TMT GROWTH FUNDING IN DANGER OF DRYING UP

TMT GROWTH FUNDING IN DANGER OF DRYING UP The number of TMT (Technology, Media & Telecoms) businesses who feel they have access to funding for their business to operate effectively has more than halved year-on-year, according to new research from accountants and business advisers BDO Stoy Hayward*. In 2009, only 38 per cent of TMT businesses said it was easy to get access to new funding compared to 73 per cent in 2008. In addition, the number who found it difficult to get access to funding more than doubled to 30 per cent (up from 14 per cent last year). Paul Anthony, Partner in charge of TMT, at BDO Stoy Hayward in Southampton said: “We are really concerned about TMT businesses ability to access the funding they need to grow their businesses effectively. We’re hearing increasing levels of frustration being expressed by TMT businesses as financiers say to them, ‘meet your growth forecasts and we’ll support you with additional finance’. These dynamic innovative businesses need the additional capital to meet their growth forecasts. All this is just creating a chicken and egg situation.” “As the economic environment remains tough over the coming months, the situation is likely to become increasingly difficult and many businesses may feel that funding has dried up completely,” he continues. Scaling back Many survey respondents have scaled back their capital raising plans – 55 per cent said this year that they are not looking to raise capital externally, up from 17 per cent last year. For those who are looking for capital, we have seen a major shift in source – in 2008, 59 per cent of TMT businesses were looking to investment banks, private equity and the capital markets for finance; this has fallen to 14 per cent this year. Instead, the number of businesses looking for straightforward bank loans has almost doubled from 9 per cent to 17 per cent. Anthony added: “There is no doubt that the environment is far tougher now than it was a year ago – many more companies are forecasting a decline in revenues in 2009. As the economic crisis subsides, and with more innovation as the key strategy for most, companies can expect a fiercely competitive market place. “However, strong growth is still forecast in the medium term. Over 60% of senior executives surveyed are confident that their companies can meet their revenue growth targets for the next three years. But whilst this medium term outlook for TMT companies is fairly robust, it will not be without casualties.” ENDS *The results form part of BDO Stoy Hayward’s annual survey into the TMT (Technology, Media & Telecoms) sector. Respondents fall across all three sub-sectors and are senior finance executives in their organisation. For more information, please contact Dee Crooks at BDO Stoy Hayward on 020 7893 2761 / 07815 172 051 or email dee.crooks@bdo.co.uk Notes to editors: BDO Stoy Hayward LLP operates across the UK with over 3,000 partners and staff. BDO Stoy Hayward LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO international is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country. The network is coordinated by BDO Global Coordination B.V., incorporated in The Netherlands, with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. In the UK the Belfast Firm is operated by a separate Partnership known as BDO Stoy Hayward - Belfast. BDO Stoy Hayward LLP and BDO Stoy Hayward - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business. BDO Stoy Hayward LLP and BDO Stoy Hayward - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business. BDO Stoy Hayward is an award winning firm. Recent achievements include: • Best Workplace UK - Financial Times 2008 • Audit Team of the Year – Accountancy Age Awards 2008 • Tax Team of the Year – Accountancy Age Awards 2008 • Corporate Finance Deal of the Year – Accountancy Age Awards 2008 • 100 Best Companies to Work For - The Sunday Times 2008 • The Women of Achievement Award – Women in the City 2008 • Business Superbrand - Business Superbrands 2008

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