Seeing Machines Limited Capital Raising (7764Y)

TIDMSEE

RNS Number : 7764Y

Seeing Machines Limited

04 December 2014

Seeing Machines Limited

("Seeing Machines" or the "Company")

Capital Raising

Placing to raise GBP5.7m

Australian Offer and Overseas Offer to raise up to GBP1m

   --      Oversubscribed placing to support growth opportunities above and beyond initial plan 

-- More than 10 automotive OEMs engaged in assessment of our ADAS (Advanced Driver Assistance Systems) driving monitoring systems technology following announcement of Takata deal

-- Accelerated interest by fleet operators in de-ruggedised DSS unit for fleet sales (trucks and coaches)

4 December 2014

Seeing Machines Limited (AIM: SEE), the AIM listed technology company with a focus on operator monitoring and intervention sensing technologies and services, is pleased to announce that it has raised GBP5.66 million, before expenses, through an equity placing. finnCap Ltd ("finnCap"), as the Company's broker, has conducted an oversubscribed placing of 102,963,652 new ordinary shares in the Company ("Ordinary Shares") (the "Placing Shares" and the "Placing") with new and existing institutional investors at a price of 5.5 pence per share (the "Placing Price"). The Placing demonstrates continued strong support by key shareholders and adds several further blue-chip institutions to the share register. In addition, the Company will provide an opportunity to certain existing shareholders to raise up to a further GBP1 million at the Placing Price or an AUD equivalent under an overseas offer and an Australian offer, details of which are set out below.

The net proceeds of the Placing, the overseas offer and the Australian offer (the "Fundraising") will provide the Company with working capital and further flexibility to pursue its six-sector business strategy, in particular to accelerate its engagement with a growing list of global car makers as well as launching a new product for the commercial transport market next year.

Automotive opportunities

Following the announcement of our agreement with Takata and the initial order received by Takata from a top tier automotive OEM, Seeing Machines has experienced strong initial indications of interest from multiple further OEMs. Over 10 further OEMs are at various stages in assessing our technology for inclusion in their vehicles scheduled for market release between 2016-2021.

The different applications of the technology under assessment range greatly in scope and require investment in dedicated engineering resource from Seeing Machines and Takata to develop these applications from technology evaluation through to vehicle launch.

Whilst no guarantee can be made that any of these OEMs will ultimately decide to purchase Seeing Machines' technology from Takata, given the early successes under the Takata relationship, the Board feel there is a significant opportunity to capitalise upon Seeing Machines' early mover advantage in the space.

Fleet opportunities

Separately, Seeing Machines has invested over the past year in developing a de-ruggedised, lower cost version of the DSS unit for the commercial fleet market, due for launch in April 2015.

The near-term sales pipeline for the commercial fleet market is far stronger than the Company had anticipated at the time of the last raise, and there is a requirement for additional working capital to support the roll out of this de-ruggedised unit to a number of fleet operators with whom Seeing Machines is in advanced negotiations.

While there is again no guarantee on the rate of conversion of this pipeline to firm purchase orders, given the scale of the opportunity and the advanced stage of these discussions, the Board feel that it is important that the Company has the necessary resources to close out the sales opportunities currently under negotiations.

The rapid acceleration of the interest from automotive OEMs and commercial fleet operators, as detailed above, necessitates additional investment in order to take full advantage of the opportunity to Seeing Machines.

The Fundraising does not require shareholder approval, as the maximum number of shares to be issued is within the cap of 15 percent of total issued shares as set out in the Company's Constitution.

Terry Winters, Seeing Machines' Chairman, commented: "This is an exciting time for the Company. In the last few months we have successfully delivered several important milestones in our strategic plan, by establishing formal partnerships with industry leaders in the automotive, rail and consumer electronics markets. We are seeing very strong demand for advanced driver assistance systems from global car makers, and from commercial fleet customers. The additional funds we have raised will allow the Company to pursue these opportunities. I would like to thank investors for their support, and invite eligible existing shareholders to participate in the proposed capital raising which is being offered on the same terms as the placing."

Background to the Fundraising and use of funds

Seeing Machines is a leading supplier of Driver/Operator Safety Monitoring technology and services, and is developing technology for next-generation Advanced Driver Assistance Systems (ADAS).

Headquartered in Australia, with offices in USA and Chile, the Company has grown strongly over the last year, with revenue increasing by 39 percent to A$17.7m (or GBP9.6m) for the year to 30 June 2014, and staff numbers doubling to more than 100.

The Company is partnering with major original equipment manufacturers (OEMs) for product development and sales in large global markets, including:

-- Caterpillar: the world's largest mining equipment supplier and one of the largest rail suppliers;

   --      Takata:       one of the world's leading automotive safety suppliers; 
   --      Samsung:   the world's largest mobile device manufacturer. 

The Company remains focused on expanding market share and driving long-term revenue growth in its six strategic markets - automotive, commercial fleet, mining, rail, consumer electronics and aviation. The funds raised through the Fundraising will allow the Company to pursue these opportunities, in particular to accelerate its engagement with a number of global car makers to develop driver monitoring systems for passenger cars, and to launch a new driver safety product for the commercial fleet market.

Working with its partner Takata, the Company plans to aggressively pursue the rapidly growing number of ADAS opportunities presented by global car makers. Proceeds from the Fundraising will be used to expand engineering resources for the Company's OEM core technology, to begin several new OEM projects expected to commence in FY15, and for potential further new OEM projects beyond June 2015.

The Company is also developing a new aftermarket driver safety solution specifically for on road commercial fleets, to be launched in April 2015. The Company has received strong interest in this product from existing customers and potential distributors. Proceeds from the Fundraising will be committed to purchasing a significant level of initial inventory, and to expand sales and marketing.

The Company's financial profile will continue to evolve with this strategic investment. Our revenue sources are expected to diversify: from mining to many markets; from direct sales to many sales channels; and from hardware sales to a mix of product sales, recurring fees and licence fees / royalties. Revenue is expected to continue to grow from FY14, weighted towards the second half of the current financial year, with a meaningful contribution from sales of the new product for the commercial fleet market in the year ending 30 June 2015. Impacts of softness in the mine site industry, below the major producers, will continue to be mitigated by the marketing of DSS for non-haul trucks. The planned investment in new markets and capabilities will mean a higher EBIT loss in the near term. The Company will continue to build its resources and assess strategic options to accelerate its product portfolio and long term revenue growth.

The Board believes that the Fundraising is in the best interests of all Shareholders and can place the Company in a stronger position to capitalise on the significant global opportunities for its products.

The investor presentation relating to the fundraising is available at www.seeingmachines.com/investors.

Details of the Placing

The Company will issue 102,963,652 Placing Shares at 5.5 pence per share. Application will be made to the London Stock Exchange for the Placing Shares to be admitted to the AIM market and admission is expected to occur on 5 December 2014. The Placing Shares will rank equally in all respects with the existing Ordinary Shares. The Placing is not being underwritten by finnCap.

Director participation in the Placing

James Walker, Chief Financial Officer, and David Gaul, Non-executive Director, have informed the Company that they will participate in the Placing. Their participation and resultant interest following admission is set out in the table below:

 
Director/key   Number of           Existing      Interest in  Total interest   Percentage of enlarged 
 executive      Placing             interest      LTIP         including        share capital following 
                Shares subscribed   in Ordinary                Placing Shares   admission, pre 
                                    Shares                     subscribed       completion of the 
                                                                                offers 
James Walker   280,000(1)          320,000(1)    2,691,532    3,291,532        0.354% 
David Gaul     100,000(2)          3,300,000(2)  -            3,400,000        0.365% 
 

1: Held through his investment vehicle Kirri Cove Pty Limited.

2: Held through his investment vehicle Jaiclimb Pty Ltd.

Total Voting Rights