REPORT ON ECONOMIC ACTIVITY

SOITRON GROUP

Since 2013, Soitron Group has been operating in a new organizational structure of one parent company and seven subsidiaries. This has resulted in significant business advantages in 2015 and we achieved several important milestones in several areas. Regarding our group solutions defined the previous year, we successfully implemented the mobile systems project – MOSY – for Municipal Police in Bucharest, Romania. This is a great example of shared Soitron Group know-how.

In terms of other solutions, we implemented several successful outsourcing projects. In 2015, our London office continued in its business activities and among many other projects – two were of significant importance: a project for NSC Global, dealing with installation and support of networking infrastructure, and the PL100 project for Hewlett-Packard, dealing with transition and transformation of HP customers´ infrastructure, processes and tools from their former platform to HP SRA (Standard Reference Architecture). Several member companies of Soitron Group were engaged in implementing the above outsourcing solutions which reinforced the cooperation as well as engagement in achieving group objectives and goals.

Another great achievement of 2015 was the establishment of a Turkish software house employing more than 30 developers. Through Sekom “Yazilim” 100% subsidiary of Sekom, the whole Soitron Group acquired professional know-how in the field of Big Data platform and Big Data analytics.

Our strong Telco footprint in Turkey and Romania and the know-how we have in this field has triggered a significant further investment in this area within Soitron Group. Several cloud service solutions were launched – “Voice Biometrics as a service”, to make this type of technology available to a wider group of customers. The “UC as a service” solution - under the name “cBridge”, and a service based monitoring solution. We started to rebuild professional monitoring tools and created a new open-source solution also available as a service.

Talking about future perspectives, the management of Soitron Group and its subsidiaries see a transformation in the Information Technology business sector. Following the trend of cloud solutions and automation, we are ready to respond to new trends by developing our product portfolio and gradual verticalization of our solutions as we understand that our customers focus on solutions with a great business impact in their investment decision-making process.

From the financial perspective – Soitron Groups focused on a more effective financial reporting and financial consolidation. Our optimized business and financial reporting provides continuous information about operation and progress of each SG member, which generally contributes to a more transparent functioning of the whole group. In financial terms, we profit from „consolidated cash-pooling“, i.e. we are able to consolidate free financial resources across all member countries of SG and make them available where needed. This setup contributes to the overall cost reduction and more efficient use of financial resources.

SOITRON (SLOVAKIA)

2015 was the first year of operation in the new organizational structure. At the beginning, the transition to a new concept naturally brought the need for process harmonization and coordination between individual business units. The new model supports the original intention to increase personal involvement of employees. Our activities in the public segment were positively influenced by the end of EU financial framework, as all projects had to be finished by the end of the year. The most important and the most complex project implemented for the Central Office of Labour, Social Affairs and Family enables citizens to communicate with public administration more easily and efficiently through the use of technologies (video, kiosks). New centres were created as a universal single point of contact for handling all necessary state-relating formalities and documentation.

The commercial segment continued to develop in a stagnation mode – considering the threat of future development, investments were frozen and only the most essential operations were supported.

In 2015, we also experienced a significant shift in outsourcing division. Thanks to a large GOC project undertaken for our long-term customer, Hewlett-Packard, we increased Soitron’s staff by more than 120 people. The new successful business case and the enhanced cooperation were the result of customer´s positive experience and satisfaction with the setup based on our service delivery model.

2RING (SLOVAKIA)

2015 was the year in which a long-term strategy of 2Ring as a supplier of box solutions started to bring results. 2Ring continued in its business development and fulfilment of set plans. More than half of the company revenue was generated by our North American office. Generally said, the North American market is considered very dynamic and promising for the future operation of 2Ring.

Identification of Finesse as a promising platform was a good step and due to the gradual maturation of Cisco Call Centre technology based on Finesse platform, the position of 2Ring has markedly improved. 2Ring became very popular and sought-after products due to providing a great added value in implemented solutions.

Concerning the future, we are optimistic about the growth of the market share and the worldwide growth of this segment in general. The current situation creates favourable conditions for further progress and business growth of the company. 2Ring operates especially in the American, European and Australian markets, but from a geographic point of view, we are able to serve customers worldwide.

SOITRON (CZECH REPUBLIC)

Soitron Czech republic has also decided to change their company’s organizational structure and adopted a similar model of operation as Soitron Slovakia. Three business units each focusing on a specific business line and a technology were formed.

The new concept should contribute to future growth of the company, process optimization and better interaction and cooperation with customers. The new BUs focus on core technologies and specific solutions in which we have strong know-how, rich experience and professional competency skills.

Regarding the product portfolio development, the most important step in 2015 was creation of a comprehensive “UC as a service” solution under the name “cBridge”. This concept followed the general Soitron Group strategy of “as a service” solutions. It is a cloud service providing our customers with voice, data and multimedia communication. Thanks to the design of the communication system built on a single Cloud Platform, the solution enables to reduce costs and complexity of an IT operation.

DATANET SYSTEMS (ROMANIA)

We consider 2015 to be a very successful year, as all the goals we set for ourselves were achieved. The management consolidation plan was put into practice in 2015 and started to bring results. The revenue plan was exceeded and the final number was more than 24 mil, with EBIT of 8.9 %. What is more, Datanet Systems maintained and consolidated the leading position in the Romanian market as a CISCO partner. We also implemented several activities supporting the initiative of becoming a multivendor integrator company, which led to several successful Data Centre and Virtualisation projects.

Our activities focused on improving the customer satisfaction which also resulted in several HR initiatives – personnel resources were optimized and supplemented by new professionals. Based on the recommendations coming from the personnel audit conducted in 2015, the optimization of the management team continued.

Datanet significantly strengthened its position in the public sector in 2015. In the near future we intend to implement some activities for the commercial segment development focusing on outsourcing projects and the further development of sale of MOSY solutions.

SEKOM (TURKEY)

2015 was also very successful for Sekom. Our Turkish subsidiary continued their intensive operations in the Telco segment and strengthened their position as the key integrator of selected service provider solutions.

Sekom recognizes the importance of application customization and custom software development. That was the reason for strategic decision of establishing a new subsidiary - SEKOM YAZILIM. With their field-proven Big Data experience and strong R&D focus, Sekom Yazilim has identified “DPI Services Management”, “Network Management” and “Business Intelligence” as their three core business streams in addition to the custom software development line.

A preparatory phase of the organizational changes, effective as of 1 January 2016, took place in 2015. The company management will be enlarged to include a new position of a Technical Director, who will manage all technology business units. Initially, four units were formed - Unified Communication & Networking, SP Video, DPI & Optimization and Data Centres & Cloud solutions.

In 2015 Sekom continued their intensive marketing support of individual business activities. Several specialized technical workshops and events were conducted and technological conferences of third parties were supported.

SOITRON (BULGARIA)

2015 was characterized by the company’s significant growth - from the EBIT value of 100.000 EUR in 2014 we rose to 180.000 EUR in 2015. We also grew in the number of employees – our Bulgarian staff was more than doubled. At the end of the 2015, a new organization structure of Soitron Bulgaria was formed, effective as of January 2016.

Our long-term effort to provide outsourcing services in the “service delivery” model was met with positive reactions of our customers. Thanks to our experience and professional know-how we are strongly competitive on the outsourcing market and balance current demanding conditions with reasonable prices.

From the strategic point of view, one of the highlights of 2015 was the transformation of the PMO (Project Management Office) project to the “service delivery” model. The PMO team of specialists was enlarged from 8 to 16 people and stabilized – a new micro organizational structure was formed and responsibilities of particular job positions were defined. With the main intention to share necessary know-how and to acquire the required certification, we established an internal training program for our employees.

Another important step was the launch of the HP project dealing with migration of around 250 people from Western to Eastern Europe. Compared to other outsourcing projects, the biggest difference is that the operation was based on an agency contracting model. We provided HP with 15 specialists, but there is a great potential for a future extension of our cooperation. Due to the agency contracting model we completed the process of license acquisition and inclusion to HP Approved List. That meant a great opportunity to enter the new business line of cooperation.

Regarding non-business activities, two important events happened in 2015 – we repeated a very successful gala evening for our customers, which contributed to building a tradition of such an event in Bulgaria. The second milestone refers to a prominent visit of the President of the Slovak Republic Andrej Kiska to our office, organized at the occasion of the Sofia Tech Park opening.

SOITRON (UNITED KINGDOM)

In 2015 we installed, configured and provided support for network infrastructure devices of our new customer NSC Global in 8 countries. Our cooperation will continue in 2016 even more intensively. Another significant project of 2015 - PL100 involved transition and transformation of infrastructure, processes and ITSM tools of the HP clients in AMS region from the formerly used SDA to SRA (Standard reference architecture). The implementation will take place in 2016 but the whole preparation, negotiation and contract signing were successfully completed in 2015.

We also succeeded in restarting our cooperation with AT&T and their agency Volte, which resulted in the implementation of one smaller project. In 2015, we also started our business communication with new customers, such as Eshhar Holding that opened a door for us to the Qatar market.

Finance - Soitron Group

Selected Indicators: SOITRON GROUP

Soitron Group achieved following results in the selected indicators (in million EUR):

Type 2014 2015
Equity 50.7 39.0
Revenue from Sales of Goods 58.9 59.3
Revenue from Sales of Own Products and Services 46.4 77.2
Total Sales Revenue 105.3 136.5
Operating Profit (Loss) 9.2 11.5
Profit before Tax 9.6 11.5
Average Number of Employees 601 752
ROE (Return on Equity) 15.8% 20.4%
Return on Sales 8.6% 7.7%
Gross Profit 33.16% 37.2%

Finance - Subsidiaries

Selected Indicators: SOITRON GROUP SUBSIDIARIES

Total Sales Revenue (in mil. EUR)

Number of Employees

Important Projects

UNIFIED COMMUNICATIONS

Queuing system and kiosk technology were installed on 110 locations throughout Slovakia. Besides the standard use of the system when generating the serial number, system offers pre-order possibility via web portal and subsequent identification of the ordered citizen thanks to unique bar code.

The second major part of the project comprises of video-conferencing network serving for multiple purposes. Smaller video systems were installed on 110 workplaces of UPSVAR and provide citizens and state officers with effective and reliable communication system – in case of specific requirement of citizen when state officer do not has required technical or linguistic skills, system enables to get in touch with specific professional or interpreter who will help to resolve the issue. Video solution also allow to scan documents, display it on both sides and subsequently make an online consultation when completing the forms.

In addition to abovementioned 110 offices equipped by portable videoconferencing system, another 31 locations were provided with bigger static video-conference solution. These devices were tailored to customers´ needs and are currently used for internal trainings, consultations or management meetings. Thank to our solution, employees of Central Office of Labour, Social Affairs and Family may communicate more effectively and at the same time profit from reduced travelling costs and saved time.

Project of Speech Analytics for Slovak Telekom is the first implementation of this solution in Slovakia. What is more, it is the first large and complex project provided for this client, thus we have expanded our customers’ portfolio. Thank to this solution, we have managed to get into the position of strategic partner of Verint, cooperating in the field of Call Recording systems, Quality Monitoring and Workforce Management. Until now, Verint technology have not provided this type of solution in Slovak language model. Development of this language variation was a part of this project. Regarding the business impact of this development step, sales potential of this solution has rapidly increased in Slovakia.

Technology of Speech Analytics allows all calls to be automatically classified into categories and sub-categories and evaluates the performance trend in contact centre. The analysis is based on keywords evaluation. According to behavior of agent and customer and keyword monitoring, system is able to identify positive and negative emotions. In addition, contact centre managers of Slovak Telekom obtained an effective tool for monitoring and evaluation of work of 622 contact centre agents. Before, agents’ skills were evaluated just by listening of call recordings, but it was possible to check only a small percentage of total number of calls. The new system has significantly improved the quality control of agent performance.

Recording system for 1000 call centre extensions is also part of the project. Calls are recorded into two separate channels what allows to distinguish voice of agent and voice of customer and subsequently analyze only one of them.

During the first phase of usage, TelePresence solution met only positive reactions. Positive experience resulted in an extension of the project also to another countries in EMEA region where Mondelez operates. Individual branches of the company in 7 countries (as Slovakia, Austria, Kazakhstan) were supplied by video conferencing devices creating a huge communication network primarily used for internal communication of our customer. Design of the solution consists of Cisco EX 90 and Cisco C 40 devices whereby management of the system is ensured by Cisco TelePresence Management Suite (TMS).

INFRASTRUCTURE, NETWORKING

The most important location of the project is Bratislava, where the largest Client Centre for citizens were built. It is the largest and the most comprehensive installation of proposed system in one place. The main intention is to centralize almost all state agenda for citizens „under one roof“ – in one building people can find Department of Education, Environment, Road transport, Land and Forestry, Documents Registration office, Cadastral office, Register Office and other.

The building was equipped by „Masterkiosk“responsible for controlling of the whole kiosk system consisting of 6 hardware devices. Masterkiosk run on two mutually substitutable devices. The remaining 6 kiosks in „slave“ mode serve to citizens as a point of contact and are also mutually substitutable, which represents a significant technological upgrade comparing to previously installed locations.

Due to expected increase of utilization rate of the system, there was a need to adapt the performance of the Queuing System application. In total numbers, system has to be prepared to serve several thousands of people per day, just in Bratislava location. After first days of operation, Client Centre reported a truly large „traffic“ – approximately 1400 clients request were handled (executed). In comparison with previous system, all authorities and offices, currently relocated „under one roof“, executed about 700 requests.

The project consisted of necessary reconstruction and cabling work, building up a network infrastructure, implementation of kiosk technology and development of customized queuing system application. What is more, design of Bratislava location was enlarged by new Exterior Queuing system, the only system of its kind in Slovakia. Exterior queuing system serves for drivers coming for car inspection to Driver License Bureau.

Sekom provides its customer also with implementation of the new SDN technology and virtualization of their currently used network and server infrastructure. Thanks to this project, Halkbank has formed fexible, redundant and high performance virtualized infrastructure. Proposed design of the solution ofers an easy way of migration, operation and maintenance by using Cisco ACI (Application Centric Infrastructure). Halkbank is the frst customer who is implementing SDN technology in Turkey.

New generation LAN, WAN, Wireless, IP telephony and TelePresence systems for ofce environments in mentioned Data Center based on Cisco solutions were also parts of the solution design.

  • Building up a new complex infrastructure for SPP DISTRIBÚCIA
  • Extension of WiFi network for HOTEL SHERATON (BRATISLAVA)
  • Upgrade of server infrastructure for JOHNS MANVILLE
  • New disk array for OMS
  • Continuation of Private Cloud project for MINISTRY OF CULTURE OF THE SLOVAK REPUBLIC

OTHER IMPORTANT PROJECTS

The FireEye Network Security solution automatically blocks threats at an early stage, captures them and analyzes at the virtual machine level. It runs over 50 billion analysis on virtual machines daily and subsequently, every 60 minutes, updates the equipment ecosystem regarding new types of emerging threats. The solution automatically blocks potentially malicious file delivery, and also the communications with the command and control servers in order to prevent network attacks and data theft.

Another advantage of the FireEye Network Security solution is that the product is almost completely “plug-and-play”. Thanks to this set-up, our customer profited from reduced effort connected with deployment process, ease of setup and use, and elimination the risk of traffic disruption (in case of equipment malfunction).

Soitron won this project by proposing to build and migrate Česká Lékárna to Office365, with the cloud selected mostly for economic reasons. At this time, the new system is successfully in full production - users had their data migrated, new client software (i.e. MS Outlook & Lync) deployed, users are trained to use it, last (minor) technical issues are fixed and handed over to the client’s IT team. And already, new up-sell (rolling out more functionality) and cross-sell opportunities (network and security related) are being identified by the project team and worked on.

Winning against tough competition of other partners would not have been possible without a combined effort of our international team (Czech sales and Slovak Applications business unit.)

OUTSOURCING

In total numbers, we were in charge of device installation and support at 80 locations in 8 countries – Slovakia, Czech Republic, Bulgaria, Romania, Turkey, Austria, Hungary and Slovenia. Great advantage of our company, which also had had an impact on NSC Global decision, was the fact that Soitron Group subsidiaries are well-established in the majority of aforementioned markets. In each country, we had a professional team, who were in charge of physical installation of the devices on set locations. All employees, who participated in this project, were at least CCNA certified. Our team closely communicated and cooperated with NSC Global Command Centre providing us with necessary documentation and details about the installation and configuration needs.

This projects opened the door to further cooperation with NSC Global. Our customer cooperates with delivery partners of various size in each country. We are currently negotiating the status of PREMIUM PARTNER in 8 countries, where we provide our services. We believe the discussion will lead to mutually beneficial set-up of cooperation and enable the seamless service delivery to our customer.

Contract of outsourcing cooperation based on managed service model were signed for two years. Soitron committed to optimize the price „per device“, regularly each quarter, which will be accomplished thanks to increasing labor efficiency and productivity.

350 employees of the Slovak Soitron grew by 120 new people thanks to this huge outsourcing project. Our new employees were divided into 6 teams according to field of service managed: Wintel, Unix, Backup & Storage, Software Services, Network and Monitoring.

Biggest difference between IT SMART and PL100 is the model of outsourcing cooperation. During the IT SMART project, we provided HP with group of employees (project managers, monitoring experts, reporting experts etc.) while HP was in charge of the whole management of that dedicated group of people. In PL100, our model of cooperation turned into service based model, what meant Soitron should deliver results for the agreed amount. Our people were responsible for migration of infrastructure, tools and processes of 15 HP customers from previously used SDA to SRA.

Project PL100 has a great potential for its extension in the future, because HP has already identified a number of other AMS customers suitable for migration.