annual
report
2021
1
annual report 2021 seeingmachines
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS996ZY
United Kingdom
Seeing Machines Limited shares are listed on the London Stock
Exchange AIM market.
Solicitors
Herbert Smith Freehills
ANZ Tower 161, Castlereagh Street,
Sydney NSW 2000 Australia
Fieldfisher LLP
Riverbank House
2 Swan Lane London EC4R 3TT
United Kingdom
Bankers
HSBC Commercial Bank
580 George Street
Sydney NSW 2000 Australia
Auditors
Ernst & Young
121 Marcus Clarke Street
Canberra ACT 2600
Australia
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 3. The following information is current as
at 30 June 2021.
Directors
Kate Hill, Non-Executive Director and Chair
Paul McGlone, Executive Director & Chief Executive Officer (CEO)
Yong Kang (YK) Ng, Non-Executive Director
Gerhard Vorster, Non-Executive Director
John Murray, Non-Executive Director
Michael Brown, Non-Executive Director
Rudolph Burger, Non-Executive Director (resigned 30 November 2020)
Les Carmichael, Non-Executive Director (resigned 30 November 2020)
Company Secretary
Susan Dalliston
Registered office
80 Mildura Street
Fyshwick ACT 2609
Principal place of business
80 Mildura Street
Fyshwick ACT 2609
Phone: + (61) 2 6103 4700
Email: info@seeingmachines.com
Share register
Computershare Investor Services Pty Limited
452 Johnston Street
Abbotsford VIC 3067
Australia
contents
our mission and purpose
letter from the chair
ceo report
the year in review
regulartory momentum supports growth
directors' report
review of operations
financial statements
notes to the financial statements
directors' declaration
04
06
08
10
12
14
16
24
30
74
3
annual report 2021 our mission:
zero transport
fatalities.
44
seeingmachines our purpose:
to get everyone
home safely.
5
5
annual report 2020 seeingmachines
letter to
shareholders
As we near the end of calendar 2021 I am delighted
to report that Seeing Machines is extremely well
positioned to capitalize on the growing demand for
driver monitoring systems across many sectors of
the transport industry. It is a pleasure to take this
opportunity to review some of the most significant
milestones of this past year.
We are also seeing a remarkable level of interest
across the Aviation industry. As the world opens
up and travel begins again, re-training pilots is
key. In addition we have seen momentum in air
traffic control, an emerging market for the company.
This will see the company deploy its eye-tracking
technology to manage the attention state of air traffic
controllers.
Achieving our purpose – to get everyone home
safely
Regulatory tailwinds
The long-awaited start of production for our Original
Equipment Manufacturer (“OEM”) business unit has
arrived, and our leading Driver Monitoring System
(DMS) technology is now deployed in more than
120,000 cars through our Automotive programs.
We are delighted that this rollout will work to keep
drivers and their communities safe, while also
signaling the start of high margin royalty revenue
for the Company. We expect to see these numbers
increase dramatically over the next few years as our
programs ramp up through our customers’ planned
production schedules.
DMS has reached an inflection point, with regulation
a big part of that momentum, and we have recently
seen this extend to the USA. The technology has
also become fundamental to the trending safety and
convenience features emerging across Automotive.
DMS enables these features to function by linking
what the driver is doing, or what state they are in,
to the Advanced Driver Assistance System. Also
important are the growing levels of automation
within a car. This has emphasised the need for an
understanding of whether a driver is able to take
control of the car, if required.
Our Aftermarket division continues to grow, with
over 31,771 individual trucks and buses carrying our
technology at 30 June, and with future growth to be
fueled by strategic partnerships such as the Global
Framework Agreement announced with Shell post
period.
As DMS evolves, our experts work closely with
our partners and customers as they navigate
the complications associated with this very new
technology. Seeing Machines has been developing
the market for DMS for twenty-one years now and
the pedigree of our technology is clear.
6
annual report 2021
The momentum for DMS technology and the
company’s success to date has grown our profile,
globally. I am delighted with the many new
customers, partners and shareholders that we have
welcomed to Seeing Machines over the past year
and we look forward to that momentum continuing.
We are driven to save lives. We are focused on our
customers and ultimately, returning value to our
shareholders.
Kate Hill
Chair
Seeing Machines Limited
Streamlined operations
The Company’s response to the COVID-19 pandemic
in FY2020 has resulted in a leaner organization with
cost savings locked in and a higher proportion of our
spending now focused on engineering effort, driving
pure innovation as well as designing the features
that our customers demand.
Through a combination of growth and cost
containment, the Aftermarket business is now
profitable in its own right and able to contribute
towards our investment into the OEM business,
which we know has a longer-term payoff. Coupled
with the recent capital raised, we are well funded to
respond to the current round of RFQs in OEM.
Conclusion
We conclude the financial year substantially further
along our journey than we were twelve months ago.
This is a testament to the leadership of our CEO,
Paul McGlone, and his executive team, as well as
the hard work and dedication delivered by all of
our employees across the globe, in what has been
another difficult year dominated by lockdowns and
hampered by the inability to meet face to face.
7
seeingmachines
ceo
report
21 in 21
Seeing Machines celebrated its 21st birthday this
year - quite the milestone for our company. The
huge steps forward in the regulatory regimes
of Europe and now the USA have provided the
backdrop for our DMS technology, conceived,
designed, built and refined over the past 21 years, to
move towards centre stage in road safety agendas
around the world.
Over the past 18 months, there has been a significant
expansion in commercial opportunities for DMS
across the global transport industry, driven by
a number of structural tailwinds, including, as
mentioned, a growing global focus on enhanced
safety for all road users. Increasing driver assistance
technologies have been rapidly permeating the
traditional consumer automotive market. With
the growing prevalence of assistive, supervised,
automated, and autonomous vehicle technology,
the requirement, and therefore demand, for driver
monitoring systems has begun to materially increase.
In Automotive, all levels of driver assistance require
careful monitoring of drivers, who will, in most cases,
remain ultimately responsible for the vehicle, for
the foreseeable future. As the level of technological
complexity inside the vehicle cabin, and vehicular
automation increases, so will the demand for Seeing
Machines’ core technology and solutions for the
automotive industry. Seeing Machines’ robust
commercial relationships with global blue-chip
tier 1 automotive component suppliers and OEMs
positions the business well to capitalise on the
opportunities associated with DMS and achieve
growth.
Furthermore, global legislation in automotive and
vehicle safety has been increasing at a significant
rate, across all key regions in which the Company
sells its solutions, Europe and North America in
particular. Legislation and regulations introduced
by the European Commission, European New Car
Assessment Programme (Euro NCAP), and others
are introducing the requirement for the deployment
of DMS technology to enhance safety on roads.
This growing trend is best evidenced through the
United States' recent passage of the SAFE Act via
the recent US infrastructure bill. The bill will require
Driver Monitoring System (DMS) technology to
detect distracted driving. In addition, the legislation
includes the RIDE Act, which will require new cars
to use advanced drunk driving technology to stop
impaired driving. As the global requirement for mass
adoption of DMS technologies in the automotive
space continues to grow, we believe the commercial
opportunity for Seeing Machines has expanded
significantly.
Seeing Machines is now engaged with seven
automotive OEMs on nine expanding programs to
deliver its FOVIO DMS, with a cumulative OEM order
book totaling A$320m, with delivery on these vehicle
models having commenced during this past year
While regulation can drive DMS fitment volume,
“feature wars” will drive OEM system value and
Seeing Machines average selling price (ASP). As
one of the leading technology and solution providers
in the global DMS sector, we believe this to be a
key inflection point for the business based on its
current market position, and the proceeds of our
recent capital raise will allow us to capitalise on an
8
annual report 2021
400 fleets and 31,771 individual trucks (at 30 June
2021). This division has experienced 39%+ CAGR
since it launched the Guardian solution in 2016 and
is now profitable on a standalone basis, and we plan
to accelerate our Guardian Gen 3 / Smart Camera
rollout allowing Seeing Machines to expand its
footprint, reduce costs internally and lower barriers
to implementation. Furthermore we are expanding
the direct Guardian sales force globally, having
established a team in the Netherlands to work with
companies like Shell to deliver Guardian across their
organisation. We are also investing in distribution
channel growth to speed up Guardian installations
around the world.
A final word
As the end of a very busy calendar 2021 is in sight, I’d
like to take this opportunity to thank our dedicated
team of experts who continue to work extremely
hard to deliver our life-saving technology across our
transport sectors. I am proud to work with a team of
such tremendous calibre, and happy to see this hard
work really start to pay off.
expanding pipeline of over A$1,100m visible RFQs.
At this stage, investment in our technology and
intrinsic company expansion is required to meet this
expanding demand.
Similarly, the Company will seek to fortify its
technology leadership position in the market. Seeing
Machines has its FOVIO chip-based solution that
is high performing and able to meet standardised
(mass-market) demand. Additional R&D investment
is now necessary to maintain and enhance the
company's market position by delivering its next
generation standardised technology offering to the
mass market, in support of expected technology
protocols recently released by Euro NCAP. The
Seeing Machines board is also considering a
number of niche technology acquisition plans and
strategic collaborations to support acceleration of an
expanding feature set.
In Aviation, we boast relationships with some of
the world’s biggest brands, including for example
our commercial engagements with the Royal
Australian Air Force and Airservices Australia, and
expect to continue to strengthen our connections
as eye-tracking supports a range of efficiencies and
safety measures across the industry. We were also
pleased to announce a collaboration with Collins
Aerospace, post-period. This collaboration underpins
the broad industry interest in our technology, given
their position as the world’s largest Tier 1 Avionics
company.
The Aftermarket division will remain critical to
near-term success of the business, with Seeing
Machines Guardian technology now connected to
Paul McGlone
CEO
Seeing Machines Limited
9
seeingmachines
the year
in review
financial
highlights
$47.4m
cash position at 30 June 2021
$47.2m
revenue↑18% from FY 2020
30% underlying revenue
growth based on
constant currency
$17.2m
annual reoccuring
revenue↑23%
from FY 2020
Post period fundraise of
$41m(US)
to accelerate Automotive and Aftermarket
business pursuit
10
10
seeingmachines annual report 2021
32%
CAGR over 5 years. excluding
one-off licence payments
oem highlights
aviation engagements with
Royal Australian Air Force,
Collins Aerospace and
Airservices Australia
$12.1m
revenue Including licence royalty
revenue of A$2.3m
120,000
DMS fitments on the road. 30 distinct models
to launch over next 18 months
7 OEM
engagements
to deliver 9
expanding
automotive
programs
Actively engaged with 16
automotive tier 1 suppliers
$1,1b
automotive RFQ value. active
and expected pipeline
11
11
annual report 2021 aftermarket
highlights
naturalistic driving data
collected from over 8
billion kms of Guardian
fitted vehicles
$35.1m
revenue↑30% from FY 2020
36%
year on year
growth aftermarket
profitable business
31,771
guardian installations at 30 June 2021
hardware sales increase
11,000 units ↑44% from FY 2020
1212
seeingmachines regulatory
momentum
supports
growth
•
European Commission: “Europe on the Move” and Euro NCAP: Incentives for safety rating (5-star)
~ camera based DMS technology, implemented from 2023
• Representative Tier 2 tech supplier in Euro NCAP Occupant Status Monitoring Working Group (OSMWG)
introducing aspects for testing and validation of DMS sensing performance
•
Engagement with National Transportation Safety Board and NHTSA as US investigates automated
vehicle accidents
• Momentum extends to USA where Bipartisan Infrastructure bill has been signed by President Biden
14
seeingmachines annual report 2021
15
annual report 2021 directors'
report
Your Directors submit their report for the year ended 30 June 2021.
Directors
The names and details of the directors of Seeing Machines Limited (the " Company") 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.
Kate Hill
Non-Executive Director and Chair
Paul McGlone
CEO and Executive Director
Yong Kang (YK) Ng
Non-Executive Director
Gerhard Vorster
Non-Executive Director
John Murray
Non-Executive Director
Michael Brown
Non-Executive Director
Rudolph Burger
Non-Executive Director
Resigned 30 November 2020
Les Carmichael
Non-Executive Director
Resigned 30 November 2020
16
seeingmachines 17
annual report 2021 review of
operations
Financial Results
The Company’s total revenue for the financial year
(excluding foreign exchange gains and finance income)
was A$47,167,000 compared to the 2020 revenue of
A$40,012,000, representing an 18% increase on prior
year results.
Product
FY2021
FY2020
Variance
A$’000
A$’000
OEM
12,088
12,789
Aftermarket
35,079
27,019
%
(5)
30
Scientific
Advances
Sales
Revenue
-
204
(100)
47,167
40,012
18
The previously anticipated start of production for
our Original Equipment Manufacturer ("OEM")
business unit (Automotive) contributed $2.3m in
revenue marking the start of an increasing stream
of royalty license revenue that will continue to
be received over the model lifetime of awarded
OEM programs. FY21 revenue was also boosted
by a US$3,250,000 (2020: USD$5,000,000) pre-
production license deal with a major Automotive Tier
1 partner. The remainder of the revenue in the OEM
segment represents NRE revenue which is software
development activities undertaken to embed
DMS technologies into the specific OEM vehicle
configuration prior to the commencement of vehicle
production.
The Aftermarket business grew by 30% on the prior
year despite a slowdown in installations arising as a
result of local and global pandemic-related changes
to business conditions. Revenue momentum
accelerated through the second half of the year with
revenue in H2 increasing by 33% on H1 results to
A$20,039,000 (H1: A$15,040,000). Hardware and
installation revenue increased by 55% over the prior
year to A$18,798,000 (2020: A$12,130,000) and
driver monitoring revenues increased by 13%
to A$11,064,000 (2020: A$9,812,000).
Gross profit increased from A$14,433,000 in FY2020
to A$20,765,000 this year, reflecting increased
sales of Guardian units and a 4% improvement in
Aftermarket gross margin.
In line with the continued accelerating momentum
in automotive safety legislation in both Europe and
more recently in the US, the Company continued
to invest in its core technology development
across global OEM and Aftermarket industries. As
a result, Seeing Machines has reflected a portion
of development expenditure attributable to future
revenues as an intangible asset amounting to
A$8,311,000 (2020: A$nil). The remaining research
and development costs have been expensed and
amount to A$9,876,000. The total investment in
research and development for the current year
amount is A$18,187,000 (2020: A$24,736,000).
All cost categories across the business have
reduced in line with a sustained focus on business
performance and cost optimisation and reduced
expenditure on tradeshows and travel that has
been heavily impacted by COVID restrictions.
18
seeingmachines Australian Government COVID-19 Grants, JobKeeper
and PAYG subsidy reduced other income to
A$1,664,000 (2020: A$2,234,000). The initial phase
of the JobKeeper Grant ran from 1 March 2021 to
27 September 2021 with Seeing Machines, like
many other Australian companies, not qualifying for
subsequent phases.
Cash used in operations fell from A$24,246,000
to A$19,641,000 primarily from the reduction
in research and development expenditure, and
increase in trade receivables in the second half of
the year. Increased revenues, particularly in the later
months of the financial year have not all converted
to cash within the reporting cycle, however overall
revenues were generated from a reduced cost base
in line with continued focus on working capital
management.
The resultant loss for the period represented a
decrease of A$29,068,000 at A$17,420,000 (2020:
A$46,488,000).
Net cash and cash equivalents at 30 June 2021
totaled A$47,393,000 (2020: A$38,138,000).
On 23 November 2021, Seeing Machines issued
277,123,492 new ordinary shares of no par value each
(the “New Ordinary Shares”) at a price of 11 pence
per New Ordinary Share, raising gross proceeds
of approximately US$41,000,000 (the “Placing”).
The net proceeds of the Placing will be used to
strengthen the Company’s balance sheet, fund core
technology expansion, and enhance OEM Business
pursuit and Aftermarket product development and
regional expansion.
Operational Highlights
where understanding what the driver is doing is
critical in maintaining driver attention and vehicle
safety.
Seeing Machines is now actively engaged with
seven automakers on nine ongoing automotive
programs to deliver its FOVIO DMS and as vehicle
models start production, the shape of
the automotive revenue is changing from NRE
(Non-Recurring Engineering) to royalties, which
are expected to significantly ramp over the coming
two to three years.
The Automotive pipeline continues to grow with
the Company actively working on RFQ’s (Request
for Quote) from OEMs in Europe, North America
and Asia. The current known pipeline (active and
anticipated) of opportunities have a lifetime value
of more than A$1,100m.
Seeing Machines’ Aftermarket business has also
achieved good growth as Guardian sales have
continued to accelerate, despite the economic
challenges. As a profitable, standalone business,
Aftermarket is gaining good ground and attracting
interest of key global organisations as they seek
to enhance safety across their vehicle fleet. Post-
period, the Company announced a Global Framing
Agreement with Shell Global Solutions International,
for the provision of Guardian across their global
fleet.
Guardian connections now stand at 31,771 and
were slower than expected due to the complications
posed by Covid-related lockdowns and pressure
on transport companies. However, hardware sales
continued at the expected rate and the Company
now has a backlog of around 5,000 units that have
been sold and are due to be installed.
Seeing Machines has managed to continue
its growth track despite the obvious pressures
stemming from Covid related interruptions,
reporting a pleasing increase in revenue which is
underpinned by the increase in global demand for
safety technology across Fleet and Automotive.
The regulatory landscape is transforming quickly
to keep up with safety requirements in Europe,
now increasing in North America and expected to
continue around the world.
The Aviation industry is now emerging from the
pressures of the global pandemic and Seeing
Machines remains engaged on key opportunities
associated with Simulated Training as well as Air
Traffic Control applications of the Company’s
eye-tracking technology. With customers like the
Royal Australian Air Force and Airservices Australia,
Seeing Machines continues to invest in the Aviation
business and is experiencing good momentum, with
limited competition, in this growing market.
Driver Monitoring System (DMS) technology is
fundamental to transport safety but is also a key
enabler in Automotive as the intelligent cabin
advances and semi-automated features emerge
across an increasing number of vehicles,
The announcement, post-period, of the Company’s
collaboration with Collins Aerospace, the world’s
largest Tier 1 Avionics company, is an extremely
positive indication of the industry’s desire for
eye-tracking technology to enhance safety,
training and efficiencies.
19
annual report 2021 Position Holders During the Period
Chief Executive Officer
The Company’s Chief Executive Officer (CEO) is Paul McGlone was formally appointed to the role on 4 July 2019.
Company Secretary
Susan Dalliston was appointed on 4 July 2019. Susan Dalliston is the Company Secretary at the date of this report.
Employee Numbers
At 30 June 2021 the Group had 213 full-time employees (203 employees at 30 June 2020).
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.
Name and qualifications
Experience and special responsibilities
Kate Hill
Chair of the Board and Member of the Risk, Audit and Finance Committee and of the
People, Culture and Risk Committee.
Appointed as a Non-Executive Director on 13 December 2018, as interim Chair of the
Board on 5 June 2019, as Chair of the Board on 22 July 2019.
Kate is a non-executive director of CountPlus Limited (ASX: CUP), where she is the
Chair of the Audit and Risk Committee and a member of the Acquisitions Committee.
She is also a non- executive director of Elmo Software Limited (ASX: ELO) where she
serves as Chair of the Audit and Risk Committee and is a member of the Remuneration
and Nominations Committee.
Kate had a distinguished 20+ year career with Deloitte ToucheTomatsu as an audit
partner where she worked with Australian Securities Exchange (ASX) listed and
privately owned clients. She has worked extensively in regulated environments
including assisting with Initial Public Offerings, capital raising and general compliance,
as well as operating in an audit environment. She held a variety of leadership and
executive roles in Deloitte and was the first woman appointed to the Board of Partners
of the Australian firm.
Kate holds a Batchelor of Science (Honours) in Mathematics and Statistics from Bristol
University, is a Member of Chartered Accountants in Australia and New Zealand, and a
Graduate of the Australian Institute of Company Directors.
Kate is considered to be an Independent Director.
20
seeingmachines Name and qualifications
Experience and special responsibilities
Paul McGlone
CEO & Executive Director
Appointed on 4 July 2019.
Paul has held the CEO position for 2 years, previously he led the Fleet, Mining and
Off-road business as the Senior Vice President (SVP). Paul has extensive experience in
public company leadership, supply chain and technology driven businesses.
During his 10-year career at Australian listed company, Brambles, Paul held operational
and corporate leadership roles including President of CHEP Asia Pacific and Group Vice
President Strategy, Planning and Innovation. He was the architect of its global growth
plan which resulted in a threefold increase in the company’s market capitalisation. Paul
was appointed as a Director of Canberra Institute of Technology (CIT) in July 2021.
Gerhard Vorster
Non-Executive Director and Chair of the People, Culture and Remuneration Committee
Appointed on 1 December 2019.
Gerhard is an accomplished senior executive and former Deloitte partner with a
growing board portfolio and significant expertise in strategy and technology. Gerhard is
currently an alternate director of the Brisbane Airport Corporation and Chairman of the
Bio Capital Impact Fund.
Gerhard began his career at Deloitte in 1987 in the consulting business as a strategic
management consultant and partner. Over a 28-year career with the firm, Gerhard was
appointed to various executive roles, including Managing Partner for Consulting for the
Australia and Asia Pacific region and his most recent role, Chief Strategy Office for the
region.
Gerhard holds a Bachelor of Science in Civil Engineering from the University of
Pretoria and a Master of Business Administration (Cum Laude) from the University of
Potchefstroom. He is a member of the Australian Institute of Company Directors.
Gerhard is considered an Independent Director.
John Murray
Non-Executive Director and Chair of the Risk, Audit and Finance Committee
Appointed on 1 December 2019.
John is a highly experienced board director with significant expertise in the technology
sector. He is currently Chairman of PainChek Limited, listed on the Australian Stock
Exchange (ASX: PCK).
John has been non-executive director and Chair of several ASX-listed and high-growth
companies throughout his career, which began in audit and investment banking,
involved rising through various positions at large organisations, and eventually
becoming Vice President and Head of Investment Banking at Bank of America Asia in
1989.
From there, John joined the Australian Technology Group where he identified and
managed investments into early-stage technology companies and went on to co-found
the venture capital firm, Technology Venture Partners, in 1997, establishing a 20 year
career of investing in, advising and directing technology companies.
John holds an Honours Degree in Law from Edinburgh University and is a member of the
Australian Institute of Company Directors. He is also a CA and a Member of the Institute
of Chartered Accountants of Scotland.
John is considered an Independent Director.
21
annual report 2021 Name and qualifications
Experience and special responsibilities
Yong Kang (YK) Ng
Non-Executive Director and member of the Risk, Audit and Finance Committee
Appointed on 22 March 2016.
YK has extensive engineering and operations experience in the manufacturing sector
with multinational corporations. Based in Johor, Malaysia, YK 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.
YK has a Bachelor of Science in Mechanical Engineering from the National Taiwan
University and an MBA from Heriot-Watt University in Edinburgh, UK.
Michael Brown
Non-Executive Director and member of the People, Culture and Remuneration
Committee
Appointed on 14 May 2020.
Michael Brown is a highly experienced financial markets professional based in London
and comes to the Seeing Machines board with a deep knowledge of the AIM market
and small to mid-cap technology companies, as well as previous plc non-executive and
observer board roles. He is currently a portfolio manager within the Volantis team at
Lombard Odier Investment Managers.
Michael has a BA (Economics and Politics) from Durham University, UK.
Dr Rudolph (Rudy) Burger Non-Executive Director and member of the Risk, Audit and Finance Committee
Appointed on 15 January 2014; Resigned 30 November 2020.
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. Rudy is currently Founder and Managing Partner of an investment bank
headquartered in California. Rudy has a BSc and MSc from Yale University and a PhD
from Cambridge University.
Les Carmichael
Non-Executive Director and Chair of the People, Culture and Remuneration Committee
Appointed on 1 February 2016; Resigned 30 November 2020.
Les, 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 served on the Board of Directors of GlobalTranz, Inc.,
a venture capital funded, technology focused, freight forwarding company operating in
the US until its sale in June 2018. Les also served on the Board of TriCon Logistics LLC,
an innovative and customer-focused third-party logistics company based in the US,
until it was sold on 30 June 20.
22
seeingmachines Principal activities
Dividends
• 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;
No dividends or distributions have been made
to members during the year ended 30 June 2021
(2020: nil) and no dividends or distributions have
been recommended or declared by the Directors in
respect of the year ended 30 June 2021 (2020: nil).
Performance Rights and Share Options
Unissued shares
• Entering commercial agreements with partners
for the development, manufacturing and sale of
products into key target markets; and
Reference is made to Note 33 of the financial
statements in respect of performance rights and
options in relation to directors and staff members.
• Research and development of the Company’s
core vision processing technologies to support the
development and refinement of the Company’s
products.
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 elsewhere in this report and in
the financial statements or notes thereto.
Subsequent Events after the Balance Date
On 23 November 2021, Seeing Machines issued
277,123,492 new ordinary shares of no par value each
(the “New Ordinary Shares”) at a price of 11 pence
per New Ordinary Share, raising gross proceeds of
approximately US$41,000,000 (the “Placing”). The
net proceeds of the Placing will be used to strengthen
the Company’s balance sheet and for general working
capital and corporate purposes.
Likely developments and expected results
The likely developments and expected results are
disclosed in Note 3(c) of the financial statements.
Environmental Regulations
The Company holds no licenses issued by relevant
Environmental Protection Authorities and there
have been no known breaches of any environmental
regulations.
(i). Performance rights granted during or
since the end of the year
During the year, 29,964,495 (2020: 65,995,070)
performance rights were granted by the
Company under the performance rights scheme
for employees. The terms and conditions of
these rights are disclosed in Note 33 to the
financial report.
(ii). Shares Issued as a result of the Vesting of
Performance rights and options
During the year 28,552,140 (2020: 18,150,781)
rights vested and ordinary shares were
transferred to the employee participants from
the Group trust (the “Trust”). During the year
the Company issued 70,000,000 (2020: nil)
ordinary shares to the Trust following the
vesting of certain performance rights and
options. The New Ordinary Shares will be
held in the existing trust until such time as
the beneficiaries of the award exercise the
performance rights and options. On the exercise
of such performance rights and / or options,
the Trust will transfer the shares to the relevant
beneficiary.
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.
23
annual report 2021 Directors’ Meetings
Non-Audit Services
During the 2021 financial year, eleven Board meetings
were held. The following table sets out the number
of Board and Committee meetings each Director
attended and the number they were eligible to attend.
Meetings Attended / Meetings Eligible to Attend
Ernst & Young rendered taxation services to Seeing
Machines Limited as disclosed at Note 37.
The Board of Directors is satisfied that the provision
of non-audit services during the year is compatible
with the general standard of independence for
auditors imposed by the Corporations Act 2001.
Director
Kate Hill
Paul McGlone
Yong Kang (YK) Ng
Gerhard Vorster
John Murray
Michael Brown
Rudolph Burger
(resigned 30 Nov 2020)
Les Carmichael
(resigned 30 Nov 2020)
*Not a member of the committee
Board
Risk, Audit & Finance Committee
People, Culture & Remuneration
Committee
11/11
11/11
11/11
11/11
11/11
11/11
5/5
5/5
4/4
*
4/4
*
4/4
*
*
*
6/6
*
*
4/4
*
6/6
2/2
2/2
Indemnification of Auditors
Non-Audit Services
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.
Rounding
The amounts contained in the financial report
have been rounded to the nearest A$1,000 (where
rounding is applicable) where noted (A$000) under
the option available to the Company under ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. The Company is an
entity to which this legislative instrument applies.
the financial statements and notes of the consolidated entity are 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 2020 and
(ii) Complying with Accounting Standards (including Australian Accounting Interpretations) and the
(a)
In the opinion of the Directors:
Ernst & Young rendered taxation services to Seeing
Directors' declaration
Machines Limited as disclosed at Note 37.
In accordance with a resolution of the Directors of Seeing Machines Limited, I state that:
The Board of Directors is satisfied that the provision of
1.
non-audit services during the year is compatible with
the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors
of its performance for the year ended on that date; and
are satisfied that the services did not compromise
the external auditor’s independence as the nature
of the services provided does not compromise the
general principles relating to auditor independence
in accordance with APES 110: Code of Ethics for
Professional Accountants set by the Accounting
2.
Professional and Ethical Standards Board.
Corporations Regulations 2001;
they become due and payable.
disclosed in note 3.6; and
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
(c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when
(b) The financial statements and notes comply with International Financial Reporting Standards as
On behalf of the board
Auditor’s Independence Declaration
We have obtained an independence declaration from
our auditors, Ernst & Young. The signed declaration is
included after this report.
Paul McGlone
Executive Director & Chief Executive Officer
Canberra
Paul McGlone
Executive Director & Chief
Executive Officer Canberra
24
64
seeingmachines
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
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 2021, 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;
b) No contraventions of any applicable code of professional conduct in relation to the audit; and
c) No non-audit services provided that contravene 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.
Anthony Ewan
Partner
24 November 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
25
annual report 2021
consolidated statement
of financial position
As at 30 June 2021
Notes
2021
A$000
2020
A$000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Other short-term deposits
Trade and other receivables
Inventories
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant & equipment
Intangible assets
Right-of-use assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Other current liabilities
Provisions
Contract liabilities
Current financial liabilities
TOTAL CURRENT LIABILITIES
14
20
15
16
17
18
19
29
21
29
22
24
25
47,393
472
19,851
2,627
5,438
75,781
3,361
9,540
4,252
17,153
92,934
8,839
918
4,893
772
-
15,422
38,138
512
9,584
4,743
4,245
57,222
3,208
899
4,371
8,478
65,700
7,874
1,057
3,763
263
553
13,510
26
seeingmachines As at 30 June 2021
Notes
2021
A$000
2020
A$000
LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Lease liabilities
TOTAL NON-CURRENT LIABILITIES
22, 23
29
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Other reserves
192
5,272
5,464
20,886
72,048
26
257,382
(202,046)
16,712
215
5,766
5,981
19,491
46,209
217,204
(184,626)
13,631
Equity attributable to the owners of the parent
72,048
46,209
TOTAL EQUITY
72,048
146,209
The above consolidated statement of financial position should be read in conjunction with
the accompanying notes.
27
annual report 2021 consolidated statement
of comprehensive income
FOR THE YEAR ENDED 30 June 2021
Notes
2021
A$000
28,542
18,620
2020
A$000
24,665
14,915
5
432
7
47,167
40,012
8
8
9
(26,402)
(25,579)
20,765
14,433
(417)
5
1,664
322
(382)
(72)
2,234
829
(9,876)
(6,092)
(7,946)
(24,736)
(8,079)
(11,506)
(14,590)
(17,480)
(518)
(705)
(16,683)
(45,464)
10
(737)
(1,246)
(17,420)
(46,710)
(17,420)
(46,710)
(17,420)
(46,710)
(169)
(169)
222
222
(17,589)
(46,488)
Sale of goods and licence fees
Rendering of services
Research revenue
Revenue
Cost of sales
Gross profit
Net loss in foreign exchange
Net gain/(loss) on disposal of property, plant and equipment
Other income
Finance income
Expenses
Research and development expenses
Customer support and marketing expenses
Operations expenses
General and administration expenses
Finance costs
Loss before income tax
Income tax expense
Loss after income tax
Loss for the period attributable to:
Equity holders of the Company
Other comprehensive (loss)/income
Exchange differences on translation of foreign operations
Other comprehensive (loss)/income net of tax
Total comprehensive loss
28
seeingmachines Total comprehensive loss attributable to: Equity holders of the Company
Total comprehensive loss for the year
(17,589)
(17,589)
(46,488)
(46,488)
Loss per share for loss attributable to the ordinary equity
holders of the Company:
Basic loss per share
Diluted loss per share
12
12
($0.01)
($0.01)
($0.01)
($0.01)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
29
annual report 2021 consolidated statement
of changes in equity
FOR THE YEAR
ENDED 30 June 2021
Contributed
Equity
A$000
Treasury
Shares
A$000
Accumulated
Losses
A$000
Foreign
Currency
Translation
Reserve
A$000
Employee
Equity
Benefits
& Other
Reserve
A$000
Total
Equity
A$000
As at 1 July 2019
217,204
(1,109)
(137,916)
(1,738)
11,051
87,492
Loss for the period
Other comprehensive
income
Total comprehensive
loss
-
-
-
-
-
-
(46,710)
(46,710)
Transactions with owners in their capacity as owners:
-
222
222
-
-
-
-
-
-
(46,710)
222
(46,488)
(1,109)
-
1,109
1,109
4,096
4,096
-
-
-
(184,626)
(1,516)
15,147
46,209
(184,626)
(1,516)
15,147
46,209
(17,420)
-
-
(169)
(17,420)
(169)
-
-
-
-
-
-
-
-
-
-
-
(17,420)
(169)
(17,589)
41,199
(1,021)
3,250
3,250
(202,046)
(1,685)
18,397
72,048
Reclassification of
treasury shares
Shares to be issued
Share-based
payments
-
-
-
At 30 June 2020
217,204
As at 1 July 2020
217,204
Loss for the period
Other comprehensive
loss
Total comprehensive
loss
-
-
-
1,109
-
-
-
-
-
-
-
Transactions with owners in their capacity as owners:
Shares issued
Capital raising costs
Share-based
payments
41,199
(1,021)
-
At 30 June 2021
257,382
-
-
-
-
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
30
seeingmachines consolidated statement
of cash flows
FOR THE YEAR ENDED 30 June 2021
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Receipt of government grants
Receipt for research and development tax incentive
Note
2021
A$000
2020
A$000
37,990
(58,985)
322
(518)
(15)
1,565
-
42,702
(67,222)
-
(705)
(1,246)
2,043
182
Net cash flows used in operating activities
28
(19,641)
(24,246)
Investing activities
Proceeds from sale of property, plant and equipment
Purchase of plant and equipment
Payments for intangible assets (patents, licences and trademarks)
Payments for intangible assets (capitalised development costs)
Maturity of term deposits
Net cash flows from/(used in) investing activities
Financing activities
Principal repayment of lease liabilities
Proceeds from issue of new shares
Cost of capital raising
Repayment of borrowings
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Net (decrease)/increase due to foreign exchange difference
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
14
5
(446)
(484)
(8,311)
40
(9,196)
(1,459)
41,071
(1,021)
-
38,591
9,754
(499)
38,138
47,393
27
(815)
(246)
-
9,049
8,015
(716)
-
-
(30)
(746)
(16,977)
306
54,809
38,138
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
31
annual report 2021 Notes to the financial
statement
1. Corporate Information
Seeing Machines Limited (the “Company”) is a limited
liability company incorporated and domiciled in
Australia and listed on the AIM market of the London
Stock Exchange. The address of the Company’s
registered office is 80 Mildura Street, Fyshwick,
Australian Capital Territory, Australia.
Seeing Machines Limited and its subsidiaries (the
“Group”) provide operator monitoring and intervention
sensing technologies and services for the automotive,
mining, transport and aviation industries.
The consolidated financial report of the Group
(the “financial report”) for the year ended 30 June
2021 was authorised for issue in accordance with a
resolution of the Directors on 24 November 2021.
2. Basis of Accounting
(A$000), except when otherwise indicated under
the option available to the company under ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. The Company is an
entity to which this legislative instrument applies.
b. Going concern
The financial report has been prepared on the going
concern basis which assumes the continuity of
normal business activity and the realisation of assets
and the settlement of liabilities in the normal course
of business.
The Group has made a loss for the year of
A$17,420,000 (2020: Loss of A$46,710,000) and
incurred net cash outflows in operating activities of
A$19,641,000 (2020: A$24,246,000). The Group has
net current assets at 30 June 2021 of A$60,359,000
(30 June 2020: A$43,700,000). The balance of
cash and cash equivalents at 30 June 2021 is
A$47,393,000 (30 June 2020: A$38,138,000).
The principal accounting policies applied in the
preparation of the financial report are set out in
Notes 2 and 3 below. These policies have been
applied consistently to all periods presented, unless
otherwise stated.
The ability of the Group to continue its activities as
a going concern is dependent on a range of factors
including:
i.
the ability to meet projected revenue levels;
a. Basis of preparation
ii.
timing of cash receipts;
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 and
other authoritative pronouncements as issued
by the Australian Accounting Standards Board
(“AASB”). The financial report also complies with
International Financial Reporting Standards (“IFRS”)
and interpretations (“IFRICs”) adopted by the
International Accounting Standards Board (“IASB”).
The financial report has been prepared under the
historical cost convention.
The financial report is presented in Australian dollars
and all values are rounded to the nearest thousand
iii.
the ability to manage overheads to budgeted
levels; and
iv.
the ability to generate additional funds from
further licensing activity, through lending
arrangements or from investors.
The Directors have reviewed the Company's
financial position and cash flow forecasts for the
next twelve months, including giving consideration
to the range of options the Group is exploring for
obtaining further funding if required, and are of the
opinion that the use of the going concern basis of
accounting is appropriate.
32
seeingmachines
c. Basis of consolidation
The consolidated financial statements comprise
the financial statements of the Company and its
subsidiaries (as outlined in Note 30) 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
•
•
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 consolidated
financial statements 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 in 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, with an exception to foreign
currency profit or loss on monetary items.
The ability to use its power over the investee to
affect its returns
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an
equity transaction.
Generally, there is a presumption that a majority
of voting rights results in control. To support this
presumption and 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:
If the Group loses control over a subsidiary, it
derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other
components of equity, while any resultant gain or
loss is recognised in the statement of comprehensive
income. Any investment retained is recognised at fair
value.
•
The contractual arrangement(s) 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
33
annual report 2021
d. Current versus non-current classification
e. Segment reporting (refer to Note 7)
The Group presents assets and liabilities in the
statement of financial position based on current/
non-current classification. An asset is current when
it is:
•
Expected to be realised or intended to be sold or
consumed in the normal operating cycle;
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision makers. The chief
operating decision makers, who are responsible for
allocating resources and assessing performance of
the operating segments, have been identified as the
Executives of the Company.
• Held primarily for the purpose of trading;
f. Foreign currency translation
•
Expected to be realised within twelve months
after the reporting period;
Or
• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for
at least twelve months after the reporting period.
i. Functional and presentation currency
Items included in the financial statements of
each Group entity are measured using the
currency of the primary economic environment
in which the entity operates (functional
currency). The functional currency of the
Company is Australian dollars (A$), which is also
the presentation currency of the Group
• All other assets are classified as non-current.
ii. Transactions and balances
• A liability is current when:
•
•
•
•
•
It is expected to be settled in the 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;
Or
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.
• Deferred tax assets and liabilities are classified
as non-current assets and liabilities.
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions
or reporting date where monetary items are
remeasured.
Foreign exchange gains and losses resulting
from the settlement of such transactions and
from the translation of monetary assets and
liabilities denominated in foreign currencies at
year end exchange rates are recognised in profit
or loss.
Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date
when the fair value is determined. The gain
or loss arising on translation of non-monetary
items measured at fair value is treated in line
with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain or
loss is recognised in OCI or profit or loss are also
recognised in OCI or profit or loss, respectively).
34
seeingmachines
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 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 other
comprehensive income relating to that particular
foreign operation is reclassified to profit or loss.
3. Summary of Significant Accounting Policies
The practical expedient applies only to rent
concessions occurring as a direct consequence of
COVID-19 and only if all of the following conditions
are met:
a. The change in lease payments results in revised
consideration for the lease that is substantially
the same as, or less than, the consideration for
the lease immediately preceding the change;
b. Any reduction in lease payments affects only
payments originally due on or before 30 June
2021 (a rent concession meets this condition if it
results in reduced lease payments on or before
30 June 2021 and increased lease payments that
extend beyond 30 June 2021); and
a. Changes in accounting policies and disclosures
c. There is no substantive change to other terms
and conditions of the lease.
The accounting policies and disclosures adopted
are consistent with those of the previous year.
Where applicable, certain comparatives have been
reclassified to comply with accounting presentation
adopted in the current year (refer to Note 3(t)).
The amendment in AASB 2020-4 applies to annual
reporting periods beginning on or after 1 June 2020
and applied to rent concessions affecting payments
originally due on or before 30 June 2021.
In the current financial year, the Group has applied
the amendment in AASB 2020-4, applying the
practical expedient retrospectively to all rent
concessions that meet the conditions in, and has not
restated prior period figures.
ii. Amendments to existing standards effective
and adopted in 2021 with no significant
impact to the Group
b. New and amended standards and interpretations
effective and adopted in 2021
The Group has adopted all of the new and revised
Standards and Interpretations issued by the AASB
that are relevant to its operations and effective for an
accounting period that begins on or after 1 July 2020.
i.
Impact of the initial application of AASB
2020-4 Amendments to Australian
Accounting Standards – COVID-19
Related Rent Concessions
AASB 2020-4 amends AASB 16 Leases to provide
practical relief to lessees in accounting for rent
concessions arising as a result of COVID-19, by
including an additional practical expedient in the
standard.
The practical expedient permits a lessee to elect
not to assess whether a COVID-19-related rent
concession is a lease modification. A lessee that
makes this election shall account for any change in
lease payments resulting from the COVID-19-related
rent concession the same way it would account for
the change applying AASB 16 if the change were not
a lease modification.
35
annual report 2021
There has been no significant impact due to the adoption of any of the following standards or amendments thereto.
AASB 2018-6
Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-7
Amendments to Australian Accounting Standards – Definition of Material
AASB 2019-1
Amendments to Australian Accounting Standards – References to the Conceptual Framework
AASB 2019-3
Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
AASB 2019-5
Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards
Not Yet Issued in Australia
c. New and amended standards and interpretations that have been issued but not yet effective or early
adopted by the Group
At the date of authorisation of the financial report, the Group has not applied the following new and
revised Australian Accounting Standards, Interpretations and amendments that have been issued but
are not yet effective.
Standard/Amendment
Effective for annual reporting
periods beginning on or after
AASB 17 and
AASB 2020-5
Insurance Contracts and Amendments to Australian
Accounting Standards – Insurance Contracts
1 January 2023
AASB 2014-
10; AASB
2015-10; and
AASB 2017-5
Amendments to Australian Accounting Standards – Sale
or Contribution of Assets between an Investor and its
Associate or Joint Venture; Amendments to Australian
Accounting Standards – Effective Date of Amendments
to AASB 10 and AASB 128; and Amendments to
Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and Editorial
Corrections
1 January 2022
(Editorial corrections in AASB 2017-5
applied from 1 January 2018)
AASB 2020-1
and AASB
2020-6
Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-Current
and Amendments to Australian Accounting Standards
– Classification of Liabilities as Current or Non-current –
Deferral of Effective Date
AASB 2020-3
Amendments to Australian Accounting Standards
– Annual Improvements 2018-2020 and Other
Amendments
1 January 2022
1 January 2022
AASB 2020-8
Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform – Phase 2
1 June 2021
AASB 2021-2
AASB 2021-3
Amendments to Australian Accounting Standards –
Disclosure of Accounting Policies and Definition of
Accounting Estimates
1 January 2023
Amendments to Australian Accounting Standards –
Covid-19-Related Rent Concessions beyond 30 June
2021
1 April 2021
36
seeingmachines
In addition, at the date of authorisation of the financial report the following IASB Standards and IFRS
Interpretations Committee Interpretations were on issue but not yet effective, but for which Australian
equivalent Standards and Interpretations have not yet been issued:
Standard/Amendment
Effective for annual reporting
periods beginning on or after
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
1 January 2023
d. Cash and cash equivalents (refer to Note 14
Cash and cash equivalents comprise cash at banks
and on hand and short-term highly liquid deposits
with a maturity of three months or less, that are
readily convertible to a known amount of cash and
subject to an insignificant risk of changes in value.
e.
Inventories (refer to Note 16)
Inventories 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:
Cost includes the purchase consideration, and those
costs directly attributable to bringing the asset to
the location and condition necessary for its intended
use. Such cost includes the cost of replacing
parts of plant and equipment if the recognition
criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals,
the Group depreciates them separately based on
their specific useful lives. Likewise, when a major
inspection is performed, its cost is recognised in
the carrying amount of the plant and equipment
as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred.
Depreciation
Finished goods: weighted average cost. The cost of
purchase comprises the purchase price and other
ancillary costs, where appropriate. Volume discounts
and rebates are included in determining the cost of
purchase.
The major categories of property, plant and
equipment are depreciated over the estimated useful
lives of the assets on a diminishing value or straight-
line basis using the following depreciation rates of
the specific asset as follows:
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, including direct costs.
f. Property, plant and equipment (refer to Note 18)
• Office furniture, fittings and equipment
2 to 20 years
• Research and development equipment
3 to 10 years
Cost
• Asset under construction
Not depreciated
Assets under construction are stated at cost less
accumulated impairment losses, if any. Property,
plant and equipment is stated at cost less
accumulated depreciation and any accumulated
impairment losses.
Depreciation commences when an asset is available
for use.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
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annual report 2021
Derecognition
An item of property, plant and equipment is
derecognised upon disposal or when no further
future economic benefits are expected from its use.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the
asset) is included in profit or loss when the asset is
derecognised.
g.
Intangibles (refer to Note 19)
Cost
Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortisation and any accumulated
impairment losses. Internally generated intangibles,
excluding capitalised development costs, are not
capitalised and expenditure is recognised in profit or
loss in the year in which the expenditure is incurred.
Amortisation
The useful lives of the Group’s intangible assets are
assessed to be finite. Intangible assets with finite
lives are amortised over the useful economic life
and assessed 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.
Derecognition
An intangible asset is derecognised upon disposal
(i.e., at the date the recipient obtains control) or
when no future economic benefits are expected
from its use or disposal. Any gain or loss arising
upon derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is included in profit
or loss when the asset is derecognised.
i. Patents, Trademarks and Licences
The Group made upfront payments to acquire
patents, trademarks and licences. The patents and
trademarks have been granted for periods ranging
between 15 to 20 years, depending on the patent
or trademark, by the relevant government agency
with the option of renewal at the end of the period.
Licences for the use of intellectual property (“IP”) are
granted for periods ranging between 3 to 20 years
depending on the specific licences.
ii. Research and Development Costs
Expenditure on research activities, undertaken with
the prospect of gaining new technical knowledge
and understanding, is recognised in the statement of
comprehensive income when incurred.
Development expenditure is capitalised only if
development costs can be measured reliably, the
product or process is technically and commercially
feasible, future economic benefits are probable, and
the Group intends to and has sufficient resources to
complete development and to use or sell the asset.
The expenditure capitalised includes the cost of
materials, direct labour and overhead costs that
are directly attributable to preparing the asset for
its intended use. Other research and development
expenditure is recognised in the statement of
comprehensive income when incurred.
Capitalised development expenditure is measured
at cost less accumulated amortisation and
accumulated impairment losses. Amortisation of the
asset begins when the development is complete and
the asset is available for use. The asset is amortised
over the period of expected future benefit and
amortisation is recorded in cost of sales. During
the period of development, the asset is tested for
impairment annually.
38
seeingmachines A summary of the policies applied to the groups intangible assets is, as follows:
Useful lives
Finite (15-20 years)
Finite (3-20 years)
Finite (5-7 years)
Patents and Trademarks
Licences
Development Costs
Amortisation method used
Internally generated or
acquired
Amortised on a straight-
line basis over the period
of the patent or trademark
Amortised on a straight-
line basis over the period
of the licence
Amortised on a straight-
light basis over the period of
expected future sales from
the related project
Acquired
Acquired
Internally generated
h.
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 or
cash-generating unit’s (“CGU”) fair value less costs
of disposal and its value in use. The 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.
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 profit or loss.
i.
Leases (refer to Note 29)
The Group assesses at contract inception whether
a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
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, including write-down of
inventories to net realisable value, are recognised
in profit or loss in expense categories consistent
with the function of the impaired asset.
For non-financial assets other than 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
Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except for
short-term leases and leases of low-value assets.
The Group recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.
i. Right-of-use assets
The Group recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities
recognised, initial direct costs incurred,
and lease payments made at or before the
commencement date less any lease incentives
received.
39
annual report 2021
Right-of-use assets in which the Group are
reasonably certain to obtain ownership of the
underlying leased asset at the end of the lease
term is depreciated from commencement date
to the end of the useful life. Otherwise, right-
of-use assets are depreciated on a straight-line
basis over the shorter of the lease term and the
estimated useful lives of the assets, as follows:
• Office Space
3 to 10 years
• Other equipment
3 to 5 years
The right-of-use assets are also subject to
impairment. Refer to the accounting policies in
Note 3(h).
The Group presents right-of-use assets as a
separate line item on the consolidated statement
of financial position.
ii. Lease liabilities
At the commencement date of the lease, the
Group recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in- substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an index
or a rate, and amounts expected to be paid under
residual value guarantees. The lease payments
also include the exercise price of a purchase
option reasonably certain to be exercised by the
Group and payments of penalties for terminating
the lease, if the lease term reflects the Group
exercising the option to terminate.
Variable lease payments that do not depend
on an index or a rate are not included in the
measurement of lease liabilities and right-of-use
assets and are recognised as an expense
(unless they are incurred to produce inventories)
in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease
payments, the Group uses the incremental
borrowing rate (“IBR”) at the lease
commencement date if the interest rate implicit
in the lease is not readily determinable.
After the commencement date, the amount
of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease
payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a
modification, a change in the lease term,
a change in the lease payments (e.g., changes
to future payments resulting from a change in
an index or rate used to determine such lease
payments) or a change in the assessment of
an option to purchase the underlying asset.
When the lease liability is remeasured in this
way, a corresponding adjustment is made to the
carrying amount of the right-of-use asset or is
recorded in profit or loss if the carrying amount
of the right-of-use asset has been reduced to
zero.
The Group’s lease liabilities are further disclosed
at Note 29.
iii. Short-term leases and leases of low-value assets
The Group applies the short-term lease
recognition exemption to its short-term
leases of equipment (i.e., those leases that
have a lease term of 12 months or less from
the commencement date and do not contain
a purchase option). It also applies the lease of
low-value assets recognition exemption to leases
of office equipment that are considered to be
low value. Lease payments on short-term leases
and leases of low-value assets are recognised as
expense on a straight-line basis over the lease
term.
40
seeingmachines
j.
Financial instruments
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.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through OCI, and fair value through profit or loss.
The classification of debt financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s
business model for managing them. With the
exception of trade receivables that do not contain
a significant financing component or for which the
Group has applied the practical expedient, the
Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing
component or for which the Group has applied the
practical expedient are measured at the transaction
price as disclosed in Note 3(p).
In order for a financial asset to be classified and
measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely
payments of principal and interest (“SPPI”)’ on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level. Financial assets with cash flows that
are not SPPI are classified and measured at fair value
through profit or loss, irrespective of the business
model.
The Group’s business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business
model determines whether cash flows will result
from collecting contractual cash flows, selling the
financial assets, or both. Financial assets classified
and measured at amortised cost are held within a
business model with the objective to hold financial
assets in order to collect contractual cash flows while
financial assets classified and measured at fair value
through OCI are held within a business model with
the objective of both holding to collect contractual
cash flows and selling.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the marketplace (regular
way trades) are recognised on the trade date, i.e., the
date that the Group commits to purchase or sell the
asset.
Subsequent measurement
For purposes of subsequent measurement, the
Group classifies its financial assets as financial assets
at amortised cost.
Financial assets at amortised cost are subsequently
measured using the effective interest (“EIR”) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecognised, modified or impaired.
The Group’s financial assets at amortised cost
include cash and cash equivalents, term deposits
and trade and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (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.
41
annual report 2021
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 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 its 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.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Group could be required to repay.
Impairment
The Group recognises an allowance for expected
credit losses (“ECLs”) for all debt instruments not
held at fair value through profit or loss. ECLs are
based on the difference between the contractual
cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive,
discounted at an approximation of the original
effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms.
ECLs are recognised in two stages. For credit
exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default
events that are possible within the next 12-months (a
12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk
since initial recognition, a loss allowance is required
for credit losses expected over the remaining life of
the exposure, irrespective of the timing of the default
(a lifetime ECL).
For trade receivables and contract assets, the Group
applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in
credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that
is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the
debtors and the economic environment.
The Group considers a financial asset in default
when contractual payments are 90 days past due.
However, in certain cases, the Group may also
consider a financial asset to be in default when
internal or external information indicates that
the Group is unlikely to receive the outstanding
contractual amounts in full before taking into
account any credit enhancements held by the Group.
A financial asset is written off when there is no
reasonable expectation of recovering the contractual
cash flows.
Financial liabilities (refer to Note 25)
Initial recognition and measurement
Financial liabilities are classified, at initial recognition,
as financial liabilities at amortised cost, net of directly
attributable transaction costs.
The Group’s financial liabilities include trade and
other payables, and lease liabilities.
Subsequent measurement
For purposes of subsequent measurement, the
Group classifies its financial liabilities as financial
liabilities at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the
EIR amortisation process.
Amortised cost is calculated by considering 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 costs in profit or
loss.
Derecognition
A financial liability is derecognised 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 derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in profit
or loss.
42
seeingmachines
Offsetting of financial instruments
ii. Long service leave
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.
k. Provisions (refer to Notes 22 and 23)
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.
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 profit or loss 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. If the effect of the time value of
money is material, provisions are discounted using
a current pre-tax rate that reflects, when appropriate,
the risks specific to the liability. When discounting
is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
i.
Employee leave entitlements
Employee entitlements to annual leave
are recognised when they are accrued
by employees. A provision is made for the
estimated liability for annual leave because
of services rendered by employees up to the
reporting date. Employee entitlements to sick
leave and maternity leave are not recognised
until the time of leave. Annual leave is
recognised in current liabilities, as it is
expected to be wholly settled within 12
months of the reporting date.
Long service leave is a period of paid leave
granted to an employee in recognition of a long
period of service to an employer. The liability for
long service leave is recognised in the provision
for employee benefits and measured as the
present value of expected future payments to
be made. Consideration is given to expected
future wage and salary levels, experience of
employee departures, and periods of service.
Expected future payments are discounted using
market yields at the reporting date on national
government bonds with terms to maturity and
currency that match, as closely as possible, the
estimated future cash outflows. Long service
leave is recognised in current and non-current
liabilities, provided there is an unconditional right
to defer settlement of the liability.
iii. Warranty provisions
The Group provides warranties for general
repairs of defects that existed at the time of sale,
as required by law. Provisions related to these
assurance-type warranties are recognised when
the product is sold. Initial recognition is based on
historical experience. The estimate of warranty-
related costs is revised annually.
l. Contingent liabilities (refer to Note 35)
Contingent liabilities are possible obligations that
arise from past events and whose existence will
only be confirmed by the occurrence of one or
more future events not wholly within the control
of the Group. Where it is not probable that an
outflow of economic benefits will be required, or the
amount cannot be estimated reliably, the obligation
is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote.
m. Share-based payments (refer to Note 33)
The Group provides benefits to employees, including
Key Management Personnel (“KMP”), in the form
of share-based payment transactions, whereby
employees render services as consideration for
equity instruments (equity-settled transactions).
The cost of these equity-settled transactions is
determined by the fair value at the date when the
grant is made using an appropriate valuation model,
further details of which are given in Note 33.
43
annual report 2021
That cost is recognised in employee benefits
expense (Note 9), together with a corresponding
increase in equity (other reserves), over the period
in which the service and, where applicable, the
performance conditions are fulfilled (the vesting
period). The cumulative expense recognised for
equity-settled transactions at each reporting date
until the vesting date reflects the extent to which
the vesting period has expired and the Group’s best
estimate of the number of equity instruments that will
ultimately vest. The expense or credit in profit or loss
for a period represents the movement in cumulative
expense recognised as at the beginning and end of
that period.
Service and non-market performance conditions are
not considered when determining the grant date fair
value of awards, but the likelihood of the conditions
being met is assessed as part of the Group’s best
estimate of the number of equity instruments that will
ultimately vest. Market performance conditions are
reflected within the grant date fair value. Any other
conditions attached to an award, but without an
associated service requirement, are considered to be
non-vesting conditions. Non-vesting conditions are
reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are
also service and/or performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or
service conditions are satisfied.
When the terms of an equity-settled award are
modified, the minimum expense recognised is
the grant date fair value of the unmodified award,
provided the original vesting terms of the award are
met. An additional expense, measured as at the date
of modification, is recognised for any modification
that increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the
employee.
Where an award is cancelled by the entity or by
the counterparty, any remaining element of the fair
value of the award is expensed immediately through
profit or loss. 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 dilutive effect of outstanding awards is reflected
as additional share dilution in the computation of
diluted earnings per share (refer to Notes 3(o) and 12).
n. Contributed equity (refer to 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.
o. Earnings per share (refer to Note 12)
Basic earnings per share (“EPS”) is calculated as net
profit or loss attributable to members of the parent,
adjusted to exclude any costs of servicing equity
(other than dividends), divided by the weighted
average number of ordinary shares, adjusted for any
bonus element.
Diluted EPS is calculated as net profit or loss
attributable to members of the parent divided by
the weighted average number of ordinary shares
outstanding during the year plus the weighted
average number of ordinary shares that would be
issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.
p. Revenue recognition
Revenue of the Group arises mainly from the sale
and licencing of Driver Monitoring System (“DMS”)
and Occupant Monitoring System (“OMS”) hardware
and software, after-sales monitoring and consulting
services.
Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer at an amount that
reflects the consideration to which the Group
expects to be entitled in exchange for those goods
or services (i.e., transaction price).
The disclosures of significant accounting
judgements, estimates and assumptions relating to
revenue from contracts with customers are provided
in Note 4.
44
seeingmachines i. Sale of goods
Revenue from the sale of goods is recognised when
control of the goods is transferred to the customer,
usually at the time of delivery of the goods to
customer, even if the terms include a right of return
or other price protection features. The normal credit
term is 30 to 60 days upon delivery.
ii. Licence fees
Licences granted to customers are perpetual
licences for use of IP (usually in the form of software).
Where the software is provided on a hardware kit this
is treated as one deliverable of a license due to the
fact that the hardware provided is of no value to the
customer without the inclusion of the software and
that the software cannot be delivered through any
other acceptable mechanism to the customer.
Recognition of revenue from licence fees is
dependent on the nature of the license and whether
it is a right to access or a right to use license.
Licenses that provide a right to use IP are
performance obligations satisfied at a point in time,
generally recognised upon provision of access to the
software.
Licenses that provide a right to access Seeing
Machines IP are performance obligations satisfied
over time because the customer simultaneously
receives and consumes the benefits provided by the
Group. The Group uses time elapsed to measure
progress toward complete satisfaction of the service
and recognises revenue on that basis.
(iii)
Rendering of services
Revenue from support and consultancy, including
monitoring services, 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.
These contracts are typically customer-specific, and
revenue recognition is therefore dependent on the
facts and circumstances of each arrangement.
For each contract of this type, the Group will
determine whether the performance obligation
is satisfied at a point in time or over time. For
performance obligations satisfied over time, the
Group will use the method to measure progress
that best depicts transfer of control to the customer,
which could be an output or an input method.
iv.
Interest revenue
Revenue is recognised as interest accrues using
the EIR 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. Royalty revenue
Revenue from royalties are performance obligations
satisfied at a point in time, generally recognised
when the customer produces a unit (i.e., a vehicle
is produced). The Group recognises revenue on a
monthly basis using total number of units produced.
vi. Agreements with multiple deliverables
Where the Group enters into agreements for the
provision of both goods and services as part of
a single arrangement, each deliverable that is
considered to have a value to the customer on
a standalone basis is accounted for separately.
The consideration from the arrangement is
allocated to each deliverable based on the
relative stand-alone selling prices of those
deliverables.
The disclosures of significant estimates and
assumptions relating to the estimation of the
stand-alone selling price of each deliverable are
provided in Note 4.
vii. Paid research and Consulting
The Group receives funding for research
activities and consulting projects. These are
typically multi-year agreements where the
Group is paid after the achievement of certain
milestones. Revenue is recognised once the
milestone has been achieved.
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annual report 2021
Timing of revenue recognition
r. Taxes (refer to Note 10)
Revenue is recognised either at a point in time
or over time, when or as the Company satisfies
performance obligations by transferring the
promised goods or services to its customers.
If the Company satisfies a performance obligation
before it receives the consideration, the Group
recognises either a contract asset or a receivable
in its statement of financial position, depending on
whether something other than the passage of time is
required before the consideration is due.
Contract balances
Contract assets
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Group transfers goods or services to
a customer before the customer pays consideration
or before payment is due, a contract asset is
recognised for the earned consideration that is
conditional.
Trade receivables
A receivable represents the Group’s right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment
of the consideration is due).
Contract liabilities
A contract liability is recognised if a payment is
received from a customer before the Group transfers
the related goods or services. Contract liabilities are
recognised as revenue when the Group performs
under the contract (i.e., transfers control of the
related goods or services to the customer).
q. Government grants
Government grants are recognised where there is
reasonable assurance that the grant will be received,
and all attached conditions will be complied with.
When the grant relates to an expense item, it is
recognised as income on a systematic basis over
the periods that the related costs, for which it is
intended to compensate, are expensed. When the
grant relates to an asset, it is recognised as income
in equal amounts over the expected useful life of the
related asset.
Current income tax
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantively enacted at
the reporting date in the countries where the Group
operates and generates taxable income.
Current income tax relating to items recognised
directly in equity is recognised in equity and not
through profit or loss. Management periodically
evaluates positions taken in the tax returns with
respect to situations in which applicable tax
regulations are subject to interpretation and
establishes provisions where appropriate
Deferred tax
Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
• When the deferred tax liability arises from the
initial recognition of goodwill or 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; and
•
In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint arrangements,
when the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised 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:
46
seeingmachines
• When the deferred 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; and
•
In respect of deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint arrangements,
deferred tax assets are recognised only to the
extent that it is probable that the temporary
differences will reverse in the foreseeable future
and taxable profit will be available against which
the temporary differences can be utilised.
The carrying amount of deferred 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 tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed 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 tax assets and liabilities are measured at the
tax rates that are expected to apply in 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.
The Group offsets deferred tax assets and deferred
tax liabilities if and only if it has a legally enforceable
right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the
same taxation authority on either the same taxable
entity or different taxable entities which intend either
to settle current tax liabilities and assets on a net
basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which
significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.
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.
Sales tax
Expenses and assets are recognised net of the
amount of sales tax, except:
• When the sales tax incurred on a purchase of
assets or services is not recoverable from the
taxation authority, in which case, the sales tax
is recognised as part of the cost of acquisition
of the asset or as part of the expense item, as
applicable; and
• When receivables and payables are stated with
the amount of sales tax included.
The net amount of sales tax recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the statement of
financial position.
Tax consolidation legislation
Seeing Machines Limited and its wholly owned
Australian controlled entities implemented the
tax consolidation legislation as of 1 July 2005.
Cash flows are included in the statement of cash
flows on a gross basis and the sales tax 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.
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.
Commitments and contingencies are disclosed
net of the amount of sales tax recoverable from, or
payable to, the taxation authority.
47
annual report 2021
s. Fair value measurement
input that is significant to the fair value measurement
as a whole) at the end of each reporting period.
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 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
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 at fair value 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
t. Comparatives
Where necessary, comparatives have been
reclassified to ensure consistency with current year
disclosures.
For enhanced visibility over cost analysis at a
segmental reporting level, account codes have been
recategorised during the year resulting in a change
in presentation. ‘Operations expenses’ and ‘General
and administrative expenses’ replace ‘Occupancy
and facilities expenses’ and ‘Corporate services
expenses’ in the prior year accounts respectively.
‘Research and development expenses’ incorporates
‘Other expenses’ within the overall balance.
For comparability, reclassifications for software
and operational costs totalling A$3,273,000 from
‘General and administration expenses’ to ‘Operations
expenses’, and for salaries and wages totalling
A$9,226,000 from ‘Research and development
expenses’, being split between ‘Operations
expenses’ (A$6,433,000), ‘Customer support and
marketing expenses’ (A$1,518,000) and ‘General and
administration expenses’ (A$1,275,000), have been
effected in 2020. These reclassifications are wholly
between the expense lines.
4. Significant accounting judgements, 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 report. 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.
48
seeingmachines
Significant accounting judgements
Capitalised development costs
Research costs are expensed as incurred. An
intangible asset arising from development
expenditure on an internal project is based on
management’s judgement that technological and
economic feasibility is confirmed, usually when a
product development project has reached a defined
milestone according to an established project
management model.
Taxation
The Group's accounting policy for taxation requires
management's judgement 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 probable that taxable profit will be
available against which the deductible temporary
differences and tax losses can be utilised.
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.
years. The Group applies judgement in evaluating
whether it is reasonably certain to exercise the option
to renew.
That is, it considers all relevant factors that create
an economic incentive for it to exercise the renewal.
After the commencement date, the Group reassesses
the lease term if there is a significant event or change
in circumstances that is within its control and affects
its ability to exercise (or not to exercise) the option to
renew (e.g. a change in business strategy).
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).
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 payments
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 Black Scholes method, with the assumptions
detailed in Note 33. 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.
Significant judgement in determining the lease term
of contracts with renewal options
Estimation of useful lives of assets
The Group determines the lease term as the non-
cancellable term of the lease, together with any
periods covered by an option to extend the lease if
it is reasonably certain to be exercised, or any periods
covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its leases
to lease the assets for additional terms of three to five
The estimation of the useful lives of assets has been
based on historical experience and 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.
49
annual report 2021
Revenue recognition - Agreements with multiple
deliverables
Where the Group enters into agreements for the
provision of both goods and services as part of
a single arrangement, each deliverable that is
considered to have a value to the customer on a
stand-alone basis is accounted for separately. The
consideration from the arrangement is allocated to
each deliverable based on the relative stand-alone
selling prices of those deliverables. In the absence
of a stand-alone selling price, the deliverable is
measured based on the best estimate of the stand-
alone selling price. The price of each component is
set in order to achieve a margin on that component
of the sale consistent with that which would be
achieved if the Company sold each item separately.
Revenue recognition - Non-recurring engineering
example, when leases are not in the subsidiary’s
functional currency). The Group estimates the IBR
using observable inputs (such as market interest
rates) when available and is required to make certain
entity-specific estimates (such as the subsidiary’s
stand-alone credit rating).
5. Financial Risk Management Objectives and
Policies
The Group’s principal financial instruments comprise
cash, trade receivables, term deposits and trade
payables.
The Group has various other financial assets and
liabilities such as sundry receivables and lease
liabilities.
The Group recognises revenue from pre-production
engineering services over time, using the completion
of specific performance obligations to measure
progress towards the complete satisfaction of the
service.
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 2021 financial year.
The Group’s exposure to interest rate risk is minimal.
Revenue recognition - Licences
Licences that provide a right to use IP are
performance obligations satisfied at a point in time,
generally recognised upon provision of access
to the software. Licences that provide a right
to access Seeing Machines IP are performance
obligations satisfied over time because the customer
simultaneously receives and consumes the benefits
provided by the Group.
Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate
implicit in the lease, therefore, it uses its incremental
borrowing rate (IBR) to measure lease liabilities. The
IBR is the rate of interest that the Group would have
to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of
a similar value to the rightof- use asset in a similar
economic environment.
The IBR therefore reflects what the Group
‘would have to pay’, which requires estimation
when no observable rates are available (such as
for subsidiaries that do not enter into financing
transactions) or when they need to be adjusted to
reflect the terms and conditions of the lease (for
50
seeingmachines
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 2021 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:
FOR THE YEAR ENDED
Financial Assets
Cash and cash equivalents:
Consolidated
2021
A$000
2020
A$000
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 Japanese variable interest rate risk
Total cash and cash equivalents
19,001
18,539
9,791
62
47,393
28,109
9,030
920
79
38,138
In addition to the above, the group had term deposits classified as financial assets at amortised cost
totaling A$472,000 (2020: A$512,000) that were subject to short-term fixed interest rates (refer to Note 20).
Interest rate risk sensitivity
Foreign currency risk
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 2021, 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:
Post Tax Profit Higher / (Lower)
FOR THE YEAR ENDED
Consolidated
+ 1% (100 basis points)
- 0.5% (50 basis points)
2021
A$000
2020
A$000
474
(237)
381
(191)
The movement in profit is due to interest rate
changes on cash balances.
Interest rates on the lease arrangements outstanding
at year end are fixed and range from 8% to 10%.
As a result of significant sales in North America,
New Zealand and Europe (denominated in those
currencies), staffing costs and significant purchases
of inventory denominated in United States dollars,
the Group’s statement of financial position can be
affected by movement in exchange rates generally
and the US$/A$ exchange rate in particular. The
Group seeks to mitigate the effect of its foreign
currency exposure by operating US Dollar (US$),
British Pound (GB£) and Japanese Yen (JP¥) bank
accounts.
Approximately 73% of the Group’s sales and
approximately 60% of the Group’s expenses and
inventory purchases are denominated in currencies
other than the functional currency of the operating
entity making the transaction. The Group evaluates
the concentration of risk with respect to foreign
currency as low, as the Group is naturally hedged
by holding funds in multiple operating currency
accounts, with revenues and expenses being closely
aligned on an annual basis.
51
annual report 2021
At 30 June 2021 the Group had the following exposure to foreign currency:
Financial Assets
Cash and cash equivalents (US$)
Cash and cash equivalents (GB£)
Cash and cash equivalents (JP¥)
Trade and other receivables (US$)
Trade and other receivables (EUR)
Trade and other receivables (GB£)
Trade and other receivables (NZD)
Trade and other receivables (ZAR)
Trade and other receivables (JP¥)
Total
Financial Liabilities
Trade and other payables (US$)
Trade and other payables (GBP)
Trade and other payables (EUR)
Trade and other payables (JP¥)
Trade and other payables (NZD)
Trade and other payables (SGD)
Trade and other payables (ZAR)
Total
Net exposure
Consolidated
2021
A$000
2020
A$000
18,539
9,791
62
9,710
8
1,091
97
14
13
9,030
920
79
2,423
41
1,168
1,048
6
-
39,325
14,715
(436)
(105)
(69)
(52)
-
-
-
(662)
38,663
(2,126)
(395)
(491)
(95)
(13)
(3)
(1)
(3,124)
11,591
52
seeingmachines The following tables demonstrate the sensitivity to a reasonably possible change in exchange rates,
with all other variables held constant. The impact on the Group’s profit before tax is due to changes
in the fair value of monetary assets and liabilities.
Consolidated change in USD rate
AUD / foreign currency +5%
AUD / foreign currency -5%
Change in GBP rate
AUD / foreign currency +5%
AUD / foreign currency -5%
Change in EUR rate
AUD / foreign currency +5%
AUD / foreign currency -5%
Change in NZD rate
AUD / foreign currency +5%
AUD / foreign currency -5%
Change in ZAR rate
AUD / foreign currency +5%
AUD / foreign currency -5%
Change in JPY rate
AUD / foreign currency +5%
AUD / foreign currency -5%
Effect on profit before tax
Equity Higher / (Lower)
2021
A$000
2020
A$000
2021
A$000
2020
A$000
(1,324)
1,464
(513)
567
3
(3)
(5)
5
(1)
1
(0.5)
1
(444)
491
(81)
89
21
(24)
(49)
54
(0.2)
0.2
1
(1)
(1,324)
1,464
(513)
567
3
(3)
(5)
5
(1)
1
(0.5)
1
(444)
491
(81)
89
21
(24)
(49)
54
(0.2)
0.2
1
(1)
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, contract assets and
other financial assets. 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
accounts for expected credit losses in accordance
with its policy on impairment of financial assets
detailed in Note 3(j). The Group does not hold any
credit derivatives to offset its credit exposure.
Trade 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. Collateral is
not requested nor is it the Group’s policy to securitise
its trade and other receivables.
Customer credit risk is managed in line with the
Group’s established policy, procedures and control
relating to customer credit risk management. The
Group also engaged a Credit Assessment Provider
for a list of recommendations and insurance policy
limits and has insurance policies in place for the most
significant customers. The internal assessment of
each customer is based on the payment history and
the reputation and size of the customer. Outstanding
customer receivables are regularly monitored
and followed up. Refer to Note 15 for credit risk
disclosures on trade and other receivables.
53
annual report 2021
Capital management and liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and by undertaking ongoing
monitoring of actual and forecast cash flows and maturity profiles of financial assets and liabilities,
in particular, the impact of differing sources of funds on cost and shareholder dilution are taken into
consideration when contemplating any funding shortfalls.
<=6 months
A$000
6-12 months
A$000
<1 year
A$000
Total
A$000
Carrying
Value
A$000
FOR THE YEAR ENDED 30 JUNE 2021
Trade and other payables
Lease liabilities
Total
FOR THE YEAR ENDED 30 JUNE 2021
Trade and other payables
Borrowings
Financial guarantee
Lease liabilities
Total
8,839
685
9,524
7,874
82
212
459
8,627
-
694
694
-
82
224
434
740
-
6,345
6,345
-
239
117
8,839
7,724
8,839
6,190
16,563
15,029
7,874
403
553
7,874
403
553
5,527
6,420
6,420
5,883
15,250
15,250
The group monitors rolling forecasts of liquidity reserves on the basis of expected cash flows.
Fair values
As at 30 June 2021, the carrying values of the
financial instruments approximate their fair value.
6. Business combinations and acquisition of
non-controlling interests
No business combinations or acquisitions of non-
controlling interests have occurred throughout the
year ended 30 June 2021 (2020: none).
7. Segment information
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
operational decision makers to make decisions
about resources to be allocated to the segment and
to assess its performance and for which discrete
financial information is available.
Operating segments that meet the qualitative criteria
as prescribed by AASB 8 Operating Segments 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.
There are no inter-segment revenues and there have
been no changes to how each segment’s profit or
loss is measured.
a. Segment Revenue based on operating segment
For management purposes, the Group is organised
into key business units based on the nature of its
products and services.
The Company has identified two key operating
segments, OEM and Aftermarket. The OEM segment
includes the Automotive and Aviation business
units which generate largely license based revenue,
channeled through Tier 1 customers. The Aftermarket
segment includes Fleet and Off-Road business units,
which generate revenue from a mix of direct and
indirect customers who retro-fit Seeing Machines
technology into commercial vehicles.
54
seeingmachines
OEM
Aftermarket
Other
Total
a. Revenue from contracts with customers
Segment Revenue
Segment Profit/(Loss)
2021
A$000
12,088
35,079
2020
A$000
12,993
27,019
2021
A$000
2020
A$000
(7,634)
(14,366)
3,039
(7,411)
-
-
(12,825)
(24,933)
47,167
40,012
(17,420)
(46,710)
In the following tables, revenue segments have been disaggregated by type of goods or services which also
reflects the timing of revenue recognition.
FOR THE YEAR ENDED 30 JUNE 2021
REVENUE TYPES SALES AT A POINT IN TIME
Paid Research
Consulting
Hardware and Installations
Royalties
Licencing
SALES OVER TIME
Driver monitoring
Non-recurring engineering
Licensing and royalties
Total revenue
FOR THE YEAR ENDED 30 JUNE 2020
REVENUE TYPES SALES AT A POINT IN TIME
Paid Research
Consulting
Hardware and Installations
Licencing
SALES OVER TIME
Driver monitoring
Non-recurring engineering
Licensing and royalties
Total revenue
OEM
A$000
Aftermarket
A$000
Total
A$000
5
-
727
2,280
4,190
-
4,886
-
-
5
1,706
1,706
18,798
19,525
-
-
11,064
-
3,511
2,280
4,190
11,604
4,886
3,511
12,088
35,079
47,167
OEM
A$000
Aftermarket
A$000
Total
A$000
432
-
1,140
8,027
-
3,308
86
12,993
-
1,432
432
1,432
12,130
13,270
-
8,027
9,812
-
3,638
9,812
3,315
3,724
27,019
40,012
55
annual report 2021 b. Geographic Information
REVENUES FROM EXTERNAL CUSTOMERS
Australia
North Amercia
Asia-Pacific (excluding Australia)
Europe
Other
Total revenue from external customers
2021
A$000
2020
A$000
14,874
19,566
6,172
3,407
3,148
47,167
12,532
13,429
9,755
1,448
2,848
40,012
The revenue information above is based on the locations of the customers.
8. Other income
a. Net gain/(loss) on foreign exchange
Unrealised gain/(loss)
Realised gain/(loss)
Total gain on foreign exchange
b. Other income
Government Grants
Research and development refundable tax incentives
Other income
Total other income
Consolidated
2021
A$000
2020
A$000
(217)
(200)
(417)
1,565
-
99
1,664
306
(688)
(382)
2,043
182
9
2,234
A total of A$1,565,000 (2020: A$1,690,000) is included in Government grants, relating to the
JobKeeper Payment scheme subsidy issued by the Australian Government for businesses significantly
affected by COVID-19.
56
seeingmachines 9. Expenses
a. Depreciation, impairment and amortisation expense
Depreciation expenses
Amortisation expense
Total depreciation, impairment and amortisation expense
b. Employee benefits expense
Wages and salaries and on-costs (excluding superannuation)
Superannuation expense
Share-based payment expense
Wages and salaries reported as cost of sales
Wages and salaries reported as cost of sales (NRE)
Wages and salaries capitalised to development costs
Total employee benefits expense
c. Short-term leases
Short-term leases and variable lease payments
Total short-term leases
d. Other expenses
Impairment of receivable
Total other expenses
10. Income Tax
Consolidated
2021
A$000
2020
A$000
525
787
1,312
40,188
2,362
3,250
(3,382)
(5,878)
(7,314)
29,226
-
-
26
26
1,337
1,105
2,442
45,155
2,708
5,205
(2,761)
(7,609)
-
42,698
112
112
2,986
2,986
The major components of income tax expense for the years ended 30 June 2021 and 2020 are:
The major components of income tax expense are:
Current income tax:
Current income tax charge
Adjustments in respect of current income tax of previous year
Taxation loss not recognised
Deferred tax:
Relating to the origination and reversal of temporary differences
Temporary differences not recognised
Income tax expense reported in the statement
of comprehensive income
Consolidated
2021
A$000
2020
A$000
(1,319)
-
2,056
(791)
791
737
(9,046)
(71)
10,363
(935)
935
1,246
57
annual report 2021 a. Reconciliation between tax expense and the product of the accounting profit before
income tax multiplied by the Group's applicable income tax rate is as follows:
Reconciliation of tax expense and the accounting profit multiplied by Australia’s domestic tax rate for
2020 and 2021:
Loss before income tax
At the parent entity's statutory income tax rate of 26.0% (2020:27.5%)
Share based payments (equity settled)
Entertainment
Research and development – R&D tax credit
Equity raising costs
Origination and reversal of temporary differences
Other temporary differences
Temporary differences not recognised
Adjustments in respect of current income tax of previous years
Taxation loss not recognised
Other non-deductible
Foreign tax-withholding not recoverable
Impact of tax rate change on deferred tax balances not recognised
Total
b. Deferred income tax at 30 June relates to the following:
Deferred tax relates to the following:
(17,420)
(4,529)
844
8
-
-
(81)
(791)
-
2,056
50
737
2,443
737
(45,464)
(12,503)
1,359
12
(50)
-
(63)
935
(71)
10,363
18
1,246
-
1,246
Consolidated Statement of Financial Position
2021
A$000
2020
A$000
(16)
(1,106)
(97)
-
(1,219)
1,219
-
58
(1,163)
-
(175)
(1,280)
1,280
-
(i) Deferred tax liabilities
Intangible assets
Right of use assets
Fixed assets
Accrued income (JobKeeper)
Gross deferred tax liabilities
Set off deferred tax assets
Net deferred tax liabilities
58
seeingmachines Continued
(ii) Deferred tax assets
R&D offset
Provision for expected credit loss
Accrued expenses
Annual leave
Long service leave
Warranties
S. 40-880 deduction
Finance lease liabilities
Accrued bonuses
Unrealised foreign exchange loss
OPEX interest
Gross deferred tax assets
Set-off deferred tax liabilities
Net deferred tax balance not brought to account
Tax losses
Losses not recognised
Net deferred tax asset
Consolidated Statement of Financial Position
2021
A$000
2020
A$000
3,244
3,244
29
28
763
217
167
427
1,626
640
56
78
7,275
(1,219)
6,056
(39,997)
39,997
-
41
39
726
221
131
868
1,765
1,028
(85)
150
8,128
(1,280)
6,848
(37,941)
37,941
-
c. Unrecognised temporary differences
At 30 June 2021, Seeing Machines Limited (consolidated) has unrecognised temporary differences
in relation to unbooked tax losses of A$153,836,000 (DTA of A$39,997,000) for which no deferred
tax asset has been recognised on the statement of financial position (2020: unrecognised tax losses
of A$138,255,000 and DTA of A$37,941,000). These losses are available for recoupment subject to
satisfaction of relevant statutory tests in each jurisdiction.
As at 30 June 2021 there are net unrecognised deductible temporary differences of A$23,294,000
(DTA of A$6,056,000) for which no deferred tax asset has been recognised on the statement of
financial position (2020: net unrecognised deductible temporary differences of A$24,901,000 and
DTA of A$6,848,000).
59
annual report 2021
d. Tax consolidation
Nature of the tax funding agreement
Members of the tax consolidated group have
entered into a tax funding agreement. Under the
funding agreement, the funding of tax within the
Group is based on accounting profit, which is not
an acceptable method of allocation under AASB
Interpretation 1052. 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.
11. Dividends Paid and Proposed
No dividends or distributions have been made to
members during the year ended 30 June 2021 (2020:
nil) and no dividends or distributions have been
recommended or declared by the directors in respect
of the year ended 30 June 2021 (2020: nil).
(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 2005.
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.
60
seeingmachines
12. Earnings Per Share
The following table reflects the income and share data used in the basic and diluted earnings per
share computations:
Earnings used in calculating earnings per share
For basic and diluted earnings per share:
Net loss
Net loss attributable to ordinary equity holders of the Company
Weighted average number of shares
Consolidated
2021
A$000
2020
A$000
17,420
17,420
46,710
46,710
2021
Thousands
2020
Thousands
Weighted average number of ordinary shares for basic earnings per share
3,634,037
Weighted average number of ordinary shares adjusted for the effect of dilution
3,634,037
3,365,319
3,365,319
There are no instruments (e.g. share awards)
excluded from the calculation of diluted earnings
per share that could potentially dilute basic
earnings per share in the future because they
are either non-dilutive or anti-dilutive for both
of the periods presented. Other than the
transaction highlighted in Note 36, 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.
13. Parent Entity Information
Current assets
Total assets
2021
A$000
2020
A$000
72,783
70,433
89,716
78,507
Current liabilities
13,657
12,250
Total liabilities
Issued capital
18,969
17,878
257,380
217,204
Information on the classification of securities
Accumulated losses
(204,844)
(171,359)
Awards granted to employees (including KMP)
as well as in the form of capital raising cost as
described in Note 33 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.
Reserves
18,212
14,784
Total shareholders’ equity
70,748
60,629
Loss of the Parent entity
(18,297)
(34,377)
Total comprehensive
income of the Parent
entity
(18,297)
(34,377)
61
annual report 2021
Significant accounting policies
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.
14. Current Assets – Cash and Cash Equivalents
Cash at bank
Total cash and cash equivalents
15. Current Assets – Trade and Other Receivables
Current
Trade receivables
Provision for expected credit losses
Deferred finance income
Receivables subject to financial guarantee
Other receivables
Total trade and other receivables - current
a. Allowance for expected credit loss
Consolidated
2021
A$000
47,393
47,393
2020
A$000
38,138
38,138
Consolidated
2021
A$000
2020
A$000
19,537
(110)
(302)
19,125
-
726
19,851
9,389
(150)
(546)
8,693
553
338
9,584
Trade receivables are non-interest bearing and are generally 30-60 days terms. The Group applies a
simplified approach in calculating ECLs and recognises a loss allowance based on lifetime ECL’s at reporting
date (refer to Note 3(j)). The provision for impairment loss recognised by the Group at 30 June 2021 was
A$110,000 (2020: A$150,000).
Set out below is the movement in the allowance for expected credit losses of trade receivables:
As at 1 July
Provision for expected credit losses increase/(decrease)
As at 30 June
Individually Impaired
2021
A$000
150
(40)
110
2020
A$000
250
(100)
150
62
seeingmachines
Set out below is the information about the credit risk exposure on the Group’s trade receivables and contract
assets using a provision matrix:
Trade receivables
Days past due
2021
Current
0-30
days
31-60
days
61-90
days
91+
days
Total
A$000
Expected credit loss rate
0.30%
1.60%
3.60%
6.60%
10.60%
Estimated total gross carrying amount
assessed
18,426
386
Expected credit loss
57
6
391
14
69
5
265
19,537
28
110
2020
Expected credit loss rate
0.30%
1.60%
3.60%
6.60%
10.60%
Estimated total gross carrying amount
assessed
Expected credit loss1
7,752
23
319
5
452
16
321
21
545
9,389
58
123
1 A specific provision for A$27,000 was created for certain balances in addition to the expected credit loss calculated using the provision matrix. The specific provision
and expected loss amount in total constitute the allowance for expected credit loss as shown in the previous table on page 60.
The Group considers a financial asset in default
when contractual payments are 90 days past due
unless the Group has entered into discussion with
the customer to agree varied payment terms.
An impairment of A$26,000 (2020: A$2,986,000)
has been recognised and included in other expenses.
Receivables 90 days past due but not considered
in default are A$265,000 (2020: A$545,000).
Payment terms on these amounts have been
renegotiated, and satisfaction has been gained
that payment will be received in full. It is expected
that all other balances will be received when due.
Consolidated
2021
A$000
2,640
(13)
Finished goods
Write-down of
inventories for the
period
Total inventories
2,627
2020
A$000
5,168
(425)
4,743
b. Fair value and credit risk
17. Other Current Assets
All trade receivables are short-term in nature and
therefore, the carrying values approximate their fair
value. 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
Prepayments
Rental bonds
Contract assets
Other
Consolidated
2021
A$000
3,098
133
2,151
56
2020
A$000
831
103
2,952
359
Detail regarding foreign exchange risk exposure is
disclosed in Note 5.
Total other current assets
5,438
4,245
63
annual report 2021
18. Non-current Assets – Property, Plant and Equipment
a. Reconciliation of carrying amounts at the beginning and end of the year
Consolidated
At 1 July 2020 net of accumulated
depreciation and impairment
Additions1
Disposals
Depreciation charge for the year2
Transferred from right-of-use assets3 (Note
29)
At 30 June 2021 net of accumulated
depreciation and impairment
At 30 June 2021
Cost
Office Furniture,
Fittings and
Equipment
A$000
Research and
Development
Equipment
A$000
Asset under
construction
A$000
Total
A$000
3,000
358
-
(426)
56
87
-
(18)
152
3,208
12
-
-
457
-
(444)
140
140
-
-
3,072
125
164
3,361
7,461
728
164
8,353
Accumulated depreciation and impairment
(4,389)
(603)
-
(4,992)
Net carrying amount
3,072
125
164
3,361
1 Additions include foreign exchange losses of A$80,000 during year ended 30 June 2021.
2 Depreciation charges include foreign exchange gains of A$81,000 during year ended 30 June 2021.
3 Office equipment leased at 30 June 2020 was purchased during the financial year ending 30 June 2021, thereby extinguishing the lease.
The transfer to property, plant and equipment consisted of original cost of A$418,000 and accumulated depreciation of A$278,000.
Consolidated
At 1 July 2019 net of accumulated
depreciation and impairment
Additions
Disposals
Office Furniture,
Fittings and
Equipment
A$000
Research and
Development
Equipment
A$000
Asset under
construction
A$000
Total
A$000
2,801
731
(21)
139
39
(80)
-
2,940
152
-
922
(101)
Depreciation charge for the year
(511)
(42)
-
(553)
At 30 June 2020 net of accumulated
depreciation and impairment
3,000
56
152
3,208
At 30 June 2020
Cost
6,685
641
152
7,478
Accumulated depreciation and impairment
(3,685)
(585)
-
(4,270)
Net carrying amount
3,000
56
152
3,208
64
seeingmachines
19. Non-current Assets – Intangible Assets and Development Costs
a. Reconciliation of carrying amounts at the beginning and end of the year
Consolidated
At 1 July 2020 net of accumulated amortisation
and impairment
Additions
Write-offs
Development
Costs
A$000
Patents,
Licences and
Trademarks
A$000
-
8,311
-
899
484
(106)
Total
A$000
899
8,795
(106)
Amortisation charge for the year
-
(48)
(48)
At 30 June 2021 net of accumulated amortisation
and impairment
8,311
1,229
9,540
At 30 June 2021
Cost
8,311
1,751
10,062
Accumulated amortisation and impairment
-
(522)
(522)
Net carrying amount
8,311
1,229
9,540
Consolidated
At 1 July 2019 net of accumulated amortisation
and impairment
Additions
Development
Costs
A$000
Patents,
Licences and
Trademarks
A$000
Total
A$000
1,456
1,083
2,539
-
246
246
Amortisation charge for the year
(1,456)
(430)
(1,886)
At 30 June 2020 net of accumulated amortisation
and impairment
-
899
899
At 30 June 2020
Cost
4,251
1,373
5,624
Accumulated amortisation and impairment
(4,251)
(474)
(4,725)
Net carrying amount
-
899
899
The Group capitalises costs for product development projects. Initial capitalisation of costs is based
on management’s judgement that technological and economic feasibility is confirmed, usually when
a product development project has reached a defined milestone according to an established project
management model. Refer to Note 3(g) for the relevant accounting policy related to intangible assets,
including development costs.
In accordance with the Group’s accounting policies and processes, the Group performs its
impairment testing annually at 30 June. Intangible assets are reviewed at each reporting period to
determine whether there is an indication of impairment or impairment reversal. Where an indicator of
impairment or impairment reversal exists, a formal estimate of the recoverable amount is made at the
reporting period. At 30 June 2021, no impairment indicators were noted.
65
annual report 2021
20. Other Financial Assets
22. Provisions
Consolidated
2021
A$000
2020
A$000
472
472
512
512
Financial assets at
amortised cost
Term deposits
Total other
financial assets
At 30 June 2021, term deposits held are classified as
short-term and consist of a term deposit of $140,000
maturing on 25 February 2022 with an interest rate of
0.15% and a term deposit of $332,000 maturing on
2 May 2022 with an interest rate of 0.0325%.
The term deposits are short-term in nature and
therefore, the carrying values approximate their
fair value.
21. Current Liabilities – Trade and Other
Consolidated
2021
A$000
2020
A$000
Trade payables
Accrued expenses
GST, Payroll Tax and
Payroll Liabilities
2,186
1,981
4,631
Other current liabilities
41
1,789
1,349
4,666
70
Consolidated
2021
A$000
2020
A$000
2,936
705
641
611
2,641
647
475
-
4,893
3,763
128
64
192
156
59
215
Current
Annual leave
Long service leave
Warranties provision
(Note 23)
Provision for income tax
Total provisions
- current
Non-current
Long service leave
Other provisions
Total provisions -
non-current
a. Nature and timing of provisions
Refer to Note 3(k) for the relevant accounting policy
and a discussion of the significant estimations and
assumptions applied in the measurement of the
provisions.
Total trade and
other payables
a. Fair value
8,839
7,874
23. Warranties – Provisions
Maintenance Warranties
A$000
Due to the short-term nature of these payables, their
carrying value is assumed to approximate their fair
value.
Included in the GST, Payroll Tax and Payroll Liabilities
is the accrual for the FY21 STI (short-term incentive)
amounting to A$2,461,000 (2020: A$3,739,000).
b. Foreign exchange, interest rate and liquidity risk
Information regarding foreign exchange, interest rate
and liquidity risk exposure is set out in Note 5.
At 1 July 2019
Arising during the year
At 30 June 2020
At 1 July 2020
Arising during the year
Utilised
At 30 June 2021
237
238
475
475
212
(46)
641
66
seeingmachines
24. Contract liabilities
26. Contributed Equity
Consolidated
2021
A$000
2020
A$000
Ordinary shares
257,382
217,204
Total contributed equity
257,382
217,204
Consolidated
Number of
ordinary shares
2021
Thousands
2021
Thousands
Issued and fully paid
3,875,618
3,365,214
Fully paid shares carry one vote per share and carry
the right to dividends.
The Company has no set authorised share capital
and shares have no par value.
Movement in ordinary
shares:
Shares
Thousands
A$000
As at 1 July 2019
3,365,214
217,204
Shares issued
-
-
At 30 June 2020
3,365,214
217,204
As at 1 July 2020
3,365,214
217,204
Shares issued
Transaction costs
510,404
-
41,199
(1,021)
As at 30 June 2021
3,875,618
257,382
Consolidated
2021
A$000
2020
A$000
772
772
263
263
Contract liabilities
Total contract liabilities
Contract liabilities totalling A$263,000 included
in the balance at 30 June 2020 were satisfied and
recognised as revenue during the year ended 30
June 2021.
25. Financial Liabilities
Consolidated
2021
A$000
2020
918
-
893
164
918
1,057
-
-
553
553
918
1,610
Consolidated
2021
A$000
2020
Current
Financial liabilities at
amortised cost
Lease liabilities
Loans and borrowings
Total financial liabilities at
amortised cost
Financial guarantee contracts
Financial guarantor
Financial gurantor
Total financial liabilities
- current
Non-Current
Financial liabilities at
amortised cost
Lease liabilities
5,272
5,527
Loans and borrowings
-
239
Total financial liabilities at
amortised cost
Total financial liabilities
- non-current
5,272
5,766
5,272
5,766
67
annual report 2021 27. Accumulated Losses and Reserves
a. Movements in accumulated losses and reserves
Refer to the statement of changes in equity for movements in 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 33 for further details of the plan.
28. Statement of cash flow information
a. Reconciliation of net loss after tax to net cash flows
Reconciliation of net loss after tax to net cash flows from operations
Loss after tax
Depreciation
Amortisation
Net gain on foreign exchange (unrealised)
(Profit)/loss on sale of assets
Financial guarantor
Share-based payments
Changes in assets / liabilities net of the effect of purchases
Decrease in inventories
(Increase) / decrease in trade and other receivables
(Increase) / decrease in other assets
Increase in provisions
Increase in trade and other payables
Increase in other liabilities
Decrease in contract liabilities
Consolidated
2021
A$000
(17,420)
525
787
219
(5)
-
3,376
2,116
(9,386)
(2,283)
1,108
969
353
-
2020
A$000
(46,710)
1,337
1,105
305
-
(350)
5,206
3,469
6,086
528
932
4,256
-
(410)
Net cash used in operating activities
(19,641)
(24,246)
68
seeingmachines 29. Leases
Group as a lessee
The Group has lease contracts for office space and other equipment used in its operations. Leases of office space
and other equipment generally have lease terms between 3 and 15 years. The Group’s obligations under its leases are
secured by the lessor’s title to the leased assets.
Generally, the Group is restricted from assigning and subleasing the leased assets. The Group also has certain leases
of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Group applies
the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
As at 1 July 2019
Amortisation expense
Office space
A$000
Other
equipment
A$000
4,918
(699)
236
(96)
Total
A$000
5,154
(795)
Foreign exchange difference on opening balance
12
-
12
As at 30 June 2020
Additions
Amortisation expense1
Transferred to property, plant and equipment2 (Note 18)
As at 30 June 2021
4,231
140
4,371
729
(708)
-
4,252
-
-
729
(708)
(140)
(140)
-
4,252
1 Amortisation charges include foreign exchange gains of A$31,000 during year ended 30 June 2021.
2 Office equipment leased at 30 June 2020 was purchased during the financial year ending 30 June 2021, thereby extinguishing the lease. The transfer to property, plant and equipment
consisted of original cost of A$418,000 and accumulated depreciation of A$278,000.
69
annual report 2021
Set out below are the carrying amounts of lease liabilities and the movements during the period:
As at 1 July
Additions
Accretion of interest
Payments
At 30 June
Current
Non-current
The maturity analysis of lease liabilities are disclosed in Note 5.
The following are the amounts recognised in profit or loss:
Amortisation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases (included in operations expense)
At 30 June
2021
A$000
2020
A$000
6,420
7,158
757
472
-
546
(1,459)
(1,284)
6,190
6,420
918
893
5,272
5,527
708
472
-
795
546
112
1,180
1,453
The incremental borrowing rate at 30 June 2021 is 8% per annum (2020: 8% per annum).
The Group has lease contracts that include extension and termination options. These options are negotiated by
management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs.
Management exercises significant judgement in determining whether these extension and termination options are
reasonably certain to be exercised (refer to Note 4).
70
seeingmachines
30. Related Party Disclosure
a.
Information about subsidiaries
The consolidated financial statements include the
financial statements of Seeing Machines Limited and its
subsidiaries’ as follows:
Name
Seeing Machines Incorporated
Country of
incorporation
United States
Seeing Machines Executive Share Plan Pty Ltd
Australia
Seeing Machines Share Plans Trust
Seeing Machines (Sales) Pty Ltd
Australia
Australia
Fovio Pty Limited (formerly Fovionix Pty Limited)
Australia
Fovio Incorporated
United States
Seeing Machines (UK) Ltd
United Kingdom
100%
Seeing Machines Japan Ltd
Seeing Machines Germany
Japan
Germany
100%
100%
b. Materially owned subsidiaries
% Equity Interest
Investment
2021
2020
2021
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
770,307
770,307
100
10
12
100
50
169
100
10
12
100
50
169
13,636
13,636
41,689
41,689
There are no subsidiaries held at 30 June 2021 that have non-controlling interests.
c. Key management personnel
Details relating to key management personnel, including remuneration paid are included in Note 32.
d. Director-related transactions
Details relating to key management personnel, including remuneration paid are included in Note 32.
(i) Shareholdings of Directors
Directors
K Hill
P McGlone
Y K NG*
J Murray
G Vorster
M Brown
Balance 1
July 2020
Granted as
remuneration
Acquired or
sold for cash
Net change
other
Balance 30
June 2021
2,187,080
375,000
200,000
-
-
250,000
1,785,349
375,000
-
-
-
-
182,291
250,000
109,375
-
-
-
-
-
-
-
-
-
2,762,080
250,000
2,160,349
432,291
109,375
-
-
-
R Burger (resigned 30 Nov 2020)
793,463
187,500
-
(980,963)
L Carmichael (resigned 30 Nov 2020)
2,070,813
375,000
-
(2,445,813)
6,836,705
1,604,166
700,000
(3,426,776)
5,714,095
Notes:
* Yong Kang NG has an additional 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 (VSI), being 0.1606% of VSI's current issued share capital.
71
annual report 2021 d. Director-related transactions (continued)
(i) Shareholdings of Directors continued
Directors
K Hill
Balance 1
July 2019
Granted as
remuneration
Acquired or
sold for cash
Net change
other
Balance 30
June 2020
550,000
187,080
1,450,000
P McGlone (appointed 4 Jul 2019)
-
-
-
Y K NG*
1,411,190
374,159
-
J Murray (appointed 1 Dec 2019)
G Vorster (appointed 1 Dec 2019)
M Brown (appointed 1 May 2020)
-
-
-
-
-
-
-
-
-
R Burger
606,383
187,080
-
L Carmichael (resigned 30 Nov 2020)
1,696,654
374,159
-
-
-
-
-
-
-
-
-
2,187,080
-
1,785,349
-
-
-
793,463
2,070,813
-
-
J Boyer (resigned 19 Jul 2019)
L Oxenham (resigned 22 Jul 2019)
666,667
100,000
-
-
-
-
(666,667)
(100,000)
Notes:
* Yong Kang NG has an additional 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
(VSI), being 0.1606% of VSI's current issued share capital.
5,030,894
1,122,478
1,450,000
(766,667)
6,836,705
(ii) Other Director related transactions
All transactions with director-related entities were made under normal commercial terms and conditions.
31. Key Management Personnel
a. Details of Key Management Personnel
(i) Directors
Kate Hill
Non-Executive Director and Chair
Paul McGlone
CEO and Executive Director
Yong Kang NG
Non-Executive Director
Gerhard Vorster
Non-Executive Director
John Murray
Non-Executive Director
Michael Brown
Non-Executive Director
Rudolph Burger
Non-Executive Director (resigned 30 November 2020)
Les Carmichael
Non-Executive Director (resigned 30 November 2020)
(ii) Executives (Other Key Management Personnel)
Paul McGlone
Chief Executive Officer
Naomi Rule
Chief Financial Officer
Nicolas Difiore
Senior Vice President (SVP) OEM Solutions
Mike Lenne
Senior Vice President (SVP) OEM Solutions
Max Verberne
General Manager - (GM) Aftermarket Solutions
Ryan Murphy
Chief Operating Officer (role terminated 4 June 2021)
72
seeingmachines 32. Compensation for Key Management Personnel
FOR THE YEAR ENDED
30 June 2021
Chair
Kate Hill
CEO and Executive
Paul McGlone
Non-Executive Directors
Y K NG
John Murray
Gerhard Vorster
Michael Brown
R Burger (resigned 30 Nov 2020)
L Carmichael (resigned 30 Nov 2020)
Other Key Management Personnel1
Total
Short-Term
A$000
Salary/Fees/
Bonus/Leave
Post-
Employment
A$000
Share-Based
Payments
A$000
Total
A$000
Superannuation
Options/
Rights
123
705
72
68
74
47
27
32
2,810
3,958
7
25
-
6
4
-
-
-
98
140
-
331
-
-
-
-
-
-
688
1,019
130
1,061
72
74
78
47
27
32
3,596
5,117
1. Other key management personnel include the Executives as listed at Note 31(a)(ii).
FOR THE YEAR ENDED
30 June 2020
Chair
Kate Hill
CEO and Executive
Paul McGlone (appointed 4 Jul 2019)
Non-Executive Directors
Y K NG
John Murray (appointed 1 Dec 2019)
Gerhard Vorster (appointed 1 Dec 2019)
R Burger
L Carmichael
Other Key Management Personnel1
Total
Short-Term
A$000
Salary/Fees/
Bonus/Leave
Post-
Employment
A$000
Share-Based
Payments
A$000
Total
A$000
Superannuation
Options/
Rights
114
548
44
40
33
58
55
2,475
3,367
-
25
-
-
-
-
-
209
234
45
645
61
15
9
30
61
1,257
2,123
159
1,218
105
55
42
88
116
3,941
5,724
1. Other key management personnel include the Executives as listed at Note 31(a)(ii).
2. Share based payments includes accrued Director shares pertaining to remuneration taken as shares during
the financial year which will be granted post balance date.
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related
to key management personnel.
73
annual report 2021
33. Share-based payments 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 the performance rights long term incentive
Expense arising from options under long term incentive
Expense arising from the shares issued to employees
Directors’ shares
Consolidated
2021
A$000
3,249
1
-
-
2020
A$000
4,919
23
171
93
Total expense arising from share-based payment transactions
3,250
5,206
b. Type of share-based payment plan
2010 Executive Share Plan
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) Long Term Incentive – 2020 Performance rights
or share options offers – Executive and key staff
From 1 July 2015, senior staff and other key staff are
offered long term incentive (LTI) performance rights
or share options. Under this structure, the staff are
only able to exercise the rights, and have new ordinary
shares issued to them, if any performance, market and
vesting conditions are met. These conditions typically
include a performance condition requiring the staff
member to achieve a minimum “meets expectations”
rating and some rights have included a market
condition in the form of a minimum Target Share
Price (TSP). The vesting period ranges from 9 months
to 5 years from the end of the relevant financial year
or grant date. Performance rights or options are
often offered as part of the annual remuneration
review and may be offered at other times. Any offer of
performance rights or options requires Board approval
and, when granted, is announced to the market.
Options were issued to a key staff member in October
2016, the options were valued using a binomial model
using volatility as a proxy for implied volatility, long
term UK government bond prices for the risk free rate
and AIM share price information. All options expire
after 10 years. At 30 June 2021 the weighted average
remaining life for the outstanding share options was
6.21 years (2020: 7.21 years) and the exercise price for
all outstanding options was £0.0561. No new options
were granted during the year.
In November 2020 the Company awarded a total of
29,964,495 performance rights in respect of ordinary
shares to Executive and key staff to be issued at nil
cost. The rights were valued at the spot rate of the
shares at grant date. The rights vest annually over
3 years in equal tranches with the first vesting date
being 1 July 2021 and require the employee to remain
continuously employed by the Company until each
relevant vesting date. If an employee leaves before the
rights vest and the service condition is therefore not
met the rights lapse.
In some cases, for 'good leavers', determined on
a discretionary basis by management, options are
prorated for service in the current period and that
portion are vested on termination, the remaining rights
are cancelled.
74
seeingmachines
There is no cash settlement of the rights. The Group
accounts for the Executive Share Plan as an equity-
settled plan.
Achievement of the following TSP performance is
required for each tranche to vest:
(ii)
Ordinary Shares
In November 2020 the Company issued a total of
1,604,166 ordinary shares to non-executive directors
in lieu of cash remuneration. The shares were valued
at grant date at £0.04. The number of shares issued
to each director was calculated with reference to the
cash equivalent the director would have received
based on their performance, net of superannuation.
(iii)
2019 CEO Call Options Scheme
In September 2019 the Company awarded rights to
acquire 12,000,000 ordinary shares as part of the
Company's Call Option Scheme to the CEO. These
rights will vest on 1 July 2022, providing the CEO
remains continuously employed by the company, and
will be exercisable at any point within one year at a
price of £0.0441 per ordinary share, being the average
daily volume weighted average price (VWAP) over the
5 trading days to 27 September 2020. There is no cash
settlement of the options and the options will expire if
they are not exercised by 1 July 2023.
Taking into account the terms and conditions upon
which the options were granted, and the assumptions
outlined below, the weighted average fair value of
the options at grant date is £0.0182. At 30 June the
weighted average remaining life for the outstanding
share options was 2 years (2020: 3 years)
(iv)
2019 CEO LTI Performance Rights
In September 2019 the Company awarded
25,000,000 rights in respect of ordinary shares to the
CEO to be issued at nil cost. The rights vest annually
over 5 years in equal tranches with the first vesting
date being 1 July 2020, with each issue conditional
on the satisfaction of key conditions including TSP
performance and require the employee to remain
continuously employed by the Company until each
relevant vesting date. For the purposes of determining
whether the TSP has been achieved at a particular
vesting date the share price will be determined by
the 30-day VWAP immediately prior to the particular
vesting date. If the employee leaves before the rights
vest and the service condition is therefore not met the
rights lapse.
Tranche 1: £0.061
Tranche 2: £0.076
Tranche 3: £0.095
Tranche 4: £0.119
Tranche 5: £0.149
If the TSP has been achieved at the particular vesting
date, then 100% of the performance rights allocated
to that tranche will vest. Where at least 90% of the
TSP has been achieved at the particular vesting date
the corresponding Performance Rights equal to the
proportion of the TSP achieved for that year will vest.
Where less than 90% of the TSP is achieved 0% of
the rights will vest. However, the performance rights
issued under the tranche will have the opportunity
to achieve 50% vesting two years later by way of
re-test. The re-test feature is such that 50% will vest
if the original TSP is achieved at the following two
consecutive LTI vesting dates. The remaining 50% will
lapse.
In some cases, for ‘good leavers’, the Board, in its
absolute discretion, may partially allow some of the
rights to acquire Shares to be exercised or allocate
cash on a pro rata basis, having regard to the group
performance to that point and the likelihood that the
group will achieve the KPIs by the performance date.
Any remaining rights are cancelled.
Taking into account the terms and conditions upon
which the options were granted, and the assumptions
outlined below, the following fair values have been
calculated:
Tranche 1: £0.0190
Tranche 2: £0.0193
Tranche 3: £0.0193
Tranche 4: £0.0192
Tranche 5: £0.0192
At 30 June the weighted average remaining life for the
outstanding performance rights was 8.23 years (2020:
9.23).
75
annual report 2021
(iv) 2019 CEO LTI Performance Rights (continued)
The fair values at grant date are estimated using a binomial pricing model using historic volatility as a proxy for implied
volatility, long term UK government bond prices for the risk-free rate and share price information from DataStream.
The following assumptions have been used in calculating the fair values in relation to offers made to the CEO:
Dividend yield: 0%
Volatility: 63%
Post-vesting Withdrawal Rate (options only): 0%
Risk-free interest rate:
1 Year: 0.56%
2 Year: 0.44%
3 Year: 0.39%
4 Year: 0.36%
5 Year: 0.35%
6 Year: 0.36%
7 Year: 0.37%
For the year ended 30 June 2021, the Company has recognised A$3,250,000 of share-based payment expense in
the statement of comprehensive income (2020: A$5,206,000).
e. Summaries of shares issued and held in Trust:
Shares held in Trust at 1 July 2020
Issued during the year
Vested and transferred during the year
Shares held in Trust at 30 June
2021
No ‘000
2021
WAEP (pence)
2020
No ‘000
2020
WAEP (pence)
41,405
70,000
(25,270)
86,135
6.92
9.50
6.80
9.64
59,556
-
(18,151)
41,405
7.06
-
4.57
6.92
f. Summaries of rights granted under the Performance Right Scheme:
2021
Number
2021
WAEP (pence)
2020
Number
2020
WAEP (pence)
Outstanding at 1 July 2020
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 30 June
Exercisable at 30 June
132,333,408
29,964,495
(7,072,085)
(24,010,464)
131,215,354
51,806,200
5.97
5.60
4.79
7.69
5.65
7.02
87,717,529
65,995,070
(8,450,406)
(12,928,785)
132,333,408
48,116,677
7.06
4.27
4.99
7.65
5.97
7.50
76
seeingmachines
34. Commitments
Events After the Reporting Date
As at 30 June 2021, the group had commitments of
A$15,981,803 (2020: A$30,284,000) relating to the
manufacturing contract for the Group's Guardian 2.1
product for the period July 2021 to May 2022.
Other than the matters outlined below, there have
been no matters that have occurred subsequent to
the reporting date, which have significantly affected,
or may significantly affect, the Group’s operations,
results or state of affairs in future years.
35. Contingent Liabilities
As at 30 June 2021, there were no contingent
liabilities (2020: A$500,000 in relation to a
guarantee with HP Financial Services New Zealand,
which is no longer applicable as the underlying loan
has been repaid in full).
• On 23 November 2021, Seeing Machines issued
277,123,492 new ordinary shares of no par value
each (the “New Ordinary Shares”) at a price of
11 pence per New Ordinary Share, raising gross
proceeds of approximately US$41,000,000 (the
“Placing”). The net proceeds of the Placing will
be used to strengthen the Company’s balance
sheet and for general working capital and
corporate purposes.
Consolidated
2021
A$000
2020
A$000
Amounts received or due and receivable by Ernst & Young for:
An audit or review of the financial report of the entity and any other entity in the
consolidated group
139,000
199,443
Other services in relation to the entity and any other entity in the consolidated group
Tax compliance
74,861
56,900
213,861
256,343
77
annual report 2021
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 are 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 2021
and of its performance for the year ended on that date; and
Complying with Accounting Standards (including Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(b) The financial statements and notes comply with International Financial Reporting Standards as
disclosed in Note 2(a); 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 Act 2001 for the financial year ended 30 June 2021.
On behalf of the board
Paul McGlone
Executive Director & Chief Executive Officer Canberra
78
seeingmachines
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor's Report to the Members of Seeing Machines
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Seeing Machines Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2021, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
b)
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Revenue recognition for non-recurring engineering services and licensing arrangements
Why significant
How our audit addressed the key audit matter
The Group has contractual arrangements with
certain customers for non-recurring engineering
services. In the year ending 30 June 2021 non-
recurring engineering services accounted for
$4.9m of total revenues of $47.2m. There is
significant judgement associated with
determining when performance obligations have
been satisfied in order to recognise revenue over
time.
The Group has licensing arrangements with
customers for use of technology developed by
the Group. In the year ending 30 June 2021
licensing revenue accounted for $7.7m of total
revenues of $47.2m. There is significant
judgement associated with determining whether
a licence conveys either:
► A right to access the Group’s intellectual
property throughout the licence period,
which results in revenue that is recognised
over time; or
► A right to use the Group’s intellectual
property as it exists at the point in time the
licence is granted, which results in revenue
that is recognised at a point in time.
Based on the significant judgement required to
determine revenue recognition for non-recurring
engineering services and licences and their
significance to total revenues recorded by the
Group, we considered this to be a key audit
matter.
Our audit procedures included the following:
► We assessed whether the Group’s revenue
recognition policies were in accordance with
Australian Accounting Standards.
►
For all non-recurring engineering and licence
arrangements that we considered to be
individually significant and for a sample of the
remaining arrangements we:
►
►
►
obtained an understanding of the
transaction through inspection of the
underlying contractual agreements and
other related documents, as well as
discussions with the Group’s accounting
and/or sales representatives;
evaluated management’s analysis of the
engineering services delivered with
reference to the performance obligations
and obtained evidence of service delivery
and customer acceptance. We agreed inputs
into the revenue recognition calculation to
sales documentation, employee time and
cost records; and
evaluated management’s analysis of the
licence arrangements including whether the
licence conveyed a right to use or a right to
access the Group’s intellectual property and
the performance obligations, if any, over
the licence period. We obtained and read
the licence agreements to assess the
position adopted by Group including
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Why significant
How our audit addressed the key audit matter
The Group has included disclosures for revenue
recognition in Note 7 and related significant
judgments in Note 4 of the financial report.
reconciliation of key inputs into the revenue
recognition calculations.
► We evaluated the associated financial report
disclosures.
Capitalised software development costs
Why significant
How our audit addressed the key audit matter
Capitalised software development costs
represent 9.0% of the total assets. These costs
were capitalised as they meet the criteria set out
in Australian Accounting Standards and will be
amortised over a period of 5 to 7 years.
Our audit procedures included the following:
► We assessed whether the Group’s accounting
policy for capitalisation of software development
costs complied with Australian Accounting
Standards.
Judgement is exercised by the Group in
determining the nature and amount of costs to
be capitalised and in determining the useful lives
over which costs are amortised.
►
Capitalised software development costs were
considered to be a key audit matter given the
value of these assets relevant to total assets, the
significant value of amounts capitalised during
the year, and the judgements required when
determining whether costs should be capitalised,
the useful lives over which costs should be
amortised and the recoverability of capitalised
software development costs.
Disclosure of capitalised software development
costs and the associated judgements are
included in Note 19 and Note 4.
For a sample of capitalised software
development costs, we assessed whether the
labour hours incurred were authorised, the costs
incurred met the criteria for capitalisation set
out in Australian Accounting Standards and
recalculated the capitalisation rate used by
management in determining the amount of the
costs to be capitalised.
► We assessed the appropriateness of the useful
life attributed to these costs by taking into
consideration the economic life of the software
and the terms of customer contracts.
► We evaluated the Group’s assessment for any
indicators of impairment of capitalised software
development costs.
► We evaluated the associated financial report
disclosures.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2021 annual report other than the financial report and our auditor’s report
thereon. We obtained the directors’ report that is to be included in the annual report, prior to the date of
this auditor’s report, and we expect to obtain the remaining sections of the annual report after the date of
this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
► Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
►
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Anthony Ewan
Partner
Sydney
24 November 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation