SIM.L Regulatory News (SIM)

7 Mar 2008 07:00

SimiGon Limited07 March 2008 SimiGon Ltd Preliminary Results for the year ended 31 December 2007 SimiGon Ltd (the Company together with its subsidiary "SimiGon" or the "Group"),a global leader in providing simulation solutions, announces its preliminaryresults for the year ended 31 December 2007. Financial Highlights • Revenues were $5.01 million, at the lower end of market expectations (2006: $7.52 million) • Gross margin at 78.91% (2006: 84.09%) • Loss of $2.89 million for the year ended December 31, 2007 (2006: Profit of $2.52 million) • Basic and diluted loss per share $0.08 (2006: Basic earnings per share $0.08 diluted earnings per share $0.07) • Cash and cash equivalents of $5.02 million at 31 December 2007 Operational Highlights • Lockheed Martin selected the SIMbox, Learning Management System, for the F-35 Lightning II Joint Strike Fighter (JSF) training program • SimiGon is the partner of choice to several major long term training programmes including UK's Military Flying Training System providing simulation training technologies and services • $2.4m contract in November 2007 from an international customer • Successfully delivered Air Traffic Controller Trainer System to the Israeli Air Force (IAF) • Portuguese Air Force selected the Company's AirBook software for its desktop training programme • SimiGon selected to provide the technological infrastructure for the Tactical Aviation Training course of Canada's Air Force, extending a successful relationship between the two parties Ami Vizer, Chief Executive Officer of SimiGon stated: "While it is disappointingthat reflecting the nature of the industry we operate in, our expected revenuegrowth has been delayed from 2007 to 2008, however operationally it has been ayear of solid progress for SimiGon. We continue to be successful in winningcontracts in competitive bids. In some instances these contracts are much largerthan in previous years and we remain well positioned for long term growth,having established ourselves as the main supplier of simulation training in theworld's top pilot computer simulation training programmes. Looking forward into 2008 and particularly 2009, the company expects to recoupthe shortfall of revenues as these large, long-running defence contracts in theUS and the UK increase in value, and we expect them to form the basis of stableand growing earnings. This gives us confidence in the long term growth prospectsof the Company and our ability to deliver shareholder value." Enquiries: SimiGon Ltd Ami Vizer, Chief Executive Officer +972 9 956 1777Haim Yatim, Chief Financial Officer Corfin CommunicationsHarry Chathli, Martin Sutton, Alexis Gore 020 7977 0020 Overview SimiGon announces its full year results for 2007, during which period the Groupconsolidated its position as one of the world's leading developers and globalsuppliers of computer simulation software to the defence, aviation andindustrial sectors through the signing of major new contracts. As stated in the announcement of 4 January 2008, SimiGon's sales are at thelower end of market expectations due principally to the timing lag between beingselected as the preferred supplier of simulation training technology andcommencement of the delivery of the systems and increased expenditure in R&D.However, despite these delays, 2007 was an encouraging year for SimiGon from astrategic point of view. The Company continued to bid successfully for contractsthat are in some instances much larger than in previous years. Although there has been a delay in generating revenues from some customercontracts, the Company remains well positioned for long term growth afterestablishing itself as the main supplier of simulation training in the world'stop pilot computer simulation training programmes.SimiGon also completed a significant milestone in July 2007 when Lockheed Martinselected the SIMbox, Learning Management System, for the F-35 Lightning II JointStrike Fighter (JSF) training program. Added to this success, the Company is thepartner of choice to provide simulation training within Lockheed Martin'swinning bids for the UK's Military Flying Training System and Singapore's BasicWings Course. These deals will help fuel SimiGon's development and provideanother affirmation of the viability of SimiGon's training solutions. UsingSIMbox's technology extends the long-term productive relationship enjoyedbetween Lockheed Martin and SimiGon. Towards the end of the year, the Group signed three further contracts. Firstly,in September the Portuguese Air Force selected the Company's AirBook softwarefor its desktop training programme. Secondly, in November, SimiGon announced ithad signed a $2.4m contract from an international customer. Finally, in October,SimiGon successfully delivered its Air Traffic Controller Trainer system to IAF. Financial Performance Revenue for the year ended 31 December 2007 was $5.01 million, compared to $7.52million in 2006, due to certain contracts being delayed. In terms of regionalbreakdown, 29.2% of SimiGon's revenues came from North America (2006: 57.3%),70.7% from Europe and the Middle East (2006: 37.8%) and 0.1% from the Far East(2006: 4.9%). Gross profit for the fiscal year was $3.96 million (2006: $6.32million). Total operating expenses for the year increased by 86.72% to $7.12 million(2006: $3.81 million), the research and development expenses increased to $2.77million (2006: $1.99 million) mainly due to salary expenses. Sales and marketingexpenses increased to $2.57 million (2006:$0.939 million) mainly due to salaryexpenses and commission for consultants. General and administration expensesincreased to $1.78 million (2006: $0.887 million) mainly due to salary expenses,share-based compensation and the costs related to the company being quoted on apublic market.The operating loss therefore is $3.16 million (2006: operating income $2.51million) and the net loss is $2.89 million in 2007 compared to net income of$2.52 million in 2006. This resulted in a net basic and diluted loss per shareof $0.08 (2006: earnings per share of $0.08 and diluted earnings per share of$0.07). As at 31 December 2007, SimiGon had cash, cash equivalent and depositsin the amount of $5.02 million. Product Development In 2007, SimiGon incurred the highest level of annual expenditure to date onresearch and development as the group sought to further develop its technologylead over its competitors. SimiGon is committed to remaining innovative and developing new features andproducts to maintain market relevance and increase market share. In 2007,SimiGon focused on the following areas to increase its competitiveness: • SIMbox Learning Management System has been improved to provide a robust training management platform supporting large scale professional communities. This enables organisations to monitor and track group and individual performance, leading to faster and more effective training. • SIMbox Simulation has been improved to support large scale scenarios. • A new generation of the SIMbox Toolkit has been developed. The tools are now seamlessly integrated to assist both the content developer and the training manager. • SIMbox Graphic Engine has been improved to support urban and ground simulation with high resolution, using more efficient algorithms. • SIMbox Simulation is now fully integrated within the SIMbox Learning Management System environment, including simulation content management, and distribution and trainee's feedback and history. • SimiGon R&D has continued to be one of the earliest adapters of cutting edge software technologies for infrastructure development. Outlook While it is disappointing that revenues and a number of contract awards havebeen delayed, postponing the revenue growth expected from 2007 to 2008, it hasbeen a year of solid progress for SimiGon. The Company remains well positionedfor long term growth after establishing itself as the main supplier ofsimulation training in the world's top pilot computer simulation trainingprogrammes. Looking forward into 2008 and particularly 2009, the Company expects to recoupprevious year's revenue shortfall as the large, long-running defence contractsin the US and the UK increase in value, and will lead to a stable base fromwhich to increase earnings. The board believes that the Group will continue togrow and deliver shareholder value. CONSOLIDATED BALANCE SHEETS December 31, 2007 2006 2005 U.S. dollars in thousandsASSETS CURRENT ASSETS:Cash and cash equivalents 5,024 8,226 1,297Short-term bank deposits - 655 473Trade receivables 1,147 1,299 604Other accounts receivable and 226 215 446prepaid expenses Total current assets 6,397 10,395 2,820 PROPERTY AND EQUIPMENT, NET 187 179 162 INTANGIBLE ASSETS, NET 1,528 - - Total assets 8,112 10,574 2,982 EQUITY AND LIABILITIES CURRENT LIABILITIES:Short-term bank loans - 200 200Loans from shareholders - - 1,521Trade payables 125 139 176Deferred revenues 21 104 2,493Other accounts payable and accrued expenses 1,139 785 472 Total current liabilities 1,285 1,228 4,862 LONG-TERM LIABILITIES:Severance pay liability 351 252 67 Total liabilities 1,636 1,480 4,929 EQUITY:Share capital 89 89 73Additional paid-in capital 14,521 14,251 5,746Accumulated deficit (8,134) (5,246) (7,766) Total equity 6,476 9,094 (1,947) Total equity and liabilities 8,112 10,574 2,982 CONSOLIDATED STATEMENTS OF OPERATIONS Year ended December 31, 2007 2006 2005 U.S. dollars in thousands Revenues 5,008 7,517 4,588 Cost of revenues 1,056 1,196 624 Gross profit 3,952 6,321 3,964 Operating expenses:Research and development 2,773 1,985 1,446Selling and marketing 2,567 939 866General and administrative 1,776 887 703 Total operating expenses 7,116 3,811 3,015 Operating profit (loss) (3,164) 2,510 949Financial income (expenses), net 276 10 (59) Profit (loss) for the year (2,888) 2,520 890 Basic earnings (loss) per share in U.S. dollars (0.08) 0.08 0.03 Diluted earnings (loss) per share in U.S. dollars (0.08) 0.07 0.03 Weighted average number of shares used in computing basic earnings(loss) per share in thousands 37,251 31,608 30,489 Weighted average number of shares used in computing diluted earnings(loss) per share in thousands 37,251 33,821 32,693 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Number Share Additional Accumulated Total of shares capital paid-in deficit equity capital U.S. dollars in thousands (except share amounts) Balance as of January 1, 2005 30,447,838 73 5,732 (8,656) (2,851) Share-based compensation - - 14 - 14Exercise of employee stoc options 72,493 *) - - - *) -Profit for the year - - - 890 890 Balance as of December 31, 2005 30,520,331 73 5,746 (7,766) (1,947)Shareholders waiver of interest on loan - - 85 - 85Issuance of shares, net **) 6,076,811 14 8,397 - 8,411Exercise of warrant to a issued bank 653,524 2 (2) - -Share-based compensation - - 25 - 25Profit for the year - - 2,520 2,520 Balance as of December 31, 2006 37,250,666 89 14,251 (5,246) 9,094 Exercise of employee stock options 8,660 *) - 5 - 5Share-based compensation - - 265 - 265Loss for the year - - - (2,888) (2,888) Balance as of December 31, 2007 37,259,326 89 14,521 (8,134) 6,476 *) Represents an amount lower than $ 1,000.**) Net of issuance expenses of $ 1,619 thousand. CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, 2007 2006 2005 U.S. dollars in thousandsCash flows from operating activities: Profit (loss) for the year (2,888) 2,520 890Adjustments to reconcile profit (loss) to net cash provided by (used in) operatingactivities (a) 563 (2,236) (800) Net cash provided by (used in) operating activities (2,325) 284 90 Cash flows from investing activities: Investment in short-term deposit - (182) (473)Proceeds from short-term deposit 655 - -Purchase of property and equipment (87) (82) (77)Proceeds from sale of property and equipment - - 2Purchase of intangible assets and goodwill (1,250) - - Net cash used in investing activities (682) (264) (548) Cash flows from financing activities: Issuance of shares, net - 8,411 -Exercise of employee stock options 5 - -Proceeds from loans from shareholders - - 675Proceeds from short-term bank loans - - 200Repayment of loans from shareholders - (1,502) -Repayment of short-term bank loans (200) - (875) Net cash provided by (used in) financing (195) 6,909 -activities Increase (decrease) in cash and cash (3,202) 6,929 (458)equivalentsCash and cash equivalents at beginning of 8,226 1,297 1,755year Cash and cash equivalents at end of year 5,024 8,226 1,297 CONSOLIDATED STATEMENTS OF CASH FLOW Year ended December 31, 2007 2006 m 2005 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 134 65 47 Share-based compensation 265 25 14 Gain on sale of property and equipment - - (1) Accrued interest on loans from - 66 88 shareholders Accrued severance pay, net 99 185 (3) Changes in operating assets and liabilities: Decrease (increase) in trade receivables 152 (695) (498) Decrease (increase) in other accounts (11) 231 (361) receivable and prepaid expenses Decrease in trade payables (14) (37) (18) Decrease in deferred revenues (83) (2,389) (38) Increase (decrease) in other accounts payable and accrued expenses 21 313 (30) 563 (2,236) (800) (b) Supplemental disclosure of cash flows: Cash paid during the year for: Interest - 80 19 Cash received during the year for: Interest 272 105 25 (c) Supplemental disclosure of non-cash financing activities: Shareholders waiver of interest on loans - 85 - Purchase of goodwill 333 - - This information is provided by RNS The company news service from the London Stock Exchange