SimiGon Ltd

(“SimiGon” or the “Company")

Audited Full Year Results

SimiGon Ltd (LSE: SIM), a global leader in simulation and training solutions, is pleased to announce its audited full year results for the year ended 31 December 2018 (the “Period”).

Financial Highlights

  • Revenues increased by 16% to $5.03 million (2017: $4.34 million)

  • Gross margin increases to 81% (2017: 78%)

  • Operating loss decreased by 21% to $0.76 million (2017: $0.96 million)

  • Adjusted operating loss (excluding doubtful debt provision) decreased by 68% to $0.31 million (2017: $0.96 million)

  • Net loss increased by 6% to $1.01 million (2017: $0.95 million)

  • Adjusted net loss (excluding doubtful debt provision) decrease by 41% to $0.56 million (2017: $0.95 million)

  • Basic and diluted loss per share of $0.02 (2017: loss per share $0.02)

  • Cash, cash equivalent, short term investment and deposits of $6.00 million as at 31 December 2018 (2017: $7.79 million)

  • Trade receivables increased by 47% to $2.57 million (2017: $1.75 million)

Operational Highlights

  • SimiGon has continued to illustrate its ability to capture new business and significantly expand product capabilities in core defence-related market:
    o Awarded additional maintenance and support services contract for the sixteen T-6A Level 5 Flight Training Devices (“FTDs”) with the United States Air Force (“USAF”);
    o Multiple contracts to provide USAF with Virtual Reality (“VR”) Aircraft Technician De-icing Simulation Based Training;
    o Secured additional work scope for Lockheed Martin’s UK Military Flight Training System (“UKMFTS”);
    o Won follow-on contract with the Federal Aviation Administration in support of civilian Unmanned Aircraft R&D.

  • Continued to support major military flight training programmes including:
    o The USAF Air Education and Training Command Undergraduate Remotely Piloted Aircraft Training (“URT”);
    o Completion of major development and delivery milestones in support of Lockheed Martin’s UKMFTS program;
    o Provide software and services as part of long-term relationship with a strategic European customer.

  • Completed multiple delivery milestones for the $2 million Israeli Air Force (“IAF”) F-16 Maintenance Trainer Program (IAF F16 Maintenance Trainer) contract announced in June 2016.

  • Released SIMbox version 5.7 in August 2018, providing many new platform capabilities including expanded Virtual Reality (VR) support and significant “under-the-hood” performance upgrades.

  • Awarded $1.1 million dollar contract with the IAF for T-6A aircrew training devices.

  • Expanded its long-term relationship with an existing European customer (the “Customer”) and has signed a contract valued at $0.92 million for the use of SIMbox in the additional programs across the Customer’s organization.

Post Period Events

  • Secured additional $0.85 million contracts in aggregate with key European to provide licenses, maintenance and support services for the Customer’s simulation training centers.

  • Signed a Blanket Purchase Agreement with the U.S. Department of Defense Enterprise Software Initiative to establish agreed pricing and processes for government customers to purchase the Company's products and services.

  • Secure additional year of software and hardware warranties and support services for the United States Air Force T-6A Level 5 FAA Compliant Flight Training Device, valued up to $1.41 million over the next twelve month period.

Mr. Ami Vizer, Chief Executive Officer of SimiGon, stated: “We were able to report higher revenues for 2018 as compared to the prior year, together with an improved gross margin and a reduction at the operating loss level. Our true success is the strong foundation we created for future growth and return to profitability.

The Company has been executing its strategy to deliver program milestones of long-term strategic contracts and continue to develop tactical positioning in the market as a leading technology provider. We have entered 2019 with more clients, more partners, stronger technology and greater utilization of our SIMbox technology across more domains than any other year in our history. SimiGon’s ability to identify new markets and their need for cost effective training is exemplified throughout the Period in several programs, such as the multiple SIMbox-based Virtual Reality Aircraft Deicing Simulator (“S-VADS”) provided to the USAF.

Though 2018 was one of our strongest product delivery years, the on-going transition to a SaaS model impacted our financial performance as license revenue is now spread over 5-12 years. As mentioned on the Company’s previous trading update, the impact of this migration to a SaaS model can be demonstrated by the fact that license revenue is reduced by 85% which in turn impact short term yet, I expect, will improve the long-term financial performance of the Company.

I am very proud of our team and our ability to adapt to changing market trends. Our growing footprint in the training and simulation industry is propelled by leading, game-changing technologies, diverse global partners, and the need for advanced training systems and positions the Company well to deliver improved financial performance in 2019 and beyond”.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.


SimiGon Ltd

Ami Vizer, Chief Executive Officer +1 (407) 951 5548

Efi Manea, Chief Financial Officer

finnCap (NOMAD & Broker) +44 (0) 207 220 0500

Scott Mathieson / Matthew Radley


During the Period, the Company achieved successful delivery milestones of its strategic contracts. This includes milestones on the IAF F-16 Maintenance Trainer program, logistics support provided to the USAF under their T-6A program and additional work scope for the UK Military Flight Training System program.

Successful deliveries and advanced proven technology has led SimiGon to be contracted with strategic programs throughout the Period which has solidified SIMbox as the major training technology platform. This includes the contract signed with the IAF to provide them with T-6A training devices utilizing advanced VR capabilities to support advanced training needs, and the contract award from its key European customer for SIMbox Commercial off-the-shelf training and simulation development platform.

In addition, SimiGon’s ability to identify new markets and their requirements for cost effective personal training systems was further demonstrated during the Period when the Company was contracted to deliver a VR Aircraft De-icing Simulators to the USAF.

Over the past 24 months, the Company’s strategic focus has been on three main areas:

Sustain the baseline - Continue to successfully deliver Distributed Learning Solutions to our core strategic partners worldwide. SimiGon, directly and through its partners, now has training sites in North America, Europe, Middle East and in the Asia Pacific markets.

Expand market reach - Expand the utilization of our SIMbox technology to multiple domains. This was successfully achieved by targeting several high opportunity markets such as maintenance training, commercial equipment operators training and research labs that utilize SIMbox as part of their research.

Strengthen our technology capabilities - Improve the technological capabilities of the SIMbox technology in order to enable the growth of the Company as detailed above. Beyond the expansion of our graphics engine, simulation and learning management system, we have added and delivered Virtual Reality solutions to multiple clients around the globe.

During the Period, revenue was $5.03 million (2017: $4.34 million) and loss before tax expenses of $0.78 million (2017: loss before income tax of $0.96 million). The key contributor to the reported operating loss is the recording of a doubtful debt provision in a total of $0.45 million related to a delay in payment from a particular customer in the civilian training market, as previously announced. Though discussions continue with that a customer and legal action has been initiated, the Company has now recorded a full (as opposed to partial) doubtful debt provision for the client’s entire outstanding debt. Due to the removal of expected future revenues from this customer, our forward backlog order book has been revised from the previously announced $20 million to $14 million, which we expect to recognize over the next ten years.

The Company continues to maintain a strong balance sheet with liquid cash balances of $6 million as at 31 December 2018.

The Company’s R&D has made major advances in simulation software development tools, Image Generation (“IG”) capabilities, user performance and data analytics capabilities. These SIMbox technology improvements serve to increase opportunities and market penetration across military and civilian training markets. The team has made major strides adapting the platform to new domains and better leverage of the Company’s technology beyond the core defence market into commercial verticals and civilian / consumer applications. The Company is well positioned to take advantage of the fundamental shift in training through immersive experiences, including Virtual Reality, Augmented Reality and Mixed Reality.

SimiGon’s technology is well suited to support the improved realism and depth perception expected from high fidelity Virtual Reality solutions as well as being integrated with our Learning Management System and virtual instructor to provide immediate training and learning value. SimiGon integrated VR capability delivers time and cost savings with a level of immersion formerly available only through far more expensive VR headsets and dome projection systems.

SimiGon’s civilian training market opportunities range from maintenance, safety, energy and other industrial operations skills. The Company’s efforts to grow vertical Government and Civilian training are pressing forward. The Company recognizes the growth potential in VR-leveraged, as well AR training solutions and is aggressively developing and marketing relevant solutions to support this fundamental shift in the training world.

The enterprise VR training market is forecasted to grow at CAGR 140% and expected to generate $216 million in 2018 and grow to $6.3 billion in 2022.

SimiGon’s market position will improve for multiple reasons. Foremost, it serves virtually any domain. No less important, potential customers are seeking solutions supporting with user data tracking and analytics, high fidelity graphics, scalability and extensibility to support synchronous and asynchronous training. The Company already has these capabilities and is delivering advanced training solutions to the satisfaction of customers and partners. Third, SimiGon has a high customer retention rate, as clients turn to the Company to make additional deliveries in existing programs and support new programs.

The Company invests considerably to advance its technologies and improve user experience. The customer base, combined with the new technologies consistently being incorporated into our product releases, will meet and exceed customer requirements to improve our market share.

Operational Review

SimiGon’s core technology, SIMbox, and support services were developed for large simulation training programmes for the Government and Commercial sectors. The Company is at the forefront of designing, developing, implementing and supporting advanced simulation and training solutions to accelerate learning reduce safety risks and save training and program development costs for its clients. By leveraging its robust and agile SIMbox ecosystem, SimiGon and its partners can deliver simulation based training content across unlimited domains and across the hardware spectrum, from tablets and laptops/PCs to high fidelity training devices.

SimiGon’s strategic, simulation-based training solutions offer flexible licensing models with traditional software licensing or SaaS. SimiGon’s technologies and capabilities provide significant added value to multiple sectors.


The Company target markets as follows:

Aerospace and defence related industry

The Company’s historical core market is the aerospace and defence arena, particularly military aviation, where the Company continues to cement its position as a preferred technology supplier for the world’s largest military training programmes. The Company’s track record of delivering on time and within budget has led to winning new military-related contracts around the world, as well as serving to further entrench the Company with existing customers into new programmes.

Civilian and Commercial vertical markets

The global smart education and learning market size is expected to reach $423.2 billion by 2025 at a 15.2% CAGR, offering extensive expansion opportunities for SimiGon.

Millennials and Generation Z users learning experience is transforming the training industry as students are exposed to digital devices from a young age. Adaptive learning, simulation-based learning, blended learning, and collaborative learning, all part of SimiGon products, have subsequently evolved to offer users enhanced learning methodologies and experiences.

The simulation-based learning segment is anticipated to grow the fastest, enabling professional organizations and educational institutions to virtually experience real world environments for trainees to practice, navigate, explore, and obtain more information through a virtual medium before they start working on real-life tasks.

Growing awareness among people and rising popularity of smart education are encouraging solution providers to invest in research and development for creating more reliable, better, and cost-effective solutions.

The Company is very excited by increased market opportunities occurring in the civilian and mass consumer training segments being supported with new technologies such as VR and AR.

As an Open System Architecture (“OSA”) software framework, SimiGon’s ability to integrate with new technologies makes it viable long-term training simulation software fully capable of leveraging the immersive training needs of the VR civilian markets. SimiGon software offers an advanced solution to organizations seeking to teach visual and interactive problem solving in far ranging markets such as civilian aviation, technician training, language training, customer service training and corporate leadership.

SimiGon’s technology, experience and personnel, place it in a unique position to take advantage of the cultural shifts democratizing learning and training to reach the wider consumer market.

The Company’s significant capabilities, proven in the defence sector, are being leveraged to pursue new civilian training contracts. Two examples of potential applications are aircraft maintenance training and aircraft deicing technician training.

In 2018, SimiGon has successfully made entries into the civilian Unmanned Aircraft Systems (“UAS”) segment with a contract signed with the US Federal Aviation Administration ("FAA") announced in Jan 2018, to deliver SIMbox simulation development tools and training in support of the FAA's Advanced UAS Research Simulator (“AURS”). This contract demonstrated how SIMbox is an effective R&D toolset for design and development as well as an advanced training system platform.

The Company continues to further develop its disruptive, baseline, commercial off-the-shelf (“COTS”) product with additional top layer application content and capabilities to reach more end users and vertical markets. Targeted verticals such as commercial aviation maintenance training, security training, language training and vocational training have common requirements to the defence-related industries the Company continues to target. Specifically, they are highly regulated, require complex and specialized skill training and have zero tolerance for error. SimiGon is seeking to increase market share and broaden the end user applications for its base line SIMbox software platform in new domains.

For marketing investments, the Company has increased digital and print advertising, social media efforts and added presence at industry exhibitions, with booths at four industry symposiums, including the 2018 Singapore Airshow, ITEC in Europe, IITSEC and TSIS in the US as well as participation in smaller industry demos for select customers. Showcasing the Group’s newest developments to existing and potential partners and customers serve to increase the overall potential business net.

Business Model

SimiGon's strategy, in line with market requirements, is to focus on long-term, high value, stable SaaS license contracts that provide better revenue and profit visibility as a result of distributing over the Period in which they are provided rather than on single lump sum license sales.

With SaaS-based contracts, the recurring maintenance and support stream is already included in the contract terms. In addition, the Company maintains flexibility with its traditional perpetual license fee model where the Company is paid for software license and support, as well as providing turnkey solutions for customers and partners as a Prime contractor or Sub-contractor.

Growth Strategy

SimiGon Group is focused on growing organically through its existing customer base, offering continuous product developments and services; leveraging its experience and IP developed from existing contracts as a Prime Contractor and Subcontractor to win new business and capture sales in established segments; and expanding its core technology’s applicability for new market domains, directly and indirectly.

SimiGon’s highly scalable, COTS technology training management system makes it an ideal solution to address new training domains with little customization required. New projects and markets continue to utilize the product infrastructure and developer tools to create the new application content; once developed, they are leveraged to target the wider market.


The Company’s R&D investments are working to expand the Group’s offering to ensure it stays a leading provider of advanced technologies. This allows SimiGon to identify prospects while maintaining a programme of solutions, upgrades and enhancements to expand business with existing clients and winning new customers.

SimiGon realized numerous R&D milestones in the financial year. The Group’s Image Generator (“IG”) has undergone a complete technology refresh and now supports higher fidelity training devices, providing industry leading user experiences, providing high resolution graphics and accurate environmental conditions.

The Company has also remained astride with its VR device support, as it has for more than twenty years. VR and AR remain a Company focus and further R&D investment on these efforts will positively impact the Company’s growth potential and are central to remaining a viable technology option.

Significant contracts

New contracts

In February 2018 SimiGon was awarded with additional onsite support services for the sixteen T-6A Level 5 FTDs with the USAF. Under the Contract’s period of performance of 28 months, SimiGon will provide warranty support for the additional six simulators delivered as part of the task order with Booz Allen in 2016, and further onsite hardware and software support for all of the SIMbox-based simulators, including the ten simulators delivered to the USAF between 2011-2012 and then upgraded on 2016.

The Contract represents another milestone for SimiGon as it establishes a full CLS capability for the T-6A training devices. The simulators are used to provide thousands of training events annually for the USAF’s URT program and it further demonstrates the market’s recognition that SimiGon is capable of delivering support for the complete ecosystem, including software, hardware and onsite support.

In February 2018 the Company signed a contract with the US FAA to deliver the Company's SIMbox simulation software, SIMbox simulation development tools, and engineering services for the FAA's AURS. This was a follow-on order from the original contract announced in September 2017 and is worth approximately $120,000 and has been factored into management’s expectations for fiscal year 2018. The AURS supports human factors research and safety research within the FAA’s Aerospace Human Factors Research Division. SIMbox delivers the user interface for the operators in an aircraft simulation environment as well as a central repository for all components with the embedded configuration management capability.

In May 2018 SimiGon was contracted to provide VR simulation based training for USAF De-icing technicians. As part of the Contract, SimiGon will deliver its SIMbox-based VR aircraft de-icing training product. By incorporating fully immersive VR with SimiGon’s de-icing simulation product, USAF technicians will receive simulation based training that includes scoring, Playback/After Action Review, feedback reports, as well as a multi-player training capability.

Aircraft de-icing is a high skills task requiring annual training of military and commercial personnel working in cold weather aviation. Ice adds significant weight to aircraft and having “clean aircraft” is critical to safe travel. SimiGon understands the importance for operators to undergo adequate training to ensure proper operations, as mistakes can result in significant aircraft damage and flight cancellations. The Directors estimates the De-Icing market to include more than 100,000 trainees per year in the civilian market. SimiGon’s technology and business model is well suited for rapid product rollout to meet expected market demand and the Company is looking forward to successfully leveraging its aircraft de-icing training product for substantial business growth.

In September 2018, SimiGon was awarded with $1.1 million contract from the IAF to provide SIMbox-based T-6A Simulation Based Trainers to the IAF Flight Academy (the “Contract”). The Contract for the new trainers is a progression of SIMbox Ground Based Training Systems (“GBTS”) for other platforms in the IAF inventory, including the M-346 Advanced Jet Trainer (“AJT”). This Contract solidifies SIMbox as the IAF’s major training technology platform for its aircrew and maintainer academies. The Contract includes the procurement of SIMbox-based T-6A training devices in a fully immersive, VR environment. Up to 4 systems will be delivered in the first phase, enabling students to train through personal stations on most of the aspects of their syllabus. The stations will include high resolution Common Database terrain and VR headsets to support advanced training of Aerobatic, Formation, Navigation and Circuit procedures, together with standard procedural and emergencies training. In the second phase, a Virtual Instructor and a self-paced syllabus using high fidelity 3D simulation will be delivered, providing accelerated, cost-effective training to the IAF cadets.

In December 2018, SimiGon further expanded its long-term relationship with a major existing European customer (the "Customer"). The contract award is for SimiGon to provide its SIMbox Commercial Off the Shelf training and simulation development platform and delivery environment for its new research & development lab at the Customer’s facility (the "Contract"). The Customer will use SIMbox technology as the technology baseline for its ATC. Under the Contract, valued at $0.92 million, SimiGon has successfully increased the use of SIMbox in the additional programs across the Customer’s organization. The expected revenue from this Contract was already factored into management's expectations for the years ended 31 December 2018 and 2019. SIMbox-based training solutions will be used to design, develop and implement advanced training for flight crew and maintenance staff, for basic, advanced and recurrent training. The SIMbox Training Management System will allow the ATC to deploy the content and monitor user performance. The embedded virtual instructor capability will ensure dynamic, highly interactive, personalized, cost-effective training solutions that reduce the cost of real flights, flight instructor hours and help prevent aviation mishaps.

Long term contracts

The Company maintained its solid portfolio of long term partnerships developing further business and providing revenue visibility. Many of these partnerships are expected to continue with additional contracts through the 2018 financial year and beyond.

SimiGon continued its successful delivery milestones for a $2 million contract announced in June 2016 to provide F-16 maintenance simulation based training systems to the IAF’s technician school in Haifa, Israel. This contract, in the maintenance training domain, is a new, lucrative vertical for SimiGon and will provide us with the experience and credentials to leverage for similar new business opportunities in other regions and other sectors.

SimiGon continues its successful support for UKMFTS as a technology and services provider to Lockheed Martin. The Company continues to deliver under this long term contract, now in its ninth year of support, exceeding partner and end user expectations of SimiGon's technologies and performance.

Ongoing USAF contracts for the continued maintenance and support for SIMbox-based T-6A FTD demonstrates the long term relationship with this strategic customer.

Check-6 Inc., one of the leading providers of training solutions to the energy and mining industries, is another example of SimiGon's ability to help companies achieve new growth. Throughout this contract, SimiGon has successfully executed on its agreed deliverables. This relationship continues to yield long term business prospects. The Company is optimistic that additional agreements will be executed to extend this relationship.

The Company continues to support a major existing European customer the Company has been supplying with software and services since 2009. The customer is operating SimiGon training solutions in four different training centers daily and has very positive customer reviews. SimiGon is certain that this relationship will continue and lead to additional future orders.

Share buy-back programme

On 1 December 2017 the Company put in place an irrevocable, non-discretionary programme for the repurchase of up to $106,000 (approximately £79,000) of its ordinary shares (the "Programme"). The Programme is independently managed by finnCap Ltd, the Company's nominated adviser and broker, which will make trading decisions independently and without the influence of the Company. Any ordinary shares repurchased on behalf of the Company will be held in treasury and will be notified to a Regulatory Information Service in accordance with the AIM Rules for Companies. The Programme will last until the end of the Company's general meeting in 2018 or until the full $106,000 has been utilized, whichever is the soonest. The Programme is conducted within the pre-set parameters and in accordance with the authority granted by the Company's shareholders to repurchase shares at its last general meeting held on 8 September 2017. To date, pursuant to the Programme, a total of 535,571 shares have been bought back.

Financial Performance

Revenue for the year ended 31 December 2018 was $5.03 million, compared to $4.34 million in 2017. 29% of SimiGon's revenues came from North America (2017: 40%), 69% from Europe, Middle East, South America and Australia (2017: 42%) and 2% from the Far East (2017: 18%).

Gross profit for the year ended 31 December 2018 was $4.06 million, as compared to $3.36 million for the year ended 31 December 2017. Accordingly, gross margins increase to 81% for the year ended 31 December 2018 as compared to 78% for the year ended 31 December 2017.

Total operating expenses for the year ended 31 December 2018 increased by 12% to $4.82 million as compared to $4.32 million for the year ended 31 December 2017, mainly as a result of increase in R&D expenses and doubtful debt provision in a total amount of $0.45 million recorded in year 2018. Research and development expenses for year ended 31 December 2018 increased by 12% to $2.34 million as compared to $2.09 million for the year ended 31 December 2017 mainly due to salary expenses. Marketing expenses for the year ended 31 December 2018 decreased by 13% to $1.02 million as compared to $1.17 million for the year ended 31 December 2017 mainly due to sales commissions and salary expenses. General and administration expenses for the year ended 31 December 2018 increased by 38% to $1.46 million as compared to $1.06 million the year ended 31 December 2017 mainly due to provision for doubtful debts recorded in year 2018 of $0.45 million.

Operating loss for the year ended 31 December 2018 was $0.76 million, as compared to $0.96 million for the year ended 31 December 2017. Operating loss excluding doubtful debt provision decreased by 68% to $0.31 million as compared to year 2017 ($0.96 million).

The Company has recorded non cash tax expense of $0.24 million for the year ended 31 December 2018 mainly as a result of a deferred tax asset in relation to the expected utilization of carry forward losses against expected income in future years.

As a consequence of the factors above, net loss for the fiscal year of $1.01 million (2017: net loss of $0.95 million). The net loss excluding doubtful debt provision, decrease by 41% to $0.56 million as compared to year 2017 ($0.95 million).

Net basic and diluted loss per share was to $0.02 for the year ended 31 December 2018 as compared to net basic and diluted earnings per share of $0.02 for the year ended 31 December 2017.

As at 31 December 2018 the Company had liquid cash of $6.00 million as compared to $7.79 million as at 31 December 2017. Trade receivables net increased by 47% to $2.57 million compared to $1.75 million for the year ended 31 December 2017, mainly as a result of work completed as part of the IAF F16 Maintenance Trainer long-term program. A total of $0.64 million of the year end trade receivables balance has been collected since the year end.


SimiGon’s impressive past and ongoing performance of developing and delivering cost effective technologies and solutions for the simulation and training market remains solid and due to its latest developments is in fact trending higher. Combined with strong economic growth and the focus on ensuring sufficiently trained maintainers to support military and civilian shortages and essential investments in training applications for millennials and Generation Z, the Company looks forward to meeting the challenges and capturing the growth foreseen by shareholders. Among the Company’s advantages is its ability to scale rapidly to support new contracts and deliver in its vision and business strategy. SimiGon’s push to reach new verticals and customers is steadfast.

By increasing SaaS-based contracts for more recurring revenue and better long term visibility, together with intensive R&D investment and business development efforts on multiple market opportunities, the Company expects to quickly resume cash flow positive activities and profitability.

View complete announcement on London Stock Exchange Website

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