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Seeing Machines Limited: THE INVESTMENT CASE

Seeing Machines is opening eyes with its technology

"Trains, planes and automobiles" - it's the name of a classic John Hughes film but it might also be a good title for the story of Seeing Machines
Big lorry
Keep on truckin'

It has been a good year for shareholders who kept the faith with driver fatigue monitoring technology firm Seeing Machines Limited (LON:SEE).

The shares started the year at 5.625p and currently trade at 9.25p, following a succession of positive news announcements.

The most recent was an announcement of a workshop aimed at improving the training of aeroplane pilots.

Three aircraft operators - Emirates, Qantas Airways and FedEX Express - attended the two-day workshop in Dubai to explore the use and benefits of eye-tracking technology in pilot training and performance monitoring.

Patrick Nolan, the general manager of aviation at Seeing Machines, said having “key industry leaders” at the workshop had demonstrated a commitment within the aviation industry to “adopt technology that will enhance safety and support critical training requirements in their organisations and across the sector”.

The workshop was another example of the company’s diversification away from its historical core market of providing fatigue monitoring systems for drivers working in the mining industry.

In short, this technology is too useful to be restricted to trucks, lorries and vans; it needs to be part and parcel of the car production process.

Car industry giants are keen to collaborate​

That’s not just Seeing Machines’ view; six Tier 1 manufacturers and four original equipment manufacturers (OEMs) have signed contracts to incorporate the company’s FOVIO driver monitoring technology into multiple vehicle platforms.

Among them are General Motors and two unnamed German original equipment manufacturers.

“The space is moving incredibly quickly. In September at the Frankfurt auto show we had two major legislative events occur even as we were displaying our technology,” the chief executive officer, Ken Kroeger, told Proactive Investors.

“We had the National Transport Safety Board in the US release a report on some semi-autonomous accidents.

“Tesla also stated that driver monitoring was a critical factor and urged the auto manufacturers to look at camera-based technologies specifically to make sure that the driver is in position to take control of the car and paying enough attention to driving.

“In Europe, Euro NCAP (which assesses the safety of new cars) stated it expects to mandate camera-based driver monitoring in cars if manufacturers want to achieve a five star safety rating by between 2020 and 2022.

“For us, that has meant heightened interest from major OEMs looking for solutions as to how they are going to do that,” Kroeger said.

Mention Tesla and people think of driverless cars, or autonomous vehicles if you prefer.

The levels of autonomy range from level 0 to level 5, with level 0 being when you hear a beep as you approach an object when reversing and level 5 is when the steering wheel becomes superfluous.

In between, you have adaptive cruise control (that keeps your car at a constant distance from the one in front), which would be Level 1, while level 2 allows you to take your hands off the wheel while driving.

“GM’s Cadillac CT6 is the world's first car that allows you to do that,” Kroeger claimed.

Technically, all cars allow you to do that; the CT6, however, ensures you don’t crash into a wall when doing so.

“So our job initially is to make sure that those autonomous systems - until they mature over the next 15, 20, 30 years - know that the driver is there to take control at extremely short notice if that's required.

“That’s really the play right now, but we are already being pulled into more convenience and comfort features around the driver and driver controls such as the human/machine interface and so on,” Kroeger revealed.

A fleet manager's dream​

Of course, the technology still has a big part to play in the lives of those who drive vehicles for a living and is a boon to fleet managers.

“Our fleet fatigue risk mitigation technology is now being installed into commercial transport vehicles and, interestingly, the footprint is growing internationally,” Kroeger told Proactive Investors.

“The size of the customers is also growing, with a lot of interest in passenger-carrying coaches including trams in the UK, which was a great success in a trial in London,” he added.

“Customers and deals are getting larger and we are moving into countries such as New Zealand, Thailand and the US,” Kroeger noted.

Total sales revenue for the Aussie company in the year to the end of June 2018 was A$30.7 million, up 127% from A$13.5mln the previous year.

Revenue momentum accelerated through the year with sales in the second half being more than 9% higher than in the first half.

Gross profit increased year-on-year, albeit from a negligible base point, with the increase attributed to a greater proportion of the revenue coming from the high-margin Automotive, Off-Road and Rail markets.

Fleet margin also improved year-on-year due to the high-margin fleet monitoring monthly recurring revenue from its growing connected customer base.

The margin for the group as a whole was affected by the previously announced delays to shipments of the Fleet Guardian Gen 2 driver monitoring product and the higher-than-expected hardware costs associated with the product.

“We were a little bit at the mercy of the vehicle owners, as installation requires the vehicles to come off the road, but we are learning about the co-ordination and the timings,” Kroeger admitted.

Seeing Machines said that despite the delays to shipments, more than 5,500 units have now been shipped to distribution partners.

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