TIDMSEE
RNS Number : 2550E
Seeing Machines Limited
27 October 2022
Seeing Machines Limited ("Seeing Machines" or the "Company")
27 October 2022
Year End Results - FY2022
Seeing Machines Limited (AIM: SEE, "Seeing Machines" or the
"Company"), the advanced computer vision technology company that
designs AI-powered operator monitoring systems to improve transport
safety, has published its audited financial results for the year
ended 30 June 2022 ("FY2022" or "the period").
FINANCIAL HIGHLIGHTS:
- Revenue has increased by 15% to A$54.4m (2021: A$47.2m)
- Underlying revenue has grown by 22%, excluding the one-off
license in FY2021, to A$55.5m when using constant currency [1]
- Automotive royalty revenues increased by 141% to A$5.5m (2021: A$2.3m)
- Non-Recurring Engineering (NRE) revenue up 67% on prior year,
a lead indicator for future Automotive royalty revenue
- Total OEM revenue, which includes Automotive and Aviation,
increased by 21% to A$14.7m (2021: A$12.1m)
- Aftermarket revenue increased by 13% to A$39.8m (2021: A$35.1m)
- Annual Recurring Revenue including royalties increased by 18% to A$17.6m (2021: A$14.9m)
- Royalties from Guardian hardware sales increased 4% to A$2.4m (2021: A$2.3m)
- Gross Profit increased by 17.3% to A$24.4m (2021: A$20.8m)
- Cash at 30 June 2022 of A$58.8m (2021: A$47.4m) (prior to the
recent investment by Magna of US$65m (A$103m) announced earlier
this month)
OPERATIONAL HIGHLIGHTS:
OEM (Automotive)
- During FY2022, Seeing Machines was appointed to deliver 5
additional automotive programs, bringing the total individual
program count to 14 with 10 automotive OEMs, one of which was the
largest driver and occupant monitoring program awarded to date,
with an initial lifetime value of A$125m
- Seeing Machines announced its first automotive design win with a Japanese OEM
- The cumulative initial lifetime value of all OEM programs that
Seeing Machines has won to date now stands at A$395m, with the
majority of that revenue expected to be realised over the next 4
years
- As cars start production, the automotive revenue mix is
changing from non-recurring engineering (NRE) to high margin
royalty revenue
- At 30 June 2022, there were 447,225 vehicles on the road
featuring Seeing Machines' DMS technology, an increase of 246% over
the previous period
- Regulatory momentum continued as the US President, Joe Biden,
signed the bipartisan infrastructure legislation, which will
require new vehicles to be fitted with Driver Monitoring System
(DMS) technology in an effort to reduce drunk and distracted
driving
- A range of semiconductor company collaborations were entered
into, including with Omnivision to develop a world-first ASIC
featuring the Occula(R) Neural Processing Unit (NPU) launched by
Seeing Machines
- An additional US semiconductor company has licensed the
Occula(R) NPU and Seeing Machines has also formally collaborated
with Ambarella to bring integrated Advanced Driver Assistance
Systems and occupant and driver monitoring systems to market
- The collaboration announced with Magna International to
develop DMS in the rear-view mirror location was enhanced
post-period with a US$65m investment in the Company (via an
exclusivity arrangement payment of US$17.5m and up to $47.5m
convertible note) and the exclusive co-marketing of DMS integrated
into the rear-view mirror location until 2025
OEM (Aviation)
- The Company announced its world-first delivery of a
cockpit-based operator monitoring system with Air Ambulance
Victoria
- Seeing Machines signed an Agreement with Airservices Australia
to enhance safety in Air Traffic Control and a collaboration with
Collins Aerospace to jointly market co-developed solutions across
the Aviation industry
AFTERMARKET
- Guardian connections at 30 June 2022 were 39,832, contributing
to the 17% growth in the Company's Annual Recurring Revenue to
A$20.1m
- Guardian connections in FY22 were affected by global supply
chain issues. An engineering solution has resolved the problem to
ensure enough stock will be available to meet expected demand in
FY2023, however, the Company continues to monitor this situation
closely
- Seeing Machines signed a Global Framework Agreement with Shell
Global Solutions International to deliver its Guardian solution
across the Shell worldwide operations
- The Company established a new sales team in the Netherlands to
support growth across the UK and Europe and to closely support the
rollout of Shell companies located in Europe, Middle East and
Africa
- Leading fleet management company, EROAD, has integrated
Guardian technology into its fleet management software to help
combat driver fatigue and simplify mutual customer access to both
systems
- As compliance dates for Europe's General Safety Regulation to
enhance road safety approaches, the Company is now engaged with a
range of commercial vehicle manufacturers to deliver Guardian as an
'After Manufacture' solution
- Seeing Machines' Backup-driver Monitoring System sales
opportunities are expanding, demonstrating the increased market
opportunity for this solution as more self-driving car, robotaxi
and truck platooning companies require the technology to satisfy
their testing periods
Quarterly Key Performance Indicator (KPI) Report [2] :
Moving forward, Seeing Machines will be issuing a quarterly
publication focused on three KPI's from the Aftermarket and
Automotive business units, launching in November 2022. Below are
metrics reported Q4 FY2022:
- Guardian connections of 39,832, a 5% increase (Q3FY22: 37,791)
- Backlog to Guardian Connections of 10,706 units to be installed
- Cars on road increased by 31% to 447,225 (Q3FY22: 341,000)
As previously announced, given over 60% of Seeing Machines
revenues are in US Dollars Seeing Machines will begin reporting in
US$ from the start of the current financial year.
Paul McGlone, CEO of Seeing Machines commented: "The results
presented in the FY2022 accounts are strong and the post-period
announcement of our collaboration with Magna and its investment
into the Company has ensured that Seeing Machines is positioned to
win more market share and secure our place as an industry leading
provider of DMS and OMS. Balance sheet strength is critical to our
customers having the confidence in our financial capacity to
deliver on our long-term innovation pipeline and commercial
commitments.
"Our Automotive business is thriving and, as we get through the
next wave of RFQs, we will be able to clearly demonstrate this
leadership position and affirm our predicted market share. The
Aftermarket business is expanding and despite some supply chain
challenges, the next 24 months will see a step-change in
opportunity as regulation drives additional growth and we move to
the next generation of our Guardian hardware. Finally, in Aviation,
we have no clear competition here and I am delighted to see this
business shaping up to be in a position to add significant value to
the Company in the near future."
Enquiries:
Seeing Machines Limited +61 2 6103 4700
Paul McGlone - CEO
Sophie Nicoll - Corporate Communications
Stifel Nicolaus Europe Limited (Nominated
Adviser and Broker) +44 20 7710 7600
Alex Price
Nick Adams
Ben Burnett
Lionsgate Communications (Media Enquiries)
Jonathan Charles +44 7791 892509
About Seeing Machines (AIM: 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
REVIEW OF OPERATIONS
Financial Highlights
The Company's total revenue for the financial year (excluding
foreign exchange gains and finance income) was A$54,435,000
compared to the 2021 revenue of A$47,167,000, representing an 15%
increase on prior year results.
Product 2022 2021 Variance
A$'000 A$'000 %
OEM 14,660 12,088 21
Aftermarket 39,775 35,079 13
Sales Revenue 54,435 47,167 15
With the start of customer production for our Original Equipment
Manufacturer ("OEM") business unit (Automotive) in FY21 and the
continuing increase in production in the FY22, royalty revenues
increased by 141% to A$5,505,000 from A$2,280,000 in FY21. An
increasing royalty licence revenue stream will continue to be
received over the model lifetime of awarded OEM programs. The
remainder of the revenue in the OEM segment primarily represents
NRE (Non-Recurring Engineering) revenue which is software
development activities undertaken to embed DMS technologies into
the specific OEM vehicle configuration prior to the commencement of
vehicle production. NRE revenue increased by A$3,286,000 to
A$8,172,000 (2021: A$4,886,000).
Aftermarket grew by 13% on the prior year despite a slowdown in
installations arising from local and global pandemic-related
changes to business conditions, including supply chain related
challenges which have now been resolved. Revenue momentum
accelerated through the second half of the year with revenue in H2
increasing by 42% on H1 results to A$23,354,000 (H1: A$16,421,000).
Hardware and installation revenue increased by 10% over the prior
year to A$20,709,000 (2021: A$18,798,000) and driver monitoring
revenues increased by 19% to A$13,169,000 (2021: A$11,064,000).
Gross profit increased from A$20,765,000 in FY2021 to
A$24,410,000 in FY22. Removing the impact of the one off licence
revenue in FY21 amounting to A$4,190,000, operational gross profit
improved 6% year on year from 39% in FY21 to 45% in FY22 primarily
reflecting increased high-margin OEM royalty licence revenues.
Increased sales of Guardian units and a 6% improvement in
Aftermarket gross margin also contributed to the improvement in
group gross profit.
In line with the continued accelerating momentum in Automotive
safety legislation in both Europe and more recently in the US, the
Company continued to invest in its core technology development
across global OEM and Aftermarket industries. As a result, Seeing
Machines has reflected a portion of development expenditure which
meets recognition criteria as an intangible asset amounting to
A$32,767,000 (2021: A$8,311,000). During FY22, such development
expenditure amounting to A$25,659,000 (2021: A$8,311,000) was
capitalised and A$1,203,000 (2021: Nil) was amortised. The
remaining research and development costs have been expensed and
amount to A$15,487,000. The total investment in research and
development for the current year amount is A$41,146,000 (2021:
A$18,187,000).
Corporate costs increased by $4,389,000 to A$17,214,000 (2021:
A$12,825,000) with a combination of one-off and incremental costs
that support organisational scale and sustainable growth.
Maintained focus on business performance and cost optimisation has
partly offset the increase, which will stabilise in future
years.
The resultant loss for the period represented an increase of
A$7,903,000 at A$25,323,000 (2021: A$17,420,000).
Cash used in operations fell from A$19,641,000 to A$15,843,000
as a result of improved revenue receipts exceeding increases in the
operating cost base and reflecting that capitalised development
costs are disclosed as cash flows from investing activities.
Increased revenues, particularly in the later months of the
financial year have not all converted to cash within the reporting
cycle.
Net cash and cash equivalents at 30 June 2022 totalled
A$58,756,000 (2021: A$47,393,000).
On 23 November 2021, Seeing Machines issued 277,123,492 new
ordinary shares of no par value each (the "New Ordinary Shares") at
a price of 11 British pence per New Ordinary Share, raising gross
proceeds of approximately A$56,855,000 (US$41,000,000) (the
"Placing"). The net proceeds of the Placing are being used to
strengthen the Company's balance sheet, fund core technology
expansion, and enhance OEM Business pursuit and Aftermarket product
development and regional expansion.
Operational Highlights
It is clear that Seeing Machines is a world-leader in driver and
occupant monitoring system technology and is making significant
advancements across each of its target transport sectors. The
growth across the business has continued despite the pandemic and
supply chain related challenges. The regulatory landscape remains a
key growth driver and, with compliance dates fast approaching (and
already in place for some vehicle classes in Europe and China) this
is quickly transforming market opportunities across Aftermarket and
is accelerating the requests for information and quotes in
Automotive. North American legislation will happen, and Seeing
Machines is working closely with regulatory bodies there to shape
protocols and assist with policy and rule-making, as was done in
Europe, specifically to shape Euro NCAP (New Car Assessment
Program) protocol.
Driver and Occupant Monitoring System (DMS/OMS) technology is
fundamental to transport safety but is also a key enabler in
Automotive as the intelligent cabin continues to advance and the
industry sees semi-automated features emerge across an increasing
number of vehicles. Where semi-automated features are enabled,
understanding what the driver is doing is critical in maintaining
driver attention and overall vehicle safety.
Seeing Machines is now actively engaged with ten automakers on
fourteen expanding automotive programs to deliver its FOVIO DMS,
and with 447,225 cars on road featuring the Company's technology,
the shape of the automotive revenue is rapidly changing from lower
margin NRE to high margin royalties, which are expected to continue
to significantly ramp over the coming two to three years. The
Automotive pipeline continues to grow with the Company actively
working on RFQ's (Request for Quote) from OEMs in Europe, North
America and Asia.
The announcement, post-period, that Seeing Machines and Magna
International will exclusively co-market DMS/OMS integrated into
the rear-view mirror is a big step-change for the Company as this
location is predicted to experience the biggest growth (integration
location) across all markets. Working with one of the world's
largest automotive tier-one suppliers, with a focus on mirrors,
will enable Seeing Machines to grab market share as OEMs work hard
to meet regulatory requirements, deliver a reliable driver and
occupant monitoring solution and respond to the integration
challenge inside the cabin.
The Aviation industry has now emerged from many of the pressures
associated with the global pandemic and Seeing Machines remains
engaged on key opportunities associated with Simulated Training as
well as Air Traffic Control applications of the Company's
eye-tracking technology. A world first, Air Ambulance Victoria will
also work with Seeing Machines to install an operator monitoring
solution inside the cockpit, signalling validation of the Company's
eye-tracking technology and its application across the Aviation
spectrum. With customers and partners such as Collins Aerospace,
the Royal Australian Air Force and Airservices Australia, Seeing
Machines continues to invest in the Aviation business as it
experiences good momentum, with limited competition, in this
growing market.
Seeing Machines' Aftermarket business has also achieved good
growth as Guardian sales have continued to accelerate, despite the
economic challenges. The offering is attracting the interest of key
global organisations as they seek to enhance safety across their
vehicle fleets. Large, multi-national companies, such as Shell
Global Solutions International, are now working with Seeing
Machines as safety receives its due focus across the professional
driving industry. These opportunities, while initially slow to
expand, will see the Company realise significant growth in direct
business with entities capable of installing the hardware
independently, swiftly and efficiently. Further, and also due to
regulatory pressure, there is growing interest in "After
Manufacture" opportunities, where commercial vehicle OEMs are
working with Seeing Machines to fit Guardian as standard, before
the vehicle is on-sold. Services will then be sold directly or
indirectly to the commercial vehicle operator market. Already
profitable, excluding corporate costs, this division is well
positioned to take advantage of these favourable market
opportunities.
Guardian is now connected to 39,832 vehicles, up 25% on prior
year and has travelled more than 10 billion kilometres globally
providing Seeing Machines unrivalled access to naturalistic driving
data which is key to the Company's algorithm improvement and
technology performance. Supply chain issues were a problem for
Seeing Machines during FY 2022 and all stock on hand was sold
during the year. Now that these issues have been engineered out of
the technology, supply will resume and be sufficient to meet demand
for FY2023, and until the next generation of hardware is available.
The Guardian 3 product is currently in development and scheduled
for release during CY2023.
Subsequent Events after the Balance Date
On 4 October 2022, Seeing Machines entered into an exclusive
collaboration agreement ("Agreement") with Magna International
("Magna"), to pursue driver and occupant monitoring system business
targeting the vehicle's interior rear-view mirror. Under the terms
of the Agreement, subject to certain exceptions, Seeing Machines
and Magna will exclusively co-market driver and occupant
monitoring, solely where the Company's IP is fully integrated
inside the rear-view mirror, until the end of June 2025. In return
for Seeing Machines granting exclusivity to Magna for the mirror,
Magna will make an upfront payment to Seeing Machines of US$10m,
with an additional US$7.5m payable over the following 2 years.
At the same time, Magna has also agreed to invest up to an
additional US$47.5m into Seeing Machines via a non-transferable
4-year convertible note maturing in October 2026 (the "Convertible
Note"). The Convertible Note, which can be drawn down in two
tranches across the 4-year term, subject to the satisfaction of
certain closing conditions, is convertible into ordinary shares at
a price of 11 British pence per share. The first tranche, being
US$30m, was drawn on 5 October 2021 with the remainder available
until December 2024. The Convertible Note has an all-in yield of
8%, inclusive of fees. 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 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.
Consolidated Statement of Financial Position
2022 2021
AS AT 30 JUNE Notes A$000 A$000
------------------------------------------------- -------- --------------------- ----------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 14 58,756 47,393
Other short-term deposits 20 472 472
Trade and other receivables 15 26,983 19,851
Inventories 16 1,305 2,627
Other current assets 17 8,243 5,438
TOTAL CURRENT ASSETS 95,759 75,781
NON-CURRENT ASSETS
Property, plant & equipment 18 4,404 3,361
Intangible assets 19 34,277 9,540
Right-of-use assets 29 3,449 4,252
TOTAL NON-CURRENT ASSETS 42,130 17,153
TOTAL ASSETS 137,889 92,934
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 21 16,391 8,839
Lease liabilities 25, 29 948 918
Provisions 22 5,098 4,893
Contract liabilities 24 3,622 772
TOTAL CURRENT LIABILITIES 26,059 15,422
NON-CURRENT LIABILITIES
Provisions 22, 23 356 192
Lease liabilities 25, 29 4,356 5,272
TOTAL NON-CURRENT LIABILITIES 4,712 5,464
TOTAL LIABILITIES 30,771 20,886
NET ASSETS 107,118 72,048
EQUITY
Contributed equity 26 313,029 257,382
Accumulated losses (227,369) (202,046)
Other reserves 21,458 16,712
Equity attributable to the owners of the parent 107,118 72,048
TOTAL EQUITY 107,118 72,048
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
Consolidated Statement of Comprehensive Income
2022 2021
FOR THE YEARED 30 JUNE Notes A$000 A$000
------------------------------------------- --------------- ---------------------------- --------------------
Sale of goods 22,397 18,840
Services revenue 21,491 18,346
Royalty and licence fees 10,547 9,981
Revenue 7 54,435 47,167
Cost of sales (30,025) (26,402)
Gross profit 24,410 20,765
Net gain/(loss) in foreign exchange 8 1,564 (417)
Other income 8 106 1,669
Finance income 392 322
Expenses
Research and development expenses 9 (15,487) (9,876)
Customer support and marketing expenses (9,067) (6,092)
Operations expenses (11,266) (8,087)
General and administration expenses (15,486) (14,590)
Finance costs (453) (518)
Loss before income tax (25,287) (16,824)
Income tax expense 10 (36) (596)
Loss after income tax (25,323) (17,420)
Loss for the period attributable to:
Equity holders of the Company (25,323) (17,420)
(25,323) (17,420)
Other comprehensive (loss)/income
Exchange differences on translation of foreign
operations (413) (169)
Other comprehensive (loss)/income net of tax (413) (169)
Total comprehensive loss (25,736) (17,589)
Total comprehensive loss attributable to:
Equity holders of the Company (25,736) (17,589)
Total comprehensive loss for the year (25,736) (17,589)
Loss per share for loss attributable to the ordinary
equity holders of the Company:
Basic loss per share 12 ($0.01) ($0.01)
Diluted loss per share 12 ($0.01) ($0.01)
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
Contributed Accumulated Foreign Employee Total Equity
Equity Losses Currency Equity
Translation Benefits
Reserve & Other
Reserve
----------------------- ----------------- ---------------- -------------------- -------------------- -------------------
FOR THE YEARED
30 JUNE A$000 A$000 A$000 A$000 A$000
------------------------------------------ ---------------- -------------------- -------------------- -------------------
As at 1 July
2020 217,204 (184,626) (1,516) 15,147 46,209
Loss for the
period - (17,420) - - (17,420)
Other
comprehensive
loss - - (169) - (169)
Total
comprehensive
loss - (17,420) (169) - (17,589)
Transactions
with
owners in their
capacity as
owners:
Shares issued 41,199 - - - 41,199
Capital raising
costs (1,021) - - - (1,021)
Share-based
payments - - - 3,250 3,250
At 30 June 2021 257,382 (202,046) (1,685) 18,397 72,048
As at 1 July
2021 257,382 (202,046) (1,685) 18,397 72,048
Loss for the
period - (25,323) - - (25,323)
Other
comprehensive
loss - - (413) - (413)
Total
comprehensive
loss - (25,323) (413) - (25,736)
Transactions
with
owners in their
capacity as
owners:
Shares issued 57,063 - - - 57,063
Capital raising
costs (1,416) - - - (1,416)
Share-based
payments - - - 5,159 5,159
At 30 June 2022 313,029 (227,369) (2,098) 23,556 107,118
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE Note 2022 A$000 2021 A$000
-------------------------------------------- ----
Operating activities
Receipts from customers 52,335 37,990
Payments to suppliers and employees (68,303) (58,985)
Interest received 392 322
Interest paid (1) (518)
Income tax paid (266) (15)
Receipt of government grants - 1,565
Net cash flows used in operating activities 28 (15,843) (19,641)
--------------------- ----------------------
Investing activities
Proceeds from sale of property, plant
and equipment - 5
Purchase of plant and equipment (1,853) (446)
Payments for intangible assets (patents,
licences and trademarks) (343) (484)
Payments for intangible assets (capitalised
development costs) (25,659) (8,311)
Maturity of term deposits - 40
--------------------- ----------------------
Net cash flows used in investing activities (27,855) (9,196)
--------------------- ----------------------
Financing activities
Proceeds from issue of new shares 57,063 41,071
Cost of capital raising (1,415) (1,021)
Principal repayment of lease liabilities (1,271) (1,459)
Net cash flows from financing activities 54,377 38,591
--------------------- ----------------------
Net increase in cash and cash equivalents 10,681 9,754
Net increase/ (decrease) due to foreign
exchange difference 682 (499)
Cash and cash equivalents at 1 July 47,393 38,138
--------------------- ----------------------
Cash and cash equivalents at 30 June 14 58,756 47,393
--------------------- ----------------------
The above consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
To read the FY2022 Annual Financial Report and access
accompanying notes to the above tables, please visit
https://www.seeingmachines.com/investors/announcements/ .
[1] This refers to underlying growth rates at constant currency
or adjusting for currency so business results can be viewed without
the impact of fluctuations in foreign currency exchange rates,
thereby facilitating period-to-period comparisons of Seeing
Machines business performance. To present this information, current
period results and comparative period results are converted into
Australian dollars at the 30 June 2022 exchange rate.
[2] Guardian connections is a global count of all vehicles
fitted with Guardian.
Backlog to connections refers to Guardian hardware which has
been sold, yet to be connected.
Cars on road counts all light vehicles in production fitted with
Seeing Machines automotive grade Driver Monitoring System (DMS)
technology.
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END
FR FFFFIILLRFIF
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