Trading Update

RNS Number : 5980Z

Seeing Machines Limited

31 May 2016

 

Seeing Machines Limited

("Seeing Machines" or "the Company")

Trading Update

31 May 2016

Seeing Machines Limited, (AIM: SEE), the AIM listed vehicle operator monitoring technology company, is pleased to provide an update on key activities.

Caterpillar

Following on from the September 2015 licensing agreement with Caterpillar, the Company has successfully transitioned its "ruggedized" product business. Caterpillar is now managing the supply chain for this product and has taken over full responsibility for sales and after sales support. The royalties on products and services for their first full operational quarter under these arrangements (January to March 2016) have delivered revenues to Seeing Machines of more than US$400,000. Higher revenues are expected for the April to June 2016 quarter. This performance confirms management's belief that Caterpillar's global distribution network will exceed what our direct sales efforts would have. Despite a soft resource sector, Caterpillar remains confident of building the DSS business including a focus on the non-mining Caterpillar industries (construction, cement and quarry, paving, forestry, marine and industrial). Caterpillar has engaged Seeing Machines' engineering services to support the development of the next generation DSS product.

Revenue from the Caterpillar licensing agreement will support the Company's transition from a low-volume, high-value hardware business to an annuity and licensing based revenue, high volume, lower unit cost product business model.  As previously announced, for the full financial year ending 30 June 2016, the Company expects total revenue to be significantly higher than last year due to the one-off Caterpillar license fee of A$21.85 million. Excluding this revenue, the Company expects other sales and service revenue to be lower than the last full year, reflecting the above transition of the business and its change in revenue profile. The Company has continued to invest significantly, including a proportion of the funds raised from V S Industry Berhad (VSI) as announced on 22 March 2016, in the fleet and automotive markets, and the receipt of the Caterpillar license fee in this financial year ensures that the Company is expected to deliver a stronger trading performance compared to the prior year.

Fleet

Sales in the Fleet business continue to develop momentum as the Company executes its market-entry strategy.  The business is currently managing a record number of Guardian product assessments that include major carriers on a global scale, including the US. The Company is exploring opportunities to partner with fleet telematics companies to develop an integrated driver monitoring and safety product, combining Seeing Machines' technology and their telematics features. The Company is in active discussions with several global telematics providers who have over 1 million connected trucks combined.

Automotive

As previously announced, the Company has been working on strategic and commercial options to maximise the value of this substantial market opportunity. This will enable us to capture more automotive business more quickly to maximise returns for our shareholders. The Company has signed a term sheet for a US-based investment firm, with significant experience in automotive technologies, to make an investment into a separately funded company, solely focused on commercialising Seeing Machines' technology in the automotive market.  Under the agreed terms, Seeing Machines would license its relevant intellectual property and contribute its automotive-focused staff and assets to the new company.

Seeing Machines would retain a significant equity stake in the new company.  The term sheet is non-binding, except for customary exclusivity and confidentiality obligations. Seeing Machines and its advisors are working with the lead investor to complete due diligence and implement the term sheet, as well as continuing discussions with other investors to join the investment round.

In the meantime the Company is continuing to develop and deliver a driver monitoring system (DMS) to a global car maker for a first-generation product launch, now expected on the road in 2017, and a second-generation order for 2018-19.

Aerospace

The last quarter at Seeing Machines' Aerospace has seen significant growth in terms of capability, profile, engagements, activity and reach.  The Company is continuing to provide our cutting edge technology and solutions to support a major aircraft manufacturer in the development of a state of the art Aircrew Training capability.  Some of our new engagements across the industry include: Carriers from the Freight, Commercial and Helicopter segments, and potential engagements with Air Navigation Services Providers, supporting training and operations within the high growth industry of Air Traffic Control.  The Company also has an increased exposure to military aerospace engagements, initially in support of training services within a simulated environment.

By the end of this calendar year the Company expects to have our capability and solutions deployed in Aircraft and Air Traffic simulators across the US, UK / Europe, UAE and Australia.  As we continue to develop our capability and global footprint, we are working closely with the relevant regulators in each of our regions as we evolve from aftermarket solutions and embedded solutions towards our ultimate target of mandated aerospace systems, both simulated and operational.

Rail

Working in close collaboration with Progress Rail and EMD, our human factors experts and product teams are jointly designing and developing a rail specific operator monitoring solution. Trials are underway with three railroads and are returning positive feedback from the industry.

Enquiries:

Seeing Machines Limited		www.seeingmachines.com  / [phone]
Ken Kroeger, Managing Director and CEO		[e-mail]
Media inquiries: Adrian Dean		[e-mail]
	finnCap Ltd, Broker for Seeing Machines
	Ed Frisby / Emily Watts, Corporate Finance	[phone]
	Joanna Scott, Corporate Broking
	Newgate, Investment Communications for Seeing Machines
	Robyn McConnachie Bob Huxford Adam Lloyd	Tel: [phone] / Mob: [phone] [e-mail] Tel: [phone] / Mob: [phone] [e-mail] Tel: [phone] / Mob: [phone] [e-mail]

About Seeing Machines

Seeing Machines, (AIM: SEE) is focused on operator monitoring and intervention sensing technologies and services. With more than 15 years of experience, Seeing Machines uses advanced detection and prevention safety assistance technologies to track eye and facial movement in order to monitor fatigue, drowsiness and distraction events, such as microsleeps, texting and cell phone use as they occur, while providing for a real-time intervention strategy, which improves operator, driver and environmental safety, preserves assets, and reduces risk. Seeing Machines' technology is used worldwide across the automotive, mining, transport and aviation industries; as well as many of the leading academic research groups and transportation authorities. Seeing Machines is headquartered in Australia and has offices in Tucson, Arizona and Mountain View, California. The Company counts Caterpillar, Electro Motive Diesel, Boeing, Takata, SEMCo and Eye Tracking Inc among its customers or partners.  

 

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