28th Mar 2007 14:40
Seeing Machines Limited28 March 2007 28th March 2006 SEEING MACHINES LIMITED ("Seeing Machines" or "the Company") REVIEWED INTERIM RESULTS FOR SIX MONTHS TO 31 DECEMBER 2006 Seeing Machines Limited (AIM: SEE) announces its reviewed interim results forthe six months to 31 December 2006. Financial Highlights • Revenue increased 18% to A$1.394m (31 December 2005: A$1.181m) • Sales of faceLAB(R)remain strong at A$1.034m for the half year (31 December 2005: A$1.152m) • Contract Revenue A$353k (31 December 2005: $6k) • Loss before tax A$141k (31 December 2005: $62k) Operational Highlights • Award of a Commercial Ready Grant worth A$2.1m over 2 years for TrueField Analyzer(R), our medical device to help doctors detect and manage glaucoma and other eye diseases; • faceLAB(R) 4.3 released and sales of over A$1 million for the half year; • Release of the Driver State Sensor Research (DSS-R), a new product offering for research and fleet trial implementation; • Excellent progress on a number of automotive projects; • Good progress on the development and commercialisation of the TrueField Analyzer(R) including clinical and scientific trials, software development, hardware development, regulatory approval and Intellectual Property protection; • Commencement of the faceAPI project that will make Seeing Machines computer vision technology accessible to application developers everywhere. Fulton Muir, Chairman stated, 'The company has made very good progress duringthe half year in its research and development and commercialisation activitiesacross a number of projects including faceLAB(R), TrueField Analyzer(R),automotive projects and faceAPI.' Copies of this announcement will be available from the Company's registeredoffice, Innovations Building, Level 3, Corner Eggleston & Garran Roads, ActonACT 2601, Australia and the website www.seeingmachines.com. Enquiries:Seeing Machines Limited Insinger de Beaufort Parkgreen CommunicationsNick Cerneaz, CEO Peter Ward Victoria Thomas+61 (0) 2 6125 6501 +44 (0) 20 7190 7015 +44 (0) 20 7851 7480 Directors' Report Your directors submit their report for the half-year ended 31 December 2006. DIRECTORS The names of the company's directors in office during the half-year and untilthe date of this report are as below. Directors were in office for this entireperiod unless otherwise stated. James Fulton Muir, AO Non Executive Chairman Nick Cerneaz Executive Director David Gaul Non Executive Director Anthony Kinnear Non Executive Director - resigned 30 November 2006 Rob Sale Non Executive Director Trent Victor Non Executive Director Alex Zelinsky Non Executive Director William Mobbs Non Executive Director - appointed 18 October 2006 Review AND RESULTS of Operations Review of 1st half of our Seventh Year of Operations The first half of the 2007 financial year has seen pleasing progress in a numberof areas of the business. Operational highlights for the half-year include: • Award of a Commercial Ready Grant worth A$2.1m over 2 years for TrueField Analyzer(R), our medical device to help doctors detect and manage glaucoma and other eye diseases; • faceLAB(R) 4.3 released and sales of over A$1 million for the half-year; • Release of the Driver State Sensor Research (DSS-R), a new product offering for research and fleet trial implementation; • Excellent progress on a number of automotive projects; • Good progress on the development and commercialisation of the TrueField Analyzer(R) including clinical and scientific trials, software development, hardware development, regulatory approval and Intellectual Property protection; • Commencement of the faceAPI project that will make Seeing Machines computer vision technology accessible to application developers everywhere. Financial Results Revenue for the half-year to 31 December 2006 was A$1.394 million, A$212,224higher than the period to 31 December 2005. This increase in revenue was due toa significant increase in contract revenue up from $6,483 at 31 December 2005 to$359,080 at 31 December 2006. Other income for the half-year was $85,814 downfrom $195,966 the previous half-year. This was due to the deferral of grantincome in the current period. Net expenditure for the half-year was A$1,620,683 up from A$1,439,210 on theprior half-year. This was due to higher staffing levels and higher corporatefees, now that Seeing Machines is a listed company. The loss for the half-year to 31 December 2006 was A$141,338 compared to a lossof $61,937 for the half-year to 31 December 2005. This was due to increasedcosts associated with the company's research and development andcommercialisation activities. The company had $1,685,583 in cash at 31 December 2006 compared to $3,126,142 at31 December 2005 which was immediately following the IPO. Net assets increasedto $3,908,044 at 31 December 2006 compared to $3,866,210 at 31 December 2005. Operational Highlights faceLAB(R) In October 2006 we released faceLAB(R) 4.3 which brought improved head andeye-gaze calculation, yielding greater accuracy and robustness over previousversions of faceLAB(R). That release also included a new smaller form-factorhardware platform, which reduced system complexity and setup time, and increasedexperimental flexibility. This new platform provides manufacturing andinventory efficiencies and has already reduced the time between the receipt ofan order and shipment to the end customer. TrueField Analyzer(R) All facets of this project progressed during the half-year including: • scientific trials; • large scale clinical study; • regulatory approval; • IP Protection (including trademarks in several jurisdictions); • Industrial design and hardware development; • Software development; • Early stage commercialisation activities. The work on this project was greatly assisted by the award in August 2006 of anAustralian Government Commercial Ready Grant of $2.1 million to be paid ininstalments over 2 years. We were also supported in this project by ourpartners at the Australian National University Research School of BiologicalSciences including Dr Ted Maddess and Dr Andrew James as well as the CanberraEye Hospital. Automotive Strong progress has been made across a number of automotive projects with thefocus being on using the core vision processing technology to develop driversafety systems. We entered into an agreement as part of our involvement as an R&D participant inthe Co-operative Research Centre for Advanced Automotive Technology (AutoCRC)for a project called Vision Based Collision Avoidance which is initially focusedon speed sign recognition but which will also examine other safety issuesincluding pedestrian detection and integrated lane departure warning. SeeingMachines is the project lead and is working with Latrobe University and theAustralian National University along with industry participants GM Holden andAustralian Arrow. A prototype of the speed sign system working in a car wasdelivered in December 2006. A field trial of the Driver Fatigue and Distraction System has continued with amajor oilfield services and mining company in Texas. This has been acollaborative effort with our automotive technology commercialization partner,Hella KGaA Hueck & Co (Hella) which has enabled us to test the technology underreal world conditions. In November 2006 we released the Driver State Sensor - Research (DSS-R) aresearch and fleet trail implementation of the DSS technology based on thesystem trialled in the US. We have continued to work with our partners Hella and have commenced work on anew technology demonstrator of an integrated driver assistance and drivermonitoring system for a major European automotive manufacturer. faceAPITM /SDK A significant amount of research has been completed to refresh the company's keyvision algorithms in order to keep us in the lead with core key head trackingtechnology. This research is currently being incorporated into the company'skey products including faceLAB(R) and the DSS-R as well as other developments. We have also commenced negotiations with a number of companies who wish tolicence one or more of our core vision algorithms to build the capability intotheir products. Auditor's Independence Declaration We have obtained an independence declaration from our auditors, Ernst & Young.The signed declaration is included after this report. Signed at Canberra this 28th day of March 2007 in accordance with a resolutionof the directors made pursuant to section 306(3) of the Corporations Act 2001. Fulton Muir Nick CerneazChairman Chief Executive Officer and Director Auditor's Independence Declaration to the Directors of Seeing Machines Limited In relation to our review of the financial report of Seeing Machines Limited forthe half-year ended 31 December 2006, to the best of my knowledge and belief,there have been no contraventions of the auditor independence requirements ofthe Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young James PalmerPartner28 March 2006 Income Statement FOR THE HALF-YEAR ENDED 31 DECEMBER 2006 31 December 2006 31 December 2005 Note A$ A$ Sale of goods 1,034,452 1,174,825Contract Income 359,080 6,483Revenue 3(a) 1,393,532 1,181,308 Other income 3(b) 85,814 195,966 Cost of sales 3(c) (293,320) (353,624)Employee benefits expense 3(d) (721,379) (784,051)Depreciation and amortisation expense 3(e) (131,391) (76,180)Other expenses 3(f) (474,594) (163,461)Finance costs 3(g) 0 (61,895) Loss before income tax (141,338) (61,937) Income tax relating to operations - - Loss after tax from operations attributable to (141,338) (61,937)members Loss per share (cents per share)• basic for loss for the half-year (0.070) (0.031) attributable to ordinary equity holders of the company• diluted for loss for the half-year (0.055) (0.030) attributed to ordinary equity holders of the company Balance Sheet AS AT 31 DECEMBER 2006 As at 31 As at 30 As at 31 December June December 2006 2006 2005 Note A$ A$ A$ CURRENT ASSETSCash and cash equivalents 5 1,685,583 2,407,053 3,126,142Trade and other receivables 982,908 639,373 550,857Inventories 120,669 129,370 97,878Other 10,902 39,380 7,045TOTAL CURRENT ASSETS 2,800,062 3,215,176 3,781,922 NON-CURRENT ASSETSProperty, plant and equipment 276,020 251,648 144,671Intangible assets 264,802 221,240 251,258Capitalised development costs 2,580,556 1,404,971 590,555Other 3,496 3,311 2,635TOTAL NON-CURRENT ASSETS 3,124,873 1,881,170 989,119TOTAL ASSETS 5,924,935 5,096,346 4,771,041 CURRENT LIABILITIESTrade and other payables 740,966 705,966 610,552Deferred revenue 1,195,637 408,451 271,024TOTAL CURRENT LIABILITIES 1,936,603 1,114,417 881,576 NON-CURRENT LIABILITIESInterest bearing loans and borrowings 0 0 0Provisions 80,287 68,692 23,255TOTAL NON-CURRENT LIABILITIES 80,287 68,692 23,255TOTAL LIABILITIES 2,016,890 1,183,109 904,831NET ASSETS 3,908,044 3,913,237 3,866,210 EQUITYContributed equity 6,553,932 6,528,748 6,550,344Accumulated losses (3,279,610) (3,138,272) (3,065,132)Other reserves 633,722 522,761 380,998TOTAL EQUITY 3,908,044 3,913,237 3,866,210 Statement of Changes in Equity FOR THE HALF-YEAR ENDED Issued Capital Accumulated Employee Equity Total Equity Losses Benefits Reserve31 DECEMBER 2006 Note A$ A$ A$ A$ At 1 July 2006 6,528,748 (3,138,272) 522,761 3,913,237 Loss for the half-year (141,338) (141,338)Issues of ordinary sharesduring the half-year Exercise of options 15,000 (10,184) 4,816Share based payment 10,184 121,945 131,329 At 31 December 2006 6,553,932 (3,279,610) 633,722 3,908,044 At 1 July 2005 3,394,946 (3,003,195) 51,066 442,817 Loss for the half-year (61,937) (61,937)Issues of ordinary sharesduring the half-year Exercise of options 16,373 16,373 Issue of share capital 3,848,550 3,848,550 Transaction costs (1,159,525) (1,159,525)Conversion of Convertible 450,000 450,000NotesShare based payment 329,932 329,932 At 31 December 2005 2(b) 6,550,344 (3,065,132) 380,998 3,866,210 FOR THE HALF-YEAR ENDED 31 December 2006 31 December 2005 31 DECEMBER 2006 A$ A$ Net income recognised 0 0 directly in equity Loss for the half-year (141,338) (61,937) Total recognised income (141,338) (61,937) and expense for the half-year Attributable to equity (141,338) (61,937) holders of the company Cashflow Statement FOR THE HALF-YEAR ENDED 31 DECEMBER 2006 31 December 2006 31 December 2005 Note A$ A$ CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 1,180,939 974,864Grants received 795,317 175,776Payments to suppliers and employees (1,367,254) (942,679)Interest received 35,198 13,916Finance costs paid 0 (83,421)NET CASH FLOWS FROM OPERATING ACTIVITIES 644,200 138,456 CASH FLOWS USED IN INVESTING ACTIVITIESPurchases of plant and equipment (98,225) (15,802)Proceeds from disposals of plant and equipment 429 0Payments for intangible assets (56,006) (19,859)Payments for research and development costs (1,226,868) (334,149) NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (1,380,670) (369,810) CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings 0 0Exercise of options 15,000 16,373Issue of shares 0 3,837,434Costs of listing on AIM 0 (1,159,524) NET CASH FLOWS FROM FINANCING ACTIVITIES 15,000 2,694,283 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (721,470) 2,462,929Cash and cash equivalents at beginning of period 2,407,053 663,213 CASH AND CASH EQUIVALENTS AT END OF PERIOD 5 1,685,583 3,126,142 Notes to the Half-Year Financial Statements 1. CORPORATE INFORMATION The financial report of Seeing Machines Limited (the Company) for the half-yearended 31 December 2006 was authorised for issue in accordance with a resolutionof the directors on 28 March 2007. Seeing Machines Limited is a company limited by shares incorporated in Australiawhose shares are publicly traded on the AIM of the London Stock Exchange. The nature of the operations and principal activities of the Company aredescribed in the Directors' Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The half-year financial report does not include all the notes of the typenormally included within the annual financial report and therefore cannot beexpected to provide as full an understanding of the financial performance,financial position and financing and investing activities of the company as thefull financial report. The half-year report should be read in conjunction with the annual FinancialReport of Seeing Machines Limited as at 30 June 2006. It is also recommended that the half-year financial report be consideredtogether with any public announcements made by Seeing Machines Limited duringthe half-year ended 31 December 2006 in accordance with the continuousdisclosure obligations arising under the Corporations Act 2001. (a) BASIS OF PREPARATION The half-year financial report is a general-purpose financial report, which hasbeen prepared in accordance with the requirements of the Corporations Act 2001,applicable Australian Accounting Standards, including AASB 134 - InterimFinancial Reporting. The half-year financial report has been prepared on ahistorical cost basis. For the purpose of preparing the half-year financial report, the half-year hasbeen treated as a discrete reporting period. (b) RESTATEMENT OF COMPARATIVES As disclosed at 30 June 2006, the company has recognised licences and applicableamortisation for technology underlying ongoing development, which has impactedon the 31 December 2005 comparatives. The effect of the adjustment to thecomparative for 31 December 2005 was to decrease the loss after tax fromoperations attributable to members by $25,141 from $87,078 to $61,937. This wasdue to capitalising an amount that had been previously expensed. (c) SIGNIFICANT ACCOUNTING POLICIES The half-year financial report has been prepared using the same accountingpolicies as used in the annual financial statements for the year ended 30 June2006, except for the adoption of amending standards mandatory for annual periodsbeginning on or after 1 July 2006, as described in Note 2(d). (d) CHANGES IN ACCOUNTING POLICIES There have been no new accounting standards that have been issued or amendedthat are applicable to the half-year reporting period ended 31 December 2006. (e) SEGMENT REPORTING The company operates in one business and one geographical segment beingresearch, development and production of computer vision technology in Australia.The company's primary product is faceLAB(R) which is marketed internationally. 31 December 2006 31 December 2005 A$ A$3. REVENUES AND EXPENSES (a) Revenue 5. Sale of goods 1,034,452 1,174,825 Contract Income 359,080 6,483 1,393,532 1,181,308 (b) Other income START Grant 0 123,394 BIF Grant 8,131 52,382 Recognition of deferred grant income 16,393 3,616 Interest Earned 60,861 13,917 Foreign Exchange gain 0 2,657 Profit on Disposal of assets 429 0 85,814 195,966 (c) Cost of sales Cost of Goods Sold (234,502) (319,477) Finishing Services (5,361) (2,970) Packaging & Freight (13,674) (12,303) Workshop Sundries (5,942) (12,211) Production (33,841) (6,663) (293,320) (353,624) (d) Employee benefits expense Provision for Long Service (11,594) (10,749) Share based payments (121,145) (329,932) Salaries & Wages (1,399,888) (435,938) Workers' Comp Insurance (11,162) (7,432) Employee Benefits capitalised 822,410 0 (721,379) (784,051) (e) Depreciation and amortisation expense Amortisation of intangible assets (57,722) (30,716) Depreciation of property, plant and (73,669) (45,464) equipment (131,391) (76,180) (f) Other expenses Foreign Exchange Differences (8,163) 0 Professional Fees (150,263) 3,457 Audit Fees (10,500) (46,500) Corporations Fees (111,795) (40,776) Office and administration costs (52,873) (57,388) Property Costs (74,843) (69,545) Other expenses capitalised 106,445 225,343 Communications (16,556) (14,020) International travel and marketing (120,525) (138,612) Domestic travel and marketing (35,521) (25,420) (474,594) (163,461) (g) Finance costs Interest Expense 0 (61,895) 4. DIVIDENDS PAID AND PROPOSED No dividends or distributions have been made to members during half-year ended 31 December 2006 andno dividends or distributions have been recommended or declared by the directors in respect of thehalf-year ended 31 December 2006. 31 December 2006 31 December 2005 A$ A$5. CASH AND CASH EQUIVALENTS Reconciliation of cashCash at the end of the half-year as shown in the Statement of CashFlows is reconciled to the related items in the Balance Sheet asfollows: CASH AND CASH EQUIVALENTSCash on hand 300 0Cash at bank 126,785 3,052,765Cash deposit 1,543,437 58,824Term deposit 15,061 14,553 1,685,583 3,126,142 (a) Financing facilities availableAt reporting date, there was $2,700 business credit card facility available but remained unused. Thecompany's term deposit is pledged as security for the credit card facility. 6. PROPERTY, PLANT AND EQUIPMENT Acquisitions and disposalsDuring the half-year ended 31 December 2006, the company acquired assets with a cost of $98,225 (2005:$15,802). Assets with a net book value of $nil were disposed of by the company during the half-year ended 31December 2006 (2005: $nil), resulting in a gain on disposal of $429 (2005:$nil). 7. INTANGIBLE ASSETS Acquisitions and disposalsDuring the half-year ended 31 December 2006, the company acquired intangible assets with a cost of $56,006(2005: $19,859). Intangible Assets with a net book value of $nil were disposed of by the company during the half-year ended31 December 2006 (2005: $nil), resulting in a gain on disposal of $nil (2005:$nil). Capitalised Development Costs During the half-year ended 31 December 2006, the company capitalised development costs totalling$1,226,868 (2005: $334,149). 8. SHARE-BASED PAYMENTS Employee Share Option PlanIn July 2006, 4,027,265 share options were granted to employees under the Employee Share Option Scheme. Theexercise price of $0.0844 is equal to the market price of the shares on the date of the grant. The optionswill become exercisable between 31 December 2007 and 30 June 2009. The fair value of the options granted isestimated as at the date of the grant using the 'Hull White" method using a trinomial lattice model. Thefollowing table lists the key inputs to the model used to determine fair value of options issued in thehalf-years ended 31 December 2006 and 2005: 2006 2005 Share price at grant date 8.39 c 7.56 cOptions exercise price 8.41c 5.16-7.56 cRisk free interest rate 4.64% 5.34%Exercise multiple 2.2 2.2Volatility 45% 35% The following table illustrates the number (No.) and weighted average exercise prices (WAEP) in cents, ofand movements in, share options issued during the half-year:- 31 December 2006 31 December 2005 WAEP WAEP No. A$ No. A$ Outstanding at the beginning of the half-year 21,297,764 6.762 c 295 $2,308.99 Forfeited during the half-year (2,914,639) 7.414 c (36) $2,308.99Cancelled 0 0 c (259) $2,308.99Reissue of options during the half-year 0 0 c 5,342,405 5.130 cGranted during the half-year (1) 4,027,265 8.440 c 14,913,379 7.461 cExercised during the half-year (292,398) 5.130 c (319,153) 5.130 cExpired during the half-year 0 0 c 0 0 cOutstanding at the end of the half-year 22,117,992 7.003 c 19,936,631 6.873 c (1) The estimated fair value of each option at grant date is $0.04 (2005 - $0.03) 2006 2005The outstanding balance as at 31 December 2006 is represented by:Options over ordinary shares with an exercise price of 5.13 cents each and an estimated fair value at grant date of $0.04 5,435,795 5,270,776Options over ordinary shares with an exercise price of 7.5 cents each and an estimated fair value at grant date of $0.03 14,665,855 14,665,855Options over ordinary shares with an exercise price of 8.44 cents each and an estimated fair value at grant date of $0.04 2,016,342 0 22,117,992 19,936,631 9. COMMITMENTS AND CONTINGENCIES The Company has no finance leases or hire purchase contracts for items of plantand machinery. The Company had two Commercial Property Leases one which expired in September2006 which was renewed and runs until February 2008. Future minimum rentals payable under non-cancellable operating leases as at 31December are as follows: 31 December 31 December 2005 2006 A$ A$(a) Operating Lease (non-cancellable) Minimum lease payments: - not later than one year 8,082 28,502 - later than one year and not later than five years 1,347 0 Aggregate lease expenditure contracted for but not provided for at 9,429 28,502 reporting date (b) Expenditure commitments Estimated licence expenditure contracted for at reporting date, but not provided for, payable: - not later than one year 90,000 118,714 - later than one year and not later than five years 0 75,000 90,000 193,714 10. RELATED PARTY DISCLOSURE (a) Director-related entity transactions All transactions with director-related entities were made under normal commercial terms and conditions. (b) Equity instruments of directors Interest at balance date: Interest in the equity instruments of Seeing Machines Ltd held by directors of the company and their director-related entities: Ordinary shares fully Options over ordinary shares Convertible Notes paid 2006 2005 2006 2005 2006 2005 Number Number Number Number Number Number A. Zelinsky1 87,417,493 4,238 - - - - R. Sale 1,175,743 171 - - - 150,000 A. Kinnear2 990,099 48 - - - - N. Cerneaz 391,914 19 12,752,917 - - - D. Gaul 1,000,000 - - - - - 1. The interests disclosed for Alexander Zelinsky relates to Ordinary Shares held by JATS Technology Pty Ltd, acompany in which he is interested in 24.4% of its issued shares at 30 June 2006. 2. Anthony Kinnear's Ordinary Shares are held by Ezaspi Pty Ltd, a company wholly owned by Ritmarn Pty Ltd (thetrustee of the Kinnear family trust). Anthony Kinnear is a director of Ritmarn Pty Ltd. (c) Equity instruments of other related parties Interest at balance date: Interest in the equity instruments of Seeing Machines Ltd held by other related parties: Ordinary shares fully paid Options over ordinary shares Convertible Notes 2005 2005 2005 2004 2006 2005 Number Number Number Number Number Number 3,939,769(1) 191 - - - - 1. This interest relates to shares held by Paula Kay Sale the wife of Rob Sale. 11. EVENTS AFTER THE BALANCE SHEET DATE There have been no significant events that have occurred after balance sheetdate. Directors' Declaration In accordance with a resolution of the directors of Seeing Machines Limited madeon 28 March 2007, I state that: In the opinion of the directors: (a) the financial statements and notes of the company are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company's financial position as at 31 December 2006 and of the performance for the half-year ended on that date; and (ii) complying with Accounting Standard AASB134 "Interim Reporting" and Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. On behalf of the Board Fulton MuirDirector Canberra, 28th March 2007 Independent Review Report to the members of Seeing Machines Limited Report on the Half-Year Condensed Financial Report We have reviewed the accompanying half-year financial report of Seeing MachinesLimited, which comprises the condensed balance sheet as at 31 December 2006, andthe condensed income statement, condensed statement of changes in equity andcondensed cash flow statement for the half-year ended on that date, otherselected explanatory notes and the directors' declaration. Directors' Responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation and fairpresentation of the half-year financial report in accordance with AustralianAccounting Standards (including the Australian Accounting Interpretations) andthe Corporations Act 2001. This responsibility includes designing, implementingand maintaining internal controls relevant to the preparation and fairpresentation of the half-year financial report that is free from materialmisstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in thecircumstances. Auditor's Responsibility Our responsibility is to express a conclusion on the half-year financial reportbased on our review. We conducted our review in accordance with AuditingStandard on Review Engagements ASRE 2410 Review of an Interim Financial ReportPerformed by the Independent Auditor of the Entity, in order to state whether,on the basis of the procedures described, we have become aware of any matterthat makes us believe that the financial report is not in accordance with theCorporations Act 2001 including: giving a true and fair view of the company'sfinancial position as at 31 December 2006 and its performance for the half-yearended on that date; and complying with Accounting Standard AASB 134 InterimFinancial Reporting and the Corporations Regulations 2001 and other mandatoryfinancial reporting requirements in Australia. As the auditor of Seeing MachinesLimited, ASRE 2410 requires that we comply with the ethical requirementsrelevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarilyof persons responsible for financial and accounting matters, and applyinganalytical and other review procedures. A review is substantially less in scopethan an audit conducted in accordance with Australian Auditing Standards andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements ofthe Corporations Act 2001. We have given to the directors of the company awritten Auditor's Independence Declaration, a copy of which is included in the Directors' Report.The Auditor's Independence Declaration would have been expressed in the sameterms if it had been given to the directors at the date this auditor's reportwas signed. Conclusion Based on our review, which is not an audit, we have not become aware of anymatter that makes us believe that the interim financial report of SeeingMachines Limited is not in accordance with: (a) the Corporations Act 2001, including: (i) giving a true and fair view of the company's financial position as at 31 December 2006 and of its performance for the half-year ended on that date; and (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) other mandatory financial reporting requirements in Australia. Ernst & Young This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Seeing Machines