News blog

SimiGon Ltd

  • BY: Andrew Hore |
  • POSTED: 03/12/2012 |

Training simulation software developer SimiGon says that its 2012 revenues will be better than expected.

Revenues will increase from $5.48m in 2011 to at least $6.5m. House broker finnCap had forecast revenues of $6.1m for 2012. The additional revenues appear to be predominantly from hardware sales. That is why the broker still expects a rise in profit from $700,000 in 2011 to $1m in 2012.

SimiGon had already had a strong first half as it began to recognise revenues from its oil and gas-focused partner Check-6. These were the first revenues for the SimiGon technology outside of the aerospace and defence sectors. First half revenues rose 43% to $3.47m, while profit improved from $11,000 to $177,000. Second half revenues are lower but so are overheads with gross margin improving. All research and development spending is written off as it is incurred.

Since the end of June, SimiGon has expanded and extended a contract with an existing European customer and won work with a South American country’s armed forces. These revenues have come through more quickly than expected and they also provide a base for 2013 revenues. The US Air Education and Training Command contract will also continue to generate revenues next year.

The strategy is to secure further partners in new sectors which have a market need for training simulation packages.

SimiGon had a strong balance sheet at the end of June 2012 with cash and deposits of $6.98m, although trade receivables of $278,000 appeared unsustainably low. Higher deferred revenues contributed to the improvement in cash. However, house broker finnCap believes that the cash figure could be similar at the year end.

At 18p a share, up 2p, SimiGon is valued at £8.49m. Cash accounts for around half that figure. The shares are trading on 13 times prospective 2012 earnings, falling to 11 for 2013.

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