SimiGon Ltd. : Interim Results for the six months ended 30 June 2013

Continued strong growth in revenues and net profit

SimiGon Ltd, a global leader in providing simulation solutions, announces its interim results for the six months ended 30 June 2013.

Financial Highlights

• Revenues increased by 20% to $4.16 million (H1 2012: $3.47 million)
• Net profit increased 24% to $0.22 million (H1 2012: $0.18 million)
• Cash, restricted cash and equivalent balances, increased by 19% to a total of $8.45 million as at 30 June 2013 (31 December 2012: $7.11 million, 30 June 2012: $6.98 million) with no bank debt remaining
• Gross margins of 65% (H1 2012: 70%), reflecting SimiGon's increased role as a prime contractor by providing complementary third party hardware and programs
• Basic and diluted EPS of 0.5 cents (H1 2012: 0.4 cents)

Operational Highlights

• Secured access to a major new geographical region by winning a significant contract worth $6.7 million, further establishing SimiGon's position as a prime contractor in the aviation training market
• Secured a further contract with an existing major European partner to provide Simulation Based Training ("SBT") solutions for a new clients' Academic Training Center ("ATC")
• Secured additional contract from the U.S. Air Force Air Education Training Command ("AETC") to support and maintain all of the T-6A Modular Training Devices ("MTD") used in the training of all Remote Piloted Aircraft ("RPA") students
• Successful delivery of SIMbox technology simulation training solutions to a South American country's armed forces, as announced in August 2012
• Entered the sixth year of supporting Lockheed Martin's F-35 Lightning II Joint Strike Fighter ("JSF") training program, providing long term revenue visibility to the company
• Continues to meet project milestones for the UK Military Flying Training System ("UKMFTS"), a partnership of over five years
• Partnership with Check 6 progressing well as SimiGon delivered its systems ahead of schedule, exceeding client expectations and increasing the potential for further expanding the relationship

Ami Vizer, Chief Executive Officer of SimiGon, stated: "We are delighted to report a further six months of excellent operational progress, continued revenue growth and increased profits. We continue to execute on our long term strategy and achieve our targets evidenced by the successful transition to become a major prime contractor, enhancing SimiGon's reputation as a market leader and company of choice for the world's largest simulation training programmes.

"Looking ahead, we have excellent revenue visibility, a strong order book in place and an encouraging pipeline of business leads, which leads us to expect that revenues for the full year will be slightly ahead of market expectations.

"We are delighted with the ongoing success of SimiGon and are confident that this will continue in the second half of 2013 and beyond."

Enquiries:

SimiGon Ltd Ami Vizer, Chief Executive Officer Efi Manea, Chief Financial Officer www.simigon.com	Tel: [phone]
finnCap (NOMAD & Broker) Stuart Andrews / Henrik Persson	Tel: [phone]
Luther Pendragon (Media & Investor Relations) Harry Chathli / Alexis Gore / Oliver Hibberd	Tel: + 44 (0) 20 7618 9100

Overview

SimiGon is pleased to report strong revenue growth and increased profitability, in the first half of 2013, for the fifth consecutive period/half year. Revenues increased by 20% to $4.16 million (2012: $3.47 million) with a $0.22 million profit, up from $0.18 million in H1 2012.

The positive momentum taken into the first half of 2013 reflects the Company's successful transition to become prime contractor. SimiGon has now proven its ability to deliver training systems as a prime contractor, further enhancing its reputation in the industry and cementing its leading position as the preferred supplier of training and simulation technologies for the world's largest military flight training programmes.

The role of prime contractor enables SimiGon to target and win significantly larger and more lucrative contracts than was previously possible. It also gives the Company a direct relationship with the customer, a greater share of revenues and profit, and greater potential for further deals with the same customer.

As stated previously moving up in the supply chain and becoming a prime contractor involves an increase in hardware sales alongside SimiGon's software solutions. The Company's continued successful transition to becoming an established prime contractor led to an increase in selling third-party hardware along with its software technology solutions, which as a result, impacted margins in the first half (65% compared with 70% last year). The Company expects margins to increase in the second half following the successful deployment of the hardware systems.

The sale of hardware along with our software technology solutions enables SimiGon to provide a total and comprehensive solution to its customers as was a stated target for the Company.

Operational Review

In the first half of 2013, SimiGon has continued to secure new contracts while expanding and diversifying its customer base.

Significant contract win in the period

In June, SimiGon announced that it has been selected as a prime contractor to deliver a SIMbox based training solution, in a contract worth $6.7 million. SimiGon was awarded this contract despite competition from major competitors, a significant endorsement of the Company's market leading training solutions. Delivery of this contract has already begun and will initially be delivered over an 18 month period with revenues from the deal expected to begin in the second half of 2013. Subsequent phases of the programme have yet to be awarded and SimiGon is confident of being considered when this takes place.

Successful delivery of contracts as prime contractor

In August 2012 SimiGon announced that it had signed a substantial contract to provide a South American country's armed forces with its SIMbox training and simulation technology platform. This contract was the first time a country's armed forces had chosen SIMbox as the training system to be deployed across its entire armed services. SimiGon is successfully delivering this contract on time and on budget, further validating SimiGon's ability as a prime contractor.

SimiGon has also exhibited the capability to fulfill the continued needs of the U.S. Air Force AETC with the successful delivery, as prime contractor, of its SIMbox based T-6A training systems following a contract signed in September 2011. The SIMbox MTD simulators are used to train undergraduate, RPA students for Pilot Instrument Qualification training. The capability displayed during the successful delivery of this specific contract meant SimiGon were considered and later selected for a further contract from AETC, which was agreed in April this year. The value of the contract is US$405,000. SimiGon's success with this contract enhances the Company's market leading offering and positions it well for similar opportunities in a large and fast growing global market.

The Company is now in its second year of a five-year agreement with Check-6 Inc., a leading provider of training solutions to the energy and mining industries. This agreement, the Company's first major contract outside the aerospace and defence industry, saw SimiGon deliver its systems ahead of schedule and exceed expectations of the client. The successful implementation of SimiGon's systems will enhance the potential to expand the agreement with Check 6 further in the oil and gas industry.

Update on long term contracts

SimiGon has a number of long term contracts and partnerships that are all progressing well as sales continue to steadily increase.

During the first half of year 2013, SimiGon expanded its relationship with a major existing European customer with contracts worth value of US$0.6 million expected to be delivered during 2013 and 2014. The new contracts increase the integration of SimiGon's SIMbox technology at the development labs for this customer's Academic Training Center and also include licenses for a new clients' ATC. This is the fourth client that will use SimiGon's technology through its Strategic European customer. The companies have been working together since 2009 and this contract is a further expansion of an ongoing long term relationship.