SimiGon: Preliminary Results for the Year Ended 31 December 2006

20 Feb 2007 11:54

SimiGon Ltd (LSE:SIM) (the Company together with its subsidiary"SimiGon" or the "Group"), a global leader in providing simulationsolutions, announces its maiden preliminary results for the year ended31 December 2006. £ Financial Highlights £ -- Revenues increased by 63.8% to $7.52 million (2005: $4.59 million) £ -- Gross margin at 84.1% (2005: 86.4%) £ -- Operating profit increased by 164.5% to $2.51 million (2005: $0.95 million) £ -- Strong balance sheet with net cash and short-term deposits of $8.88 million at 31 December 2006 £ Operational Highlights £ -- Successful London IPO and admission to AIM on 2 November 2006 raising $10m capital for expansion into new markets £ -- Well established blue chip customer base in the defence sector £ -- In 2006, revenues from AirTrack (non-defence licensing agreements) increased to 19% of the revenue for 2006 from 3% of revenues in 2005 £ -- New contract signed with Belgian Air Force for F-16 pilot data link training £ -- Significant product investment during 2006 - including the launch of SIMbox version 5, an advanced simulation technology platform featuring development tools, a server, and a runtime environment £ Ami Vizer, SimiGon's President and CEO, said: "We reached severalmajor milestones in 2006 chiefly among them was our successful IPO. Webelieve that the capital raised will enable the Company to developsales and marketing capabilities and to expand the Company's presencein key markets. £ Furthermore, we successfully met our 2006 earnings forecast and weare confident we can meet expectations for the year to December 2007.Our plans are to leverage SIMbox to increase market share in ourexisting and future markets over the coming years." \* TSimiGon LtdAmi Vizer, Chief Executive Officer +972 9 956 1777Haim Yatim, Chief Financial OfficerShiri Darie, Director of Public Relations Corfin CommunicationsHarry Chathli, Ben Hunt 020 7929 8989\* T £ Overview £ SimiGon announces its maiden full year results since admission toAIM on 2 November 2006, with a strong operating performance thatconsolidated its position as one of the world's leading developers andsuppliers of e-learning simulation software. £ 2006 was an encouraging year, marking the maturity of SimiGon andculminating in our successful IPO and admission to AIM and the launchof SIMbox 5. During the financial year, we made significant progressin consolidating our position as one of the leading simulationtechnology suppliers to the Defence and Aerospace industry. £ SimiGon believes that workers learn better and more quickly bydoing rather than being shown or being told what to do. Itshigh-technology distributed simulation software allows people to learnto use the equipment they operate in a safe and enjoyable environment.This results in a more effective and efficient training programme fororganisations that reduces training time and cost while increasingknowledge transfer and trainee success rates. £ SimiGon's core simulation product, SIMbox, has been used todevelop several Commercial Off-the-Shelf (COTS) products, includingaviation training mission rehearsal, In Flight Entertainment Systemsand ground debriefing systems. These products have been tested andused in the aerospace and defence environment where they havedemonstrated reliability and robustness and the ability to handlecomplex distributed simulations. £ SimiGon derives the majority of its revenues from contracts in thedefence sector and has established a blue chip customer base in thatindustry. However, in 2006 its revenues from AirTrack (non-defencelicensing agreements) increased to 19% of the revenues in 2006 from 3%in 2005. £ Towards the end of the year, the Group signed a contract with theBelgian Air Force, which signifies increased awareness of ourtechnology solution and encouraged SimiGon to commit additionalresources to address the European market. The contract will initiallygenerate approximately $350,000 of revenues in 2007 with expectedfollow-on orders worth more than $600,000 by the end of 2008.Subsequently, there has been an increased interest for SimiGon'soffering in this region. £ After the year end, on January 24, 2007, the Group purchased theassets of Visual Training Solution Group, Inc ("VTSG"). The Group hasworked closely with VTSG over the past few years, providing them withsoftware development tools and licenses, while they performed addedvalue content and hardware integration services for end users. Thetransaction will provide us with a closer relationship with VTSGcustomers and a better position to leverage SIMbox capabilities. £ Financial Performance £ Revenue for the year ended 31 December 2006 was $7.52 million,compared to $4.59 million in 2005, an increase of 63.8%. In terms ofregional breakdown, 57.3% of our revenues came from North America(2005: 78.6%), 37.8% from Europe and the Middle East (2005: 12.9%) and4.9% from the Far East (2005: 8.5%). Gross profit for the fiscal yearwas $6.3million (2005: $3.96 million), an increase of 59%. £ Total operating expenses for the year increased by 26.4% to $3.81million (2005: $3.015 million), mainly due to the increase in researchand development expenses to $1.98 million (2005: $1.45 million) andgeneral and administration expenses to $0.887 million (2005: $0.703million) due to salary increases and the costs related to being apublic company. £ Operating income therefore increased to $2.51 million (2005:$0.949 million) and our net income increased from $0.89 million in2005 to $2.52 million in 2006. This resulted in net basic earnings pershare of $0.08 (2005: $ 0.03 basic earning per share) and dilutedearning per share of $0.07 (2005: $0.03 diluted earning per share). Asof 31 December 2006, SimiGon had cash, cash equivalent and deposits inthe amount of $8.88 million. £ As of 31 December 2006, the Group had 55 employees, compared to 51employees in 31 December 2005. £ Product Development £ 2006 saw our highest level of expenditure yet on R&D as we soughtto further stretch our technology lead over our competitors. £ SimiGon understands the need to remain innovative and develop newfeatures and products to maintain market relevance and increase marketshare. In 2006, SimiGon focused on the following areas to increase itscompetitiveness: £ -- New generation of the SIMbox Learning Management System has been developed with better performance, mass user support, and unique integration with SIMbox Simulation. £ -- SIMbox training solutions have been expanded to include Air Traffic Control operator training capabilities, with high fidelity Speech Recognition capabilities and Artificial Intelligence simulation. £ -- SIMbox Simulation has been improved to be able to easily integrate with full scale simulator hardware, providing cost effective solutions for full scale trainers. £ -- SIMbox Graphic Engine has been improved to support urban and ground simulation with high resolution using more efficient algorithms. £ -- SimiGon R&D has continued to be one of the earliest adapters of cutting edge software technologies for infrastructure development. £ -- SIMbox Toolkit has been upgraded extensively with new tools and features, new content encryption tools and more content templates to reduce content development time. £ -- SIMbox Learning Management System has been ported for use on PDA hardware, enabling access through the WebAccess application on mobile handhelds, benefiting especially instructors who provide feedback during observation. £ -- SimiGon continues to be one of the fastest to comply with the most advanced E-learning Standard (SCORM) and is now certified for SCORM2004, 3rd Edition. £ -- Air Traffic Control training system for improving the skills and reducing the training and certification time of air traffic controllers, models a complete base with all taxi, take-off, departure, and emergency procedures. £ Outlook £ SimiGon is well positioned within strong growth markets and, overthe past year, has achieved a significant increase in revenues and netincome. £ Looking ahead, the Group plans to leverage SIMbox to increasemarket share in its existing and future markets over the coming yearsand as a consequence, the Board believes that the Group will continueto grow and is confident that it can meet market expectations for theyear to December 2007. Copyright Business Wire 2007