SIM.L Regulatory News (SIM)

31 Jul 2007 07:02

SimiGon Limited31 July 2007 Interim Results for the six months to 30 June 2007 SimiGon Ltd (the Company together with its subsidiary "SimiGon" or the "Group"),a global leader in providing simulation solutions, announces its interim resultsfor the six months to 30 June 2007. Financial Highlights • Turnover was in-line with revised guidance of $ 1.53m (H1 2006: $3.7m) • Loss before tax was $1.87m (H1 2006: Profit $1.01m) • Gross margin at 63.7% (2006: 84.1%) • Strong balance sheet with net cash and short-term deposits of $6.1m at 30 June 2007 ($1.64m at 30 June 2006 and $8.9m at 31 December 2006) Operational Highlights • Continued to leverage its core product SIMbox to increase market share in existing markets and laid solid foundations in newer markets • Partner of choice to provide Learning and simulation systems within Lockheed Martin's winning bids for the UK's Military Flying Training System and Singapore's Basic Wings Course • Post Balance sheet events: - Lockheed Martin's selects SIMbox technology for its JSF NxLearn training program, the world's largest programme of its kind - Canadian Air force extends SimiGon contract for Winged Warriors exercise Ami Vizer, Chief Executive Officer of SimiGon stated: "While much of the growthwe had expected to see in 2007 has been pushed back, SimiGon is makingsignificant progress in its core business as it establishes itself as thepartner of choice to deliver simulation training for the largest trainingprograms in the world. The selection of our technology by Lockheed Martin for the JSF training program,is a very significant milestone for SimiGon, one which we will leverage to winadditional programs in the defence sector as well as the commercial markets. "Looking ahead, although the growth in new territories is taking longer thananticipated, the Group has many opportunities in its core areas. As a result, weare confident about the long term growth prospects of the Group and our abilityto deliver shareholder value." Enquiries: SimiGon LtdAmi Vizer, Chief Executive Officer +972 9 956 1777Haim Yatim, Chief Financial Officer Corfin CommunicationsHarry Chathli, Ben Hunt 020 7929 8989 Operational Review Since the beginning of the year the Group has continued to leverage its coreproduct SIMbox to increase market share in its existing markets and laid solidfoundations in newer markets. The Group is the partner of choice to providelearning and simulation systems within Lockheed Martin's winning bids for theUK's Military Flying Training System and Singapore's Basic Wings Course. As stated in its statement of 8 June 2007, sales growth were lower than expecteddue to delay of a programme with a customer in the Far East to ensure compliancewith applicable regulations. Also, in Europe, two customers have delayed their purchase of the Group'sD-Brief systems until next year. In addition the Group also saw slower sales inits AirTrack products to the commercial airlines who are taking longer toupgrade their in-flight entertainment system. Though most of the Group's earnings are from North American defence-relatedcontracts, the Group has identified several opportunities in Europe and longterm sales growth in this region is expected. The Group successfully delivered an Air Traffic Control training system to aleading Middle Eastern air force. After the end of the first half, the Group was delighted to announce that theNxLearn Learning Management System, built around its unique learning framework,SIMbox, has been selected for the F-35 Lightning II Joint Strike Fighter (JSF)training program. NxLearn will be an integral part of the JSF training systemand is one element of NxSys, a Lockheed Martin (NYSE: LMT) integrated trainingsystem infrastructure. The SIMbox technology in NxLearn provides a variety oftraining benefits, allowing easy creation and distribution of advanced SCORM2004 content. By providing solutions for multiple requirements, NxLearn willenable the JSF program to meet critical support lifecycle costs. Lockheed Martinanticipates that F-35 training systems will be delivered over the lifespan ofthe JSF program. Additionally, SimiGon has been selected to provide the technologicalinfrastructure for the Tactical Aviation Training course of Canada's Air Force,extending a successful relationship between the two parties. SimiGon's AirBooktechnology is planned to be at the heart of Winger Warrior 2007, the CanadianAir Force's next major virtual training exercise, which will take place inOctober, although deployment of the systems is expected to take place in August2007. The Group continues to invest in research and development to ensure it maintainsits position as a leading developer and global supplier of e-simulation softwareto the defence, aviation and industrial sectors. Financial Performance Revenue for the six months ended 30 June 2007 was $1.53 million (H1 2006: $3.7m) decrease of 59 %. Gross profit for the six months ended 30 June 2007 was $0.98 million (H1 2006: $2.99 million). Total operating expenses for the six months ended 30 June 2007 increased by 55%to $3.02 million (H1 2006: $1.95 million), the increase in research and development expenses to $1.33 million (H1 2006: $1.15 million), sales and marketingexpenses to $0.87 million (H1 2006:$0.47 m) and general and administration expenses to $0.81 million (2006: $0.3 million) is due to salary increases and the costs related to being a public company. An operating loss of $2.04 million was incurred (H1 2006: $1.04 million profit).This resulted in a net loss for the first half of $1.87 million compared to anet profit of $1.01 million in H1 2006.The Group reports a net basic and dilutedloss per share of $0.05 (H1 2006: $0.03 basic and diluted earnings per share). As of 30 June 2007, SimiGon had cash, cash equivalent and deposits in the amountof $6.15 million. As of 30 June 2007, the Group had 64 employees, compared to 55 employees in 30June 2006. Outlook The market for simulation and training technologies and services remains robustand continued to grow and SimiGon is making significant progress in its corebusiness as it establishes itself as the partner of choice to deliver simulationtraining. 2007 will be a transitional year in which SimiGon is growing beyond small shortterm programs to being part of multi million long term contracts with theworld's best known defence contractors. This enables the Group to have a steadyrevenue stream and good visibility of future revenue. However, the risks in theinitial stages is that there is a timing lag between ,being selected as thepreferred supplier of simulation training technology and commencement of thedelivery of the systems. Hence, it is difficult to predict from when the Groupwill start recognizing the revenues. Looking ahead, although the growth in new territories is taking longer thananticipated, the Group has many opportunities in its core areas and is part ofthe largest training programs in the world. As a result, the management team isconfident in the long term growth prospects of the Group and its ability todeliver shareholder value. CONSOLIDATED BALANCE SHEETS June 30, December 31, 2007 2006 -------- ---------- Unaudited Audited -------- ---------- U.S. dollars in thousands -------------------------------- ASSETS CURRENT ASSETS:Cash and cash equivalents 6,145 8,226Short-term bank deposit - 655Trade receivables 906 1,299Other accounts receivable and prepaid expenses 223 215 -------- ---------- Total current assets 7,274 10,395 -------- ---------- PROPERTY AND EQUIPMENT, NET 201 179 -------- ---------- INTANGIBLE ASSETS, NET 1,612 - -------- ---------- Total assets 9,087 10,574 ======== ========== LIABILITIES AND EQUITY CURRENT LIABILITIES:Short-term bank loans - 200Trade payables 401 139Deferred revenues 89 104Other accounts payable and accrued expenses 999 785 -------- ---------- Total current liabilities 1,489 1,228 -------- ---------- SEVERANCE PAY LIABILITY 300 252 -------- ---------- Total liabilities 1,789 1,480 -------- ---------- EQUITY:Share capital 89 89Additional paid-in capital 14,327 14,251Accumulated deficit (7,118) (5,246) -------- ---------- Total equity 7,298 9,094 -------- ---------- Total equity and liabilities 9,087 10,574 ======== ========== CONSOLIDATED STATEMENTS OF OPERATIONS Six months ended Year ended June 30, December 31, 2007 2006 2006 -------- -------- -------- Unaudited Audited --------------- -------- U.S. dollars in thousands ---------------------- Revenues 1,537 3,709 7,517 Cost of revenues 558 721 1,196 -------- -------- -------- Gross profit 979 2,988 6,321 -------- -------- -------- Operating expenses:Research and development expenses 1,338 1,148 1,985Selling and marketing expenses 872 470 939General and administrative expenses 812 329 887 -------- -------- -------- Total operating expenses 3,022 1,947 3,811 -------- -------- -------- Operating profit (loss) (2,043) 1,041 2,510Financial income (expenses), net 171 (34) 10 -------- -------- -------- Profit (loss) for the period (1,872) 1,007 2,520 ======== ======== ======== Basic earnings (loss) per share for theperiod in US dollars (0.05) 0.03 0.08 ======== ======== ======== Diluted earnings (loss) per share forthe (0.05) 0.03 0.07period in US dollars ======== ======== ======== CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY) Share Additional Accumulated Total capital paid-in capital deficit equity (deficiency) U.S. dollars in thousands ------------------------------ Unaudited ------------------------------ Balance as of January 1,2006 (audited) 73 5,746 (7,766) (1,947) Shareholders' waiver ofinterest on loan - 85 - 85 Issuance of shares, net *) 14 8,397 - 8,411Exercise of warrant issued to a bank 2 (2) - -Share-based compensation - 25 - 25Profit for the year - - 2,520 2,520 ------- --------- --------- ---------Balance as of December 31,2006 (audited) 89 14,251 (5,246) 9,094 Share-based compensation - 76 - 76Loss for the period - - (1,872) (1,872) -------- --------- --------- --------- Balance as of June 30, 2007 89 14,327 (7,118) 7,298 ======== ========= ========= ========= *) Net of issuance expenses of $ 1,619 in 2006. Share Additional Accumulated Total capital paid-in capital deficit equity (deficiency) U.S. dollars in thousands ------------------------------ Unaudited ------------------------------ Balance as of January 1,2006 (audited) 73 5,746 (7,766) (1,947) Shareholders' waiver ofinterest on loan - 85 - 85Share-based compensation - 5 - 5Profit for the period - - 1,007 1,007 ------- -------- --------- --------- Balance as of June 30, 2006 73 5,836 (6,759) (850) ======= ========= ========= ========= CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended Year ended June 30, December 31, 2007 2006 2006 -------- -------- -------- Unaudited Audited --------------- -------- U.S. dollars in thousands ---------------------- Cash flows from operating activities: Profit (loss) for the period (1,872) 1,007 2,520Adjustments to reconcile profit (loss)to net cash provided by (used in) operating activities (a) 644 (1,103) (2,236) --------- --------- --------- Net cash provided by (used in)operating activities (1,228) (96) 284 --------- --------- --------- Cash flows from investing activities: Investment in short-term deposit - (767) (182)Proceeds from short-term deposit 655 - -Purchase of intangible assets and goodwill (1,250) - -Purchase of property and equipment (58) (33) (82) --------- --------- --------- Net cash used in investing activities (653) (800) (264) --------- --------- --------- Cash flows from financing activities: Issuance of shares, net - - 8,411Proceeds from short-term bank loans 200 -Repayment of long-term loans from - - (1,502)banksRepayment of short-term bank loans (200) (200) - --------- --------- --------- Net cash provided by (used in)financing (200) - 6,909activities --------- --------- --------- Increase (decrease) in cash and cashequivalents (2,081) (896) 6,929Cash and cash equivalents at beginningof period 8,226 1,297 1,297 --------- --------- --------- Cash and cash equivalents at end of 6,145 401 8,226period ========= ========= ========= CONSOLIDATED STATEMENTS OF CASH FLOWS --------------- Six months ended Year ended June 30, December31, --------------- 2007 2006 2006 -------- -------- --------- Unaudited Audited --------------------- --------- U.S. dollars in thousands ----------------------(a) Adjustments to reconcile profit (loss) to net cash provided by (used in) operating activities: Income and expenses not involving operating cash flows: Depreciation and amortization 61 31 65 Share-based compensation 76 5 25 Accrued interest on loans from - 53 66 shareholders Accrued severance pay, net 48 12 185 Changes in operating assets and liabilities: Decrease (increase) in trade 393 160 (695) receivables Decrease (increase)in other accounts (8) 304 231 receivable and prepaid expenses Increase (decrease) in trade payables 262 2 (37) Decrease in deferred revenues (15) (1,689) (2,389) Increase (decrease) in other accounts (173) 19 313 payable and accrued expenses -------- -------- --------- 644 (1,103) (2,236) ======== ======== ========= (b) Supplemental disclosure of cash flows: Cash paid during the period for: Interest - 5 80 ======== ======== ========= Cash received during the period for: Interest 173 29 105 ======== ======== ========= Supplemental disclosure of non cash activities: Shareholders waiver of interest on - 85 85 loans ======== ======== ========= ======== ======== ========= Purchase of intangible assets and goodwill 387 - - ======== ======== ========= This information is provided by RNS The company news service from the London Stock Exchange