SIM.L Regulatory News (SIM)

 13 April 2015

SimiGon Ltd

("SimiGon" or "the Company")

Audited full year results and annual 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 2014.

Financial Highlights

· Net profit increased by 51% to $1.36 million (2013: $0.90 million)

· Revenues increased by 2% to $8.32 million (2013: $8.17 million)

· Gross margin of 76% (2013: 75%)

· Basic and diluted EPS of $0.03 (2013: $0.02)

· Annual dividend declared at 0.6 cents per share

Operational Highlights

New major awards:

· Awarded additional three years maintenance and support contract worth $0.8 million for major European customer

· Signed new license agreement with Corporacion de Alta Tecnologia para la Defensa (Codaltec), a leading Latin American high technology corporation

· Selected by the University of Central Florida (UCF), the second largest university in the U.S and an internationally recognized academic leader in the field of modeling, simulation and training

· Signed Chinese civil aviation training agreement, initially worth $0.75 million

Delivering on all long term contracts: 

· Delivering on project milestones on $6.7 million contract awarded in June 2013

· Now in our seventh year supporting Lockheed Martin's F-35 Lightning II Joint Strike Fighter training program (JSF);

· Entered the sixth year of supporting the UK Military Flying Training System;

· In the sixth year of a long-term contract to provide training simulations for a strategic European aircraft manufacturer;

· In the fourth year of a contract with Check-6, the Company's first major contract outside the aerospace and defence industry; and

· Now in our second 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: "We are delighted to announce another year of strong growth in profitability and increased revenue as a result of achieving milestones set out in our growth strategy. SimiGon has continued to expand into new territories, secure significant new contracts and further cement its role as a prime contractor as it continues to provide a highly valued solution to our customers. Generating sales from the successful delivery of key projects and winning new strategic contracts, we are very pleased with our strong performance in 2014

"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. SimiGon has excellent revenue visibility based on our long term contracts and a strong order book in place. As a result the board enters 2015 with increased confidence in delivering continued year-on-year growth and viewing the future with confidence as demonstrated by the Company's continued annual dividend distribution."

Enquiries:

Overview

SimiGon is pleased to report another year of strong growth in profitability and increased revenue, both as a result of new business being won within the period and an increase in recurring revenues from existing strategic partners. The Company's net profit increased by 51% to $1.36 million (2013: $0.9 million) and revenues increased by 2% to $8.32 million as compared to $8.17 million in 2013.

SimiGon's ability to capture a share of the largest global simulation and training projects has enabled the Company to increase its strategic business scope and potential revenue. Chief among these initiatives is competing as a prime contractor for multiple government contracts in the defence sector. As a prime contractor, aside from larger contracts, by interfacing directly with the customer, the Company has another opportunity to build a long term relationship with the end user.

SimiGon has a blossoming partnership in the Chinese civil aviation market and as well as seeing multiple opportunities on the horizon for military and civilian pilot training services, the Company is inclined to pursue this area more aggressively in the future.

As stated at the time of the interim results, the Company delivered a strong performance for 2014 and has a bedrock foundation for 2015 and beyond. Our market position as a preferred supplier for simulation and training technologies and solutions has been solidified by our work this past year.

The revenue mix of new contracts and support contracts, along with a growth strategy, means that the tools are in place to build a larger business. The Company believes it is well positioned for immediate and long term growth.

SimiGon continues to focus on developing further strategic programs that will assist the Company's long term growth. Our ability to grow business and bolster our strong financials is demonstrated by greater revenue visibility and our robust pipeline of new opportunities for 2015 and beyond.

Operational Review

During the year, SimiGon strengthened its position as the provider of choice for large simulation training programs. The Company continues to be a leading supplier of training and simulation technologies for the world's largest military flight training programmes while expanding into vertical markets such as military and civil aviation training. In positioning itself as a prime contractor for major, long term simulation training and services programmes, SimiGon's market reach has expanded to new areas while its technologies continue to lead the industry.

As a prime contractor, SimiGon benefits from a direct relationship with the customer which gives us increased visibility of the market and long term revenues while affording valuable insight into new and potentially significantly larger opportunities. This places SimiGon in the spotlight for some of the industry's largest simulation training contracts with the Company now targeting programs far larger than had previously been possible.

SimiGon has enhanced its prospects for securing new contracts by further diversifying its training products and services by entering new markets, such as the rapidly growing civil aviation market in China.

Major Training systems deliveries as prime contractor

SimiGon is currently fulfilling training system deliveries milestones under the $6.7 million contract announced in June 2013. This contract was a milestone contract for the Company in terms of the value of the order and the location.

The Company expects that its performance under this contract will lead to subsequent contracts with the customer.

Expanding into civil aviation market 

SimiGon announced in February 2014 that it had successfully entered the civil aviation training services market with a joint venture (JV) agreement with a leading Chinese aviation services company. The initial contract valued at $0.75 million, will provide the new entity with SimiGon's SIMbox technology for developing its training solutions.

SimiGon has identified the civil aviation market as a long term growth driver. With China's well known burgeoning civilian aviation market, this JV is an ideal entry point for SimiGon in this attractive sector and region.

New major contracts

SimiGon signed a new license agreement with Corporacion de Alta Tecnologia para la Defensa (Codaltec), a leading Latin American high-technology corporation, as announced in September 2014. Codaltec was formed in August 2012 by the Colombian Government to meet the defense sector's needs, including training and simulation for her armed forces. 

Codaltec has agreed to extend its original agreement with SimiGon and purchase additional software licenses to support its numerous training programs. The partnership is evidence of how companies adopt SimiGon's technology to rapidly develop and deliver a higher quality training and simulation solution for their customers. It is another significant endorsement for SimiGon and a milestone in this growing relationship.

SimiGon strengthened its relationship with a major European customer in August 2014 when it announced a three year agreement valued at $0.8 million to provide additional maintenance and support services for the customer's simulation training centers. 

Long term contracts

The Company has a growing portfolio of long term partnerships that continue to blossom into further business and provide good revenue visibility. Many of these partnerships are expected to continue with additional purchases in 2015.

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 their 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 confident the partnership will be extended with additional agreements.

In October 2014, SimiGon secured maintenance and support contract from the USAF for the SIMbox based T-6A Modular Training Devices it delivered as part of a June 2011 contract. This support 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. Following additional orders, received during 2014, the Company is confident that this relationship will continue and lead to additional orders in the future.

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 22% of the Company's earnings per share. The dividend will be payable on Friday, 29 May 2015. The record date of payment of the dividend will be Friday, 8 May 2015. The ex-dividend date will be Thursday, 7 May 2015.

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 of Wednesday, 6 May 2015.

Financial Performance

Revenue for the year ended 31 December 2014 was $8.32 million, compared to $8.17 million in 2013, an increase of 2%. In terms of regional breakdown, 50% of SimiGon's revenues came from North America (2013: 62%), 14% from Europe and the Middle East (2013: 17%) and 36% from the Far East (2013: 21%).

Net profit for the fiscal year increased by 51% to $1.36 million (2013: profit of $0.90 million).

Total operating expenses for the year decreased by 2% to $5.02 million (2013: $5.10 million). Research and development expenses were $2.38 million (2013: $2.40 million) reflecting SimiGon's continued investment in its product development. Sales and marketing expenses decreased by 12% to $1.46 million (2013: $1.65 million) mainly due to a decrease in salary and related benefits expenses and general and administration expenses increased to $1.18 million (2013: $1.05 million) mainly due to professional fees.

The operating profit therefore is $1.31 million (2013: $1.0 million) and the net profit is $1.36 million (2013: $0.9 million). This resulted in an increase in net basic and diluted earnings per share of $0.03 (2013: $0.02).

Outlook

SimiGon has cemented its position as a prime contractor for major, long term simulation training programmes, expanded into new territories and diversified its offering. As a result of achieving milestones set in its growth strategy, the Company continues to deliver strong growth in profitability and increased revenue.

With excellent revenue visibility as a result of our long term contracts and a strong forward order book, the board enters the current financial year with increased confidence in delivering continued year-on-year growth as demonstrated by the Company's continued annual dividend distribution".

SIMIGON LTD

AND ITS SUBSIDIARIES

The accompanying notes are an integral part of the consolidated financial statements.

SIMIGON LTD

AND ITS SUBSIDIARIES

SIMIGON LTD

AND ITS SUBSIDIARIES

SIMIGON LTD

AND ITS SUBSIDIARIES

SIMIGON LTD

AND ITS SUBSIDIARIES

*) Represents an amount lower than $ 1 thousand.

SIMIGON LTD

AND ITS SUBSIDIARIES

SIMIGON LTD

AND ITS SUBSIDIARIES

SIMIGON LTD

AND ITS SUBSIDIARIES