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09.06.12 – Management Report 2011 – English Version

08.06.12 – Management Report 2011

Report of the Board of Directors of Performance Technologies SA for the financial year ended 31.12.2011


Dear Shareholders,

The Board of Directors of PERFORMANCE TECHNOLOGIES SA presents the following information about the business and financial results of the Company and its subsidiaries for the year 01/01/2011 to 31/12/2011, and sets out management`s goals for 2012.


A. Introduction: Company organization and activity

Our Company ( provides IT solutions and services for: virtualization, cloud computing, enterprise storage and computing environments, data protection and information security, ITSM solutions for networks, systems and applications management. We also design, develop and provide Cloud Computing Services under the Bronet brand (

The Company has a strong brand, a loyal customer base and is being perceived as a leader in the areas of its specialization. The core business activity is in solution areas of high demand, even more so in times of economic downturn, as experienced in Greece during the last five years. Virtualization solutions that reduce spending (OPEX and CAPEX) through IT consolidation, transformation and re-platforming projects, deploying Cloud Services and exploiting the benefits of the cloud operating model, IT services management practices, building affordable business continuity & disaster recovery capability, embracing mobility, are all top priorities of organizations in the private and public sector. The Company is well positioned to service such customer needs; we have working relationships, business partnerships and supply arrangements with major international IT companies. These allow us to maintain a very competitive cost structure when engaging in projects involving building complete operating IT environments that are virtualized and optimized to the requirements of each client.


The Company has quality procedures certified to ISO 9001:2008 standard for the design, development, implementation, procurement and support of information systems and solutions. It also operates an information security management system, certified to ISO 27001:2005 standard by Bureau Veritas; this system applies to the Bronet Cloud Computing services, as well as the supply of IT Consulting Services and Technology Services for project implementation and IT support, that are typically offered under contract.


The Company possesses extensive know-how, expertise and experience, having successfully delivered major projects during the last dozen years, and even more importantly during the last three years. Our client base now includes large and medium sized businesses and organizations from nearly every sector of the economy: telecommunications providers, banks, business services and utilities, industrial companies, retail and distribution companies, media, publishing, companies, educational and research institutions and public entities.


The Company has established three fully owned subsidiaries abroad: Performance Technologies (Cyprus) Ltd (“PTC” – direct investment), Performance Technologies BG AD (indirect participation, 100% subsidiary of PTC) and Performance Technologies (Romania) SRL (indirect participation, 100% subsidiary of PTC).


In addition, through the fully owned subsidiary Petabyte Solutions SA (direct investment, 100% subsidiary) provides: specialized implementation services and solutions support, IT infrastructure transformation projects using virtualization & cloud computing technologies and Open Source (Linux OS) software subscriptions and related consulting services (e.g. for Red Hat, Zimbra, etc.); Petabyte Solutions also engages in contractual arrangements with major customers (e.g. in the Banking sector) to supply IT outsourcing services.


The Company`s sales revenue comes primarily from the provision of IT solutions and services for transforming IT infrastructures through virtualization technology, data storage, implementing systems and processes for comprehensive/large-scale backup & restore operations, systems and services to ensure high availability of key applications, engagements relating to information systems security, for network and applications management and control, and for ensuring SLAs are met in the IT services provided by organizations to internal and external customers.


Among the services provided by PT are: ITSM consulting and implementation services, IT solution development, design, planning and implementation, IT technical support services (support and maintenance services); IT technical training services by certified trainers/instructors, leveraging PT’s state-of-the art training facilities and remotely accessed computing lab infrastructure.


During the last 4 years the company has invested more than €1 million towards acquiring the developing the necessary IT infrastructures, processes and services, for the provision of state-of-the-art Cloud Computing Services to the Greek and international markets. These Cloud Services are marketed by Bronet, an independent Business Unit ( that was formed on 1.1.2010, after PT consolidated and absorbed its fully owned subsidiary BRONET HELLAS SA.


The solutions promoted by the Company utilize reliable/proven software and hardware technologies and products from world-leading manufacturers such as EMC, DELL, HP, IBM and other IT vendors with whom the Company has established and maintains business agreements as a direct commercial partner (Tier 1).


The Company established and operated since 1.1.2010 an independent Business Unit («BU») under the name “Performance VAD” ( responsible for conducting “value-added distribution”(«VAD») activities, thereby selling products and services of international firms to IT companies (resellers and System Integrators) inside and outside Greece. This BU has been tasked with marketing, promoting and conducting the business of professional education and technical training. Commercial contracts with international firms have provided “Performance VAD” BU with distribution rights for products and/or for operating official technical education centers in its areas of technical expertise (such as VMware Authorized Training Center and Symantec Education Partner). During 2012 a new subsidiary (AlfaVAD S.A.) was setup to conduct all VAD business, with new independent management and equity structure, operating under a new- brand ( that is different from Performance; the intention is that this new company will be divested as soon as practicable, so that Performance can concentrate on its core activity, which is IT solution and services provision.


During 2011 the Company expanded its activities in educational services provision: through a new business partnership with international IT vendor RED HAT, became a technical education and professional training partner in open source software, and successfully engaged in providing Red Hat certification trainings and exams in Greece and abroad.


The combination of experience and know-how, with the low cost structure due to business/supply contractual arrangements with key manufacturers, provides a highly competitive position for the Company in all focus areas;   such business partnerships also allow the selection of optimal combinations of solution components from different manufacturers, for comprehensive “best of breed” solution offerings. This is often appreciated by customers as a key advantage over solution offerings from large multinational firms-manufacturers (who are limited to their own product portfolio when developing a comprehensive solution). The solutions designed and implemented by the Company are based on the best and most proven technologies and are designed to fit the real needs and budget of each client.


During the last 3 years the Company has been focused on expanding its customer base and business in Greece and other countries. This effort has brought very positive results. The Company during this time acquired very important new customers that include large telecom providers, banks and financial institutions, industrials, service providers and public sector entities. PT has delivered to those clients advanced solutions and services in the areas of our expertise that are distinguished for high quality, robustness and effectiveness and for bringing substantial business impact and quick ROI.


During 2011 the Company continued to expand the operations related to the EMC Velocity Signature Solution Center established in 2010; we have implemented and are able to showcase new solution offerings leveraging this facility, providing us with a significant advantage over the competition.


Also during 2011, PT was among the first companies in Europe (and so far, the only one in Greece and the Balkans) to attain the level and become officially recognized as «Symantec Master Specialist – Data Protection». This recognition by Symantec came as a result of the successful engagements of the Company (for 14 consecutive years) in the design, implementation and support of complex and demanding Data Protection and Business Continuity projects in Greece and other countries. Since 2010, PT also achieved the “Symantec Data Protection Specialization” and the “Symantec Data Archiving & e-Discovery Specialization”. During the current year (2012) the company achieved one additional specialization (“Symantec High Availability Specialization”), being so far the only company in Greece to demonstrate such skills and capabilities. These important distinctions exemplify the company`s ability in implementing effective state-of-the art solutions to protect corporate information and systems, for businesses and organizations of all sizes.


B. Comparative Presentation of Annual Financial Results 2011 and 2010.


During the financial year 2011 the Company achieved the following:


The consolidated sales revenue in 2011 was 10.035 million €, increasing 2.7% compared to 2010; the Parent company had sales revenue of 9.734 million €, an increase of 4.11% over 2010. The consolidated gross profit was 2.578 million € compared to 2.540 million € in during the previous year and the gross profit margin was stable at 26% of revenue.


The EBITDA in 2011 on a consolidated basis increased by 16% amounting to 727.4 thousand € compared to 622 thousand € for the previous year, while for the parent company, EBITDA increased by 17% amounting to 752.1 thousand € compared to 637.7 thousand € in 2010.


The consolidated earnings before taxes and financing & investment expenses were 109.1 thousand € versus 68.6 thousand € in 2010, an increase of 59%, while the parent company gains were 139.3 thousand € compared to 95.2 thousand €, an increase of 46%.


The earnings before taxes in 2011 for the parent company were 12.2 thousand € versus losses of 6.7 thousand € in 2010; on consolidate basis the loss was reduced by 57% to 17.66 thousand €, versus a loss of 41.65 thousand € in 2010.


Expenditure was contained and reduced in key categories, e.g. a decrease of administrative expenses by about 13% on a consolidated basis; however, other categories of expenditures, as those associated with the investment and development activity (including recruitment of new employees), increased.


The financing expenditure increased by 40.6 thousand € for the Group and 44 thousand € for the Company (59% and 46% respectively). This is due to increases in interest rates in 2011 and reduced liquidity of Greek customers due to the deep recession in Greece. The DSO (Days Sales Outstanding) of receivables on a consolidated basis (as determined from the simple ratio on 31/12 of each year) increased from 132 days in 2009 to 161 in 2010 and 172 days in 2012, reflecting the deteriorating business environment in Greece.


The Company, through tight credit control systems, has managed again in 2011 to keep bad debt from account receivables at very low level (approximately 0.5% of revenue) and managed to maintain the current and quick liquidity ratios of the Company and the Group, at a level that is substantially similar to the previous year, 2010. In particular, on 31/12/2011 the current liquidity ratio on a consolidated basis stands at 1.5 (1.3 for the parent), while the quick (acid test) ratio is 1.3 and 1.4 respectively.


It is noteworthy that despite the adverse recession conditions that have been prevalent in Greece for several years, the Company was selected (for the second year in a row) among the «Strongest Companies in Greece» community of the ICAP Group, i.e. as one of the strongest companies in terms of high credit ratings, active in Greece. Companies in this group demonstrate consistently proper business conduct when transacting with all of their suppliers, customers, employees and the banks. The ICAP Group is recognized by the Bank of Greece as an External Credit Assessment Organization and by the European Central Bank as an acceptable source of credit ratings. The Company also maintained a strong evaluation by Dun & Bradstreet (D&B), the world leader in providing credit rating information for businesses, and more importantly a strong credit rating by all its key suppliers that include major multinational companies.


C. Significant developments during 2011


1)   Development of clientele, new partnerships, new products & services


The Group in 2011 acquired 172 new customers in Greece and abroad including telecommunications companies, financial sector, information technology companies, service providers, industrials, shipping companies, distributors/wholesales, public sector entities and more.




During the current year 2012 new significant customer engagements have been won, including a multiyear project awarded by Wind Hellas (exceeding 1M euro) to refresh Wind enterprise storage infrastructure at the primary and DR site; a project awarded by ATE Insurance for rebuilding/transforming their core IT environment leveraging DELL servers, storage and virtualization; a project awarded by OPAP SA, to implement modern data center computing and storage infrastructure in the primary site in Athens and DR site in Thessaloniki and effect replication processes between the sites; a project awarded by Forthnet to design and build a state-of-the-art private cloud service delivery capability; a project awarded by ELTA for centralized storage and virtualization; a project awarded by PPC («ΔΕΗ») for delivering a new virtualized environment (including servers, enterprise storage and virtualization software) and more. The company pursues vigorously all business opportunities presented, realizing the increased needs of customers to consolidate their legacy environments, slash costs and increase their agility.


During the current year, the Company is expanding into new areas, building new products and service offerings mainly in the areas of Cloud Computing Services, Virtualization and ITSM engagements.


The Company continues to pursue opportunities for client engagements outside Greece. We focus on delivering highly specialized services, on the provision of technical education and professional training services and Cloud Services offerings.


2)   Major events, Investments and projects pursued; collaboration with Universities


The Virtualization & Cloud Computing Forum events, in Athens and Nicosia, were organized by the Company in 2011 and 2012 and met with great success. Each year more than 800 business executives and professionals from organizations businesses from a variety of sectors of the Greek and Cypriot economy have been attending these events. Each event provides valuable information to attendees for deploying virtualization technology and cloud computing services, showcases the latest developments in the field and how companies and organizations of all sizes can reap the maximum benefit from the technology advances.


Aiming at strengthening its business outside Greece, the Company organizes customer events abroad in fields where it holds a leading position, expertise and competence. In 2011 such events took place in Cyprus and Malta. During 2011, the Company prepared a comprehensive business-investment plan aiming to enhance the sales of solutions, products and services to customers outside Greece, with a total budget of €245 thousand, submitted for co-funding through the NSRF («Εξωστρέφεια»). A budget of €113 thousand was approved, with state-provided financing (grant) of approximately 51 thousand € and is currently being implemented. The implementation of this initiative began in 2011, with the majority of the actions scheduled for completion during the current fiscal year (2012).


Furthermore, in July of 2011 the Company prepared and submitted business plans-proposals for the development of new innovative broadband services for the Bronet BU, to become eligible for substantial grants under the program NSRF <<Συνεργασία 2011>>. The proposals were submitted in collaboration with the University of Athens, University of Crete, Forthnet/Nova Group and the software development company “CAMBO Industries Ltd”. The results of evaluation of the proposals that were submitted have not been made public as of this writing.


3) Investments in education and staff training in new technologies and skills


The Company believes that developing further its human resources is a key business success factor, even so during times of economic recession. During 2011 we invested about €20.000 for training staff and in new technologies and acquiring new business skills, in order to increase our competitiveness, improve our efficiency and maintain a leading market position. The Company tries to leverage all additional financial resources being provided from relevant investment programs of the NSRF and the National Employment Agency. In particular, the Company in April of 2011 submitted a request for funding to the National Employment Agency, to conduct a comprehensive training program for its employees, through the program “Structural Adjustment Operations” totaling €92.000; this was recently approved and the Company aims to implement it in full during FY2012 and FY2013.


The Company, through a grant program, managed to get partly subsidized for the employer (social security) costs starting in November of 2010, assuming all necessary relevant commitments for eighteen months, all of which have been met to date.


The number of people employed by the Company has increased significantly. The number of employees at the end of 2011 was 44 people for the Group (from 38 at the end of 2010) while for the parent Company increased to 30 people (from 29 at the end of 2010). The number of people fully engaged with Company and its subsidiaries under contractual agreements for dedicated services provision, has also increased substantially. A new business unit, for the provision of ITSM/BSM consulting services and related IT solutions has been recently formed; new hires and organization changes resulted to a 7-strong team of consultants with experience and track record, that are able to compete for demanding customer engagements in these areas; some important projects have been won in this area and are currently under way.


D. Business objectives and estimates for the year 2012


The Company believes it is well positioned to make the most of the opportunities presented during a strong downturn or recession, as the prevalent conditions have been in the Greek economy during recent years, and to continue to grow leveraging its key strengths and capabilities.


Key business objectives for the current year are to maintain and expand the strategic alliances and supply arrangements with major international vendors and business partners and to maintain and expand its client base in Greece and abroad. We are fully focused on the provision of quality solutions and services to our customers, and continue to invest in the development of new products and services that appeal to the market.


Subject to normal operating conditions in Greece and that no major disruptions will occur due to the political and economic environment, during the current year 2012 the Company aims to increase the total sales revenue from project engagements, as well as the operating profitability by increasing the total gross margin and by improving the product mix with high-value services. We will continue and intensify our efforts to manage financial risks and to maintain a prudent financial planning.


The Company will continue to invest in further developing and enhancing our solution offerings, and developing new quality services such as the Cloud Services being gradually introduced to the market by the BU Bronet. The company has being consistently spending each year significant resources for conducting technology research and development activities, that amount to 4% – 5% of our annual revenue; we plan to continue investing at such levels, seeking to secure additional sources for co-financing such activities through grants and/or loans with favorable financial terms.


The development, education and training of human resources and the ability to attract and retain competent staff remain high priority objectives. During 2012 the Company plans to develop and adopt management and development policies for our human resources, along with training and adopting a new system for documenting and evaluating individual’s performance against business objectives.


The Company`s seeks to attract capital resources from investors that will allow it to better exploit business opportunities that are presented today, and to facilitate the geographical expansion into new markets. Its strong expertise in technology areas of high demand such as Virtualization and Cloud Computing, its ability to offer new attractive products and services, makes it the “supplier of choice” for reliable IT solutions to major end-users including large corporations, banks and financial institutions, utilities, service providers, telecommunications and public sector entities.


Agios Dimitrios, June 30, 2012

Dr. Dimitrios Papantoniou


Chairman of the Board & CEO