News Details

SimiGon: Preliminary Results for the Year Ended 31 December 2006

View announcement on London Stock Exchange Website

HERZLIA, Israel--SimiGon Ltd (LSE:SIM) (the Company together with its subsidiary “SimiGon” or the "Group"), a global leader in providing simulation solutions, announces its maiden preliminary results for the year ended 31 December 2006.

Financial Highlights

Revenues increased by 63.8% to $7.52 million (2005: $4.59 million)
Gross margin at 84.1% (2005: 86.4%)
Operating profit increased by 164.5% to $2.51 million (2005: $0.95 million)
Strong balance sheet with net cash and short-term deposits of $8.88 million at 31 December 2006
Operational Highlights

Successful London IPO and admission to AIM on 2 November 2006 raising $10m capital for expansion into new markets
Well established blue chip customer base in the defence sector
In 2006, revenues from AirTrack (non-defence licensing agreements) increased to 19% of the revenue for 2006 from 3% of revenues in 2005
New contract signed with Belgian Air Force for F-16 pilot data link training
Significant product investment during 2006 – including the launch of SIMbox version 5, an advanced simulation technology platform featuring development tools, a server, and a runtime environment
Ami Vizer, SimiGon’s President and CEO, said: “We reached several major milestones in 2006 chiefly among them was our successful IPO. We believe that the capital raised will enable the Company to develop sales and marketing capabilities and to expand the Company’s presence in key markets.

Furthermore, we successfully met our 2006 earnings forecast and we are confident we can meet expectations for the year to December 2007. Our plans are to leverage SIMbox to increase market share in our existing and future markets over the coming years.”

SimiGon Ltd

Ami Vizer, Chief Executive Officer
Haim Yatim, Chief Financial Officer
Shiri Darie, Director of Public Relations

+972 9 956 1777

Corfin Communications

Harry Chathli, Ben Hunt

020 7929 8989

Overview

SimiGon announces its maiden full year results since admission to AIM on 2 November 2006, with a strong operating performance that consolidated its position as one of the world’s leading developers and suppliers of e-learning simulation software.

2006 was an encouraging year, marking the maturity of SimiGon and culminating in our successful IPO and admission to AIM and the launch of SIMbox 5. During the financial year, we made significant progress in consolidating our position as one of the leading simulation technology suppliers to the Defence and Aerospace industry.

SimiGon believes that workers learn better and more quickly by doing rather than being shown or being told what to do. Its high-technology distributed simulation software allows people to learn to use the equipment they operate in a safe and enjoyable environment. This results in a more effective and efficient training programme for organisations that reduces training time and cost while increasing knowledge transfer and trainee success rates.

SimiGon's core simulation product, SIMbox, has been used to develop several Commercial Off-the-Shelf (COTS) products, including aviation training mission rehearsal, In Flight Entertainment Systems and ground debriefing systems. These products have been tested and used in the aerospace and defence environment where they have demonstrated reliability and robustness and the ability to handle complex distributed simulations.

SimiGon derives the majority of its revenues from contracts in the defence sector and has established a blue chip customer base in that industry. However, in 2006 its revenues from AirTrack (non-defence licensing agreements) increased to 19% of the revenues in 2006 from 3% in 2005.

Towards the end of the year, the Group signed a contract with the Belgian Air Force, which signifies increased awareness of our technology solution and encouraged SimiGon to commit additional resources to address the European market. The contract will initially generate approximately $350,000 of revenues in 2007 with expected follow-on orders worth more than $600,000 by the end of 2008. Subsequently, there has been an increased interest for SimiGon’s offering in this region.

After the year end, on January 24, 2007, the Group purchased the assets of Visual Training Solution Group, Inc ("VTSG"). The Group has worked closely with VTSG over the past few years, providing them with software development tools and licenses, while they performed added value content and hardware integration services for end users. The transaction will provide us with a closer relationship with VTSG customers and a better position to leverage SIMbox capabilities.

Financial Performance

Revenue for the year ended 31 December 2006 was $7.52 million, compared to $4.59 million in 2005, an increase of 63.8%. In terms of regional breakdown, 57.3% of our revenues came from North America (2005: 78.6%), 37.8% from Europe and the Middle East (2005: 12.9%) and 4.9% from the Far East (2005: 8.5%). Gross profit for the fiscal year was $6.3million (2005: $3.96 million), an increase of 59%.

Total operating expenses for the year increased by 26.4% to $3.81 million (2005: $3.015 million), mainly due to the increase in research and development expenses to $1.98 million (2005: $1.45 million) and general and administration expenses to $0.887 million (2005: $0.703 million) due to salary increases and the costs related to being a public company.

Operating income therefore increased to $2.51 million (2005: $0.949 million) and our net income increased from $0.89 million in 2005 to $2.52 million in 2006. This resulted in net basic earnings per share of $0.08 (2005: $ 0.03 basic earning per share) and diluted earning per share of $0.07 (2005: $0.03 diluted earning per share). As of 31 December 2006, SimiGon had cash, cash equivalent and deposits in the amount of $8.88 million.

As of 31 December 2006, the Group had 55 employees, compared to 51 employees in 31 December 2005.

Product Development

2006 saw our highest level of expenditure yet on R&D as we sought to further stretch our technology lead over our competitors.

SimiGon understands the need to remain innovative and develop new features and products to maintain market relevance and increase market share. In 2006, SimiGon focused on the following areas to increase its competitiveness:

New generation of the SIMbox Learning Management System has been developed with better performance, mass user support, and unique integration with SIMbox Simulation.
SIMbox training solutions have been expanded to include Air Traffic Control operator training capabilities, with high fidelity Speech Recognition capabilities and Artificial Intelligence simulation.
SIMbox Simulation has been improved to be able to easily integrate with full scale simulator hardware, providing cost effective solutions for full scale trainers.
SIMbox Graphic Engine has been improved to support urban and ground simulation with high resolution using more efficient algorithms.
SimiGon R&D has continued to be one of the earliest adapters of cutting edge software technologies for infrastructure development.
SIMbox Toolkit has been upgraded extensively with new tools and features, new content encryption tools and more content templates to reduce content development time.
SIMbox Learning Management System has been ported for use on PDA hardware, enabling access through the WebAccess application on mobile handhelds, benefiting especially instructors who provide feedback during observation.
SimiGon continues to be one of the fastest to comply with the most advanced E-learning Standard (SCORM) and is now certified for SCORM2004, 3rd Edition.
Air Traffic Control training system for improving the skills and reducing the training and certification time of air traffic controllers, models a complete base with all taxi, take-off, departure, and emergency procedures.
Outlook

SimiGon is well positioned within strong growth markets and, over the past year, has achieved a significant increase in revenues and net income.

Looking ahead, the Group plans to leverage SIMbox to increase market share in its existing and future markets over the coming years and as a consequence, the Board believes that the Group will continue to grow and is confident that it can meet market expectations for the year to December 2007.

Contacts

SimiGon Limited
Haim Yatim, CFO, +972 9 956 1777
or
Corfin Communications
Harry Chathli or Ben Hunt, +44 (0) 20 7929 8980