parent entity.
15. Current Assets – Cash and Cash Equivalents
Cash at bank and in hand
Short-term deposits
Consolidated
2016
A$
2015
A$
16,948,300
-
16,948,300
6,174,355
8,047,260
14,221,615
Reconciliation to Cash Flow Statement
For the purpose of the Cash Flow Statement, cash and cash equivalents comprise the following at 30 June:
Consolidated
2016
A$
2015
A$
16,948,300
-
16,948,300
6,174,355
8,047,260
14,221,615
Cash at bank and in hand
Short-term deposits
72
16. Current Assets – Trade and Other Receivables
Current
Trade receivables
Provision for doubtful debts
Deferred finance income
Other receivables
Non-Current
Trade receivables
Deferred finance income
Consolidated
2016
A$
2015
A$
7,533,190
(71,427)
(867,277)
6,594,486
191,560
6,786,046
6,868,308
(583,840)
6,284,468
13,070,514
7,511,347
(322,512)
(34,758)
7,154,077
-
7,154,077
166,489
-
166,489
7,320,566
The Non-current trade receivable amount of $6,868,308 relates to the sale to Caterpillar of a licence to manufacture and
distribute the DSS mining product. The agreement was made outside of our standard 30-60 day terms with the amounts
scheduled to be repaid over three years.
a) Allowances for impairment loss
Trade receivables are non-interest bearing and are generally 30-60 days terms. A provision for impairment loss is
recognised when there is objective evidence that an individual trade receivable is impaired. A provision for impairment loss
of $71,427 (2015: $322,512) has been recognised by the Group. See below for movement in the provision for impairment of
receivables.
At 1 July 2014
Charge for the year
Utilised
Unused amounts reversed
As at 30 June 2015
Charge for the year
Utilised
Unused amounts reversed
As at 30 June 2016
Individually impaired
A$
276,902
126,200
(19,904)
(60,686)
322,512
71,427
(315,224)
(7,288)
71,427
The ageing analysis of trade receivables is as follows:
e
u
d
t
o
n
s
y
a
d
0
3
-
0
e
u
d
t
o
n
s
y
a
d
0
3
-
0
d
e
r
i
a
p
m
i
e
u
d
t
o
n
s
y
a
d
0
6
-
1
3
I
N
D
P
s
y
a
d
0
6
-
1
3
I
*
N
D
P
s
y
a
d
0
9
-
1
6
I
*
N
D
P
s
y
a
d
+
1
9
I
D
P
s
y
a
d
+
1
9
l
a
t
o
T
2016
2015
14,401,499
13,794,941
7,677,836
6,766,839
-
-
494,191
83,490
18,092
315,224
73
16. Current Assets – Trade and Other Receivables (continued)
a) Allowances for impairment loss (continued)
Receivables past due but not considered impaired are: Consolidated $535,131 (2015: $595,773). Payment
terms on these amounts have not been re-negotiated. Direct contact has been made with relevant debtors
and satisfaction has been gained that payment will be received in full. Other balances within trade and
other receivables do not contain impaired assets and are not past due. It is expected that other balances
will be received when due.
*Past due not impaired
b) Fair value and credit risk
Apart from Caterpillar receivable, all other trade receivables are short term in nature and therefore, the
carrying values approximate their fair value. The Caterpillar receivable has been discounted to present
value with a portion of the receivable recognised as finance income when received.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor
is it the Group’s policy to transfer (on-sell) receivables.
c) Foreign exchange risk
Detail regarding foreign exchange risk exposure is disclosed in note 4.
17. Current Assets – Inventories
Raw materials
Finished goods
Stock in transit
Work in progress
Total inventories at the lower of cost and net realizable value
Consolidated
2016
A$
2015
A$
-
8,297,373
-
122,977
8,420,350
139,734
2,157,514
115,750
7,769,635
10,182,633
Inventory expense
Inventories recognised as an expense for the year ended 30 June 2016 totalled $4,647,393 (2015: $4,465,423) for the Group.
This expense has been included in cost of sales. The inventory of fleet units was written down to reflect the net realisable value.
The total expense recognised for the write down totalled to A$5,242,981 (2015: NIL). This expense is included in other expenses
in the statement of profit or loss as shown in Note 10.
18. Other Current Assets
Prepayments
Rental Bonds
Accrued income
Total
74
Consolidated
2016
A$
2015
A$
432,766
20,057
210,792
663,615
205,305
19,605
-
224,910
19. Non-current Assets – Property, Plant and Equipment
a) Reconciliation of carrying amounts at the beginning and end of the year
CONSOLIDATED
At 1 July 2015 net of accumulated depreciation and
impairment
Additions
Additions through the incorporation of a subsidiary
Disposals
Depreciation charge for the year
At 30 June 2016 net of accumulated depreciation and impairment
At 30 June 2016
Cost
Accumulated depreciation and impairment
Net carrying amount
CONSOLIDATED
At 1 July 2014 net of accumulated depreciation and
impairment
Additions
Additions through the incorporation of a subsidiary
Disposals
Depreciation charge for the year
At 30 June 2015 net of accumulated depreciation and impairment
At 30 June 2015
Cost
Accumulated depreciation and impairment
Net carrying amount
Office Furniture,
Fittings & Equipment
A$
Research &
Development
Software and
Equipment
A$
614,942
463,899
(119,789)
(1,060)
(416,842)
541,150
1,556,594
(1,015,444)
541,150
248,272
63,597
-
-
(161,058)
150,811
548,318
(397,507)
150,811
Total
A$
863,214
527,496
(119,789)
(1,060)
(577,900)
691,961
2,104,912
(1,412,951)
691,961
Office Furniture,
Fittings & Equipment
A$
Research &
Development
Software and
Equipment
A$
Total
A$
188,917
267,391
456,308
597,757
121,567
-
(293,299)
614,942
1,216,401
(601,459)
614,942
187,402
-
(93,122)
(113,399)
248,272
484,721
(236,449)
248,272
785,159
121,567
(93,122)
(406,698)
863,214
1,701,122
(837,908)
863,214
75
20. Non-current Assets – Intangible Assets and Development Costs
a) Reconciliation of carrying amounts at the beginning and end of the year
CONSOLIDATED
A$
A$
A$
A$
A$
Development Costs
Patents, Licences and
Trademarks
Customer
Contracts
Goodwill
Total
At 1 July 2015 net of accumulated amortisation
Additions
Disposal through sale of subsidiary
Amortisation
At 30 June 2016 net of accumulated amortisation
At 30 June 2016
Cost
Accumulated amortisation
Net carrying amount
1,840,926
1,683,575
-
(148,796)
3,375,705
3,524,501
(148,796)
3,375,705
878,689
315,295
-
(165,421)
1,028,563
1,660,856
(632,293)
1,028,563
75,589
-
(75,589)
216,356
-
(216,356)
-
-
-
-
-
-
-
-
-
-
3,011,560
1,998,870
(291,945)
(314,217)
4,404,268
5,185,357
(781,089)
4,404,268
Development Costs
Patents, Licences and
Trademarks
Customer
Contracts
Goodwill
Total
A$
480,757
482,048
-
-
(20)
-
-
(84,096)
(153,252)
-
878,689
-
75,589
1,345,561
(466,872)
878,689
228,841
(153,252)
75,589
A$
-
-
A$
-
-
228,841
216,356
A$
1,288,655
1,934,686
445,197
-
(146,555)
(370,232)
(140,191)
3,011,560
3,631,684
(620,124)
3,011,560
-
-
-
-
216,356
216,356
-
216,356
CONSOLIDATED
At 1 July 2014 net of accumulated amortisation
Additions
Additions through incorporation of the subsidiary
Disposal
Impaired
Amortisation
Transferred to non-current financial asset (Note 21)
At 30 June 2015 net of accumulated amortisation
At 30 June 2015
Cost
Accumulated amortisation
Net carrying amount
A$
807,898
1,452,638
-
-
(146,535)
(132,884)
(140,191)
1,840,926
1,840,926
-
1,840,926
76
20. Non-current Assets – Intangible Assets and Development Costs (continued)
a) Description of Group’s intangible assets
i. Development costs
Development costs are carried at cost less accumulated amortisation and accumulated impairment losses.
Development costs represent costs incurred in the development phase of internal projects to bring the Group’s
products to sale. This intangible asset has been assessed as having a finite useful life and is amortised over a
period of three years. Amortisation commences once the product is available for sale and future economic benefits
from development can arise. If an impairment indication arises, the recoverable amount is estimated and an
impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.
ii. Patents, licenses and trademarks
Patents, licences and trademarks have been acquired and are carried at cost. These intangible assets have been
determined to have useful lives between 3 and 20 years and are amortised using the straight line method over
the relevant period. Patents, licences and trademarks are subject to impairment testing on an annual basis or
whenever there is an indication of impairment.
b) Impairment losses recognised
i. Continuing operations
No impairment loss on intangible assets has been recognised in the year to 30 June 2016 (2015: $146,555).
21. Financial Assets and Financial Liabilities
Available for sale financial assets at fair value through profit or loss
Investment in NuCoria Pty Limited
Total available for sale financial assets at fair value through profit or loss
Held to maturity financial assets
Term deposit
Total held to maturity financial assets
Total financial instruments at fair value
Total current
Total non-current
Consolidated
2016
A$
2015
A$
140,191
140,191
241,159
241,159
381,350
241,159
140,191
The Group transferred the development costs incurred on Truefield as an investment in NuCoria Pty
Limited to commercialise the Truefield Analyser. NuCoria is currently not in operation and is in the process
of raising further capital. Until the company has raised further capital the fair value of the investment
cannot be reliably measured, therefore the carrying value approximates fair value.
140,191
140,191
238,462
238,462
378,653
238,462
140,191
77
22. Current Liabilities - Trade and Other Payables
Trade payables
Other payables
Total
a) Fair value
Consolidated
2016
A$
2015
A$
635,154
1,166,617
1,801,771
1,500,941
2,574,531
4,075,472
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
b) Foreign exchange, interest rate and liquidity risk
Information regarding foreign exchange, interest rate and liquidity risk exposure is set out in Note 4.
23. Current Liabilities – Provisions
Annual Leave
Long service leave
Warranties provision
Total
Consolidated
2016
A$
2015
A$
1,223,639
285,945
82,403
1,591,987
1,008,226
254,291
147,438
1,409,955
a) Nature and timing of provisions
Refer to Note 3(p) for the relevant accounting policy and a discussion of the significant estimations and
assumptions applied in the measurement of the provisions.
24. Non-current Liabilities – Provisions
Long service leave
Total
a) Nature and timing of provisions
Consolidated
2016
A$
2015
A$
33,324
33,324
20,389
20,389
Refer to Note 3(p) for the relevant accounting policy and a discussion of the significant estimations and
assumptions applied in the measurement of the provisions.
78
25. Warranties - Provisions
As at 01 June 2014
Arising during the year
Utilised
Unused Amounts Reversed
As at 30 June 2015
Arising during the year
Utilised
Unused Amounts Reversed
As at 30 June 2016
Maintenance Warranties
A$
94,985
52,453
-
-
147,438
82,404
-
(147,438)
82,404
All returns for FY 2016 have been covered by the manufacturer’s warranty. Due to a lack of historical data
for the fleet product, a 2% failure rate for the fleet product has been provided for. This figure is based on
historical data for the ruggedized mining product.
Space intentionally left blank.
79
26. Contributed Equity
Ordinary Shares
Treasury Shares
a) Ordinary shares.
Issued and fully paid
Fully paid shares carry one vote per share and carry the right to dividends.
At 1 July 2014
Share issue
Treasury Shares issued
Transaction costs
At 30 June 2015
Share issued
Treasury Shares issued
Transaction costs
At 30 June 2016
Consolidated
2016
A$
2015
A$
70,592,134
(1,226,938)
69,365,196
57,490,870
(1,301,823)
56,189,047
Consolidated
2016
2015
1,073,583,411
940,978,309
Shares
A$
822,226,253
114,364,703
4,387,353
-
940,978,309
133,452,383
(847,281)
-
1,073,583,411
45,069,064
12,301,678
(594,713)
(586,982)
56,189,047
13,136,529
42,356
(2,736)
69,365,196
847,281 treasury shares were sold during the year ended 30 June 2016.
27. Retained Earnings and Reserves
a) Movements in Retained earnings and reserves
Refer to the Statement of Changes in Equity for movements in retained earnings (accumulated losses) and
other reserves.
b) Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the
translation of the financial statements of foreign subsidiaries.
Employee equity benefits reserve
The employee equity benefits reserve is used to record the value of share based payments provided to
employees, including KMP, as part of their remuneration. Refer to note 31 for further details of the plan.
80
28. Statement Cash Flow Reconciliation
FOR THE YEAR ENDED 30 JUNE 2016
a) Reconciliation of net profit / (loss) after tax to net cash flows from operations
Consolidated
2016
A$
2015
A$
Profit / (loss) after tax
Depreciation
Amortisation
Net loss on foreign exchange (unrealised)
Net (gain)/loss on disposal of the assets
Impairment loss recognised
Share-based payments
Net operating cash flows from discontinued operations
Amortisation of customer contracts
Loss from discontinued operations
Provision for income tax
Bad debts
Warranties expense
Doubtful debt expense
Foreign tax withholdings
Changes in assets / liabilities net of the effect of purchases and disposals of subsidiary
(Increase) / decrease in inventories
(Increase) / decrease in trade and other receivables
Decrease / (increase) in other assets
Increase / (decrease) in provisions
Increase / (decrease) in trade and other payables
Increase / (decrease) in deferred revenue
Net Cash used in operating activities
29. Related Party Disclosure
a) Information about subsidiaries
(1,642,261)
577,900
314,217
1,414,040
8
5,242,981
476,711
260,095
-
20,485
(20,376)
256,998
(65,034)
(251,085)
-
(3,837,372)
(8,040,415)
(443,522)
260,002
(1,546,781)
1,948,889
(5,074,520)
(10,635,161)
406,698
216,980
(2,826,977)
(222)
146,555
417,939
-
153,252
-
381,790
19,904
52,453
45,610
(10,232)
(6,433,066)
(1,438,632)
(253,484)
438,035
698,950
-
(18,619,608)
The consolidated financial statements include the financial statements of Seeing Machines Limited and its
subsidiaries’ details are as follows.
Name
Seeing Machines Incorporated
Seeing Machines Latin America SpA
Seeing Machines Executive Share Plan Pty Ltd
Seeing Machines Share Plans Trust
Seeing Machines (Sales) Pty Ltd
Country of
Incorporation
United States
Chile
Australia
Australia
Australia
% Equity Interest
Investment (A$)
2016
2015
2016
2015
100%
0%
100%
100%
100%
100%
55%
100%
100%
100%
770,307
-
100
10
12
770,307
616,482
100
10
12
81
29. Related Party Disclosure (continued)
·
·
·
·
·
Seeing Machines Incorporated was incorporated in Delaware, United States on 21 April 2008.
Seeing Machines Latin America SpA was incorporated in Santiago, Chile on 8 August 2014.
Seeing Machines Executive Share Plan Pty Limited was incorporated in the Australian Capital Territory, Australia on 20 May
2013.
Seeing Machines Executive Share Plans Trust was settled in the Australian Capital Territory, Australia on 31 May 2013.
Seeing Machines (Sales) Pty Limited formerly known as Truefield Ophthalmic Devices Pty Limited was incorporated in
Victoria, Australia on 9 April 2013.
b) Materially owned subsidiaries
Ownership information of subsidiaries that have material non-controlling interests are provided below:
Proportion of equity interest held by non-controlling interests:
Name
Seeing Machines Latin America SpA
Country of incorporation
2016
Chile
Name
Accumulated balances of material non-controlling interest
Seeing Machines Latin America SpA
Profit allocated to material non-controlling interest
2016
-
-
-
2015
2015
45%
1,175,516
646,537
The summarised financial information of this subsidiary is included in note 8 Discontinued Operations.
(c) Key management personnel
Details relating to key management personnel, including remuneration paid are included in note 30.
(d) Transactions with related parties
In 2011, Seeing Machines Limited (the parent entity) converted an intercompany loan in its subsidiary, Seeing Machines Inc. to
equity as per note 29(a) above.
Seeing Machines Latin America(SMLA) buys hardware and software services from Seeing Machines Limited for the purpose of
resale to its customers.
GTD services some customers on behalf of SMLA and recovers the cost of supplying these services from SMLA. The following
table provides the total amount of transactions that have been entered into with related parties for the relevant financial year.
Seeing Machines Inc
Seeing Machines Latin America
SpA
GTD Ingenieria de Sistemas SpA
Sales to related
parties
Purchases from
related parties
Amounts owed by
related parties
Amounts owed to
related parties
A$
A$
A$
A$
-
-
7,359,915
7,447,530
-
-
1,303,916
53,876
1,082,411
646,698
-
-
3,158,390
2,485,989
-
-
415,877
-
-
-
-
-
-
-
2015
2016
2015
2016
2015
2016
The intercompany balances are eliminated on consolidation.
82
29. Related Party Disclosure (continued)
e) Director-related transactions
i. Shareholdings of Directors
Shares in Seeing Machines Limited
30 JUNE 2016
Directors
T Winters
K Kroeger1,5
D Gaul2
M Roberts
R Burger
J A Walker
J D Walker3
Peter Housden
Les Carmichael
Yong Kang NG4
Total
Balance
01 July 2015
Granted as
Remuneration
Acquired or sold
for cash
Net chance
other
Balance
30 June 2016
1,632,166
2,272,357
3,400,000
4,995,376
-
-
600,000
-
-
-
260,310
64,286
130,155
156,186
130,155
156,186
69,796
-
-
-
12,899,899
967,074
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,530,155)
(5,151,562)
-
-
(669,796)
-
-
-
1,892,476
2,336,643
-
-
130,155
156,186
-
-
-
-
(9,351,513)
4,515,460
30 JUNE 2015
Balance
01 July 2014
Granted as
Remuneration
Acquired or sold
for cash
Net chance
other
Balance
30 June 2015
Directors
T Winters
K Kroeger1,5
D Gaul2
M Roberts
R Burger
J A Walker
J D Walker3,6
Total
Notes
1,632,166
2,272,357
3,300,000
13,495,376
-
-
320,000
21,019,899
-
-
-
-
-
-
-
-
-
-
100,000
(8,500,000)
-
-
280,000
(8,120,000)
-
-
-
-
-
-
-
-
1,632,166
2,272,357
3,400,000
4,995,376
-
-
600,000
12,899,899
1. K Kroeger holds shares through Cook Kroeger Superannuation Fund.
2. D Gaul holds shares through Jaiclimb Pty Limited.
3. J D Walker holds shares through Kirri Cove Pty Limited ATF Kirri Cove Superannuation Fund.
4. Yong Kang NG has no direct shareholding in the Company. He will have an indirect interest in the Company
by virtue of his direct and deemed (by virtue of his spouse) ownership of shares in V S Industry Berhad,
being 0.086% of VSI’s current issued share capital.
5. K Kroeger has been issued with 1,286,503 share options (2015: 5,606,250) as part of executive
remuneration
6. No closing balance shown for those directors that resigned during the period.
ii) Other Director related transactions
All transactions with director-related entities were made under normal commercial terms and conditions.
83
30. Key management personnel
a) Details of Key Management Personnel
i) Directors
Non Executive Chairman
Managing Director
Non-Executive Director – resigned 22 March 2016
Non-Executive Director – resigned 31 March 2016
Non Executive Director
Non Executive Director
Executive Director - resigned 1 March 2016
Terry Winters
Ken Kroeger
David Gaul
Michael Roberts
Rudolph Burger
James A Walker
James D Walker
Peter Housden Non-Executive director – appointed 31 March 2016
Les Carmichael Non-Executive director – appointed 1 February 2016
Yong Kang NG Non-Executive director – appointed 22 March 2016
ii) Executives (Other Key Management Personnel)
Paul Angelatos
Tim Edwards
David Nagy
Sebastian Rougeaux
Chief Operating Officer
Chief Technology Officer
Senior Vice President Product Management – resigned on 31 May 2016
Principal Research Scientist
b) Compensation for Key Management Personnel
FOR THE YEAR ENDED 30 JUNE 2016
Salary / Fees / Bonus / Leave
Superannuation
Options / Rights
A$
A$
A$
Short-term
Post-Employment
Share-Based Payments
A$
Total
75,000
349,158
283,857
28,125
49,272
35,113
45,000
12,319
17,109
7,631
938,713
1,841,297
7,125
35,841
25,818
2,672
-
-
4,275
-
-
-
-
25,000
112,763
14,250
12,500
12,500
15,000
15,000
-
-
-
-
75,731
207,013
107,125
497,762
323,925
43,297
61,772
50,113
64,275
12,319
17,109
7,631
938,713
2,124,041
Chairman
T Winters
Executive Directors
K Kroeger
J D Walker
Non-Executive Directors
D Gaul
M Roberts
R Burger
J A Walker
Peter Housden
Les Carmichael
Yong Kang NG
Other Key Management Personnel
Total
84
30. Key management personnel (continued)
b) Compensation for Key Management Personnel (continued)
FOR THE YEAR ENDED 30 JUNE 2015
Salary / Fees / Bonus
Superannuation
Options / Rights
A$
A$
A$
Short-term
Post-Employment
Share-Based Payments
A$
Total
Chairman
T Winters
Executive Directors
K Kroeger
J D Walker
Non-Executive Directors
D Gaul
M Roberts
R Burger
J A Walker
Other Key Management Personnel
Total
74,500
466,058
319,311
37,138
39,630
43,136
43,447
1,007,761
2,030,981
7,078
38,279
27,627
3,528
-
-
-
352,427
428,939
20,833
140,131
38,929
10,417
12,500
10,417
12,500
81,818
327,545
102,411
644,468
385,867
51,083
52,130
53,553
55,947
1,442,006
2,787,465
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period
related to key management personnel.
Space intentionally left blank.
85
31. Share-based Payment Plans
a) Recognised share-based payment expenses
The expense recognised for employee services received during the year is shown in the table below:
Expense arising from share-based payment transactions under Employee share Loan
Expense arising from the performance rights long term incentive
Expense arising from the shares issued to the employees
Total expense arising from share-based payment transactions
b) Type of share-based payment plan
2010 Executive Share Plan
Consolidated
2016
A$
2015
A$
183,470
65,548
220,495
469,513
304,897
-
113,042
417,939
In July 2010 the Company adopted an Executive Share Plan (2010 Plan). Under the 2010 Plan the Board may offer and issue
ordinary fully paid shares (Shares) to employees or officers (including Directors) of the Company from time to time. The
Company has made the following types of offers under the 2010 Plan:
(i) Issue of shares up-front
The Company has issued Shares: to eligible staff who are not covered by the Company’s other incentive scheme; to executives
as a short-term incentive; and to non-executive Directors as part of their remuneration. The issue price for these Shares was
the market price at the time the Company released its annual accounts. There are no loans for these Shares and they vest on
issue.
(ii) Long Term Incentive – Loan Plan
As a long-term incentive, during FY2014 and FY2015 the Company also operated a share loan plan. Under these offers, the
share issue price is equal to the market value of the shares or as determined by the Board on the date of the invitation to apply
for options over the shares. Under the terms of the loan plan, eligible employees are provided with non-recourse loans which
will be extinguished if the employee chooses to acquire the shares by applying the exercise price of the option at any time after
the vesting date. Under this scheme awards are delivered in the form of options over shares which vest over a period of three
years subject to meeting performance measures. The Company uses Target Share Price (TSP) as the performance measure for
the loan plan. The Company issues shares to a trustee, to be held on trust for eligible employees during the vesting period
Relative TSP performance outcome
Percentage of award that will vest
Below the 90th percentile
At the 90th percentile
At the 95th percentile
At the 100th percentile
86
0%
50%
75%
100%
31. Share-based Payment Plans (continued)
c) Summaries of shares issued:
Summary of shares held in trust
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
2016
No.
2016
WAEP (cents)
2015
No.
2015
WAEP (cents)
20,604,252
-
(3,345,157)
(847,281)
-
16,411,814
6.04
-
7.43
5.56
-
5.78
18,920,020
4,684,232
-
-
(3,000,000)
20,604,252
5.56
11.06
-
-
(5.56)
6.04
Conditions have been met and rights to 2,803,125 shares have been granted. These shares were still held in
trust at 30 June 2016.
In addition to the closing balance shown above, a further 6,345,157 shares are held in trust with no obligation to
be issued to any staff members. These shares may be sold at board discretion with profits allocated to staff as
part of future incentives not yet determined.
(i) Long Term Incentive – Performance Rights
In 2015 the Board had adopted performance rights as a long term incentive tool, instead of using the more
complex trust and loan structure. Using performance rights also means that Shares are only issued if and when
performance and vesting criteria are satisfied, rather than being issued up-front to a trustee. Performance
rights offers have been made to executives and other senior staff. Under these offers, the employees are
only able to exercise the rights, and have new Shares issued to them, if, after a waiting period (typically three
years), the Company's share price meets a target share price set by the Board when it made the offer, and the
employee is still employed by the Company (subject to some exceptions for ‘good leavers’). The rights vest in
proportion to the target share price. If less than 90 percent of the target share price is achieved, then none of
the rights vest. If these conditions are met, then the employee may exercise their rights and the Company will
issue the number of new Shares set out in the offer.
Summary of options granted under the
Performance rights scheme
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
2016
No.
2016
WAEP (cents)
2015
No.
2015
WAEP (cents)
-
5,965,559
(2,007,950)
-
-
3,957,609
-
10.02
10.02
-
-
10.02
87
32. Commitments
a) Leasing commitments
Operating lease commitments – Group as lessee
At 30 June 2016 the Group had seven operating leases, five in Australia and two in the US. Of these, four
were month to month and the other three are due to finish by no later than 31st of October 2016.
Future minimum rental payments under non-cancellable operating leases as at 30 June are as follows:
Within one year
After one year but not more than five years
Total
Consolidated
2016
A$
2015
A$
113,890
-
113,890
437,364
96,383
533,747
Finance leases and hire purchase commitments – Group as lessee
The Group has no finance leases or hire purchase commitments for items of property, plant and equipment.
33. Events After the Reporting Date
There have been no events after the reporting date that materially affect the presentation of these
financial statements.
34. Auditor’s remuneration
The auditor of Seeing Machines Limited is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia)
for:
•
•
•
An audit or review of the financial report of the entity and any other
entity in the consolidated group
Assurance services on transition to the new finance system
Other services in relation to the entity and any other entity in the
consolidated group:
• Tax compliance and advisory
Consolidated
2016
A$
2015
A$
91,226
-
129,500
89,000
15,000
19,170
220,726
123,170
88
Directors' Declaration
In accordance with a resolution of the directors of Seeing Machines Limited, I state that:
1.
In the opinion of the directors:
a)
The financial statements and notes of the consolidated entity is in accordance with the
Corporations Act 2001, including:
i) Giving a true and fair view of the consolidated entity’s financial position as at 30
June 2016 and of its performance for the year ended on that date; and
ii) Complying with Accounting Standards (including Australian Accounting
Interpretations) and Corporations Regulations 2001.
b) The financial statements and notes comply with the international financial reporting
Standards as disclosed in note 3 (b); and
c) There are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
2.
This declaration has been made after receiving the declarations required to be made to the
directors in accordance with section 295A of the Corporations Regulations 2001 for the
financial year ending 30 June 2016.
On behalf of the Board
Terry Winters
Chairman
Canberra, 30 September 2016
89
Ernst & Young
121 Marcus Clarke Street
Canberra ACT 2600 Australia
GPO Box 281 Canberra ACT 2601
Tel: +61 2 6267 3888
Fax: +61 2 6246 1500
ey.com/au
Independent auditor's report to the members of Seeing Machines Limited
Report on the financial report
We have audited the accompanying financial report of Seeing Machines Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 3(b), the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
90
Opinion
In our opinion:
a.
the financial report of Seeing Machines Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2016
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 3 (b).
Ernst & Young
Anthony Ewan
Partner
Canberra
30 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
91
seeingmachines.com.au