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In 2018, we mainly focused on the expansion and utilisation of development activities and the new products and services that had been launched the previous year.
One of the main focuses remains on IT security solutions. To be introduced in Q1 2O19, preparations took place in 2018 to set up a Security Operations Centre under the separate brand of VOID. This cybersecurity monitoring service combines unique technology with a team of experienced cybersecurity analysts and engineers, the result of a long-term strategy to invest in this area.
The significant acceptance of digitalisation is visible in the market today. Digitalisation is now widely accepted, and enterprises see it as a must, something they should consider as part of their business. To respond to this trend, we introduced products such as IoT, RPA, email and chat bots, as well as IT Advisory and IT Business Management, where we can provide significant know-how. In this light, our decisions turned out to be very up-to-date and relevant.
With IoT we have focused heavily on Industry 4.0, trusting that with Soitron’s many years of experience with cutting-edge technologies, we are able to help our customers remove the complexities of the IoT world and help them with what is absolutely necessary for their businesses today – data gathering and analysis. There are strong synergies within the IoT competence in Soitron Group – sensors, networks, sales and implementations are managed on local, country levels, whereas business logics and the platform are developed centrally.
It is also clear now that setting up the IT Advisory department was a smart decision. We mainly focus on compliance and advisory in specific IT areas.
We are continuously focusing on the trend of moving from staff augmentation to services, with the ability to change processes and automate them.
Even though the year was not rich for large projects, we saw a strong shift towards the services-oriented business. However, this was assumed to be the trend for the past several years. Investing and developing in competences in the area of RPA, ITSM and consulting services had an effect on all business lines of the company, both in infrastructure and process management. We made an investment into the Nettle startup – nature language processing platform.
2018 was the first year of the joint Soitron Czechoslovakia. One of the main aims and expectations of growing in enterprise sales had not been completely achieved yet. Growing in the enterprise and public markets is a long-term process, and with the current state of the market, our position is to enter these segments via new technologies. There was a significant growth in the commercial business in the Czech Republic, though. Overall, we consider the processes set up in the Czech Republic branch to be healthy and that is why we intend to continue implementing the strategy set out at the beginning of 2018.
The annual revenue decline was caused by the decrease in the total number of large projects. Also with a higher ratio of services, we must count on this trend in the future as well, specifically with the aim of focusing on recurring services. This will result in smaller revenue, but should be reflected in gross margin growth in the future.
The EBIT decline had to do with the investments in transitioning to Soitron Czechoslovakia and continued investments into new products and services, as these activities had been funded from internal resources, thus influencing external productivity of the teams.
2018 was similar to 2017 in terms of public sector funding and labour market: public sector investments remained at a low level and the demand for skilled IT specialists exceeded the market availability. The competition environment in 2018 in the Romanian IT&C market was intense.
In this fierce business climate, Datanet ended the year with revenues of about EUR 20 million and an EBIT of 4.3%, achieving 83% of its revenue and gross margin objectives.
Datanet continued to have the leading position as a Cisco partner in the Romanian market and increased the number of its customers. In 2018, the company’s outsourcing division followed a positive trend, with revenues of more than EUR 800,000. Also, in 2018, Datanet set up a new business division, Datanet Systems powered by Millennium, with solutions built on the Microsoft Dynamics 365 platform.
Despite weakened currency with resultant negative side effects across markets and consumers, Sekom achieved highly successful financial results while demonstrating growth in all core business units. As a result of ongoing investments in new technologies and human resources, Sekom started to achieve some very positive results not only in so called ‘emerging technologies’ such as cyber security, IoT and software development, but also in managed services business.
One of Sekom’s core businesses – providing video services - has been revitalized through the successful deployment of the MTN project with a centralized monitoring facility (i.e. Video Assistant Referee ‘VAR’) across selected football stadiums. Sekom was awarded two major outsourcing contracts to deliver support and maintenance services at designated customer sites across the country.
To effectively and systematically complement our solution-delivery capability set, new partnerships have been created with selected vendors in areas of ultra- broadband, data protection, storage, security and network automation.
The Soitron Bulgaria portfolio consists of both Outsourcing and System integration services, and 2018 was a very challenging year for both divisions. The main goal was to expand the range of services provided as well as their quality improvement. Despite many obstacles, we were able to deliver the MOSY project (intelligent police cars for the Ministry of the Interior), and we successfully piloted the IoT waste management project for Sofia and Plovdiv. Both projects required investments which resulted in a 15.2% year-over-year revenue increase followed by a 22% cost increase, which resulted in a net profit decrease.
The UK market as a whole has experienced turbulent times following the 2016 referendum. Two years later and with no certainty of when the UK would likely leave the EU, its economic instability continued with many big brand names closing their UK bases for fear of a potential ‘No Deal’ or otherwise catastrophic impacts from a “bad deal”. With the focus on growth in an unstable economy, the increased need for quality staffing at a lower price became much more prevalent, especially models which focused on hiring the right skillset for the job and an overall emphasis on quality as well as price saving.
At Soitron UK, the portfolio on how we can better meet our customers’ needs expanded to include transformation project and an ITSM solution named SMAX, as part of our gold partnership with Micro focus. With the opening of further centres in the Soitron group too, our ability to tap into a vast pool of IT talent increased and thus came the requirement for a larger team and office in the UK. Attending various events throughout the year showcasing the core services on offer, the Soitron brand became much more recognisable; thanks greatly to its reputable sister centres, bringing together contacts from across Europe back to their UK bases.
In 2018, 2Ring remained one of the leaders in add-on solutions for Cisco Contact Centres. Revenue from the North American market remained stable (with a very positive outlook for 2019), while revenue from the European market significantly grew – as a result of Cisco’s European customers moving from CAD to the Cisco Finesse platform. 2Ring’s short-term outlook for additional growth is promising – 2Ring has added additional products to Cisco’s pricelist and is getting ready to introduce subscription-based pricing. In the long term, 2Ring is exploring synergies with other ISVs, whose proven solutions could be brought on to the Cisco Finesse platform.
This was the first full fiscal year for Soitron spółka z o.o. after the group had decided to enter the Polish market in the middle of 2017. Due to that, we focused on increasing brand awareness while building partnerships and alliances and pursuing new opportunities. We also continued to further develop our operations from legal, marketing, accounting, HR, & sales points of view. Our sales activities were driven by lead generation, where we continued to seek synergies in the technological area (recognizing that our RPA and biometrics solutions were positively received on the competitive Polish market) and geographical area (where our rich CEE presence positions us as an all-around partner in the region). We have also started delivering to two global accounts for outsourcing business units, which contributed to our revenue stream.
Millennium has been a part of the Soitron Group since 2017. This new partnership was not only the biggest change in the history of Millennium, but it also opened the door to new opportunities, both in local and international markets.
Millennium confirmed its position in the Slovak and Czech market with a more than 57.41% gross margin in this quickly developing segment. The company’s activities were aimed mainly at the financial segment with a 62.48% turnover.
Business activities in the Czech Republic were successful as well. Millennium Services, a daughter company, maintained its turnover level and confirmed its position on the local market.
In June 2018, Millennium expanded to a market in yet another country. Together with the Romanian company Datanet Systems operating under the Soitron Group, Millennium started to offer its services and solutions to customers within this large market.
In 2018, Millennium established an important strategic partnership – the company became a partner of the global software company Bpm’online in the area of CRM and business processes.
In cooperation with the Soitron Group, Millennium started to develop its own products with the ambition of succeeding in the global market.
In 2018, the company continued to diversify its business by operating in other countries outside the Slovak Republic.
Soitron Group achieved following results in the selected indicators (in million EUR):
| Type | 2017 | 2018 |
|---|---|---|
| Equity | 36.2 | 31.3 |
| Revenue from Sales of Goods | 50.6 | 42.4 |
| Revenue from Sales of Own Products and Services | 53.2 | 61.8 |
| Total Sales Revenue | 103.8 | 104.2 |
| Operating Profit (Loss) | 5.7 | 7.8 |
| Profit before Tax | 4.7 | 7.1 |
| Number of Employees | 813 | 796 |
| ROE (Return on Equity) | 4.5% | 15.9% |
| Return on Sales | 2.5% | 7.5% |
| Gross Profit | 33.2% | 44.2% |
