Tech Barometer: AIM. Enterprise values accelerate to record levels following exceptional second half of year. January

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1 Tech Barometer: AIM Enterprise values accelerate to record levels following exceptional second half of year January PRECISE. PROVEN. PERFORMANCE.

2 Tech Barometer: AIM Enterprise values accelerate to record levels following exceptional second half of year Introduction The average enterprise value of a technology company on the Alternative Investment Market (AIM) at 31 December 2016 was 73.3m a 26.4% increase from 30 June This is the highest level seen since our review started in The increase in value in the last six months has been driven by all sub-sectors with hardware companies increasing by 36%, support services 30% and software by 26%. This research indicates that the market is anticipating the weaker pound to open up increased earning opportunities for these companies rather than solely benefiting from converting international earnings. The increase in value of AIM tech companies may also be a key factor in delivering more tech IPOs in 2017 compared with the relative few that have happened over the last couple of years. Key findings Over 175m was raised in the six month period to 31 December 27.6m from four IPOs and 150m relating to secondary fundraisings. This compares with 115m in the first half of the year and reflects further positive sentiment in the technology sector on AIM. x1.68 x m First half of m Second half of 2016 An increase in overall revenue valuation multiples to 1.99 compared with 1.68 at 30 June Software companies EV/EBITDA multiples have decreased from 12.9 to 11.9 whilst hardware companies multiples have rebounded to 9.9 following the decline in the first half of 2016 to The number of technology companies on AIM has decreased from 173 to 169 following a number of acquisitions

3 Technology companies on AIM July to December 2016 IPOs 4 Secondary fundraisings m Raised in six months ended 31 December m 25m 27.6m Raised in six months ended 31 December m 14m

4 Technology companies on AIM July to December 2016 Enterprise values (EV) 73.3m* EV/revenue multiples 1.86* 26.4% 1.99x Increase in six months ended 31 December % Software Software Hardware 1.85x 36% Hardware 30% Support services *Average Telecoms Support services 1.90x 1.67x *Median

5 Technology companies on AIM July to December 2016 EV/EBITDA multiples 6.0% 10.9* Decrease in six months ended 31 December Software Hardware 9.1 Electronics 6.7 Support Services 11.1 Telecoms * Median based on latest available financials to 1 July 2016 to 31 December 2016 and companies with positive EBITDA. AIM tech companies 93 Software 13 Hardware 11 Telecoms 18 Electronics 22 Support services 12 Other

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