2006 The top 800 UK & 1250 Global companies by R&D investment

Notes on Scope, Definitions and Data SourcesNotes on Scope, Definitions and Data SourcesThe top 1250 Global R&D Scoreboard and the top 800 UK R&DScoreboard each rank companies by their R&D investment. They havebeen prepared by Company Reporting Ltd from the annual reports andaccounts of the companies featured and on the bases set out below.In the UK Scoreboard, companies not listed on the London StockExchange have been distinguished separately by the use of italics with** appended additionally to the name of any company which is asubsidiary of a foreign parent (e.g. Ford**). Where a UK company hasbeen acquired by a foreign company, it will be shown in italics but twoasterisks ** will only be added when its financial results areconsolidated in the published annual accounts of its new parent shownin the Scoreboard. Where a UK company is a subsidiary and theultimate parent is a UK company one asterisk * will be appended(e.g. Britannia Soft Drinks*).In the top 1250 Global Scoreboard, companies not listed on arecognised stock exchange have been distinguished separately by theuse of italics.Companies are assigned to the appropriate sectors of the ICB sectorclassifications as of the year-end date of their accounts. Eachcompany’s national stock exchange is consulted to obtain an industryclassification e.g. FTSE for UK companies, Dow Jones for UScompanies and Euronext for Belgian, French, Dutch and Portuguesecompanies. Unlisted companies are allocated an industry sector thatbest reflects their business as described in their annual accounts.For companies that prepare an annual report and accounts for a periodnot equal to 12 months, the figures in the Scoreboard have been“normalised” to reflect a 12 month period. In such cases, “†” has beenappended to the company name (e.g. British Energy †).For country rankings, companies are assigned to the country wherethey have chosen to incorporate the overall group. All FTSE 100companies are assigned to the UK for the purpose of the Scoreboard.Listing status of UK and European companies has been taken as at1 September 2006.Scope of the R&D Scoreboards1. The Scoreboards have been published and prepared on the basisof annual reports and consolidated accounts received by CompanyReporting Ltd up to and including 31 July 2006. Annual reportswith a year-end older than 30 months from the cut-off date or apublication date older than 24 months from cut-off date are excluded.2. UK companies which were expected to publish their accounts onor about the cut-off date have appended to their names in the indexthe period end date of the accounts included in the Scoreboard.All FTSE 100, FTSE 250 and significant global companies expectedto publish accounts in July 2006 have their latest accountsincluded; for example, the Misys 2005/06, Sony 2005/06, CasioComputer 2005/06 & Microsoft 2005/06. In some such cases,preliminary full year accounts have been used provided all theinformation needed for a complete Scoreboard entry is available.3. For the UK rankings, the accounts used are the consolidated groupaccounts of the ultimate UK parent. Companies which aresubsidiaries of other UK companies are not ranked separately,except for (i) some significant foreign owned companies that takeadvantage of the EC 7th Directive non-consolidation provision, asset out in Limitations below, (ii) companies that disclose R&D costswhere the ultimate consolidating parent does not (e.g. BritanniaSoft Drinks*), (iii) the ultimate UK parent does not produceconsolidated accounts or (iv) the ultimate UK parent has not yetpublished accounts.4. For the global rankings, the accounts used are the consolidatedgroup accounts of the ultimate parent company. Companies whichare subsidiaries of any other company are not ranked separately.These bases seek to maximise completeness while at the sametime minimising double counting.5. The R&D investment included in the Scoreboards is the cashinvestment which is funded by the companies themselves. Itexcludes R&D undertaken under contract for customers such asgovernments or other companies. It also excludes the companies’share of any associated company or joint venture R&D investment.However, joint venture companies that publish accounts anddisclose R&D are included; an example is LGPhilips. Where part orall of R&D costs have been capitalised, to calculate the cashinvestment the additions to the appropriate intangible assets areincluded in the Scoreboard as R&D investment and anyamortisation is eliminated. For some foreign-owned UK companies,R&D investment is incurred within the UK but funded by the parentor another group company. In such cases, and where such R&D isnoted in the UK company report, the scope of R&D investmentincluded in the UK Scoreboard is broadened to include the activitytaking place in the UK but funded from overseas (e.g. Ford**).248 The 2006 R&D ScoreboardThe 2006 R&D Scoreboard 249