28 Apr 2014 07:00
28 April 2014
SimiGon Ltd
("SimiGon" or "the Company")
Audited full year results and maiden dividend declaration
SimiGon, a global leader in providing simulation solutions, is pleased to announce its audited full year results for the year ended 31 December 2013.
Financial Highlights
· Revenues increased by 20% to $8.17 million (2012: $6.81 million)
· Net profit increased by 27% to $0.9 million (2012: $0.71 million)
· Gross margin of 75% (2012: 80%)
· Significant increase in cash and cash equivalents and short term bank deposits at the year end to $8.61 million (31 December 2012: $7.11 million) and the Company has no outstanding bank debt
· Maiden dividend declared at 0.543 cents per share
Operational Highlights
New major contract:
· Won a significant contract worth $6.7 million, securing access to a major new geographical region and further cementing role as prime contractor
Delivering on all long term contracts:
· Now in its sixth year supporting Lockheed Martin's F-35 Lightning II Joint Strike Fighter training program (JSF);
· Entered the fifth year of supporting the UK Military Flying Training System;
· In the fifth year of a long-term contract to provide training simulations for a strategic European aircraft manufacturer;
· In the third year of a contract with Check-6, the Company's first major contract outside the aerospace and defence industry; and
· Awarded additional contract from U.S. Air Force Air Education Training Command in July 2013
Post period-end events:
· Entered civil aviation market in China, through joint venture, with a contract worth $0.75 million
Ami Vizer, Chief Executive Officer of SimiGon, stated: "We are delighted to announce another year of strong revenue growth and increased profits. 2013 saw SimiGon expand into new territories, secure significant new contracts and further cement our role as a prime contractor as we continued to provide a highly valued solution to our customers.
"Looking ahead, we will continue to leverage our leading position and our improved global footprint to build new partnerships, expand our customer base, and target even larger contracts. 2014 has begun positively with strong demand for our solutions and a robust pipeline of exciting new opportunities. In addition, we are encouraged by our first foray in to the civil aviation market in China, the world's fastest growing aviation market. As a result of our strong progress, we view the future with confidence as demonstrated by the Company's maiden dividend."
Enquiries:
SimiGon Ltd Ami Vizer, Chief Executive Officer Efi Manea, Chief Financial Officer www.simigon.com
|
Tel: +1 (407) 737 7722 |
finnCap (NOMAD & Broker) Stuart Andrews / Henrik Persson
|
Tel: +44 (0) 207 220 0500 |
Luther Pendragon (Public Relations) Harry Chathli / Alexis Gore / Oliver Hibberd
|
Tel: + 44 (0) 207 618 9100 |
Overview
SimiGon is pleased to report another year of strong revenue and profit growth in 2013, both as a result of significant new business being won within the period, and an increase in recurring revenues from existing strategic partners. Revenues increased 20% to $8.17 million (2012: $6.81 million), resulting in a $0.9 million net profit (2012: $0.71 million).
The management's strategic decision to align itself with some of the largest global simulation and training projects in the world and move up in the supply chain to become a prime contractor is bearing fruit as evidenced by the positive results in 2013. Consequently, the Company is encouraged by being able to target significantly larger contracts, such as the $6.7 million contract that the Company was pleased to announce in June 2013.
As stated at the time of the interim results, the successful transition to becoming a prime contractor involves an increase in hardware sales alongside SimiGon's software which affects its margins. As expected margins improved in the second half following the successful deployment of the hardware systems in the first half and were 75% for the full year compared with 80% last year, which the Company continues to believe remain higher than the sector average.
The strategy, foundations and combination of new and extended contracts have now been established, the Company's reputation in the market has been enhanced, and the Company now believes it now has an ideal platform for growth in both the short and long term.
Operational Review
2013 saw SimiGon take another significant step forward in cementing its position as the provider of choice for large simulation training programs. The Company has continued to deliver upon its long term contracts on time and on budget, often exceeding customer expectations in both the execution of delivery and performance of its systems, enhancing the Company's chances of extensions being agreed.
The Company is particularly pleased, in June 2013, to have secured a $6.7 million contract to provide, as a prime contractor, a SIMbox training solution and delivery upon this contract has progressed well with a number of milestones already reached.
Being prime contractor gives the Company a direct relationship with the customer, further secures us with increased visibility of long term revenues and opens up new and potentially significantly larger opportunities with customers. Positioning SimiGon in this way puts the company in the window for some of the largest simulation training contracts in the world and the Company is now targeting contracts far larger than had previously been possible.
Furthermore, SimiGon has continued to enhance its prospects for securing new contracts by further diversifying its product offering and entering new markets as demonstrated by the move into the rapidly growing civil aviation market in China.
Cementing role as prime contractor
In June 2013 the Company secured one of the largest contracts in its history, valued at $6.7m and expected to be delivered over an 18 month period, and thereby also opened up a major new geographical region for SimiGon. The Company has already begun to deliver upon this contract, which comprises Phase I of the customer's program, and believes there remains potential for similar contracts with this customer in potential subsequent phases.
Long-term contracts
The Company is pleased to have continued to develop and further a number of long-term relationships during the year, with certain particular relationships described further below:
SimiGon continues to successfully deliver upon its exclusive contract, signed in October 2011, with Check-6 Inc., one of the leading providers of training solutions to the energy and mining industries, for the provision and delivery of SIMbox based training solutions.
SimiGon maintains its close relationship with a major existing European customer that it has been working with since 2009. Following additional orders, received during 2013, the Company is confident that this relationship will continue and lead to additional orders in the future.
In late 2011, SimiGon was selected as prime contractor for AETC for the delivery of SIMbox based T-6A Modular Training Devices. After the successful delivery of the initial phase, this agreement was subsequently extended in July 2013 as SimiGon secured an additional contract from AETC to support and maintain all of the T-6A Modular Training Devices used in the training of all Remote Piloted Aircraft students. This specific contract is valued over an 18 month period and further evidence of the long term nature of the relationship with this valued partner.
In addition to its longstanding relationship with AETC, SimiGon is now in its sixth year supporting Lockheed Martin's JSF training program a contract that has consistently been delivered on time and on budget.
SimiGon is also in its fifth year supporting the UK Military Flying Training System. The Company has continued to deliver upon this long term contract, often exceeding customer expectations in both the execution of delivery and performance of its systems.
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 growing UAV market.
Maiden dividend declaration
In light of the strong cash position and its confidence in continued strong cash generation, the Board intends to pay a maiden dividend of 0.543 cents per share.
The Company remains keen to reinvest its strong organic cash flow from existing operations into the growth of the business. The directors recognise, however, the importance of a cash dividend to certain shareholders and potential investors and have therefore decided to commence the payment of annual dividends, equating to approximately 30% from the Company's earnings per share and to approximately 30% of the Company's net profit, and subject to the Board believing that it is prudent to do so. The dividend will be payable on Friday, 30 May 2014. The record date of payment of the dividend will be Friday 9 May 2014. The ex-dividend date will be Wednesday 7 May 2014.
According to 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 of Tuesday, 6 May 2014.
Financial Performance
Revenue for the year ended 31 December 2013 was $8.17 million, compared to $6.81 million in 2012, reflecting increase of 20%. In terms of regional breakdown, 62% of SimiGon's revenues came from North America (2012: 72%), 17% from Europe and the Middle East (2012: 25%) and 21% from the Far East (2012: 2%).
Net profit for the fiscal year increased by 27% to $0.9 million (2012: profit of $0.71 million).
Total operating expenses for the year increased by 8% to $5.1 million (2012: $4.73 million). Research and development expenses increased to $2.40 million (2012: $2.15 million) mainly due currency exchange rates between the NIS and the USD and the investment made in recruiting new research and development employees. Sales and marketing expenses increased by 5% to $1.65 million (2012: $1.57 million) and general and administration expenses increased to $1.05 million (2012: $1.02 million).
The operating profit therefore is $1.0 million (2012: $0.71 million) and the net profit is $0.9 million in 2013 compared to net profit of $0.71 million in 2012. This resulted in a net basic and diluted earnings per share of $0.02 (2012: Basic and diluted earnings per share of $0.02).
SimiGon generated positive cash flow from operations of $1.93 million in 2013 resulting in the Company having cash, cash equivalents and deposits totaling $8.61 million as of 31 December 2013 (31 December 2012: $7.11 million) with no outstanding bank debt.
Outlook
SimiGon's successful transition to becoming a prime contractor, its robust pipeline of new opportunities and increasingly strong financial position strengthens the Board's confidence in the Company's long term prospects as demonstrated by the Company's maiden dividend declaration.
The positive momentum seen in 2013 has been maintained at the start of 2014 and as a result the Company expects to see continued growth in revenues and profit in 2014.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, | ||||||
2013 | 2012 | |||||
U.S. dollars in thousands | ||||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | 8,100 | 6,550 | ||||
Short-term bank deposits | 511 | 556 | ||||
Trade receivables | 249 | 656 | ||||
Other accounts receivable and prepaid expenses | 69 | 41 | ||||
Total current assets | 8,929 | 7,803 | ||||
NON-CURRENT ASSETS: | ||||||
Restricted cash | 404 | 23 | ||||
Long-term prepaid expenses | 31 | 25 | ||||
Property, plant and equipment | 115 | 132 | ||||
Intangible assets, net | 1,223 | 1,274 | ||||
Total non-current assets | 1,773 | 1,454 | ||||
Total assets | 10,702 | 9,257 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, | ||||||
2013 | 2012 | |||||
U.S. dollars in thousands | ||||||
EQUITY AND LIABILITIES | ||||||
CURRENT LIABILITIES: | ||||||
Trade payables | 143 | 140 | ||||
Deferred revenues | 1,218 | 1,005 | ||||
Other accounts payable and accrued expenses | 808 | 678 | ||||
Total current liabilities | 2,169 | 1,823 | ||||
NON-CURRENT LIABILITIES: | ||||||
Employee benefit liabilities, net | 177 | 141 | ||||
Other non-current liabilities | 777 | 748 | ||||
Total non-current liabilities | 954 | 889 | ||||
Total liabilities | 3,123 | 2,712 | ||||
EQUITY: | ||||||
Share capital | 113 | 113 | ||||
Additional paid-in capital | 16,248 | 16,110 | ||||
Accumulated deficit | (8,782) | (9,678) | ||||
Total equity | 7,579 | 6,545 | ||||
Total liabilities and equity | 10,702 | 9,257 | ||||
SIMIGON LTD
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended December 31, | ||||||||
2013 | 2012 *) | 2011 *) | ||||||
U.S. dollars in thousands (except share and per share amounts) | ||||||||
Revenues | 8,172 | 6,805 | 5,484 | |||||
Cost of revenues | 2,070 | 1,367 | 828 | |||||
Gross profit | 6,102 | 5,438 | 4,656 | |||||
Operating expenses: | ||||||||
Research and development, net | 2,404 | 2,145 | 1,695 | |||||
Selling and marketing | 1,652 | 1,568 | 1,699 | |||||
General and administrative | 1,048 | 1,015 | 979 | |||||
Total operating expenses | 5,104 | 4,728 | 4,373 | |||||
Operating profit | 998 | 710 | 283 | |||||
Other income | - | 26 | - | |||||
Finance income | 57 | 126 | 305 | |||||
Finance expense | 159 | 154 | 267 | |||||
Net income | 896 | 708 | 321 | |||||
*) Restated to reflect the implementation of IAS 19 (Revised) Employee Benefits.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended December 31, | ||||||||
2013 | 2012 *) | 2011 *) | ||||||
U.S. dollars in thousands (except share and per share amounts) | ||||||||
Net income | 896 | 708 | 321 | |||||
Other comprehensive income not to be reclassified to profit or loss in subsequent period: | ||||||||
Remeasurement gain (losses) from defined benefits plan | **) - | (16) | 29 | |||||
Total comprehensive income | 896 | 692 | 350 | |||||
Basic and diluted earnings per share in U.S. dollars | 0.02 | 0.02 | 0.01 |
Weighted average number of shares used in computing basic earnings per share (in thousands) | 47,188 | 45,884 | 42,867 | |||||
Weighted average number of shares used in computing diluted earnings per share (in thousands) | 49,131 | 46,454 | 42,932 |
*) Restated to reflect the implementation of IAS 19 (Revised) Employee Benefits.
**) Represents an amount lower than $ 1 thousand.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Number of shares | Share capital | Additional paid-in capital | Accumulated deficit | Total equity | ||||||
U .S. dollars in thousands (except share amounts) | ||||||||||
Balance as of January 1, 2011 | 41,642,283 | 98 | 15,644 | (10,720) | 5,022 | |||||
Net income | - | - | - | 321 | 321 | |||||
Other comprehensive income: | ||||||||||
Actuarial gain from defined benefit plan *) | - | - | - | 29 | 29 | |||||
Total comprehensive income | - | - | - | 350 | 350 | |||||
Issuance of shares | 2,444,984 | 7 | - | - | 7 | |||||
Share-based compensation | - | - | 353 | - | 353 | |||||
Exercise of stock options | 47,502 | **) - | - | - | **) - | |||||
Balance as of December 31, 2011 | 44,134,769 | 105 | 15,997 | (10,370) | 5,732 | |||||
Net income | - | - | - | 708 | 708 | |||||
Other comprehensive income: | ||||||||||
Actuarial losses from defined benefit plan *) | - | - | - | (16) | (16) | |||||
Total comprehensive income | - | - | - | 692 | 692 | |||||
Issuance of shares | 3,009,106 | 8 | - | - | 8 | |||||
Share-based compensation | - | - | 112 | - | 112 | |||||
Exercise of stock options | 9,304 | **) - | 1 | - | 1 | |||||
Balance as of December 31, 2012 | 47,153,179 | 113 | 16,110 | (9,678) | 6,545 | |||||
*) Restated to reflect the implementation of IAS 19 (Revised) Employee Benefits.
**) Represents an amount lower than $ 1 thousand.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Number of shares | Share capital | Additional paid-in capital | Accumulated deficit | Total equity | ||||||
U .S. dollars in thousands (except share amounts) | ||||||||||
Balance as of January 1, 2013 | 47,153,179 | 113 | 16,110 | (9,678) | 6,545 | |||||
Net income | - | - | - | 896 | 896 | |||||
Other comprehensive income: Actuarial losses from defined benefit plan | - | - | - | *) - | *) - | |||||
Total comprehensive income | - | - | - | 896 | 896 | |||||
Issuance of shares | 119,727 | *) - | - | - | *) - | |||||
Share-based compensation | - | - | 137 | - | 137 | |||||
Exercise of stock options | 19,800 | *) - | 1 | - | 1 | |||||
Balance as of December 31, 2013 | 47,292,706 | 113 | 16,248 | (8,782) | 7,579 | |||||
*) Represents an amount lower than $ 1 thousand.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, | ||||||
2013 | 2012 | 2011 | ||||
U.S. dollars in thousands | ||||||
Cash flows from operating activities: | ||||||
Net income | 896 | 708 *) | 321 *) | |||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||
Adjustments to the profit or loss items: | ||||||
Depreciation and amortization | 98 | 98 | 85 | |||
Gain on disposal of fixed assets | - | (26) | - | |||
Finance expense (income), net | (1) | (3) | 16 | |||
Accrued interest on non-current liabilities | 28 | (12) | (124) | |||
Share-based compensation | 137 | 112 | 353 | |||
Change in employee benefit liabilities, net | 36 | 17 *) | 15 *) | |||
Changes in asset and liability items: | ||||||
Decrease in trade receivables | 407 | 584 | 2,137 | |||
Decrease (increase) in other accounts receivable and prepaid expenses (including long-term) | (21) | 260 | (222) | |||
Increase (decrease) in trade payables | 3 | (34) | (31) | |||
Increase (decrease) in deferred revenues | 213 | 892 | (296) | |||
Increase (decrease) in other accounts payable and accrued expenses | 132 | (84) | 72 | |||
1,032 | 1,804 | 2,005 | ||||
Cash paid and received during the year for: | ||||||
Interest paid | - | (1) | (24) | |||
Interest received | 1 | 4 | 9 | |||
1 | 3 | (15) | ||||
Net cash provided by operating activities | 1,929 | 2,515 | 2,311 | |||
*) Restated to reflect the implementation of IAS 19 (Revised) Employee Benefits.
SIMIGON LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, | ||||||
2013 | 2012 | 2011 | ||||
U.S. dollars in thousands | ||||||
Cash flows from investing activities: | ||||||
Proceeds from disposal of fixed assets | - | 36 | - | |||
Increase in restricted cash | (381) | (23) | - | |||
Decrease (increase) in short-term bank deposits | 45 | (45) | - | |||
Increase in long-term deposits | (12) | - | - | |||
Purchase of fixed assets | (30) | (103) | (37) | |||
Net cash used in investing activities | (378) | (135) | (37) | |||
Cash flows from financing activities: | ||||||
Proceeds from share issuance | *) - | 2 | *) - | |||
Exercise of stock options | 1 | 1 | *) - | |||
Repayment of long-term bank loan | - | (188) | (563) | |||
Proceeds from (repayment of) refundable grants | (2) | 124 | 410 | |||
Net cash used in financing activities | (1) | (61) | (153) | |||
Increase in cash and cash equivalents | 1,550 | 2,319 | 2,121 | |||
Cash and cash equivalents at beginning of year | 6,550 | 4,231 | 2,110 | |||
Cash and cash equivalents at end of year | 8,100 | 6,550 | 4,231 | |||
(a) | Supplemental disclosure of non-cash financing activities: | ||||||
Receivable in respect of issuance of shares | *) - | 6 | 6 |
*) Represents an amount lower than $ 1 thousand.