News
May 2002
Brown’s Budget announces breaks for business
On 17th April Chancellor Gordon Brown unveiled his Budget for the year ahead, his sixth since taking office in 1997. Its key focus was on raising funds to pay for improvements in the UK’s National Health Service, and to this end he announced an increase in National Insurance, an income-related tax levied on both employers and employees. Contributions will rise by 1 per cent from April 2003 on all earnings above £4,613 ($6,458). To compensate, however, he announced a cut in corporation tax for small companies and a series of tax breaks for larger ones, worth in total an estimated $700 million-$840 million a year. He released some of his plans for business ahead of the main Budget, to resolve uncertainty for companies before the start of the new tax year.
For large companies, Mr Brown introduced a new tax credit of 25 per cent for firms undertaking research and development, in addition to the current 100 per cent deduction on R&D expenditure. This is equivalent to a cash rebate of 7.5 per cent on all R&D spending. The credit is an extension of the R&D tax credits for small companies introduced in April 2000. Companies are not required to hold any intellectual property rights attaching to the R&D, a fact which the government believes will encourage overseas companies to sub-contract R&D work to group companies in the UK. There will be additional relief of 50 per cent on expenditure on pharmaceutical research into vaccines for TB, malaria, HIV and AIDS. The volume-based tax credit is estimated to be worth some $560 million per year to business.
Capital gains tax (CGT) will be cut to 20 per cent for business assets held for one year and to 10 per cent for assets held for more than two years. Companies will be exempt from CGT on sales of substantial shareholdings, saving an estimated $210 million a year. The tax exemption on the sale of UK subsidiaries can also apply to joint ventures where at least 10 per cent of the share capital is held by a UK trading company in a joint venture company.
Employees who own shares in their companies will be able to take advantage of the reform because the equities are treated as business assets. Senior company executives with large numbers of share options are expected to be the biggest beneficiaries. "From this year, three quarters of taxpayers with business assets will pay only a 10 per cent tax rate, rewarding entrepreneurship and giving Britain overall a capital gains tax regime more favourable to enterprise than that of the US," said Mr Brown.
There will also be tax relief on the cost of intangible assets, or intellectual property, worth $280 million in the first year and rising to $490 million a year in the longer term. For inward investors, Mr Brown eased the regime on cross-border royalties. Under certain conditions, UK companies can now pay royalty payments gross of withholding tax, without obtaining advanced clearance from the Inland Revenue.
Foreign multinationals, however, face an increase in tax. Mr Brown plans to alter the way they are taxed in the UK if they operate through a branch, rather than a subsidiary, bringing the UK regime into line with international practice. Foreign banks are likely to feel the greatest impact, though insurance companies could also be affected. The changes could net the government an extra $490 million a year.
For small companies, the Chancellor cut the rate of corporation tax from 20 per cent to 19 per cent, with immediate effect. Companies with taxable profits of less than £10,000 [$14,000] will be exempt. The change will benefit up to 485,000 smaller companies, saving them an average $980 per year apiece.
Mr Brown also eased the Value Added Tax (VAT) regime for smaller firms. For the 500,000 companies with a turnover of less than $140,000 a year, there will be a new optional flat rate calculation of VAT payments, dispensing with the need to calculate exact figures every year. This will be extended to businesses with turnovers up to $210,000 next April. The VAT threshold has been raised to £55,000 ($77,000), which means an extra 4,000 companies avoid the tax altogether. Grants will be introduced to encourage the electronic filing of tax returns, and automatic fines for late payment of VAT will be abolished.
At the same time, Mr Brown moved to close a number of tax loopholes. The financial services industry is normally exempt from VAT, but new rules will restrict exemption on business conducted outside the EU. Retailers will now have to pay VAT on gift vouchers, which were previously exempt. Loopholes in stamp duty (a transaction tax related to the value of property) on large commercial properties were plugged, with the aim of preventing tax avoidance on high-value property deals. Mr Brown also announced a wide-ranging review of the 400-year-old tax, the first since 1891.
The Chancellor also proposed to review the residence and domicile rules for wealthy foreigners living in the UK. Around 60,000 currently benefit from non-domicile status to avoid paying tax on income and investments, and the government calculates that it loses an annual $7 billion in tax as a result.
UK companies that pay bribes to foreign officials to secure overseas contracts will no longer be able to claim tax relief. The reform will bring the UK into line with international convention.
In an effort to encourage regeneration in run-down areas of inner cities, Mr Brown has abolished stamp duty for those acquiring commercial property in areas of high unemployment. A new community investment tax credit, to be supported by a Community Development Venture Capital Fund, will provide $56 million to invest in deprived areas.
There will be new measures aimed at raising the skills base of the UK’s workforce and boosting productivity, with responsibility shared between employers, individuals and government. An extra $42 million will be put into helping small businesses achieve Investors in People status.
From September, pilot schemes offering free basic skills courses for employees from participating companies will be launched by Learning and Skills Councils in a number of areas around the country. Companies will be asked to give their workers time off to train, but will receive financial support in return - on a sliding scale of 75 per cent to 150 per cent of wage costs. In the pilot projects incentives will be paid in the form of a grant; if the scheme goes national, it is expected to be in the form of a tax credit worth $1.4 billion a year.
Fuel duty will be frozen at the current level, for the second year in succession, representing a price cut of 1p per litre in real terms when inflation is taken into account. Duty on certain environmentally friendly alternative fuels, such as bio-diesel and hydrogen, was cut. Vehicle excise duty (VED) was frozen for standard vehicles and reduced for some ‘greener’ vehicles. Company car drivers will be taxed on emissions, rather than on value and mileage.
VED was also frozen for commercial vehicles. The government has plans to introduce a distance-based road-user charge for lorries by 2005 or 2006 to ensure that overseas hauliers pay their fair share towards using UK roads, but will offset this with tax breaks for UK operators. The scheme is widely considered to be a precursor of congestion charging for cars. Airport tax was frozen.
Growth focus switches from spending to productivity
The UK recorded economic growth of 2.2 per cent in 2001. This was the fastest rate of growth of any of the G7 leading industrialised countries and was achieved in the face of the global economic downturn. However, it was led mainly by consumer spending, buoyed by high earnings growth and low interest rates. This kind of growth is considered unsustainable, especially as company profitability - and hence wage increases - has fallen in recent months and household debt has reached record levels. Instead the Chancellor wants to shift the emphasis to higher productivity, aiming to increase the long-term annual growth rate in output per worker beyond the current 2 per cent.
Overall, Mr Brown forecast that the economy would grow by 2-2.5 per cent in 2002, rising to 3-3.5 per cent in 2003. Household consumption is predicted to grow by 3-3.5 per cent this year and by 2.25-2.75 per cent in 2003. The Treasury has increased its estimate of the long-term trend rate of growth from 2.5 per cent to 2.75 per cent, although manufacturing output is expected to decline by 2.5-3 per cent from 2001. Underlying inflation, which averaged 2 per cent in the final quarter of 2001, is expected to grow to an average of 2.25 per cent by the final quarter of this year and to 2.5 per cent by the end of next year. The government’s annual inflation target is 2.5 per cent.
Despite the changes announced in the Budget, the UK government still takes less overall in taxes than any large economy in Europe. According to the Organisation for Economic Co-operation and Development, government revenues in 2001 were 39.5 per cent of GDP, compared with 43.2 per cent in Germany and 49.3 per cent in France. Mr Brown’s proposals will increase the overall proportion by 0.8 per cent by 2005-06 but will still leave a gap of more than 3 per cent between the UK and the EU average of 44 per cent.
Budget reaction: for most, it’s good news
The new measures were designed to enhance the UK’s overall attractiveness as a business environment, and on the whole they met with a positive response. Business and science groups welcomed the tax credit on R&D, which was set at a higher level than had been predicted. "This is good news for innovation and £400 million [$560 million] is an excellent start," said Rob Margetts, who headed a Royal Academy of Engineering working group on tax credits. "We have been impressed by the government’s willingness to listen to industry at every stage of the consultation process."
Drug companies are responsible for almost 40 per cent of all industrial R&D in the UK and they will be the biggest beneficiaries of the scheme. The Association of the British Pharmaceutical Industry gave it an enthusiastic welcome. "This is good news for patients and the future of healthcare in this country," said Trevor Jones, ABPI director.
Regional Development Agencies welcomed most of the measures in the Budget, particularly the tax credit on R&D, which they feel will help encourage innovation, and the extra help for small businesses. "This budget will help our own efforts to boost enterprise and innovation," said Yorkshire Forward, while the South West RDA commented: "It is a budget for low inflation and steady growth and confirms that the economy is in a healthy state."
The Confederation of British Industry, the employers’ organisation, said that the changes in capitals gains tax would help company restructuring and move the UK nearer to the competitive regime of other EU countries. However, it voiced "strong reservations" about the scheme to allow employees time off work for training.
The Freight Transport Association welcomed the freeze on fuel duty and VED, as well as the proposed charges for foreign lorries using British roads. "Today’s Budget is good news for the freight transport industry," said FTA chief executive Richard Turner.
Tax experts warned that the cut in capital gains tax for employees with share options could lead to tax avoidance. The new tax rate of 10 per cent on assets held for more than two years looks attractive compared with the top rate of income tax, which is 40 per cent. "I am already seeing individuals arranging their affairs to convert remuneration into gains taxed at 10 per cent," said Edward Troup, head of tax strategy at accountants Simmons and Simmons.
Enterprise Bill aims to foster competitive environment
At the same time as the pre-Budget announcement of his main proposals for business, Mr Brown unveiled his long-awaited Enterprise Bill, containing a series of measures aimed at boosting productivity by encouraging enterprise and competition. The Chancellor hopes the bill will foster the kind of entrepreneurial culture seen in the US. It is split into two parts, dealing with competition and insolvency. Its main measures involve removing the stigma of bankruptcy through reform of the insolvency law and toughening up the powers of independent regulators such as the Office of Fair Trading and the Competition Commission.
The new rules on insolvency will help companies survive bankruptcy by encouraging creditors to keep them going, with a decisive shift away from receivership towards administration. This will allow struggling companies to be held together for longer while a rescue package is devised. The administration procedure will be made less cumbersome, with company directors and banks permitted to appoint administrators without the need for a court hearing.
The current system of Crown Preference, which puts the Inland Revenue at the head of the queue when money from insolvent companies is shared out, will be abolished. Instead, it will now be distributed amongst unsecured creditors. Interest on money held in government accounts during insolvency will also be increased. The government hopes these measures will save $154 million a year for creditors. Entrepreneurs who go bankrupt will be given a second chance: provided they have not acted recklessly or dishonestly, bankrupts will now be discharged from restrictions after one year instead of three.
The other half of the bill clamps down on uncompetitive behaviour. The government will crack down on cartels, making them a criminal offence punishable with fines or jail sentences for guilty directors. Competition lawyers estimate that there will soon be at least half a dozen prosecutions annually, resulting in prison sentences of six to 12 months. The Competition Commission will get new powers, and ministers will no longer be able to overrule its merger decisions, except in the defence and media sectors. In addition, there will be a new mechanism for consumer groups to make formal requests for the Office of Fair Trading to conduct investigations into companies or markets.
UK retains top spot amidst investment downturn
The UK remained Europe’s top location for inward investment projects last year, with 19 per cent of the total, and London was the best-performing region for the second year running, according to Ernst & Young’s annual European Investment Monitor review. However, inward investment fell sharply across much of the continent in the wake of the economic slowdown in the US, and the UK was one of the biggest losers. Its total of new projects fell by 34 per cent, nearly three times the average 12 per cent decline across Europe as a whole.
Pro-euro campaigners claimed the figures were evidence of the economic cost of exclusion from the single currency. Mark Hughes, the report’s author, however, said that there was no consistent pattern and that in most European countries the main cause for the fall-off was a 26 per cent drop in investment from the US. American companies had invested particularly heavily in UK high-technology sectors such as telecommunications and software, which have contracted in the current global economic downturn.
Other countries seeing big falls in the number of new investment projects were Switzerland (47 per cent), the Irish Republic (46 per cent), the Netherlands (37 per cent) and France (25 per cent). France retained the second highest share in Europe, though it shrank from 16 per cent to 13 per cent. Of the 12 euro-zone countries, Portugal and Finland did relatively well while Holland, Ireland and Belgium fared badly. Sweden, which is not a member of the single currency, increased its share.
The top-performing sectors in 2001 were transport, which recorded a 21 per cent rise in the number of new projects, pharmaceuticals (18 per cent) and automotive, including components (9 per cent). Manufacturing investment continued to grow in central and eastern Europe, particularly in countries close to European Union accession, such as Hungary, the Czech Republic and Estonia. Investment also increased in Turkey, Romania, Russia, Bulgaria and Ukraine, where investment climates have become much more stable in recent years.
UK small businesses are best in Europe
The UK’s small firms have came out top in a survey comparing the key business aspects of small companies in nine European countries. The Reacte report, published by Small Business Minister Nigel Griffiths, is the first European benchmark for the sector. Researchers gathered data from 1,390 firms in the UK, Austria, Germany, Spain, Ireland, Greece, Italy and Portugal, sampling firms from both the manufacturing and service sectors. The UK scored the highest marks in 20 of the 70 categories included in the survey.
Among the report’s findings was the fact that the UK has the highest pre-tax profit margin, relating to turnover, of all the nine countries; Portugal and Spain have the lowest. British manufacturers are the least likely to go out of business, as they have enough liquid assets to cover their liabilities were creditors to call in their debts - although the UK service sector came last in this category. German employees take the highest number of sick days and German companies have the highest number of customer complaints, while those in the UK have the least. However, German and Greek firms are most likely to plough their turnover back into the company, while British firms are least likely to do so. Spanish manufacturers are the worst at delivering goods on time, but Italian companies are the least likely to send out defective goods.
Nigel Griffiths said: "The benchmark scheme provides invaluable help to small companies by giving a no-holds-barred analysis of their strengths and weaknesses and comparing them to similar businesses in the same sector [across Europe]. This allows them to boost their productivity and helps to develop their economic growth."
MG Rover forges partnership with China Brilliance
MG Rover, the UK car manufacturer which two years ago split from the German BMW group under the leadership of a group of British businessmen, has sealed its long-term future by agreeing a 50-50 strategic alliance with the China Brilliance Industrial Group. The agreement, which has taken more than six months to negotiate, is "a wide-ranging global alliance with a minimum operating horizon of ten years," according to the company’s chief executive Kevin Howe. The two car-makers will pool virtually every aspect of their business, including the joint development of cars and powertrains, sourcing of components and sales revenue from the various markets worldwide in which they operate.
MG Rover is making a loss at present but has invested some $182 million in product development over the past two years. The new agreement will help to meet the $490 million cost of developing a new mid-range model, which will replace the Rover 45/MG ZS range from 2004. China Brilliance is investing around $300 million in the partnership, which will be capable of producing around 330,000 vehicles a year - small by automotive industry standards but offering substantial potential for economies of scale.
The Chinese company sold around 150,000 vehicles last year but expects this figure to grow when it launches several new models in July, including its first saloon car. China Brilliance has also been negotiating production agreements with BMW and Renault, although these are on a smaller scale than the alliance with MG Rover.
Anglo-French action agreed on Chunnel disruption
British and French delegations met in Paris on 25th March to discuss the recent disruption to rail freight through the Channel Tunnel, caused by illegal immigrants attempting to board trains on the French side of the Channel at Calais. Both sides underlined the importance of international rail freight and multimodal transport to their economies and agreed on the need to resume normal services as quickly as possible. The French authorities have introduced new security measures at the Calais-Frethun freight depot, including the deployment of more police and security personnel. Transport minister John Spellar thanked his French counterpart Jean-Claude Gayssot, but stressed his concern at the time taken to implement the measures.
The total number of vehicles travelling to mainland Europe in 2001 was just under 4,000,000, some 3 per cent higher than in 2000, according to statistics from the Department for Transport, Local Government and the Regions. Of this total, 1,712,100 were powered vehicles, a 7 per cent increase on the previous year, while the number of unaccompanied trailers fell by 4 per cent. UK-registered vehicles accounted for 30 per cent of powered vehicles, compared with 34 per cent a year earlier. In the fourth quarter of the year, this proportion dropped to 29 per cent.
On a happier note, Mr Spellar has welcomed the launch of the development phase of the Galileo project by the European Transport Council and the release of $450 million for its funding. Galileo is a pan-European satellite navigation system designed to manage traffic and to help develop intelligent transport systems across all modes of transport. It will help control congestion and pollution and lead to improvements in safety. The Council has decided that Galileo will be a civil programme that is independent but interoperable with the US civil GPS service. This will allow users to exploit the combined services of both systems, and will ensure continued access should one of the systems become unavailable.
Medical expertise tempts foreign buyers
The UK has a thriving medical and biotechnology sector and its cutting-edge reputation has led to a new wave of acquisitions by overseas investors. Abbot Laboratories of Abbot Park, Illinois, for example, has announced a $234 million deal under which it will acquire the cardiovascular stent business of Biocompatibles International, based in Farnham, Surrey in South East England. Stents are devices used in heart surgery to prop open clogged arteries. Abbott will acquire access to Biocompatible’s innovative polymer chemistry research and development organisation, which will augment its own drug-coated stent programme. It also gains the UK company’s commercial and marketing infrastructure in Europe.
Another Illinois-based company, AbilityOne, the portfolio company of One Equity Partners, has bought the rehabilitation business of London-based Smith and Nephew for $101 million. The American company is a leading distributor of rehabilitative and mobility devices for the aged, injured and physically challenged. Smith and Nephew specialise in tissue repair products, primarily for bones, joints, skin and other soft tissue. Dublin-based United Drug, meanwhile, has acquired medical device company New Splint, based in Hook, Hampshire in South East England, for around $11 million. New Splint sells orthopaedic implants and related instruments throughout the UK, and has a number of exclusive distribution agreements with leading international manufacturers.
In the research field, Galileo Laboratories of Santa Clara, California has acquired Phytera, based in Sheffield, Yorkshire and Humber, for an undisclosed sum. Galileo targets biochemical dysfunctions in cellular energy metabolism - known as redox failure - including stroke, heart attack, inflammation and diabetes, and has a number of redox-targeted therapeutics in clinical trials. Phytera specialises in plant cell culture and has industrialised the growth and manipulation of numerous species in the laboratory.
Commercial rents continue to show gentle decline
Prime rents for commercial property fell at an annual rate of 1.7 per cent in the final quarter of 2001, the first such fall since 1994, according to Healey & Baker’s quarterly market report. Industrial rents remained unchanged and retail rents recorded a slight gain, but office rents dropped by 5.7 per cent, driven by falls in London and the south. The decline was in line with the slowing world economy, said the consultancy, but it predicted an upturn in corporate activity in the latter part of 2002 and forecast an overall growth in rentals of 0.5-1.5 per cent for the year.
DTZ Research paints a similar picture in its European Commercial Property Markets Overview for 2002, pointing out that demand for commercial space has eased in major cities across Europe, particularly from companies in the ICT sector. In the UK, it found that the volume of speculative office developments planned for Central London had fallen by 15 per cent since February 2001. There was just under 1.7 million sq ft of office space under construction in the capital at the end of November, less than a third of it speculative. The City accounted for 47 per cent of the total, while just 12 per cent was in the West End. Prime rents in the West End fell to just over $100 per sq ft per annum as of December, although in the City they rose slightly to $87.50 per sq ft. Outside London, prime rents in the main regional markets stabilised over the year and availability rose by 1 per cent.
In the industrial sector, DTZ found an average rent rise across the country of 2.7 per cent to the end of October 2001, although there were marked regional variations. Growth was strongest in the North East, while in London rents were static and in the South East they fell by 1.2 per cent. Prime warehouse rents at London’s Heathrow Airport remained unchanged at $16.10 per sq ft, while in Glasgow and Birmingham they held steady at $7.70 per sq ft.
In a separate report looking at the office market in the M25 region (the area bounded by London’s orbital motorway), DTZ found a more dramatic fall-off in rentals. Total office availability at the end of 2001 amounted to 6.4 million sq ft, an increase of 31 per cent since June of that year. The amount of speculative office space under construction fell by 50 per cent over the same period, to 586,000 sq ft. Take-up fell by 45 per cent in the second half of the year compared with the first and, on an annualised basis, was 40 per cent lower than in 2000 - although still in line with 1999 levels. On average, prime office rents declined slightly over the second half of the year, although in certain hotspots they shot up by 14-16 per cent. Demand from businesses in the telecoms, media and technology sector still accounted for 33 per cent of total take-up, despite the sector’s much-publicised troubles.
Northern Ireland welcomes investment boost
US-owned B/E Aerospace Inc, based in Wellington, Florida, is to transfer its entire civilian aircraft seat manufacturing operations to Northern Ireland as part of a worldwide restructuring exercise. The company, the world’s leading manufacturer of civilian aircraft interior products, is to invest £24 million in its plant at Kilkeel, safeguarding the jobs of the 300-strong workforce and creating 64 new jobs over the next three years.
Sir Reg Empey, the province’s minister for Enterprise, Trade and Investment, called the decision "a massive endorsement of Northern Ireland as an international industrial location by one of the most respected groups in the aerospace business". Michael Baughan, B/E Aerospace’s group vice president and general manager, said: "We’ve been impressed by the pride which employees here at Kilkeel have in their work, their attention to detail, their adaptability and the overall flexibility which is a feature of this plant’s performance. This investment will enable Kilkeel to play a pivotal role in helping the group to grow its business within the global airline industry."
Another major investment in Northern Ireland has been announced by Ryobi Aluminium Casting (UK), a subsidiary of Ryobi of Japan, which is to spend $10 million to expand its die-casting and machining capacity at its plant in Carrickfergus. The company has trebled its sales of automotive components since beginning operations in the province. It initially supplied components to Ford; its customer base has subsequently expanded to include Jaguar, Isuzu, Saab, General Motors and Visteon.
In the IT sector, Avalanche Technology of Denver, Colorado, an information services and enterprise application outsourcing company, is to create 40 new jobs in an expansion of its Belfast facility. Also in Belfast, Irish Bonding Company, a subsidiary of Diageo plc, is to invest $12.6 million over the next three years to create a packaging ‘centre of excellence’. The company bottles beer for Guinness and packages other ready-to-drink products.
South West looks to high-tech future
German semiconductor manufacturer X-FAB, headquartered in Erfurt, has bought Zarlink Semiconductor’s factory in Plymouth, South West England, for $28 million. The deal includes a licensing agreement that allows X-FAB to use the site’s technology at its other facilities worldwide. The takeover was eased by a $2.7 million government Regional Selective Assistance grant, designed to safeguard the jobs of the plant’s 180 employees. Canadian-owned Zarlink will continue to base part of its design and test capability in Plymouth, employing 150 people.
The factory, based in Roborough on the northern edge of the city, was originally opened by Plessey in 1986. Zarlink manufactured silicon chips there for the medical and communications markets, but X-FAB’s specialisations in the telecommunications and automotive industries mean that new production lines and new markets are likely. X-FAB estimates that there is potential to treble the site’s production of 8in wafers.
Also in Plymouth, development is proceeding at the 82-acre Plymouth International Business Park, which is aiming to attract high-tech and innovative companies to the area. Commercial property developer Rokeagle has applied for planning permission for two 25,000 sq ft office buildings, while the South West Regional Development Agency is to build a new road to the site by July, at a cost of $2.1 million.
Further west, off the A30 near Camborne in Cornwall, the $5.6 million Tolvaddon Energy Park has officially opened for business [see picture]. Tolvaddon, built on a brownfield site in a former mining and industrial area, is the county’s most environmentally advanced business park. Its 19 business units have been designed to minimise energy use; features include above-standard insulation, a rainwater recovery system and geothermal heating. Ranging in size from 750 sq ft to 5,000 sq ft, the units are aimed primarily at the high-tech and environmental technology sectors. Half are already under offer to prospective tenants.
Tolvaddon Energy Park
Funding for the project came from the South West RDA and the Objective One European funding programme, which are to invest a similar sum in a new facility at the Eden Project near St Austell, also in Cornwall. A new building will be designed to house the Eden Foundation, which will cater for researchers, postgraduates and visiting experts from around the world. The Eden Project, which features huge ‘biomes’ housing tropical and temperate micro-climates, is seen as much more than a tourist attraction and to date the RDA has invested more than $8.4 million. The project is building links with local colleges and businesses and has attracted intellectual capital to the region in the fields of science, education and research.
Around the regions
AVL of Graz, Austria, which designs and builds low-emission engines, is to invest $2.3 million in a new test facility at its UK base in Peterborough, Eastern England, after winning a major contract to develop an engine for combined domestic heat and power generation. The 12,000 sq ft centre will create 10 new jobs in engine design and development.
Normanby Enterprise Park, in Scunthorpe, Yorkshire and Humber, has been officially declared open for business. The 46-acre development, on the site of a former steelworks, is situated close to the Humber ports on the east coast of England and has good links to the UK motorway network. It is hoped that the project will eventually create up to 800 new jobs.
Energy group RWE AG of Germany is to acquire electricity retailer Innogy Holdings, the UK’s leading integrated energy company, for around $5 billion. Innogy, based in Swindon, South West England, has approximately 4.7 million electricity customers and 1.9 million gas customers. Its brand names include Npower, Yorkshire Power and Northern Electric.
International Rectifier Corporation of El Segundo, California has bought the assets of European Semiconductor Manufacturing and its submicron semiconductor manufacturing facility in Newport, South Wales, in a deal worth $81 million. The 290,000 sq ft wafer fabrication facility has both advanced mixed-signal and analogue process capabilities. The company expects to invest up to $125 million over the next five years.
US corporation NCR, based in Dayton, Ohio, has opened a new research and development centre in Dundee, Scotland. The $28 million centre will house 500 of NCR’s 1,800-strong Scottish workforce and will provide engineering development facilities for its next generation of automated teller machines (ATMs).
Law firm Edwards & Angell, of Providence, Rhode Island, has opened a representative office in London, its first overseas venture. Founded in 1894, the company has seven full-service offices on the east coast of America and three satellite offices; it specialises in financial services, including insurance, re-insurance, private equity and technology. The London office has been established to serve the US legal requirements of its European clients, but it will not practise UK law.
Three more US software companies have set up operations in London. Aperture Technologies of Stamford, Connecticut, a provider of enterprise software solutions, and data integration solutions provider Data Junction Corporation, of Austin, Texas, have both opened London offices. Vocus, a provider of web-based public relations automation software, based in Lanham, Maryland, has opened an international headquarters in the UK capital.
Narad Networks of Westford, Massachusetts, an internet protocol (IP) services infrastructure company, has opened its first international office in Guildford, South East England. Aelita Software of Columbus, Ohio has opened its first European office in nearby Reading. The company specialises in Windows-based enterprise management solutions.
The South Yorkshire Investment Fund, a public/private project set up in 2001 to finance local businesses, plans to invest some $70 million in more than 700 companies over the next six years. The fund offers loans and equity deals, for amounts ranging from $21,000 to $700,000, under the Objective One programme of European funding. So far this year it has already received 70 applications from local companies. More details on: www.syif.com.
The Random House Group, part of Random House Inc, the book publishing division of German media giant Bertelsmann, has acquired London-based publisher The Harvill Press. Harvill, founded in 1946, publishes world-class fiction and non-fiction by English-language authors and in translation. Random House has over 30 imprints and operates five publishing divisions in the UK. Harvill will remain an independent imprint within the group.
Media and e-commerce company USA Networks, headquartered in New York, is to acquire the UK-based TV Travel Group for $100 million. TV Travel Group owns three TV Travel Shop channels, two in the UK and one in Germany, and broadcasts 24 hours a day. Launched in 1998, it is now distributed to all of the UK’s 11 million multi-channel homes, making it the sixth most widely distributed channel after the five terrestrial channels.