Seeing Machines (LSE:SEE) — FY2023 Results Presentation

0:01 Good morning, and welcome to the SEEING MACHINES LIMITED Full Year twenty twenty three Results Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted any time via the Q and A tab situated in the right hand corner of your screen. Just click Q and A, scroll to the bottom, type your question and press send. Due to the number of attendees on today's meeting, the company won't be in a position to answer every question received during the meeting itself. I hope the company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Paul McGlant, CEO, Martin Ives, CFO. Good morning.

0:33 Good morning. Thank you. Well, this morning, Martin and I will take you through the results for FY '23, which I know everybody's seen already, But we'll give another layer of detail, which I'm sure will be helpful in understanding exactly what's going on, what we're focused on. And importantly, today, we're gonna give some insight into how our business will develop between now and financial year 2026. As as you would all know, it would be the first time that we've presented a bit of an outlook, and we think now is the right time to do that. But getting on, what's what is going on in our business that really has the potential to move the dial? Well, I've spoken before about the change in revenue, the change in mix that's driving higher margins.

1:25 This is essentially the quarter on quarter increase in automotive royalties as cars start to hit the road. They come out of their engineering project environment and into the real world. And that drives high margin royalties, and we will continue to see significant quarter on quarter growth in those royalty streams for business already won right through towards the end of FY twenty seven. And of course, they will continue beyond that date. Our fleet product has really improved over the course of the last two years despite the supply constraints that we've had. They're largely sorted now, so we're not too worried about that. We're at well over 50,000 connected units, which deliver a really important cash flow into the business.

2:22 The monthly recurring revenue is very, very stable, has a churn rate, as I've said before, of less than 2%. And we continue to grow at percent, circa 30%. Now in Europe, GSR is causing all vehicles to require systems that can detect fatigue and distraction. And this has opened up a a new market for us. And it's a new market that's very significant. And still, there are very few competitors that can tick the technical boxes. Perhaps more so in the short term, but over the long term, the requirements of GSR continue to increase as they do with Euro NCAP.

3:07 So the launch of our generation three product is a very, very important milestone in the history of the company. We expect it will deliver significant growth and expanding margins just as our automotive business is starting to do over the course of the last year and looking forward. So that's a really important new initiative for us. We're expecting to have our kickoff launch CES, and we're expecting to move into an environment fully tested where we can get into higher volume production in the March to April timeline. What is interesting about this product and the first target market that we're going after, which is European GSR, we're already starting to see purchase orders flow in for a product that will be delivered, say, six months from now.

4:06 Now this is a really important difference between operating fleets, which has been our core business up to now, and dealing with truck and bus OEMs. So they're taking a more structured view, looking at purchasing equipment to manage their production schedules. And it's my view that this new environment will deliver really important benefits to the way we are able to forecast, but also really important benefits in supply chain with lower working capital demands and the like. So this is this is a really important step for us. In aviation, we recently announced our relationship with Collins, and we are working very, very closely with them.

4:54 You will have noticed also an announcement that we've kicked off our first program of work, which is a significant program of work, developing the proof of concept, which will ultimately be marketed to all participants in the aviation value chain. So this is a really important part of that equation. The business that we announced today is in addition to the license values that we reported a couple of months ago. So aviation is now well and truly on its way with Collins, and we're delighted to have them as a partner. The other area that I wanted to call out, and you might imagine that we given the the increase in scale that we've experienced over the last two years, that this would continue, and that is we're focusing on really the digital enablement of our business processes.

5:47 You know, if we're gonna move our fleet business from what was a couple of years ago, 15 or 20,000 to a 100 or 200,000 over time, That's obviously a very significant upscaling. And in order to do that, we need to automate effort internally, and we need to automate the way our distributors and end customers communicate and interact with us. And that program, which is what we're calling the digital factory, is well underway for initial kickoff this calendar year. The other area that is driving material improvements in in performance or or productivity is that we're starting to see a a world where we're getting more and more reuse out of our core engineering platform.

6:39 And, you know, over the last two years, we've been heavily investing in the development of an additional 50 plus new features. That's coming to its natural conclusion. And whilst that won't be the end of feature development because, really, that's what we do to gain incremental value, we do see that we we are and will continue to get more reuse and platform benefit from the features and the software that structures that we currently have in place, which is really important. Moving on now to the regulatory environment. This is a space where we have really immense pride, to be frank. I mean, we were instrumental in setting up the technology that's enabled the Euro NCAP five star rating and what's going on now today with GSR in Europe.

7:33 We've continued to stay involved

7:37 with NCAP, Euro NCAP, and and do so to this very day. We've shifted our emphasis into The US, and we're working with a whole range of of regulators, academic bodies, researchers on things like the specific wording to go into legislation,

8:04 exploring our technology and evidencing its capability with these regulators. We're in third party arrangements with academic associations and regulators in The US using our technology. And all this is designed to have a stronger voice in the DMSOMS environment to help craft what the regulations and the legislation ultimately lays down as requirements. And we're we're really pleased that, you know, some of them, like like SEEING MACHINES from FISHWIC, Canberra, listed on AIM, can have such an influence on global regulations, but it is in fact the case.

8:49 And to put that into perspective, if we consider the key players here, you know, NHTSA, NTSB, US National Distracted Driving Coalition of which we're a party, and many others. We've had more than a 150 meetings over the last two years with peer decision makers in order to enable them with the the technical know how to make good decisions around what should come next for driver and occupant monitoring. And JT Griffin and Mike Linea have been leading this for us in The US, and it's something that we will continue to invest in because whilst it benefits everybody, we think being a leading voice in the design of legislation and the definition of how technology needs to perform to deliver legislation is mission critical important, and we'll continue to do that.

9:57 So just on the market opportunity, most of this is known and we've mentioned it many times, but I just want to zero in on two numbers on this page. And that is, you know, third party automotive analysts are predicting a DMS fitment rate by the end of calendar two thousand and twenty seven as opposed to financial of 54,000,000 vehicles. And I've said before, we'll repeat again today, that we're at about a 40% share by volume and probably a little higher by value, and we expect that to continue. So the addressable market for us in auto, the place where we derive the royalties that I spoke about, is really strong. The second area, and this is by no means the total addressable market for fleet because as everyone would know, it's predominantly for fleets that are up and running in operation. And it's well and truly a retrofit where you have to take the vehicle off the road, fit and then release.

11:00 This new market driven by GSR in Europe. In Europe alone, there are 330,000 new commercial vehicles manufactured per year, or certainly in FY 2023.

11:13 Now, that's a market that didn't really exist for us in the past, and it's new, and it's time bound. So from 2024, there are requirements on all vehicle manufacturers to embed technology like ours. There aren't many competitors. In fact, there are very, very few. And, you know, we it's it's hard to say as we sit here what percent share we will take of this new European market. But, needless to say, we're already receiving POs, and that's really, really unusual. So it augurs well for what might happen towards the end of FY twenty four and throughout FY twenty five and beyond.

12:01 So So just to auto now for a minute, and I've presented these numbers before, but just on the left hand side, we can see, you know, the increase in the vehicles on road that are using our technology, and that's having an impact on on safety, without a doubt. 143% increase over the last twelve months with six OEM programs. We've got roughly double that number to be rolled out over the course of the next two years. And so we expect that that quarterly run rate chart on the right hand side to continue to increase, as I mentioned earlier. This is a really important factor in what's driving the margin shift and ultimately the cash flow generation of our business.

12:56 So if we boil that down to, I guess, more gross annualized numbers still in financial year rather than calendar, we can see that the line at the top, the dotted straight line, is the forecast for fitment of DMS year by year out to 2033. And then you can see here that the volume that we've already won, and that's of the $3.20 odd million US dollars of business already won. And then our expectation of volume that we will win on top of that. And then the black chart, that that's what we expect to receive in terms of RFQs between now and 2033.

13:45 But just the first two bars lead you very quickly to the conclusion that as as as you observe this picture with the quarterly picture, that we are consistently moving towards significant revenue and therefore cash margin from automotive. And Mark will analyze that a little deeper as we go further in the presentation. So on Guardian, I mentioned this also before, and to some extent, I think this is conservative because we're really unsure of what the ultimate take up rate and market share position will be with GSR. I mean, it's not the only market that we're going for, obviously. We have our traditional markets. But we do expect at least a 2.5 times increase in connected units between now and 2026.

14:43 So that starts to become quite a material number in terms of the recurring cash flow, the margin expansion from both hardware, given that the Gen three unit has a significantly lower unit cost of development, but also increasing margin through services as we digitize service delivery. So we feel really good about our position here, and we're ready for scale. I'll hand over to Martin now, who'll take us through what I hope will be really interesting and exciting part of the presentation, which is our outlook. And over to you, Mark. Cool. Thanks, Paul.

15:26 What I what I'd like to do here is just kind of talk through the impact of some of the drivers that Paul has talked about and how that impacts revenue as we go out to f y twenty six, and then the impact of that on on margins and the cash flow generation of the business. So you can see here in the left hand chart on the slide the current breakdown of revenue in f y twenty three. So $58,000,000 broken out across the three business units, 31,000,000 for aftermarket, 26 for automotive, and just under 1,000,000 for aviation. And traditionally, aftermarket has been the main revenue driver for the business. But in the current year, we've seen a significant increase in the revenue generated by automotive.

16:17 And with that, higher value or higher margin revenue streams, which are impacting the gross profit of the business. Now as we see how that moves into f y twenty six, and combined with our expectation that in the f in the year f y twenty six, we'll be generating at least a $125,000,000 of revenue, we see the automotive business taking up around 45 to 50 mill 50% of that revenue stream. And the way that I kind of think about this is is to break it out a little bit more simply is automotive with 60,000,000, aftermarket with 60,000,000, and aviation with 5,000,000 to make up the 125.

17:02 Now with the automotive business, largely, that's gonna be coming from the growth in royalties. And by the time we get to f y twenty six, looking at the the the slide two slides back, you can see from the awarded business that we'll be getting around six and a

17:20 half to seven and a half million units from business that has already been awarded. Now that is based on the minimum lifetime volumes at the start of the agreements with the OEMs. So there is some upside in those numbers if production is increased. We also have about 10 of the overall number, putting us up to, in total, around seven and a half to around eight and a half million units from RFQs that are currently in play and with the expectation that they'll be awarded at some point before the end of the calendar year. So that will generate somewhere around $55,000,000 of royalties for the automotive business, with the extras 5,000,000 to make up the 60 coming from the continuation of of NRE.

18:13 Now in terms of how you a a good way to be able to track that over the period to f y twenty six is looking at the quarterly KPI numbers. And in order to achieve those volumes, we'll need a compounded growth rate on a quarterly basis of somewhere around 23%. And when you go back and look at the KPIs over the last twelve months, that's roughly around what we've been able to achieve. So we need to continue with that momentum over the next twelve quarters to the end of f y twenty six to be able to achieve those numbers. Moving on to aftermarket. I see the the $60,000,000 there being broken out around $30,000,000 worth of hardware revenue and around $25,000,000 worth of services revenue for the monitoring of the connected units.

19:05 An additional 5,000,000 there probably split between a small amount of NRE and also the royalties that we received from Caterpillar for the sales that go into the mining verticals. Now this is a little bit more difficult for us to forecast what we would expect to achieve in f y twenty six, largely because of the significant opportunity that Paul talked to earlier around the the GSR requirements for commercial vehicles. So with annualized production of around 330,000,000 units, we're just expecting here conservatively somewhere around 10% market share of that of that new opportunity that would mean for us around 33,000 units.

19:57 On top of what we are currently doing across Asia with our gen two products, which by the time we get to f y '26, we'll we'll change up to the gen three product, and then also expansion into North America where we've been setting up a direct sales channel.

20:16 So in total, we feel that that will get us to somewhere around 45,000 units and generate around 30,000,000 US dollars of revenue. Another unknown at this point is of that GSR opportunity, how many of the purchase units would take up monitoring services. It is possible to meet the GSR requirements with a closed loop system within a cabin so that there would be alerts generated, whether that be a beeping noise by the unit itself or vibration under the seats. And that closed loop unit wouldn't require any monitoring services. But we're expecting a take up or we've we've modeled a take up rate of around 50% of all sold units over the course of the three years through to f y twenty six to get to around a 110 to a 120,000 monitored units with around $25,000,000 of revenue.

21:16 In terms of aviation, you would have seen the announcement that went out this morning about the the the development work for the first generation products. That will see us through till around the end of f y twenty four with a a second phase of development being done through f y twenty five. So the f y twenty six number of around five to 10%, so that's somewhere between 6.5 to $13,000,000 worth of revenue is largely gonna be coming from royalties at that point. So it's the start of the royalty streams that we would be seeing from the sales of the the first generation and Ladies and gentlemen, do bear with me one second. So we look to just lost connectivity.

22:12 Bear with me one second, please.

22:26 Second generation units, which would be Ladies and gentlemen, do bear with me just while the team reconnect to the platform. Ladies and gentlemen, do please bear with me. If you can just click on the link, and we'll get you back through.

22:56 Guys, we have you back. Sorry. We lost you momentarily there. You're back. We can hear you perfectly well. Thank you very much indeed. Okay. Thank you. So now just to talk through what what does what does this mean from a not just from a revenue growth perspective, but then also through to gross profit. And we see the current the current split of the the the the types of revenue that we have on the left hand side chart in FY twenty three, which is a a significant component of of NRE and hardware. Now that hardware is our gen two unit, which is a a a lower margin product than we will we'll have with the gen three. And then NRE, which currently is undertaken particularly on the auto side at a at a very low margin.

23:45 Now the NRE, by the time we get to f y twenty six, becomes a a much less significant part of the revenue streams, and the royalty streams, which currently are less than 20%, by the time we get to f y twenty six, will be around 50% or slightly higher. Now the the the benefit for for gross profit and royalties is that all of the royalty revenue largely drops through to the bottom line given that the development work that's done prior to the the production starting has all been expensed or has been capitalized and then will be amortized over the the the life of those projects and and that technology. So the out the outcome of this is that in f y twenty three, we have a gross profit margin of around 50%.

24:33 As we go through to f y twenty six, we're estimating that we would have a gross profit margin of coming up to, if not 70%. So a significant increase not just in revenue, but also in the the gross profit margin achieved on those revenues. Now the pathway between there and f y twenty six, we'd we'd expect in f y twenty four to have a a small increase in the gross profit margin, a more significant increase as we go into f y twenty five, and then the final step going up to 70% as we go through into f y twenty six, and we get a significant increase because of the royalty revenue streams that that come through. Now in terms of the operating cost, just final I'll just finish on the outlook by going through into the the operating costs and the impact on cash overall.

25:33 We don't expect to require a significant increase in costs in order to achieve the revenue growth and the gross profit in f y twenty six. As Paul mentioned, there's some work that has been undertaken to ensure that we have the infrastructure and the processes to be able to scale, particularly on the aftermarket side. Most of those costs were incurred in the latter part of f y twenty three and also in the start of f y twenty four, but we don't feel that there'll be a requirement for additional costs as we go further into f y twenty five and '26, and we will start to see the benefit of the efficiencies that come from the digitization of those processes.

26:20 Similarly, we don't feel that there will be a significant amount of NRE needed to be able to achieve, the production royalty targets that we have for f y twenty five and '26 either. So I'd expect to see a a slight increase in costs as we go into the first part of f y twenty four, and then that would start to reduce, in the second half of f y twenty four and then into f y twenty five. And we've talked about previously how we've set up our r and d, resources in a flexible way so that we could increase or decrease requirements or or resources as and when the requirements change. So as we go through into '24, '25, and '26, we we would see revenues increasing.

27:09 We'd see costs stabilizing, and the impact for that on cash is that by the time we get to f y twenty six, we'll have a cash margin that would be in double digits. The impact in our cash burn rate as we go through f y twenty four, particularly in the second half, would be that it would decrease and that we would be in a position with the growing revenue streams in f y twenty five that we'll get to a point where we're cash flow breakeven, and we have a cash flow breakeven run rate during f y twenty five. I'll talk a little bit more about that when we go through the next part of the f y twenty three results. Now given that much of this information had already been provided in the trading update, I'll just focus on a a few areas and take it as read, and maybe we can go through some of the q and a about specific items of the f y twenty three results.

28:05 But I think it's important particularly to talk about the the balance sheet strength and the and the cash flow, particularly with respect to the supply the the working capital and the impact of that or the the impact from the supply chain and how we see that unwinding as we go into f y twenty four. So at the end of, at the end of June, we had just over $36,000,000 worth of cash. And largely, that reduction in the cash balance was was due to a buildup in working capital of around $16,500,000 in the second half, around $20,000,000 overall in the financial year, which came from the the timing of when we had the the Guardian gen two units delivered to us for the aftermarket business.

28:56 So in the twelve months prior, so the end of or the final half of f y twenty two and the first half of f y twenty three, we had supply chain shortages, which meant that we didn't have any stock to sell. So we committed to ensuring that we had sufficient stock through the the second half of f y twenty three. A significant portion of that stock was delivered in the in the fourth quarter. We were able to meet the backlog of demand that we had that had built up over that previous six months with many of those deliveries going out towards the end of June. So what that meant is that we had a buildup in our receivables balance where we'd sold units and not yet collected the cash.

29:41 And we also had a buildup in the inventory, which we had already paid for, but would which meets the demand requirements that we have largely for the first half of f y twenty four and going into the first part of the second half. So we expect that that inventory balance would be largely unwound by the time we get to the end of the third quarter in FY twenty four, and we'll continue from that point on with a a significantly reduced inventory balance of gen two units. As we go into production of gen three and the sale of the gen three units, it's a it's a it's a much more forecastable sale into the OEM market in The EU. Given that what we're doing is we're meeting the requirements or the manufacturing schedules of those OEMs, we'll be able to plan out much more effectively what stock we're going to require from our suppliers and the production schedules that we have that aligns with and matches with the OEMs that we'll be selling to. So that will enable us to run a much tighter inventory schedule and and management process and keep that working capital investment at a much lower level.

30:59 The receivable receivables balance has started to unwind as we go into the or we've gone through the first quarter of f y twenty four, and that will continue to unwind as we go through to the end of the first half. Now I expect that we'll have somewhere around 15 to $20,000,000 of unwind from that working capital, throughout the course of the year, with somewhere around 70% of that being in the first half and around 30% being in the second half. And you can start to see the impact of some of that as we look at the cash balance at the end of September, just under $31,000,000 So we've had a $5,000,000 reduction in cash for the for the first quarter.

31:45 Now our normalized burn rate, so that's taking away the impact of the working capital movements in the second half of FY twenty three was around $3,000,000 per month. I expect that that's gonna slightly has slightly increased on normalized basis in the first quarter. I'd expect it to level off at around $3,000,000 in the second quarter. And then as we go into the second half of f y twenty four, it would then start to reduce to the point where we'd be getting to, an average monthly burn rate of somewhere between 1 and $1,500,000, for q four of f y twenty four with the expectation that we'll be with a cash position in the high single double digits, potentially up to $20,000,000, which will put us in a good position to breakeven from a cash flow run rate perspective during f y twenty five.

32:44 And if we meet those targets that I talked about there towards the end of f y twenty four, I would expect that to be in the first half of f y twenty five. Now I'll leave the majority of the the the slides reviewing f y twenty three performance with the exception of the automotive chart. And one thing I just wanna talk about here is the impact of the license revenue from Magna. So in f y twenty three, that contributed around $10,900,000 of revenue. As we go into f y twenty four, that will probably be around 3.5 to $4,000,000 for the year. So it's a a significant reduction.

33:33 In terms of the revenue growth, if you strip out the the the the impact of Magna Magna in f y in f y twenty three, I think the the revenue growth from the automotive business was around 20 was 54% still. And for the SEEING MACHINES company, around 20%. Now as we go into f y twenty four, we will probably refer to the underlying growth in the automotive sector just so that it gives people a a better idea of how we're tracking in terms of getting to those numbers in FY twenty six. Close off with Paul with the FY twenty four outlook. Hey. Thanks, Martin. So FY twenty twenty four is a very important year. We're one quarter down, we feel good about what's ahead of us in terms of the next three quarters. What we are expecting is a doubling of the automotive production units and therefore royalties.

34:32 That's really important. We expect that to continue at that run rate out to 2027 also. But in terms of 2024, we're we're confident of a doubling of royalties in that area. We're looking at a 25% increase in connected units for Guardian. As as we've said before, it's a bit unknown what GSR could deliver for us. We're making the switch between gen two and gen three. We still have significant market for Gen two, by the way. It's very important to our relationship with Caterpillar, at least for the next three to five years, so that will continue. And we expect to get a better handle on our ability to forecast this new market by the end of this financial year.

35:21 So as I've said, launching at CES, moving to full run rate production March April timeframe, processing purchase orders into sales that we've already received and will continue to receive through the course of this next six months. Aviation, really important. The announcement this morning was the first project in addition to the exclusive license arrangement that we mentioned a month or two ago. So that's now well and truly on track to begin to deliver and contribute to the business in a meaningful way, Even at a 5% to 10% contribution by FY 2026, it will be a meaningful margin contributor.

36:09 The monthly cash burn will be reducing over the course of this year and throughout FY '25 to get us to the profitable position that Martin mentioned. Now what's important here is that several years ago, when we were gearing up and increasing the cost base across the board in order to deliver what we had in front of us technically. We did that in what what I think is a responsible way. We used a range of different collaboration partners. We outsourced wherever we could, and and we continue to to operate that way. Now if we consider those methods of operation, that affords us significant flexibility going forward in terms of being able to manage the supply demand relationship in our cost base. So we're well set to be able to capitalize on that where we need to.

37:07 And we'll just reiterate the cash run rate breakeven by FY 2025. Point of inflection, I mentioned this before. We've got this crossover in revenue to more high margin royalty revenue streams. We've got increasing margins from hardware and fleet. We've got increasing margins by a reduction in our cost to serve in fleet, driven by automation or digitization. And we expect to be able to demonstrate those improvements throughout the course of FY 2024, which hopefully will give significant confidence into what we're saying is our twenty sixth outlook. Thank you. Fantastic. Thank you very much indeed for the presentation. I'd like to remind attendees that recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via investor dashboard.

37:58 Let's move on to some questions, please. We have received a number of questions, and thank you to the investors who submitted those today. I did look to focus around several things we look to address. And just to remind you that due to the number of attendees on the call today, the company won't be able to answer every question received. Have a review of questions submitted today, we'll publish responses where appropriate to do so. Right. The first question we've got, and we've had a couple in, just around the theme of profitability. When we're seeing machines reach profitability? Thanks there, Nick. I'll I'll I'll I'll maybe answer answer this in a in a couple of ways. I think the the thing that we're most focused on right now is getting to the point where we are we have a a cash flow breakeven run rate. Now as we discussed, we expect that that is gonna be during f y twenty five depending on how successful we are in maintaining our cash balance during f y twenty four and getting to a a cash burn rate during the the final quarter of f y twenty four to that 1 to $1,500,000 a month mark, I think that would mean that it would be towards the end of the first half of f y twenty five that we would end up in that breakeven position.

39:15 I think through the period the taking the full period of f y twenty five into account would likely just be cash flow positive for that full year and then be in a fully, you know, cash positive position as we go into f y twenty six. Now what that means in terms of, you know, accounting profit or or EBITDA, I think from an EBITDA perspective, statutory EBITDA, it's likely to be f y twenty five as well. In terms of statutory profit after tax, one of the things that we would need to take into account is that we'd likely start to recognize tax losses on our balance sheet at some point during f y either late twenty four or in f y twenty five, which would put us into a a a profit after tax position.

40:04 But I I think the thing that we're focused on, I'll re reiterate again, is that cash flow breakeven, and I think that run rate will happen during f y twenty five. And and hopefully, that's something that we can report when we get to our half year results for for f y twenty five. That's great. Thank you very much indeed. Next group we've got really around RFQ. Please, can you clarify the RFQ process for the automotive program? Yeah. Well, RFQs are received via a t one from an OEM. So they're managed by the t one. And of the RFQs that we've been talking about, probably for the most part of the year that we expected would be awarded in early January, decisions were taken by the OEMs, not the tier ones, by the OEMs to rethink essentially the technical strategy, given the complexity of what had to be done in a very short time frame and essentially, reproduce, RFQs that accounted for this different range of technical options.

41:16 Now we're a we're a participant in that process. We don't lead it. We don't drive it. We're involved in the technical discussions with the OEMs and obviously the tier ones. A 100% of the commercial discussion is with the tier one, and the the sales process is driven entirely by the tier one. That's always been the case. And it's, I guess, more pronounced now that there have been a number of RFQs that have been delayed as as I've discussed. And, you know, we we are still confident that they will be awarded because they must be. And those numbers are reflected in the material that we presented here this morning.

42:05 Next one we've got is around rail. Can you provide an update on the rail opportunity? Look, years ago, we we had an arrangement with Progress Rail, which was a division of Caterpillar. That proved in the end to be nigh on impossible to get off the ground. So it it took back the exclusive nature of that. And as it happens, we're in the midst of a range of trials with rail providers as we speak. So it's really a relaunch of rail, and we're managing the relationship this time around directly as opposed through the likes of a distributor like Progress.

42:58 And it's effectively a new market for us. Fantastic. Thank you very much indeed, Paul. Okay. Next one's around the college arrangement. Could you give an overview on this? How do we expect to oh, how's the awards managed? Well, they're gonna be managed in a similar fashion to automotive awards. Commons are are the tier one in essence. They're the systems integrator. So we provide a lot of technical input. We're working on the proof of concept as we announced this morning. We did bring to the party a whole range of highly developed relationships with regard to our tech in consoles, in in aircraft, and in simulators.

43:47 And so they essentially become warm to hot hot leads. But Collins will take full responsibility for sales and management of the venue's customers, and we'll be participating from a technical perspective along the way with Collins. But the the the responsibility for sales is is well and truly with the Collins team as the owner of the customers. Fantastic. Thanks, Paul. Also around listing plans, what are your listing plans? What are the listing plans for SEEING MACHINES going forward? Look. I I guess it depends on what happens with the trajectory of that business and what happens with world markets.

44:37 The one thing's for sure is that we, as a company and an executive and a board review from time to time exactly where we're at, what's going on, you know, are we in the best place we can be, other things that we can do differently. So this kind of review is a semi regular event for us. We're about to undergo the same process again towards the end of this calendar year. And, you know, based on our our combined view plus the view of the advisers that we bring into this discussion, we'll we'll take a decision on on on that. I mean, all things being equal, we still think we're about a year away of having any scale that would facilitate a successful shift to Nasdaq, for example, if that if that's the question.

45:36 But all of the things that we're doing are with that kind of event in mind, whether that's the exact event or not, time will tell. The the scale isn't quite there just right now, and markets aren't quite there just right now. But it's something that we we take a very serious look at on a a semi regular basis, and we'll continue to do so. That's great. Thanks very much, Paul. Something you have touched on, think, Martin, you touched on this, but kind of a couple of questions again just blending into that theme of fundraise. Are you confident that you won't need a further fundraise ahead of cash flow breakeven and should breakeven shift further than our cash or working cash where we seek debt rather than future shareholder dilution? So I I I think I kind of go back to one of the comments that I I made earlier that that our priority is getting to that cash flow breakeven position.

46:35 You know, one of the one of the things, you know, that we need to navigate is the requirement for us to do continued development and particularly research so that we have technology being developed that isn't just meeting the current RFQs, but also the RFQs that we'll receive that will be generating revenue for us through to the end of f y, 2030 and onwards. And that's something that we need to we need to balance what we're investing in research from that perspective versus hitting our cash flow targets. Now if we got to a point where we felt that our cash flow breakeven point was in jeopardy, then we have other levers that we can pull from a cost perspective, which would enable us to keep on track in terms of breaking even from a cash perspective.

47:28 So for for our our plans are all centered around being able to achieve that. So, yes, we do have the funds needed in order to achieve that breakeven point. Now in terms of whether we would look to to to raise additional debt other than the the Magna convertible note that we have, I think it's unlikely that we would have any structured debt. But there are particularly with the the the kind of blue chip customers that we have, we may be able to get something like a receivables funding that would provide us with a a short term benefit from a cash flow perspective.

48:13 But I I think that would be the limit of any debt that we would consider. That's great. Thank you very much indeed. Next question. Any comment around the AIS aftermarket after manufacturer offer from Smart Eye for trucks and heavy vehicles? Are they a threat to our Guardian solution? Well, you know, it's a big market. So and there are lots of competitors of different types in different places with different capabilities. I think if you analyze our products side by side, you you can very quickly come up with some key differences. So it's not really for me to say whether they're better or worse, but, you know, their their new product is still a two box system, and your product will be a single box system.

49:03 Uniquely, we have this twenty four seven connected environment. Now from a a metrics perspective, we know that by by having this additional service that we provide, we improve the reduction in fatigue and distraction risks from something like sixty odd percent to 90 odd percent. Now that's a 50% improvement, and that's why our product has a churn rate of less than 2%. Because once a company has experienced that kind of impact, typically, no one's gonna put their hand up to say, let's stop doing this. So so, look, we think we're really well positioned.

49:49 Certainly, we're not gonna be the price leader. We're not gonna be the guys going to the small end of town offering the cheapest product. We we we don't do that in auto. We don't do it in our fleet product today, and we won't do it into the future. But what we will offer is an appropriately priced product with a unique service that has a profound impact on risk. And I think in balance, that will position us well. But there will be other competitors, whether it's Smart High or or anybody else. Great. Thanks very much, indeed, Paul. What have we got here? Gentex has shown a mirror solution. Any comment on what that means for the Magna based solution? Might this go legal, or are they approaching it in a different way? Gentex have been in mirrors for a very, very long time.

50:39 And and and so I suspect there's, you know, nothing like a legal conversation we had. They'll be developing their own technology. And, you know, they'll come a day when they have a good product. I'm absolutely certain of that. So, no, it's just a normal competitive response. I think we've provided Magna with a head start. And, you know, it'll be interesting to see how that unfolds over the next cup couple of years, but I think they're very, very well positioned. Okay. Thank you, Paul. We've got one here. Says, at the town hall last year, it was implied that several post production GC contracts for 50 to a 100,000 units each are expected to be won to coincide with its launch. Is that still the case? Are we still hoping for a step change in fleet on launch of g three?

51:30 Yeah. We are. Now those those contracts are kind of the discussions around those contracts are multi year. So this is what Mark was explaining. One of the big benefits in dealing with an OEM as opposed to a fleet manager is that they have a production schedule. So we we fully expect to be engaging with an OEM that is satisfied with our product and then entering into a multi year production relationship as opposed to sort of a one off sale. So as I said earlier, we've started receiving purchase orders from European customers already. We expect that that will continue because in the first six months, stock will be limited. So it's really a first in best dressed arrangement.

52:17 But, yeah, I mean, the the volumes are significant. That's great. Thanks very much indeed. And thank you both for answering those questions from investors. And, course, the company will review questions submitted today, and we'll publish response responses where appropriate to do so on the Investor Meet company platform. Paul, just before redirecting investors to provide you with their feedback, which I know is particularly important to you and the team, could I ask you for a few closing comments, please? Well, look, I'd like to thank everybody for taking the time out to listen to the story of your company. I think that we've made material progress over the last few years. I'm quite pleased with the numbers that we've just published. And I'm also quite pleased that we're now at a point in time or level of maturity, if you will, where we can talk sensibly and confidently about an outlook. So as market as as Martin said, we're focused on cash.

53:08 What enables us to be confident about the plan that we've outlined is that we are very confident about the quarter on quarter growth rate of automotive royalties, but also the impact of a higher margin fleet product in an environment that's been driven again by regulators. So this inflection point is not just in auto, it's also in fleet. And given the size of our business today, the contribution of both has a material impact. So we sit here feeling good about the future. The team that works with us every day of the week is equally positive. And I'd just like to thank you all for continuing to support us.

53:56 Fantastic. Look. Thank you both for updating investors today. Can I please ask investors not to close the session? You should be automatically redirected to provide your feedback. In order the team can better understand your views and expectations, this will only take a few moments to complete, and that's greatly valued by the company. On behalf of the management team of SEEING MACHINES LIMITED, we'd like to thank you for attending today's presentation, and good morning to you all. Thank you very much.