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Letter from the CEO

In 2021 we completed our 15th year of activity and we continued the tradition of surpassing our previous results every single year. From a financial point of view, 2021 is the best year in history: consolidated revenues amounted to RON 112,6 million, i.e. a 3% increase compared to the previous year, the gross margin increased by 14% to RON 24,5 million, the operating profit was worth RON 7.3 million, 24% higher than the previous year, while the gross profit reaches RON 16,2 million, 11 times higher than in 2020.

These figures continue the positive evolution of 2020, when the operating profit had increased 5 times compared to 2019, and the net profit had increased by RON 5.5 million, thus confirming the continuous growth strategy that we have proposed since the listing: profit for the year 2021 is higher than the entire annual turnover of any of the first 10 years of Bittnet’s existence. It goes without saying that we could not have extracted RON 15 million profit even from a company with a business amounting to RON 21 million (as of 2017). Bill Gates’ famous quote that people underestimate what can be done in 10 years is more valid than ever.

The debate on financial results is not complete without addressing two additional points. The first aspect is the operational cash flow: this is the fifth consecutive year during which it is positive, with a significant value – RON 4.25 million. It completes the image shown by the solid financial position, with RON 23,4 million in cash reserves, equity exceeding for the first time the amount of RON 55 million, and debts to suppliers covered 1: 1 by receivables from customers. (RON 28 million receivables versus RON 24 million debt).

The second matter is the significant difference in the contribution of financial profit to gross profit: if in previous years financial activity generated costs, which were deducted from operating income, generating a lower gross profit than the operating profit, as the investments made in the previous years paid off in 2021 – generating financial profits that increased the profit from the current activity: RON 9.1 million as a financial profit, and a RON 7.3 million-worth operational profit.

We believe that a successful investment activity can significantly enhance both the group’s growth plan and, above all, generate a state of anti-fragility. The accounting regulations strictly stipulate how the investment results are accounted for, having the potential to sometimes generate significant fluctuations of these values “on paper”, in a very different way from how investors naturally expect this activity to be accounted for. We kindly invite you to read more in the chapter “Presentation of the Profit Account”.

We will continue to invest heavily in other companies, according to the M&A programmatic strategy, which will generate various fluctuations in financial profits in the future. Such outcomes never result from a linear process, and they are not meant to replace operational activity – as we are not an investment fund. It is instead the result of how we build every partnership, every investment, and how we position ourselves – small downside, infinite upside.

We suggest to the shareholders to analyse both the operational activity and the benefits of the investment activity (or “capital allocation”) – over the 7 years since our company has been listed on the Bucharest Stock Exchange (BVB), we have generated for investors an annualized return of over 40% of the invested amounts. There are premises for this positive track record to continue in the future, without making any estimate or promise on the actual value of the yields.

The operational business in 2021

The investment business

Future perspectives

In conclusion, I invite you to read in detail about the results of our Group in the following pages or sections, if you go through a digital version of our financial report. As always, we remain open to receiving your feedback or answering any questions on the following email address: investors@bittnet.com.

Mihai Logofătu,
Cofounder & CEO of Bittnet Group