South African technology firm expands business to in the UK

Mergers, Acquisitions and Financial Results

Technology supplier EOH is making progress with a new venture in the UK and with new divisions to serve specific industries, although CEO Asher Bohbot says its expansion will be steady rather than swift.

The UK operation was launched a couple of months ago and should be profitable by the end of the year, Bohbot said when EOH issued its results for the year to July yesterday. The division is initially focusing on software implementation, and will gradually offer all the business services that EOH supplies, including customer relationship management, business intelligence and e-commerce software, consultancy skills and technology outsourcing.

The UK branch was formed by recruiting local people EOH had worked with in the past, and they had created a base that would tackle the European markets too, Bohbot said. One cost benefit is that much of the software can be tested, monitored and supported from SA. "We are not banking on it to make huge bundles of money. What we are planning to do can be done everywhere in Europe, but we are not going to run at the speed of light."

The results showed revenue of R951m for the year , up 35% from R703m. Headline earnings per share of 96c were up 23% from 78,8c, allowing a dividend of 25c. Analyst Warwick Lucas of Imara SP Reid jokingly described the figures as "another boringly familiar display of excellence" and rated EOH a long-term buy.

To improve the group's ability to run its clients' technology infrastructure by outsourcing, EOH has been providing more hosted technology services. It has also invested in new divisions to focus on selling its services to the mining, financial services, telecommunications, manufacturing and public sectors.

Bohbot said those new divisions were already profitable. Its public sector division needed strengthening, however, as EOH won only a small percentage of the available contracts. A big push would be made this year to win more public sector business. "Our market share is tiny, so we see it as an opportunity," he said. The company had the skills to supply technologies that met the government's requirements, but it lacked the sales and marketing teams to do that effectively.

Another area of expansion was call centres, where it recently bought a company with 300 call centre agents. Again, that division could use local skills and cost structures to work for foreign clients, Bohbot said. The call centre niche also offered a large opportunity to create more employment, which would be good for the sector and good for EOH, he said.

Within a few weeks EOH would launch a technology training initiative. It already runs training courses for its own staff, but wanted to expand that into a profitable sideline to train technicians for other companies and for the industry in general. "We can't just keep poaching from each other," Bohbot said.

Business Day