— “Good guys” of IT security happy to stay in Cyprus —
Have you seen that note at the bottom of emails we often ignore that says “this message has been checked by AVG”? Well, believe it or not, the $100 mln in sales that the company generates is booked through Cyprus, propelling the island into a leading player on the worldwide map of software security and anti-virus companies.
Did you even know that AVG Technologies, among the Big Five security firms, was a Cyprus-based company that also contributes more than 1 mln euros to the VAT coffers?
And considering that the Cyprus operations only employ five people, one could even say that AVG is the biggest contributor to VAT per employee, at 200,000 euros a head.
If this is not “the best kept secret in Cyprus”, then what is?
This is a company that has been based here ever since a group of investors took it over in 2004 and moved their marketing, sales and tax base to Cyprus, according to Dennis Smith (photo), a shareholder and director, who was here for a fifth anniversary event in Nicosia.
There were many reasons for this move, Smith explained, and as much as it may sound as a cliché, AVG’s principals chose Cyprus because it was a new member of the European Union, it has a favourable tax regime with a multitude of double taxation avoidance agreements, a sophisticated services sector, a great talent pool of highly educated local staff and a corporate culture based on English Law.
AVG Technologies is also keen to invest in the future generations and is engaged in several community programmes, such as a free multi-license anti-virus and security programme deal with the University of Nicosia, while its corporate social responsibility is reflected through its support of the Europa Donna charity for breast cancer awareness.
E-COMMERCE
“Our success is based on our early entry into the e-commerce business and the free distribution of our functional home-use product, that gave us tremendous brand recognition,” said Smith.
From 1991 when it was initially established, it has grown into a multi-national technology and security company employing 480 to 500 people, primarily in Holland, the Czech Republic, the UK and the U.S.
The Czech subsidiary is a product development company, the U.K. is for sales in Britain and Ireland, Cyprus is for e-commerce and administration of sales, and the U.S. company is for sales in North America and some development.
AVG built up a solid reputation as the earliest free security programme on offer, with 24/7 updates.
“LinkScanner offers a real-time scan that helps us protect the customer, whereas our competitors don’t. We are in the business of trapping a virus, writing a fix and distributing it very fast, as all security threats are recorded in the AVG database and redistributed immediately,” Smith explained, adding that the company is picking up a lot of market share, with 60% of new sales coming from dissatisfied users who are abandoning other brands.
TRUSTED PRODUCTS
“We have trusted products and a trusted brand. We have invested in a strong network and enjoy high download speeds. We are the good guys,” added Smith.
The free download of AVG’s security programmes and online scans has ranked the company’s website as the 250th most popular in the world, based on traffic.
This has helped AVG significantly outperform its peers, enjoying an annual profit growth of 10% in recent years, recording 5-6% this year alone, despite the global financial crisis and the need for cost cutting in all companies.
WEB IS VULNERABLE
“No business can get onto the Internet without security as the Web is still vulnerable,” Smith said, acknowledging the stark reality that some corporates are renewing their annual contracts for fewer licenses.
“That is why we are offering a unique business model with one-year licenses or two years with protection from inflation.”
On the financial side, Smith said that AVG Technologies is a debt-free company that recently bought three other companies in the US, with a high rate of cash generation.
Does it need more shareholders?
“No, our financials are extremely robust and our sales position is in double digits,” he concluded.
Asked about the investment mood in the market, and whether the trend was for liquidations and to downsize companies, Dennis Smith said simply, “I’m a people person, the first thing you look at and work on are the people.”
The Canadian who recently returned to Europe after an 11-year stint in New Zealand, said that there are risks and opportunities, “and if you find the right opportunity with a company going for 20-40c on the dollar, that is a good investment but only if you can turn it around and restart the business.”
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AVG Technologies celebrated its fifth anniversary in Cyprus with a party at the Stoa in Old Nicosia, attended by Finance Minister Charilaos Stavrakis who said he appreciated the company’s tax contributions to the state. Also present were Trade Minister Antonis Paschalides, former ministers Michalis Sarris and Nicos Koshis, MPs and associates. Dennis Smith and AVG’s CEO J.R. Smith presented a cheque to Europa Donna and announced the donation of 5,000 security licenses for the students and staff at the University of Nicosia.
