Performance Technologies S A : Comments on the Financial Statements of 06/30/2022

On a consolidated basis, the turnover amounted to 17,461 thousand euros for the 1^st half of 2022, against the amount of 19,257 thousand euros of the 1^st half of 2021, a decrease of 9.3%. Gross profit amounted to 6,185 thousand euros, compared to 4,944 thousand euros in the 1^st half of 2021, an increase of 25.1%. Earnings before taxes, financing, investment results and depreciation (EBITDA) amounted to 2,906 thousand euros, compared to 2,357 thousand euros in the 1^st half of 2021, an increase of 23.3%. Profits before taxes, financial and investment results (EBIT) amounted to 2,639 thousand euros, compared to 2,103 thousand euros in the 1^st half of 2021, an increase of 25.5%. Profits before taxes amounted to 2,504 thousand euros, compared to 1,943 thousand euros in the 1^st half of 2021, an increase of 28.9%. Profits after taxes amounted to 1,986 thousand euros, compared to 1,588 thousand euros in the 1^st half of 2021, an increase of 25.1%.

The group's net borrowing on 06/30/2022 was negative, at -7,337 thousand euros, compared to -6,900 thousand euros on 12/31/2021, with cash and cash equivalents amounting to 10,074 thousand euros on 06/30/2022. Net equity increased, reaching 18,618 thousand euros on 06/30/2022, compared to 16,242 thousand euros on 12/31/2021.

The strong increase in profitability was achieved despite the disruption and difficulties caused in international markets by the war situation in Ukraine, and problems in the supply chain - mainly of microprocessors - due to the covid-19 pandemic, which significantly delayed project deliveries. Also, despite a significant increase in expenses, as the number of employees on 06/30/2022 in the group reached 145 people, compared to the 115 people employed a year ago, as the company is gearing up to maintain the growth in business and profitability in coming years.

The results achieved reflect the gradual change in the revenue mix towards more profitable activities and the increase in the value-add, as well as the change in customer preferences regarding cloud services. In the last two years, the trend of cloud adoption by businesses and organizations, that is prevailing in the global market, is becoming more noticeable in Greece as well. The market for software with the subscription model, as well as infrastructure services with the IaaS cloud model, is experiencing significant growth, while the markets for hardware and software assets that are installed and operate within organizations ("on-premises") are gradually decreasing.

Performance is a pioneer in the creation and provision of cloud services and managed services in Greece, and we are pleased to see the positive response from customers, as revenues from these types of activities and services are growing at a strong pace. The flip side of this trend is that revenues from sales of one-off solutions, especially in terms of hardware systems, are shrinking. The significant increase in EBITDA margin and pre-tax profits, is due in part to cloud and managed services and enterprise software solutions having a much higher gross margin than traditional one-off solutions. Significant benefit from increased revenue share from cloud services, managed services, and software subscriptions also results to stronger relationships created through long-term service contracts and increased recurring revenue. There is also a virtuous circle setting in, as the increased volume of such business facilitates further investment in infrastructure to scale the cloud and managed services to server a larger number of customers, which in turn leads to economies of scale and further increase in profitability.