Adapting Business and Investments to Brexit

DIY Investor Magazine is always looking to speak to interesting businesses and investors; since our last issue we met with IT and network service provider hSo and their Managing Director Chris Evans who works in hSo’s Head office in the City.

As a business that is looking to challenge the more established and well known suppliers in their industry, we wanted to see how hSo has manoeuvred itself since the Brexit vote, whilst at the same time see what action Chris has taken to adjust his own investment portfolio.

DIY – Tell us a little about hSo and what the business does

CE  ‘HighSpeed Office Ltd (hSo) is a leading and award winning network service provider specialising in bespoke cloud solutions for voice, data and IT security. Founded in 2000 we raised funds a year later, secured our first client in 2001 and became profitable in 2005.

hSo is a one stop shop technology services provider for businesses, delivering everything from internet and cloud services to telephone systems and data security. Essentially we package up existing solutions, but because we are whole of market, we obtain discounts from the wholesalers and pass these onto our customers. This approach allows us to offer truly resilient and diverse solutions to customers especially for connectivity services. We pride ourselves on our flexible and customised solution approach with the added benefit of a dedicated account manager and 24/7 UK based support.

To date we have been recognised for our growth and exemplary service with a number of achievements and industry awards, most significantly we were listed in the Sunday Times Tech Track 100 and more recently won the Business Continuity Award at the 2016 Vendor Excellence Awards’.

DIY – What trends have you seen since the Brexit vote and how, if at all, has the business adapted?

CE – We recently researched the number of government technology tenders since Brexit and found that they have declined since the referendum (Click here for more information).

There’s definitely been an impact and we’ve seen some delays to orders, however, UK businesses are always looking of ways to cut costs or increase efficiency and we’ve not seen any lull in demand from smaller UK centric businesses. The weakness in sterling has also made hardware that we source from US manufacturers more expensive, for example networking equipment, switches and routers.

However, we see this as a natural reaction similar to the aftermath of the financial crisis, but probably on a smaller scale; back in 2008 businesses held back on their spending but it wasn’t long before they started again as they needed to improve efficiency and productivity, which meant our products and services were back in demand’.

DIY – Can you give a little background into your role within hSo?

CE – ‘I joined hSo back in 2001 as the Financial Director but had a very commercial bias and soon after moved to become the Managing Director, a position I’ve held since 2003. Back then I was heavily focused on the systems and processes, but in the past few years my role has been more orientated around attracting the right talent, growing the business and increasing revenues; this has been particularly exciting just recently, since we have joined some of the big players in our industry having been admitted to the government’s RM1045 network services framework agreement.

DIY – What sort of investor you are?

CE – ‘I would classify myself as a medium risk investor, with a dose of caution, particularly given today’s environment. I am a fan of equities and tend to focus on UK and European stocks which I believe provide the potential for longer-term growth, although I am not a frequent trader, I keep a close eye on things and react to major events, which is why it’s fair to say I’ve been a little more active recently than I would normally be!

DIY – How have you positioned your investments following Brexit?

CE – It’s fair to say I am overweight in equities and have been for some time now, so I haven’t derisked too much despite what’s been going on. I am a firm believer in the adage ‘it’s about time in the market, rather than timing the market’. The action I have taken though is to shift the bias of my portfolio more towards UK exporters and away from Europe, for example Melrose Industries given its exposure to the US and Asia; so far that decision looks to have been a good one.

DIY – What are your greatest concerns about Brexit both for your investments and business?

CE – From a business perspective the uncertainty around Brexit is unhealthy and it has impacted decision making by existing and prospective customers. As our research suggests the government is reigning in its horns too with the dip in tenders, however, we also feel there is a degree of a seasonal effect with this.

Costs have also gone up a little as mentioned with the weakness in sterling. The other challenge with Brexit is what image it projects of the UK and we have concerns around being able to attract staff with the right skills as a frequent recruiter of non-UK citizens.

There’s also a great deal of uncertainty around Trump and what sort of President he will actually be. He has definitely put some clear blue water between his election campaign rhetoric and his President elect statements, so that makes us more optimistic, but there are ‘unknown unknowns’ here.

Then there’s Europe and the EU. Lots of political change which has made both businesses and investors really focus on preparation for the year ahead, which could be bumpy, but we do not foresee any lack of opportunities and have an exciting pipeline ahead of us.

DIY – Where do you see investment opportunities in the months ahead?

CE – ‘My eyes from both a business and investment perspective are focused firmly on the Brexit negotiations, but then there are other issues that are far from peripheral like Trump, French elections next year, how Italy will pan out post referendum on electoral reform.

I believe the European markets are in for a rough ride next year hence my move to reduce exposure there and I think growth and income stocks will remain attractive, so I like the look of the utility sector, especially as I think with sterling having declined there could be some M & A there.

I am not averse to looking at US stocks, but I will be doing my homework on the Obama / Trump handover before dipping my toes in there!’

DIY – What’s your biggest wish for 2017?

CE – It sounds a little clichéd but I do wish for a more stable world from a political standpoint! The main reason being is I think this would be best for the world economy. Unfortunately I think that may just be wishful thinking as it looks like we’ve seen just the beginning of a changing political landscape.

For hSo, we have big plans for 2017 and are always on the lookout for opportunities, whether that be winning new business or considering an acquisition, for example of a smaller telecoms company. Whatever happens I am certain 2017 will not be dull!’.

Website – www.hso.co.uk

Twitter – https://twitter.com/hSo