TIDMSIM
RNS Number : 1340K
SimiGon Limited
19 September 2016
19 September 2016
SimiGon Ltd
("SimiGon" or "the Company")
Interim Results for the six months ended 30 June 2016
Growth in net profit by 5% YoY to $0.83 million and EPS of
$0.02
SimiGon Ltd, a global leader in providing simulation solutions,
announces its interim results for the six months ended 30 June
2016.
Financial Highlights
-- Net profit increased by 5% to $0.83 million (H1 2015: $0.79 million)
-- Profit before tax increased by 2% to $0.81 million (H1 2015: $0.79 million)
-- Revenues of $3.29 million (H1 2015: $3.46 million)
-- Gross margin of 78% (H1 2015: 75%)
-- Basic and diluted EPS of $0.02 (H1 2015: $0.02)
-- Paid 2015 annual dividend of 0.6 cents per share in May 2016
Operational Highlights
New major awards:
-- Awarded a five-and-a-half year contract worth $7.9 million to
deliver SIMbox based training solutions to a leading provider of
training solutions for the civilian aviation industries in the Far
East
-- Received a Winning Notice from the Israeli Air Force for a $2
million contract to provide F-16 maintenance trainers
Delivering on long term contracts:
-- Meeting delivery millstones under the $6.7 million contract
signed in June 2013 although on a slower timetable than initially
expected as a result of the client requesting SimiGon to provide a
number of deliverables outside of the original contract scope
-- Continuing long term contracts supporting the UK Military
Flying Training System ("UKMFTS") program
-- Continuing to meet project milestones for long term contract
with Check-6, the Company's first major contract outside the
aerospace and defence industry
-- Continued support for Lockheed Martin's F-35 Lightning II
Joint Strike Fighter training program (JSF)
-- Continuing long-term contract to provide training simulations
for a strategic European aircraft manufacturer; and
-- Continued support for U.S. Air Force Air Education Training
Command on its T-6 Modular training simulator devices used in the
training of all Remote Piloted Aircraft students
Post period-end event
-- The release of SIMbox v.5.3 in September 2016 marks the next
step of the Company's technologyevolution, bringing more advanced
capabilities to the training and simulation industry.
Ami Vizer, Chief Executive Officer of SimiGon, said: "Continuing
to execute our growth strategy, I am pleased to report another
period of increased profitability. SimiGon recorded net profit of
$0.83 million as compared to $0.79 million in H1 2015 and revenues
of $3.29 million in the first half of 2016 (H1 2015: $3.46
million). During the course of this first half of 2016, we have
been awarded with new high value contracts and further established
our position as a prime contractor providing a highly valued
solution to our customers".
"Looking ahead, SimiGon will continue to leverage its position
in the market and its global footprint to build new partnerships,
expand its customer base, and target large contracts. The Company
is continuing its transition into high value, long term license
contracts in order to meet market requirements. Though it may lead
to lower revenue from these contracts in the early years, it is
expected to give SimiGon much better revenue and profits visibility
in the long term. Having unique distributed training systems and
proven technology applicable for multiple domains and devices
together with a business model that allows creating partnerships
and relationships with Blue Chip corporations, the Board enters the
second half of 2016 with expectations to deliver growth over the
long term".
Enquiries:
SimiGon Ltd
Ami Vizer, Chief Executive Tel: +1 (407)
Officer 951 5548
Efi Manea, Chief Financial
Officer
www.simigon.com
finnCap (NOMAD & Broker)
Stuart Andrews/ Scott Mathieson Tel: +44 (0) 207
(corporate finance) 220 0500
Overview
SimiGon is pleased to report another period of increased
profitability as a result of recurring revenues from existing
strategic partners and new business being won. SimiGon recorded net
profit of $0.83 million as compared to $0.79 million in H1 2015 and
revenues of $3.29 million in the first half of 2016 as compared to
$3.46 million in the first half of 2015.
SimiGon had received two major awards in the first half of 2016;
these awards have improved SimiGon's position as a technology and
services provider for large simulation training programs. A long
term supplier of training and simulation technologies for the
world's largest military aviation training programmes, the Company
is simultaneously focused on achieving growth into vertical markets
such as civil aviation training, industrial skills training and
soft skills training.
SimiGon's capture of a growing share of the global market for
simulation and training projects is allowing the Company to expand
project scope and increase potential revenues. Competing as a Prime
Contractor, Supplier or Strategic Partner, the Company is focused
on participating in more business opportunities to achieve growth
and advance its technological capabilities.
SimiGon is working to be consistently positioned as a strategic
player in programs that will assist its long term growth. SimiGon's
revenue mix of new contracts and support contracts provides the
Company with the confidence that it will succeed in achieving
growth over the years.
Operational Review
SimiGon has continued to consolidate its position as the
technology provider of choice for large simulation training
programs and as a strategic supplier of training and simulation
technologies for the worlds' largest military flight training
programmes. SimiGon is dedicated to developing strategic,
simulation-based training programs. This development is allowing
expansion into vertical markets, including civil aviation training
and industrial training, as well as boosting long term growth.
SimiGon has been delivering on all of its major contracts during
the first half of 2016 and continued to increase its visibility of
the market and of new opportunities available to it as a prime
contractor and strategic partner. The Company continues to benefit
from direct relationships with the end users and, as the business
and our reputation grows, SimiGon will be in a stronger position to
compete for and secure far larger contracts.
Delivery of major contract as prime contractor
SimiGon announced in June 2013 that it had signed a contract
valued at $6.7 million for a major training program. This was a
milestone contract for the Company in terms of the geographic
region, the contract value and the programme scope.
As noted on SimiGon's 2015 full year financial results, delivery
under this contract has continued on a slower timetable than
expected as a result of the client requesting SimiGon to provide a
number of deliverables outside of the original contract scope. As
part of SimiGon's drive to support all of its clients, SimiGon has
been prepared to agree to these new demands and has been meeting
the delivery milestones during the first half of 2016. The Company
looks forward to meeting all remaining delivery milestones during
the course of H2 2016.
The Company expects that its technology and performance will put
it in a good position to be selected for potential subsequent
phases of the programme.
Expansion into civil aviation market
In May 2016, SimiGon signed an exclusive five-and-a-half-year
contract (the "Contract Period") to deliver SIMbox based training
solutions to a leading provider of training solutions for the
civilian aviation industries in the Far East (the "Contract").
Under the terms of the Contract, SimiGon will be paid $7.9 million
to license its SIMbox software over the Contract Period, with a
minimum of $1.4 million per year starting this year.
As indicated, this is another major contract outside of the
defence industry and it will further expand the Company's growth
strategy to diversify its product offering and increase its
addressable market. The Contract underlines SimiGon's ability to
penetrate a much larger market and can be a stepping stone to
securing additional business in civilian aviation industry through
similar opportunities.
New contract wins
SimiGon announced in June 2016 that it has received a Contract
Winning Notice for a $2 million contract from the Israeli Air Force
("IAF") to provide new F-16 maintenance trainers ("the Contract
Winning Notice") to be delivered within a period of 18 months once
the expected contract is signed.
By adding a new solution for virtual maintenance training to its
product offering, SimiGon will be able to build upon its past
performance to succeed in a growing market for aircraft technician
virtual training. The same technology, training aids and
methodology delivering advanced training for aircrew is now
leveraged for maintenance staff training, saving organizations
considerable time and money with a single training technology
backbone. This comprehensive solution is already being marketed
worldwide and will contribute to the Company's market share.
The expected contract with the IAF includes SimiGon's SIMbox
software technology customized to train F-16 maintenance
technicians in a virtual environment. Up to 60 trainees across two
classes will be provided with personal training stations, allowing
them to learn avionics and front line maintenance with a Virtual
Instructor and a self-paced syllabus using high fidelity
simulation. SIMbox is already used by several air forces to train
their pilots in the most advanced programs and platforms and the
same technology and concept will now also be used to train the
aircrafts' maintenance teams.
The Contract Winning Notice underscores SimiGon's successful
entry into the military fixed wing training market and further
strengthens the Company's strategic market position which should
lead to similar opportunities in the future.
Long term contracts
The Company's long term partnerships have blossomed into
additional business opportunities and offer good revenue
visibility. Many partnerships are expected to continue with
additional purchases through 2016 and beyond.
SimiGon is now in its eighth year of providing support to
Lockheed Martin's JSF training program and additional licenses and
ongoing maintenance support agreements are part of the ongoing,
long term partnership.
The Company is now in its seventh year of providing support to
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.
The long term recurring revenues from SimiGon's partnership with
Check-6 Inc., one of the leading providers of training solutions to
the energy and mining industries, have continued during 2016.
Throughout this contract, SimiGon has successfully delivered SIMbox
software and the Company is bullish on extending this partnership
with Check 6 in the future.
The maintenance and support contract from the USAF for the
SIMbox-based T-6A Modular Training Devices SimiGon delivered as
part of a June 2011 contract demonstrates the long term nature of
the relationship with this strategic customer. This relationship is
also expected to grow and positively impact future earnings.
SimiGon maintains its close relationship with a major existing
European customer that it has been working with since 2009.
SimiGon's technology is now being operated on a daily basis in 3
different training centers and is receiving high customer
satisfaction reviews. SimiGon is confident that this relationship
will continue and lead to additional orders in the future.
SimiGon has been providing successful solutions for Unmanned
Aerial Systems (UAS) training for a leading provider in the small
tactical unmanned aircraft systems. SimiGon's technology is used to
support initial operator training in classrooms as well as advanced
operational training. SimiGon will continue to work with this
partner to increase its footprint in the growing UAS arena.
Financial Performance
For the reasons set out above revenues for the six months ended
30 June 2016 were $3.29 million as compared to $3.46 million for
the six months ended 30 June 2015. Gross profit for the six months
ended 30 June 2016 was $2.58 million, as compared to $2.59 million
for the six months ended 30 June 2015. Accordingly, gross margin
increased to 78% for the six months ended 30 June 2016 as compared
to 75% for the six months ended 30 June 2015. Net profit before tax
for the six months ended 30 June 2016 improved by 2% to $0.81
million as compared to $0.79 million for the six months ended 30
June 2015 and net profit for the six months ended 30 June 2016
increased by 5% to $0.83 million as compared to $0.79 million for
the six months ended 30 June 2015.
Total operating expenses for the six months ended 30 June 2016
decreased by 1% to $1.79 million as compared to $1.8 million for
the six months ended 30 June 2015. Research and development
expenses for the six months ended 30 June 2016 increased by 9% to
$0.8 million as compared to $0.74 million for the six months ended
30 June 2015, mainly due to an increase in salary expenses.
Marketing expenses for the six months ended 30 June 2016 decreased
by 13% to $0.5 million as compared to $0.57 million for the six
months ended 30 June 2015 and general and administration expenses
for the six months ended 30 June 2016 decrease by 2% to $0.48
million as compared to $0.49 million the six months ended 30 June
2015.
The Company has recorded net income tax of $0.02 million for the
six months ended 30 June 2016 mainly as a result of updating its
deferred tax asset created in 2015 in relation to the expected
utilization of carry forward losses against expected income in
future years.
As a consequence of the factors above operating profit for the
six months ended 30 June 2016 amounted to $0.79 (H1 2015: 0.79
million) and net basic and diluted earnings per share of $0.02 (H1
2015: Basic and diluted earnings per share $0.02).
As at 30 June 2016 the Company had liquid cash of $8.4 million
as compared to $7.4 million for the year ended 31 December 2015 and
trade receivables of $3.12 million as compared to $3.72 million for
the year ended 31 December 2015. $0.78 million of the year end
trade receivables balance has been collected since 30 June
2016.
In light of the strong cash position and further to the
Company's declared intention to pay an annual dividend announced in
the full year financial results for 2015, a dividend of 0.6 cents
per share, equating to approximately 15% of the Company's earnings
per share and to approximately 17.2% of the Company's net profit as
of December 31, 2015 was paid to shareholders on 27 May 2016.
Outlook
Achieving its strategic milestones, SimiGon continues to deliver
strong profitability. The Company's goal of being a prime
contractor and technology provider for major, long term simulation
training programmes is being executed and SimiGon continues to
secure sizable new contracts while expanding its customer base.
To meet market requirements, SimiGon will continue its
transition into high value, long term license contracts during
2016. Though it may lead to lower revenue from these contracts in
the early years, in the long term, it is expected to provide the
Company with much better visibility of revenue and profits.
The Board of Directors enters the second half with expectations
to successfully deliver long term growth.
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
December
June 30, 31,
2016 2015
--------- --------
Unaudited Audited
--------- --------
U.S. dollars in
thousands
-------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 6,497 5,545
Short-term investments 1,902 1,867
Trade receivables 3,121 3,715
Other accounts receivable and prepaid expenses 74 59
--------- --------
Total current assets 11,594 11,186
--------- --------
NON-CURRENT ASSETS:
Restricted cash 374 374
Long-term prepaid expenses 38 12
Deferred tax 180 159
Property, plant and equipment 122 82
Intangible assets 1,097 1,122
--------- --------
Total non-current assets 1,811 1,749
--------- --------
Total assets 13,405 12,935
========= ========
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
December
June 30, 31,
2016 2015
--------- --------
Unaudited Audited
--------- --------
U.S. dollars in
thousands
-------------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables 132 123
Deferred revenues 507 574
Other accounts payable and accrued expenses 727 875
--------- --------
Total current liabilities 1,366 1,572
--------- --------
NON-CURRENT LIABILITIES:
Long term deferred revenues 126 -
Employee benefit liabilities, net 214 192
Other non-current liabilities 719 722
--------- --------
Total non-current liabilities 1,059 914
--------- --------
Total liabilities 2,425 2,486
--------- --------
EQUITY:
Share capital 124 124
Additional paid-in capital 16,538 16,526
Accumulated deficit (5,682) (6,201)
--------- --------
Total equity 10,980 10,449
--------- --------
Total liabilities and equity 13,405 12,935
========= ========
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
Year ended
Six months ended December
June 30, 31,
------------------
2016 2015 2015
-------- -------- ----------
Unaudited Audited
------------------ ----------
U.S. dollars in thousands
(except per share data)
------------------------------
Revenues 3,285 3,459 6,935
Cost of revenues 707 873 1,534
-------- -------- ----------
Gross profit 2,578 2,586 5,401
-------- -------- ----------
Operating expenses:
Research and development 803 735 1,472
Selling and marketing 500 574 1,245
General and administrative 483 491 1,048
-------- -------- ----------
Total operating expenses 1,786 1,800 3,765
-------- -------- ----------
Operating profit 792 786 1,636
Financial income 92 77 74
Financial expenses (74) (70) (82)
-------- -------- ----------
Income before income taxes 810 793 1,628
Income tax benefit 21 - 154
-------- -------- ----------
Net income 831 793 1,782
======== ======== ==========
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
Year ended
Six months ended December
June 30, 31,
------------------
2016 2015 2015
-------- -------- ----------
Unaudited Audited
------------------ ----------
U.S. dollars in thousands
(except per share data)
------------------------------
Net income 831 793 1,782
Other comprehensive income
not to be reclassified to
profit or loss in subsequent
periods:
Remeasurement gain (loss)
from defined benefit plan (6) 8 4
-------- -------- ----------
Total comprehensive income 825 801 1,786
-------- -------- ----------
Basic and diluted earnings
per share (in U.S. dollars) 0.02 0.02 0.04
======== ======== ==========
Weighted average number of
shares used in computing
basic earnings per share
(in thousands) 50,993 50,368 50,683
======== ======== ==========
Weighted average number of
shares used in computing
diluted earnings per share
(in thousands) 51,421 51,027 50,818
======== ======== ==========
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
Additional
Number Share paid-in Accumulated Total
of shares capital capital deficit equity
---------- -------- ---------- ----------- ---------
U .S. dollars in thousands (except
share amounts)
--------------------------------------------------------
Balance as of January
1, 2015 (audited) 50,079,690 121 16,350 (7,687) 8,784
Total comprehensive
income - - - 1,786 1,786
---------- -------- ---------- ----------- ---------
Dividend distribution - - - (300) (300)
Share-based compensation - - 65 - 65
Share issuance 285,000 1 107 - 108
Exercise of stock
options 628,464 2 4 - 6
Balance as of December
31, 2015 (audited) 50,993,154 124 16,526 (6,201) 10,449
Total comprehensive
income - - - 825 825
---------- -------- ---------- ----------- ---------
Dividend distribution - - - (306) (306)
Share-based compensation - - 12 - 12
Balance as of June
30, 2016 (unaudited) 50,993,154 124 16,538 (5,682) 10,980
========== ======== ========== =========== =========
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
Additional
Number Share paid-in Accumulated Total
of shares capital capital deficit equity
---------- -------- ---------- ----------- ---------
U .S. dollars in thousands (except
share amounts)
--------------------------------------------------------
Balance as of January
1, 2015 (audited) 50,079,690 121 16,350 (7,687) 8,784
Total comprehensive
income - - - 801 801
---------- -------- ---------- ----------- ---------
Dividend distribution - - - (300) (300)
Share-based compensation - - 39 - 39
Issuance of shares 285,000 1 107 - 108
Exercise of stock
options 628,464 2 4 - 6
Balance as of June
30, 2015 (unaudited) 50,993,154 124 16,500 (7,186) 9,438
========== ======== ========== =========== =========
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
Six months ended December
June 30, 31,
------------------
2016 2015 2015
------- --------- ----------
Unaudited Audited
------------------ ----------
U.S. dollars in thousands
------------------------------
Cash flows from operating
activities:
Net income 831 793 1,782
------- --------- ----------
Adjustments to reconcile net
to net cash provided by (used
in) operating activities:
Income and expenses not involving
operating cash flows:
Depreciation and amortization 30 42 88
Increase in deferred tax benefit (21) - (159)
Financial income , net (51) (12) (34)
Share-based compensation 12 39 65
Change in employee benefit
liabilities, net 16 17 19
Changes in operating assets
and liabilities:
Decrease (increase) in trade
receivables 594 (1,785) (3,209)
Decrease (increase) in other
accounts receivable and prepaid
expenses (6) - 11
Increase (decrease) in trade
payables 9 (13) (30)
Increase (decrease) in deferred
revenues 59 (380) (351)
Increase (decrease) in other
accounts payable and accrued
expenses (166) 53 99
------- --------- ----------
476 (2,039) (3,501)
------- --------- ----------
Net cash provided by (used
in) operating activities 1,307 (1,246) (1,719)
------- --------- ----------
SIMIGON LTD. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
Six months ended December
June 30, 31,
------------------
2016 2015 2015
-------- -------- ----------
Unaudited Audited
------------------ ----------
U.S. dollars in thousands
------------------------------
Cash flows from investing
activities:
Proceeds from short-term investments - 1,011 1,086
Increase in long-term deposits (26) (2) (2)
Purchase of fixed assets (45) (4) (16)
-------- -------- ----------
Net cash provided by (used
in) investing activities (71) 1,005 1,068
-------- -------- ----------
Cash flows from financing
activities:
Proceeds from share issuance - - 1
Exercise of stock options - 4 5
Dividend distribution (306) (300) (300)
Receipt of refundable grants 22 - -
Net cash used in financing
activities (284) (296) (294)
-------- -------- ----------
Increase (decrease) in cash
and cash equivalents 952 (537) (945)
Cash and cash equivalents
at beginning of period 5,545 6,490 6,490
-------- -------- ----------
Cash and cash equivalents
at end of period 6,497 5,953 5,545
======== ======== ==========
(a) Supplemental disclosure
of significant non-cash
transactions:
Receivable in respect of
issuance of shares - 2 2
=== ===
Issuance of shares in respect
of 2014 annual bonus to
employees -116 108
=== ===
This information is provided by RNS
The company news service from the London Stock Exchange
END
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