News Details

Audited full year results and annual dividend declaration

SimiGon Ltd (LSE: SIM), a global leader in providing simulation and training solutions, is pleased to announce its audited full year results for the year ended 31 December 2015.

Financial Highlights

Net profit increased by 31% to $1.78 million (2014: $1.36 million)
Revenues of $6.94 million (2014: $8.32 million)
Gross margin 78% (2014: 76%)
Basic and diluted EPS $0.04 (2014: $0.03)
Annual dividend declared of 0.6 cents per share
Operational Highlights

New major contract awards:

Awarded a five year Contractor Logistics Support ("CLS") contract by the U.S. Air Force Air Education Training Command ("AETC") to support and maintain all of the T-6A training simulators used in the training of all Remote Piloted Aircraft ("RPA") students.
Signed an industrial offset contract to support leading Latin American training and simulation group Corporacion de Alta Tecnologia para la Defensa ("Codaltec").
Awarded an additional contract valued at $0.8 million from a leading provider in the small tactical Unmanned Aircraft Systems ("UAS") market in which SimiGon supplies the underlying training system technology for the UAS program.
Awarded $4.0 million contract with Booz Allen Hamilton Engineering Services to provide the U.S. Air Force with software and support for the addition of multiple T-6 simulators.
Delivering on all long term contracts:

Delivery under the $6.7 million contract signed in June 2013 although on a slower timetable than expected as a result of the client requesting SimiGon to provide a number of deliverables outside of the original contract scope.
Now in our eighth year supporting Lockheed Martin's F-35 Lightning II Joint Strike Fighter training program ("JSF").
Continuing long term contracts supporting the UK Military Flying Training System ("UKMFTS") program.
In the seventh year of a long-term contract to provide training simulations for a strategic European aircraft manufacturer.
Continuing to meet project milestones for long term contract with Check-6, the Company's first major contract outside the aerospace and defence industry.
Now in our third year of supporting U.S. Air Force Air Education Training Command on its T-6 Modular training devices.
Ami Vizer, Chief Executive Officer of SimiGon, stated: "SimiGon is pleased to report another year of strong operational performance and growth in profitability while continuing to execute our growth strategy. During the course of the year we have secured several new, high value contracts. We have also further established our position as a prime contractor providing a highly valued solution to our customers. Despite seeing a reduction in revenue as a result of delays in delivery under the $6.7 million contract signed in June 2013 we are encouraged to see that our net profit and profit margins have improved.

"Looking ahead, we will continue to leverage our position in the market and our global footprint to build new partnerships, expand our customer base, and target large contracts. In line with market requirements the Company is focusing more and more on high value, long term license contracts. The transition to these long term contracts may lead to lower revenue from these contracts in the early years but is expected to give much better long term revenue and profit visibility to the Company. The Board's confidence in its ability to deliver growth over the long term is demonstrated by the Company's continued annual dividend distribution".

Enquiries:

SimiGon Ltd
Ami Vizer, Chief Executive Officer
Efi Manea, Chief Financial Officer
Tel: +1 (407) 951 5548

finnCap (NOMAD & Broker)
Stuart Andrews/Scott Mathieson (corporate finance)
Stephen Norcross (corporate broking)

Tel: +44 (0) 207 220 0500

Overview

SimiGon is pleased to report another year of increased profitability which has been achieved due to both new business being won in the period and an increase in recurring revenues from existing strategic partners. SimiGon recorded a net profit of $1.78 million in 2015 compared to $1.36 million in 2014 and revenues of $6.94 million compared to $8.32 million in 2014. The strong profit performance, despite the decrease in revenue in 2015, is mainly as a result of a change in the Company's sales mix, primarily due to its long term $6.7 million dollar contract signed in June 2013. Research and development expenses decreased from $2.38 in 2014 to $1.47 million in 2015 which is reflective of the Company's focus on cost control while still investing sufficient funds in developing its products to ensure future success.

SimiGon continued to improve its position as a technology and services provider for large simulation training programs in 2015. The Company operates as a key supplier of training and simulation technologies for the world's largest military flight training programmes and has seen further growth into vertical markets such as civil aviation training and industrial training solutions.

SimiGon's ability to capture more market share due to its participation in the largest global simulation and training projects enables the Company to increase its strategic business scope and potential revenue streams. The Company's goals are to compete as a prime contractor and strategic technology provider. Aside from being advantageous in acquiring a larger share of contracts, this enables the Company to establish a long term relationship with the end user organization.

Our market position as a preferred supplier for simulation and training technologies and solutions has been strengthened by our work in the past year. Our foundation of new contracts and support contracts, in tandem with our growth strategy, positions the Company to enjoy what the Directors believe will be a period of long term growth.

SimiGon is focused on developing strategic programs that will enhance the Company's long term growth. Our ability to grow the business and improve our financial performance is evident in our robust pipeline of new opportunities for 2016 and beyond and the greater transparency in revenue streams.

Operational Review

SimiGon is a fast-growing company, dedicated to developing strategic, simulation-based training programs. This development is allowing expansion into vertical markets, including civil aviation training and industrial training, as well as boosting long term growth. SimiGon has consolidated its position as technology provider of choice for large simulation training programs, as well as a strategic supplier of training and simulation technologies for the worlds' largest military flight training programmes. As such, our industry-leading position remains well established.

SimiGon continues to increase its visibility of the market and of new opportunities available to it as a prime contractor and strategic partner. The Company continues to benefit from direct relationships with the end user and, as the business and our reputation grows, SimiGon will be in a stronger position to compete for and win far larger contracts.

Delivery of a major contract as prime contractor

SimiGon announced in June 2013 that it had signed a contract valued at $6.7 million for a major training program. This was a milestone contract for the Company in terms of the geographic region, the contract value and the programme scope.

Delivery under this contract has continued during 2015 although on a slower timetable than expected as a result of the client requesting SimiGon to provide a number of deliverables outside of the original contract scope. As part of SimiGon's drive to support all its clients, the Company has been prepared to agree to these new demands and it looks forward to meeting the delivery milestones during the course of 2016.

The Company expects that its strong performance will put it in a good position to win similar programmes in other countries and regions in the future.

Expansion into the civil aviation market

In June 2015, SimiGon entered the Latin American civil aviation market by establishing a subsidiary incorporated in Colombia (the "Subsidiary").

SimiGon's move into the civil aviation market has been a long term strategic goal for the Company. Taking into account the potential of the fast growing Latin American aviation market, the Subsidiary provides an ideal platform for SimiGon to enter an attractive growth sector and region.

New contract wins

In May 2015, SimiGon was awarded a five year Contractor Logistics Support ("CLS") contract by the U.S. Air Force Air Education Training Command ("AETC") to support and maintain all of the T-6A training simulators used in the training of all Remote Piloted Aircraft ("RPA") students. The first year base value of the contract is $0.33 million with a total contract value of $1.66 million over an expected period of five years.

This contract builds on the successful delivery and performance of systems provided by SimiGon as a prime contractor for the U.S. Air Force since September 2011. It strengthens the Company's position as a supplier of choice in the provision of simulation training solutions while, at the same time, demonstrating that SimiGon has the capability to develop and support the unmanned aircraft training sector which is a rapidly growing segment worldwide.

As announced in June 2015, SimiGon signed a new technical support agreement to provide Corporacion de Alta Tecnologia para la Defensa ("Codaltec"), a leading Colombian high technology corporation. Subsequent to the successful delivery and performance of SimiGon's systems and additional SimiGon software licenses purchases announced during September 2014, SimiGon will deliver under this contract, additional technical support services, as part of an industrial offset agreement.

Codaltec was formed in August 2012 by the Colombian government to meet the defense sector's needs, including training and simulation. Being one of the largest and most successful groups utilizing SimiGon's SIMbox training and simulation software platform, Codaltec is considered a highly valued strategic partner for SimiGon.

In August 2015 SimiGon was awarded an additional $0.8 million contract from a leading provider in the small tactical Unmanned Aircraft Systems ("UAS") market in which SimiGon have supplied the underlying training system technology for the UAS program. The contract demonstrates SimiGon's ability to provide successful training solutions and highlights the Company's growing footprint in the UAS market.

In December 2015 SimiGon was awarded a $4 million contract with Booz Allen Hamilton Engineering Services, LLC ("Booz Allen ES") to provide the U.S. Air Force with support and software for the addition of multiple T-6 simulators for the RPA training simulators ("the Contract"). The initial phase of the Contract is worth $0.92 million and includes the procurement of the SIMbox software technology, T-6 model content and integration for six newly fabricated RPA training simulators.

Long term contracts

The Company has a growing portfolio of long term partnerships that continue to develop into further business and provide good revenue visibility. Many of these partnerships are expected to continue with additional purchases through 2016 and beyond.

The Company is now in its seventh year of supporting Lockheed Martin's JSF training program. Additional licenses and ongoing maintenance support agreements are part of the ongoing, long term partnership.

SimiGon is now in its sixth year supporting the UK Military Flying Training System. The Company continues to deliver under this long term contract, exceeding partner and customer expectations of SimiGon's technologies and performance.

SimiGon's partnership with Check-6 Inc., one of the leading providers of training solutions to the energy and mining industries, is also blossoming into long term, recurring revenue. Throughout this contract, SimiGon has successfully executed against its agreed deliverables. As a result, the Company is expecting this partnership to be extended with additional agreements.

The maintenance and support contract from the USAF for the SIMbox based T-6A Modular Training Devices SimiGon delivered as part of a June 2011 contract demonstrates the long term nature of the relationship with this strategic customer. SimiGon expects this relationship to continue to evolve.

SimiGon maintains its close relationship with a major existing European customer that it has been working with since 2009. SimiGon's technology is now being operated on a daily basis in 3 different training centers and is receiving high customer satisfaction reviews. SimiGon is confident that this relationship will continue and should lead to additional orders in the future.

SimiGon continues to provide successful solutions for Unmanned Aerial Vehicle ("UAV") training for a leading provider in the small tactical unmanned aircraft systems. Through SimiGon's ecosystem of partners worldwide, the Company's technology is used to support initial operator training in classrooms as well as advanced operational training. SimiGon continues to increase its footprint in the fast growing UAV market.

Annual dividend declaration

In light of the strong cash position and further to the Company's declared intention to pay an annual dividend, the Board intends to pay a dividend of 0.6 cents per share, equating to approximately 15% of the Company's earnings per share and to approximately 17.2% of the Company's net profit. The dividend will be payable on Friday 27 May 2016. The record date for payment of the dividend will be Friday 6 May 2016. The ex-dividend date will be Thursday 5 May 2016.

In line with the Israeli tax ordinance and regulations, the dividend payment will be subject to 25% withholding at source unless reduced by a relevant tax treaty.

In this regard, shareholders, who have a tax withholding exemption or reduced withholding tax rate from dividend payments obtained from by Israeli Tax Authorities, should present and deliver it to the Company, together with the contact details of their stock broker, no later than the end of the business day on Wednesday 4 May 2016.

Financial Performance

Revenue for the year ended 31 December 2015 was $6.94 million, compared to $8.32 million in 2014. In terms of regional breakdown, 56% of SimiGon's revenues came from North America (2014: 50%), 27% from Europe, Middle East, South America and Australia (2014: 14%) and 17% from the Far East (2014: 36%).

Gross profit for the year ended 31 December 2015 was $5.4 million, as compared to $6.33 million for the year ended 31 December 2014. Accordingly, gross margins increased to 78% for the year ended 31 December 2015 as compared to 76% for the year ended 31 December 2014.

Net profit for the fiscal year increased by 31% to $1.78 million (2014: profit of $1.36 million).

Total operating expenses for the year ended 31 December 2015 decreased by 25% to $3.77 million as compared to $5.02 million for the year ended 31 December 2014. Research and development expenses for year ended 31 December 2015 decreased by 38% to $1.47 million as compared to $2.38 million for the year ended 31 December 2014, mainly due to lower salary expenses. Marketing expenses for the year ended 31 December 2015 decreased by 15% to $1.25 million as compared to $1.46 million for the year ended 31 December 2014 mainly due consultant's fees.

General and administration expenses for the year ended 31 December 2015 decreased by 11% to $1.05 million as compared to $1.18 million the year ended 31 December 2014 mainly due to the collection of debts for which provisions for doubtful debts were recorded in the prior period.

The Company has recorded a net income tax credit of $0.15 million for the year ended 31 December 2015 mainly as a result of creating a deferred tax asset of $0.16 million in relation to the expected utilization of carry forward losses against expected income in future years.

As a consequence of the factors above, operating profit for the year ended 31 December 2015 amounted to $1.64 million, improving upon the performance for the year ended 31 December 2014. Net basic and diluted earnings per share increased to $0.04 for the year ended 31 December 2015 as compared to $0.03 for the year ended 31 December 2014.

As at 31 December 2015 the Company had liquid cash of $7.41 million (2014: $9.44 million) and trade receivables of $3.72 million compared to $0.51 million for the year ended 31 December 2014. $1.82 million of the year end trade receivables balance has been collected since the year end.

Outlook

As a result of achieving strategic milestones, SimiGon continues to deliver strong growth in profitability. The Company's goal of being a prime contractor and technology provider for major, long term simulation training programmes is being achieved and it continues to secure significant new contracts while diversifying its markets.

The transitioning into high value long term license contracts in order to meet market requirements may lead to lower revenue from these contracts in the early years, but in the long term, is expected to give SimiGon much better revenue and profits visibility.

The Board of Directors looks to the future with expectations to successfully deliver long term growth.

View complete announcement on London Stock Exchange Website