Seeing Machines Limited (M2Z.F) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, or good morning if you're dialing in from the U.K. It's a pleasure to welcome you to the 2024 Annual General Meeting of Seeing Machines Limited. I have been advised by the Company Secretary that a quorum is present, and so I declare the AGM open. For shareholders using the online voting platform today, if you experience any technical difficulties during the meeting, please call our share registry, Computershare, on the number that should be coming up now on the screen. But I'll read it out. It's (613)9415-4024. My name is Kate Hill, and as Chair of the Board of Seeing Machines Limited, it's my pleasure to chair this Annual General Meeting today. First of all, I'd like to acknowledge the traditional owners of the different lands in Australia on which we're meeting today, including the Ngunnawal country, the location of our head office. I would also like to pay my respects to their elders, both past and present, and I extend that respect to other aboriginal and Torres Strait Islanders who are attending today. I'd like to welcome my fellow directors joining by video conference. We have on the line Gerhard Vorster, John Murray, Michael Brown and Stephane Vedie. Paul McGlone, our CEO and Managing Director, is attending in person as well as Susan Dalliston, the Company Secretary. And members of the executive leadership team are also in attendance. A representative of PricewaterhouseCoopers, our auditor, is also present online. The agenda for today's meeting will commence with a short Chair's address. Following this, the annual financial report, the directors' report and the auditor's report will be presented to the meeting. We will then proceed through the formal items of business, following which we will bring the meeting to a close. So welcome again to the 2024 Annual General Meeting for Seeing Machines. Another year has passed, and we continue to make progress on our purpose of getting people home safely as we approach an important inflection point in the life of our company. As of the most recent reported quarter, we now have 2.6 million cars on the road with our driver monitoring technology. As there are more than 60,000 -- and there are more than 60,000 commercial vehicles fitted with Guardian, which has now traveled more than 18 billion kilometers, keeping drivers and communities protected all around the world. Seeing Machines has delivered double-digit growth during FY '24 with revenue up by 17% to USD 67.6 million, in line with market consensus, demonstrating a robust performance despite some industry-specific challenges against the current global geopolitical backdrop. Our cash position bolstered by the new agreement with our long-standing partner, Caterpillar, was also in line with expectations at USD 23.4 million. And we now have a total of USD 392 million in awarded automobile business -- automotive business, sorry, with most of that revenue expected by 2028. I'll make some more comments on the cash position in a few moments. The long-awaited tailwinds have arrived as Europe's general safety regulation or GSR came into force in July this year. And we expect that to continue to drive demand for our technology across both automotive and aftermarket as the requirements expand over the coming 2 years. This is backed up by the European New Car Assessment Program or Euro NCAP, their safety protocols. And while we cannot control how OEMs meet those for their safety ratings, we do know that they are well down the path of ensuring that they are focused on meeting them in 2026 or by then. Our relationships with these regulatory and safety bodies has ensured that our technology is in line with the protocols, and we can closely support our customers to achieve these important NCAP points. Turning to the 2024 results and our cash position in a little more detail. I did want to take this opportunity to address some concerns, which have emanated from the going concern wording in our annual report. While this has been covered in a range of forums by management, I would like to affirm that position from the Board's perspective. The Board stands by the expectation that Seeing Machines will achieve a cash flow breakeven run rate in financial year 2025. To be clear, this does not mean we will be cash flow positive for the whole year, but that during the later part of the year, we expect our cash flows into the business to start to exceed our cash flows out of the business, an important inflection point for our company and a common goal of many software companies around the globe. This expectation is based on our ongoing focus on 3 things: growth in revenue, margin expansion and cost management. And these 3 levers have also been spoken about in a number of investor presentations made by our CEO and CFO. As you can see from Note 34B in our financial statements, the ability to generate sufficient cash to pay our outgoings is based on a range of factors, and we have mitigations in place if these are not sufficient. A good example of this is the ability to access receivables funding, which brings forward cash inflows from customers, and we are well down the track of setting up a facility for this type of funding to the tune of some USD 5 million to USD 10 million. So in summary, the Board is confident that we will be able to manage the cash flows through to when the business is generating positive cash flow and become self-funding. Our purpose is to get everyone home safely. And in order to do this, we need to grow profitably and generate a return for our shareholders. Your Board and management are very focused on these goals. I do believe that the future is bright for Seeing Machines as the world seeks safer travel for everyone, whether it be by -- in a car, a truck, a bus, a train or on an airplane. Thank you. So I'm now going to explain the voting and question procedures for the meeting, which are also set out in the Notice of Meeting. First of all, for virtual attendees, so shareholders who are registered on the company's Australian register and are attending the meeting virtually can vote online using the online voting platform link, which is found in the Notice of Meeting. Once you've registered and logged into the platform, you can commence voting when I open the polls by using the vote icon shown on your screen. Please ensure you see a tick against the item you're voting on as this indicates that your vote has been received. You may change your vote at any time until the polls are closed by selecting the icon on your screen, change your vote. Shareholders attending virtually can also submit a question by using the chat function in Teams. You may type your question in the chat function at any time. When addressed, your question will be read out loud to the meeting by the company Secretary. Please include your registered holder name and your question. We will address questions at the appropriate time in the meeting. If we receive a number of questions on a similar topic, we may choose to amalgamate them, and we may not attribute a question to the person who asked it. In terms of physical attendees, if a shareholder in the room wishes to ask a question, please raise your hand when I invite questions. I will ask the company -- I may ask the Company Secretary to repeat your question out loud, so that those attending online have the benefit of hearing your question. Please note that only shareholders, proxy holders or shareholder representatives, including corporate representatives, where validly appointed, may vote and speak at the meeting. The notice of meeting invited shareholders to send questions to the Company Secretary ahead of the meeting. I have been advised by the Company Secretary that no questions have been received. I'll now move to the formal business of today's meeting. The Notice of Meeting dated the 4th of November 2024, was sent to all registered shareholders, and I will take it as read. The notice of meeting sets out the agenda and the items to be considered at this meeting. Please note that as Chair of the AGM, I will be voting all undirected proxies in favor of all resolutions. As set out in the Notice of Meeting, a poll will be conducted on all resolutions put to the meeting, and the results of the poll will be announced on our website as soon as they're available. Before the vote on each resolution, we will disclose on the screen the valid proxies received prior to the meeting. So moving to the financial statements and reports. The first item of business is the receipt and consideration of the 30 June 2024 financial report for the company and the reports of the directors and the auditor. No vote is required on this item of business. I will now open for questions from shareholders for either the company or the auditor on the financial statements or the audit. I also invite any questions on the management or governance of the company. I note that no questions for the auditor were received before the meeting. Susan, have we received any questions?

No.

Thank you. With the reports received, I will now move to the resolutions before the meeting today. As mentioned earlier, all voting will be conducted by way of a poll, and I now declare the polls open. I'll provide a warning when the polls are to be closed to allow an opportunity for all shareholders to submit their votes. The online voting platform will continue to accept votes for approximately 3 minutes following the close of the polls. Resolution 1. The resolution before the meeting relates to the reelection of Michael Brown as a director. I refer shareholders to the Notice of Meeting, which contains Michael's biography. The Board, with Michael abstaining, unanimously supports Michael's reelection. Resolution 1 and the proxies received are shown on the screen. I now put the resolution to the meeting that Michael Brown, who retires in accordance with Rule 6.4A of the constitution and being eligible, offers himself for reelection, be reelected as a director of the company. Susan, are there any questions on this resolution?

No.

Thank you. Please now enter your vote in relation to Resolution 1. [Voting]

Moving to Resolution 2. The next item of business is to consider Gerhard Vorster's reelection as a director. I refer shareholders to the notice of meeting, which includes Gerhard's biography. The Board, with Gerhard abstaining, unanimously supports Gerhard's reelection. Resolution 2 and the proxies received are shown on the screen. I now put the resolution to the meeting that Gerhard Vorster, who retires in accordance with Rule 6.4A of the constitution and being eligible, offers himself for reelection, be reelected as a Director of the company. Susan, are there any questions on this resolution?

No.

Thank you. Please now enter your vote in relation to Resolution 2. [Voting]

The next resolution for today's meeting is to consider for approval the issue of rights to the Managing Director, Paul McGlone. I refer shareholders to the Notice of Meeting, which includes details of the proposed issue. The Board, with Paul abstaining, unanimously supports the issue of rights to the Managing Director. Resolution 3 and the proxies received are shown on the screen. I now put the resolution to the meeting that for the purposes of Section 208 of the Corporations Act 2001 Commonwealth and for all other purposes, approval is given for the company to issue to Mr. Paul McGlone and/or his nominee 4,778,140 rights on the terms and conditions set out in the explanatory statement. Susan, are there any questions on this resolution?

No.

Thank you. Please now enter your vote in relation to Resolution 3. [Voting]

The final resolution for today's meeting is to consider for approval a prior issue by the company of performance rights. I refer shareholders to the notice of meeting, which includes background on this resolution. The Board unanimously supports this resolution. Resolution 4 and the proxies received are shown on the screen. I now put the resolution to the meeting that for the purposes of Rules 2.1(b) and 2.1(c) VIII of the constitution and for all other purposes, the prior issue by the company of performance rights in respect of up to 118,904,187 ordinary shares on the terms set out in the explanatory notes is approved. Susan, are there any questions on this resolution?

No.

Thank you. Please now enter your vote in relation to Resolution 4. [Voting]

We're now nearing the close of the Annual General Meeting, at which time I will declare the polls closed. For those joining online, please ensure that you have voted and that you can see a tick on your screen next to each of the 4 resolutions. The online voting platform will continue to accept votes for approximately 3 minutes following the close of the polls. I'll now pause shortly to allow those joining online to finalize their votes. [Voting]

Before I proceed to close the meeting, I would like to invite shareholders to ask any other questions that they may have. Are there any questions, Susan?

No.

Thank you. As we have no questions, that concludes the formal business of the meeting. To all our shareholders who have joined today, we appreciate your attendance and your ongoing support of the company. I thank all staff at Seeing Machines for their valued contribution over the past year. I now direct that the polls be closed and declare the meeting closed. Thank you again for your attendance.