Taking Distributed Simulation Personally ‘08 2008 ANNUAL REPORT About SimiGon SimiGon (AIM: SIM) is a leading developer and supplier of distributed simulation solutions for defence and civilian applications. SimiGon is the creator of SIMbox, a leading PC-based platform for creating, managing and deploying simulation-based content across multiple domains. Through its off-the-shelf training solutions for demanding high-skill occupations, SimiGon provides diverse organizations with faster and more cost-effective training. SimiGon’s growing client base includes blue-chip training and simulation systems providers as well as over 20 air forces and commercial airlines worldwide. Founded in 1998, SimiGon maintains offices in Israel and the United States. Contents 4 Market 6 Solutions 10 Chairman & CEO Reviews 12 Board & Management 14 Financials 2 Taking distributed simulation personally When it comes to distributed simulation solutions, SimiGon technology is the way to go. Leading the industry shift away from inflexible, stationary and expensive training systems, offering personal, portable and cost-effective training solutions optimized for the PC or laptop. Our off-the-shelf platform and products – for air, land and industrial applications – are highly flexible, adaptable and robust. This “personal” approach enables multiple high-skill users to train simultaneously on multiple platforms, saving defence and civilian organizations significant time and money. We also offer state-of-the-art simulation solutions for non- training applications, bringing the best of personal simulation to wider audiences. Financial Highlights • • • • Revenues were $5.14 million (2007: $5.01million). Gross margin at 80.58% (2007: 78.91%). Loss of $1.98 million for the year ended 31 December 2008 (2007: Loss of $2.89 million). Basic and diluted loss per share $0.05 (2007: Basic and diluted Operational Highlights • • • • • • • • • SimiGon won a $3.1 million contract with Lockheed Martin ("LM") for the Advanced Jet Training phase of the UK Military Flying Training System ("UKMFTS"). The program includes 25 years of support with additional phases and could provide other growth opportunities for SimiGon. SimiGon continues its support for Lockheed Martin's F-35 Lightning II Joint Strike Fighter ("JSF") training program. The SIMbox Learning Management System was selected by LM for JSF pilot training systems in 2007. This strategically important project strengthens SimiGon's position when competing for new contracts. SimiGon continues to leverage its core product, SIMbox, to compete for more programs in its existing markets, as well as compete in newer markets. SimiGon was selected by BAE Systems Australia to provide the Company's AirBook software for a desktop simulation training programme, designed for Royal Australian Air Force pilots. Individual Dental Education Assistant (IDEA) selected SimiGon to provide simulation training applications for dentists. This reflects the flexibility of SimiGon's SIMbox technology. Israeli Air Force (IAF) has selected SimiGon to provide additional advanced pilot training systems, reflecting the success of the training systems that SimiGon already provides to the IAF operational squadrons and to the Air Force Academy for initial pilot training. SimiGon has been selected by an additional European country to provide its Air Force with SimiGon's simulation software for the F-16. SimiGon has been selected by the Cessna Aircraft Company ("Cessna") to provide Web-based cold weather simulation and training courses for CE-208 Caravan. This further reflects the flexibility of SimiGon's SIMbox technology. SimiGon's subsidiary, National Simulation Services ("NSS") Inc. loss per share $0.08). Cash, cash equivalents and short- and its partner, NCI, won a USAF task order to provide information term bank deposits of $3.64 million at 31 December 2008 (Cash technology services to upgrade, support, and maintain the Air and cash equivalents of $5.02 million at 31 December, 2007). Battle Manager Training System (UABMTS). The mission of the UABMTS is to conduct initial skills training of United States Air Force Air Battle Managers. • The SIMbox technology infrastructure continues its forward movement, now offering complete web-based simulation through Full Mission Simulator capabilities, increasing the Company's growth potential. SIMbox's advanced 3D graphic engine can be utilised for air, land, sea and industrial environments. The SIMbox LMS remains an industry leading application and the Company is also examining additional ways to leverage this in the commercial markets. 3 4 Leveraging Growing Markets for Personal Training & Simulation A number of key trends are driving the adoption of personal, flexible solutions in the fast growing training and simulation markets. Key Trends System complexity: Platforms for airplanes, vehicles and other those in demanding high-skill occupations in both military and advanced products are becoming increasingly complex, and require civilian markets. Despite the economic turmoil, the personal improved training tools. Traditional user manuals, however, are training & simulation market is thriving. The global e-learning far less effective as they are based on an obsolete "learning by and simulation market: As many as 40% of organizations are reading" methodology. using a learning management system (LMS), with the highest growth in usage among mid-market buyers. The Defence industry Customer sophistication: Organizations training requirements are is a principle growth driver of the simulation market. The US becoming more educated and sophisticated, and typically know continues to be the undisputed leader in providing training and what type of solution they want. As a result, large suppliers can no simulation solutions for military preparedness and readiness longer “force” their inflexible solutions onto their customers. against enemies and is forecast to increase usage of simulation based training for that purpose. Ongoing conflicts in Iraq and Off-the-shelf solutions: In both military and civilian markets, there Afghanistan shape industry requirements for cutting-edge training is a move towards commercial off-the shelf (COTS) components and solutions. In the pilot training market, Forecast International products that provide clear time to- market and cost benefits. projects 1,550 new fixed wing military training aircraft will be Cost of training: Instructors and platforms have limited availability delivered through 2019, valued at $17.1 billion. The US is currently and associated high costs especially in a complex environment the leader in Commercial and Military Flight Simulations while This increases the need to maximize preparations and increase Asia-Pacific is forecast to emerge as the fastest growing market. the effectiveness of Instructor led and actal platform exercises. The Civilian market continues to also be a driver in the simulation It is the continuous need for individualized training on a low cost market; Although the global economy might have some affect on platform that will prepares user for high end training. Growing Markets In light of these trends and the current state of the global economy, there is an industry shift away from expensive, stationary training systems towards more robust, cost-effective PC or laptop-based COTS training solutions. Moreover, “learning by doing” is becoming widely recognized as the most effective way to train users, especially the potential of commercial areas such as commercial flight, air traffic control, maritime operations, nuclear and electric power plants, driving and medical care these areas continue to require applications, such as simulators, enabling operators to achieve and maintain high levels of operational skill. 5 6 Getting Personal with Distributed Simulation Solutions SimiGon’s comprehensive portfolio of off-the-shelf solutions – including a state-of-the-art simulation platform and range of compelling products – “closes the knowledge gap” for professional users. At the same time, SimiGon’s flexible solutions are easily integrated either by customer organisations or third-party systems integrators for both military and civilian applications. SIMbox SimiGon is the creator of SIMbox, a leading PC-based platform for creating, managing and deploying simulation based content across multiple domains including training, mission debriefing, homeland security and entertainment. SIMbox is a flexible, off-the- shelf 3D simulation engine comprised of a wide array of software modules that empowers users to create an unlimited range of new products and content. Built from the ground up as a robust and flexible platform, SIMbox has been deployed successfully by large training and simulation systems providers, leading military contractors, and over 20 air forces and commercial airlines worldwide. SIMbox is comprised of three main environments: • SIMbox Toolkit development environment: SIMbox Toolkit is an easy-to-use development suite, empowering non-programmers to create, reuse and control simulation-based applications. • SIMbox Server management environment: SIMbox Server which serves as the Learning Management System (LMS), contains various software modules used for configuration management of developed content, control over content distribution, data gathering from end users, and data analysis and report generation. • SIMbox Runtime delivery environment: SIMbox Runtime provides hi-fidelity 3D distributed simulations that place the user in a virtual or constructive environment with numerous viewpoints for both military and civilian applications. 7 8 Getting Personal with Distributed Simulation Solutions (continued) KnowBook Family Debriefing Systems KnowBook is a family of PC-based COTS training applications SimiGon offers advanced post-mission debriefing applications used by leading organisations for training professional users. that provide critical feedback and improve operational readiness. KnowBook provides a common platform for learning, training, Utilizing a standard Windows graphical user interface (GUI), the PC- planning and debriefing. based systems can be deployed at any location and are extremely The key members of the KnowBook family are: • AirBook ™: the family’s flagship application that enables aircrew simple to operate. SimiGon’s debriefing systems include D-Brief PC™ and MDDS Pro™. and organisations to remain completely updated with the Operated from a server connected to multiple client workstations, rapidly changing demands of the military and civilian aviation the systems analyze flight data stored on the aircraft’s PMC or world. RMM cartridge. D-Brief PC is used to support real-time air combat • GroundBook ™, MarineBook™ and CarBook™: the newest members debriefing. MDDS Pro is a digital debriefing solution incorporating of the KnowBook family designed for ground, maritime and video with 3D simulation. driving training scenarios. AirTrack AirTrack represents the next generation of passenger in-flight Air Traffic Control entertainment (IFE) solutions. Successfully installed and operational SimiGon's successfully deployed Air Traffic Control training solution on airlines worldwide, AirTrack is a cost-effective, rapidly deployable include instructor operator stations, virtual pilots, voice recognition solution for airlines seeking to upgrade their IFE systems. Based and the ability for instructors to modify training sessions in real time. on advanced SIMbox technology, the system’s capabilities include The systems are used by ATC instructors to train new controllers hi-fidelity 360º 3D simulation views, moving maps, external plane in guiding aircraft through takeoff and landing procedures as views, dynamic media, and real-time flight data and news. AirTrack well as for recurrent and operational training. The Company aims is provided with an easy-to-use, PC-based software configuration to leverage its success in this market to compete for additional tool that enables airlines to independently and rapidly customize military and civilian ATC training contracts. and upload in-flight content based on specific needs. 9 Sharing Personal Messages from Corporate Leadership Chairman’s Statement Chief Executive’s Review SimiGon Ltd. (the company together with its subsidiaries During 2008 SimiGon continued to substantiate its position as one of the "SimiGon" ) announces its full year results for 2008. Despite world's leading developers and suppliers of distributed computer simulation the global economic crisis and expected revenue growth solutions by wining numerous strategic contracts this year that will positively that has been delayed, the Board believes SimiGon is impact the Company's longer term prospects. We focused on winning large, well positioned for long term growth and the Company strategic programs to secure the companies position in the marketplace the will continue to build on its success providing PC-based global crisi s has affected our entry into the commercial markets but has not training and simulation systems for the industry’s largest affected our leading position in our core SIMbox training business. training programmes. SimiGon retains its positive outlook due to the large contracts that have already begun to As a provider of advanced PC-based training and simulation technologies for the impact revenues and additional substantial wins that are world's largest military flight training programmes, SimiGon has transformed expected in the coming years. In the current business into a formidable player in the market of PC-based training and simulation environment, SimiGon is committed to exacting prudent solutions. The Company's reconfigurable SIMbox technology platform can be and measured actions to steer the business through the used for all initial, recurrent and operational requirements, across all domains global economic recession. The Company will remain such as air, land and sea, and industrial. The Company will continue to leverage focused on delivering quality products to its customers its core product, SIMbox, to compete for more programs in its existing markets, and doing its utmost to build on its current market as well as compete in newer markets such as medical, maritime and industrial positioning to compete for upcoming military aviation operations training. training contracts as well for contracts in other training SimiGon is extremely pleased to have been chosen as a partner in the UKMFTS domains. Alistair Rae Chairman 10 program. This is a significant milestone for the company and it represents a success of its strategic business model as it transitions from primarily six figure contracts to long term multimillion dollar contracts. We are very excited to be part of the team for this program as this further extends the mutually beneficial relationship with Lockheed. The UKMFTS will be using our technology the way it was designed to be - network centric, personal and dynamic hi-fidelity training systems for each trainee. We are confident this program will demonstrate the viability of the SIMbox technology platform and our business model. This and other recent contract wins give us confidence in the growth prospects of SimiGon. The selection of the SIMbox Learning Management System for the F-35 Lightning II Joint Strike Fighter training program by Lockheed Martin and winning the Contract with Lockheed Martin for the Advanced Jet Training phase of the UKMFTS will continue to impact SimiGon more significantly in the longer term. This success has led to the addition of several significant partners including BAE Systems Australia and Cessna along with several training companies. These new partnerships serve to strengthen SimiGon's foundations, providing further affirmation of the viability of SimiGon's training solutions and will further fuel the Company's expansion. Amos Vizer President & CEO Financial Performance Revenues for the year ended 31 December 2008 were $5.14 million, high resolution, getting better performance for the end user. In compared to $5.01 million in 2007, an increase of 2.59%. In terms addition, a new SIMbox Simulation platform was developed; SIMbox of regional breakdown, 58.55% of SimiGon's revenues came from Web Simulation provides an interactive mode to support access to North America (2007: 29.2%), 31.73% from Europe and the Middle the simulation from a web browser. The Web Simulation platform East (2007: 70.7%) and 9.72% from the Far East (2007: 0.1%). Gross significantly increases the number of end users training with SIMbox. profit for the fiscal year was $4.14 million (2007: $3.96 million). SimiGon R&D continues to be one of the earliest adapters of cutting Research and development expenses for the year decreased by edge software technologies for infrastructure development with 8.30% to $2.54 million (2007: $2.77 million), primarily due to lower the improvements to the SIMbox Toolkit, supporting a wider range salary expenses. Sales and marketing expenses for the year 2008 Special Matter Experts (SME) with non-programmer knowledge to decreased by 29.18% to $1.82 million (2007:$2.57 million) mainly develop simulation platforms using SIMbox Toolkit. due to a decrease in sales commission. General and administration expenses increased by 3.93% to $1.85 million (2007: $1.78 million) mainly due to provision for doubtful debt. As a result, the total operating expenses for the year decreased Outlook by 12.78% to $6.21 million (2007: $7.12 million). The operating loss Despite the global economic crisis and the delays in the expected therefore is $2.06 million (2007: operating loss $3.16 million) and revenue growth, the Company remains positive in its outlook due the net loss is $1.98 million in 2008 compared to a net loss of $2.89 to the strategic partnerships and large contracts that have already million in 2007. This resulted in a net basic and diluted loss per share begun to impact revenues and others that are expected to be of $0.05 (2007: loss per share of $0.08). As at 31 December 2008, closed in the future. The Company is well positioned to compete SimiGon had cash, cash equivalents and deposits in the amount for upcoming military aviation training contracts as well as for of $3.64 million. As at 31 December 2008, the Company had 47 other training contracts in other domains. The Board believes the employees, compared to 60 employees on 31 December 2007. Company is well positioned for near term and longer term growth, continuing its success in providing PC-based training and simulation systems for the industry’s largest training programmes. Product Development During 2008, SimiGon incurred a high level of annual expenditure on research and development as the group sought to further extend its technology lead over its competitors. SimiGon is committed to technology innovation and developing new capabilities and products to ensure market relevance and build market share. In 2008, SimiGon R&D efforts focused on improving the SIMbox Learning Management System to provide a distributed site management platform supporting multiple professional communities across different locations. This enables far flung organizations to collaborate, monitor and track group and individual performance, leading to faster effective training. Another major effort was focused on the new generation SIMbox Graphic Engine, developed to support urban and ground simulation with 11 Displaying Personal Commitment to Organizational Success Board of Directors Alistair Rae, Non-Executive Chairman Alistair is currently chief executive of LTG Technologies Plc, an AIM traded company, having been a non-executive director from 2002 to 2005. He was the group finance director of Jarvis Plc from 2004 to 2005, guiding the company through Eitan Cohen, Co-Founder and Chief Executive Eitan Cohen is a Co-Founder and Chief Executive Officer of ASIC Depot OOD an EDA and Semiconductor design centre. Eitan previously held positions as CEO and Country manager for a period of reconstruction. Prior to this he was a director in the Semiconductor and EDA companies, in which he led to the award corporate finance department of HSBC Investment Bank from of multi-million dollar deals with tier-one companies and managed 1996 to 2002, and before that he worked in corporate finance at business development activities with potential partners worldwide. Cazenove for ten years in the UK and the Far East. Alistair qualified as a chartered accountant with KPMG. Amos Vizer, President & CEO Prior to founding SimiGon, Amos founded Logi-Cali, a software development house specializing in data storage applications. He previously served as marketing and business Nevat Simon, Independent Non- Executive Director Nevat has practiced as a certified public accountant in his own accounting firm since 1991, providing both accounting and other financial services to the firm’s clients. He has development manager of ISYS Operational previously served on the board of Sprint Investments Ltd. and Management Systems, an international IT company. Amos also Multimetrics Ltd., both publicly listed companies on the Tel Aviv previously worked for the missiles division of RAFAEL Armament Stock Exchange, and on the board of a number of private companies. Development Authority Ltd. Additionally, he served ten years in Nevat has a BA in accounting and marketing from the Business the Israeli Air Force (IAF) as an F-4 Phantom Fighter navigator, a College of Management in Tel Aviv and has been a member of the flight school course commander, and a Popeye missile weapons Certified Public Accountant Council in the Justice Department of officer. With extensive training in advanced software development, the State of Israel since 1991. Amos holds a BA in business administration. Haim Yatim, CFO Haim joined SimiGon as chief financial officer Dr. Vered Shany, Independent Non-Executive Director Since March 2002, Vered has managed Tashik Consultants, providing strategic consulting and corporate analysis in the life sciences following several successful stints in the high- sector. Previously, Vered served as managing director of Up-Tech technology sector as a CFO and CPA. Previously, Ventures Ltd., as a member of the board of directors of the Weizmann Haim served as CFO at Digital Power (AMEX: Science Park Incubator, and as vice president of marketing for DPW). There, his responsibilities included Arad Technological Incubator. Prior to that, she was business and financial reporting to the SEC, corporate accounting and tax marketing manager of Medun Ltd., a medical start-up company, preparation, budgeting and forecasting, and risk management. from 1995 to 1998. Vered received her masters’ degree in business He is a former partner at Ernst & Young’s Tel Aviv office, where he administration from Heriot–Watt University, Edinburgh Business advised on successful NASDAQ listings of technology companies. School, and gained her doctorate of medical dentistry and her Haim holds a B.Sc. in accounting and economics. B.Med.Sc. from the Hebrew University of Jerusalem. 12 Management Amos Vizer, President & CEO Prior to founding SimiGon, Amos founded Logi-Cali, a software development house specializing in data storage applications. He previously served as marketing and business development manager of ISYS Operational Alon Shavit, VP Business Development Before joining SimiGon, Alon served 15 years in the Israeli Air Force (IAF), having flown F-16s for the past 20 years. He was an instructor in the Operational Training Unit (OTU) on A-4s for two years and a commander of the F-16 OTU for Management Systems, an international IT company. Amos also 18 months. His last role in the IAF was managing the planning, previously worked for the missiles division of RAFAEL Armament coordination, synchronization, and monitoring of the training Development Authority Ltd. Additionally, he served ten years in program. Alon holds an MBA and bachelor’s degrees in economics the Israeli Air Force (IAF) as an F-4 Phantom Fighter navigator, a and psychology. flight school course commander, and a Popeye missile weapons officer. With extensive training in advanced software development, Amos holds a BA in business administration. Haim Yatim, CFO Haim joined SimiGon as chief financial officer following several successful stints in the high- technology sector as a CFO and CPA. Previously, Haim served as CFO at Digital Power (AMEX: DPW). Koby Ben Yakar - Director, Product Development Koby, 33, has a distinguished record as an experienced manager with extensive technical skills and knowledge. Mr. Ben Yakar has led a wide range of projects with cross- There, his responsibilities included financial functional teams, including serving as SimiGon’s Information reporting to the SEC, corporate accounting and tax preparation, Technology team leader and overseeing the architecture, design budgeting and forecasting, and risk management. He is a former and development of the SIMbox LCMS Server infrastructure. partner at Ernst & Young’s Tel Aviv office, where he advised on Mr. Ben Yakar has over 10 years of experience in large training successful NASDAQ listings of technology companies. Haim holds and simulation technologies enterprise projects with a proven a B.Sc. in accounting and economics. ability to manage business and technical relationships for large- scale projects. Yaron Goldberg - VP Programs Yaron has worked in SimiGon as a Software Designer, Program Manager and then Programs Director, managing all aspects of multiple, large-scale programs to ensure delivery and implementation of customer contracts, starting from marketing stages to delivery. Mr. Goldberg served for 7 years in the IAF as an F-4 pilot and as an instructor in the IAF academy. Iris Siruse, Director of Human Resources Iris has been managing SimiGon’ s HR Department for over six years. Before joining SimiGon, she served as assistant to the CEO at a major publishing house, where she developed the company's human resources organization, Mr. Goldberg has a Bachelor degree in Business Management and was employed as an interviewer at a job placement company. majoring in Information Technologies. He serves in the reserve Formerly an Israeli Air Force (IAF) officer, she was responsible for as an instructor in the IAF academy. operations of the IAF Commander’s office. Iris holds a BA. 13 Simigon Ltd. And Its Subsidiary Consolidated Financial Statements As Of December 31, 2009 U.S. Dollars in Thousands Financials Simigon Ltd. And Its Subsidiaries Consolidated Financial Statements As Of December 31, 2008 U.S. Dollars in Thousands 14 INDEX Corporate Governance Report on Directors Remuneration Directors Report Independent Auditors’ Report Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Share Information, Advisers, Contact Information 16 17 18 19 20 21 22 23-24 25-53 54 15 Corporate Governance for the Period Ended 31 December 2008 Introduction SimiGon Ltd. commenced trading on the AIM Market operated by the London Stock Exchange on 2 November 2006. Although the rules of AIM do not require the Company to comply with the Combined Code on corporate governance (“the Code”) published by the Financial Reporting Council, the Company fully supports the principles set out in the Code and will attempt to comply with them wherever appropriate, given the Company’s size, the constitution of the Board and the resources available to the Company. Details are provided below of how the Company applies those parts of the Code, which it believes to be appropriate. Directors The Board comprises two executive Directors, two Non- Executive Directors and two independent Non-Executive Directors nominated by the majority shareholders of the Company. The Board generally meets a minimum five times a year and receives a Board pack comprising a report from senior management together with any other material deemed necessary for the Board to discharge its duties. It is the Board’s responsibility for formulating, reviewing and approving the Group’s strategy, budgets, major items of expenditure and acquisitions. Audit Committee The audit committee consists of Eitan Cohen Graham Woolfman (till June 3, 2008), Dr. Vered Shany and Nevat Simon and meets at least twice a year. The role of the audit committee is to review the management and systems of internal control of the company, including in consultation with the internal auditor and the company’s independent auditor and to recommend any remedial action. In addition, the approval of the audit committee is required to effect certain related-party transactions. Remuneration Committee The remuneration committee consists of Alistair Rae, Dr. Vered Shany and Nevat Simon. The Remuneration Committee has a primary responsibility to review the performance of the Company’s executive directors and the senior employees and to recommend their remuneration and other terms of employment. Shareholder Relations The Company meets with its shareholders and analysts periodically to encourage communication with shareholders. In addition, the Company intends to facilitate communication with shareholders through the annual report and accounts, interim statement, press releases as required during the ordinary course of business and the Company website (www. simigon.com). Going Concern The directors have satisfied themselves that the Company has adequate resources to continue in operational existence for the foreseeable future, and for this reason the financial statements are prepared on a going concern basis. Internal Control The Board is responsible for the system of internal control and for reviewing its effectiveness. Such systems are designed to manage rather than eliminate risks and can provide only reasonable and not absolute assurance against material misstatement or loss. Each year, on behalf of the Board, the audit committee reviews the effectiveness of these systems. This is achieved primarily by considering risks potentially affecting the Group and from discussions with the external auditors. Each year, the Group is subject to internal audit, the results of which are presented to the audit committee. A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s results, as compared against budget, are reported to the Board on a quarterly basis and discussed in detail at each meeting of the Board. The Group maintains appropriate insurance cover in respect of any legal actions against the Directors as well as against material loss or claims against the Group and reviews the adequacy of the cover regularly. To comply with AIM rules, the Company has adopted a code for dealings in its shares by directors and employees. 16 Report on Directors Remuneration Remuneration Policy The remuneration packages for non-executive directors are based principally on annual salaries. The remuneration packages for independent non-executive directors are based on an annual fixed fee plus additional payment for each Board or Board committee meeting attended. The remuneration packages for executives are based on annual salaries and benefits. Total 2008 Total 2007 Executive Ami Vizer * Haim Yatim Non-Executive Alistair Rae Graham Woolfman** Eitan Cohen*** Nevat Simon Dr. Vered Shany Total $ 377,876 167,354 60,768 19,695 9,411 43,908 42,676 721,688 $ 369,730 145,840 70,276 52,050 - 34,296 34,050 706,242 * Year 2007 amount does not include $65,774 paid in respect of previous yearsand $47,903 vacations day's. Year 2008 amount does not include $56,635 paid in respect of vacation days. ** Till June 2008. ***From July 2008. Please see the Directors Report below for details of options granted to directors. Report 17 Directors Report The directors submit their report and the financial statements of the Group for the period ended 31 December 2008. Directors Interest in Shares and Share Options The interest of directors in the issued share capital of the company at 31, December 2008 were as follows. Incorporation and Admission onto the AIM Market The Company was incorporated on 1 October 1998. On November 2006 the Company commenced trading on AIM and issued 6,076,811 new Ordinary Shares of NIS 0.01 at price of £0.88 per share. The number of Ordinary Shares issued immediately following the admission is 37,250,666. Shares As of December 31, 2008 the total numbers of Ordinary Shares Issued were 37,798,194. Share Options As of 31 December 2008, the outstanding balance of options granted to certain employees of SimiGon is approximately 6.4 percent of the Company’s issued and outstanding shares at an average exercise price of $0.706. The majority of the options vest in four years from the date of grant. The options expire in ten years from the date of grant. Review of Business and Future Developments The business review is given within the Chief Executive Officer’s statement. Dividends The Company has not declared a dividend in respect of the relevant period. Directors The following directors have held office during the year: Alistair Rae, appointed as a director and Chairman of the Board on 27 October 2006. Graham Woolfman, appointed as an independent director on 27 October 2006. On June 3, 2008 he announced that he decided not to stand for re-election. Mr. Eitan Cohen was appointed a non-executive director on June 3, 2008. Nevat Simon, appointed as an independent director on 27 October 2006. Dr. Vered Shany, appointed as an independent director on 27 October 2006. Haim Yatim, appointed as an executive director on 24 September 2006. Amos Vizer has been an executive director of the Company since 4 November 1998. Directors Alistair Rae Graham Woolfman Eitan Cohen Dr. Vered Shany Nevat Simon Ami Vizer Haim Yatim Number of Ordinary Shares Capital 22,727 0 0 0 0 1,662,500 0 Percentage of Ordinary shares 0.06 0 0 0 0 4.4 0 Options 0 0 0 0 0 1,372,074 214,500 Substantial Shareholdings At 31, December 2008 the Company was informed of the following interests of 3% or more in its ordinary shares issued at that date: Jeffrey Braun Packet Science Rami Weitz G. Poran Holding Ltd Green Venture Capital Ltd. Israel Aircraft Industries Ltd Moldavski High-tech Ltd A. Vizer Holdings Ltd.-DI S.S.D.E Technologies (1999) Ltd. Number Of Shares 6,543,039 5,557,444 3,778,444 3,067,848 2,624,310 1,750,297 1,662,500 1,166,895 Percentage of issued 17.31% 14.70% 10.00% 8.2% 6.94% 4.7% 4.40% 3.1% Suppliers Payment Policy The Group does not operate a standard code in respect of payment to suppliers. It has due regard to the payment terms of suppliers and generally settles all undisputed accounts within 60 days of the date of invoice, except where different arrangements have been arranged with suppliers. Auditors Kost Forer Gabbay & Kasierer A member of Ernst & Young Global 3 Aminadav St. Tel Aviv 67067 Israel 18 Share Information SimiGon is listed on the AIM. The shares of the Company are available through the Crest settlement system, enabling immediate, secured electronic trading and registration of shareholders’ assets. Symbol: SIM Financial Year End: 31 December Contact Information To request additional information about SimiGon and our products, please contact us by telephone, fax or e-mail: SimiGon Ltd. 1 Sapir St. PO Box 12050 Herzliya, Israel 46733 Tel: +972-9-956-1777 Fax: +972-9-951-3566 SimiGon Inc. 12001 Research Parkway Suite 236 Orlando, FL, USA 32826-3009 Tel: +1 407 737-7722 Fax: +1 321 251-7692 For more information: info@simigon.com Advisers Nominated Adviser and Broker Evolution Securities 100 Wood Street London EC2V 7AN Registrar Computershare Investor Services (Channel Islands) Limited Ordnance House 31 Pier Road St. Helier Jersey Auditors and Reporting Accountants Kost Forer Gabbay & Kasierer A member of Ernst & Young Global 3 Aminadav Street Tel Aviv 67067 Israel Solicitor to the Company as to English law Halliwells LLP 1 Threadneedle Street London EC2R 8AW Counsel of the Company as to Israeli law Efrati Galili & Co. 6 Wissotsky St. Tel Aviv 62338 Israel www.simigon.com WWW.SIMIGON.COM
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