Seeing Machines : Half year results to 31 December 2020

Seeing Machines Limited

("Seeing Machines" or the "Company)

31 March 2021

Half year results and financial report

Seeing Machines Limited (AIM: SEE), the advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety, today publishes its unaudited results and financial report for the six months to 31 December 2020 ("H1 2021").

Financial Highlights:

• Operational revenue of A$18.1m (H1 2020: A$15.8m) reflecting comparative growth of 15% on previous period. Underlying revenue growth using constant currencies is 19% year on year (exchange rate as at 1 July 2020).

1. Aftermarket (Fleet and Off-Road) revenue grew by 17% to A$15m (H1 2020: A$12.9m)

1. Annualised Recurring Revenues including royalties of A$15.5m, representing growth of 17.4% (H1 2020: A$13.2m)

• 1. OEM (Automotive and Aviation) revenue of A$3.1m (H1 2020: A$2.97m), representing a 5% increase on previous period
• Net loss of A$16.8m, representing an improvement of 33% compared with the same period last year (H1 2020: A$24.9m)
• Cash at 31 December 2020 of A$52.3m (31 December 2019: A$47.4m)
• Range of cost-saving initiatives, introduced through height of COVID-19 pandemic, has resulted in improved cost base management aimed at contributing to better operational performance and improved cash balance.

OEM Highlights:

• Driver Monitoring System (DMS) technology now firmly established as fundamental to improved safety on roads, underpinned by regulation and standards, as well as to the increasingly smart vehicle interior for carmakers;
• The number of active automotive RFQs (Requests For Quotes) requesting DMS has increased accordingly across major automotive markets;
• Cadillac Escalade by General Motors, is now available on roads with Driver Attention System featuring Seeing Machines technology, bringing total current production vehicles to five, aross three OEM programs;

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• Automotive three-pillar embedded product strategy launched to support carmakers with a range of integration options for DMS;
• Seeing Machines now formally working with a range of semi-conductor companies including Qualcomm Technologies and Omnivision Technologies to extend the deliver of its DMS.

Aftermarket Highlights:

• Max Verberne appointed to lead the Aftermarket business, bringing a wealth of industry understanding having led telematics businesses for over ten years including with Radius Telematics Australia and Ctrack by Inseego, and has previously managed divisions and channels for Siemens across Australia and New Zealand;
• Business continues to grow despite challenging global conditions as Guardian hardware sales remain consistent with ongoing momentum around safety technology in commercial transport and logistics, and installation rates in Southern Hemisphere, accelerate;
• Guardian connections as at 31 December 2020 of 26,597 represents growth in installed base of over 3,000 units in the six months prior, contributing to unrivalled set of naturalistic driving data which now exceeds 6.3 billion kilometres and underpins ongoing development of the Company's DMS platform technology.

Investment Highlights:

• Investment by leading US based insititutional investors has strengthened Seeing Machines' balance sheet and positioned the Company to initiate a range of strategies to support incremental growth objectives across its key transport markets.

Outlook:

Seeing Machines continues to trade in line with expectations for FY2021.

Guardian connections are expected to accelerate as COVID-19 challenges subside with the global vaccine rollout and H2 2021 is expected to see an incremental growth in Aftermarket related revenue.

As the Company expects to be in production with existing OEM customers on more than 30 distinct car models within the next two calendar years, the current makeup of Automotive revenue is set to change from NRE (Non-Recurring Revenue) to signficantly higher margin based royalty revenue.

Paul McGlone, CEO of Seeing Machines commented: "The first half of FY2021 has been pleasing and we are buoyed by the progress in Fleet, as well as the significant increase in RFQ activity in Automotive across key markets as carmakers ready themselves for mounting safety standards and technology advances inside the cabin, all supported by camera-based DMS. We are now in production on five car models, working across three OEMs, and that is set to ramp up signficantly over the coming two years.

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"Further, I'm delighted with the interest we are seeing from both UK and US based institutional investors, as DMS becomes more and more relevant across all key Seeing Machines transport sectors. We are now positioned to look beyond the near term and leverage our strengthened balance sheet to grow company opportunities across core markets."

Enquiries:
Seeing Machines Limited	[phone]
Paul McGlone - CEO
Sophie Nicoll - Corporate Communications
Cenkos Securities plc (Nominated Adviser and Broker)	[phone]
Neil McDonald
Pete Lynch
Stifel Nicolaus Europe Limited (Joint Broker)	[phone]
Alex Price
Nick Adams
Lionsgate Communications (Media Enquiries)	[phone]
Jonathan Charles

Seeing Machines (LSE: SEE), a global company founded in 2000 and headquartered in Australia, is an industry leader in vision-based monitoring technology that enable machines to see, understand and assist people. Seeing Machines' technology portfolio of AI algorithms, embedded processing and optics, power products that need to deliver reliable real-time understanding of vehicle operators. The technology spans the critical measurement of where a driver is looking, through to classification of their cognitive state as it applies to accident risk. Reliable "driver state" measurement is the end-goal of Driver Monitoring Systems (DMS) technology. Seeing Machines develops DMS technology to drive safety for Automotive, Commercial Fleet, Off-road and Aviation. The company has offices in Australia, USA, Europe and Asia, and supplies technology solutions and services to industry leaders in each market vertical.

www.seeingmachines.com

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Review of Operations

Financial Results

As reported at the end of FY2020, the Company has identified two key operating segments, OEM and Aftermarket, reflecting the different paths to market for our products. The OEM segment includes the Automotive and Aviation businesses which generate largely license based revenue, channeled through Tier 1 customers. The Aftermarket segment includes Fleet and Off-Road and generates revenue from a mix of direct and indirect customers who retro-fit Seeing Machines technology into commercial vehicles.

The Company's total sales revenue for H1 FY2021 (excluding foreign exchange gains and finance income) increased by 14.6% to A$18.1m (H1 FY2020: A$15.8m).

Business unit	H1FY21	H1FY20	Variance
OEM	$'000	$'000	%
3,103	2,965	5
Aftermarket	15,040	12,866	17
Sales Revenue	18,143	15,831	15

Monitoring services revenue in Aftermarket grew by more than 42% to A$5.8m for the half year, compared to

A$4.1m for the same period last year. Installed Guardian units increased by over 3,000 to 26,597 connected units representing a 15.6% growth in connections over the six month period (FY20: 23,000 units), demonstrating ongoing momentum for Aftermarket, despite the challenges posed by COVID- 19.

Total OEM revenue increased 5% to A$3.1m compared to the same period last year (H1 FY2020: A$3m).

Currently, OEM revenue is primarily made up of Non-recurring Engineering (NRE), which is revenue provided by OEMs to fund the development of DMS technology solutions and feature sets for their specific requirements. Over the next few years, the nature of OEM revenue will change to consist primarily of royalty revenue, and will increase significantly as OEMs begin mass production on vehicles under existing Seeing Machines DMS technology program awards.

The Australian Government COVID-19 Grant, JobKeeper, increased other income by A$1.6m to A$1.7m (2019: A$0.3m). Seeing Machines qualified for the initial phase of the JobKeeper Grant which ran from 1 March 2020 to 27 September 2020. Additional COVID-19 cost reduction initiatives reduced the cost base by A$3.5m for the period with a range of permanent (A$1.6m) and temporary initiatives (A$1.9m) which included a temporary 4-day work week, CEO and Director fee reductions and enforced travel restrictions. Of the total A$12m identified COVID cost-saving initiatives, the Company has achieved A$8.4m, in permanent and temporary savings and grants to date with remaining savings expected to be achieved by end of FY2021.

On 23 October 2020, Seeing Machines issued 372,000,000 new ordinary shares of no par value each ("New Ordinary Shares") to Federated Hermes, a well known US institutional investor, at a price of

4.10 pence per New Ordinary Share, raising gross proceeds of approximately US$20,000,000 (the "Purchase"). Subsequent to 31 December 2020, on 22 March 2021, Seeing Machines issued an additional 68,403,430 New Ordinary Shares to another US based investor, Toronado Fund, at a premium price of 10.50 pence per New Ordinary Share, raising gross proceeds of approximately US$10,000,000. The net proceeds of these Placings strengthen the Company's

balance sheet as well as facilitating a range of incremental growth initiatives.

Cash and cash equivalents at 31 December totaled A$52.4m (H1FY20: A$47.4m).

We highlight this report is unaudited. There is no requirement for the interim financial statements to be subject to audit review by the external auditor and accordingly no audit or review has been conducted.

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Interim Consolidated Statement of Financial Position - Unaudited

		Consolidated
		31 Dec	30 Jun
AS AT	Notes	2020	2020
Unaudited	Reviewed
		A$000	A$000
ASSETS
CURRENT ASSETS	9	52,361	38,138
Cash and cash equivalents
Trade and other receivables	8	9,592	9,584
Inventories	7	4,102	4,743
Current financial assets	8	332	512
Other current assets		3,480	4,233
TOTAL CURRENT ASSETS		69,867	57,210
NON-CURRENT ASSETS	6
Property, plant & equipment	3,171	3,208
Right-of-use assets		3,847	4,371
Intangible assets	10	1,084	899
TOTAL NON-CURRENT ASSETS		8,102	8,478
TOTAL ASSETS		77,969	65,688
LIABILITIES
CURRENT LIABILITIES	8	7,651	7,874
Trade and other payables
Provisions		3,897	3,763
Current financial liabilities	8	378	553
Contract liabilities		647	263
Interest-bearing loans and borrowings	8	1,141	1,057
TOTAL CURRENT LIABILITIES		13,714	13,510
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings	8	5,196	5,766
Provisions		186	215
TOTAL NON-CURRENT LIABILITIES		5,382	5,981
TOTAL LIABILITIES		19,096	19,491
NET ASSETS		58,873	46,197
EQUITY
Contributed equity		244,730	217,204
Accumulated losses		(201,454)	(184,638)
Other reserves		15,597	13,631
Equity attributable to equity holders of the parent		58,873	46,197
TOTAL EQUITY		58,873	46,197

The above interim consolidated statement of financial position should be read in conjunction with theaccompanying notes.

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