TAKING DISTRIBUTED
TRAINING SIMULATION
PERSONALLY
‘15
2015 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
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.
faster and more cost-effective
Contents
3
4
6
7
11
13
Financial and Operational Highlights
Market
Solutions
Chairman & CEO Reviews
Board & Management
Financial
2
TAKING DISTRIBUTED TRAINING 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, sea 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 offer state-of-the-art simulation solutions for non-training
applications, bringing the best of personal simulation to wider audiences.
Financial Highlights
Delivering on all long term contracts:
Delivery under the $6.7 million contract signed in
June 2013 although 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.
Now in our eighth year supporting Lockheed
Martin's F-35 Lightning II Joint Strike Fighter
training program ("JSF").
Continuing long term contracts supporting the UK
("UKMFTS")
Military Flying Training System
program.
In the seventh year of a long-term contract to
provide training simulations
for a strategic
European aircraft manufacturer.
Continuing to meet project milestones for long
term contract with Check-6, the Company's first
major contract outside the aerospace and defence
industry.
Now in our third year of supporting U.S. Air Force
its T-6
Air Education Training Command on
Modular training devices.
Net profit increased by 31% to $1.78 million
(2014: $1.36 million)
Revenues of $6.94 million (2014: $8.32 million)
Gross margin 78% (2014: 76%)
Basic and diluted EPS $0.04 (2014: $0.03)
Annual dividend declared of 0.6 cents per share
Operational Highlights
New major awards:
Awarded a
five year Contractor Logistics
Support ("CLS") contract by the U.S. Air Force
Air Education Training Command ("AETC") to
support and maintain all of the T-6A training
simulators used in the training of all Remote
Piloted Aircraft ("RPA") students.
Signed an industrial offset contract to support
leading Latin American training and simulation
group Corporacion de Alta Tecnologia para la
Defensa ("Codaltec").
Awarded an additional contract valued at $0.8
million from a leading provider in the small
tactical Unmanned Aircraft Systems ("UAS")
market
the
underlying training system technology for the
UAS program.
in which SimiGon
supplies
Awarded $4.0 million contract with Booz Allen
Hamilton Engineering Services to provide the
U.S. Air Force with software and support for the
addition of multiple T-6 simulators.
3
HIGH SKILLS JOBS REQUIRE ADVANCED, PERSONALIZED TRAINING &
SIMULATION
Organizations recognize the need for more Training and Simulation to improve
personnel and organizational preparedness and reduce potentially costly work
incidents.
Key Trends
Growth in the training and simulation market will
continue due to increasing training needs for high
skills jobs and proven cost savings available through
advances in technology.
The military training and simulation market
expected to reach US$15.8 billion by 2025.
is
The Commercial Training & Education market was a
$27.7 billion in the US alone.
Commercial training is transitioning to technology-
based solutions to save costs, following the longer
trend of Military training.
Every professional organization, military or civilian,
requires well trained operators in high function, high
skill roles. The types and quantities of training systems
and training devices required are dependent on the
necessary operational skill level and the ratio of
operators per system and total amount of systems
acquired. Although even the best simulators can’t
completely replicate the feeling of landing on a
moving aircraft carrier; successfully operating a crane
on an oil rig; or maintenance service on an F-16, the
is well
positive
documented. In additional to replicating the operating
environment, the cost savings of simulation reduces
the training footprint, environmental impact and can
ensure a high level of operator readiness for real life
conditions. Market drivers in the military sector are
the acquisition of new platforms such as aircraft,
ships, tanks, and other complex systems. There are
many similarities in the civilian sector, also driven by
reducing accidents and liabilities by implementing
advanced training methods and technologies.
impact of simulation
training
Military and civilian organizations, whether mandated
by budget cuts, government regulations or by seeking
efficiencies through additional training exercises
utilizing training and simulation systems. The cost
savings of big simulators versus aircraft flight hours
for training tasks ranges between 5% to more than
20% for fighters and multi-engine turbine aircraft.
4
Cost efficiencies delivered through training technologies
such as Intelligent Tutor, an important dynamic training
capability that adapts to trainees and enables them to
learn at an individual pace. Government and civilian
organizations will continue to require cost effective,
advanced training and simulation technologies and
solutions. SimiGon’s comprehensive disruptive training
and simulation technologies, solutions and services meet
and exceed requirements for effective and efficient
training systems delivering significant time and cost
savings for customer and partners.
Additional growth drivers are system maintenance,
upgrades and support services for existing training
devices as well as real life events that spur changes to
accepted training practices and require technology
upgrades and further investment in training aids, devices
and simulators.
The benefits of using simulators for procedural training
are recognized and well documented. Higher fidelity
devices are used to offload operational and mission
training needs.
SimiGon’s comprehensive technologies, solutions and
services meet market requirements providing added-
value through improved training efficiencies, training
analytics and cost-effective, saving significant time and
money.
Growth Opportunities in the Market
SimiGon is focused on growing its business through
several market opportunities.
The credibility SimiGon has gained by delivering advanced
simulation based training technologies and solutions as a
Prime contractor or as a key technology partner for multi-
million dollar contracts is leading to additional business
with current customers and new ones. The Company’s
systems are recognized by end users and partners as one
of the best methods for achieving proficiency in complex
skills or operations.
HIGH SKILLS JOBS REQUIRE ADVANCED, PERSONALIZED TRAINING &
SIMULATION (CONT.)
Our long track record and expertise in delivering
solutions
advanced military
training
aviation
continues to present near term and
long term
business.
The Company is also leveraging its training and
simulation expertise in areas such as maintenance
training, commercial aviation training, oil and gas
industry training and other vertical markets.
According to Deloitte’s Global Aerospace & Defense
Outlook for 2016, the military subsector is expected
to grow due to increases in defense budgets by the US
and other key countries around the world. The global
Fixed-Wing Aircraft market is expected to be worth
US$61.2 billion in 2016 and is expected increase to
US$88.9 billion by 2026.
The value of the global military aircraft market is
estimated at US$61.5 billion in 2016, and by 2025 is
expected to reach a value of US$87.5 billion. The US is
anticipated to be the
largest spender with a
cumulative expenditure of US$260.9 billion over the
next decade.
According to the US Department of Defense, as
reported by the US General Accounting Office (GAO),
basic flight training costs per pilot is about US$1
million while the cost of fully training a pilot to
requisite operational experience can be over US$9
million, depending on the type of aircraft.
These costs underline the need to “download” more
flight hours to the simulators and training devices.
Another area with strong growth forecasts are in the
still-emerging Unmanned Aircraft Vehicles (UAV)
for military and commercial aircraft
subsector,
subsector with considerable growth potential. The
Teal Group 2015 market study reports an estimated
value of $93 billion by 2024 for the production of
UAVs for military and commercial use. The US DoD
budgeted $2.9 billion on unmanned aerial systems in
fiscal 2016. The USAF Air Combat Commander (ACC),
General Herbert "Hawk" Carlisle, stated in a March
2016 testimony to the US Senate Armed Services
Committee that the Air Force needed 511 fighter
pilots and approximately 200 more UAV operators.
the overworked
to alleviate
Carlisle said
operators, the true shortfall is nearly 500.
that
Since the US Federal Aviation Administration’s initial
release of UAV operator requirements, the commercial
UAV training sector is expected to create approximately
100,000 new jobs in the first 10 years after unmanned
aircraft are cleared for U.S. airspace, according to UAV
trade groups.
Non-aerospace companies, including Google, Amazon and
Facebook, as well as defense contractors are acquiring
UAV manufacturers and hiring experienced operators and
engineers.
learning market
is
The global smart education &
estimated to grow more than 24%, from $105.23 Billion in
2015 to $446.85 Billion in 2020. The North American
market is expected to be the largest market while APAC is
expected to experience a high growth and adoption rate.
The various learning modes in this market, comprised of
e-learning, virtual instructor-led training, mobile learning,
social learning, simulation-based learning, and adaptive
learning, are capabilities that can be delivered within
SimiGon’s high technology training platform.
In the civilian aviation sector, approximately $122 billion
worth of new aircraft were delivered. This is expected to
reach $172 billion by 2020. Almost 37,000 commercial
airplanes are forecast to be produced over the next 20
years, valued at $5.2 trillion. Along with this, there is a
significant need to train new civilian airline pilots over the
next 20 years, expected to reach more than 530,000.
Together with the aircraft, there is also a corresponding
demand for maintenance technicians to maintain fleets
over the next 20 years. This is expected to reach 584,000.
SimiGon’s advanced
technologies and a
training
methodology, successful in the military aviation market,
has an opportunity in this significant market.
The Company will build on its past performance of success
to compete and win new contracts in the government and
civilian sectors, including training products and services
for commercial aviation to increase company growth.
remains constant as
The ability to leverage SimiGon technologies in multiple
the Company has
domains
continuously proven in multiple vertical markets. High
skills jobs require the advanced, training and simulation
management systems and services provided by SimiGon
to reach and maintain high levels of operational skill
required by professional organizations and communities.
5
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 organizations 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
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.
easy-to-use development
an
is
Major Existing COTS products under
SIMbox
Fully Functional F-16 Training Device
T-6 Flight Training Device
Cessna Caravan Training Device
Sensor Operator Training System
KnowBook™ Family
KnowBook
is a family of PC-based COTS training
applications used by leading organisations for training
professional users. KnowBook provides a common
platform for learning, training, planning and debriefing.
The key members of the KnowBook family are:
* AirBook™: the family’s flagship application that
enables aircrew and organisations to remain completely
6
updated with the rapidly changing demands of the
military and civilian aviation world.
GroundBook, MarineBook and CarBook: the newest
members of the KnowBook family designed for ground,
maritime and driving training scenarios.
AirTrack™
AirTrack represents the next generation of passenger in-
flight entertainment
solutions. Successfully
(IFE)
installed and operational on airlines worldwide, AirTrack
is a cost-effective, rapidly deployable solution for
airlines seeking to upgrade their IFE systems. Based on
advanced SIMbox technology, the system’s capabilities
include hi-fidelity 360º 3D simulation views, moving
maps, external plane views, dynamic media, and real-
time flight data and news. AirTrack is provided with an
easy-to-use, PC-based software configuration tool that
enables airlines to independently and rapidly customize
and upload in-flight content based on specific needs.
Debriefing Systems
SimiGon offers advanced post-mission debriefing
applications that provide critical feedback and improve
operational readiness. Utilizing a standard Windows
graphical user interface (GUI), the PC-based systems can
be deployed at any location and are extremely simple to
operate. SimiGon’s debriefing systems include D-Brief
PC and MDDS Pro. Operated from a server connected to
multiple client workstations, the systems analyse flight
data stored on the aircraft’s PMC or RMM cartridge. D-
is used to support real-time air combat
Brief PC
debriefing. MDDS Pro is a digital debriefing solution
incorporating video with 3D simulation.
Air Traffic Control
SimiGon's successfully deployed Air Traffic Control
training solution includes instructor operator stations,
virtual pilots, voice recognition and the ability for
instructors to modify training sessions in real time. The
systems are used by ATC instructors to train new
controllers in guiding aircraft through take-off and
landing procedures as well as for recurrent and
operational training. The Company aims to leverage its
success in this market to compete for additional military
and civilian ATC training contracts.
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP
Chairman & CEO Reviews
Chairman’s Statement
Chief Executive’s Review
I am delighted to report SimiGon’s fifth consecutive
year of growth in profitability as a result of continuing
to achieve the milestones set out in its strategy.
During year 2015, SimiGon successfully continued to
leverage its position as a leading supplier of training and
simulation technologies. This included cementing its
position as a prime contractor for major, long term
simulation training programmes, securing significant
new contracts and diversifying its product capabilities.
SimiGon has also been focusing on long-term, high
value, stable license contracts which provide better
revenue and profit visibility rather than on single lump
sum license sales. Furthermore, the Company has
continued to meet project milestones for long term
contracts, executing delivery and performance of its
systems. Delivery under the $6.7 million contract signed
in June 2013 has continued although 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 which we expect
this now to complete in 2016. Further to the Company’s
declared intention to pay an annual dividend to its
shareholders and in light of its strong cash position, the
Board has decided to pay a dividend of 0.6 cents per
share, equating to approximately 15% of the Company’s
earnings per share.
The required pillars for long term growth are in place,
based on our ability
to create and maintain
partnerships, be a prime contractor and expand into
new territories and vertical markets. Our recent
contract award in 2016 is testament to our ability to
enter both a new market and a new territory. Adding
SimiGon’s strong foundation and successful execution
of this strategy, I look to the future with confidence in
SimiGon’s ability to deliver long term growth.
to
thank
On behalf of the board, I would like to take this
opportunity
SimiGon’s management,
employees and all those involved with SimiGon for their
dedication and resourcefulness which led SimiGon to
consecutive growth in profit and to express gratitude
for their continued commitment in 2016 and beyond.
SimiGon is pleased to report another year of strong
operational performance and growth in profitability
while continuing to execute our growth strategy. During
the course of the year we have secured several new,
high value contracts. We have also further established
our position as a prime contractor providing a highly
valued solution to our customers. Despite seeing a
reduction in revenue as a result of delays in delivery
under the $6.7 million contract signed in June 2013 we
are encouraged to see that our net profit and profit
margins have improved.
Looking ahead, we will continue to
leverage our
position in the market and our global footprint to build
new partnerships, expand our customer base, and
target large contracts. In line with market requirements
the Company is focusing more and more on high value,
long term license contracts. The transition to these long
term contracts may lead to lower revenue from these
contracts in the early years but is expected to give
much better long term revenue and profit visibility to
the Company. The Board's confidence in its ability to
deliver growth over the long term is demonstrated by
the Company's continued annual dividend distribution.
Overview
SimiGon is pleased to report another year of increased
profitability which has been achieved due to both new
business being won in the period and an increase in
recurring revenues from existing strategic partners.
SimiGon recorded a net profit of $1.78 million in 2015
compared to $1.36 million in 2014 and revenues of
$6.94 million compared to $8.32 million in 2014. The
strong profit performance, despite the decrease in
revenue in 2015, is mainly as a result of a change in the
Company's sales mix, primarily due to its long term $6.7
million dollar contract signed in June 2013. Research
and development expenses decreased from $2.38 in
2014 to $1.47 million in 2015 which is reflective of the
Company's focus on cost control while still investing
sufficient funds in developing its products to ensure
future success.
Alistair Rae
Chairman
7
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
improve
its position as a
SimiGon continued to
technology and services provider for large simulation
training programs in 2015. The Company operates as a
key supplier of training and simulation technologies for
the world's largest military flight training programmes
and has seen further growth into vertical markets such
as civil aviation training and industrial training solutions.
SimiGon's ability to capture more market share due to
its participation in the largest global simulation and
training projects enables the Company to increase its
strategic business scope and potential revenue streams.
The Company's goals are to compete as a prime
contractor and strategic technology provider. Aside
from being advantageous in acquiring a larger share of
contracts, this enables the Company to establish a long
term relationship with the end user organization.
Our market position as a preferred supplier for
simulation and training technologies and solutions has
been strengthened by our work in the past year. Our
foundation of new contracts and support contracts, in
tandem with our growth strategy, positions the
Company to enjoy what the Directors believe will be a
period of long term growth.
SimiGon is focused on developing strategic programs
that will enhance the Company's long term growth. Our
ability to grow the business and improve our financial
performance is evident in our robust pipeline of new
opportunities for 2016 and beyond and the greater
transparency in revenue streams.
Operational Review
strategic,
simulation-based
is a fast-growing company, dedicated to
SimiGon
developing
training
programs. This development is allowing expansion into
vertical markets, including civil aviation training and
long term
industrial training, as well as boosting
growth. SimiGon has consolidated
its position as
technology provider of choice for large simulation
training programs, as well as a strategic supplier of
training and simulation technologies for the worlds'
largest military flight training programmes. As such, our
industry-leading position remains well established.
SimiGon continues to increase its visibility of the market
and of new opportunities available to it as a prime
contractor and strategic partner.
8
to benefit
from direct
The Company continues
relationships with the end user and, as the business and
our reputation grows, SimiGon will be in a stronger
position to compete for and win far larger contracts.
Delivery of a 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
in terms of the geographic region, the
Company
contract value and the programme scope.
Delivery under this contract has continued during 2015
although 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 its
clients, the Company has been prepared to agree to
these new demands and it looks forward to meeting the
delivery milestones during the course of 2016.
The Company expects that its strong performance will
put it in a good position to win similar programmes in
other countries and regions in the future.
Expansion into the civil aviation market
In June 2015, SimiGon entered the Latin American civil
aviation market by
subsidiary
incorporated in Colombia (the "Subsidiary").
establishing
a
SimiGon's move into the civil aviation market has been
a long term strategic goal for the Company. Taking into
account the potential of the fast growing Latin
American aviation market, the Subsidiary provides an
ideal platform for SimiGon to enter an attractive growth
sector and region.
New contract wins
In May 2015, SimiGon was awarded a five year
Contractor Logistics Support ("CLS") contract by the U.S.
Air Force Air Education Training Command ("AETC") to
support and maintain all of the T-6A training simulators
used in the training of all Remote Piloted Aircraft
("RPA") students. The first year base value of the
contract is $0.33 million with a total contract value of
$1.66 million over an expected period of five years.
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
The Company is now in its seventh year of supporting
Lockheed Martin's JSF training program. Additional
licenses and ongoing maintenance support agreements
are part of the ongoing, long term partnership.
SimiGon is now in its sixth year supporting 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 performance.
SimiGon's partnership with Check-6 Inc., one of the
leading providers of training solutions to the energy
and mining industries, is also blossoming into long
term, recurring revenue. Throughout this contract,
SimiGon has successfully executed against its agreed
deliverables. As a result, the Company is expecting this
additional
partnership
agreements.
extended with
to be
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. SimiGon expects this
relationship to continue to evolve.
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 should lead to additional orders in the future.
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 should lead to additional orders in the future.
SimiGon continues to provide successful solutions for
Unmanned Aerial Vehicle ("UAV") training for a leading
provider
in the small tactical unmanned aircraft
systems. Through SimiGon's ecosystem of partners
worldwide, the Company's technology
is used to
support initial operator training in classrooms as well
as advanced operational training. SimiGon continues to
increase its footprint in the fast growing UAV market.
This contract builds on the successful delivery and
performance of systems provided by SimiGon as a
for the U.S. Air Force since
prime contractor
September 2011.
the Company's
It strengthens
position as a supplier of choice in the provision of
simulation training solutions while, at the same time,
demonstrating that SimiGon has the capability to
develop and support the unmanned aircraft training
sector which is a rapidly growing segment worldwide.
As announced in June 2015, SimiGon signed a new
technical support agreement to provide Corporacion
de Alta Tecnologia para la Defensa ("Codaltec"), a
technology corporation.
leading Colombian high
Subsequent
and
performance of SimiGon's systems and additional
licenses purchases announced
SimiGon software
during September 2014, SimiGon will deliver under this
contract, additional technical support services, as part
of an industrial offset agreement.
successful
delivery
the
to
Codaltec was formed in August 2012 by the Colombian
government to meet the defense sector's needs,
including training and simulation. Being one of the
largest and most successful groups utilizing SimiGon's
SIMbox training and simulation software platform,
Codaltec is considered a highly valued strategic partner
for SimiGon.
In August 2015 SimiGon was awarded an additional
$0.8 million contract from a leading provider in the
small tactical Unmanned Aircraft Systems ("UAS")
market in which SimiGon have supplied the underlying
training system technology for the UAS program. The
contract demonstrates SimiGon's ability to provide
successful
the
training solutions and highlights
Company's growing footprint in the UAS market.
In December 2015 SimiGon was awarded a $4 million
contract with Booz Allen Hamilton Engineering
Services, LLC ("Booz Allen ES") to provide the U.S. Air
Force with support and software for the addition of
multiple T-6 simulators for the RPA training simulators
("the Contract"). The initial phase of the Contract is
worth $0.92 million and includes the procurement of
the SIMbox software technology, T-6 model content
and integration for six newly fabricated RPA training
simulators.
Long term contracts
The Company has a growing portfolio of long term
partnerships that continue to develop into further
business and provide good revenue visibility. Many of
these partnerships are expected to continue with
additional purchases through 2016 and beyond.
9
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
Annual dividend declaration
In light of the strong cash position and further to the
Company's declared
intention to pay an annual
dividend, the Board intends to pay 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. The dividend will be
payable on Friday 27 May 2016. The record date for
payment of the dividend will be Friday 6 May
2016. The ex-dividend date will be Thursday 5 May
2016.
In line with the Israeli tax ordinance and regulations,
the dividend payment will be subject to 25%
withholding at source unless reduced by a relevant tax
treaty. In this regard, shareholders, who have a tax
withholding exemption or reduced withholding tax
rate from dividend payments obtained from by Israeli
Tax Authorities, should present and deliver it to the
Company, together with the contact details of their
stock broker, no later than the end of the business day
on Wednesday 4 May 2016.
Financial Performance
Revenue for the year ended 31 December 2015 was
$6.94 million, compared to $8.32 million in 2014. In
terms of regional breakdown, 56% of SimiGon's
revenues came from North America (2014: 50%), 27%
from Europe, Middle East, South America and Australia
(2014: 14%) and 17% from the Far East (2014: 36%).
Gross profit for the year ended 31 December 2015 was
$5.4 million, as compared to $6.33 million for the year
ended 31 December 2014. Accordingly, gross margins
increased to 78% for the year ended 31 December
2015 as compared to 76% for the year ended 31
December 2014.
Net profit for the fiscal year increased by 31% to $1.78
million (2014: profit of $1.36 million).
Total operating expenses for the year ended 31
December 2015 decreased by 25% to $3.77 million as
compared to $5.02 million for the year ended 31
December 2014. Research and development expenses
for year ended 31 December 2015 decreased by 38%
to $1.47 million as compared to $2.38 million for the
year ended 31 December 2014, mainly due to lower
salary expenses. Marketing expenses for the year
ended 31 December 2015 decreased by 15% to $1.25
million as compared to $1.46 million for the year
ended 31 December 2014 mainly due consultant's
fees.
General and administration expenses for the year
ended 31 December 2015 decreased by 11% to $1.05
million as compared to $1.18 million the year ended 31
December 2014 mainly due to the collection of debts
for which provisions for doubtful debts were recorded
in the prior period.
The Company has recorded a net income tax credit of
$0.15 million for the year ended 31 December 2015
mainly as a result of creating a deferred tax asset of
$0.16 million 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 year ended 31 December 2015 amounted
to $1.64 million, improving upon the performance for
the year ended 31 December 2014. Net basic and
diluted earnings per share increased to $0.04 for the
year ended 31 December 2015 as compared to $0.03
for the year ended 31 December 2014.
As at 31 December 2015 the Company had liquid cash
of $7.41 million (2014: $9.44 million) and trade
receivables of $3.72 million compared to $0.51 million
for the year ended 31 December 2014. $1.82 million of
the year end trade receivables balance has been
collected since the year end.
Outlook
As a result of achieving strategic milestones, SimiGon
continues to deliver strong growth in profitability. The
Company's goal of being a prime contractor and
technology provider for major, long term simulation
training programmes is being achieved and it continues
to secure significant new contracts while diversifying
its markets.
The transitioning into high value long term license
contracts in order to meet market requirements may
lead to lower revenue from these contracts in the early
years, but in the long term, is expected to give SimiGon
much better revenue and profits visibility.
The Board of Directors looks to the future with
expectations to successfully deliver long term growth.
Amos Vizer
President & CEO
10
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
of
through
reconstruction. Prior to this he was a director in
the corporate finance department of HSBC Investment Bank from
1996 to 2002, and before that he worked in corporate finance at
Cazenove for ten years in the UK and the Far East. Alistair
qualified as a chartered accountant with KPMG.
company
period
a
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 Management
Systems, an international IT company. Amos
also previously worked for the missiles division
of RAFAEL Armament Development Authority Ltd. Additionally, he
served ten years in the Israeli Air Force (IAF) as an F-4 Phantom
Fighter navigator, a flight school course commander, and a
Popeye missile weapons officer. With extensive training
in
advanced software development, Amos holds a BA in business
administration.
financial
including
Efraim Manea, CFO
Mr Manea joined the Company as its finance
controller in June 2008, managing its financial
aspects
reporting,
corporation accounting and tax preparation,
budget and forecasting and risk management.
He has more than seven years of accounting
and management experience and before
joining SimiGon served for approximately four years as an Audit
Team Manager at Ernst & Young's High-Technology sector. Mr
Manea is a Certified Public Accountant and holds a BA in
Accounting and Business Administration from the College for
Management in Israel.
Semiconductor design
Eitan Cohen, Non-Executive Director
Eitan Cohen is a Co-Founder and Chief
Executive Officer of ASIC Depot OOD an EDA
and
centre.
Eitan previously held positions as CEO and
Country manager for Semiconductor and EDA
companies, in which he led to the award of
tier-
multi-million
business
one companies and managed
dollardeals with
development activities with potential partners worldwide.
Nevat Simon, Independent Non-Executive
Director (until December 30, 2015)
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
previously served on the board of Sprint
Investments Ltd. and Multimetrics Ltd., both
publicly listed companies on the Tel Aviv Stock Exchange, and on
the board of a number of private companies. Nevat has a BA in
accounting and marketing
the Business College of
from
Management in Tel Aviv and has been a member of the Certified
Public Accountant Council in the Justice Department of the State of
Israel since 1991.
Dr. Vered Shany, Independent Non-Executive Director (until
December 30, 2015)
Since March 2002, Vered has managed Tashik Consultants,
providing strategic consulting and corporate analysis in the life
sciences sector. Previously, Vered served as managing director of
Up-Tech Ventures Ltd., as a member of the board of directors of the
Weizmann Science Park Incubator, and as vice president of
marketing for Arad Technological Incubator. Prior to that, she was
business and marketing manager of Medun Ltd., a medical start-up
company, from 1995 to 1998. Vered received her masters’ degree
in business administration from Heriot–Watt University, Edinburgh
Business School, and gained her doctorate of medical dentistry and
her B.Med.Sc. from the Hebrew University of Jerusalem.
(effective
large organization engaged
Independent Non-Executive Director
Ran Pappo,
December 30, 2015)
Mr. Ran Poppo has 25 years of business experience while delivering
results worldwide. Mr. Pappo is the Chief Executive Officer of Diva
Hirschthal Ltd. a
in designing,
manufacturing and world wild selling of high quality swimwear. Mr.
Pappo also serves as a director in JS Group Srl, supervising its
financial activities while reviewing its manuals and goals. Mr Pappo
is a strategic consultant focusing on organizational workflows,
financial
resources
forecasting, budgeting, auditing, human
optimization, production planning and marketing. Mr Pappo has an
extensive financial knowledge including budgeting, managing and
auditing financial statements for national Organizations. Mr. Pappo
holds a BS in Business Administration, Finance and International
Marketing, from the College for Management in Israel.
Independent Non-Executive Director
Deborah M. Bitman,
(effective December 30, 2015)
Mrs. Deborah M. Bitman has extensive experience on school
improvement committees and other school activities and programs.
Mrs. Bitman works with various educators to address curriculum
standards and needs. Working as a director at the Jewish Academy
of Orlando, she has great experience in school policy guidance,
future plans, and creating and managing
budget
educational curriculum. Mrs. Deborah M. Bitman holds a Bachelor
in English from the University of Michigan in Ann Arbor and a
Masters
in
Bloomington.
in Elementary Education from Indiana University
review,
11
DISPLAYING PERSONAL COMMITMENT TO
ORGANIZATIONAL SUCCESS (CONT.)
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
Management Systems, an international IT
company. Amos also previously worked for the missiles
division of RAFAEL Armament Development Authority Ltd.
Additionally, he served ten years in the Israeli Air Force (IAF)
as an F-4 Phantom Fighter navigator, a flight school course
commander, and a Popeye missile weapons officer. With
extensive training in advanced software development, Amos
holds a BA in business administration.
in
aspects
June 2008, managing
including
Efraim Manea, CFO
Mr Manea joined the Company as its finance
its
controller
financial
financial
reporting, corporation accounting and tax
preparation, budget and forecasting and risk
management. He has more than seven years
of accounting and management experience and before joining
SimiGon served for approximately four years as an Audit
Team Manager at Ernst & Young's High-Technology sector.
Mr Manea is a Certified Public Accountant and holds a BA in
Accounting and Business Administration from the College for
Management in Israel.
Roger Torres - Director, Programs
Mr Torres joined SimiGon’s Programs team in
2011. He has over 14 years of management
primarily with Aerospace,
experience,
Department
and
of Defense
Courseware Development programs. Prior to
program management Mr. Torres was a pilot,
and flew charter, corporate, and commercial operations
world-wide. He holds several certificates and ratings from the
aviation industry, including Flight Instructor, Flight Engineer,
and Airline Transport Pilot. Mr. Torres has a Bachelor in
Vocational Education and a Master’s in Aeronautical Science.
(DoD),
Hagai Pichovich - VP, R&D
Mr Pichovich
joined the company as a
software developer for the LMS team in 2006
and since then carried out various roles such
as team lead and Director of R&D. He has an
extensive experience with large scale project
architecture and deep knowledge with
SimBox based solutions and internals. Picho has over 15 years
of experience with software development using various
technologies and methodologies, and holds a bachelor degree
in computer science.
12
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 18
months. His last role in the IAF was managing the planning,
coordination, synchronization, and monitoring of the
training program. Alon holds an MBA and bachelor’s degrees
in economics and psychology.
Koby Ben Yakar, VP Product
Koby, 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-functional teams, including serving as
Information Technology team
SimiGon’s
the architecture, design and
leader and overseeing
development of the SIMbox LCMS Server infrastructure. Mr.
Ben Yakar has over 10 years of experience in large training
and simulation technologies enterprise projects with a
technical
proven ability
relationships for large-scale projects.
to manage business and
and
training,
Jeff Annis, VP Sales & Marketing
Mr Annis, joined SimiGon in 2011 and has a
in the Sales & Marketing of
career
simulation,
software
development technology, primarily in the
Aerospace/Defense
Automotive
sectors. Before joining SimiGon he held
Director positions at Adacel Systems, Advanced Rotorcraft
Technology, and Engenuity Technologies each specializing in
high-tech, advanced pilot training software systems. Prior to
this Mr. Annis founded American Data-Pro, a company
specializing in the development of database and network
systems. Mr. Annis has a Bachelor degree in Management
and Marketing from Troy University in Alabama.
and
joined
SimiGon
Merav Nahmani, Director of Human
Resources
Ms. Nachmani,
in
November 2005 and has been managing
SimiGon’s HR Department since July 2009.
Ms. Nachmani has more than ten years of
experience in financial aspects including
payroll controlling, accounts payable, accounts receivable ,
cash flow and tax reporting. Before joining SimiGon Ms.
Nachmani served as a bookkeeping & salary controller in
several High-Technology companies. Ms. Nachmani has a
Bookkeeping & Salary controller diploma.
FINANCIALS
Consolidated Financial Statements of SimiGon Ltd.
and Its Subsidiaries as of December 31, 2015
(U.S. Dollars in Thousands)
INDEX
Corporate Governance
Report on Directors Remuneration
Directors Report
Independent Auditors' Report
Consolidated Statement of Financial Position
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Share Information, Advisers, Contact Information
PAGE
14
15
16 – 17
18
19 - 20
21 - 22
23
24 - 25
26 – 68
69
13
CORPORATE GOVERNANCE FOR THE PERIOD ENDED 31 DECEMBER 2015
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, 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.
14
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 and till October 2009 were
including payment for each Board or Board committee meeting attended. The remuneration packages for executives
are based on annual salaries and benefits.
Executive
Ami Vizer *
Efraim Manea **
Non-Executive
Alistair Rae
Eitan Cohen
Nevat Simon
Dr. Vered Shany
Total
Total 2015
$
408,275
123,689
53,348
26,400
26,400
26,400
664,512
Total 2014
$
408,082
134,397
53,772
26,400
26,400
26,400
675,451
* Year 2015 does not include $19,583 paid in respect of vacation days, additional $28,721 paid in respect of severance allocation
transfer, additional $35,144 paid in respect to health insurance, a bonus of $79,609 paid in respect to year 2014 performance
and a bonus provision of $62,500 in respect to year 2015 performance .
Year 2014 does not include $26,110 paid in respect of vacation days, additional $28,721 paid in respect of severance allocation
transfer, additional $32,996 paid in respect to health insurance, bonus of $116,000 paid in respect to year 2013 performance
and a bonus provision of $79,609 in respect to year 2014 performance which was paid in year 2015.
** Year 2015 does not include bonus of $20,470 paid in respect to year 2014 performance and a bonus provision of $ 16,121 in
respect to year 2015.
Year 2014 does not include bonus of $32,826 paid in respect to year 2013 performance and a bonus provision of $20,470 in
respect to year 2014 paid in year 2015.
Please see the Directors Report below for details of options and shares granted to directors.
15
DIRECTORS REPORT
The directors submit their report and the financial statements of the Group for the period ended 31 December 2014.
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 were 37,250,666.
Shares
As of December 31, 2015 the total numbers of Ordinary Shares Issued were 50,993,154.
Share Options
As of 31 December 2015, the outstanding balance of options granted to certain employees of SimiGon is
approximately 2.7 percent of the Company’s issued and outstanding shares at an average exercise price of $0.4. 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.
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.
Directors
The following directors have held office during the year:
Mr. Amos Vizer has been an executive director of the Company since 4 November 1998.
Mr. Efraim Manea was appointed as an executive director on July 30, 2010.
Mr. Alistair Rae, appointed as a director and Chairman of the Board on 27 October 2006.
Mr. Nevat Simon, appointed as an independent director on 27 October 2006. On December 30, 2015 Mr. Ran
Pappo was appointed as an independent external, replacing Mr. Nevat Simon.
Dr. Vered Shany, appointed as an independent director on 27 October 2006. On December 30, 2015 Mrs. Deborah
M Bitman appointed as an independent external, replacing Dr. Vered Shany.
Mr. Eitan Cohen was appointed a non-executive director on June 3, 2008.
16
DIRECTORS REPORT (CONT.)
Directors Interest in Shares and Share Options
The interest of directors in the issued share capital of the company at 31, December 2015 were as follows.
Directors
Alistair Rae
Eitan Cohen
Dr. Vered Shany
Nevat Simon
Ami Vizer
Efraim Manea
Number of Ordinary
Shares Capital
202,249
72,000
72,000
72,000
11,064,454
284,346
Percentage of
Ordinary shares
0.40
0.14
0.14
0.14
21.70
0.56
Shares to be
issued
25,000
25,000
25,000
25,000
-
-
Options
-
-
-
-
351,038
50,000
Substantial Shareholdings
At 31, December 2015 the Company was informed of the following interests of 3% or more in its ordinary shares
issued at that date:
Shareholder
A. Vizer Holdings A. Vizer
Jeffrey Braun
Herald Investment Management Limited
Yorkville Global Master SPV, Ltd.
Green Venture Capital Ltd.
G. Poran Holding Ltd
Shroder Euroclear Nominees Limited
Number Of Ordinary Shares
11,064,454
6,543,039
5,050,000
4,030,000
3,067,848
2,273,444
1,711,070
Percentage of issued
21.70
12.83
9.90
7.90
6.02
4.46
3.36
Auditors
Kost Forer Gabbay & Kasierer
A member of Ernst & Young Global
3 Aminadav St.
Tel Aviv 67067
Israel
17
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
SIMIGON LTD.
We have audited the accompanying consolidated financial statements of SimiGon Ltd. and its subsidiaries
("the Group"), which comprise the consolidated statements of financial position as of December 31, 2015
and 2014, and the consolidated statements of comprehensive income, consolidated statements of changes in
equity and consolidated statements of cash flows for each of the years ended December 31, 2015, 2014 and
2013, and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards as adopted by the European
Union and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Group as of December 31, 2015 and 2014, and its financial performance and cash flows for
each of the years ended December 31, 2015, 2014 and 2013, in accordance with International Financial
Reporting Standards as adopted by the European Union.
14 April, 2016
Tel-Aviv, Israel
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
- 18 -
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SIMIGON LTD.
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short-term investments
Trade receivables
Other accounts receivable and prepaid expenses
Total current assets
NON-CURRENT ASSETS:
Restricted cash
Long-term prepaid expenses
Deferred tax
Property, plant and equipment
Goodwill and intangible asset
Total non-current assets
Total assets
December 31,
2015
2014
Note
U.S. dollars in thousands
3
4
5
6
7
5,545
1,867
3,715
59
11,186
374
12
159
82
1,122
1,749
6,490
2,952
506
51
9,999
374
29
-
103
1,173
1,679
12,935
11,678
The accompanying notes are an integral part of the consolidated financial statements.
- 19 -
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SIMIGON LTD.
EQUITY AND LIABILITIES
CURRENT LIABILITIES:
Trade payables
Deferred revenues
Other accounts payable and accrued expenses
Total current liabilities
NON-CURRENT LIABILITIES:
Employee benefit liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY:
Share capital
Additional paid-in capital
Accumulated deficit
Total equity
Total liabilities and equity
December 31,
2015
2014
Note
U.S. dollars in thousands
8
9
13a
10
123
574
875
153
925
909
1,572
1,987
192
722
914
178
729
907
2,486
2,894
124
16,526
(6,201)
10,449
12,935
121
16,350
(7,687)
8,784
11,678
The accompanying notes are an integral part of the consolidated financial statements.
14 April, 2016
Date of approval of the
financial statements
Alistair Rae
Non-Executive Chairman
of the Board of Directors
Ami Vizer
Chief Executive Officer
and Director
Efraim Manea
Chief Financial Officer
and Director
- 20 -
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIMIGON LTD.
Revenues
Cost of revenues
Gross profit
Operating expenses:
Research and development
Selling and marketing
General and administrative
Total operating expenses
Operating profit
Finance income
Finance expenses
Income before income taxes
Income tax benefit
Net income
Note
15
14a
14b
14c
14d
14e
14f
12
Year ended
December 31,
2014
U.S. dollars in thousands
(except share and per share amounts)
2015
2013
6,935
1,534
5,401
1,472
1,245
1,048
3,765
1,636
74
82
1,628
154
1,782
8,316
1,989
6,327
2,381
1,458
1,181
5,020
1,307
178
127
1,358
-
1,358
8,172
2,070
6,102
2,404
1,652
1,048
5,104
998
57
159
896
-
896
The accompanying notes are an integral part of the consolidated financial statements.
- 21 -
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIMIGON LTD.
Year ended
December 31,
2014
U.S. dollars in thousands
(except share and per share amounts)
2015
2013
Note
Net income
1,782
1,358
896
Other comprehensive income not to be
reclassified to profit or loss in subsequent
periods:
Remeasurement gain from defined benefit plan
4
6
Total comprehensive income
1,786
1,364
-
896
Basic and diluted earnings per share in U.S.
dollars
Weighted average number of shares used in
computing basic earnings per share (in
thousands)
Weighted average number of shares used in
computing diluted earnings per share (in
thousands)
0.04
0.03
0.02
14
50,683
48,854
47,188
14
50,818
49,085
49,131
The accompanying notes are an integral part of the consolidated financial statements.
- 22 -
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
SIMIGON LTD.
Number
of shares
Share
capital
U .S. dollars in thousands (except share amounts)
Additional
paid-in capital
Accumulated
deficit
Total
equity
16,110
(9,678)
6,545
Balance as of January 1, 2013
47,153,179
Total comprehensive income
Issuance of shares (Note 10a1)
Share-based compensation
Exercise of stock options (Note 10a4)
-
119,727
-
19,800
Balance as of December 31, 2013
47,292,706
Total comprehensive income
Dividend distribution
Share-based compensation
Exercise of stock options (Note 10a2 and
10a5 till 10a7)
-
-
-
2,786,984
113
-
*) -
-
*) -
113
-
-
-
8
-
-
137
1
896
-
-
-
16,248
(8,782)
-
-
90
12
1,364
(269)
-
-
Balance as of December 31, 2014
50,079,690
121
16,350
(7,687)
Total comprehensive income
Dividend distribution
Share-based compensation
Share issuance (Note 10 a9)
Exercise of stock options (Note 10a2 and
10a10 till 10a12)
-
-
285,000
628,464
-
-
1
2
-
65
107
4
1,786
(300)
-
-
-
896
*) -
137
1
7,579
1,364
(269)
90
20
8,784
1,786
(300)
65
108
6
Balance as of December 31, 2015
50,993,154
124
16,526
(6,201)
10,449
*)
Represents an amount lower than $ 1 thousand.
The accompanying notes are an integral part of the consolidated financial statements.
- 23 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
Cash flows from operating activities:
Net income
1,782
1,358
896
Adjustments to reconcile net income to net cash used in
operating activities:
Adjustments to the profit or loss items:
Depreciation and amortization
Deferred tax
Finance expense (income), net
Share-based compensation
Change in employee benefit liabilities, net
Changes in asset and liability items:
Decrease (increase) in trade receivables
Decrease (increase) in other accounts receivable and
prepaid expenses (including long-term)
Increase (decrease) in trade payables
Increase (decrease) in deferred revenues
Increase in other accounts payable and accrued expenses
88
(159)
(34)
65
19
(3,209)
11
(30)
(351)
99
(3,501)
101
-
(9)
90
6
(257)
28
10
(293)
53
(271)
Net cash provided by operating activities
(1,719)
1,087
98
-
(1)
137
36
407
(21)
3
213
160
1,032
1,929
The accompanying notes are an integral part of the consolidated financial statements.
- 24 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
Cash flows from investing activities:
Decrease (increase) in short-term investments
Decrease (increase) in restricted cash
Decrease in short-term bank deposits
Increase in long-term deposits
Purchase of fixed assets
1,086
-
-
(2)
(16)
(2,943)
30
511
-
(39)
Net cash used in investing activities
1,068
(2,441)
Cash flows from financing activities:
Proceeds from share issuance
Exercise of stock options
Dividend distribution
Repayment of refundable grants
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
1
5
(300)
-
(294)
(945)
6,490
-
13
(269)
-
(256)
(1,610)
8,100
Cash and cash equivalents at end of year
5,545
6,490
-
(381)
45
(12)
(30)
(378)
-
1
-
(2)
(1)
1,550
6,550
8,100
(a)
Supplemental disclosure of non-cash financing
activities:
Receivable in respect of issuance of shares
Issuance of shares in respect of 2014 annual bonus to
employees
2
108
7
-
-
-
The accompanying notes are an integral part of the consolidated financial statements.
- 25 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL
SIMIGON LTD.
a.
b.
The Company commenced its operations on October 1, 1998, and is engaged in
developing advanced learning, training and simulation technologies and applications for
use in professional communities. The Company's registered office is in Herzlia, Israel.
The Company has two wholly-owned subsidiaries in the United States, SimiGon Inc.
and National Simulation Services Inc., which are engaged in the marketing of the
Company's products in the United States and a wholly-owned subsidiary in Singapore,
SimiGon Pte Ltd which is engaged in marketing of the Company's products in the Far
East and a subsidiary in Colombia for the purpose of marketing the Company’s products
in South America.
c.
The Company's shares are traded on the Alternative Investment Market ("the AIM") on
the London Stock Exchange.
d.
Definitions:
In these financial statements:
The Company
- SimiGon Ltd.
The Group
- SimiGon Ltd. and its subsidiaries.
Subsidiaries
- Companies that are controlled by the Company, as defined in IFRS
10.
Related parties
- As defined in IAS 24.
Dollar/$
- U.S. dollar
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the financial statements
for all periods presented, unless otherwise stated.
a.
Basis of preparation of the financial statements:
These financial statements have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union ("IFRS as adopted by
the EU").
b.
Functional currency, presentation currency and foreign currency:
The consolidated financial statements are presented in U.S. dollars, which is the
Company's functional currency. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured
using that functional currency.
The functional currency of the subsidiaries is the U.S. dollar.
- 26 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Transactions, assets and liabilities in foreign currency:
SIMIGON LTD.
Transactions denominated in foreign currency (other than the functional currency) are
recorded on initial recognition at the exchange rate at the date of the transaction. After
initial recognition, monetary assets and liabilities denominated in foreign currency are
translated at the end of each reporting period into the functional currency at the
exchange rate at that date. Exchange differences, other than those capitalized to
qualifying assets or recorded in equity in hedging transactions, are recognized in profit
or loss. Non-monetary assets and liabilities measured at cost in a foreign currency are
translated at the exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currency and measured at fair value are translated into
the functional currency using the exchange rate prevailing at the date when the fair
value was determined.
c.
Consolidated financial statements:
The consolidated financial statements comprise the financial statements of companies
that are controlled by the Company (subsidiaries). Control is achieved when the
Company is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee.
Potential voting rights are considered when assessing whether an entity has control. The
consolidation of the financial statements commences on the date on which control is
obtained and ends when such control ceases.
The financial statements of the Company and of the subsidiaries are prepared as of the
same dates and periods. The consolidated financial statements are prepared using
uniform accounting policies by all companies in the Group. Significant intragroup
balances and transactions and gains or losses resulting from intragroup transactions are
eliminated in full in the consolidated financial statements.
d.
Cash equivalents:
Cash equivalents are considered as highly liquid investments, including unrestricted
short-term bank deposits with an original maturity of three months or less from the date
of acquisition.
e.
Short-term deposits:
Short-term bank deposits are deposits with an original maturity of more than three
months from the date of acquisition. The deposits are presented according to their terms
of deposit.
f.
Allowance for doubtful accounts:
The allowance for doubtful accounts is determined in respect of specific debts whose
collection, in the opinion of the Company's management, is doubtful.
- 27 -
SIMIGON LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company did not recognize an allowance in respect of groups of trade receivables
that are collectively assessed for impairment due to immateriality. Impaired receivables
are derecognized when they are assessed as uncollectible.
g.
Financial instruments:
1.
Financial assets:
Financial assets within the scope of IAS 39 are initially recognized at fair value
plus directly attributable transaction costs, except for financial assets measured at
fair value through profit or loss in respect of which transaction costs are recorded
in profit or loss.
After initial recognition, the accounting treatment of investments in financial
assets is based on their classification into one of the following categories:
financial assets at fair value through profit or loss;
loans and receivables.
a)
Financial assets at fair value through profit or loss:
This category includes financial assets held for trading (short-term
investments in mutual funds).
b)
Loans and Receivables:
Loans and receivables are investments with fixed or determinable
payments that are not quoted in an active market.
After initial recognition, loans are measured based on their terms at
amortized cost less directly attributable transaction costs using the effective
interest method and less any impairment losses. Short-term receivables
(such as trade and other receivables) are measured based on their terms,
normally at face value.
2.
Financial liabilities:
Financial liabilities are initially recognized at fair value. After initial recognition,
loans and other liabilities are measured at amortized cost based on their terms net
of directly attributable transaction costs using the effective interest method.
- 28 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
A financial liability is derecognized when it is extinguished, that is when the
obligation is discharged or cancelled or expires. A financial liability is
extinguished when the debtor (the Group):
discharges the liability by paying in cash, other financial assets, goods or
services; or
is legally released from the liability.
i.
Leases:
The criteria for classifying leases as finance or operating leases depend on the substance
of the agreements and are made at the inception of the lease in accordance with the
following principles as set out in IAS 17.
The Group as lessee:
Operating leases:
Lease agreements are classified as an operating lease if they do not transfer substantially
all the risks and benefits incidental to ownership of the leased asset. Lease payments are
recognized as an expense in profit or loss on a straight-line basis over the lease term.
j.
Property, plant and equipment:
Property, plant and equipment are measured at cost, including directly attributable costs,
less accumulated depreciation, accumulated impairment losses and any related
investment grants and excluding day-to-day servicing expenses.
Depreciation is calculated on a straight-line basis over the useful life of the assets at
annual rates as follows:
Computers and peripheral equipment
Office furniture and equipment
Leasehold improvements
%
33
7 - 15 (mainly 15%)
Over the term of the lease or the
expected life, whichever is shorter
The useful life, depreciation method and residual value of an asset are reviewed at least
each year-end and any changes are accounted for prospectively as a change in
accounting estimate.
- 29 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as
held for sale and the date that the asset is derecognized. An asset is derecognized on
disposal or when no further economic benefits are expected from its use. The gain or
loss arising from the derecognizing of the asset (determined as the difference between
the net disposal proceeds and the carrying amount in the financial statements) is
included in profit or loss when the asset is derecognized.
k.
Intangible assets:
Intangible assets (Technology) acquired in a business combination are included at fair
value at the acquisition date. After initial recognition, intangible assets are carried at
their cost less any accumulated amortization and any accumulated impairment losses.
According to management's assessment, intangible assets have a finite useful life. The
assets are amortized over their useful life using the straight-line method and reviewed
for impairment whenever there is an indication that the asset may be impaired. The
amortization period and the amortization method for an intangible asset are reviewed at
least at each financial year end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset are accounted
for prospectively as changes in accounting estimates. The amortization of intangible
assets is recognized in the profit or loss.
The useful life of the Technology is 10 years.
l.
Research and development:
Research and development costs are charged to profit or loss as incurred as
development costs do not meet the criteria for recognition as an intangible asset.
m.
Impairment of non-financial assets:
The Company evaluates the need to record an impairment of the carrying amount of
non-financial assets whenever events or changes in circumstances indicate that the
carrying amount is not recoverable. If the carrying amount of non-financial assets
exceeds their recoverable amount, the assets are reduced to their recoverable amount.
The recoverable amount is the higher of fair value less costs of sale and value in use. In
measuring value in use, the expected future cash flows are discounted using a pre-tax
discount rate that reflects the risks specific to the asset. The recoverable amount of an
asset that does not generate independent cash flows is determined for the cash-
generating unit to which the asset belongs. Impairment losses are recognized in profit or
loss.
The following criteria are applied in assessing impairment of these specific assets:
- 30 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Goodwill in respect of business combination:
SIMIGON LTD.
For the purpose of impairment testing, goodwill acquired in a business combination is
allocated, at the acquisition date, to each of the Group's cash-generating units that is
expected to benefit from the synergies of the combination.
The Company reviews goodwill for impairment once a year as of December 31 or more
frequently if events or changes in circumstances indicate that there is impairment.
Goodwill is tested for impairment by assessing the recoverable amount of the cash-
generating unit (or group of cash-generating units) to which the goodwill has been
allocated. An impairment loss is recognized if the recoverable amount of the cash-
generating unit (or group of cash-generating units) to which goodwill has been allocated
is less than the carrying amount of the cash-generating unit (or group of cash-generating
units). Any impairment loss is allocated first to goodwill. Impairment losses recognized
for goodwill cannot be reversed in subsequent periods.
n.
Government grants:
Government grants are recognized where there is reasonable assurance that the grant
will be received and the Company will comply with the attached conditions.
Government grants received from the Office of the Chief Scientist ("OCS") and the
Korea Israel Industrial R&D Foundation as support for research and development
projects which grants include an obligation to pay royalties that are conditional on
future sales arising from the project, are recognized upon receipt as a liability if future
economic benefits are expected from the project that will result in royalty-bearing sales.
If no such economic benefits are expected, the grants are recognized as a reduction of
the related research and development expenses. In that event, the royalty obligation is
treated as contingent liability in accordance with IAS 37.
At the end of each reporting period, the Company evaluates, based on its best estimate
of future sales, whether there is reasonable assurance that the liability recognized, in
whole or in part, will not be repaid (since the Company will not be required to pay
royalties). If there is such reasonable assurance, the appropriate amount of the liability
is derecognized and recorded in profit or loss as a reduction of research and
development expenses. If the estimate of future sales indicates that there is no such
reasonable assurance, the appropriate amount of the liability that reflects expected
future royalty payments is recognized with a corresponding adjustment to research and
development expenses.
- 31 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Grants received after January 1, 2009, which are recognized as a liability, are accounted
for as forgivable loans, in accordance with IAS 20 (Revised), pursuant to the provisions
of IAS 39, "Financial Instruments: Recognition and Measurement". Accordingly, when
the liability for the loan is first recognized, it is measured at fair value using a discount
rate that reflects a market rate of interest. The difference between the amount of the
grants received and the fair value of the liability is accounted for upon recognition of
the liability as a government grant and recognized as a reduction of research and
development expenses.
After initial recognition, the liability is measured at amortized cost using the effective
interest method. Changes in the projected cash flows are discounted using the original
effective interest and recorded in profit or loss in accordance with the provisions of IAS
39.AG8.
Royalty payments are treated as a reduction of the liability.
o.
Revenue recognition:
Revenues are recognized in profit or loss when the revenues can be measured reliably, it
is probable that the economic benefits associated with the transaction will flow to the
Company and the costs incurred or to be incurred in respect of the transaction can be
measured reliably. When the Company acts as a principal and is exposed to the risks
associated with the transaction, revenues are presented on a gross basis. Revenues are
measured at the fair value of the consideration less any trade discounts.
The Company generates revenues mainly from licensing the software products and sales
of software licenses that require significant customization. The Company also generates
revenues from maintenance, support and training.
Revenues from software licensing that requires significant customization are recognized
by reference to the stage of completion of the transaction at the end of the reporting
period. When the outcome of the transaction cannot be estimated reliably, revenues are
recognized only to the extent of the costs recognized that are recoverable. A provision
for estimated losses on uncompleted contracts is recorded in the period in which such
losses are first identified. As of December 31, 2015 and 2014, no provision for such
losses has been identified.
Maintenance and support revenue included in multiple element arrangements is deferred
and recognized on a straight-line basis over the term of the maintenance and support
agreement. The fair value of the undelivered elements (maintenance and support
services) is determined based on the price charged for the undelivered element when
sold separately.
Deferred revenue includes unearned amounts received under maintenance and support
contracts, and amounts received from customers but not recognized as revenues.
- 32 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Revenues from software arrangements:
SIMIGON LTD.
Software arrangements contain multiple elements (software, integration, installation,
upgrades, support,
the
arrangement's elements, including those delivered on a "when and if available basis", in
order to determine if the elements can be separately identified.
training, consultation etc.). The Company evaluates
The Company recognizes revenues from the sale of software only after the significant
risks and rewards of ownership of the software have been transferred to the buyer for
which a necessary, but not sufficient condition, is delivery of the software, either
physically or electronically, or providing the right to use or permission to make copies,
of the software. The Company recognizes revenues from providing software related
services when the outcome can be measured reliably by reference to the stage of
completion of the transaction at the end of the reporting period.
If the services consist of a number of activities that are not defined over a specified
period of time, revenues are recognized on a straight-line basis over the specified
period, unless there is evidence that some other method better represents the stage of
completion.
p.
Earnings per share:
Earnings per share are calculated by dividing the net income attributable to equity
holders of the Company by the weighted number of Ordinary shares outstanding during
the period. Basic earnings per share only include shares that were actually outstanding
during the period. Potential Ordinary shares are only included in the computation of
diluted earnings per share when their conversion decreases earnings per share or
increases loss per share from continuing operations. Further, potential Ordinary shares
that are converted during the period are included in diluted earnings per share only until
the conversion date and from that date in basic earnings per share. The Company's share
of earnings of investees is included based on the earnings per share of the investees
multiplied by the number of shares held by the Company.
q.
Provisions:
A provision in accordance with IAS 37 is recognized when the Company has a present
(legal or constructive) obligation as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
If the effect is material, provisions are measured according to the estimated future cash
flows discounted using a pre-tax interest rate that reflects the market assessments of the
time value of money and, where appropriate, those risks specific to the liability.
- 33 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
r.
Employee benefits:
SIMIGON LTD.
The Company's liability for severance pay pursuant to the Israel's Severance Pay Law
(for those who elected not to be fully included under section 14 of the Severance Pay
Law, 1963) is based on the last monthly salary of the employee multiplied by the
number of years of employment, as of the date of severance.
The cost of providing severance pay is determined using an independent actuary.
Remeasurements, comprising of actuarial gains and losses, are recognized immediately
in the statement of financial position with a corresponding debit or credit to other
comprehensive income in the period in which they occur. Remeasurements are not
reclassified to profit or loss in subsequent periods.
Pursuant to Section 14 of the Severance Pay Law, which covers 75% of most of the
employees' severance pay, monthly deposits with insurance companies release the
Company from any future severance obligations in respect of those employees (defined
contribution). Deposits under Section 14 are recorded as an expense in the Company's
statements of comprehensive income.
s.
Fair value of financial instruments:
The carrying amounts of cash and cash equivalents, short-term investments, trade
receivables, other accounts receivable, trade payables and other accounts payable and
other non- current liabilities approximate their fair value due to the short-term maturity
and high probability of repayment of such instruments.
Share-based payment transactions:
t.
The Company applies the provisions of IFRS 2, "Share-Based Payment". IFRS 2
requires an expense to be recognized where the Company buys goods or services in
exchange for shares or rights over shares ("equity-settled transactions"), or in exchange
for other assets equivalent in value to a given number of shares of rights over shares
("cash-settled transactions"). The main impact of IFRS 2 on the Company is the
expensing of employees' and directors' share options (equity-settled transactions).
The Company's employees/other service providers are entitled to remuneration in the
form of equity-settled share-based payment transactions.
The cost of equity-settled transactions with employees is measured at the fair value of
the equity instruments granted at grant date. The fair value is determined using an
acceptable option pricing model.
As for other service providers, the cost of the transactions is measured at the fair value
of the goods or services received as consideration for equity instruments. In cases where
the fair value of the goods or services received as consideration of equity instruments
cannot be measured, they are measured by reference to the fair value of the equity
instruments granted .
- 34 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The cost of equity-settled transactions is recognized in profit or loss, together with a
corresponding increase in equity, during the period which the performance and/or
service conditions are to be satisfied, ending on the date on which the relevant
employees become fully entitled to the award ("the vesting period"). The cumulative
expense recognized for equity-settled transactions at the end of each reporting period
until the vesting date reflects the extent to which the vesting period has expired and the
Group's best estimate of the number of equity instruments that will ultimately vest. The
expense or income recognized in profit or loss represents the change between the
cumulative expense recognized at the end of the reporting period and the cumulative
expense recognized at the end of the previous reporting period.
No expense is recognized for awards that do not ultimately vest, except for awards
where vesting is conditional upon a market condition, which are treated as vesting
irrespective of whether the market condition is satisfied, provided that all other vesting
conditions (service and/or performance) are satisfied.
u.
Finance income and expenses:
Finance income includes interest income on amounts invested, government grants and
exchange rate gains.
Finance expenses comprise interest expense on bank loan, government grants, fees and
exchange rate losses.
v.
Significant accounting judgments, estimates and assumptions used in the preparation of
the financial statements.
In the process of applying the significant accounting policies, the Group has made the
following judgments which have a significant effect on the amounts recognized in the
financial statements:
1.
Judgments:
-
Determining the fair value of share-based payment transactions:
The fair value of share-based payment transactions is determined upon
initial recognition by an acceptable option pricing model. The inputs to the
model include share price and exercise price and judgments regarding
expected volatility, expected life of share option and expected dividend
yield.
- 35 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2.
Estimates and assumptions:
SIMIGON LTD.
The preparation of the financial statements requires management to make
estimates and assumptions that have an effect on the application of the accounting
policies and on the reported amounts of assets, liabilities, revenues and expenses.
These estimates and underlying assumptions are reviewed regularly. Changes in
accounting estimates are reported in the period of the change in estimate.
The key assumptions made in the financial statements concerning uncertainties at
the end of the reporting period and the critical estimates computed by the Group
that may result in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
-
Chief Scientist grants:
Government grants received from the Office of the Chief Scientist at the
Ministry of Industry, Trade and Labor are recognized as a liability if future
economic benefits are expected from the research and development activity
that will result in royalty-bearing sales. There is uncertainty regarding the
estimated future cash flows and the estimated discount rate used to
measure the amount of the liability. As for the accounting treatment of
grants received from the OCS, see also Note 13.
-
Deferred tax assets:
Deferred tax assets are recognized for unused carryforward tax losses and
deductible temporary differences to the extent that it is probable that
taxable profit will be available against which the losses can be utilized.
Significant management judgment is required to determine the amount of
deferred tax assets that can be recognized, based upon the timing and level
of future taxable profits, its source and the tax planning strategy.
- 36 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
w.
Taxes on income:
SIMIGON LTD.
Current or deferred taxes are recognized in profit or loss, except to the extent that they
relate to items which are recognized in other comprehensive income or equity.
1.
Current taxes:
The current tax liability is measured using the tax rates and tax laws that have
been enacted or substantively enacted by the reporting date as well as adjustments
required in connection with the tax liability in respect of previous years.
2.
Deferred taxes:
Deferred taxes are computed in respect of temporary differences between the
carrying amounts in the financial statements and the amounts attributed for tax
purposes.
Deferred taxes are measured at the tax rate that is expected to apply when the
asset is realized or the liability is settled, based on tax laws that have been
enacted or substantively enacted by the reporting date.
Deferred tax assets are reviewed at each reporting date and reduced to the extent
that it is not probable that they will be utilized. Temporary differences for which
deferred tax assets had not been recognized are reviewed at each reporting date
and a respective deferred tax asset is recognized to the extent that their utilization
is probable.
Taxes that would apply in the event of the disposal of investments in investees
have not been taken into account in computing deferred taxes, as long as the
disposal of the investments in investees is not probable in the foreseeable future.
Also, deferred taxes that would apply in the event of distribution of earnings by
investees as dividends have not been taken into account in computing deferred
taxes, since the distribution of dividends does not involve an additional tax
liability or since it is the Company's policy not to initiate distribution of dividends
from a subsidiary that would trigger an additional tax liability.
Deferred taxes are offset if there is a legally enforceable right to offset a current
tax asset against a current tax liability and the deferred taxes relate to the same
taxpayer and the same taxation authority.
x.
Disclosure of new standards in the period prior to their adoption
IFRS 15, "Revenue from Contracts with Customers":
In May 2014, the IASB issued IFRS 15 ("IFRS 15").
IFRS 15 replaces IAS 18, "Revenue", IAS 11, "Construction Contracts", IFRIC
13, "Customer Loyalty Programs", IFRIC 15, "Agreements for the Construction
of
- 37 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Real Estate", IFRIC 18, "Transfers of Assets from Customers" and SIC-31,
"Revenue - Barter Transactions Involving Advertising Services".
The IFRS 15 introduces a five-step model that will apply to revenue earned from
contracts with customers:
Step 1:
Identify the contract with a customer, including reference to contract
combination and accounting for contract modifications.
Step 2:
Identify the separate performance obligations in the contract
Step 3:
Step 4:
Determine the transaction price, including reference to variable
consideration, financing components that are significant to the
contract, non-cash consideration and any consideration payable to
the customer.
the
transaction price
Allocate
the separate performance
obligations on a relative stand-alone selling price basis using
observable information, if it is available, or using estimates and
assessments.
to
Step 5:
Recognize revenue when
obligation over time or at a Point in time.
the entity satisfies a performance
IFRS 15 is to be applied retrospectively for annual periods beginning on or after
January 1, 2018. Early adoption is permitted. IFRS 15 allows an entity to choose
to apply a modified retrospective approach, according to which IFRS 15 will only
be applied in the current period presented to existing contracts at the date of
initial application. No restatement of comparative periods is required.
The Company is evaluating the possible impact of IFRS 15 but is presently
unable to assess its effect, if any, on the financial statements.
IFRS 9, "Financial Instruments"
In July 2014, the IASB issued the final and complete version of IFRS 9,
"Financial Instruments" ("IFRS 9"), which replaces IAS 39, " Financial
Instruments: Recognition and Measurement". IFRS 9 mainly focuses on the
classification and measurement of financial assets and it applies to all assets in
the scope of IAS 39.
According to IFRS 9, all financial assets are measured at fair value upon initial
recognition. In subsequent periods, debt instruments are measured at amortized
cost only if certain conditions are met. Subsequent measurement of all other debt
instruments and financial assets should be at fair value.
- 38 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
According to IFRS 9, the provisions of IAS 39 will continue to apply to
derecognizing and to financial liabilities for which the fair value option has not
been elected. IFRS 9 also prescribes new hedge accounting requirements.
IFRS 9 is to be applied for annual periods beginning on January 1, 2018. Early
adoption is permitted.
The Company is evaluating the possible impact of IFRS 9 but is presently unable
to assess its effect, if any, on the financial statements.
Amendments to IAS 7, "Statement of Cash Flows", regarding additional disclosures of
financial liabilities:
In January 2016, the IASB issued amendments to IAS 7, "Statement of Cash
Flows", ("the amendments") which require additional disclosures regarding
financial liabilities. The amendments require disclosure of the changes between
the opening balance and the closing balance of financial liabilities, including
changes from cash flows, changes arising from obtaining or losing control of
subsidiaries, the effect of changes in foreign exchange rates and changes in fair
value.
The amendments are effective for annual periods beginning on or after January 1,
2017. Comparative information for periods prior to the effective date of the
amendments is not required. Early application is permitted.
The Company will include the necessary disclosures in the financial statements
when applicable.
IFRS 16, "Leases"
In January 2016, the IASB issued IFRS 16, "Leases" ("the new Standard").
According to the new Standard, a lease is a contract, or part of a contract, that
conveys the right to use an asset for a period of time in exchange for
consideration.
According to the new Standard:
Lessees are required to recognize an asset and a corresponding liability in
the statement of financial position in respect of all leases (except in certain
cases) similar to the accounting treatment of finance leases according to the
existing IAS 17, "Leases".
Lessees are required to initially recognize a lease liability for the obligation
to make lease payments and a corresponding right-of-use asset. Lessees
will also recognize interest and depreciation expenses separately.
The new Standard includes two exceptions according to which lessees are
permitted to elect to apply a method similar to the current accounting
treatment for operating leases. These exceptions are leases for which the
underlying asset is of low value and leases with a term of up to one year.
- 39 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The accounting treatment by lessors remains substantially unchanged,
namely classification of a lease as a finance lease or an operating lease.
The new Standard is effective for annual periods beginning on or after January 1,
2019. Earlier application is permitted provided that IFRS 15 is applied
concurrently.
The Company believes that the new Standard is not expected to have a material
impact on the financial statements.
NOTE 3:- SHORT-TERM INVESTMENTS
December 31,
2015
2014
U.S. dollars in thousands
Financial assets classified as held for trading at fair value
through profit or loss- Mutual Funds *)
1,867
2,952
*) Short-term investments in mutual funds are considered as highly liquid low risk
investments.
NOTE 4: - TRADE RECEIVABLES
Trade receivables (1)
(1) Net of allowance for doubtful debts
December 31,
2015
2014
U.S. dollars in thousands
3,715
224
506
302
Trade receivables are non-interest bearing and are generally on 30 - 90 days' terms.
The aging analysis of trade receivables is as follows:
Neither past
due nor
impaired
Past due but not impaired
< 30
days
30 - 60
days
60 - 90
day
U.S. dollars in thousands
2015
2014
3,579
131
-
41
72
13
-
305
> 90
days
64
16
Total
3,715
506
- 40 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5:- RESTRICTED CASH
SIMIGON LTD.
a.
b.
c.
As part of a $ 6.7 million contract signed in May 2013 in which the Company was
selected as a prime contractor to deliver a SIMbox based training solution, on June 10,
2013 the Company issued a Performance Bond in favor of its customer in a total amount
of $ 335 thousand prior to contract deliveries and receiving payments from the client.
On April 8, 2016, the expiration date of the Performance Bond has been extended to
October 15, 2017.
To operate an ongoing business bank account, the Company is obligated to secure a
deposit in the amount of $ 15 thousand in favor of the bank.
As part of its premises lease agreement, the Company is obligated to secure a deposit in
the amount of $ 24 thousand in favor of the landlord.
NOTE 6:- PROPERTY, PLANT AND EQUIPMENT
Composition and movement:
Cost:
Balance as of January 1, 2014
Disposal during the year
Acquisitions during the year
Balance as of December 31, 2014
Disposal during the year
Acquisitions during the year
Balance as of December 31, 2015
Accumulated depreciation:
Balance as of January 1, 2014
Disposal during the year
Depreciation during the year
Balance as of December 31, 2014
Disposal during the year
Depreciation during the year
Balance as of December 31, 2015
Depreciated cost as of December 31, 2015
Depreciated cost as of December 31, 2014
Computers
and
peripheral
equipment
Office
furniture
and
equipment
Leasehold
improvements
Total
U.S. dollars in thousands
735
(19)
31
747
(10)
8
745
687
(19)
37
705
(10)
24
719
26
42
208
(11)
7
204
-
8
212
142
(11)
14
145
-
13
158
54
59
54
-
1
55
-
-
55
53
-
-
53
-
-
53
2
2
997
(30)
39
1,006
(10)
16
1,012
882
(30)
51
903
(10)
37
930
82
103
- 41 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7:- GOODWILL AND INTANGIBLE ASSET
Technology **)
Goodwill *)
Total
SIMIGON LTD.
Carrying amount as of
December 31,
2015
2014
U.S. dollars in thousands
54
1,068
1,122
105
1,068
1,173
*)
As the activities of Visual Training Solution Group (“VTSG”) have been fully
integrated into those of the Company, the goodwill arising in the acquisition of VTSG is
evaluated for impairment purposes as part of the cash generating unit representing the
Company. As of December 31, 2015, the recoverable amount determined based on the
fair value of the Company's shares exceeded significantly the carrying amount of the
Company's net assets (equity), and therefore, no provision for impairment was recorded.
**) During the years ended December 31, 2015, 2014 and 2013, the Company recorded
amortization in the amount of $ 51 thousand, $ 50 thousand and $ 51 thousand,
respectively, which was recorded in cost of revenues.
NOTE 8:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Employees and payroll accruals
Accrued expenses
NOTE 9:- EMPLOYEE BENEFIT LIABILITIES, NET
a.
Post-employment benefits:
December 31,
2015
2014
U.S. dollars in thousands
554
321
875
594
315
909
According to the labor laws and Severance Pay Law in Israel, the Company is required
to pay compensation to an employee upon dismissal or retirement or to make current
contributions in defined contribution plans pursuant to Section 14 to the Severance Pay
Law, as specified below.
The Company's liability is accounted for as a post-employment benefit. The
computation of the Company's employee benefit liability is made in accordance with a
valid employment contract based on the employee's salary and employment term which
establish the entitlement to receive the compensation.
- 42 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9:- EMPLOYEE BENEFIT LIABILITIES, NET (Cont.)
b.
Amounts recognized in the statements of comprehensive income are as follows:
SIMIGON LTD.
Current service cost
Interest cost
Exchange rate
Total expense included in profit or loss
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
46
7
(1)
52
50
7
(20)_
37
48
7
10
65
c.
Changes in the present value of defined benefit obligation:
Composition:
Balance at January 1
Interest cost
Exchange rate
Current service cost
Benefits paid
Net actuarial loss (gain)
Balance at December 31
d.
The actuarial assumptions used are as follows:
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
178
7
(1)
46
(34)
(4)
192
177
7
(21)
50
(29)
(6)
178
141
7
10
48
(29)
*) -
177
Year ended
December 31,
2014
2013
2015
Discount rate
4.13%
3.83%
4.26%
Future salary increases
3.55%
3.80%
4.43%
Average expected remaining working
years
7.57
6.78
6.65
Year ended
December 31,
2015
2014
2013
U.S. in thousands
Gain in respect of defined contribution
plans
4
6
-
- 43 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY
a.
Share issuance:
SIMIGON LTD.
1. Further to the implementation of a one-year plan for salary reduction of 15% for the
Non-Executive Board members dated July 27, 2009, on April 12, 2012 the
Company issued a total of 72,000 and 47,727 Ordinary Shares to the Company's
Non-Executive Directors and to Non-Executive Chairman of the Board respectively
in return for a one year salary reduction.
On October 9, 2013 the Company issued a total of 72,000 and 47,727 Ordinary
Shares to the Company's Non-Executive Directors and to Non-Executive Chairman
of the Board respectively in return for a one year salary reduction.
2. On September 12, 2011, the Board of Directors approved the implementation of a
share bonus plan ("the Share Bonus Plan") for year 2011.
According to the Share Bonus Plan, the Bonus Compensation will be granted with
an equivalent value of Ordinary shares based on the quoted fair market price of the
shares as of September 12, 2011, which is equal to $ 0.0812 per Ordinary share
("the Bonus Shares"). The Bonus Shares will vest upon receiving actual payment
from the customer under the relevant PO ("the Bonus Shares Vested Date").
The fair value, on date of grant equal to $ 0.08 per Ordinary Share.
Based on full vesting as of December 31, 2011, the Company's senior management
and other employees are entitled to a total of 2,889,379 Ordinary Shares and a total
of 3,141,288 Options at an exercise price of NIS 0.01 per share of the Company,
which Ordinary Shares and Options were issued in 2012.
On April 12, 2012 the Company issued a total 2,055,838 Ordinary Shares and
3,141,288 Options at an exercise price of 0.01 NIS each ("Options") to its senior
management and other employees.
On October 11, 2012, a total of 833,541 Ordinary Shares of have been issued to
senior management and employees, including 516,921 Ordinary Shares to Mr. Ami
Vizer the Chief Executive Officer of the Company and also a Director of the
Company.
Further to the above, on April 30, 2014 a total of 1,712,429 options were exercised
under the Company's Stock Option Plan by senior management into SimiGon's
Ordinary Shares at an exercise price of NIS 0.01 each. Out of the shares issued,
1,497,674 and 37,582 Ordinary Shares were issued to the Company's CEO and
CFO, who are also Directors of the Company; respectively.
On November 11, 2014 a total of 527,554 options were exercised under the
Company's Stock Option Plan into SimiGon's Ordinary Shares at an exercise price
of NIS 0.01 each by the Company's CEO, who is also Director of the Company.
- 44 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
The Company recorded share-based compensation expenses of $ 46 thousand and
$ 66 thousand, in respect of the bonus compensation for year 2014 and 2013,
respectively.
3. On October 17, 2012, a total of 9,304 options were exercised under the Company's
Stock Option Plan at an average exercise price of $ 0.09.
4. On August 5, 2013, a total of 19,800 options were exercised under the Company's
Stock Option Plan at an average exercise price of $ 0.043.
5. On April 30, 2014 a total of 27,500 options were exercised under the Company's
Stock Option Plan by senior management into SimiGon's Ordinary Shares at an
exercise price of $ 0.08 each.
6. On April 30, 2014 a total of 454,000 options were exercised under the Company's
Stock Option Plan by senior management into SimiGon's Ordinary Shares at an
exercise price of NIS 0.01 each.
7. On May 20 2014, a total of 15,500 options were exercised under the Company's
Stock Option Plan by a former employee into SimiGon's Ordinary Shares of 0.01
NIS. Out of the options exercised, 8,000 Options and 7,500 Options were exercised
at an exercise price of $ 0.13 and $ 0.08 each; respectively.
8. On November 11 2014, a total of 50,001 options were exercised under the
Company's Stock Option Plan by a former employee into SimiGon's Ordinary
Shares of 0.01 NIS. Out of the options exercised, 16,667 Options and 33,334
Options were exercised at an exercise price of $ 0.25 and $ 0.14 each; respectively.
9. On February 26, 2015, the Company’s Board of directors approved the grant of an
annual bonus to key employees and Non-Executive Directors of $150 thousand in
recognition of their contribution to the Company's positive financial performance in
2014 and as part of the Company’s consistent approach to compensate its key
employees and Non-Executive Directors (excluding the Company’s CEO and
CFO). The bonus was to be granted in shares calculated based on the closing price
on the day of announcement of the Company's financial results for 2014. The bonus
granted to the Non-Executive Directors was subject to the approval of the
Company’s shareholders. A provision for this bonus was recorded in the 2014
annual financial statements.
Further to the above, on May 21, 2015 the Company issued a total of 285,000
Ordinary shares to the key employees and Non-Executive Directors.
The Board of Directors also approved the grant of an annual cash bonus to Mr. Ami
Vizer, the Company's Chief Executive Officer and to Mr. Efraim Manea the
Company's Chief Financial Officer who are also Directors of the Company, with
respect to fiscal year 2015 in accordance with the Company’s Compensation Policy
Plan.
- 45 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
The bonuses granted to Mr. Ami Vizer and Mr. Efraim Manea are in the amount of
up to $125 thousand and NIS125 thousand, respectively, subject to revenues, net
profit and share price criteria and milestones (see Note 17a).
10. On January 21, 2015, a total of 3,194 options were exercised under the Company's
Stock Option Plan by a by a former employee at an average exercise price of $ 0.19.
11. On April 16, 2015, a total of 25,000 options were exercised under the Company's
Stock Option Plan by a by a former employee at an average exercise price of $ 0.12.
12. Further to Note 10a2 in the Company’s 2014 annual financial statements, on April
27, 2015, a total of 600,270 options were exercised under the Company’s Stock
Option Plan by the Company’s CEO, Mr. Ami Vizer, who is also a Director of the
Company, into Ordinary shares at an exercise price of NIS 0.01 each.
b.
Composition of share capital:
December 31,
2015, 2014
and 2013
Authorized
2015
December 31,
2014
Issued and outstanding
2013
Number of shares
Ordinary shares of
NIS 0.01 par value each
100,000,000
50,993,154 50,079,690 47,292,706
c.
Stock option plan:
In August 2000, the Company's Board of Directors authorized an incentive share option
plan ("the Option Plan") and has since granted options to purchase Ordinary shares to
employees and consultants. Under the Option Plan, options generally vest ratably over a
period of four years, commencing with the date of grant.
The exercise price of the options granted under the Option Plan may not be less than the
par value of the shares. The options generally expire no later than 10 years from the date
of the grant, and are non-transferable, except under the laws of succession. On
November 2, 2010, the Company decided to increase its Option Plan reserves by
8,000,000 options to accumulate a total of 17,500,000. As of December 31, 2015, an
aggregate of 1,871,510 Ordinary shares of the Company are still available for future
grant.
On January 31, 2012 the Board of Directors granted to the Company employees a total
of 190,000 options to purchase Ordinary shares of the Company. Such options are
granted in accordance with the Company's Employees' Stock Option Plan (the "ISOP")
and will vest quarterly over a period of 4 years commencing from the grant date at an
exercise price of US$ 0.14.
- 46 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
On April 11, 2013 the Board of Directors granted to the Company employees a total of
155,000 options to purchase Ordinary shares of the Company. Such options were
granted in accordance with the Company's Employees' Stock Option Plan and will vest
quarterly over a period of 4 years commencing from the grant date at an exercise price
of $ 0.33 U.S. dollars.
On May 30, 2013 the Board of Directors granted to the Company employees a total of
150,000 options to purchase Ordinary shares of the Company. Such options were
granted in accordance with the Company's Employees' Stock Option Plan and will vest
quarterly over a period of 4 years commencing from the grant date at an exercise price
of $ 0.42 U.S. dollars.
On November 24, 2013, the Company's Board of directors approved the extension of
the Israeli Share and Option Plan for 2003 for additional 10 years under the same terms
and conditions.
The fair value of share options is measured at the grant date using the Black-Scholes
option pricing model taking into account the terms and conditions upon which the
options were granted. The following are the inputs to the model used for the years ended
December 31, 2014 and 2013: risk-free interest rate of 1% for year 2014 and risk-free
interest rate ranging from 0.87%-1.92% for year 2013; a dividend yield of 0%; volatility
factor of the expected market price of the Company's Ordinary shares of 80%; and a
weighted average expected life of the options of 6 years. The weighted average fair
values of the options granted in 2014 and 2013 were $ 0.43 and $ 0.38, respectively.
A summary of the activity in options to employees, consultants, and directors (including
the senior management, see d. below) for the years 2015, 2014 and 2013 is as follows:
2015
Year ended
December 31,
2014
2013
Number
of
options
Weighted
average
exercise
price
Number
of
options
Weighted
average
exercise
price
Weighted
average
exercise
price
Number
of options
Outstanding at
beginning of year
2,121,188
Granted
Exercised
Expired
Forfeited
Outstanding at end of
-
$ 0.297
-
$ 0.008
(628,464)
(22,050) $ 0.6
(84,167) $ 0.417
4,962,471 $ 0.134
227,000 $ 0.425
(2,786,984) $ 0.007
(128,300) $ 0.6
(152,999) $ 0.214
5,021,788
305,000
(19,800)
-
$ 0.133
$ 0.377
$ 0.043
$ -
(344,517) $ 0.053
year
1,386,507
$ 0.416
2,121,188 $ 0.297
4,962,471
$ 0.134
Exercisable options
958,585
$ 0.393
908,481 $ 0.409
2,549,519
$ 0.187
- 47 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
The options outstanding as of December 31, 2015, have been separated into ranges of
exercise price as follows:
Exercise price
$ 0.002 - $ 0.224
$ 0.335 - $ 1.2
$ 1.33 - $ 2.5
Options
outstanding
as of
December 31,
2015
719,507
472,000
195,000
1,386,507
Weighted
average
remaining
contractual
life (years)
5.6
1.96
1.43
Options
exercisable
as of
December 31,
2015
646,312
147,273
165,000
958,585
d.
Options to the CEO and senior employees:
1.
On January 27, 2010, the Board of Directors granted 1,249,000 options as
follows:
a)
b)
c)
d)
e)
A total of 360,000 options were granted to the CEO at an exercise price of
NIS 0.01 per share.
A total of 312,000 options were granted to senior management at an
exercise price of NIS 0.01 per share.
A total of 132,000 options were granted to employees at an exercise price
of NIS 0.01 per share.
A total of 304,000 options were granted to employees at an exercise price
of $ 0.13 per share.
A total of 141,000 options were granted to the former CFO at an exercise
price of NIS 0.01 per share.
The options will vest in 3 tranches annually equal amounts commencing as of
January 1, 2010 and will be conditional upon the following:
a)
Employee being employed by the Company, and
b)
The EBITDA of the Company (on a consolidated basis) for the relevant
fiscal year (2011, 2012 and 2013) shall increase by more than 20%
compared to the previous year.
The 2011 EBITDA performance goal was not achieved therefore the first
tranche did not vest.
The 2012 and 2013 EBITDA performance goal was achieved.
- 48 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
Vesting will be fully accelerated in the event of any of the following:
a) Merger, acquisition or reorganization of the Company with one or more
other entities;
b)
A sale of all or substantially all of the assets or shares of the Company;
c)
An investment in the Company of at least $ 2 million.
As of December 31, 2013 a total of 552,233 options have been vested and the
Company recorded share-based compensation expenses in a total of $ 15
thousand, $ 12 thousands and $ 6 thousands in respect to Mr. Ami Vizer, the
Company's Chief Executive Officer who is also a Director of the Company, to
senior management and to employees, respectively for the year 2013.
Further to the above and to note 2a6, on April 30, 2014 a total of 454,000 options
were exercised under the Company's Stock Option Plan by senior management
into SimiGon's Ordinary Shares at an exercise price of NIS 0.01 each. Out of the
shares issued, 240,000 and 50,000 Ordinary Shares were issued to the Company's
CEO and CFO, who are also Directors of the Company; respectively
On June 29, 2011 the Company's Board of Directors approved. the extension in
terms of options granted to former senior employee according to which, options
in a total of 75,000 will be exercisable until June 10, 2012 only in case of a
Transaction (as defined in the Company's Share Option Plan). All other vested
options in a total of 85,400 will be exercisable until December 7, 2012 only in
case of a Transaction (as defined in the Company's Share Option Plan).
On November 28, 2011 the Annual General meeting of the Company's approved
the grant of 40,000 options to purchase ordinary shares of the Company to Mr.
Efraim Manea, a director of the Company and its CFO. Such options are granted
to Mr. Manea in accordance with the Company's Employees' Stock Option Plan
(the "ISOP") and in the same terms that similar options are granted to the
employees of the Company. The options will be vested over 36 months
commencing September 2012 at an exercise price of US$ 0.08. The Vested
Options are exercisable only in an event of a Transaction as defined under the
ISOP.
Further to note 10a2, (a) on April 12, 2012, the Company issued 2,926,533 and
182,541 Options to Mr. Ami Vizer, the Company's Chief Executive Officer who
is also a Director of the Company, and to senior management, respectively; (b) on
December 20, 2012 the Annual General meeting of the Company's approved the
grant of 37,582 options to purchase Ordinary Shares to Mr. Efraim Manea, a
director of the Company and its CFO and (c) as of December 31, 2014 and 2013,
the Company recorded share-based compensation expenses in a total of $ 46
thousand and $ 66 thousand in respect to the CEO, respectively.
2.
3.
4.
- 49 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
e.
Shares to the CEO and senior employees:
SIMIGON LTD.
Further to Note 10a2, (a) on April 12, 2012 the Company issued a total 1,972,233 and
66,291 Ordinary Shares to Mr. Ami Vizer the Company's Chief Executive Officer who
is also a Director of the Company and to senior management, respectively; (b) On
October 11, 2012, a total of 516,921 and 309,711 Ordinary Shares each have been
issued, to Mr. Ami Vizer and to senior management, respectively; (c) On April 30, 2014
a total of 1,497,674 and 214,755 Ordinary Shares have been issued, to Mr. Ami Vizer
and to senior management, respectively; (d) on November 11, 2014 a total of 527,554
Ordinary Shares have been issued, to Mr. Ami Vizer and (e) on April 30, 2014 a total of
27,500 options were exercised under the Company's Stock Option Plan by senior
management into SimiGon's Ordinary Shares at an exercise price of $ 0.08 each. Out of
the shares issued, 7,500 Ordinary Shares were issued to Mr. Ami Vizer.
For the years ended December 31, 2015, 2014 and 2013, the Company recorded share-
based compensation expenses in a total of $ 28 thousand, $ 46 thousand and $ 66
thousand, in respect to the shares granted to the CEO, respectively.
NOTE 11:- JOINT VENTURE
On March 30, 2014 SimiGon's subsidiary ("the Subsidiary") entered into a Joint Venture
agreement ("the Joint Venture") with a company based in China that will provide the Joint
Venture with aviation services. Under the terms of the Joint Venture agreement, the Subsidiary
will provide the SIMbox licenses enabling the Joint Venture to develop its own training
solutions. The Subsidiary will invest $ 30 thousand in the Joint Venture representing an
interest of 4% in its shares. As of the date of the approval of the financial statements as of
December 31, 2015, the Joint Venture hasn’t started to operate, yet.
NOTE 12:- INCOME TAXES
a.
Tax benefits under the Law for the Encouragement of Capital Investments, 1959:
The Company has been granted an "Approved Enterprise" status for an original program
and an additional expansion program, ("the programs") under the Law for the
Encouragement of Capital Investments, 1959 ("the Law"). According to the provisions
of the Law, the Company has elected to enjoy the "alternative benefits track" - a waiver
of grants in return for tax holidays.
The "Approved Enterprise" status will allow the Company a tax holiday on
undistributed income derived from the "Approved Enterprise" program.
- 50 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES (Cont.)
SIMIGON LTD.
The income derived from this "Approved Enterprise" will be tax-exempt for a period of
two years, and may enjoy a reduced tax rate of 10% to 25% (based on percentage of
foreign ownership) for an additional five years. The seven-year period of benefits will
commence with the first year in which the Company earns taxable income.
The Company completed the implementation of its original and expansion programs.
The period of tax benefits, detailed above, is subject to limits of the earlier of 12 years
from the commencement of production, or 14 years from receiving the approval. The
period of benefits has not yet commenced, and will expire in the year 2016.
The entitlement to the above benefits is conditional upon the Company's fulfilling the
conditions stipulated by the above Law, regulations published thereunder and the letters
of approval for the specific investments in "Approved Enterprises". In the event of
failure to comply with these conditions, the benefits may be canceled and the Company
may be required to refund the amount of the benefits, in whole or in part, including
interest.
Should the Company derive income from sources other than the "Approved Enterprise"
during the period of benefits, such income shall be taxable at the regular corporate tax
rate.
If tax-exempt profits are distributed to shareholders, they would be taxed at the
corporate tax rate applicable to such profits as if the Company had not elected the
alternative system of benefits, currently between 10%-25% for an "Approved
Enterprise".
An amendment to the Law, which became effective in 2005 ("the Amendment")
changed certain provisions of the Law. The change in the tax rate will have immaterial
effects on the Company.
As a result of the Amendment, a company is no longer obliged to implement an
"Approved Enterprise" status in order to receive the tax benefits previously available
under the alternative benefits provisions, and therefore there is no need to apply to the
Investment Center for this purpose (Approved Enterprise status remains mandatory for
companies seeking grants).
Rather, a company may claim the tax benefits offered by the Investment Law directly in
its tax returns, provided that its facilities meet the criteria for tax benefits set out by the
Amendment. A company is also granted a right to approach the Israeli Tax Authorities
for a pre-ruling regarding their eligibility for benefits under the Amendment.
- 51 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES (Cont.)
SIMIGON LTD.
Tax benefits are available under the Amendment to production facilities (or other
eligible facilities), which are generally required to derive more than 25% of the
company's business income from export. In order to receive the tax benefits, the
Amendment states that a company must make an investment in the beneficiary
enterprise exceeding a minimum amount specified in the Law. Such investment may be
made over a period of no more than three years ending at the end of the year in which
the company requested to have the tax benefits apply to the beneficiary enterprise ("the
Year of Election").
Where a company requests to have the tax benefits apply to an expansion of existing
facilities, then only the expansion will be considered a beneficiary enterprise and the
company's effective tax rate will be the result of a weighted combination of the
applicable rates. In this case, the minimum investment required in order to qualify as a
beneficiary enterprise is required to exceed a certain percentage of the company's
production assets before the expansion.
The duration of tax benefits is subject to a limitation of the earlier of 7 years from the
Commencement Year, or 12 years from the first day of the Year of Election.
Amendments to the Law for the Encouragement of Capital Investments, 1959:
In December 2010, the "Knesset" (Israeli Parliament) passed the Law for Economic
Policy for 2011 and 2012 (Amended Legislation), 2011 ("the Amendment"), which
prescribes, among others, amendments in the Law for the Encouragement of Capital
Investments, 1959 ("the Law"). The Amendment became effective as of January 1,
2011.
According to the Amendment, the benefit tracks in the Law were modified and a flat tax
rate applies to the Company's entire preferred income. Commencing from the 2011 tax
year, the Company will be able to opt to apply (the waiver is non-recourse) the
Amendment and from the elected tax year and onwards, it will be subject to the
amended tax rates that are: 2011 and 2012 - 15% (in development area A - 10%), 2013
and 2014 - 12.5% (in development area A - 7%) and in 2015 and thereafter - 12% (in
development area A - 6%).
b. Measurement of results for tax purposes under the Income Tax (Inflationary
Adjustments) Law, 1985:
Results for tax purposes are measured in terms of earnings in NIS after certain
adjustments for increases in the Israeli Consumer Price Index ("CPI"). As explained in
Note 2b, the financial statements are presented in U.S. dollars.
The difference between the annual change in the Israeli CPI and in the NIS/dollar
exchange rate causes a difference between taxable income or loss and the income or loss
before taxes reflected in the financial statements.
- 52 -
SIMIGON LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES (Cont.)
c. Carryforward losses:
Domestic:
As of December 31, 2015, 2014 and 2013, the Company had accumulated losses for
Israeli tax purposes of approximately $ 0.3 million, $ 1.5 million and $ 2.6 million,
respectively, which may be carried forward, in order to offset taxable income in the
future, for an indefinite period (See Note f below).
Foreign:
As of December 31, 2015, 2014 and 2013, the federal tax loss carryforwards of the U.S.
subsidiaries amounted to approximately $ 5.4 million, $ 5.8 million and $ 6.4 million,
respectively. Such losses are available for offset against future U.S. taxable income of
the subsidiaries and will expire in the years 2023-2026.
As of December 31, 2015 and 2014, the tax loss carryforwards of the Singaporean
subsidiary amounted to approximately $ 74 thousands and $ 67 thousands; respectively,
which may be carried forward, in order to offset taxable income in the future, for an
indefinite period.
d. Deferred tax:
As of December 31, 2015, deferred tax assets of $ 159 thousand were recorded in
respect of certain operating losses. Deferred tax assets relating to the balance of
carryforward operating losses were not recognized because their utilization in the
foreseeable future is not probable.
e. Tax rates applicable to the income of the Company and its subsidiaries:
Domestic:
The Israeli corporate tax rate was 24% in 2011 and 25% in 2012 and 2013. A company
is taxable on its real (non-inflationary) capital gains at the corporate tax rate in the year
of sale.
A temporary provision for 2006-2009 stipulates that the sale of an asset other than a
quoted security (excluding goodwill that was not acquired) that had been purchased
prior to January 1, 2003, and sold by December 31, 2009, is subject to corporate tax as
follows:
The part of the real capital gain that is linearly attributed to the period prior to
December 31, 2002 is subject to the corporate tax rate in the year of sale as set forth in
the Israeli Income Tax Ordinance, and the part of the real capital gain that is linearly
attributed to the period from January 1, 2003 through the date of sale is subject to tax at
a rate of 25%.
- 53 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES (Cont.)
SIMIGON LTD.
On December 5, 2011, the "Knesset" (Israeli parliament) passed the Law for Tax
Burden Reform (Legislative Amendments), 2011 ("the Law") which, among others,
cancels effective from 2012, the scheduled reduction in the corporate tax rate. The Law
also increases the corporate tax rate to 25% in 2012. In view of this increase in the
corporate tax rate to 25%, as above, the real capital gain tax rate and the real betterment
tax rate were also increased accordingly. On August 5, 2013, the "Knesset" issued the
Law for Changing National Priorities (Legislative Amendments for Achieving Budget
Targets for 2013 and 2014), 2013 ("the Budget Law"), which consists, among others, of
fiscal changes whose main aim is to enhance the collection of taxes in those years.
These changes include, among others, increasing the corporate tax rate from 25% to
26.5%, cancelling the reduction in the tax rates applicable to privileged enterprises (9%
in development area A and 16% elsewhere) and, in certain cases, increasing the rate of
dividend withholding tax within the scope of the Law for the Encouragement of Capital
Investments to 20% effective from January 1, 2014. There are also other changes such
as taxation of revaluation gains effective from August 1, 2013.
The provisions regarding revaluation gains will become effective only after the
publication of regulations defining what should be considered as "retained earnings not
subject to corporate tax" and regulations that set forth provisions for avoiding double
taxation of overseas assets. As of the date of approval of these financial statements,
these regulations have not been issued.
On January 4, 2016, the Israeli Parliament's Plenum approved by a second and third
reading the Bill for Amending the Income Tax Ordinance (No. 217) (Reduction of
Corporate Tax Rate), 2015, which includes a reduction of the corporate tax rate from
26.5% to 25%.
Foreign:
The subsidiaries were incorporated in Orlando, Florida, U.S.A., and are taxed according
to U.S. tax laws. The statutory federal tax rate is 35%.
f. Tax assessments:
The Company's tax assessments in Israel for the years until and including 2009 are
considered final, subject to the powers vested with the director of the Tax Authority
pursuant to sections 145, 147 and 152 to the Income Tax Ordinance.
g. Tax reconciliation:
In 2014 and 2013, the main reconciling item between tax expense, assuming income
before taxes was taxed at the statutory tax rate of the Company, and the tax expense
recorded in profit or loss is carryforward tax losses and tax exemption for which no
deferred taxes were provided. In 2015, the income tax benefit recorded in profit or loss
is due to the recognition of carryforward losses which were not recognized in prior
years –see item c. above.
- 54 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS
a.
Royalty commitments:
SIMIGON LTD.
1.
In June 2001, the Company and a third party signed a Cooperation and Project
Funding Agreement with Britech, which is an establishment of the United
Kingdom-Israel Industrial Research and Development Fund. According to the
agreement, Britech agreed to fund, by conditional grant, the implementation of
the proposal submitted by the Company and the third party for a research and
development project in the maximum amount of £ 227 thousand.
The Company shall make repayments to Britech, based on gross sales derived
from the sale, leasing or other marketing or commercial exploitation of the
innovation, including service or maintenance contracts, commencing with the
first commercial transaction. Such payments shall be repaid in Pounds Sterling at
the rate of 2.5% of the first year's gross sales and, in succeeding years, at the rate
of 5% of the gross sales until 100%-150% of the conditional grant and other sums
have been repaid (incremental 50% based upon agreed milestone which was not
fulfilled).
The Company received a total amount of $ 324 thousand, of which $ 150
thousand and $ 174 thousand were deducted from the research and development
expenses in 2001 and 2003, respectively.
Although the development of technology had been completed by the third party
and the Company, the Company has never received the third party's portion of the
developed technology upon completion of the project although it requested it
from both the third party and Britech.
Therefore, since the Company cannot utilize the developed technology without
the essential portion developed by the third party, the Company has not paid any
royalties to Britech and the Company's management believes that it will not be
required to pay royalties in the future for the abovementioned project. In addition,
the Company did not submit any patent applications in connection with the
Britech grant.
2.
On September 1, 2009, the Company and a third party signed a Cooperation and
Project Funding Agreement with KORIL ("the Agreement"), which is an
establishment of the Korea-Israel Industrial Research and Development Fund.
According to the agreement, KORIL agreed to fund, by conditional grant, the
implementation of the proposal submitted by the Company ("the proposal") and
the third party for a research and development project in the maximum amount of
$ 273 thousand.
As of December 31, 2015, the Company received a total amount of $ 254
thousand.
- 55 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS (Cont.)
SIMIGON LTD.
The Company shall make repayments to KORIL, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
technology, discoveries,
improvements, modifications, methods, software,
specifications, or any form of technical information developed or arising from the
proposal (gross sales). Such payments shall be repaid in U.S. dollars at the rate of
2.5% of the first year's gross sales until 100% of the conditional grant and other
sums have been repaid.
The total non-current liability for the years ended December 31, 2015 and 2014
was $ 206 thousand and $ 211 thousand, respectively.
3.
On September 16, 2010, the Company signed a Project Funding Agreement ("the
Agreement") with the Israeli Chief Scientist ("the OCS"). According to the
Agreement, the OCS agreed to fund, by conditional grant, the implementation of
the proposal submitted by the Company for a research and development project in
the maximum amount of $ 365 thousand.
On March 29, 2011, the Company signed on a supplement to the Agreement ("the
Supplement"). According to the Supplement, the OCS agreed to fund, by
conditional grant, the implementation of the proposal submitted by the Company
for a research and development continued project in the maximum amount of
$ 278 thousand.
As of December 31, 2015, the Company received total amount of $ 611 thousand.
The Company shall make repayments to the OCS, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
technology, discoveries,
improvements, modifications, methods, software,
specifications, or any form of technical information developed or arising from the
proposals (gross sales).
Such payments shall be repaid in NIS at the rate of 3% of the first year's gross
sales until 100% of the conditional grant and other sums have been repaid.
The total non-current liability for the years ended December 31, 2015 and 2014
was $ 444 thousand and $ 448 thousand, respectively.
4.
On April 7, 2011, the Company and a third party signed a Cooperation and
Project Funding Agreement with the OCS, which is an establishment of the
Italian-Israel Industrial Research and Development Fund. According to the
agreement, the OCS agreed to fund, by conditional grant, the implementation of
the proposal submitted by the Company ("the proposal") and the third party for a
research and development project in the maximum amount of $ 91 thousand.
- 56 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS (Cont.)
SIMIGON LTD.
As of December 31, 2015, the Company received a total amount of $ 95
thousand.
The Company shall make repayments to the OCS, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
technology, discoveries,
improvements, modifications, methods, software,
specifications, or any form of technical information developed or arising from the
proposal (gross sales). Such payments shall be repaid in NIS at the rate of 3% of
the first year's gross sales until 100% of the conditional grant and other sums
have been repaid.
The total non-current liability for the year ended December 31, 2015 and 2014
was $ 72 thousand and $ 70 thousand, respectively.
5.
On November 24, 2015, the Company and a third party signed a Cooperation and
Project Funding Agreement with the OCS, which is an establishment of the
Italian-Israel Industrial Research and Development Fund. According to the
agreement, the OCS agreed to fund, by conditional grant, the implementation of
the proposal submitted by the Company ("the proposal") and the third party for a
research and development project in the maximum amount of $ 62 thousand.
The Company shall make repayments to the OCS, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
technology, discoveries,
improvements, modifications, methods, software,
specifications, or any form of technical information developed or arising from the
proposal (gross sales). Such payments shall be repaid in NIS at the rate of 3% of
the first year's gross sales until 100% of the conditional grant and other sums
have been repaid.
b.
Lease commitments:
1.
2.
3.
Premises occupied by the Company are rented under various non-cancelable lease
agreements. The latest rental agreement for the premises expires in October 2017
as determined under a lease agreement signed on October 1, 2014.
The Company has leased various motor vehicles under cancelable operating lease
agreements, which expire on various dates, the latest of which is in 2016.
Premises occupied by the subsidiaries are rented under non-cancelable lease
agreements. The latest rental agreement for the premises expires in March 2016
as determined under a lease agreement signed on December 14, 2011 by SimiGon
Inc.
- 57 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS (Cont.)
4.
Future minimum rental payments under non-cancellable operating leases are as
follows:
SIMIGON LTD.
Year ended December 31,
U.S. dollars
in thousands
2016
2017
192
124
316
The total expense for the years ended December 31, 2015, 2014 and 2013 was
$ 266 thousand, $ 342 thousand and $ 317 thousand, respectively.
- 58 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14:- SUPPLEMENTARY
INFORMATION
TO
THE
STATEMENT
OF
COMPREHENSIVE INCOME
SIMIGON LTD.
a.
Cost of revenues:
Salaries and related benefits
Lease and office maintenance
Travel expenses
Depreciation and amortization
Share-based compensation
Subcontractors
b.
Research and development expenses:
Salaries and related benefits
Lease and office maintenance
Depreciation and amortization
Share-based compensation
Other
Government grants
c.
Selling and marketing expenses:
Salaries and related benefits
Lease and office maintenance
Consultant fees
Advertising and sales promotion
Travel expenses
Depreciation and amortization
Share-based compensation
Commission
d.
General and administrative expenses:
Salaries and related benefits
Lease and office maintenance
Travel expenses
Professional fees and public company
expenses
Depreciation and amortization
Share-based compensation
Doubtful debt provision
Other
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
910
148
185
66
13
212
946
151
149
69
15
659
1,534
1,989
1,436
173
13
12
(121)
(41)
1,472
1,006
59
-
33
77
6
38
26
1,245
648
63
11
394
3
2
(78)
5
2,060
312
21
13
-
(25)
2,381
1,042
66
101
32
102
7
60
45
1,458
659
58
26
425
4
2
-
7
595
72
139
59
14
1,191
2,070
2,084
319
25
16
2
(44)
2,404
1,118
80
123
41
92
9
93
96
1,652
681
63
14
314
5
14
(43)
-
1,048
1,181
1,048
- 59 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14:- SUPPLEMENTARY
INFORMATION
TO
THE
STATEMENT
OF
COMPREHENSIVE INCOME (Cont.)
SIMIGON LTD.
e.
Finance income:
Exchange rate differences
Government grants interest
Interest income from banks and short
term investments
f.
Finance cost:
Exchange rate differences
Government grants interest
Bank loans and fees
Year ended
December 31,
2014
U.S. dollars in thousands
2015
2013
67
-
7
74
74
4
4
82
132
37
9
178
120
-
7
127
56
-
1
57
124
29
6
159
NOTE 15:- REVENUES
The Company manages its business on the basis of one reportable segment.
a.
Revenues:
Software licenses and customization
Recurring Maintenance & Support
Training
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
5,449
1,460
26
6,935
6,798
1,466
52
8,316
6,356
1,745
71
8,172
- 60 -
SIMIGON LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15:- REVENUES (Cont.)
b.
Geographical information:
Revenues classified by geographical destinations based on the customer location:
North America
Asia Pacific
Rest of the world (1)
Year ended
December 31,
2014
U.S. dollars in thousands
2015
2013
3,884
1,172
1,879
6,935
4,166
2,963
1,187
8,316
5,032
1,741
1,399
8,172
(1) Europe, South America, Middle East and Australia.
The carrying amounts of non-current assets (property, plant and equipment and
intangible assets) based on the location of the assets are as follows:
Asia Pacific and rest of the world
North America
2015
December 31,
2014
U.S. dollars in thousands
2013
30
1,174
1,204
43
1,233
1,276
41
1,297
1,338
c.
Information about major customers:
Revenues from major customers, each of whom amount to 10% or more of total
revenues reported in the financial statements:
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
Year ended
December 31,
2014
22%
7%
20%
3%
5%
32%
2015
21%
3%
29%
5%
11%
16%
2013
21%
10%
15%
21%
4%
20%
- 61 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16:- EARNINGS PER SHARE
The following reflects the income and share data used in the basic and diluted earnings per
share computations:
SIMIGON LTD.
Year ended
December 31,
2014
U.S. dollars in thousands
2015
2013
Net income for the year
1,782
1,358
896
2015
2014
2013
Weighted average number of Ordinary shares
for computing basic earnings (loss) per share
50,683
48,854
47,188
Effect of dilution:
Share options
135
231
1,943
Weighted average number of Ordinary shares
adjusted for the effect of dilution
50,818
49,085
49,131
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES
a.
Compensation of key management
personnel of the Company:
Employee benefits *)
Share-based payments **)
Year ended
December 31,
2014
U.S. dollars in thousands
2013
2015
1,621
41
1,662
1,628
55
1,683
1,560
83
1,643
*)
Includes long-term employee benefits in the amount of $ 8 thousand and $ 11
thousand for the years ended December 31, 2015 and 2014, respectively.
Year 2015 includes bonus provision to VP Marketing with respect to fiscal year
2015 in the amount of $ 23 thousand.
As disclosed under Note 10a9, year 2014 includes bonus payment of $ 51
thousand to the VP of Business Development and VP Projects. Year 2013 include
bonus payment of $ 17 thousand to the VP of Business Development and VP
Projects.
- 62 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
Year 2015 includes bonus provision to Mr. Efraim Manea, a director of the
Company and its CFO with respect to fiscal year 2015 in the amount of $ 16
thousand (see Note 17d). Year 2014 includes bonus provision to Mr. Efraim
Manea, a director of the Company and its CFO with respect to fiscal year 2014 in
the amount of $ 21 thousand (see Note 17d). Year 2013 includes bonus provision
to Mr. Efraim Manea, a director of the Company and its CFO with respect to
fiscal year 2013 in the amount of $ 33 thousand (see Note 17d).
Year 2015 includes bonus provision to Mr. Ami Vizer, the Company's Chief
Executive Officer and executive director ("the CEO") in respect to fiscal year
2014 in the amount of $ 63 thousand (see Note 17e). Year 2014 includes bonus
provision to Mr. Ami Vizer, the Company's Chief Executive Officer and
executive director ("the CEO") in respect to fiscal year 2014 in the amount of
$ 80 thousand (see Note 17e). Year 2013 includes bonus provision to the CEO in
respect to fiscal year 2013 in the amount of $ 114 thousand and a payment of $ 6
thousand paid to the CEO in respect of the bonus of the fiscal year 2012 (see
Note 17e).
Year 2012 include the provision for sales bonus of $ 2 thousand to the VP of
Business Development.
Year 2012 includes bonus of $ 30 thousand and a bonus provision of $ 114
thousand to the CEO in respect of the fiscal year 2011 and 2012, respectively (see
Note 17e).
**) Years 2015 and 2014 include share-based compensation of $ 28 thousand and
$ 46 thousand, respectively, due the Share Bonus Plan as described under Note
10e, in respect to the CEO.
Year 2013 includes share-based compensation of $ 15 thousand and $ 17
thousand in respect of Options granted in section 1 under Note 10d, to the CEO
and senior management,
includes share-based
compensation of $ 15 thousand and $ 12 thousand in respect of options granted in
section 1 under Note 10d, to the CEO and senior management, respectively.
respectively. Year 2012
b.
Balances with related parties:
Balances with related parties as of December 31, 2015 and December 31, 2014 amount
to $ 108,261 and $ 103,658.
c.
Compensation policy for the Company's Directors and officers:
On November 24, 2013, the Company's Board of directors approved the adoption of a
Compensation policy for the Company's Directors and officers (the "Compensation
Policy Plan") as required by the Israeli Companies Law in order to provide the
Company the ability to attract, retain, reward and motivate highly skilled Officers and to
assure that the compensation structure meets the Company's interests and its overall
financial and strategic objectives.
- 63 -
SIMIGON LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
The Compensation policy for the Company's Directors and officers was approved at
SimiGon Annual General Meeting for year 2013 held on December 30, 2013.
d.
Agreement with CFO:
On December 6, 2012, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Efraim Manea, a director of the Company and its CFO with respect to
fiscal year 2013 in the amount of up to $ 34 thousand, subject to revenues, net profit and
share price criteria and milestones. The actual bonus was paid on May 2014 and
amounted to $ 34 thousand.
On November 24, 2013, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Efraim Manea, a director of the Company and its CFO with respect to
fiscal year 2014 in accordance to the Company's Compensation Policy Plan mentioned
above. The granted bonus is in the amount of up to $ 35 thousand, subject to revenues,
net profit and share price criteria and milestones. The actual bonus was paid on May
2015 and amounted to $ 21 thousand.
On February 26, 2015, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Efraim Manea, a director of the Company and its CFO with respect to
fiscal year 2015 in accordance to the Company's Compensation Policy Plan mentioned
above. The granted bonus is in the amount of up to $ 35 thousand, subject to revenues,
net profit and share price criteria and milestones.
As of December 31, 2015, the Company has made a provision of $ 16 thousand in
respect of its CFO annual bonus for year 2015.
e.
Significant agreements with shareholders:
1.
On September 21, 2006, the Company signed an agreement with Mr. Ami Vizer,
the Chief Executive Officer of the Company, according to which Mr. Ami Vizer
is engaged with a current salary of $ 313 thousand per annum (excluding bonuses
and benefits), terminable by either party on nine months' notice. In addition,
pursuant to this agreement, Mr. Vizer received options.
On January 27, 2010, the Board of Directors approved an increase of 10% in his
salary effective January 1, 2010.
On December 6, 2012, the Board of Directors approved a one-time cash bonus
grant to Mr Ami Vizer with respect to fiscal year 2011 in the amount of $ 30
thousand. It has also approved the grant of a one-time cash bonus to Mr Ami
Vizer with respect to fiscal years 2012 and 2013 in the amount of up to $ 125
thousand per year, subject to revenues, net profit and share price criteria and
milestones (the "Conditions"). Based on the Conditions above, the Company
recorded as of December 31, 2012, a provision of $ 114 thousand in respect to Mr
Ami Vizer bonus for year 2012. The actual bonus was paid on April 2013
amounted to $ 120 thousand.
- 64 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIMIGON LTD.
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
On November 24, 2013, the Board of Directors approved the grant to Mr. Ami
Vizer, the Company's Chief Executive Officer and executive director of a one-
time cash bonus to with respect to fiscal year 2014 in accordance with the
Company's Compensation Policy Plan mentioned above. The granted bonus is in
the amount of up to $ 125 thousand, subject to revenues, net profit and share price
criteria and milestones. On December 30, 2013 the Company's Annual General
Meeting for year 2013, approved 2014 bonus grant to Mr Ami Vizer. The actual
bonus was paid on May 2015 and amounted to $ 80 thousand.
On February 26 2015, the Board of Directors approved the grant to Mr. Ami
Vizer, the Company's Chief Executive Officer and executive director of a one-
time cash bonus to with respect to fiscal year 2015 in accordance with the
Company's Compensation Policy Plan mentioned above. The granted bonus is in
the amount of up to $ 125 thousand, subject to revenues, net profit and share price
criteria and milestones.
As of December 31, 2015, the Company has made a provision of $ 63 thousand in
respect of Mr. Ami Vizer annual bonus for year 2015.
In the annual general meeting for year 2013 held on December 30, 2013, the
shareholders, reapproved the employment agreement of Mr. Ami Vizer as the
Company's Chief Executive Officer and an executive director.
Total salary including employer tax (excluding share bonus grant mentioned
under Note 10a2) of Mr. Ami Vizer during year 2015 amounted to an annual
salary of $ 359 thousand, related benefits include bonus for 2014 fiscal year of
$ 80 thousand, annual social benefits of $ 43 thousand (12.5% out of his annual
salary), expenses allowance of $ 6 thousand, recovery fees of $ 1 thousand,
severance pay of $ 29 thousand, vacation days of $ 39 thousand and health
insurance of $ 35 thousand. In addition, the Company has made a provision for
2015 bonus of $ 63 thousand.
2.
On September 27, 2006, the Company entered into a consultant agreement ("the
Consultant Agreement") with Mr. Rami Weitz, pursuant to which Mr. Weitz
receives a fee of $ 122 thousand per annum in consideration of consulting
services. The agreement may be terminated by either party by at least six months'
written notice. In addition, pursuant to this agreement, Mr. Weitz received
options.
Prior to this agreement, Mr. Rami Weitz had been the Chairman of the Board of
Directors of the Company.
- 65 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
On April 22 2014, the Company signed on a Loan Agreement with Mr. Rami
Weitz ("the Loan Agreement") according to which, the Company will provide
Mr.Weitz with a loan in a total of $ 60 thousand bearing interest at the minimum
rate mandated by law, repayable within 12 months till April 7, 2015. According
to the Loan Agreement, the Company shall have the right at any time (even prior
to the due repayment date) to set-off and deduct any amount due hereunder from
any amount payable by the Lender to Mr.Weitz, to Packet Science Ltd. or to any
company in which Mr.Weitz and/or his immediate family and/or third respective
affiliates have a controlling interest.
On May 18 2014, the consultant Agreement was terminated and the Company
offset the above loan against fees due to Mr. Weitz.
NOTE 18:- DIVIDEND DISTRIBUTION
a. On May 2014 the Company's Board paid a dividend in an amount of $ 269 thousands
(approximately $ 0.543 cent per share).
b. On May 2015 the Company paid a dividend in an amount of $300 thousand (0.6 cents
per share, representing approximately 22% of the Company's earnings per share for
2014).
NOTE 19:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Capital management:
The primary objective of the Company's capital management is to ensure that it maintains a
strong credit rating and sufficient capital in order to support its business and maximize
shareholder value.
The Company manages its capital structure and makes adjustments to it, in light of changes in
economic conditions.
Financial risks factors:
The Company's activities expose it to various financial risks such as market risk (including
foreign exchange risk), credit risk and liquidity risk.
a.
Foreign exchange risk:
The Company operates in a number of countries and is exposed to foreign exchange risk
resulting from the exposure to different currencies, mainly the NIS. As of December 31,
2015, balances in foreign currency are immaterial.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
b.
Credit risk:
SIMIGON LTD.
Financial instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash and cash equivalents, restricted cash, short-term
investments, trade receivables and other accounts receivables.
Cash and cash equivalents, including restricted cash, are invested in major banks in
Israel and the United States. Management believes that the financial institutions that
hold investments of the Company and its subsidiaries are financially sound and,
accordingly, minimal credit risk exists with respect to these investments.
The Company trades only with creditworthy customers. The Company performs
ongoing credit evaluation of its customer's financial condition and requires collateral as
deemed necessary.
The Company has no off-balance-sheet concentration of credit risk such as foreign
exchange contracts, option contracts or other foreign hedging arrangements.
The Company has no significant concentrations of credit risk. The Company has a
policy to ensure collection through sales of its products to wholesalers with an
appropriate credit history and through retail sales in cash or by credit card.
As of December 31, 2015, cash and cash equivalents together with the Company's short
time bank investments amounted to $ 7,412 thousand.
c.
Liquidity risk:
The table below presents the maturity profile of the Company's financial liabilities
based on contractual undiscounted payments:
December 31, 2015:
Less than
one year
3 to 4
Years
U.S. dollars in thousands
Total
Government grants
Trade payables
Other accounts payable and accrued
expenses
11
123
864
998
722
-
-
722
733
123
864
1,720
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
December 31, 2014:
SIMIGON LTD.
Less than
one year
3 to 4
Years
U.S. dollars in thousands
Total
Government grants
Trade payables
Other accounts payable and accrued
expenses
37
153
872
1,062
729
-
-
729
766
153
872
1,791
NOTE 20:- SUBSEQUENT EVENT
On April 14, 2016 the Company's Board of Directors approved the grant of an annual cash
bonus to Mr. Ami Vizer, the Company's Chief Executive Officer and to Mr. Efraim Manea the
Company's Chief Financial Officer, both of which are also Directors of the Company, with
respect to fiscal year 2016 in accordance with the Company’s Compensation Policy Plan and
employment agreements. The granted bonuses are in the amount of up to $125 thousand and
NIS125 thousand, respectively, subject to revenues, net profit and share price criteria and
milestones.
- - - - - - - - - - - - - - - - - -
- 68 -
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:
ADVISERS
Nominated Adviser and Broker
finnCap
60 New Broad St
London, EC2M 1JJ
SimiGon Ltd.
1 Sapir St.
PO Box 12050
Herzliya, Israel 46733
Tel: +972-9-956-1777
Fax: +972-9-951-3566
Registrar
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES
SimiGon Inc.
111 S. Maitland Avenue,
Suite 210, Maitland, Florida 32751
Phone: +1 (407) 951-5548
Fax: +1 (407) 960-4794
For more information:
info@simigon.com
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
Amit, Pollak, Matalon & Co. Advocates and Notary
Nitsba Tower, 19th Floor, 17 Yitzhak Sadeh St.,
Tel Aviv 67775
Israel
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WWW.SIMIGON.COM