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Simigon unveils defence sector contract worth US$430,000

Published: 15:01 01 May 2012 BST

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Shares in Simigon (LON:SIM) advanced more than six per cent today as it unveiled a new contract in the defence sector worth US$430,000.

The agreement is to supply the firm's simulation software products to US-based TAISR Group, which provides training for the Joint Close Air Support (JCAS) and manned/unmanned Intelligence, Surveillance and Reconnaissance (ISR) community.

As at 2.50 pm, the firm's shares were up 6.06 per cent, at 8.75 pence each. 

JCAS and ISR technology aims to improve mission success rates for personnel operating in hostile environments.

The company says the ISR market is a fast growing one for the firm and was valued at US$17.3bn in 2011 by Visiongain - an independent UK-based business information provider. 

The move demonstrates the firm's expansion into new markets and revenue from the deal has already been factored into the management's expectations for the 2012 year.

Simigon president and chief executive Ami Vizer said: "The JCAS and ISR market segment is growing rapidly in size and importance and will lead to numerous growth opportunities.

"The partnership with TAISR further validates the value our technology brings to our partners. We see this contract as a first step in a long term, mutually beneficial relationship for both parties."

FinnCap, which started coverage of Simigon following its prelims in April, said the agreement represented a prestigious partnership and underpinned the broker's growth forecasts.

"The TAISR Group is owned and operated by disabled US military veterans, supplying mainly US special operations and conventional forces with training to rapidly integrate intelligence from manned/unmanned ISR aircraft," said analyst Lorne Daniel.

The analyst also highlighted that Simigon was "significantly undervalued", stating its market cap less net cash implied an enterprise value of less than $2million for what was "a unique global business".

"The company has come out of a period of retrenchment: FY 2011 saw revenue growing strongly and the company return to profit, with major contracts being won, new markets being opened and the board confident of a strong growth potential," added Daniel.

In the year to December 31, 2011, Simigon increased revenues 5 per cent to $5.48 million (2010: $5.21 million) and net profit improved by $1.03 million to $0.35 mln (2010: Loss of $0.68 mln).

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