EOH looks to offshore expansions after returning to profit
Technology group EOH aims to increase revenue contribution from its offshore businesses to a third, through a combination of organic growth and acquisitions, CEO Stephen van Coller said last week.
The company, which is recovering from a major corruption scandal related to government contracts under previous management, makes 10% of revenues from its businesses outside SA, while 90% is generated locally.
But EOH has set its focus on growing its operations in Egypt, with plans to use that footprint to expand into the Middle East. It is also eyeing further expansion in the UK and other European countries through its existing offerings and new suite of software services for the medical aid and insurance industries, among others.
“Now that we have finally returned to profitability, we are generating cash, we are looking at how we expand to new geographies,” Van Coller said.
He said the company was not looking at huge deals but rather at acquisitions that would strengthen existing businesses.
“We will look at plugging holes. We will start with that to increase the size of [existing] businesses,” he said.
EOH’s operating profit swung from a R1.3bn loss in their 2020 financial year to a R147m profit in the year to July 2021.
In Egypt, EOH will add new products and services including application development, cloud computing and big data, which it says are among the main drivers of future growth.
“We have quite a lot of customers and we need more products,” said Van Coller.
In the UK, it will look for “good small businesses in some of the new age things (such as) securing and data analytics. If they fit well we will like to consolidate”, he said.
Under Van Collar, the company has spent about three years cleaning up the business by selling companies, paying off debts and making the company profitable.
Total revenue was R7.9bn from R11.3bn after the closure and disposal of businesses. Its property portfolio reduced from 56 to 33 and legal entities under the group reduced to about 145 from 272.
“For the first time since I arrived, our current assets exceed our current liabilities. We are well-positioned to progress the transformed EOH in supporting our customers to solve their business challenges using our innovative technology offerings. Today EOH is streamlined, profitable and is winning new public and private sector contracts across multiple geographies,” the CEO said.
It won 441 public sector deals worth R3.1bn. EOH generates 20% of revenues from the government.
“The public sector remains an important customer, we just need to do business the right way. [There] was a small rogue unit at the group, but we sorted it and consolidated all offerings into a centre of excellence, where products (for all clients) are run by one group of people not different levels like before.”
In addition to expansion to other countries, in SA EOH aims to enter into partnerships and attract new customers in industries such as manufacturing and mining, and medium- sized financial services companies.