By Daniel Hunter
Technology, media and telecoms (TMT) businesses in the South East are eyeing up expansion plans in Asia, Northern Europe and the US, according to a new report by accountancy and business advisory firm BDO LLP.
Unlike other parts of the country, TMT growth in the South East is not focused on acquisitive strategies; instead two-thirds are looking to increased export levels in the next 12 months to satisfy growth targets.
In addition, they are working in partnership with other companies in a bid to seek out new markets while reducing the risks and costs involved with international expansion.
The report was compiled following in-depth interviews with business leaders in the sector, located in the South East (excluding London).
“UK-wide, the sector is going through a period of consolidation as companies look to increase market share and bolt on specialist know-how, however the South East is taking a slightly different tack," John Everingham, partner and TMT specialist at BDO LLP in the South East, said.
“Although regional companies will consider acquisitions — both domestic and international — they see access to finance as a real stumbling block. Instead they pursue organic growth plans that focus on new product development and new market segments, particularly in Asia, Northern Europe and the US.”
According to the report, nine in ten companies are confident that the sector — and their business — will grow in the next two to three years. However investment in research & development and sales is not likely to increase employment levels across the sector, with a third expecting to potentially make cuts to central staff as they look to create efficiencies through partnerships.
Businesses also want government to do more to ease the burden of R&D and investment spend. With attractive tax incentives in other countries, they’re urging for a broadening of the Patent Box regime to include wider categories of intangible assets if it is to remain truly competitive.
“The South East is rich in creative enterprise, with huge specialisms in technology, media and telecom innovation. There are real concerns that the government is not doing enough to support the growth potential of the sector," BDO’s Everingham added.
“The Patent Box regime, amongst others, can be difficult to interpret; there are a number of complexities to consider when evaluating the relief. It is essential for companies in the TMT sector to examine their IP policy and seek professional advice to ensure the potential tax benefits are maximised.”
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