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Grant Thornton - Technology International Expansion Report 2012


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As financial advisers to the technology industry, one of the most common questions we’re asked is “How can my business expand into new markets?” This new research report focuses on the international expansion plans of UK technology businesses and investigates the strengths and weaknesses of some of the UK's top investment destinations through the eyes of mid-corporates and our own specialist sector experts.

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  • 1. APRIL 2012Technology investment reportUnlocking growth potentialin emerging markets
  • 2. Contents ForewordForeword 1 As financial advisers to the technology industry, one of the most common questions we’re asked isTechnology Expansion Index 2 “How can my business expand into new markets?” Every business that asks this question has varyingInvesting for growth 4 challenges, but their ambitions are the same – growth.Country profile: Mainland China 8 To help respond to this question we conducted research to investigate the strengths andClient case study: Galleon Holdings 9 weaknesses of some of the UK’s top current countries for investment, including our ownCountry profile: India 10 domestic market, through the eyes of mid-sized businesses and our own specialist sectorClient case study: IDEAL INDUSTRIES 11 experts. As part of this, we explore the level of appetite and the encouraging factors such as the opportunities offered by the R&D conditions, the confidence of the equity supportCountry profile: Israel 12 and available tax breaks, whilst also examining the potential pitfalls.Client case study: Mobile Tornado 13 The findings of the report highlight that both the hurdles of the UKCountry profile: Brazil 14 downturn and the Eurozone crisis have contributed to planned investment by UK technology companies in global markets proving low, with three quarters ofClient case study: Kelkoo 15 our survey respondents having no plans at all to push beyond existing markets.Country profile: Eurozone 16 This is a concerning statistic, however, when you consider this against theCountry profile: United Kingdom 18 comparatively huge opportunity in the fast-growing, tech-friendly economies of India, China, Brazil and Israel. As the case studies cited in this reportCountry profile: USA 19 identify, international expansion into these countries, approached in the rightClient case study: Tessella 20 way and with the right support, can pay off.Further information 21 Furthermore, the US, Australia, Germany and the Netherlands have comeContacts 22 consistently top for international expansion in comparison to other markets and there remain some attractive business cases hinting opportunities for growth. For example: • US technology jobs in the past year, have outpaced the overall rate of new employment nearly four times. • In 2010, investments totalling 26 billion euros were made in Germany’s renewable energies sector, presenting great opportunities for innovation and R&D. • The report identifies that these markets remain attractive to UK technology companies because they offer a familiar business environment, language commonalities and access to high skills. Many of our clients have international operations or aspirations. With the right advice, funding and local support, there are opportunity areas that offer some solid foundations for overseas expansion. With expertise across 100 countries, Grant Thornton International Ltd member firms specialise in supporting technology companies to assess when the time is right, prepare and to implement their expansion plans. We hope that you find this report useful and look forward to supporting you in your ambitions for growth. Wendy Hart Head of Technology Sector Group Grant Thornton UK LLP Technology investment report 1
  • 3. Technology Expansion IndexThe Grant Thornton Technology Expansion Index Prepared by Experian using a range of data sources,has been constructed to cover the most important the Index compares and ranks ten countries selected by Key findings Grant Thornton’s Technology team.aspects of what a country can offer in terms of • At an aggregate level, the United States of America is • The rankings for France at five and Italy at nine tend to The ten countries comprise a mix of those with high GDPinvestment opportunities ranging from the ease of identified as the most attractive country for technology reflect their middle to low rankings in most of the four forecasts, countries considered emerging technology marketsstarting a business to the strength of political and and more traditional markets where respondents to our business expansion. It ranks top for economic, themes. France scores highly for business start-up, where, infrastructure/technology and political/legal factors notably, it has the second lowest number of days (seven)legal systems. primary research survey (see page four) are planning and ranks second for business start-up factors. Its key required to start a business, behind Italy (six). However, to acquire. strengths lie in having the largest economy in the world, other start-up factors, for example the ease of doing For the Index, 41 variables and four themes have been a strong infrastructure, a stable political environment and business index, mitigate against Italy building on its swift- weighted to take into account how important they are being time efficient when it comes to starting a business. start-up process to improve its ranking. France’s political relative to a technology business making a decision to invest and economic performances are reinforced by its attitude • The United Kingdom is ranked second at an aggregate or expand into an overseas market. to press freedom and its spending on education. level and has performed strongly across all four themes. It The final outputs for the Index provide a ranking for In contrast, Italy’s economic troubles have contributed ranks first for business start-up by having one of the fewest to its low overall ranking. each of the selected countries at an aggregate level as well as start-up procedures and is a relatively easy place to do a ranking within each theme to give an assessment of each business with. It is the highest scoring country for quality • For infrastructure and technology, the United States country’s relative strengths and weaknesses. of research institutions and also performs well for physical of America ranks top whilst Israel ranks bottom of the and intellectual property rights. The United Kingdom also selected countries. China ranks third, largely due to the A full list of the variables, weightings and source data is has the second highest internet penetration rate of the technology aspects of this theme having more than 450 available on request. selected countries (83%) after the Netherlands. million internet users and over 740 million mobile phone subscribers. It is worth noting that, whilst the number of • Mainland China ranks third at the aggregate level internet users is greatest, the internet penetration rate with a strong economic and infrastructure/technology is only 36% indicating there is huge potential for further performance. With the second largest economy in the worldCountry Index Scores by Category Country Index Ranking by Category expansion in this area. The Netherlands scores highly in and the largest population, China has the largest market terms of digital accessibility which is related to the overall to target and the highest growth forecast over the next Political/ Infrastructure/ Business Political/ Infrastructure/ Business ability of individuals in a country to access and use four years. This would suggest it is an ideal location for Country Legal Technology start-up Economic Total Legal Technology start-up Economic Rank new ICTs. expansion. However, China has the second largest number Total Weight 0.15 0.30 0.10 0.45 1.00 of start-up procedures and scores amongst the bottom • India offers significant potential for the future, but its USA 0.11 0.25 0.06 0.35 0.76 1 1 2 1 1 countries in relation to how much investors are protected position in the overall rankings is hindered by low ratings UK 0.10 0.20 0.08 0.27 0.65 3 4 1 4 2 through disclosure of ownership and financial information, for both its political/legal infrastructure and the ease of Mainland China 0.03 0.21 0.03 0.33 0.60 9 3 7 2 3 indicating that there are likely to be barriers to being able to start up a business. These are offset by expanding here. a high economic ranking and recognition that although Germany 0.09 0.22 0.04 0.24 0.59 4 2 6 7 4 infrastructure and technology issues remain, they are being France 0.06 0.17 0.05 0.26 0.54 5 6 3 6 5 • Germany’s position in fourth place at an aggregate addressed as the country’s technological and economic level is due to its average overall performance across all India 0.03 0.18 0.02 0.30 0.53 8 5 9 3 6 capacity develops. four themes, but in particular due to infrastructure and Brazil 0.03 0.16 0.02 0.26 0.46 10 7 10 5 7 technology performance. It has the strongest score for • It is worth noting that whilst Brazil is ranked bottom for Netherlands 0.10 0.14 0.05 0.17 0.46 2 9 5 9 8 logistical performance which takes into account efficiency business start-up theme, it is amongst the top countries for Italy 0.05 0.16 0.03 0.17 0.41 7 8 8 8 9 of the clearance process (ie speed, simplicity and new businesses registered, indicating that businesses are predictability of formalities) by border control agencies, setting up in Brazil even though it is some way behind other Israel 0.06 0.06 0.05 0.16 0.33 6 10 4 10 10 quality of trade and transport related infrastructure and countries relating to the other business start-up factors. InSource: Experian competence and quality of logistics services. contrast to Brazil’s low overall start-up rating, Israel scores highly, reflecting, with 1,800 active start-ups, that Israel is • Within the political and legal environment, the Netherlands poised for significant growth as a venture-backed economy also scores strongly and this is backed by perceptions that with the appropriate start-up environment to match. its government is the least likely to be destabilised as well as one with the highest quality of public and civil services, policy formulation and implementation.2 Technology investment report Technology investment report 3
  • 4. Investing for growth Where are UK Technology companies investing? Top ten countries for acquisitions made by UK Technology companies 2007–2011 (Source: Thomson Reuters) 217 170 150 142 141 40 39 38 13 13 31 11The current economic climate seems pretty dire. ‘Gloomy’, ‘unpredictable’, ‘volatile’, ‘bleak’ – we’re running out 18 8of words to describe the outlook for the economy. The Q4 2011 results from Grant Thornton’s International 6 5Business Report (IBR1), showed business confidence across all sectors in Europe fall from a net 0% to -17%. 3 4 4 3 3 3 1 3 3In the Eurozone, confidence fell from two per cent to -16%. Across Europe, more businesses expected a 2 2 2 – – United States Canada United Kingdom Sweden Germany FRANCEdecrease in profitability, revenue, employment, exports, sales and investment in new building and equipment,than expected an increase. For UK businesses the challenging condition of the Eurozone, where many of ourtop trading partners reside, is a great concern for order books.The outlook Where are UK Technology Plans for future expansionThe miserable outlook in Europe companies investing? As part of our Technology Expansioncontrasts starkly with a far more Over the last five years, volatility in Index research, we asked 50 UK mid-positive outlook in other regions. the global market has inevitably had market technology companies aboutThe IBR indicated that optimism in an impact on the volume of cross- their plans for future investment. 26%North America rose three percentage border deals taking place. Furthermore, planned to invest in countries wherepoints to six per cent, while in the the volume of investment by UK their business already has a presenceBRIC economies – Brazil, Russia, India technology companies into emerging and a further 50% have no plansand China – confidence rose from net technology markets such as India, for investment at all. The remaining25% to 34%. This confidence is an China, Brazil and Israel has remained 24% planned to branch out into newindicator of the increasing economic relatively low, dropping off entirely in markets. In practice this means thatstrength of emerging markets and of the 2010, however returning with renewed three quarters of those surveyed havevast opportunity they present to those vigour in 2011. Our analysis of reported no plans at all to push beyond existingable and willing to invest. deals show the US, Germany and markets. This is a concerning statistic Australia have consistently placed as the when you consider the comparatively most popular countries for outbound huge opportunity in the fast-growing, M&A (see chart on page five). tech-friendly economies of India, China, Brazil and Israel. Netherlands Spain South Africa Australia TOTAL number of acquisitions by 7 7 7 uk technology 6 5 5 5 5 5 5 4 4 3 1 1 1 1 – 2 2 351 In practice this means that three quarters of those surveyed have no plans at all to push beyond existing markets. 282 This is a concerning statistic when you consider the 238 comparatively huge opportunity in the fast-growing, tech-friendly HOW FOUR EMERGING MARKETS COMPARE 203 222 economies of India, China, Brazil and Israel. Brazil INDIA ISRAEL CHINA 5 4 3 3 1 3 1 1 – – – 2 2 – 2 – 2 – – 2 2007 2008 2009 2010 2011Source: KEY4 Technology investment report Technology investment report 5
  • 5. Investing for growth (continued) Country profiles andWhere UK mid-market technology companies plan to invest in the next 12–18 monthsNo plans for any 50% client case studiesinvestment in the next • Of those with plans to invest 18% were12–18 months planning domestic investment (UK). • The Netherlands is the most likelyNew international country to be invested in over the nextcountries where your 12 to 18 months by respondents whobusiness does not 24% at present do not invest there (33%).currently have investment • The United States of America, Italy, Germany and France are also likelyCountries where your to be investment targets (all at 25%).business already hasan investment 26%Source: International Technology Expansion Survey 2011Challenges and opportunities In reality there is not a lack of In our experience thereOur Technology Expansion Index appetite for or interest in high-growth is no shortage of interest(see page two), based on economic data markets. The low M&A figures in India, China andsourced and analysed by Experian, represent deals that have actually Brazil as potential places to invest.demonstrates that the markets with come to fruition, but in our experience It’s the ‘in practice’ part that prevents a higherthe highest growth also have the most there is no shortage of interest in India, volume of investment.challenging environments in which China and Brazil as potential placesto conduct business. Take mainland to invest. It’s the ‘in practice’ part thatChina for example; ranked second only prevents a higher volume of the US in the Index for economic In our research, the majority of In the next section, you will find countrystrength but coming a mere ninth for respondents cited red tape and high profiles with commentary from localpolitical and legal infrastructure and levels of taxation as the main barriers Grant Thornton partners and case studiesa hostile seventh for business start-up to investment in unfamiliar territories. featuring UK clients who have alreadyenvironment. Throughout the Index, Another reason that many aspirations achieved, or are looking to achieve,this pattern is a theme, with the weakest to break into fast-growing economies growth in overseas markets.countries in terms of economic growth fail is a lack of financing options forscoring higher for their comfortable, overseas acquisition or investmentfamiliar business environments. strategies. As this report will show, inUltimately, investors looking to make a overcoming these challenges, there is aquick buck will be rapidly disillusioned multitude of opportunities out there forby hard realities. the taking.6 Technology investment report Technology investment report 7
  • 6. IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Huge economic growth potential, Complex for start-ups, low rank 8.2% 3 tax incentives in tier II cities for investor protectionCountry profile Case studyMainland China Galleon HoldingsGrant Thornton’s Technology One of the reasons that UK Galleon Holdings is an entertainment media company with two principal businesses operating in differentExpansion Index ranks China second technology businesses are reluctant Where to locate? markets. Galleon Entertainment publishes digital content in China across both online and mobile platforms andfor economic growth and third for to enter China is a fear of copying or Chongqing – Chinese states are providing also develops and exploits its multi-platform branded formats to establish a direct, interactive relationship withinfrastructure and technology. On the reverse-engineering of their products. tax breaks to attract high tech businesses to poorer western provinces. In Chongqing users. It also has a product business, Croco Worldwide, which makes promotional toys to foster brand loyaltyflip side, China is one of the lowest Though this is still a risk, as China’sranked markets for political and legal patent system evolves there are plans are underway for a Government for snacks such as crisps and cereals. funded $154m 10sq km cloud computinglandscape and has one of the most increasing opportunities for businesses centre for hi-tech and start-up firms.complex systems in the world for to protect their intellectual property Shanghai, Beijing, Guangzhou and Listed on AIM since December 2001 Galleon’s business is unusual in that, into China remotely from the start-ups. It is this dichotomy, (IP). These opportunities are being Shenzhen – these East Coast cities are and with offices in London, Hong rather than developing its business in We found Hong Kong and China topaired with the complexities of Chinese noticed. Recent research by the China- well developed and are saturated with Kong and China including Beijing, Europe and then taking the concept still be worlds apart in many aspects. foreign investment. UK businesses lookingculture, that best explains the lack of Britain Business Council showed that Galleon is a leading publisher of digital to China, it went there to prove its What has been most effective for us is to invest here may find their competitionUK businesses looking to enter the 59% of UK businesses with a presence is already here or may find a better deal content on both mobile and online interactive media model worked, to have someone from mainland ChinaChinese market. in China want to increase their R&D elsewhere. platforms with distribution across the with Chelsea Football Club its first in place to develop the business. Our However, great returns are never activity there1. Hong Kong – Hong Kong is a good whole of China and more than nine partner in a reality television venture. day to day operations are also run byeasily achieved. The opportunity in launchpad for many technology million registered users on its online Now it is exporting its business model local staff. “There is an argument that it’s better companies. For new starters in the successfully into other worldwide “The overriding factor for successChina is huge, not just in terms of platform. East, Hong Kong’s western style Asiasalary arbitrage and tax incentives. to enter China with IP safeguards in It is also a wireless short-messaging markets. in China is communication. You need with English still as a primary businessDespite the recent slowdown in China, place than not to enter it, and find language may suit. Hong Kong is also a service (SMS) and multimedia Galleon has benefited from using to go and spend time there and buildgrowth is still upwards of 8% and this that your products have been copied low tax haven that attracts many global messaging service provider in China, Grant Thornton’s local audit expertise relationships, otherwise things can anyway, reinvented and eventually technology companies to place their APAC get lost in translation. It also helpshigh growth potential means that those holding nationwide SMS billing in Beijing. It has also successfully patented in China by someone else so headquarters there.companies able to access the Chinese codes for major groups such as struck up relationships with third to develop the business if you have a that you can’t sell them at all. China is Chengdu, Qingdao, Zhenzhou andmarket will be better at meeting China Mobile and China Unicom. In parties to help develop its business. partner who is as committed as you rapidly becoming a major hub for IP Zhejiang – fourteen second tier citiesconsumer needs and faster to market, and research.” such as these offer cheaper labour, low October 2008, Galleon acquired this As Galleon’s Chief Financial Officer are to the project. Sometimes you’llleaving those who shied away from rent and energy costs, favourable local operation to strengthen the Group’s Hayden Eastwood explains: “There find ‘partners’ who want to take your Nick Farr, Head of China Britain Services policies and a steady flow of workers.early investment trailing in their wake. media infrastructure in emerging are lots of companies that will say they money to fund their business. If they Group, Grant Thornton UK LLP markets and to provide complete multi- have expertise in China. We used a third put up hard cash, they’re more likely platform media solutions to Chinese party based in China and we have used to be wedded to your idea. It does take broadcasters. The company has now Grant Thornton’s local office to do time at first to get things done in China, evolved into online games to exploit the our auditing because they have a good but then they will suddenly take off, significant growth opportunity in this Western understanding. When you’re because the Chinese are very good atIn 2010, UK companies made 2,087 patent applications sector in China. investing in China, it pays to use local making things happen.”in China, of which 1,164 were granted2. people. You cannot expect to move The overriding factor for success in China is communication. You need to go and spend time there and build relationships, otherwise things can get lost in translation.Source: China Business Climate Survey, November 2010 State intellectual property office of P.R.C, Technology investment report Technology investment report 9
  • 7. IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Huge long-term growth potential High levels of complex bureaucracy, no quick 7.0% 6 and potential customer demand return, sensitivity of local business cultureCountry profile Case studyIndia IDEAL INDUSTRIESTaking India into the future A strong driver for IT investment IDEAL INDUSTRIES is a 100 year old family-owned manufacturer of tools and supplies for electrical, data, is India’s own Generation Y who are Where to locate?• India has more than doubled its telecommunications, low voltage and security installations. Over the last decade it has expanded into hourly wage rates during the primed to become hungry consumers, Special Economic Zones (SEZ) – environmental monitoring through its acquisition of Casella Measurement and into the automotive sector last decade. particularly of IT, consumer technology India’s states are home to numerous• India’s burgeoning middle classes specially allocated areas created through its acquisition of SK Handtools. Its connection with India began through a joint venture established by and social media. India’s consumer with disposable income are market, currently the world’s thirteenth specifically to attract investment. As of another IDEAL company, Trend Communications, acquired in 2004. October 2010 there were 114 operating projected to number 580 million largest, is expected to become the fifth SEZs in India with the most being in the by 2030. largest by 20252. Its telecommunication state of Tamil Nadu (20), followed by In early 2011, the rules on requiring a Grant Thornton India LLP and by compliance issues and to establishIndia is one of the world’s fastest- industry, the world’s fastest-growing, Karnataka (18). Approximately 500 more No Objection Certificate from Indian the appointment of an Indian entry robust systems. One of the issues new SEZs have been approved throughoutgrowing economies. However, GDP added 227 million subscribers during joint venture partners changed and the development firm. Lee Thomas, the company has had to consider in the country with the most in the state ofper capita is still relatively low and, the period 2010–113. Andhra Pradesh (109). original joint venture was dissolved. IDEAL INDUSTRIES’ Group Finance developing its pricing and offer modelthere is plenty of room for tapping Vibrant economic areas excluding A new direct Indian subsidiary has been Director EMEA, explains: “When you is India’s import duties, which can be asinto the unlocked disposable income A developing business culture SEZs are: set up, focusing on network installation set up operations in India, everything much as 25%. IDEAL plans to use angenerated by the middle classes. Although dealing with the larger West Bengal – for three decades under and management, the professional is based on trust. If you want to indirect channel to market and will sellTo support this strong domestic IT services companies in India is a Communist regime, this state saw little electrical channel, and the supply of employ quality people, how do you through local dealers and distributors. little different from large companies growth. Economic reform was introduced attract someone unless the local trust For UK technology companiesdemand for goods and services, environmental devices and equipment. in the mid-1990s and the state is nowthe Indian government is investing elsewhere, smaller businesses can be The new office is based in Gurgaon, is there? Our use of an Indian entry planning to invest in India, Thomas a beacon for ICT investment with taxheavily in infrastructure projects to less professional, with delays in getting exemptions for investors. one of Delhi’s four satellite cities in the development firm has helped increase recommends using a reliable entryfacilitate the GDP growth, but it’s deals completed and getting people to Gujarat – arguably India’s most National Capital Region. our local credibility in entering strategist to help engender local trustbeen a bumpy ride. In late 2011, India’s adhere to agreed contractual terms. economically proactive and reform-minded The development of infrastructure the market. because trying to go it alone is atelecom networks finally rolled out state, Gujarat is planning a new city, the in India is a critical government goal, “It was soon clear how important long haul. “When investing in India you need Gujarat International Finance Tech-City3G when the rest of Asia was moving to be there for the long term, ie at and one of IDEAL’s key business trust was and that the customer always Lee says: “Be prepared for a lot (GIFT), to attract finance and technologyon to 4G. The Indian Government’s least two business cycles (ten years). firms to relocate from Mumbai and of investment of time and money,new ICT policy aims at speeding up You have to be visible and work Bangalore. but principally time. You have todevelopment, including plans for fibre collaboratively with local business There are 37 Indian cities among the It was soon clear how important trust was and that understand the culture. And don’toptic cable installation and aggressive people.” world’s 300 fastest growing urban centres, the customer always looks for local support, so forget the opportunity cost of the according to the City Mayors Foundation,broadband implementation1. Anuj Chande you need to have a base within India. Customers people you may have managing your a global think tank on urban affairs. want to know that you are a trusted brand and that investment from outside too. Managing“Previously, agriculture would have Cities that have benefited from technology you’re committed to the market. from Europe is practical because of thebeen the highest contributor to GDP investment include:growth in India – but this is no longer Pune – emerging as a technology hub time difference crossover, which is fivethe case. IT and telecoms are very and home to a number of large software opportunities is to address this looks for local support, so you need to and a half hours. We have found using 40% of India’s companies such as Wipro, Infosys, development through an initial three have a base within India. Customers IP telephony and video conferencing ismuch enablers for future growth.”Anuj Chande, Head of South Asia Group, population is younger Satyam, Tata Technologies and Veritas. platforms that it is establishing in want to know that you are a trusted particularly helpful in working closelyGrant Thornton UK LLP than 35 years old. Nagpur – The US airliner-making Boeing, in partnership with Air India, is building the market. brand and that you’re committed to together with our colleagues in India.” a maintenance, repair and overhaul The creation of trust is critical in the market.” facility here. establishing an Indian investment, and To develop IDEAL’s Indian IDEAL’s new operations have benefited presence, the business has put in place1 Source: from professional advice on the most a country manager, and a financial2 Source: appropriate structure provided by controller to deal with legislation and3 Source: Technology investment report Technology investment report 11
  • 8. IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Favourable climate for entrepreneurs Bureaucracy and red tape can 3.6% 10 and innovators be a significant burdenCountry profile Case studyIsrael Mobile TornadoIsrael is well known for its Foreign technology companies Advanced Technologies Park at Mobile Tornado is a provider of next generation instant messaging solutions which serve the market of mobileentrepreneurial spirit, enabling it investing in Israel can access a number Ben-Gurion University (BGU) data services in the mobile communications industry. These services include a group of services genericallyto quickly transform start-ups into of financial incentives such as: A key example of the Israeli termed ‘Push to x’ services, of which ‘Push to Talk’ (PTT) is the most commonly known.profitable and competitive companies. • tax reductions Government’s desire to attract newOut of the top technology • exemptions on capital gains and inward bound technology companiesinvestment regions highlighted infrastructure investments is this new facility in Negev. Designed Mobile Tornado is seeing increasing it supplies its technology platform We are a Britishby Grant Thornton’s Technology • credit lines for business and to enhance the economy of the region, interest in PTT in developing countries, and provides professional services to company but weExpansion Index, Israel is ranked export credit to provide world class facilities for and has been approached by a number install and configure the system into have receivedfourth for business start-up, after the • funds to hire workers and BGU researchers and nurture start-up of potential partners who are well the operator’s own network. It has also significant support in Israel from theUK, US and France. for retraining companies, including incubators, Israel Mobile and Communication this programme presents a great placed to address significant market concluded a similar deal with a mobile“With 1,800 active start-ups – the • support for R&D. Association (IMA) which helps opportunity for foreign investors. opportunities. operator in Israel, which has embracedhighest seed stage investment levels Israeli mobile and communications Large multinationals that have already PTT turns a mobile phone into a PTT with around 500,000 users.since the 1990s – and a diversified “Though Israel has many opportunities companies succeed and grow invested in Israel include a number walkie-talkie but with a global range. Mobile Tornado has a stronghigh-tech pipeline spread out over for foreign investors, the challenge by providing them with of technology companies such as: Instead of transmitting/receiving base in Israel which doubles as itslife sciences, semi-conductors and presented by bureaucracy can be strategic and practical Microsoft, Motorola, Intel, HP, radio frequencies, PTT uses the GPRS research and development arm and as assistance.Internet technologies, Israel is poised as significant as the encouragement Siemens, GE, IBM, Philips, AOL, data connection on mobile phones the management base for its Indianfor significant growth as a venture offered by the Israeli Government’s Cisco and Applied Materials. to send and receive calls using VOIP operations.backed economy.” innovation policy. To avoid unnecessary market restrictiveness, technology. Mobile Tornado Chief ExecutiveIlanit Halperin, Partner, Head of Technology Technological incubatorsand Life Sciences Department, Fahn potential investors would be advised In the last year, Mobile Tornado has Jeremy Fenn says the company As part of a drive to strengthen Israeli to seek local consulting services closed deals with two mobile operators has received significant support inKanne & Co. Grant Thornton Israel export power, the Government has to fully understand both risks and in India for over 200,000 licences, Israel: “We have worked closely in Israel has the largest number of developed a programme of support opportunities.” and signed partnership agreements in partnership with the Israel Mobile andNASDAQ listed companies outside the corporations to give fledgling Ilanit Halperin South Africa and Guatemala. That has Communication Association (IMA)United States and an increasing number entrepreneurs an opportunity to raised Mobile Tornado’s profile and it which helps connect Israeli productlisted on the London Stock Exchange. develop their innovative technological is now discussing further partnership companies with global operators and Apart from Silicon Valley, the ideas and start to build a business. The opportunities in Mexico and Brazil. It network and handset vendors. We are ahighest concentration of high-tech incubator programme is applied in all has also deployed technical resources British company but we have receivedcompanies is found in Israel. parts of Israel, under the guidance, across Israel, UK and India to maximise significant support in Israel from the and with the support, of the Office of its business efficiency. IMA which helps Israeli mobile and the Chief Scientist of the Ministry of Its preferred way of working in communications companies succeed Industry and Trade. developing markets like India is to and grow by providing them with partner with local operators where strategic and practical assistance.” The Government has developed a programme of support corporations to give fledgling entrepreneurs an opportunity to develop their innovative technological ideas and start to build a business.12 Technology investment report Technology investment report 13
  • 9. IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Second most favoured destination for PE in Greater innovation; restrictive 3.0% 7 emerging markets; large IT market; technology labour laws; IT skills shortage driver for future global sporting eventsCountry profile Case studyBrazil KelkooAt 8.5 million square kilometres, Brazil accounts for nearly half Kelkoo is a price comparison shopping and travel website which helps consumers to get the best deals byBrazil is the size of a continent, and of all IT spending in Latin America; Where to locate? comparing the prices of retailers and travel suppliers. It currently operates in 12 countries across the world,currently accounts for 40% of Latin prompting the government to Key tech locations mainly in Europe, but also now extending to the US and Brazil.America’s economy. IMF GDP growth introduce a plan to expand broadband • City of Sao Paulo and Sao Paulo state.forecasts through 2013 are strong at infrastructure throughout the • Recife in the North East – Brazil’s ‘China’. Kelkoo’s move into Brazil takes it into “We looked at India, but there “We’ve benefited from4%, potentially underpinned by the country. The results are beginning to • Porto Alegre (in the South of Brazil). a large, growing market where it has is only a small market for online Grant Thornton’s help. Because we’reimpact of the 2014 World Cup and be apparent. The first all-Brazilian • Belo Horizonte/Minais Gerais a very strong opportunity to compete purchases. There isn’t a lot of online not large in size, ease of market entry,2016 Olympic Games, which will drive semiconductor manufacturing facility (South Eastern Brazil). with an existing comparison shopping spend. The big opportunity in India is the overall size of the market, and thetechnology investment. The domestic is now in production, and IBM has Emerging tech – Porto Digital site. A benefit for Kelkoo is that, as mobile,” says Craig Dixon, Kelkoo’s number of competitors are importantmarket for IT in Brazil is now the selected Brazil for its first new research • A fast growing tech cluster in Recife, a site offering comparison shopping, Chief Financial Officer. “We are not a criteria for us. I’m very optimisticseventh largest in the world. $165.7bn facility in 12 years. North Eastern Brazil. it can enter a market virtually and large company and there are regulatory about the Brazilian market. It is a largewas spent on ICT in 2010 with only Apart from the World Cup and • Vision to be leading centre for innovation does not necessarily need a physical issues in China which would mean we’d market and we’ve found that people are$2.4bn of services exported. the Olympics, opportunities exist in and enterprise for ICT and creative presence. However, as with its existing need to find a local partner. We were very savvy, so you have to be aware of Brazil is a potential technology areas such as the broadcast and health sectors in Brazil. European operations, a virtual presence looking to get into a market more easily the regulatory environment andinvestment hotspot because of its large, sectors, in industrial automation, • Cluster includes CESAR which has is likely, in time, to become a physical than that, which is why Brazil offers the cost and complexity of doing created innovative solutions forstable, growing economy; a modern mobility solutions for retail and presence. Its main challenge in entering such a good opportunity.” business there.” Motorola, Intel, Dell, Samsung and system that has largely commercial sectors, and partnering the Brazilian market is to drive traffic One of the issues in Brazil is the • Successful spin-outs include Silicon Reefescaped the global financial crisis; a for corporate IT opportunities. There (mixed signal ICs). to its site which it does by search engine considerable cost of import duties,strong base of local investors; and is a large private health sector due to Source: UK Trade & Investment optimisation and through paid search which can be up to 20%. Forrobust capital markets and a middle the pressure on Brazil’s public health in Google. that reason, Kelkoo has utilisedclass of almost 100 million people as service, and both sectors want to use Kelkoo has also looked closely at Grant Thornton’s expertise inpotential technology consumers. the latest technologies, including other emerging markets that might offer delivering local compliance and China is already targeting Brazil’s e-health and remote diagnostic tools. bureaucratic and requires at least 15 a competitive opportunity, including auditing sector and plans to invest However, Brazil faces some documents and many visits to a notary. China and India.US$4.5 billion this year, shifting challenges which could hinder Brazil has a need for greaterinvestment in Latin America from technology investors, including technology innovation. One bright spotagriculture and mining. Apple’s a shortage of trained IT labour. is an innovation cluster, Porto Digital, One of the issues in Brazil is the considerableChinese manufacturing partner According to predictions, by 2020 the in the Recife area of North-Eastern cost of import duties, which can be up to 20%. Brazil which employs around 6,500 IT For that reason, Kelkoo has utilised Grant Thornton’sIncluding telecommunications, IT end-user spending in professionals and now has an annual expertise in delivering local compliance and auditing advice.Brazil is expected to approach US$134.2 billion in 2014. turnover of around US$431 million. The cluster includes CESAR, which hasFoxconn is reported to be considering country will be short of about 750,000 created innovative solutions for IntelBrazil as an assembly site for the iPad. IT workers. Brazil payroll costs are and IBM as well as successful spin-outsMoreover, the Brazilian government also amongst the highest in the world, such as Silicon Reef which providesis granting relevant tax incentives for and the overall expense for employers, mixed signal integrated circuits.the manufacturing of tablets within including taxes and benefits, supportedcountry lines. The Manaus Free Zone is by protective local labour laws, isan interesting option for those seeking significant, A company can be startedsuch opportunities. quite easily, but the process is very14 Technology investment report Technology investment report 15
  • 10. IMF GDP Growth Grant Thornton Opportunity: Challenges: IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Supportive of R&D and innovation; Complexity of labour laws prediction 2012: expansion index: Strong Biotech and Cleantech Weak growth and unclear financial outlook; 0.2% 5 tax incentives; labour reforms -2.2% 9 sectors; innovative heritage bureaucracy and funding hurdlesFrance ItalyIn the last couple of years, French France has also created a Strategic France should take advance advice on Despite its recent financial problems, Thriving areas for technology Renewable energy is a growingreforms have made the country more Investment Fund to support the contract and employment practices and which are likely to culminate in start-ups include the Lombardy region, sector with solar and wind powerattractive to technology investors, development of small and medium- perhaps consider outsourcing to local economic shrinkage of 2.2% in 2012 home to Milan, and the area around prominent areas. Southern Italynotably by investing in innovation, sized companies, particularly those specialists. and a further 0.6% in 2013, Italy’s IT Pisa. Both have strong university links provides an ideal hot, windy climate tochanging labour regulations and with scope for innovation and market France has also introduced tax market is the fourth largest in Europe, that have created numerous start-ups. attract cleantech interest, especially ininstituting more attractive tax policies leadership. Its ongoing investments credits exempting new investments its mobile wireless market is a world Italy is strong in life sciences and is regions such as Apulia and Calabria.for those setting up businesses. include Bull and YouTube rival from local business tax and providing leader and Italy ranks third in Europe committed to innovation with over a One key focus is research and Dailymotion. up to 50% tax relief on R&D costs. in the field of wind energy. billion euros from a mix of funding Entrepreneurship amongdevelopment. A growing area twenty France’s labour laws remain Companies investing in Italy will sources spent annually on research and scientists and researchersmiles south of Paris, Plateau de Saclay, complex, although reforms now Gross domestic R&D find bureaucractic barriers being development, notably in biotechnology. is increasing. In the lastdubbed ‘Europe’s Silicon Valley’, enable companies to better tune spending exceeded $42 steadily lifted but not completely The Italian marketplace isaccounts for 10% of all research employment contracts and working removed. There have been some dominated by small and medium few years more than billion in 2008, placingpersonnel in France, providing a base hours to their business requirements. marked changes in tax legislation sized enterprises. There are only 800 university spin-outsfor 43,000 people, covering scientific National Insurance contributions France second only to and investor funding for technology 3,500 companies with more than 250 were created.disciplines as broad as nano-science, in France, however, are greater for Germany in Europe. ventures is not easy to find. Funds are employees. 95% of companies have lessclimate and the environment, and IT. both employers and employees than available for research in some regions, than nine staff. in the UK. Companies investing in notably in Southern Italy. IMF GDP Growth Grant Thornton Opportunity: Challenges: IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Strong technological base; well-qualified Language and cultural barriers; prediction 2012: expansion index: UK-friendly environment to target the rest of Western Restrictive labour laws; 0.3% 4 workers; compelling market breadth weaker growth 1.3% 8 Europe; health technology specialism; tax advantages small domestic marketGermany NetherlandsAlthough Germany is facing Investment incentives can reach Germany, close to the North Sea. Raising finance in the Netherlands is Holland spawning a number of health- to avoid double taxation on profitscomparatively weak growth of just up to 50% of the cash needs for small The automotive industry in the south a straightforward process and there is technology spin-offs. whilst an ‘innovation box’ provides a0.3% in 2012, rising to 1.5% in 2013, its investors. Maximum investment has created several local, innovative a well-trodden path of Anglo-Dutch Groningen and Assen are both in special tax regime where all income tostrong technological base ensures a high support can be obtained if a business companies. joint ventures, particularly in the oil the sparsely-populated North-East, be allocated to qualifying intellectualquality of research and development, is located in the new federal states industry. which provides incentives to attract property (IP) is subject to an effectivea clear prerequisite for technology that previously belonged to Eastern In 2010, investments The labour market, however, foreign investment in the form of Dutch corporate income tax rate of 5%.investors. Well qualified workers and Germany. Subsidies are most generous totalling 26 billion euros lacks flexibility. ‘Older’ European tax breaks and grants. Groningena constant strive for innovation are for technology start-ups in the countries like the Netherlands suffer in particular has a reputation for The digital divide is were made in Germany’skey drivers. As a further incentive, Berlin area. from restrictive legislation with strong entrepreneurialism. Tax advantages for barely noticeable in thecompanies investing in Germany can Germany has a strong focus on renewable energies sector. redundancy protection. foreign investors are also offered inaddress the German-speaking market renewables with solar companies The Netherlands has a strong the South East, around Maastricht. Netherlands where 88.6%of 100 million people and springboard established in the federal states of the focus on health technologies, with the Comparatively, the Netherlands of the total populationinto the growing markets of Central former Eastern Germany and wind universities of Groningen in the North offers significant tax advantages. Many is online.and Eastern Europe. companies located in north western and Leiden in the province of South companies use a Netherlands base16 Technology investment report Technology investment report 17
  • 11. IMF GDP Growth Grant Thornton Opportunity: Challenges: IMF GDP Growth Grant Thornton Opportunity: Challenges: prediction 2012: expansion index: Strong technology infrastructure, Nervousness in the market caused prediction 2012: expansion index: A supportive technology investment environment, Economic uncertainty, 0.6% 2 innovation at relatively low cost, by poor economic conditions and 1.8% 1 accessibility of talent, and a large potential decline in smaller IPOs familiar legal and financial landscape lack of available funding customer base when products are developedCountry profile Country profileUnited Kingdom USAAccording to our survey, 18% of UK “There is a trend in the UK technology “A symptom of the current UK For UK technology companies looking In all of these areas, a key criteriontechnology companies plan domestic market where large corporates marketplace is nervousness from to invest overseas, the US remains a to attract investment is the accessibility Where to locate?investment in the next 12–18 months. are increasingly looking to acquire funders, acquirers and sellers alike magnet – 25% of survey respondents of talent, which is the lifeblood for US hot beds include:Despite the economic downturn, companies that provide specialist about potential deals. Even with a planning investment in new markets technology organisations. • Madison, Wisconsin, has attracted aor perhaps because of it, many services or offer some innovation sophisticated, large and committed were considering the US. Going 2012 will be a major political number of life sciences companies. that addresses a niche they want to vendor, a deal will typically take sixtechnology companies are still looking some way to explain this, the year in the US, with a battle for the • Detroit, now targeting biotech and reach. Importantly, the current state months at minimum to complete. life sciences, cleantech or alternativeto consolidate and strengthen their Grant Thornton Technology Expansion White House and elections to the of the overall market means that The most frequent cause of delay energy companies to take up slack frompresence at home rather than seeking Index demonstrates the continuing Senate and House of Representatives. these companies can be acquired in deals is postponed funding, for the automotive industry.out riskier, but potentially more more cheaply than might have been example by something unearthed strength of the business environment The elections’ outcome may have a • Atlanta, Georgia one of the leadingrewarding climates. possible pre credit-crunch.” during due-diligence.” which has a powerful mix of significant impact on the future of metropolitan areas in the far south of The UK’s high ranking on the Wendy Hart, Head of Technology, Wendy Hart infrastructure, support services, venture Dodd-Frank legislation intended to the country.Grant Thornton Technology Expansion Grant Thornton UK LLP capital, access to finance and legal reform Wall St. The Dodd-Frank Act • North Virginia and Baltimore andIndex, second only to the US, is Services that attract high interest from services, smart potential employees and, spans over 2,300 pages and affects the suburbs of Washington DC. investors in the UK include: almost every aspect of the US financial Companies previously part of the USreflective of the fact that the UK is still Technology infrastructure in the UK not least, a huge number of potential • IT services defence research industry, are nowan attractive market to grow a business. At 83% broadband coverage, the customers. services industry. using their electronic warfare expertiseFor investors, of course, domestic UK is already one of the most well- • mobile applications In attracting investment, Silicon “Apart from the supportive to create online games companies.acquisitions are more straightforward, connected countries in the world. • IT security Valley is a Mecca, and an ecosystem for environment for technology • Austin, Texas – strong inwith less risk, and a known legal The government has further plans for • mobile data management technology investment, with 40 years’ companies in the US and an semiconductor, biotech and somelandscape. Access to finance, however, investment, announcing a commitment • cloud computing experience in creating and nurturing environment in which jurisdictions one of the most consistently of £530m in funding to extend superfast • digital convergence technology companies. California is across the country are competing • Chicago, an old city, but now attracting • services which specialise in a to try to replicate the successes of new industries. Groupon is based here.mentioned barriers to growth – and broadband coverage across the country. a very progressive state in its attitudewith growth predictions for the UK growth market such as financial to low carbon and Cleantech, but Silicon Valley and Boston, there are • Seattle and Portland – many spin-off Further, the government has committed businesses in Seattle close to Microsoft, services or healthcare. two compelling reasons to invest incontinuing a steady decline, there seems to establish a new urban broadband is becoming expensive in terms of while Portland is very friendly to the US: the access to talent and alittle respite on the horizon. fund that will create up to ten ‘super- regulation. alternative energy companies. large potential customer base for connected cities’ across the UK, with That is persuading other US cities • Other areas of interest are North new technology products.” 80–100 megabits per second superfast to put themselves up as alternative Carolina, Florida and Denver, Cal Hackeman, Technology Industry New Jersey and Philadelphia. broadband, including Edinburgh, locations for new and growing Partner, Grant Thornton USA Belfast, Cardiff and London. companies by offering favourable incentives. Areas trying to lure interest include: Georgia, which wants companies toMany technology companies are still looking to consolidate and strengthen set up some of their operations in the In the US this past year technology jobs outpaced thetheir presence at home rather than seeking out riskier, but potentially more state; New York, which claims to have overall rate of new employment nearly four times1. surpassed Boston as the second largestrewarding, climates. centre after Silicon Valley for start-ups; and San Diego, which has attracted biotech and life sciences companies (with lots of infrastructure to support early stage businesses). Source: High Technology Industry, US Office Outlook, Jones Lang La Salle, Fall 2011 118 Technology investment report Technology investment report 19
  • 12. Case studyTessella Further informationFounded in the UK in 1980, Tessella is an international provider of science powered technology and consulting About this report About Grant Thornton Primary research Grant Thornton UK LLP is a leading financial and business adviser, operating outservices. Its customers are world-leading organisations who choose its unique blend of scientific thinking, In the autumn of 2011, Grant Thornton UK LLP engaged Experian to survey 50 UK of 27 offices. Led by 215 partners and employing nearly 4,000 of the profession’ssector knowledge and software expertise to help deliver innovative, cost-effective solutions to complex headquartered mid-market technology companies with turnovers between £5 and brightest minds, we provide personalised assurance, tax and specialist advisory £200 million on where they currently owned businesses outside of the UK and their services to over 40,000 individuals, privately-held businesses and public interestbusiness and technical challenges. plans for acquiring overseas businesses in their sector in the next 12–18 months. entities. Secondary research Our clients, whether local or global, consistently tell us that we work with them in aTessella adds value to clients’ When it comes to overseas investment, we take Experian was engaged to build the Grant Thornton Technology Expansion Index, very different way. We make sure our clients receive what they need – award-winningoperations through the application of one step at a time. We could have sent more comparing and ranking ten countries, selected by Grant Thornton’s technology audit, tax and advisory expertise that’s responsive and insightful, in-depth sector experts. Evidence from the primary research undertaken as well as consultation with knowledge and a relationship that’s built on their agenda not our own.IT and consulting services based on resources to the US when we set up our operations Grant Thornton’s technology experts has helped to inform the weightings with somescientific methods and rigorous quality there, but we have had 31 years of profitable variables having been identified as being more important to the technology sector. Grant Thornton UK LLP’s technology practice has national strength, but local growth where the company’s culture has been a presence, with our specialists operating from key centres across the UK. We haveprocedures. IMF GDP Growth Prediction 2012 data source: an enviable track record of working with successful technology companies at all key driver for success. Its biggest asset is its people. stages of their lifecycle, providing a complete range of services, including: tend to be fast moving, and Tessella sees the US driving example, create consoles for monitoring • accounting services • audit and tax complianceuncertain and complex, so Tessella further growth beyond the 15% slice it drilling operations. We help them make • business and strategic advice currently represents of the company’s better decisions about what they’re Country profilesemploys scientists with first class • commercialisation of intellectual property Information for the country profiles featured is based on research conducted • corporate finance including M&Aacademic minds; over 50% of overall business. Its current plans doing”. independently using various external sources and interviews with clients of • employment issuesTessella staff hold PhDs, and are fully involve building up its resources in the “When it comes to overseas Grant Thornton UK LLP and colleagues from Grant Thornton International member • fund raising and flotations firms in the UK, USA, China, Germany, France, India, Brazil, Netherlands, Italy • PPP/PFI schemestrained and experienced in software Houston area to service the business as investment, we take one step at a time. and Israel. • private client servicesengineering. it arises. We could have sent more resources to • risk management and internal audit Contributors • Sarbanes Oxley review and compliance Tessella has invested in operations in For that reason, and because Tessella the US when we set up our operations Grant Thornton wishes to thank the 50 survey respondents and the following • specialist tax advisory services, including R&D tax credits advicethe Netherlands and in the US, creating provides a services-led solution rather there, but we have had 31 years of individuals who took part in one of our client case studies: • transfer pricingits first overseas branch in The Hague than developing new products, it sees profitable growth where the company’s • Hayden Eastwood, Chief Financial Officer, Galleon Holdings • valuations. • Lee Thomas, Group Finance Director EMEA, IDEAL INDUSTRIESin 2000 and then opening its first US its overseas business being driven from culture has been a key driver for • Jeremy Fenn, Chief Executive, Mobile Tornado We support the UK technology industry as members of Intellect and TIGA.branch in Boston in 2003. Both moves the US rather than investing in China success. Had we had more resources • Craig Dixon, Chief Financial Officer, Kelkoo • Kevin Gell, Founder and Managing Director, Tessella. Grant Thornton International Ltd is one of the world’s leading internationalwere led by sales opportunities which or India. in the US, we could have grown more organisations of independently owned and managed accounting and consultingled to a requirement to base staff in Tessella’s founder and managing quickly, but equally the company’s Copywriter firms. As the UK member firm, Grant Thornton UK LLP offers our clients access to David Bicknell. professional advice delivered by other Grant Thornton International Ltd member firmsoverseas locations rather than specific director Kevin Gell, says: “We are culture could have changed. Often in over 100 countries worldwide, including the world’s main technology centres.corporate decisions to invest overseas in scientists and engineers and we offer a in the US, they want to hire through Disclaimerspecific countries. specialist approach to solving business networks, looking for specific skills. The commentary provided by Grant Thornton UK LLP is intended to be used as For more information on Grant Thornton International member firms, information only. Whilst Grant Thornton UK LLP and its employees take every please visit The US venture was led by a leading problems. Our winning advantage When Java was developed, they were care to ensure that the content is accurate, Grant Thornton UK LLP will accept noUK salesman who wanted to go and comes from our people. We’re not looking for five years’ experience in it. responsibility or liability in respect of any errors, inaccuracies and losses which may arise from its use.set up the US office to take advantage offering a unique product but a service But there weren’t any people with fiveof sales opportunities offered by that helps our customers solve their years’ Java experience, because it was sopharmaceutical companies based on problems. One customer once said new. What we provide for our clientsthe US East Coast. Pharmaceutical that it was ‘great having people on are clever people who can learn thingscompanies are significant customers board who are geophysical engineers’. on the go, apply their minds and solveof Tessella and account for a sizeable We’re not actually. But what we have the client’s problems.”amount of its business. are academically very bright people Further US sales opportunities who pick things up very quickly, andarose with oil customers in Houston can deliver risk assessment and, for20 Technology investment report Technology investment report 21
  • 13. ContactsFor further information on any of the issues explored in this report, contact:Wendy HartHead of Technology Sector GroupT 01865 799938E other queries, please contact your local Grant Thornton office:Belfast Kettering NorthamptonT 028 9031 5500 T 01536 310000 T 01604 826650Birmingham Leeds NorwichT 0121 212 4000 T 0113 245 5514 T 01603 620481Bristol Leicester OxfordT 0117 305 7600 T 0116 247 1234 T 01865 799899Cambridge Liverpool ReadingT 01223 225600 T 0151 224 7200 T 0118 983 9600Cardiff London Reading IQT 029 2023 5591 T 020 7383 5100 T 0118 955 9100Edinburgh Manchester SheffieldT 0131 229 9181 T 0161 953 6900 T 0114 255 3371Gatwick Milton Keynes SloughT 0870 381 7000 T 01908 660666 T 01753 781001Glasgow Newcastle SouthamptonT 0141 223 0000 T 0191 261 2631 T 023 8038 1100© 2012 Grant Thornton UK LLP. All rights reserved.‘Grant Thornton’ means Grant Thornton UK LLP, a limited liability partnership.Grant Thornton is a member firm of Grant Thornton International Ltd (Grant ThorntonInternational). References to ‘Grant Thornton’ are to the brand under which the Grant Thorntonmember firms operate and refer to one or more member firms, as the context requires.Grant Thornton International and the member firms are not a worldwide partnership. Servicesare delivered independently by member firms, which are not responsible for the services oractivities of one another. Grant Thornton International does not provide services to clients.This publication has been prepared only as a guide. No responsibility can be accepted by usfor loss occasioned to any person acting or refraining from acting as a result of any material inthis