News Details

Trading Update

SimiGon Limited (“SimiGon” or “the Company”), a developer and global supplier of computer simulation software to the defence, aviation and industrial sectors, provides an update on trading since the announcement of its interim results on 31 July 2007.

In 2007, the Company was confirmed as the partner of choice to provide simulation training as an important element of major long term international programmes worldwide including Lockheed Martin’s UK’s Military Flying Training System and the F-35 Lightning II Joint Strike Fighter training programme.

However, as mentioned at the time of the interim results SimiGon faced the risks in the initial stages of these programmes of there being a timing lag between being selected as the preferred supplier of simulation training technology and commencement of the delivery of the systems. Hence, it was difficult to predict from when the Company would start recognising the revenues. The finalisation of the contract between Lockheed Martin and the respective parties is still ongoing with a view to commencement of the training programme in H1 2008 rather than as expected in H2 2007. These delays are typical of the defence industry and have not resulted from concerns with SimiGon’s products.

These delays have had a knock-on effect on SimiGon, which was expecting to deliver its systems and start recognising the revenues in H2 2007. As a result, the Company expects revenues for the full year 2007 to be approximately $5 million, falling at the lower end of market expectations.

While this short term setback has been frustrating, the timing of such major contract completions is out of the control of SimiGon and the long term view of SimiGon’s management remains positive. On the fundamental level SimiGon is doing well and winning business, as highlighted by the award of a $2.4m contract in November 2007 from an international customer.

Ami Vizer, Chief Executive Officer of SimiGon stated: “It is disappointing that several contracts have been delayed, postponing our expected revenue growth from 2007 to 2008. We continue to bid successfully for contracts that are in some instances much larger than in previous years but the length of time for these contracts to be awarded is longer.

“Although there has been a delay in generating revenues from some contracts the Company remains well positioned for long term growth after establishing itself as the main supplier of simulation training in the world’s top pilot computer simulation training programmes.

Looking forward into 2008 and particularly 2009, the company expects to recoup this shortfall as these large long-running defence contracts in the US and the UK will increase in value, and this should add stability to earnings. This gives us confidence in the long term growth prospects of the Company and our ability to deliver shareholder value.”