Notes on Scope, Definitions and Data SourcesNotes on Scope, Definitions and Data Sourcesdisclosure; in others (e.g. small <strong>companies</strong>) this is permitted <strong>by</strong> currentaccounting standards. However, the number of such <strong>companies</strong> makingvoluntary disclosure suggests that issues of definition are not regardeduniversally as insurmountable. Fortunately the level of voluntarydisclosure amongst smaller <strong>UK</strong> <strong>companies</strong> (i.e. those below the sizewhere disclosure of R&D is compulsory) is particularly high in R&Dintensive sectors such as Pharmaceuticals & biotechnology or Software& computer services.In the <strong>UK</strong> Scoreboard, some significant European owned <strong>companies</strong>do not appear. <strong>The</strong>y have taken advantage of the EC 7th Directiveprovision, which allows them to not prepare consolidated accounts iftheir results are reflected in the consolidated accounts of a parentcompany within another member country of the European Union; anexample is Volkswagen. Where there are no meaningful figures atgroup level, the accounts of the major <strong>UK</strong> operating subsidiary areused if these disclose R&D; examples of this are BMW (<strong>UK</strong>)Manufacturing** and Denso Manufacturing**.A few foreign-owned <strong>UK</strong> <strong>companies</strong> are known to have significant R&D<strong>investment</strong> but do not disclose this <strong>investment</strong> in their accounts andcan not therefore be included; example of this are Intel <strong>UK</strong> and Procter& Gamble <strong>UK</strong>. Companies occasionally change the basis on which theycalculate R&D and/or disclose it in their reports and accounts. <strong>The</strong>Scoreboard always records the published figure but, whereexplanations of major changes are available, the essence of suchexplanations is included in these notes. This year Pfizer (<strong>UK</strong>) haschanged the basis on which it has presented its R&D expenditure forthe last few years. <strong>The</strong> change involves excluding R&D carried out inthe <strong>UK</strong> but funded <strong>by</strong> Pfizer USA. <strong>The</strong> latest Pfizer (<strong>UK</strong>) accounts giveR&D expenditure as £350.5m compared to £597.8m for the previousyear and these figures are quoted in the Scoreboard. Pfizer (<strong>UK</strong>) advisethat, if the latest accounts had been prepared on the previous basis,they would have included additional US funded R&D and the total R&Dexpenditure would have been £554.7m. Since the £554.7m figure is notmentioned anywhere in the published accounts it is not possible toinclude it in the data section of the Scoreboard.<strong>The</strong> <strong>companies</strong> of some countries are less likely than others to discloseR&D <strong>investment</strong>, or to disclose it consistently. As a result, the globalScoreboard cannot set out to capture systematically all <strong>companies</strong> withR&D activity. <strong>The</strong>re is evidence to suggest that the distribution of R&Dactivity is highly skewed towards larger <strong>companies</strong>. <strong>The</strong> Scoreboardcaptures the more significant R&D investing <strong>companies</strong>, and in anycase, the minimum R&D needed for inclusion in the global Scoreboardis over £19M. <strong>The</strong> Scoreboard therefore allows reasonablecomparisons to be made. In Germany some private <strong>companies</strong> do notreadily make available copies of their accounts.A significant number of <strong>companies</strong> from South Asia and the AsiaPacific regions were analysed, however, many were found to haveR&D activity below the £19M required to be included in theScoreboard. Such <strong>companies</strong> include: Acer (Taiwan), Biocon (India),BOC (China), Braskem (Brazil), China Telecom (China), Far Eastone(Taiwan), Fisher & Paykel Healthcare (New Zealand), GreaterChinaTechnology (China), Infosys Technologies (India), ITC (India), National<strong>The</strong>rmal Power (India), Oil & Natural Gas (India), Reliance Group(India), Shanghai Baosteel (China), Singapore Telecom (Singapore),Sinovec Biotech (China), SK Corporation (South Korea), SunPharmaceutical (India), Taiwan Mobile (Taiwan), TATA Chemicals(India), TATA Consultancy Services (India), Telecom Malaysia(Malaysia), Tenaga Nasional (Malaysia) & Wipro (India). NumerousChinese <strong>companies</strong> did not respond to requests for their accounts.A number of <strong>companies</strong> identified in the Standard & Poor’s Compustat<strong>Global</strong> Vantage database as significant investors in R&D did notdisclose any R&D spend in their published annual accounts. Such<strong>companies</strong> include: Alps Electric (Japan), Doosan Infracore (SouthKorea), Halla Climate Control (South Korea), Hyosung (South Korea),JEOL (Japan), Moshida Pharmaceutical (Japan), NHN (Japan), SK(South Korea), Yulon Motor (Taiwan) & Zeria Pharmaceutical (Japan).Microsoft’s figures that are included in the Scoreboard are taken fromtheir preliminary full year accounts. As an employee figure was notdisclosed in the document an approximation was taken which wasprovided <strong>by</strong> Microsoft’s investor relations department.<strong>The</strong>re is a lack of consistency in the disclosure of sales data used forthe “Market Breadth” analysis. Many <strong>companies</strong> disclose sales <strong>by</strong>geographic origin as opposed to geographic destination – these<strong>companies</strong> have been excluded from the “Market Breadth” analysis.If it has not been possible to disaggregate a company’s sales into thethree standard regions, the company has also been excluded from the“Market Breadth” analysis.Due to industry classification moving from FTSE to ICB there is a smallnumber of <strong>companies</strong> that have moved from one industry sector toanother. Such <strong>companies</strong> include: Philips Electronics (was Electronic &electrical equipment, now Leisure goods), Sony (was Electronic &254 <strong>The</strong> <strong>2006</strong> R&D Scoreboard<strong>The</strong> <strong>2006</strong> R&D Scoreboard 255
Notes on Scope, Definitions and Data Sourceselectrical equipment, now Leisure goods) & Matsushita Electric (wasElectronic & electrical equipment, now Leisure goods).Commentaries<strong>The</strong> Department believes that the external personal commentariesprovided <strong>by</strong> City and Business representatives play a crucial role inhighlighting the key messages of this publication. <strong>The</strong> views arehowever, personal to these individuals and do not necessarily reflectthe views of the Department of Trade & Industry or Her Majesty’sGovernment.Distribution<strong>The</strong> information in the Scoreboard, and an extract from the data set,is available at: http://www.innovation.gov.uk/rd_scoreboard.An electronic version in Microsoft Excel format can be downloadedfrom the DTI web site or, alternatively, from the Company Reportingweb site at: www.companyreporting.com. Enquiries about the datacan be directed to: research@comrep.co.uk. Printed copies of theScoreboard are available free of charge via e-mail from:publications@dti.gsi.gov.uk or <strong>by</strong> calling the DTI Publications Orderlineon 0845 015 0010 or fax 0845 015 0020256 <strong>The</strong> <strong>2006</strong> R&D Scoreboard
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