annual
report
2024
ABN 34 093 877 331
This annual financial report covers Seeing Machines Limited as a
consolidated entity. The Group’s functional and presentation currency
is US Dollars ($).
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 2. The following information is current
as at 30 June 2024.
Directors
Kate Hill Non-Executive Director and Chair
Paul McGlone Executive Director and Chief Executive Officer (CEO)
Yong Kang (YK) Ng Non-Executive Director (resigned 29/11/2023)
Gerhard Vorster Non-Executive Director
John Murray Non-Executive Director
Michael Brown Non-Executive Director
Stephane Vedie Non-Executive Director (appointed 25/10/2023)
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
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
PricewaterhouseCoopers
2 Riverside Quay
Southbank Victoria 3006
Australia
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contents
Our Mission and Purpose
4
Letter to Shareholders
6
The Year in Review
8
Financial Highlights
8
Company Highlights
9
Growing Market Opportunity
10
Directors’ Report
13
Review of Operations
14
Financial Statements
26
Notes to the Financial Statements
32
Consolidated Entity Disclosure Statement
81
Directors' Declaration
82
Auditor's Report
84
our mission:
zero
transport
fatalities.
our purpose:
to get
everyone
home safely.
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5
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letter to
shareholders
Safety in motion: Regulatory tailwinds
become a reality
I am delighted to present the Seeing Machines
2024 annual report, highlighting the progress the
company has made during the period as regulation
comes into effect, underpinning our ambitions for
future, profitable growth.
This year, as we celebrate 24 years in business,
over 2.6 million+ cars on the road (Q1 FY2025)
have our technology installed, establishing
Seeing Machines as a leader in the field of interior
sensing technology for software enabled vehicles.
Our success in bringing automotive programs
to production sets us apart, showcasing our
ability to solve complex engineering problems to
deliver safety solutions that meet the needs of
a modern driver.
At the end of the financial year, there were more
than 62,000 commercial vehicles equipped with
our Guardian aftermarket technology, ensuring
that professional drivers and the communities
they drive through, are protected from the risks
associated with long hours on the road.
In Aviation we continue, uncontested, to move
closer to delivering the world’s first pilot support
system together with Collins Aerospace, the
world’s largest Avionics Tier 1 supplier, to enhance
safety and training in this huge transport sector.
We are seeing our purpose come to life as
we get more and more people home safely
As transport regulators globally continue to address
technological advancements and aim to improve
road safety, Seeing Machines is set to benefit
as our core technology becomes mandated by
more jurisdictions, globally. Driver and occupant
monitoring system (DMS/OMS) technology is
becoming a standard feature in vehicles worldwide
to reduce crashes by addressing drowsy and
distracted driving.
Europe’s General Safety Regulation now requires
more features for all vehicles by 2026, aligning with
Seeing Machines’ technology and roadmap. Euro
NCAP's five-star ratings based on Advanced Driver
Assistance Systems and driver monitoring are
setting safety standards that the USA is looking to
adopt in the coming years. These markets are vital
to Seeing Machines' growth, and we are closely
aligned as we support these regulatory bodies to
ensure robust safety protocols.
We anticipate further growth across 2025,
notwithstanding the ongoing and well documented
challenges facing the global automotive sector,
as more automotive programs start production,
generating high-margin royalty revenue. Guardian
Generation 3 production has started to accelerate,
enabling the company to leverage the expanding
opportunity in Europe and North America, while
also supporting the growing demand in Asia
Pacific. Generation 3, now featuring automotive
grade technology, promises commercial vehicle
manufacturers and operators a more robust,
simplified solution that leans into telematics and
broadens our market both geographically and
through industry verticals.
We have signed a new Agreement with our
long-time partner Caterpillar which has helped to
secure our balance sheet and provide us with more
opportunity to directly work across some new on-
6
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road sectors previously out of bounds.
Caterpillar and Seeing Machines will continue
working together to protect against dangerous
driving across the mining sector and we value
highly our long-standing collaboration.
The acquisition of Asaphus alongside another
deep collaboration in Automotive with leading
Tier 1, Valeo, will see us bring significant new talent
into the Group, enhancing our AI expertise with
specialised data and capabilities that will secure
our future technology roadmap and underpin
our leading-edge solutions. We will also benefit
from the Berlin location as the customer base in
Europe expands.
I’m proud to chair the board of Seeing Machines
with a group of directors from diverse industries
and with valuable experience. We further bolstered
the team when we welcomed Stephane Vedie,
a North American based Automotive industry
veteran, in 2023.
Finally, I would like to acknowledge the hard
work of all our team members, in Australia and
around the world. I would also like to thank my
fellow directors for their support and congratulate
CEO Paul McGlone and Seeing Machines’ senior
leadership team on another challenging but
successful year.
Kate Hill
Chair
Seeing Machines Limited
"we are seeing
our purpose
come to life as
we get more
and more
people home
safely"
7
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the year
in review
financial
highlights
$67.6m(US)
revenue up 17% from FY2023
$16.5M(US)
new agreement with caterpillar
upfront payment related to guardian tech
cash position at 30 June 2024
$23.4m(US)
$13.3m
annual reoccuring
revenue↑12% from
FY 2023
cars on road across 8 programs
2.2m+
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company
highlights
62,010
guardian connections
289,000
fatigue related driving
events in the past 12 months
18m
distraction events
guardian has traveled over
protecting drivers and communities
18 billion
km's
Seeing Machines was recipient
of the prestigious Prince
Michael of Kent International
Road Safety Award, 2023
we have intervened in over
Seeing Machines has
alerted drivers to over
9
growing
market
opportunity
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The market opportunity for
our technology is expanding
fleet/off-road
automotive
aviation
Guardian Gen 3 leans
into telematics, GSR requires
DMS in Europe, set to
extend globally
$8.7bn1 (US)
Fleet / off-road
retro-fit market
72m1 +
Connected heavy
trucks in CY2029
$540m2(US)
Truck and bus
factory-fit market
102m+
Global DMS Fitments
in CY20303
OEM DMS annual fitment
for passenger and light
commercial vehicles
Commercial aircraft
fleet forecast to grow to
32,7004+
by CY2029 Retrofit
into simulators
(~2,000simulators by CY2030)5
Euro NCAP, GSR requires
DMS + semi-automated
features driving increased
fitment over time
Pilot shortage leads to
reduced crew operations,
new commercial aircraft,
training efficiencies lead to
simulator potential
$9.3bn(US)
$0.7bn(US)
$0.5bn(US)
Total: $10.5bn(US) (2029/30)
Notes: 1. Assumes 20% DMS penetration rate in total connected heavy truck telematics market and ASP of US$600. Target markets include North America,
Europe, LATAM and ANZ. Connected truck data sourced from Frost & Sullivan - Global Connected Truck Telematics Outlook, 2024. 2. Factory-fit market
based on European heavy truck and bus production only. Sourced from International Organization of Motor Vehicle Manufacturers. ASP assumed as
US$600. 3. Light passenger vehicle DMS installation forecast sourced from Semicast Research – ADAS and DMS Market Report, 2024. Includes light
commercial vehicle forecast sourced from International Organization of Motor Vehicle Manufacturers. Automotive ASP assumed as US$6.50. 4. Oliver
Wyman – Global Fleet And MRO Market Forecast, 2024. Commercial aircraft ASP assumed to be US$10,000. 5. Commercial simulator data sourced from
FlightGlobal, assumed to grow at rate of 100 new simulators per annum. Commercial simulator ASP assumed to be US$100,000.
11
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directors’
report
Your Directors present their report on the consolidated entity consisting of Seeing
Machines Limited and the entities it controlled at the end of, or during, the year
ended 30 June 2024. Throughout the report, the consolidated entity is referred to
as the Group.
Directors
The following persons were Directors of Seeing Machines Limited during the whole of the financial
year and up to the date of this report:
Kate Hill
Non-Executive Director
and Chair
John Murray
Non-Executive Director
Paul McGlone
CEO and Executive Director
Michael Brown
Non-Executive Director
Yong Kang (YK) Ng
Non-Executive Director
(resigned 29/11/2023)
Stephane Vedie
Non-Executive Director
(appointed 25/10/2023)
Gerhard Vorster
Non-Executive Director
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13
review of
operations
Principal activities
The Company’s principal activities
during the year were:
a.
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;
b.
Entering commercial agreements
with partners for the development,
manufacturing and sale of products
into key target markets; and
c.
Research and development of the
Company’s core vision processing
technologies to support the development
and refinement of the Company’s products.
Dividends - Seeing Machines Limited
No dividends or distributions have been made
to members during the year ended 30 June 2024
(FY2023: nil) and no dividends or distributions
have been recommended or declared by the
Directors in respect of the year ended 30 June
2024 (FY2023: nil).
Review of operations
The Group’s total revenue for the financial year
(excluding foreign exchange gains and finance
income) increased by 17% and total adjusted
EBITDA decreased by 19% on prior year results.
30 June
2024
30 June
2023
Variance
$’000
$’000
%
OEM
26,524
26,707
(1%)
Aftermarket
41,101
31,064
32%
Revenue
67,625
57,771
17%
OEM
(19,051)
(14,682)
(21%)
Aftermarket
(19,832)
(18,082)
(10%)
Adjusted
EBITDA*
(38,883)
(32,764)
(19%)
*Adjusted EBITDA is a non-IFRS measure but
included as an important metric for shareholders
understanding of the business. Please refer to
Note 4(b) for a reconciliation of adjusted EBITDA
with loss before income tax.
OEM division
At the end of FY2024, Seeing Machines had 7
automotive programs in production, and over
2.2 million cars on the road featuring its DMS
technology, an increase of 104% from 12 months
ago. Seeing Machines is now engaged with 11
OEMs on 18 expanding programs with a cumulative
total initial lifetime revenue of $392 million, most
of which is expected to be recognised over the
period to 2028.
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During the financial year the OEM business was
strengthened through both a deepening of its
collaborations with Magna and Valeo and also as a
result of securing two new Automotive programs
with both a new and an existing OEM.
At the end of the prior financial year, the Group
diversified its exposure to other industries
beyond Automotive by entering into an exclusive
license and development agreement with
Collins Aerospace in the Aviation sector. This
has generated both licensing and non-recurring
engineering revenue being recognised during this
financial year.
30 June
2024
30 June
2023
Variance
$’000
$'000
%
Royalties
10,632
7,580
40%
Non-
recurring
engineering
9,242
6,766
37%
Licensing
6,038
11,719
(48%)
Hardware
and
installations
612
642
(5%)
OEM
Revenue
26,524
26,707
(1%)
OEM
Adjusted
EBIDA
(19,051)
(14,682)
(30%)
•
Royalty revenues, derived from installation of
Seeing Machines’ Driver Monitoring System
(DMS) technology, and represent very high
margin revenue. Despite the backdrop of
slower OEM production across the globe, the
Group achieved a 100%+ increase in cars on
road fitted with our technology compared
with the prior year, resulting in royalty volumes
increasing by 76% and revenues increasing by
40%. This ramp up is expected to continue as
Automotive programs become the dominant
source of revenue for the business unit.
•
Non-Recurring Engineering (NRE) revenue
is software development activities
undertaken to embed DMS technologies
into the specific OEM configuration, and the
increase represents additional programs and
development work undertaken in the current
financial year. NRE revenue, although at a lower
margin itself, is a leading indicator of future
high-margin royalty revenue.
•
Revenue from license fees was earned from
exclusive collaboration agreements with
Magna Electronics and Collins Aerospace and
reflects the volume of work undertaken during
the year to fulfil those agreements. The nature
of this type of revenue generally means that
each agreement is unique and one-off. This
revenue attracts a high margin.
•
Adjusted EBITDA represents the EBITDA
earned by the division after adjusting for
capitalised research and development
expenditure and allocating corporate costs
and overheads. The measure is a proxy for the
cash earned or used by the division during
the year. A lower mix of high margin revenue,
contributed to a 30% decline in adjusted
EBITDA for the year, which was also impacted
by an increase of investment in research and
development costs, particularly during the first
half of the year.
Aftermarket division
Seeing Machines’ Guardian technology is now
connected to over 62,000 individual vehicles,
representing 19% year on year growth, with those
vehicles having travelled over 17 billion kilometres.
During FY2024, the company launched Guardian
Generation 3 to commercial vehicle manufacturers
in Europe in support of the General Safety
Regulation (GSR) requirements to detect driver
drowsiness, required in all new vehicles on the road
in Europe from July 2024. These requirements will
escalate to include distraction for all new vehicles
from July 2026.
The advent of these regulations opens up a new
market segment for Seeing Machines known as
After Manufacture (factory-fit). Since the end of
FY2024, two OEMs have successfully achieved
vehicle homologation, including the installation
of Guardian Generation 3, allowing them to
incorporate the technology into their vehicles after
manufacture but prior to the vehicles being sold as
compliant with the GSR.
Guardian Generation 3 will also underpin
expansion in the US market for traditional
aftermarket (retrofit) opportunities.
15
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The Company also signed a new 5-Year Master
License and Marketing Agreement with mining
company Caterpillar Inc, which created new
opportunities for the Company to sell its Guardian
product to mining related on-highway vehicles,
previously exclusive to Caterpillar, while supplying
smarter and more competitive products to the
heavy equipment sector.
30 June
2024
30 June
2023
Variance
$'000
$'000
%
Driver
monitoring
12,433
11,117
12%
Hardware
and
installations
18,902
14,495
30%
Royalties
3,463
2,387
45%
Licensing
5,000
-
100%
Non-
recurring
engineering
/ Consulting
1,303
3,065
(57%)
Aftermarket
Revenue
41,101
31,064
32%
Aftermarket
Adjusted
EBITDA
(19,832)
(18,082)
(10%)
•
Driver monitoring revenue represents the high
margin recurring revenue generated from
Guardian connections with revenue increasing
by 12% and connected units increasing by 19%
to 62,010 units in June 2024 (FY2023: 51,975).
•
Hardware and installation revenue from
the sale and installation of Guardian units
saw growth of 30% as the majority of the
remaining inventory of Generation 2 units were
sold, making way for the new higher margin
Generation 3 units which began production
during the period.
•
Royalties continued to be generated from
the agreement with Caterpillar, Inc, and
saw growth as Caterpillar refocused on this
segment of their business. As the previous
arrangement with Caterpillar came to an
end in June 2024, the Group entered into
a new five-year license Agreement which
included an upfront license payment of
$16,500,000 related to Guardian technology.
As a result, $5,000,000 licensing revenue
(FY2023: nil) was recognised during the year
from Caterpillar.
•
Non-recurring engineering revenue relates
to technology development and consulting
projects with Caterpillar. The decrease in
revenue represents a reduction in project
activity as existing projects were completed
and entered extended final phases
of completion.
•
Adjusted EBITDA declined by 10% for the
period reflecting investment for the final
stages of the Generation 3 product which was
launched during the year. Additional costs
were also incurred to expand the global sales
team and make investments in infrastructure
and people to scale the division in readiness
for further growth now that the Generation 3
product is launched. Margins on the outgoing
Generation 2 product also saw a decline as
a result of continued unfavourable foreign
exchange conditions.
Gross Profit
Gross profit increased across the entire business
from $28,898,000 in FY2023 to $31,525,000 in
FY2024 although the gross profit margin declined
by 3% year on year from 50% in FY2023 to 47% in
FY2024. The reduction in gross profit margin was
largely due to sales mix changes compared to
the prior year with a lower proportion of revenue
from license fees and a higher proportion of lower
margin hardware revenue.
Expenditure
The Group continued to invest in its core
technology development to further strengthen
its competitive moat, rapidly expand features
and leverage its systems approach across global
OEM and Aftermarket industries. Including the
generation 3 investment, the Company incurred
total research and development expenses of
$41,403,000 (FY2023: $34,949,000) during the
year ended 30 June 2024 of which $22,868,000
(FY2023: $23,685,000) was capitalised.
16
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30 June
2024
30 June
2023
Variance
$'000
$'000
%
Research and development expenses
11,681
8,820
32%
Customer support and marketing expenses
8,033
6,477
24%
Operations expenses
14,473
11,336
28%
General and administration expenses
15,284
12,938
18%
Operating expenses (excluding depreciation and amortisation)
49,471
39,571
25%
Depreciation and amortisation
8,981
3,973
126%
Operating expenses
58,452
43,544
34%
Operating expenses increased compared to last
year which was due to additional (non-cash)
amortisation for development costs, development
resources for OEM customer projects, investment
in the Aftermarket operations as discussed above,
and an expanded global Aftermarket sales team.
During the year, several customer projects were
completed resulting in a reduction in outsourced
development resource capacity. This contributed
to operating expenses excluding depreciation
and amortization reducing by 6% in the second
half of the financial year compared to the first
half. Operating expenses included $1,114,000
(FY2023: nil) related to one-off restructuring
expenses ($738,000) and acquisition costs related
to Asaphus Vision GmbH ($376,000). Excluding
these one-off restructuring and acquisition costs,
the second half operating expenses excluding
depreciation and amortization reduced by 9%
compared to the first half of the financial year.
As a result of these factors, the loss for the year
ended 30 June 2024 increased by $15,728,000 to
$31,276,000 (FY2023 loss: $15,548,000).
Working capital management
After adjusting for the receipts from one-off
licensing arrangements, cashflows from operating
and investing activities have improved significantly
year on year, mainly as a result of a strong focus on
working capital management.
30 June
2024
30 June
2023
$'000
$'000
Net cash flows from/
(used in) operating
activities
12,052
(25,039)
Net cash flows used in
investing activities
(23,996)
(25,628)
Net cash flows used
in operating and
investing activities
(11,944)
(50,667)
Less: cash from
one-off licensing
arrangements
(25,250)
(10,000)
(37,194)
(60,667)
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Inventories reduced during the year by $7,566,000
with all deliveries of Generation 2 Guardian units
received and the majority of units sold by year end.
The supply chain model for Generation 3 units
will result in lower inventories being held in future
periods. Trade and other receivables reduced
compared to June 2023, with a significant overdue
balance being paid after 30 June 2024.
At year end, trade and other payables balance
increased primarily as a result of extended credit
terms being negotiated for final deliveries of
Guardian Generation 2 units, which were largely
sold prior to year-end with the proceeds included
within the trade and other receivables balance.
Going concern
The attached annual financial report for the year
ended 30 June 2024 contains an independent
auditor’s report which highlights the existence of a
material uncertainty that may cast significant doubt
about the Group’s ability to continue as a going
concern. For further information, refer to Note
34(b) to the financial statements, together with the
auditor’s report.
Industry update
As transport regulators around the world continue
to try keep up with technological advancements
and strive to enhance safety on roads, Seeing
Machines is well positioned to benefit from
supportive regulatory tailwinds as its core
technology, underpinned by its purpose of getting
home safely, has become a key regulatory focus.
Touted as the next ‘seat belt’, driver and occupant
monitoring system (DMS/OMS) technology is set
to become commonplace in cars and all road-
going vehicles globally, to help reduce accidents
by mitigating risks associated with drowsy and
distracted driving.
In China, requirements for safety technologies,
including DMS, are already in place. In Europe, the
General Safety Regulation (GSR) requiring driver
monitoring came into effect in July 2024. Further,
the protocols set by Europe’s New Car Assessment
Program (NCAP) also play a crucial role in driving
global safety technology advancements as they
continue to develop their roadmap, increasing
standards over time to improve safety.
In the United States, the regulatory landscape
is evolving to increase emphasis on integrating
advanced driver safety technologies into vehicles.
These developments are part of a broader effort
by lawmakers and safety agencies to address
the growing concerns around road safety and
the impact of modern vehicle features on
driver behaviour.
These regulatory tailwinds are now influencing and
supporting robust growth in vehicles in production
with the Company’s technology installed. The
influence of Level 2+ automation, where two
or more aspects of driving are controlled by
technology, is also notable particularly in the North
American market where regulators are responding
to accidents caused by advanced features that may
endanger driver safety.
This momentum is set to continue, and the
Company expects to see significant growth in high-
margin royalty revenue into FY2025 and beyond
as ongoing automotive programs start production,
and OEMs meet these requirements across more of
their car lines in Europe and around the world.
In the aviation sector, the company works
exclusively with Collins Aerospace, a Raytheon
company and the world’s largest Tier 1 Avionics
company. This partnership continues to mature
as the development of the launch product moves
forward. Pilot and crew support in simulators
and cockpits is the key focus for enhanced
safety and efficiency and Seeing Machines, a
pioneer in this space, is set to secure a leadership
path across this rapidly expanding industry, in
partnership with Collins.
Other highlights
Post period end, Seeing Machines acquired Berlin-
based Asaphus Vision GmbH, providing a European
team located close to its European customer base,
and enhancing its interior sensing capabilities with
AI expertise and specialised data, critical to the
continued development of the Company’s feature
technology roadmap.
The Seeing Machines board was further
strengthened with the appointment of Stephane
Vedie, a North American based Automotive
industry veteran.
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Finally, Seeing Machines was honoured to receive the
prestigious Prince Michael of Kent Safety Award 2023,
one of the highest accolades in the field, testament
to the commitment of the Company to its purpose of
getting people home safely.
Significant changes in the 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
Since 30 June 2024 Seeing Machines Limited has
acquired 100% of the issued shares in Asaphus Vision
GmbH, a highly specialised development group with
leading Machine Learning and Artificial Intelligence
capability, for $6,000,000 (cash consideration of
$1,000,000 on acquisition and deferred consideration
of $5,000,000).
No other matter or circumstance has arisen since
30 June 2024 that has significantly affected the
group’s operations, results or state of affairs, or may
do so in future years.
Likely developments and expected
results of operations
More information on the likely developments and
expected results of the operations are included in
the review of operations, trading update and other
highlights on pages 2 to 6.
Environmental regulation
The Company holds no licences issued by relevant
Environmental Protection Authorities and there
have been no known breaches of any
environmental regulations.
Chief Executive Officer
The Company’s Chief Executive Officer (CEO) is
Paul McGlone (appointed 4 July 2019).
Company secretary
Susan Dalliston is the General Counsel & Company
Secretary (appointed 4 July 2019) at the date of this
report. Prior to joining Seeing Machines, Susan
was General Counsel & Company Secretary for an
advanced biofuel company with a patented process
converting biomass residues into biocrude. She
has several years’ experience advising on financial
transactions, mergers and acquisitions, capital raising,
contract negotiation, commercialisation of intellectual
property, governance and risk management. Susan
holds a Bachelor of Arts, Bachelor of Laws, Master
of Laws and a Graduate Certificate in Intellectual
Property. She has undertaken the Company Directors
Course through the Australian Institute of Company
Directors (MAICD), is a member of the Association of
Corporate Counsel (ACC) and holds an unrestricted
practicing certificate through the ACT Law Society.
Employee Numbers
At 30 June 2024 the Group had 421 full-time
employees (FY2023: 399).
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Directors
Kate Hill
Chair of the Board & Non-Executive Director
Experience and expertise
Kate had a distinguished 20+ year career with Deloitte Touche Tomatsu 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 BSc (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.
Other current directorships
Kate is a Non-Executive Director of Count Limited (ASX: CUP), Artrya Limited (ASX:AYA),
MedAdvisor Limited (ASX: MDR) and Hipages Group Holdings Ltd (ASX: HPG).
Special responsibilities
Appointed as a Non-Executive Director on 13 December 2018, as interim Chair of the
Board on 5 June 2019, and as Chair of the Board on 22 July 2019.
Member of the Risk, Audit and Finance Committee and of the People, Culture and Risk
Committee.
Interests in shares and options
Ordinary shares
4,800,000
Paul McGlone
CEO & Executive Director
Experience and expertise
Appointed as CEO on 4 July 2019, prior to which he held the position of Head of Fleet,
prior to its renaming as Aftermarket. 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.
Other current directorships
None
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.
20
seeingmachines
Directors
Special responsibilities
Chief Executive Officer
Interests in shares and options
Ordinary shares
Options in shares
Rights in shares
9,590,882
12,000,000
25,000,000
Gerhard Vorster
Non-Executive Director
Experience and expertise
Appointed on 1 December 2019. Gerhard is the Managing Director of Quidni Advisory,
a boutique strategy advisory firm. He is an accomplished senior executive and former
Deloitte partner with a growing board portfolio and significant expertise in strategy and
technology. 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 Officer for the region.
Gerhard holds a BSc 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 to be an independent Director.
Other current directorships
Gerhard is currently an alternate director of the Brisbane Airport Corporation and
Chairman of the Bio Capital Impact Fund.
Special responsibilities
Non-Executive Director and Chair of the People, Culture and Remuneration Committee
Interests in shares and options
Ordinary shares
109,375
John Murray
Non-Executive Director
Experience and expertise
Appointed on 1 December 2019. John is a highly experienced board director with
significant expertise in the technology sector.
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 to be an independent Director.
21
seeingmachines
Directors
Other current directorships
He is currently Chair of PainChek Ltd (ASX: PCK).
Special responsibilities
Non-Executive Director and Chair of the Risk, Audit and Finance Committee
Interests in shares and options
Ordinary shares
1,032,291
Michael Brown
Non-Executive Director
Experience and expertise
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.
Michael is not considered to be an independent Director on the basis of his association
with Lombard Odier, a significant shareholder.
Other current directorships
None
Special responsibilities
Non-Executive Director and member of the People, Culture and Remuneration
Committee
Interests in shares and options
None
Stephane Vedie
Non-Executive Director
Experience and expertise
Appointed on 25 October 2023. Stephane Vedie is a seasoned CEO with a track record of
growth and significant expertise in mergers and acquisitions. He has 27 years’ experience
in the automotive industry, working for global corporations in Europe and North America,
and is currently the CEO of LUXIT Group based in Michigan USA, a global lighting
supplier to the automotive industry. Prior to LUXIT Group, Stephane was CEO of Magneti
Marelli (now Marelli) and prior to that, CEO for global company Varroc Lighting Systems
(now Plastic Omnium Lighting).
Stephane holds a Masters degree in Purchasing Management (DESS/MBA) from
Grenoble University (1997) and a Master’s degree in Business from the Graduate
Business School of Amiens in France (1996).
Stephane is considered to be an independent Director.
Other current directorships
Stephane is a Non-Executive Director of CLM Search Ltd.
Special responsibilities
Non-Executive Director and member of the Risk, Audit and Finance Committee
Interests in shares and options
None
22
seeingmachines
Directors’ Meetings
During the 2024 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.
Director
Board
Risk, Audit
& Finance
Committee
People,
Culture &
Remuneration
Committee
Kate Hill
11/11
5/5
4/4
Paul McGlone
11/11
*
*
Yong Kang (YK) Ng
5/5
3/3
*
Gerhard Vorster
11/11
*
4/4
John Murray
10/11
5/5
*
Michael Brown
11/11
*
4/4
Stephane Vedie
6/7
2/2
*
* = Not a member of the relevant committe
Performance rights and share options
Unissued ordinary shares
Reference is made to Note 27 of the financial
statements in respect of performance rights and
options in relation to directors and staff members.
(i) Performance rights granted during or since
the end of the year
During the year no (FY2023: 12,420,232)
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 27 to the
financial report.
(ii) Shares Issued as a result of the Vesting of
Performance rights and options
During the year 15,532,751 (FY2023: 14,937,470)
rights vested and ordinary shares were transferred
to the employee participants from the Group Trust
(the “Trust”). 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.
Indemnification of Auditors
To the extent permitted by law, the Company
has agreed to indemnify its auditors,
PricewaterhouseCoopers, 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 PricewaterhouseCoopers during or
since the financial year.
23
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Audit and non-audit services
Details of the amounts paid or payable to the
auditor (PricewaterhouseCoopers) for audit and
non-audit services during the year are disclosed in
Note 32 Remuneration of auditors.
The board of Directors, in accordance with
advice provided by the audit committee, is
satisfied that the provision of the non-audit
services is compatible with the general standard
of independence for auditors imposed by
the Corporations Act 2001. The Directors are
satisfied that the provision of non-audit services
by the auditor did not compromise the auditor
independence requirements of the Corporations
Act 2001 for the following reasons:
•
all non-audit services have been reviewed
by the audit committee to ensure they do
not impact the impartiality and objectivity of
the auditor, and
•
none of the services undermine the general
principles relating to auditor independence
as set out in APES 110 Code of Ethics for
Professional Accountants.
Auditor's independence declaration
A copy of the auditor's independence declaration
as required under section 307C of the Corporations
Act 2001 is set out on page 11.
Rounding of amounts
The Company is of a kind referred to in ASIC
Legislative Instrument 2016/191, relating to the
'rounding off' of amounts in the directors' report.
Amounts in the directors' report have been
rounded off in accordance with the instrument to
the nearest thousand dollars, or in certain cases, to
the nearest dollar.
Signed at Canberra on 30 October 2024 in
accordance with a resolution of the Directors
made pursuant to section 298(2) of the
Corporations Act 2001.
Paul McGlone
Executive Director & Chief Executive Officer
Canberra
24
seeingmachines
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor for the audit of Seeing Machines Limited for the year ended 30 June 2024, I declare that
to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Seeing Machines Limited and the entities it controlled during the period.
Jon Roberts
Melbourne
Partner
PricewaterhouseCoopers
30 October 2024
As at 30 June
Notes
2024
$000
2023
$000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
9
23,361
36,139
Trade and other receivables
10
25,293
27,039
Contract assets
11
7,044
6,513
Inventories
12
3,625
11,191
Other financial assets
13
315
312
Other current assets
14
2,113
1,116
TOTAL CURRENT ASSETS
61,751
82,310
ASSETS
NON-CURRENT ASSETS
Property, plant & equipment
15
3,486
3,861
Right-use-of assets
25
3,737
1,853
Intangible assets
16
61,323
45,064
TOTAL NON-CURRENT ASSETS
68,546
50,778
TOTAL ASSETS
130,297
133,088
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
17
21,161
11,646
Contract liabilities
19
5,471
4,634
Lease liabilities
25
1,122
708
Provisions
18
4,909
4,414
TOTAL CURRENT LIABILITIES
32,663
21,402
financial statements
consolidated statement of
financial position
26
seeingmachines
As at 30 June
Notes
2024
$000
2023
$000
LIABILITIES
NON-CURRENT LIABILITIES
Contract liabilities
19
9,088
-
Borrowings
20
45,701
40,322
Lease liabilities
25
4,097
2,195
Deferred tax liabilities
6
1,423
2,464
Provisions
18
342
174
TOTAL NON-CURRENT LIABILITIES
60,651
45,155
TOTAL LIABILITIES
93,314
66,557
NET ASSETS
36,983
66,531
EQUITY
Contributed equity
21
240,948
240,948
Other equity
22
5,582
5,749
Accumulated losses
23
(216,796)
(185,520)
Other reserves
23
7,249
5,354
EQUITY ATTRIBUTABLE TO THE OWNERS
OF THE PARENT
36,983
66,531
TOTAL EQUITY
36,983
66,531
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
27
seeingmachines
consolidated statement of
comprehensive income
FOR THE YEAR ENDED 30 JUNE
Notes
2024
$000
2023
$000
Sale of goods
18,168
14,596
Services revenue
24,324
21,489
Royalty and licence fees
25,133
21,686
Revenue
4
67,625
57,771
Cost of sales
(36,100)
(28,873)
Gross profit
31,525
28,898
Net gain/(loss) in foreign exchange
69
916
Other income
-
31
Expenses
Research and development expenses
5
(18,535)
(11,264)
Customer suport and marketing expenses
(8,033)
(6,477)
Operations expenses
(16,600)
(12,865)
General and administration expenses
(15,284)
(12,938)
Operating loss
(26,858)
(13,699)
Finance income
411
691
Finance costs
(5,757)
(2,571)
Finance costs - net
(5,346)
(1,880)
Loss before income tax
(32,204)
(15,579)
Income tax benefit
6
928
31
Loss after income tax
(31,276)
(15,548)
Loss for the period attributable to:
Equity holders of the Company
(31,276)
(15,548)
28
seeingmachines
FOR THE YEAR ENDED 30 JUNE
Notes
2024
$000
2023
$000
Other comprehensive (loss)/income
Exchange differences on translation of foreign operations
(26)
310
Other comprehensive (loss)/income net of tax
(26)
310
Total comprehensive loss
(31,302)
(15,238)
Total comprehensive loss attributable to:
Equity holders of the Company
(31,302)
(15,238)
Total comprehensive loss for the year
(31,302)
(15,238)
Loss per share for loss attributable to the ordinary
equity holders of the Company:
Cents
Cents
Basic loss per share
8
(0.753)
(0.374)
Diluted loss per share
8
(0.753)
(0.374)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
29
seeingmachines
consolidated statement of
changes in equity
Consolidated entity
Notes
Contributed
Equity
$000
Other
Equity
$000
Accumulated
Losses
$000
Foreign
Currency
Translation
Reserve
$000
Employee
Equity
Benefits
& Other
Reserve
$000
Total
Equity
$000
Balance at 1 July 2022
240,948
-
(169,972)
(14,128)
16,968
73,816
Loss for the period
-
-
(15,548)
-
-
(15,548)
Other comprehensive
gain
-
-
-
310
-
310
Total comprehensive
loss
-
-
(15,548)
310
-
(15,238)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Share-based
payments
27
-
-
-
-
2,204
2,204
Value of conversion
rights on convertible
notes
22
-
5,749
-
-
-
5,749
Balance at
30 June 2023
240,948
5,749
(185,520)
(13,818)
19,172
66,531
Balance at
1 July 2023
240,948
5,749
(185,520)
(13,818)
19,172
66,531
Loss for the year ended
-
-
(31,276)
-
-
(31,276)
Other comprehensive
loss
-
-
-
(26)
-
(26)
Total comprehensive
loss
-
-
(31,276)
(26)
-
(31,302)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Shares based
payments
27
-
-
-
-
1,921
1,921
Value of conversion
rights on convertible
notes
-
(167)
-
-
-
(167)
Balance at
30 June 2024
240,948
5,582
(216,796)
(13,844)
21,093
36,983
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
30
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consolidated statement
of cash flows
Notes
2024
$000
2023
$000
OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
81,634
52,183
Payments to suppliers and employees (inclusive of GST)
(69,952)
(77,412)
Interest received
411
691
Interest paid
-
(5)
Income tax paid
(41)
(496)
NET CASH FLOWS USED IN OPERATING ACTIVITIES
24
12,052
(25,039)
INVESTING ACTIVITIES
Purchase of plant and equipment
(831)
(1,703)
Payments for intangible assets (patents, licences and trademarks)
(297)
(253)
Payments for intangible assets (capitalised development costs)
(22,868)
(23,685)
Interest received on financial assets held as investments
-
13
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(23,996)
(25,628)
FINANCING ACTIVITIES
Proceeds from borrowings
-
47,500
Transaction costs in borrowings
-
(1,202)
Repayment of lease liabilities
(729)
(1,005)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(729)
45,293
Net decrease in cash and cash equivalents
(12,673)
(5,374)
Effects of exchange rate changes on cash and cash equivalents
(105)
1,043
Cash and cash equivalents at the beginning of the financial year
36,139
40,470
Cash and cash equivalents at 30 June
9
23,361
36,139
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
31
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notes to the financial
statements
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
2024 was authorised for issue in accordance with a
resolution of the Directors on 30 October 2024. The
Directors have the power to amend and reissue the
financial statements.
2. Material accounting policies, 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 as follows:
•
Capitalised development costs intangible
assets and their determination of useful
lives – Note 16
•
Recognition of deferred tax assets – Note 6
•
Revenue recognition - non-recurring
engineering – Note 4
•
Accounting and valuation of convertible
notes – Note 20
3. 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 2024 (FY2023: none).
4. Segment information
(a) Description of segments and
principal activities
The Executives (including the Executive the Chief
Executive Officer and Chief Financial Officer) and
the Board, examines the Group’s performance
from a product and services perspective and have
organised the Group into key business units and
identified two reportable operating segments
of the business:
32
seeingmachines
1.
The OEM operating segment includes both the automotive and aviation business units, which
generate largely licence-based royalty and non-recurring engineering services-based revenue,
channelled through Tier 1 customers.
2.
The Aftermarket operating 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.
The Executive Leadership Team uses a measure of adjusted earnings before interest, tax, depreciation
and amortisation (EBITDA) to assess the performance of the operating segments. However, the
Executive Leadership Team also receives information about the segments’ revenue on a monthly basis.
(b) Segment revenue and adjusted EBITDA
30 June 2024
30 June 2023
Segment
revenue
$’000
Adjusted
EBITDA
$’000
Segment
revenue
$’000
Adjusted
EBITDA
$’000
OEM
26,524
(19,051)
26,707
(14,682)
Aftermarket
41,101
(19,832)
31,064
(18,082)
TOTAL
67,625
(38,883)
57,771
(32,764)
There are no inter-segment revenues and there have been no changes to how each segment’s adjusted
EBITDA is measured.
Corporate costs and overheads within adjusted EBITDA have been allocated to the operating segments
using a percentage of revenue. Research and development costs are allocated based on actual costs that
relate to an operating segment.
Adjusted EBITDA excludes the effect of significant items of income and expenditure which may have
an impact on the quality of earnings such as restructuring costs and acquisition costs. It also adds back
capitalised expenditure during the period to help assess the free cashflow of the business units.
Adjusted EBITDA reconciles to loss before income tax as follows:
30 June 2024
$000
30 June 2023
$000
Total adjusted EBITDA
(38,883)
(32,764)
Capitalised development costs during the period
22,732
23,685
Depreciation and amortisation expense
(8,981)
(3,973)
Finance costs - net
(5,346)
(1,880)
Restructuring and acquisition costs
(1,489)
-
Other
(237)
(647)
Loss before income tax
(32,204)
(15,579)
33
seeingmachines
(c) Disaggregation of revenue from contracts with customers
In the following tables, revenue segments have been disaggregated by type of goods or services which also
reflects the timing of revenue recognition.
30 June 2024
30 June 2023
OEM
$’000
Aftermarket
$'000
Total
$'000
OEM
$’000
Aftermarket
$'000
Total
$'000
Sales at a point in time
Consulting
-
150
150
-
235
235
Hardware and
Installations
612
18,902
19,514
642
14,495
15,137
Royalties
-
3,463
3,463
-
2,387
2,387
Licensing
-
5,000
5,000
387
-
387
Sales over time
Driver Monitoring
-
12,433
12,433
-
11,117
11,117
Non-recurring
Engineering
9,242
1,153
10,395
6,766
2,830
9,596
Royalties
10,632
-
10,632
7,580
-
7,580
Licensing
6,038
-
6,038
11,332
-
11,332
TOTAL REVENUE
26,524
41,101
67,625
26,707
31,064
57,771
(d) Revenue from contracts with customers by geographic location
30 June 2024
$000
30 June 2023
$000
Australia
17,347
12,131
North America
34,660
31,015
Asia-Pacific (excluding Australia)
4,565
4,685
Europe
8,110
5,552
Other
2,943
4,388
TOTAL REVENUE
67,625
57,771
The revenue information above is based on the locations of the customers.
34
seeingmachines
(d) Material accounting policies, estimates
and assumptions
Revenue recognition - non-recurring engineering
The Group grants perpetual software licence to its
customers for use of its Background Intellectual
Property (“Background IP”) which includes DMS
and OMS licences. The Group also renders non-
recurring engineering services to make significant
customisations to the Background IP to make it
commercially viable for the customer.
Judgement is required to determine the nature
of the performance obligation in these contracts.
Management’s judgement is that the software
licence and the non-recurring engineering
services are inputs into a combined output, which
is a promise to deliver customised software, and
therefore that these services are not distinct
from each other. Judgement is also required to
determine whether the performance obligation
is satisfied at a point in time or over time.
Management’s judgement is that the performance
obligation is satisfied over time, as the development
services generate an asset without an alternative
use to the group, and the group has an enforceable
right to payment for work performed to date.
(e) Segment reporting – accounting policy
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 and Board of the Company.
No segment assets and liabilities are regularly
reported to the entity’s chief operational
decision makers.
(f) Revenue recognition – accounting policy
Revenue of the Group arises mainly from the
sale and licensing 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).
i.
Hardware and installation
Revenue from the sale of hardware units is
recognised when control of the hardware units
is transferred to the customer. Revenue is only
recognised to the extent that it is highly probable
that a significant reversal will not occur (reflecting,
for example, expected levels of returns). The normal
credit term is 30 to 60 days upon invoicing.
Revenue from installation service is recognised
when the previously sold hardware unit has
been installed and connected to the driver
monitoring platform, as per the arrangement
with the customer.
ii.
Driver Monitoring
Revenue from driver monitoring service is
recognised periodically with reference to the
hardware units that are connected to the
driver monitoring platform during that period,
typically every month.
iii. 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
licence 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 licence
and whether it is a right to access or a right
to use licence.
Licences granted to customers generally provide
a right to use IP, and therefore these performance
obligations are satisfied at a point in time, generally
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. The Group uses time elapsed to
measure progress toward complete satisfaction of
the service and recognises revenue on that basis.
35
seeingmachines
iv. Royalty revenue
Revenue from royalties relate to performance
obligations that may be satisfied at a point in time
(for example, royalty payments related to a right
to use licence) or over time (for example, royalty
payments related to sale of customised software).
Where the predominant item in the contract to
which the royalties relate is right to use licence, the
royalties are recognised as revenue when the sale
or usage that gives rise to the royalty occurs, given
this is generally after the performance obligation
has been satisfied. Where the predominant item in
the contract to which the royalties relate is sale of
customised software, the royalties are recognised
as the associated performance obligation is
satisfied, to the extent that the amount of revenue
recognised is highly probable of not being subject
to significant reversal.
v.
Non-recurring engineering
The Group grants perpetual software licence to its
customers for use of its Background Intellectual
Property (“Background IP”) which includes DMS
and OMS licences. The Group also renders non-
recurring engineering (“NRE”) services to make
significant customisations to the Background IP to
make it commercially viable for the customer.
The software licence and the non-recurring
engineering services are inputs into a combined
output, which is a promise to deliver customised
software, and therefore the software licence is not
considered to be distinct from the non-recurring
engineering services. This customised software
is delivered in packages with increasing levels
of customisation in each Sample delivery with
reference to the arrangement with the customer.
This performance obligation is satisfied over
time, as the services create an asset without an
alternative use to the group, and the group has
an enforceable right to payment for performance
completed to date.
This revenue is recognised over time using the
input method based on costs incurred to date
relative to the estimated total cost to complete
a package, including a reasonable margin.
vi. Consulting
Revenue from consultancy and support 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.
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.
vii. 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.
viii. Agreements with multiple deliverables
Where the Group enters into agreements for the
provision of both goods and services as part of
a single arrangement, the group identifies the
separate performance obligations in the contract.
The consideration from the arrangement is
allocated to each performance obligation based
on their relative stand-alone selling prices.
ix. Timing of revenue recognition
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.
36
seeingmachines
5. Expenses
30 June 2024
$000
30 June 2023
$000
A. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses
41,403
34,949
Capitalised development costs during the period
(22,868)
(23,685)
TOTAL RESEARCH AND DEVELOPMENT EXPENSES
18,535
11,264
B. DEPRECIATION, IMPAIRMENT AND AMORTISATION
Depreciation expense - owned assets
1,209
968
Depreciation expense - leased assets
866
522
Amortisation expense - development costs
6,854
2,444
Amortisation expense - others
52
39
TOTAL DEPRECIATION, IMPAIRMENT AND AMORTISATION EXPENSE
8,981
3,973
C. EMPLOYEE BENEFITS EXPENSE
Wages and salaries and on-costs (excluding superannuation)
49,065
40,195
Superannuation expense
4,016
3,182
Share-based payment expense
1,921
2,204
Wages and salaries reported as cost of sales
(14,545)
(12,268)
Wages and salaries capitalised to development costs
(18,225)
(19,388)
TOTAL EMPLOYEE BENEFITS EXPENSE
22,232
13,925
D. OTHER EXPENSES
Restructuring and acquisition costs
1,489
-
Impairment of receivable
24
-
Non-recoverable foreign withholding taxes
237
443
TOTAL OTHER EXPENSES
1,750
443
37
seeingmachines
6. Income tax
(a) Income tax expense/(benefit)
30 June 2024
$000
30 June 2023
$000
Current income tax:
Current income tax charge
(14,230)
(4,702)
Adjustments in respect of current income tax of previous year
41
(31)
Taxation loss not recognised
14,230
4,702
Deferred tax:
Relating to the origination and reversal of temporary differences
(1,524)
828
Temporary differences not recognised
555
(828)
Income tax benefit reported in the statement of comprehensive income
(928)
(31)
(b) 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:
30 June 2024
$000
30 June 2023
$000
Loss before income tax
(32,204)
(15,579)
At the parent entity's statutory income tax rate of 30% (FY2023:30%)
(9,661)
(4,673)
Share based payments (equity settled)
288
661
Legal fees
56
-
Adjustments in respect of current income tax of previous years
41
(31)
Research and development tax offset
(5,555)
-
Other permanent differences
87
138
Origination and reversal of temporary differences:
Convertible Note
(969)
-
Temporary differences not recognised
555
(828)
Taxation loss not recognised
14,230
4,702
Income tax benefit
(928)
(31)
38
seeingmachines
(c) Amounts recognised directly in equity
30 June 2024
$000
30 June 2023
$000
Aggregate current and deferred tax arising in the reporting period and
not recognised in net profit or loss or other comprehensive income but
directly debited or credited to equity:
Deferred tax: Convertible notes
(72)
2,464
(d) Deferred income tax at 30 June relates to the following:
i.
Deferred tax liabilities
30 June 2024
$000
30 June 2023
$000
The balance comprises temporary differences attributable to:
Right-of-use assets
(1,121)
(556)
Intangible assets
(16)
(18)
Unrealised foreign exchange gain
-
(193)
(1,137)
(767)
Other
Convertible notes
(1,423)
(2,464)
Total deferred tax liabilities
(2,560)
(3,231)
Set-off of deferred tax assets
1,137
767
Net deferred tax liabilities
(1,423)
(2,464)
i.
Deferred tax assets
30 June 2024
$000
30 June 2023
$000
The balance comprises temporary differences attributable to:
Provision for expected credit loss
90
40
Accrued expense
155
96
Annual leave
904
798
Long service leave
415
309
Warranties
223
245
S. 40-880 deduction
97
274
Borrowing cost
211
-
39
seeingmachines
Finance lease liabilities
1,565
871
Accrued bonuses
483
587
Others
51
49
Gross deferred tax assets
4,194
3,269
Set-off of deferred tax liabilities
(1,137)
(767)
Net deferred tax balance not brought to account
3,057
2,502
Tax losses
(57,877)
(43,647)
Losses not recognised
57,877
43,647
-
-
(e) Unrecognised temporary differences
At 30 June 2024, Seeing Machines Limited
(consolidated) has unrecognised temporary
differences in relation to unbooked tax losses
(including R&D tax offsets) of $192,923,000 (DTA
of $57,877,000) for which no deferred tax asset has
been recognised on the statement of financial position
(FY2023: unrecognised tax losses of $145,490,000
and DTA of $43,647,000). These losses are available
for recoupment subject to satisfaction of relevant
statutory tests in each jurisdiction.
As at 30 June 2024 there are net unrecognised
deductible temporary differences of $10,190,000
(DTA of $3,057,000) for which no deferred tax asset
has been recognised on the statement of financial
position (FY2023: net unrecognised deductible
temporary differences of $8,340,000 and DTA
of $2,502,000).
(f) Material accounting policies, estimates
and assumptions
The Group's accounting policy for taxation requires
management's judgement in assessing whether
deferred tax assets 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 depend on management's estimates of future
cash flows. Given the recent history of tax losses,
management’s judgement is that there is not
convincing evidence
of future taxable profits, and therefore deferred tax
assets are only recognised to the extent that there
are taxable temporary differences against which
these deferred tax assets can be recovered.
(g) Tax consolidation
(i)
Members of the tax consolidated group
and the tax sharing arrangement
Seeing Machines Limited and its 100% owned
Australian resident subsidiaries formed a tax
consolidated group with effect from 1 July 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
40
seeingmachines
measured in a systematic manner that is consistent
with the broad principles in AASB 112 Income
Taxes. The nature of the tax funding agreement is
discussed further below.
In addition to its own current and deferred tax
amounts, the head entity also recognises current
tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from controlled entities in the tax
consolidated group.
Nature of the tax funding agreement
Members of the tax consolidated group have
entered into a tax funding agreement. 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.
(h) Income tax – accounting policy
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:
•
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.
41
seeingmachines
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.
7.
Dividends
No dividends or distributions have been made to
members during the year ended 30 June 2024
(FY2023: nil) and no dividends or distributions have
been recommended or declared by the directors in
respect of the year ended 30 June 2024 (FY2023: nil).
8. Earnings per share
30 June 2024
$000
30 June 2023
$000
Basic earnings per share
For basic and diluted earnings per share:
Net loss
(31,276)
(15,548)
Net loss attributable to ordinary equity holders of the Company
(31,276)
(15,548)
2024
Thousands
2023
Thousands
Weighted average number of ordinary shares for basic earnings per share
4,156,019
4,156,019
Weighted average number of ordinary shares adjusted for the effect of dilution
4,156,019
4,156,019
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 periods presented.
There have been no transactions involving ordinary shares or potential ordinary shares outstanding between
the reporting date and the date of completion of these financial statements.
(a) Earnings per share - accounting policy
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.
42
seeingmachines
(b) Information on the classification of securities
Awards granted to employees (including KMP) as well as in the form of capital raising cost as described
in Note 27 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.
9. Cash and cash equivalents
30 June 2024
$000
30 June 2023
$000
Current assets
Bank balances
23,361
36,139
(a) Cash and cash equivalents - accounting policy
Cash and cash equivalents comprise cash at banks and on hand that are readily convertible to a known
amount of cash and subject to an insignificant risk of changes in value.
10. Trade and other receivables
30 June 2024
$000
30 June 2023
$000
Current assets
Trade receivables from contracts with customers
24,850
25,928
Provision for expected credit losses
(235)
(135)
Deferred finance income
(2)
(101)
24,613
25,692
Net other receivables
680
1,347
Total trade and other receivables - current
25,293
27,039
(a) Provision for expected credit loss
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.
Set out below is the movement in the allowance for expected credit losses of trade receivables:
30 June 2024
$000
30 June 2023
$000
At 1 July
135
156
Provision for expected credit losses increase/(decrease)
100
(21)
As at 30 June
235
135
43
seeingmachines
Days past due
30 June 2024
Current
0-30
days
31-60
days
61-90
days
91+
days
Total
$’000
Expected loss rate (%)
0.5%
0.6%
1.1%
1.8%
2.0%
Gross carrying amount -
trade receivables ($000)
14,156
2,258
2,010
434
5,992
24,850
Loss allowance ($000)
71
14
22
8
120
235
30 June 2023
Expected loss rate (%)
0.5%
0.6%
1.1%
1.7%
2.0%
Gross carrying amount –
trade receivables ($000)
17,156
3,974
1,159
1,178
2,461
25,928
Loss allowance ($000)
81
17
9
9
19
135
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. There was impairment
of $24,000 included in other expenses (FY2023: nil). Receivables 90 days past due but not considered in
default are $5,992,000 (FY2023: $2,545,000). Payment terms on these amounts have been re-negotiated,
and satisfaction has been gained that payment will be received in full. It is expected that all other balances
will be received when due.
(b) Fair value and credit risk
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
Detail regarding foreign exchange risk exposure is disclosed in Note 26.
(d) Trade receivables – accounting policy
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).
11. Contract assets
30 June 2024
$000
30 June 2023
$000
Unbilled revenue
7,110
6,513
Provision for expected credit losses
(66)
-
Total contract assets
7,044
6,513
44
seeingmachines
(a) Contract assets – accounting policy
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 and satisfies its performance obligations
before the customer pays consideration or before payment is due, a contract asset is recognised for the
earned consideration that is conditional.
12. Inventories
30 June 2024
$000
30 June 2023
$000
Finished goods – at cost
3,746
11,206
Write-down of inventories for the period
(121)
(15)
Total inventories
3,625
11,191
(a) Inventories – accounting policy
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:
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.
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.
13. Other financial assets
30 June 2024
$000
30 June 2023
$000
Financial assets at amortised cost
Term deposits
315
312
Total other financial assets
315
312
At 30 June 2024, term deposits held are classified as short-term and consist of a term deposit of $221,000
maturing on 2 May 2025 with an interest rate of 4.17% and a term deposit of $94,000 maturing on 27
February 2025 with an interest rate of 3.92%. The term deposits are short-term in nature and therefore,
the carrying values approximate their fair value.
14. Other current assets
30 June 2024
$000
30 June 2023
$000
Prepayments
1,898
1,032
Rental bonds
161
75
Other
54
9
2,113
1,116
45
seeingmachines
15. Property, Plant and Equipment
Office
Furniture,
Fittings and
Equipment
$’000
Research and
Development
Equipment
$’000
Assets under
construction
$’000
Total
$’000
Year ended 30 June 2023
Opening net book value
2,531
389
113
3,033
Foreign exchange differences
-
-
(1)
(1)
Additions
1,280
492
-
1,772
Depreciation charge
(791)
(177)
-
(968)
Write offs
24
1
-
25
Closing net book amount
3,044
705
112
3,861
At 30 June 2023
Cost or fair value
6,709
1,363
112
8,184
Accumulated depreciation and
impairment
(3,665)
(658)
-
(4,323)
Net book amount
3,044
705
112
3,861
Year ended 30 June 2024
Opening net book value
3,044
705
112
3,861
Foreign exchange differences
3
-
-
3
Additions
799
32
-
831
Depreciation charge
(931)
(278)
-
(1,209)
Write offs
-
-
-
-
Closing net book amount
2,915
459
112
3,486
At 30 June 2024
Cost or fair value
7,511
1,395
112
9,018
Accumulated depreciation and
impairment
(4,596)
(936)
-
(5,532)
Net book amount
2,915
459
112
3,486
46
seeingmachines
(a) Property, plant and equipment
– accounting policy
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.
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
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:
•
Office furniture, fittings and equipment
2 to 20 years
•
Research and development equipment
3 to 10 years
•
Asset under construction
Not depreciated
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.
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.
47
seeingmachines
16. Intangibles
Patents, Licenses and
Trademarks
$’000
Development
Costs
$’000
Total
$’000
Year ended 30 June 2023
Opening net book value
1,040
22,569
23,609
Additions
253
23,685
23,938
Amortisation charge for the year
(39)
(2,444)
(2,483)
Closing net book value
1,254
43,810
45,064
At 30 June 2023
Cost
1,507
47,082
48,589
Accumulated amortisation and
impairment
(253)
(3,272)
(3,525)
Net book amount
1,254
43,810
45,064
Year ended 30 June 2024
Opening net book value
1,254
43,810
45,064
Additions
297
22,868
23,165
Amortisation charge for the year
(52)
(6,854)
(6,906)
Closing net book value
1,499
59,824
61,323
At 30 June 2024
Cost
1,804
69,950
71,754
Accumulated amortisation and
impairment
(305)
(10,126)
(10,431
Net book amount
1,499
59,824
61,323
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 2024, for any impairment indicators that were identified, our
detailed impairment assessments resulted in significant headroom.
(a) Material accounting policies, estimates and assumptions
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
48
seeingmachines
and economic feasibility is confirmed, usually
when a product development project has reached
a defined milestone according to an established
project management model.
The determination of the useful lives of
development intangible assets has been based
on historical experience and expectations of future
forecast economic benefits to be derived from
the underlying intellectual property which was
developed. Adjustments to useful lives are made
when considered necessary.
(b) Intangibles – accounting policy
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 methods and periods
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.
49
seeingmachines
Patents and Trademarks
Licenses
Development
Costs
Useful lives
Finite (10-20 years)
Finite (3-20 years)
Finite (7-10
years)
Amortisation method used
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-line
basis over
the period
of expected
future sales
from the
related project
Internally generated or acquired
Acquired
Acquired
Internally
generated
17. Trade and other payables
30 June 2024
$’000
30 June 2023
$’000
Trade payables
11,615
3,616
Accrued expenses
3,927
4,909
GST, payroll tax and payroll liabilities
4,940
3,058
Other payables
679
63
Total trade and other payables
21,161
11,646
(a) Fair value
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 FY2024 STI (short-term
incentive) amounting to $1,611,000 (FY2023: $986,000).
(b) Foreign exchange, interest rate and liquidity risk
Information regarding foreign exchange, interest rate and liquidity risk exposure is set out in Note 26.
50
seeingmachines
18. Provisions
30 June 2024
30 June 2023
Current
$’000
Non-
current
$’000
Total
$’000
Current
$’000
Non-
current
$’000
Total
$’000
Annual leave
3,012
-
3,012
2,663
-
2,663
Long service leave
1,146
239
1,385
905
125
1,030
Warranties provision
744
-
744
817
-
817
Provision for income tax
7
-
7
29
-
29
Other
-
103
103
-
49
49
Total provisions
4,909
342
5,251
4,414
174
4,588
(a) Nature and timing of provisions
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.
(b) Movements in provisions
30 June 2024
Warranties
$’000
30 June 2023
Warranties
$’000
Carrying amount at start of year
817
522
Arising during the year
439
531
Utilised during the year
(512)
(236)
Carrying amount at end of year
744
817
(c) Provisions – accounting policy
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.
51
seeingmachines
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.
ii.
Long service leave
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.
19. Contract liabilities
30 June 2024
30 June 2023
Current
$’000
Non-
current
$’000
Total
$’000
Current
$’000
Non-
current
$’000
Total
$’000
Deferred revenue
5,471
9,088
14,559
4,634
-
4,634
Total contract liabilities
5,471
9,088
14,559
4,634
-
4,634
Contract liabilities totalling $4,634,000 included in the balance at 30 June 2023 were satisfied and
recognised as revenue during the year ended 30 June 2024.
(a) Contract liabilities – accounting policy
A contract liability is recognised if a payment is received from a customer before the Group satisfies
its performance obligations. Contract liabilities are recognised as revenue when the Group performs
under the contract (i.e., satisfies its performance obligations of the related goods or services
to the customer).
52
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20. Borrowings
Non-current
30 June 2024
$’000
30 June 2023
$’000
Unsecured
Convertible notes (i)
45,701
40,322
Total borrowings - non-current
45,701
40,322
i.
Convertible notes
On 4 October 2022, Seeing Machines received funding of $47,500,000 from Magna International in the
form of a non-transferable 4-year convertible note maturing in October 2026 (the “Convertible Note”). The
Convertible Note can be drawn down in two tranches across the 4-year term. The Convertible Note has
an all-in yield of 8%, inclusive of fees. The Convertible Note contains standard covenants, and anti-dilution
provisions. The interest due at the end of the facility can be paid in cash or converted into equity at Seeing
Machines' election. The first tranche of $30,000,000, was drawn on 5 October 2022 and the second
tranche of $17,500,000 was drawn down on 27 June 2023. The liability portion of tranches 1 and 2 are
valued at amortised cost in accordance with AASB 9 Financial Instruments (“AASB 9”) and have effective
interest rates of 13.14% and 11.84% respectively. Magna may elect to convert the principal and at Seeing
Machines’ election, interest outstanding under the Convertible Note at any time during its term, up to a
maximum of 349,650,350 shares which, when added to Magna’s existing shareholding in the Company,
will represent approximately 9.9% of the fully diluted share capital of the Company. The conversion will
be at a price of 11 British pence per share. The option provided to Magna is deemed to be an embedded
derivative and is classified as other equity.
30 June 2024
$’000
30 June 2023
$’000
Face value of notes issued
47,500
47,500
Other equity securities - value of conversion rights (see Note 22)
(7,974)
(8,213)
Transactions costs on Borrowings
(1,202)
(1,202)
Other costs on borrowings
(317)
(74)
38,007
38,011
Interest expense
7,694
2,311
Non-current liability
45,701
40,322
(a) Material accounting policies, estimates and assumptions
Using the terms and conditions of the Convertible Note, entered into in the current financial year, and
other available inputs and assumptions, the Group has valued the option component of the Convertible
Note using the Binomial Tree Model with 16 steps to value the option. It is to be noted that this valuation
technique is permissible as per paragraph B11 of AASB 13 Fair Value Measurement.
53
seeingmachines
(b) Borrowings – accounting policy
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction
costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
The fair value of the liability portion of a convertible bond is determined using a market interest rate for an
equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until
extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the
conversion option. This is recognised and included in shareholders' equity, net of income tax effects.
21. Contributed Equity
30 June 2024
Shares
Thousands
30 June 2023
Shares
Thousands
30 June 2024
Shares
$’000
30 June 2023
Shares
$’000
Ordinary shares
Issued and fully paid
4,156,019
4,156,019
240,948
240,948
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. 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.
22. Other Equity
30 June 2024
$’000
30 June 2023
$’000
Value of conversion rights - convertible notes (i)
7,974
8,213
Deferred tax liability component
(2,392)
(2,464)
Total other equity
5,582
5,749
(i)
Conversion right of convertible notes
The amount shown for other equity securities is the value of the conversion rights relating to the
convertible note, details of which are shown in Note 20.
54
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23. 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 other reserves
Foreign currency translation
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 27 for further details of the plan.
24. Statement of Cash Flow Information
Reconciliation of net loss after tax to net cash inflows
30 June 2024
$’000
30 June 2023
$’000
Loss for the period
(31,276)
(15,548)
Adjustments for:
Depreciation
2,076
1,490
Amortisation
6,906
2,483
Share-based payments
1,921
2,204
Accrued interest on convertible notes
5,383
2,311
Income tax expense on convertible note
(969)
-
Net loss/(gain) on foreign exchange (unrealised)
124
(644)
Change in assets / liabilities net of the effects of purchases:
(increase)/decrease in inventories
7,566
(10,258)
(Increase)/decrease in trade and other receivables
1,746
(8,451)
(Increase)/decrease in contract assets
(531)
(3,080)
(Increase)/decrease in other current assets
(997)
1,128
Increase/(decrease) in other provisions
663
831
Increase/(decrease) in trade and other payables
9,515
356
Increase/(decrease) in contract liabilities
9,925
2,139
Net cash inflow/(outflow) from operating activities
12,052
(25,039)
55
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25. 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.
Set out below are the carrying amounts of right-of-use assets recognised and the movements
during the period:
Office space
30 June 2024
$’000
Office space
30 June 2023
$'000
As at 1 July
1,853
2,376
Additions
2,687
-
Amortisation expense
(866)
(522)
Foreign exchange differences
63)
(1)
As at 30 June
3,737
1,853
Set out below are the carrying amounts of lease liabilities and the movements during the period:
30 June 2024
$’000
30 June 2023
$’000
As at 1 July
2,903
3,653
Additions
2,643
-
Accretion of interest
374
255
Lease termination
-
-
Payments
(729)
(1,005)
Foreign exchange differences
28
-
At 30 June
5,219
2,903
Lease liabilities
Current
1,122
708
Non-current
4,097
2,195
5,219
2,903
56
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57
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30 June 2024
$’000
30 June 2023
$’000
Amortisation expense of right-of-use assets
866
522
Interest expense on lease liabilities (included in finance cost)
374
255
At 30 June
1,240
777
The incremental borrowing rate at 30 June 2024 is
between 6 - 10% per annum (FY2023: between 6 -
10% 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.
(a) Leases – accounting policy
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.
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.
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 34(g).
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.
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
The maturity analysis of lease liabilities are disclosed in Note 26. The following are the amounts recognised
in profit or loss:
58
seeingmachines
30 June 2024
$’000
30 June 2023
$'000
Exposed to United States of America variable interest rate risk
21,391
20,384
Exposed to Australian variable interest rate risk
1,676
13,179
Exposed to United Kingdom variable interest rate risk
117
2,385
Exposed to European variable interest rate risk
124
121
Exposed to New Zealand variable interest rate risk
33
48
Exposed to Japanese variable interest rate risk
20
22
Total cash and cash equivalents
23,361
36,139
In addition to the above, the Group had term deposits classified as financial assets at amortised
cost totalling $315,000 (FY2023: $312,000) that were subject to short-term fixed interest rates
(refer to Note 13).
Sensitivity
The Group’s policy is to not hedge against interest rate movements as funds held are in cash and
short-term deposits.
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.
26. Financial risk management
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 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.
(a) Market risk
i.
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 2024 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:
59
seeingmachines
At 30 June 2024, 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:
Consolidated entity
Impact on post-tax profit
2024
$’000
2023
$’000
+ 1% (100 basis points)
234
361
- 1% (100 basis points)
(234)
(361)
The movement in profit is due to interest rate changes on cash balances.
Interest rates on the lease arrangements outstanding at year end are fixed and range from 6% to 10%.
Interest rates on the convertible note outstanding are fixed at 6%.
ii.
Foreign exchange risk
Exposure
As a result of sales in Australia, New Zealand and Europe (denominated in those currencies) and
contractors costs denominated in Australian dollars, the Group’s statement of financial position can be
affected by movement in exchange rates generally and the A$/US$ exchange rate in particular. The Group
seeks to mitigate the effect of its foreign currency exposure by operating Australian Dollar (AU$), British
Pound (GB£), Euro (EUR), New Zealand Dollar (NZD) and Japanese Yen (JP¥) bank accounts.
Approximately 69% of the Group’s sales and approximately 50% of the Group’s expenses are denominated
in currencies other than the functional currency of the operating entity making the transaction. The Group
evaluates the concentration of risk with respect to foreign currency as low, as the Group is naturally
hedged by holding funds in multiple operating currency accounts, with revenues and expenses being
closely aligned on an annual basis.
60
seeingmachines
At 30 June 2024 the Group had the following exposure to foreign currency:
Consolidated entity
30 June 2024
US$’000
30 June 2023
US$’000
FINANCIAL ASSETS
Cash and cash equivalents (AU$)
1,676
13,179
Cash and cash equivalents (GB£)
117
121
Cash and cash equivalents (EUR)
124
48
Cash and cash equivalents (NZD)
33
2,385
Cash and cash equivalents (JP¥)
20
21
Trade and other receivables (AU$)
8,545
10,166
Trade and other receivables (EUR)
229
44
Trade and other receivables (GB£)
1,264
1,052
Trade and other receivables (NZD)
-
5
Trade and other receivables (ZAR)
18
14
Trade and other receivables (JP¥)
7
7
Trade and other receivables (TRY)
13
-
Other Current Assets (EUR)
-
27
Total
12,046
27,069
FINANCIAL LIABILITIES
Trade and other payables (AU$)
(10,526)
(8,860)
Trade and other payables (GBP)
(203)
(60)
Trade and other payables (EUR)
(346)
(342)
Trade and other payables (JP¥)
(33)
(23)
Trade and other payables (NZD)
(21)
(13)
Trade and other payables (ZAR)
(5)
-
Total
(11,134)
(9,298)
Net exposure
912
17,771
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Sensitivity
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 entity
Impact on post-tax profit
Impact on other components
of equity
2024
$’000
2023
$’000
2024
$’000
2023
$’000
CHANGE IN AUD RATE
USD/AUD exchange rate +5%
15
(690)
15
(690)
USD/AUD exchange rate -5%
(16)
762
(16)
762
CHANGE IN GBP RATE
USD/GBP exchange rate +5%
(56)
(53)
(56)
(53)
USD/GBP exchange rate -5%
62
59
62
59
CHANGE IN EUR RATE
USD/EUR exchange rate +5%
-
11
-
11
USD/EUR exchange rate -5%
-
(12)
-
(12)
CHANGE IN NZD RATE
USD/NZD exchange rate +5%
(1)
(113)
(1)
(113)
USD/NZD exchange rate -5%
1
125
1
125
CHANGE IN ZAR RATE
USD/ZAR exchange rate +5%
(1)
(1)
(1)
(1)
USD/ZAR exchange rate -5%
1
1
1
1
CHANGE IN TRY RATE
USD/TRY exchange rate +5%
(1)
-
(1)
-
USD/TRY exchange rate -5%
1
-
1
-
Management believes the reporting date risk exposures are representative of the risk exposure inherent in
financial instruments.
62
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(b) 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 34(h). The Group
does not hold any credit derivatives to offset its
credit exposure.reporting date risk exposures are
representative of the risk exposure inherent in
financial instruments
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 10 for credit risk disclosures on trade and
other receivables.
(c) 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.
The following table reflects all contractually fixed
pay-offs for settlement, repayments and interest
resulting from recognised financial liabilities as of
30 June 2024. Cash flows for financial liabilities
without fixed amount or timing are based on the
conditions existing at 30 June 2024.
i.
Maturities of financial liabilities
The risk implied from the table below reflects a
balanced view of cash inflows and outflows.
Trade payables and other financial liabilities mainly
originate from the financing of assets used in
our ongoing operations such as plant, equipment
and investments in working capital (e.g., inventories
and trade receivables). To monitor existing
financial liabilities as well as to enable an effective
controlling of future risks, Seeing Machines
Limited has established risk reporting systems that
reflects expectations of management of expected
settlement of financial liabilities.
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The tables below summarises the maturity profile of the Group's liabilities based on their contractual
undiscounted payments:
Contractual maturities of financial liabilities
at 30 June 2024
Less than 6
months
US$’000
6 - 12 months
US$’000
> 1 year
US$’000
Total
contractual
cash flows
US$’000
Carrying
Value
US$’000
Trade payables
21,161
-
-
21,161
21,161
Borrowings
-
-
58,118
58,118
45,701
Lease liabilities
708
963
6,356
8,027
5,219
Total
21,869
963
64,474
87,306
72,081
Contractual maturities of financial liabilities
at 30 June 2023
Less than 6
months
US$’000
6 - 12 months
US$’000
> 1 year
US$’000
Total
contractual
cash flows
US$’000
Carrying Value
US$’000
Trade payables
11,646
-
-
11,646
11,646
Borrowings
-
-
58,118
58,118
40,322
Lease liabilities
445
452
2,451
3,348
2,903
Total
12,091
452
60,569
73,112
54,871
The group monitors rolling forecasts of liquidity reserves on the basis of expected cash flows.
ii.
Fair values
As at 30 June 2024, the carrying values of the financial instruments approximate their fair value.
27. Share-based payments
(a) Recognised share-based payment expenses
The expense recognised for employee services received during the year is shown in the table below:
30 June 2024
$’000
30 June 2023
$’000
Expense arising from the performance rights long term incentive
1,921
1,990
Expense arising from options under long term incentive
-
214
Total expense arising from share-based payment transactions
1,921
2,204
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(a) 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 2024
the weighted average remaining life for the
outstanding share options was 3.21 years (FY2023:
4.21 years) and the exercise price for all outstanding
options was £0.0561. No new options were granted
during the year.
In March 2023 the Company awarded a total
of 12,420,232 performance rights in respect of
ordinary shares to Executive and key staff to be
issued at nil cost.
8,004,838 of the performance rights under the
LTI were awarded in recognition of the past
achievement of the Company's objectives in
FY2022. The rights were valued at the spot rate of
the shares at grant date, and the value is amortised
over the vesting period. The rights vest annually
over 3 years in equal tranches with the first vesting
date being 1 July 2023 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.
The remaining 4,415,394 performance rights were
granted under a Key Person Agreement in respect
of one nominated person. This person has been
identified as having a key role directly related to the
Company's long-term success and the allocation
of accelerated performance rights has been
implemented by the Board to successfully retain
this employee and affirm successful delivery on
a range of projects and customer commitments.
These awards have an accelerated grant with
delayed vesting taking place on 1 July 2024 and
require the employee to remain continuously
employed by the Company until the vesting date.
If the 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 is vested on termination, the remaining
rights are cancelled.
There is no cash settlement of the rights.
The Group accounts for the Executive Share
Plan as an equity-settled plan.
65
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ii.
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 vested on 1 July 2022, given the CEO
remained with the Company and were 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 were
due to expire if they are not exercised by 1 July
2023. On the 30 June 2023, the Board approved
the modification to these options by extending the
life of these options until 30 June 2026.
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.
The weighted average fair value uplift to extend
the options until 30 June 2026 at modification date
is £0.0142. At 30 June 2024 the weighted average
remaining life for the outstanding share options
was 2 years (FY2023: 3 years).
iii. 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.
Achievement of the following TSP performance
is required for each tranche to vest:
Tranche 1: £0.061 - 1 July 2020
Tranche 2: £0.076 - 1 July 2021
Tranche 3: £0.095 - 1 July 2022
Tranche 4: £0.119 - 1 July 2023
Tranche 5: £0.149 - 1 July 2024
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.
100% of tranche 1 and 50% of tranche 2 vested in
previous financial years. In the current financial
year, 7,500,000 shares were issued as a result of
the vesting of these performance rights.
Due to the COVID-19 pandemic and geopolitical
factors adversely influencing the share-price during
FY22 the Board agreed to roll 100% of the Tranche
3 rights (5,000,000 rights) for retesting on 1 July
2023 and 1 July 2024.
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 rights 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
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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%
On 30 June 2023 the Board extended the terms
of its employment contract with CEO for a
3-year period to 30 June 2026 and invited him
to participate in the Seeing Machines Employee
Benefits Plan (“the Plan) in respect of 10,000,000
ordinary shares of no par value in the Company
(“Ordinary Shares”) subject to shareholder approval.
As part of the Plan, the CEO was awarded rights in
respect of 10,000,000 Ordinary Shares, to vest on
30 June 2026, conditional on the satisfaction of key
conditions, including a TSP performance condition
and adjusted EBITDA non-market performance
condition, to be measured on 30 June 2026.
In addition, previously issued rights of 15,000,000
Ordinary Shares via the Plan in 2019 will be rolled
over and extended to vest on 30 June 2026. Vesting
hurdles have not been met on 15,000,000 of these
rights as at the original dates of 30 June 2022,
2023, and 2024, The full amount of 15,000,000
rights has now been extended to 30 June 2026
and vesting will be conditional on the satisfaction
of the relevant conditions, including a TSP
performance condition and adjusted EBITDA non-
market performance condition, to be measured
on 30 June 2026.
Achievement of the following TSP performance
is required for rights to vest:
• £0.12 - 40% of rights vest
• £0.12 - £0.20 - linear sliding scale
from 40% to 100%
Taking into account the terms and conditions upon
which the rights were granted and modified, the
weighted average fair value uplift of the rights at
modification date is £0.0124.
(c) Summaries of shares issued and held in Trust:
2024
No ‘000
2024
WAP* (pence)
2023
No ‘000
2023
WAP* (pence)
Shares held in Trust at 1 July
34,780
10.29
49,717
9.06
Vested and transferred during the year
(15,533)
5.69
(14,937)
6.18
Shares held in Trust at 30 June
19,247
13.94
34,780
10.29
Shares held and issued in trust in Seeing Machines Limited are held by the Seeing Machines Share Plans
Trust for the purpose of issuing shares under the 2010 Executive Share Plan.
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(d) Summaries of rights granted under the Performance Right Scheme:
2024
2023
No ‘000
WAP* (pence)
No ‘000
WAP* (pence)
As at 1 July
157,784
6.64
162,460
6.75
Granted during the year
-
-
12,420
6.76
Exercised during the year *
(15,533)
8.97
(14,937)
7.86
Forefited during the year
(6,174)
5.31
(2,159)
7.28
As at 30 June
136,077
6.69
157,784
6.64
Vested and exercisable at 30 June
63,090
5.16
64,839
4.79
*Weighted Average Price (WAP) is the Market price at the time of grant.
(e) Share-based payments – accounting policy
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.
That cost is recognised in employee benefits
expense (Note 5), 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 Note 8).
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28. Commitments
As at 30 June 2024, the Group had no
commitments (FY2023: $5,882,026) relating
to the manufacturing contract for the Group's
Guardian 2.1 products.
29. Contingent liabilities
The Group had no contingent liabilities at 30 June
2024 (FY2023: nil).
(a) Contingent liabilities – accounting policy
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.
30. Events occurring after the reporting period
(a) Acquisition of Asaphus Vision GmbH
On 5 July 2024 Seeing Machines Limited acquired
100% of the issued shares in Asaphus Vision GmbH,
a highly specialised development group with
leading Machine Learning and Artificial Intelligence
capability, for consideration of $6,000,000
($1,000,000 cash consideration on acquisition
and $5,000,00 deferred consideration). The
acquisition is expected to increase the Group’s
market share in OEM.
The financial effects of this transaction have not
been recognised at 30 June 2024. The operating
results and assets and liabilities of the acquired
company will be consolidated from 5 July 2024.
Acquisition-related costs of $376,000 are included
in general and administration expenses in the
statement of comprehensive income in the
reporting period ending 30 June 2024.
No other matter or circumstance has occurred
subsequent to period end that has significantly
affected, or may significantly affect, the operations
of the Group, the results of those operations or the
state of affairs of the Group or economic entity in
subsequent financial years.
31. Related party transactions
(a) Information about subsidiaries
The consolidated financial statements include the
financial statements of Seeing Machines Limited
and its subsidiaries’ as follows:
% Equity interest
Investment
Name of entity
Country of
incorporation
2024 %
2023 %
2024 $
2023 $
Seeing Machines Incorporated
United States
100
100
533,960
533,960
Seeing Machines Executive Share
Plans Pty Ltd
Australia
100
100
69
69
Seeing Machines Share Plans Trust
Australia
100
100
7
7
Seeing Machines (Sales) Pty Ltd
Australia
100
100
8
8
Fovio Pty Limited
Australia
100
100
69
69
Fovio Incorporated
United States
100
100
35
35
Seeing Machines (UK) Ltd
United Kingdom
100
100
117
117
Seeing Machines Japan Ltd
Japan
100
100
9,452
9,452
Seeing Machines Germany GmbH
Germany
100
100
28,898
28,898
Seeing Machines (NZ) Ltd
New Zealand
100
100
63
63
69
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(b) Materially owned subsidiaries
There are no subsidiaries held at 30 June 2024 that have non-controlling interests.
(c) Key management personnel
Key management personnel covered in this report
Non-executive and executive Directors
Kate Hill
Non-Executive Director and Chair
Paul McGlone
Executive Director and Chief Executive Officer
Yong Kang (YK) Ng
Non-Executive Director (resigned 29/11/2023)
Gerhard Vorster
Non-Executive Director
John Murray
Non-Executive Director
Michael Brown
Non-Executive Director
Stephane Vedie
Non-Executive Director (appointed 25/10/2023)
Executives (Other Key Management Personnel)
Paul McGlone
Chief Executive Officer
Martin Ive
Chief Financial Officer
Nicholas DiFiore
Senior Vice President (SVP) and General Manager (GM)
Automotive OEM Solutions (resigned as SVP and GM
30/06/2024)
Gary Collins
SVP and GM Automotive OEM Solutions (appointed
1/07/2024)
Mike Lenné
Chief Science and Innovation Officer
Max Verberne
GM - Aftermarket Solutions
Patrick Nolan
GM - Aviation
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Compensation for Key Management Personnel
Short-Term
Post-
Employment
Share-Based
Payments
Total
Name
Year
Salary/Fees/
Bonus/Leave
Superannuation
Rights/Options
CHAIR
Kate Hill
2024
100,393
11,043
-
111,436
2023
103,496
10,867
-
114,363
CEO AND EXECUTIVE
Paul McGlone
2024
752,125
18,026
48,027
818,178
2023
505,152
18,500
235,254
758,906
NON-EXECUTIVE DIRECTORS
Y K NG
2024
24,582
-
-
24,582
2023
60,545
-
-
60,545
John Murray
2024
64,960
7,146
-
72,106
2023
66,968
7,032
-
74,000
Gerhard Vorster
2024
64,960
7,146
-
72,106
2023
66,968
7,032
-
74,000
Michael Brown
2024
58,996
-
-
58,996
2023
60,545
-
-
60,545
Stephane Vedie
2024
41,129
-
-
41,129
Other Key Management Personnel
2024
1,664,803
107,493
392,061
2,164,357
2023
1,723,333
89,390
495,291
2,308,014
Total
2024
2,771,948
150,854
440,088
3,362,890
2023
2,587,007
132,821
730,545
3,450,373
71
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(d) Director-related transactions
i.
Shareholdings of Directors
2024
Balance at the
start of the
period
Previously
vested rights
converted to
shares
Acquired or
sold for cash
Change due
to director
resignation
Balance at
end of the
period
Name
Directors of Seeing Machines Limited
ORDINARY SHARES
K Hill (v)
4,500,000
-
300,000
-
4,800,000
P McGlone (iv)
540,000
7,500,000
1,550,882
-
9,590,992
Y K NG (i)
2,160,349
-
-
(2,160,349)
-
J Murray (ii)
832,291
-
200,000
-
1,032,291
G Vorster
109,375
-
-
-
109,375
M Brown (iii)
-
-
-
-
-
S Vedie
-
-
-
-
-
8,142,015
7,500,000
2,050,882
(2.160,349)
15,532,548
2023
Balance at the
start of the
period
Previously
vested rights
converted to
shares
Acquired or
sold for cash
Change due
to director
resignation
Balance at end
of the period
Name
Directors of Seeing Machines Limited
ORDINARY SHARES
K Hill (v)
4,037,920
-
462,080
-
4,500,000
P McGlone (iv)
250,000
-
290,000
-
540,000
Y K NG (i)
2,160,349
-
-
-
2,160,349
J Murray (ii)
832,291
-
-
-
832,291
G Vorster
109,375
-
-
-
109,375
M Brown (iii)
-
-
-
-
-
7,389,935
-
752,080
-
8,142,015
(i) Yong Kang NG has an additional indirect interest in the Company by virtue of his deemed (by virtue of his spouse)
ownership of shares in V S Industry Berhard (VSI).
(ii) John Murray’s interest in the Company is held by virtue of his direct ownership of shares in Nanjop Pty Ltd.
(iii) Michael Brown has an additional indirect interest in the Company by virtue of his relationship with Lombard Odier Asset
Management (Europe) Limited.
(iv) Paul McGlone has unvested performance rights on 30 June 2024. Please refer to Note 27 for more details.
(v) Kate Hill’s interest in the Company includes a direct holding as well as by virtue of an interest in her superannuation fund,
Dunford Super Fund (SMSF).
72
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ii.
Other Director related transactions
All transactions with director-related entities were made under normal commercial terms and conditions.
32. Remuneration of auditors
The auditor of the Group is PricewaterhouseCoopers.
Consolidated entity
30 June 2024
$
30 June 2023
$
AUDIT AND REVIEW OF FINANCIAL REPORTS
Consolidated group
198,553
188,632
Controlled entities and joint operations
39,509
35,311
Total audit and review of financial reports
238,062
223,943
OTHER SERVICES IN RELATION TO THE ENTITY AND ANY OTHER ENTITY IN THE CONSOLIDATED GROUP:
Accounting advisory services
4,623
223,943
Total services provided by PricewaterhouseCoopers
242,685
223,943
33. Parent entity financial information
(a) Summary financial information
30 June 2024
$’000
30 June 2023
$’000
Balance sheet
Current assets
64,081
89,981
Total assets
132,494
140,604
Current liabilities
32,906
25,243
Total liabilities
93,550
65,901
Shareholders’ equity
Issued capital
240,948
240,948
Reserves
8,411
6,260
Other equity
5,582
5,749
Accumulated losses
(215,997)
(178,255)
Total shareholders’ equity
38,944
74,702
Loss of the Parent entity
(31,631)
(9,511)
Total comprehensive income of the Parent entity
(31,631)
(9,511)
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(b) Parent entity financial information -
accounting policy
The accounting policies of the parent entity are
consistent with those of the consolidated entity,
as disclosed throughout the other notes to the
financial statements and in Note 34, except,
investments in subsidiaries are accounted for at
cost, less any impairment, in the parent entity.
34. Summary of other potentially material
accounting policies
This note provides a list of the other potentially
material accounting policies adopted in the
preparation of these consolidated financial
statements to the extent they have not already
been disclosed in the other notes above. These
policies have been consistently applied to all the
years presented, unless otherwise stated. The
consolidated financial statements are for the
Group consisting of Seeing Machines Limited
and its subsidiaries.
(a) Basis of preparation
i. Compliance with IFRS
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 ($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.
ii.
Historical cost convention
The consolidated financial statements have
been prepared on a historical cost basis, except
for the following:
•
certain financial assets and liabilities
(including derivative instruments), certain
classes of property, plant and equipment, and
investment property - measured at fair value or
revalued amount
•
assets held for sale - measured at the
lower of carrying amount and fair value less
costs to sell, and
•
defined benefit pension plans - plan assets
measured at fair value.
iii. New and amended standards
adopted by the Group
The Group has applied the following standards
and amendments for the first time for their annual
reporting period commencing 1 July 2023:
•
AASB 17 Insurance Contracts
•
AASB 2023-2 Amendments to Australian
Accounting Standards – Definition of
Accounting Estimates International Tax Reform
– Pillar Two Model Rules [AASB 112].
•
AASB 2021-5 Amendments to Australian
Accounting Standards – Deferred Tax related
to Assets and Liabilities arising from a Single
Transaction [AASB 112], and
•
AASB 2021-2 Amendments to Australian
Accounting Standards – Disclosure of
Accounting Policies Definition of Accounting
Estimates [AASB 7, AASB 101, AASB 108, AASB
134 & AASB Practice Statement 2].
The amendments listed above did not have any
impact on the amounts recognised in prior periods
and are not expected to significantly affect the
current or future periods.
74
seeingmachines
iv. New standards and interpretations
not yet adopted
Certain new accounting amendments to
accounting standards and interpretations have
been published that are not mandatory for 30
June 2024 reporting periods and have not been
early adopted by the Group. These standards,
amendments or interpretations are not expected
to have a material impact on the entity in the
current or future reporting periods and on
foreseeable future transactions.
(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
$31,276,000 (FY2023: loss of $15,548,000) and
incurred net cash outflows in operating and
investing activities of $11,944,000 (FY2023:
$50,667,000). The Group has net current assets
at 30 June 2024 of $29,088,000 (FY2023:
$60,908,000). The balance of cash and cash
equivalents at 30 June 2024 is $23,361,000
(FY2023: $36,139,000).
The ability of the Group to continue its activities as
a going concern is dependent on a range of factors
and initiatives including:
i.
against the backdrop of global uncertainty
regarding vehicle production, achieving
projected increases in OEM royalty revenue
as car production with Seeing Machines DMS
technology continues to increase;
ii.
achieving Aftermarket hardware revenues and
gross margins related to the transition to third
generation Guardian technology;
iii. achieving efficiencies in Aftermarket
operations as the volume of customers
and monitoring activity increases following
the implementation of standardised and
automated processes during FY2024;
iv. ongoing management of working capital
levels and strategies to advance the timing
of cash receipts;
v.
completing customer and new product
development projects on schedule; and
vi. managing research and development and
operating expenses to within budgeted levels.
Should the Group be unsuccessful in
achieving these aims,
vii. securing access to additional funding,
including receivables funding, from new
or existing sources to support the Group’s
activities as it transitions to profitability and
sustained positive operating and investment
cash flow operations.
As a result of these matters, there is a material
uncertainty related to events or conditions that
may cast significant doubt on the Group’s ability
to continue as a going concern and, therefore,
that the Group may be unable to realise its assets
and discharge its liability in the normal course of
business. The consolidated financial statements do
not include any adjustments that might result from
the outcome of this uncertainty.
The Group has a strong track record in recent
years of sourcing non-dilutive and/or strategic
funding and the Directors are of the view that,
should such a step be necessary, such funding
could be achieved.
The Directors are of the view that the Group will be
successful in the above matters and accordingly
have prepared the financial statements on a going
concern basis.
(c) Basis of consolidation
The consolidated financial statements comprise
the financial statements of the Company and its
subsidiaries (as outlined in Note 31(a)) 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.
75
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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
•
The ability to use its power over the investee to
affect its returns
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:
•
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
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.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an
equity transaction.
If the Group loses control over a subsidiary,
it derecognises the related assets (including
goodwill), liabilities, noncontrolling 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.
(d) Current versus non-current classification
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;
•
Held primarily for the purpose of trading;
•
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.
All other assets are classified as non-current.
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;
76
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•
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.
(e) Foreign currency translation
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 US dollars ($), which is
also the presentation currency of the Group.
ii.
Transactions and balances
Foreign currency transactions are translated into
the functional currency using the exchange rates
at the dates of the transactions. 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 generally recognised in profit or loss. They are
deferred in equity if they relate to qualifying cash
flow hedges and qualifying net investment hedges
or are attributable to part of the net investment in a
foreign operation.
Non-monetary items that are measured at fair
value in a foreign currency are translated using
the exchange rates at the date when the fair value
was determined. Translation differences on assets
and liabilities carried at fair value are reported as
part of the fair value gain or loss. E.g. translation
differences on non-monetary assets and liabilities
such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the
fair value gain or loss and translation differences on
non-monetary assets such as equities classified as
at fair value through other comprehensive income
are recognised in other comprehensive income.
iii. Group companies
On consolidation, exchange differences arising
from the translation of any net investment in
foreign entities, and of borrowings and other
financial instruments designated as hedges
of such investments, are recognised in other
comprehensive income. When a foreign operation
is sold or any borrowings forming part of the net
investment are repaid, the associated exchange
differences are reclassified to profit or loss, as part
of the gain or loss on sale.
(f) Climate-related risks
The AASB and the Auditing and Assurance
Standards Board (AUASB) issued a joint bulletin
in December 2018 (and updated in April 2019),
Climate-related and other emerging risks
disclosures: assessing financial statement
materiality using AASB Practice Statement 2. The
bulletin states that Qualitative external factors, such
as the industry in which the company operates
and investor expectations, may make climate-
related risks material and may require such risks
to be disclosed in the financial statements as they
pertain to specific financial statement line items.
The Group has performed an assessment based
on the guidance prescribed in the bulletin and
concluded that there are no material impacts
of climate change that may impact specific
financial statement line items. This is based on
management's assumption that the transition
to a greener economy will result in a move to
electric vehicles, and not the cessation of the
use of vehicles.
(g) 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.
77
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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 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.
(h) 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.
i.
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 4.
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.
ii.
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.
78
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The Group’s financial assets at amortised cost
include cash and cash equivalents, term deposits
and trade and other receivables.
iii. 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:
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.
iv. 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
i.
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.
ii.
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.
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iii. 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.
Offsetting of financial instruments
Financial assets and financial liabilities are offset,
and the net amount is reported in the consolidated
statement of financial position if there is a currently
enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities
simultaneously.
(i) 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.
(j) Fair value measurements
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 input that is significant to the fair value
measurement as a whole) at the end of each report
(k) Comparatives
Where necessary, comparatives have been
reclassified to ensure consistency with current
year disclosure.
35. Changes in accounting policies
The accounting policies applied are consistent with
those of the consolidated financial statements for
the year ended 30 June 2023.
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consolidated entity
disclosure statement
Name of entity
Type of
entity
Trustee, partner
or participant
in JV
% of share
capital
Place of
business/
country of
incorporation
Australian
resident or
foreign resident
Seeing Machines
Limited
Body
Corporate
-
n/a
Australia
Australian
Seeing Machines
Executive Share
Plans Pty Ltd
Body
Corporate
Trustee
100%
Australia
Australian
Seeing Machines
Executive Share
Plans Trust
Trust
-
n/a
Australia
Australian
Seeing Machines
(Sales) Pty Ltd
Body
Corporate
-
100%
Australia
Australian
Fovio Pty Limited
Body
Corporate
-
100%
Australia
Australian
Seeing Machines
(UK) Ltd
Body
Corporate
-
100%
United Kingdom
Australian
Seeing Machines
Germany GmbH
Body
Corporate
-
100%
Germany
Australian
Seeing Machines
(NZ) Ltd
Body
Corporate
-
100%
New Zealand
Australian
Seeing Machines
Japan Ltd
Body
Corporate
-
100%
Japan
Australian
Seeing Machines
Incorporated
Body
Corporate
-
100%
United States
Australian
Fovio
Incorporated
Body
Corporate
-
100%
United States
Australian
Basis of preparation
The ultimate controlling entity of the Group is Seeing Machines Limited. The Consolidated entity
disclosure statement has been prepared in accordance with Section 295(3A) of the Corporations Act
2001 and includes information for each entity that was part of the consolidated entity as at the end of the
financial year in accordance with AASB 10 Consolidated Financial Statements.
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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 set out on pages 26 to 80 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 2024
and of its performance for the year ended on that date; and
ii.
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 34(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; and
d.
The consolidated entity disclosure statement set out on page 81 is true and correct.
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 2024.
On behalf of the board
Paul McGlone
Executive Director & Chief Executive Officer
Canberra
directors'
declaration
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"we exist to
get people
home safely"
83
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PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of Seeing Machines Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Seeing Machines Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2024 and of its financial
performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
●
the consolidated statement of financial position as at 30 June 2024
●
the consolidated statement of comprehensive income for the year then ended
●
the consolidated statement of changes in equity for the year then ended
●
the consolidated statement of cash flows for the year then ended
●
the notes to the consolidated financial statements, including material accounting policy information
and other explanatory information
●
the consolidated entity disclosure statement as at 30 June 2024
●
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
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 & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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.
Material uncertainty related to going concern
We draw attention to Note 34(b) in the financial report, which indicates that the Group incurred a net loss
of $31,276,000 and net cash outflows in operating and investing activities of $11,944,000 during the year
ended 30 June 2024, and as a result the Group is dependent on a range of factors, or securing access to
additional funding to support the Group’s activities as it transitions to profitability and sustained positive
operating and investment cash flow operations.
These conditions, along with other matters set forth in Note 34(b), indicate that a material uncertainty
exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matters to the Risk, Audit and
Finance Committee.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matter(s) described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition for non-recurring engineering
services
(Refer to notes 4 and 34) [$9.4 million]
The Group recognised revenue from pre-production
non-recurring engineering services of $9.4 million.
Revenue recognition is a key audit matter due to the
significant judgement associated with the recognition of
this revenue, particularly:
Our audit procedures included, amongst others:
●
Obtaining an understanding of the terms and
conditions of the contracts.
●
Assessing whether the Group’s revenue
recognition policies are in accordance with
Australian Accounting Standards.
●
Assessing distinct goods within the contract
that qualify as separate performance
obligations and assessing the allocation of the
Key audit matter
How our audit addressed the key audit matter
●
Identification of performance obligations within
the contract including a number of identifiable
goods from non-recurring engineering services
and an Intellectual Property (IP) licence,
●
Allocating the transaction price to separate
performance obligations,
●
Determining the forecast contract costs and
the percentage completion of performance
obligations in order to recognise revenue over
time.
transaction price based on the relative stand-
alone selling price of each good.
●
Agreeing a sample of non-recurring
engineering services revenue transactions to
relevant supporting documentation for
performance obligations completed during the
year.
●
For non-recurring engineering services
commenced but not completed, assessing
total forecasted contract costs and evaluating
the percentage of completion based on the
actual costs incurred to date and the
estimated costs to complete for performance
obligations in progress as of the reporting
date.
●
Assessing the Group’s forecasting accuracy
by comparing historical actual costs incurred
relative to the forecast of those costs.
●
Evaluating the reasonableness of the
disclosures in light of the requirements of
Australian Accounting Standards.
Capitalised development costs
(Refer to notes 16 and 34) [$22.9 million]
During the year the Group capitalised $22.9 million of
internally generated project development costs.
The capitalisation of project development costs is a key
audit matter due to the size of the internal costs
capitalised to the balance sheet and the significant
judgement involved by the Group in assessing whether
the criteria set out in the Australian Accounting
Standards required for capitalisation of such costs had
been met, particularly:
●
The technical feasibility of the project,
●
The likelihood of the project delivering
sufficient future economic benefits,
●
The useful lives over which costs should be
amortised,
●
Recoverability of project development costs.
Our audit procedures included, amongst others:
●
Evaluating the Group’s policy and process for
calculating the time and cost spent by staff on
product development activities eligible for
capitalisation in accordance with Australian
Accounting Standards.
●
Developing an understanding of the
capitalised product development projects
undertaken during the year and assessing
whether the costs meet the criteria for
capitalisation in accordance with Australian
Accounting Standards.
●
On a sample basis, agreeing capitalised costs
to supporting documentation, including time
sheets and employee contracts, to assess
whether labour hours were authorised and to
assess the capitalisation rate used in
determining the amount of costs to be
capitalised.
●
Assessing the appropriateness of the useful
life attributed to these costs through
consideration of the economic life of the
projects and benchmarking the useful life
based on the industry.
Key audit matter
How our audit addressed the key audit matter
●
Evaluating the Group’s assessment for
indicators of impairment.
●
Assessing the Group’s recoverable amount
calculation for capitalised development costs
which are not yet ready for use or have
identified impairment indicators, including:
o
evaluating the appropriateness of the
valuation methodology and
discounted cash flow models used to
estimate the recoverable amount with
reference to Australian Accounting
Standards;
o
testing the completeness, accuracy
and relevance of a sample of
underlying data used in the models;
and
o
evaluating the appropriateness of
significant assumptions used by the
Group.
●
Evaluating the reasonableness of the
disclosures in light of the requirements of
Australian Accounting Standards.
Revenue recognition for licensing agreements
(Refer to notes 4 and 19) [$5.0 million]
During the year, the Group entered into an amended
master licence and marketing agreement in relation to
an aftermarket segment customer, recognising $5.0
million licensing revenue for the year and a deferred
revenue contract liability of $11.5 million as at 30 June
2024.
This was a key audit matter due to the complexity
involved in assessing revenue recognition in line with
the Australian Accounting Standards, particularly:
●
Identification of performance obligations within
the contract,
●
Assessing whether there is an inherent
financing component within the agreement,
●
Allocating the transaction price to separate
performance obligations,
●
Determining when and how performance
obligations are satisfied in order to recognise
revenue at a point in time or over time.
Our audit procedures included, amongst others:
●
Obtaining an understanding of the terms and
conditions of the contract.
●
Assessing whether the Group’s revenue
recognition policies are in accordance with
Australian Accounting Standards.
●
Identifying and evaluating distinct services,
licences and material rights within the contract
that qualify as separate performance
obligations and assessing the allocation of the
transaction price based on the relative stand-
alone selling price of each component.
●
Evaluating the Group’s assessment and
calculation of the financing component in the
agreement
●
Evaluating the allocation of transaction price
based on the Group’s standalone selling
prices.
●
Evaluating the Group’s assessment of when
and how identified performance obligations
are satisfied throughout the contract term.
Key audit matter
How our audit addressed the key audit matter
●
Evaluating the reasonableness of the
disclosures in light of the requirements of
Australian Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2024, but does not include the financial report
and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we
obtained included the directors report. We expect the remaining other information to be made available to
us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon through our opinion on the financial
report. We have issued a separate opinion on the remuneration report.
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 that we 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.
When we read the other information not yet received, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and use our professional judgement
to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related 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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing
Standards.
PricewaterhouseCoopers
Jon Roberts
Melbourne
Partner
30 October 2024