Renewable Energy Equipment and Services in United Kingdom: A Strategic Reference, 2007 0497824590, 9780497824594, 9781429499347

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Renewable Energy Equipment and Services in United Kingdom: A Strategic Reference, 2007

Edited by

Philip M. Parker, Ph.D. Eli Lilly Chair Professor of Innovation, Business and Society INSEAD (Fontainebleau & Singapore)

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COPYRIGHT NOTICE ISBN 0-497-82459-0 All of ICON Group International, Inc. publications are copyrighted. Copying our publications in whole or in part, for whatever reason, is a violation of copyrights laws and can lead to penalties and fines. Should you want to copy tables, graphs, or other materials from our publications, please contact us to request permission. ICON Group International, Inc. often grants permission for very limited reproduction of our publications for internal use, press releases, and academic research. Such reproduction requires, however, confirmed permission from ICON Group International, Inc. Please read the full copyright notice, disclaimer, and user agreement provisions at the end of this report.

IMPORTANT DISCLAIMER

Neither ICON Group International, Inc. nor its employees can be held accountable for the use and subsequent actions of the user of the information provided in this publication. Great efforts have been made to ensure the accuracy of the data, but we cannot guarantee, given the volume of information, accuracy. Since the information given in this report is forward-looking, the reader should read the disclaimer statement and user agreement provisions at the end of this report.

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About Icon Group International, Inc. Icon Group International, Inc.’s primary mission is to assist managers with their international information needs. U.S.-owned and operated, Icon Group has field offices in Paris, Hong Kong, and Lomé, Togo (West Africa). Created in 1994, Icon Group has published hundreds of multi-client databases, and global/regional market data, industry and country publications. Global/Regional Management Studies: Summarizing over 190 countries, management studies are generally organized into regional volumes and cover key management functions. The human resource series covers minimum wages, child labor, unionization and collective bargaining. The international law series covers media control and censorship, search and seizure, and trial justice and punishment. The diversity management series covers a variety of environmental context drivers that effect global operations. These include women’s rights, children’s rights, discrimination/racism, and religious forces and risks. Global strategic planning studies cover economic risk assessments, political risk assessments, foreign direct investment strategy, intellectual property strategy, and export strategies. Financial management studies cover taxes and tariffs. Global marketing studies focus on target segments (e.g. seniors, children, women) and strategic marketing planning. Country Studies: Often managers need an in-depth, yet broad and up-to-date understanding of a country’s strategic market potential and situation before the first field trip or investment proposal. There are over 190 country studies available. Each study consists of analysis, statistics, forecasts, and information of relevance to managers. The studies are continually updated to insure that the reports have the most relevant information available. In addition to raw information, the reports provide relevant analyses which put a more general perspective on a country (seen in the context of relative performance vis-à-vis benchmarks). Industry Studies: Companies are racing to become more international, if not global in their strategies. For over 2000 product/industry categories, these reports give the reader a concise summary of latent market forecasts, pro-forma financials, import competition profiles, contacts, key references and trends across 200 countries of the world. Some reports focus on a particular product and region (up to four regions per product), while others focus on a product within a particular country.

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Table of Contents 1

INTRODUCTION & METHODOLOGY.............................................................................1

1.1

What Does This Report Cover?

1

1.2

How to Strategically Evaluate United Kingdom

1

1.3

Latent Demand and Accessibility in United Kingdom

3

2 2.1

RENEWABLE ENERGY EQUIPMENT AND SERVICES IN UNITED KINGDOM ...5 Latent Demand and Accessibility: Background

5

2.2 Latent Demand: Market Composition 5 2.2.1 Market Data................................................................................................................................................ 7 2.2.2 Biofuels and Wastes ................................................................................................................................... 8 2.2.3 Hydropower................................................................................................................................................ 8 2.2.4 Wind and Wave Power............................................................................................................................... 8 2.2.5 Solar Power ................................................................................................................................................ 9 2.2.6 Geothermal Aquifers .................................................................................................................................. 9 2.3 Latent Demand: Leading Segments 9 2.3.1 Public Power Supply Projects .................................................................................................................. 10 2.3.2 Individual Business Projects .................................................................................................................... 10 2.3.3 Household Consumer Opportunities ........................................................................................................ 10 2.4

Key Suppliers

10

2.5

Prospective Buyers

11

2.6

Accessibility: Market Entry

12

2.7

Market Issues and Obstacles

13

2.8 Key Contacts 13 2.8.1 Trade Events............................................................................................................................................. 13 2.8.2 Public Sector ............................................................................................................................................ 14 2.8.3 Trade Organizations ................................................................................................................................. 14 2.8.4 Publications and Information ................................................................................................................... 14

3 FINANCIAL INDICATORS: STEAM, GAS AND HYDRAULIC TURBINES AND TURBINE GENERATOR SET UNITS .....................................................................................15 3.1 Overview 15 3.1.1 Financial Returns and Gaps in United Kingdom...................................................................................... 16 3.1.2 Labor Productivity Gaps in United Kingdom........................................................................................... 19 3.1.3 Limitations and Extensions ...................................................................................................................... 19 3.2 Financial Returns in United Kingdom: Asset Structure Ratios 20 3.2.1 Overview .................................................................................................................................................. 20 3.2.2 Assets – Definitions of Terms .................................................................................................................. 20 3.2.3 Asset Structure: Outlook .......................................................................................................................... 23 3.2.4 Large Variances: Assets ........................................................................................................................... 24

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Key Percentiles and Rankings .................................................................................................................. 27

3.3 Financial Returns in United Kingdom: Liability Structure Ratios 42 3.3.1 Overview .................................................................................................................................................. 42 3.3.2 Liabilities and Equity – Definitions of Terms .......................................................................................... 42 3.3.3 Liability Structure: Outlook ..................................................................................................................... 44 3.3.4 Large Variances: Liabilities ..................................................................................................................... 45 3.3.5 Key Percentiles and Rankings .................................................................................................................. 48 3.4 Financial Returns in United Kingdom: Income Structure Ratios 61 3.4.1 Overview .................................................................................................................................................. 61 3.4.2 Income Statements – Definitions of Terms .............................................................................................. 61 3.4.3 Income Structure: Outlook ....................................................................................................................... 64 3.4.4 Large Variances: Income.......................................................................................................................... 65 3.4.5 Key Percentiles and Rankings .................................................................................................................. 68 3.5 Financial Returns in United Kingdom: Profitability Ratios 83 3.5.1 Overview .................................................................................................................................................. 83 3.5.2 Ratios – Definitions of Terms .................................................................................................................. 83 3.5.3 Ratio Structure: Outlook .......................................................................................................................... 86 3.5.4 Large Variances: Ratios ........................................................................................................................... 87 3.5.5 Key Percentiles and Rankings .................................................................................................................. 90 3.6 Productivity in United Kingdom: Asset-Labor Ratios 103 3.6.1 Overview ................................................................................................................................................ 103 3.6.2 Asset to Labor: Outlook ......................................................................................................................... 104 3.6.3 Asset to Labor: International Gaps......................................................................................................... 105 3.6.4 Key Percentiles and Rankings ................................................................................................................ 108 3.7 Productivity in United Kingdom: Liability-Labor Ratios 123 3.7.1 Overview ................................................................................................................................................ 123 3.7.2 Liability to Labor: Outlook .................................................................................................................... 124 3.7.3 Liability and Equity to Labor: International Gaps.................................................................................. 125 3.7.4 Key Percentiles and Rankings ................................................................................................................ 128 3.8 Productivity in United Kingdom: Income-Labor Ratios 141 3.8.1 Overview ................................................................................................................................................ 141 3.8.2 Income to Labor: Outlook ...................................................................................................................... 142 3.8.3 Income to Labor: Gaps ........................................................................................................................... 143 3.8.4 Key Percentiles and Rankings ................................................................................................................ 146

4 4.1

MACRO-ACCESSIBILITY IN UNITED KINGDOM....................................................161 Executive Summary

161

4.2 Economic Fundamentals and Dynamics 161 4.2.1 Principal Growth Sectors........................................................................................................................ 161 4.2.2 Government Intervention Risks.............................................................................................................. 162 4.2.3 Infrastructure .......................................................................................................................................... 162 4.3 Political Risks 162 4.3.1 Political Relationship with the United States ......................................................................................... 162 4.3.2 Politics and the Business Environment .................................................................................................. 163 4.3.3 The Political System............................................................................................................................... 163

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4.4 Marketing Strategies 163 4.4.1 Creating a Sales Office........................................................................................................................... 163 4.4.2 Creating a Joint Venture......................................................................................................................... 164 4.4.3 Agents and Distributors.......................................................................................................................... 164 4.4.4 Hiring Local Counsel ............................................................................................................................. 164 4.4.5 Checking Bona Fides.............................................................................................................................. 164 4.4.6 Distribution and Sales Channels............................................................................................................. 164 4.4.7 Franchising and Direct Marketing.......................................................................................................... 165 4.4.8 Selling Strategies.................................................................................................................................... 165 4.4.9 Pricing and Licensing Issues .................................................................................................................. 166 4.4.10 Advertising and Trade Promotion .......................................................................................................... 166 4.4.11 Government Procurement....................................................................................................................... 167 4.5 Import and Export Regulation Risks 167 4.5.1 Membership in Free Trade Arrangements.............................................................................................. 167 4.5.2 Tariff and Non-Tariff Barriers................................................................................................................ 168 4.5.3 Prohibited Imports and USG-Imposed Export Controls......................................................................... 168 4.5.4 Import Taxes and License Requirements ............................................................................................... 168 4.5.5 Customs Regulations and Contact Information...................................................................................... 168 4.5.6 Temporary Goods Entry Requirements.................................................................................................. 169 4.5.7 Labeling Issues....................................................................................................................................... 169 4.5.8 Warranty and Non-Warranty Repairs..................................................................................................... 169 4.5.9 Free Trade Zones and Warehouses......................................................................................................... 169 4.6 Investment Climate 170 4.6.1 Openness to Foreign Investment ............................................................................................................ 170 4.6.2 Conversion and Transfer Policies........................................................................................................... 171 4.6.3 Expropriation and Compensation ........................................................................................................... 171 4.6.4 Dispute Settlement ................................................................................................................................. 171 4.6.5 Political Violence ................................................................................................................................... 171 4.6.6 Performance Requirements and Incentives ............................................................................................ 172 4.6.7 Right to Private Ownership and Establishment ...................................................................................... 172 4.6.8 Protection of Property Rights ................................................................................................................. 173 4.6.9 Regulatory System ................................................................................................................................. 174 4.6.10 Bilateral Investment Agreements ........................................................................................................... 174 4.6.11 OPIC and Other Investment Insurance Programs................................................................................... 174 4.6.12 Labor ...................................................................................................................................................... 174 4.6.13 Foreign Trade Zones and Free Ports....................................................................................................... 175 4.6.14 Major Foreign Investors ......................................................................................................................... 175 4.7 Trade and Project Financing 176 4.7.1 The Banking System .............................................................................................................................. 176 4.7.2 Foreign Exchange Control Risks............................................................................................................ 176 4.7.3 General Availability of Financing .......................................................................................................... 176 4.8 Travel Issues 176 4.8.1 Local Business Practices ........................................................................................................................ 176 4.8.2 Travel Advisory and Visas ..................................................................................................................... 177 4.8.3 Infrastructure for Conducting Business.................................................................................................. 178 4.8.4 Country Data .......................................................................................................................................... 180 4.9 Key Contacts 180 4.9.1 U.S. Embassy Trade-Related Contacts................................................................................................... 180 4.9.2 Bilateral Business Councils.................................................................................................................... 181 www.icongrouponline.com

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UK Trade and Industry Associations ..................................................................................................... 182 UK Government Offices ........................................................................................................................ 183 UK Commercial Banks .......................................................................................................................... 185 Multilateral Development Banks............................................................................................................ 186 Washington D.C.-Based U.S. Contacts .................................................................................................. 186

DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS .........187

5.1

Disclaimers & Safe Harbor

187

5.2

Icon Group International, Inc. User Agreement Provisions

188

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1 1.1

INTRODUCTION & METHODOLOGY WHAT DOES THIS REPORT COVER?

The primary audience for this report is managers involved with the highest levels of the strategic planning process and consultants who help their clients with this task. The user will not only benefit from the hundreds of hours that went into the methodology and its application, but also from its alternative perspective on strategic planning relating to renewable energy equipment and services in United Kingdom. As the editor of this report, I am drawing on a methodology developed at INSEAD, an international business school (www.insead.edu). For any given industry or sector, including renewable energy equipment and services, the methodology decomposes a country’s strategic potential along four key dimensions: (1) latent demand, (2) micro-accessibility, (3) proxy operating pro-forma financials, and (4) macro-accessibility. A country may have very high latent demand, yet have low accessibility, making it a less attractive market than many smaller potential countries having higher levels of accessibility. With this perspective, this report provides both a micro and a macro strategic profile of renewable energy equipment and services in United Kingdom. It does so by compiling published information that directly relates to latent demand and accessibility, either at the micro or macro level. The reader new to United Kingdom can quickly understand where United Kingdom fits into a firm’s strategic perspective. In Chapter 2, the report investigates latent demand and microaccessibility for renewable energy equipment and services in United Kingdom. In Chapters 3 and 4, the report covers proxy operating pro-forma financials and macro-accessibility in United Kingdom. Macro-accessibility is a general evaluation of investment and business conditions in United Kingdom.

1.2

HOW TO STRATEGICALLY EVALUATE UNITED KINGDOM

Perhaps the most efficient way of evaluating United Kingdom is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to renewable energy equipment and services are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”). www.icongrouponline.com

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Introduction & Methodology

2

Framework for Prioritizing Countries Demand/Market Potential Driven Firm

High

Highest Priority

High Priority Latent Demand

Moderate Priority Low Priority

Low

Lowest Priority Low

High Relative Accessibility

Accessibility/Supply Averse Firm High Highest Priority High Priority Latent Demand

Moderate Priority Low Priority

Lowest Priority Low High

Low Relative Accessibility

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Introduction & Methodology

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In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market – neither a market-driven nor a costdriven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).

1.3

LATENT DEMAND AND ACCESSIBILITY IN UNITED KINGDOM

This report provides a detailed overview of factors driving latent demand and accessibility for renewable energy equipment and services in United Kingdom. Latent demand is largely driven by economic fundamentals specific to renewable energy equipment and services. This topic is discussed in Chapter 2 using work carried out in United Kingdom on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for renewable energy equipment and services in United Kingdom. I use the term “micro” since the discussion is focused specifically on renewable energy equipment and services. Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in United Kingdom. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in United Kingdom. The numbers are only indicative of an average firm whose primary activity is in United Kingdom. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in United Kingdom. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “steam, gas and hydraulic turbines and turbine generator set units”, as defined in Chapter 3. Again, while “steam, gas and hydraulic turbines and turbine generator set units” does not exactly equate to “renewable energy equipment and services”, it nevertheless gives an indicator of how United Kingdom compares to other countries for a proxy adjacent category along various dimensions. Chapter 4 deals with macro-accessibility and covers factors that go beyond renewable energy equipment and services. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in United Kingdom: •

Openness to Trade in United Kingdom

•

Openness to Direct Investment in United Kingdom

•

Local Marketing and Entry Strategy Alternatives

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Introduction & Methodology

•

Local Human Resources

•

Local Risks

4

Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in United Kingdom. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering United Kingdom. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.

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2

RENEWABLE ENERGY EQUIPMENT AND SERVICES IN UNITED KINGDOM

2.1

LATENT DEMAND AND ACCESSIBILITY: BACKGROUND

The UK’s renewable energy market is set to grow by around 22% per year from $1.7 billion in 2007 to over $30 billion by 2020. Two key factors are driving this growth: •

The urgent need to find new sources of energy to replace rapidly diminishing UK oil and gas reserves, and strong UK and EU environmental legislation aimed at substantially increasing the proportion of energy produced from renewable sources.

•

The UK has a target to deliver 10% of its electricity from renewable sources by 2010, and 20% by 2020. According to industry experts, it may be difficult to achieve the 2020 target unless there is a dramatic increase in the production of renewable capacity in the short term.

As a result, the renewable energy industry is currently attracting substantial investment. Over 1,000 companies are actively involved in the renewable energy industry in the UK. Global organizations are attracted to the UK by the strength of market demand, substantial government investment, and the country’s relatively low-risk business environment. Partnerships between UK and overseas organizations are increasingly viewed as an important means of fast-tracking the introduction of additional renewable energy projects into the UK. Future opportunities for U.S. companies are particularly strong in wind and wave power. The UK has more than 50% of Europe’s wind resource, as well as the greatest potential for wave and tidal stream power in Europe. The main risks and challenges in entering the UK renewables market involve tight government regulation, complex contracting procedures, planning delays, and a possible longer term shortage of available sites—for wind farms in particular. Also, there is a danger that future UK policy makers could switch their focus to nuclear power as a means of achieving their particularly challenging targets for non-carbon-based energy production.

2.2

LATENT DEMAND: MARKET COMPOSITION

The main forms of renewable energy currently consumed in the UK are biofuels and wastes (83.3%), followed by hydropower (10%), and wind power (5.9%). Between 2001 and 2005, biofuels saw year-on-year growth. Hydropower usage, though an important contributor, varied—mostly because of changing weather conditions. Between 2001 and 2005, the fastest percentage growth was in wind power, which increased by 201% from 83,000 toe (tons of oil equivalent) to 250,100 toe. In 2005, 88.6% of total consumption of renewable energy was used for electricity generation and 11.4% for heat production. Compared to conventional sources, the use of renewable energy will remain a relatively small contributor to overall energy production in the foreseeable future, even if the government manages to meet its ambitious target of 20% by 2020.

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Renewable Energy Equipment and Services

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Renewable Energy Demand in the UK, 2005 90.0%

83.3%

80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0%

10%

5.90%

10.0% 0.0% Biofuels

Hydro power

Wind power

Source: Digest of UK Energy Statistics 2006, UK Department of Trade and Industry However, the growth rate in renewable energy production is set to substantially exceed that of conventional energy sources. The use of renewable energy for electricity production is forecast to grow 430% between 2000 and 2015. In the same period, the use of gas will advance by 44%, there will be no significant change in the use of oil, and coal use will decline 11%. It is this high rate of growth in renewable energy production from a relatively small existing base that is creating significant new opportunities for businesses that supply renewable energy products and services to the UK.

Forecast Growth in Total UK Energy Production by Type, 2000-2015 Energy Type Gas Coal Oil Renewables

2000 100 100 100 100

2005 16% 13% No Change 70%

2010 18% -5% No Change 230%

2015 44% -11% No Change 430%

Source: “The Energy Challenge;” UK Department of Trade and Industry In order to stimulate renewable energy market growth over the next decade, the UK government has approved substantial funding for research and development. For example, $234 million has been allocated to offshore wind farm development, $62 million to photovoltaics, $43 million to community electricity projects, and $100 million to the Marine Renewables Fund for research into wave power.

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Renewable Energy Equipment and Services

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Market Data

There are 5 main forms of renewable energy in the UK. Recent production trends and compound annual growth rates (CAGR) for each are shown in the following table.

Total Use of Energy from Renewable Sources in the UK, 2001-2005 (‘000 toe) Renewable Energy Source Biofuels and Wastes hydropower Wind Power Solar Power Geothermal Aquifers Total

2001 2,171.6 348.7 83.0 13.4 0.8 2,617.6

2002 2,359.6 411.7 108.0 16.3 0.8 2,896.4

2003 2,706.3 277.5 110.5 20.0 0.8 3,115.2

2004 3,076.4 423.9 166.4 24.9 0.8 3,692.4

2005 3,538.0 426.6 250.1 30.1 0.8 4,245.5

GAGR*% 13.0 5.2 31.8 22.4 0.0 12.9

Note: Totals do not sum due to rounding. * CAGR is compound annual growth rate. Source: Key Note Ltd., 2006 Biofuels dominate the market with an 83.3% share of total production in 2005.

All Sources Of Renewable Energy In The UK, 2005

Source: Digest of Energy Statistics 2006, UK Department of Trade and Industry

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Renewable Energy Equipment and Services

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Biofuels and Wastes

Biofuels and wastes are currently the fastest growing segment in both electricity generation and heating. While the use of renewable energy for heating has declined due to a decrease in the use of industrial wood combustion, biofuels and wastes remain the most significant segment in the production of heat. Combined Heat and Power (CHP) is becoming an increasingly attractive option for biomass plants, offering a reliable low-cost heat source for industrial or commercial uses. Excess electricity can then be sold to the local grid. Biomass fuels are increasingly being used with advanced conversion technologies, such as gasification systems, which offer superior efficiencies compared with conventional power generation.

2.2.3

Hydropower

Currently, the largest regional producers of hydropower are in Wales and Scotland, where geographical and meteorological conditions are best suited for large-scale hydropower projects. The hydropower sector is the longest established renewable energy market segment in the UK, with most of the potential for hydropower already developed. However, the British Hydropower Association forecasts that the greatest potential future growth is in “micro hydro,”—smaller power systems situated on dams and rivers rather than on major reservoirs.

2.2.4

Wind and Wave Power

The UK’s long coastlines offer significant potential for growth in offshore wind farms. The use of wind and wave power tripled between 2001 and 2005 due to the tremendous growth in offshore power production. In addition, plans for the world’s largest onshore wind farm, a joint venture between Amec and British Energy, were submitted in mid2006. This project has the potential to provide electricity to over 20% of Scotland’s population, indicating significant growth prospects in this segment. There are almost twice as many wind farm projects currently approved for construction or in planning (322) as there are existing wind farms (172). In addition, new project capacity (14,786 megawatts) will be nearly five times that available from current wind farms (3,019 megawatts).

UK Wind Farm Projects Operational Under Construction Agreed Projects Planned Projects

Onshore 132 31 79 226

Megawatt Capacity 1,731 691 1,481 8,196

Offshore 5 4 10 7

Megawatt Capacity 303 294 2,484 2,625

Source: British Wind Energy Association 2007 The UK Department of Trade and Industry (DTI) suggests that up to half of the UK’s 2010 target for electricity production from renewable sources can be met by wind energy. The International Energy Agency estimates that the global cost of producing wind energy has dropped from 80 cents a kilowatt hour in 1980 to less than ten cents today. One issue often highlighted as a possible short-term risk for the continued growth of wind power is the worldwide shortage of available wind turbines. This supply situation will soon change, however, because major global manufacturers are currently increasing capacity to meet forecast demand.

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The use of wave power in the UK is also set to significantly increase because the Scottish Parliament is planning to provide funding to create the world’s biggest wave farm off the Orkney Islands north of the Scottish mainland. This venture, being planned by local supplier Scottish Power, could create enough power for 2,000 homes. A government funding package of over $25 million has been announced to help get wave and tidal machines in the water within the next twelve to eighteen months.

2.2.5

Solar Power

Unlike other renewable energy segments, solar power is not generally used for mass production of power or heat. Most of its applications are small scale; it is used to heat and/or generate electricity for domestic and industrial buildings. The UK government is currently encouraging the adoption of solar energy solutions at the household level through its Low Carbon Buildings Program. This initiative offers grants to subsidize the cost of installing solar panels and roof-mounted wind turbines. However, this heavily oversubscribed funding program is due to end in 2008.

2.2.6

Geothermal Aquifers

This segment’s share of renewable energy produced between 2001 and 2005 was consistently less than 1%. The potential for warm aquifer geothermal energy in the UK is limited as most identified sources are too far from major cities or are not commercially exploitable.

2.3

LATENT DEMAND: LEADING SEGMENTS

A 2006 UK industry study, “Business Opportunities for SMEs in Tackling Climate Change,” concluded that SMEs are well placed to benefit from the growth in the UK renewable energy market. This is because newer and smaller businesses tend to be able to adapt more dynamically to rapid market change, are typically less risk averse, and are often more technologically innovative than larger, more traditional companies. For these reasons, some of the largest traditional energy players, such as BP, are themselves establishing smaller specialist divisions focused solely on addressing the dynamics of the renewables market. There are three general types of business projects in the renewable energy market.

Business Projects for Renewable Energy Companies Type Public power supply.

Products Power generation equipment and components.

Services Research, design and project management.

Individual businesslevel renewables.

Off-grid generation products and equipment to supply power for internal business use.

Installation and maintenance.

Household renewable energy.

Consumer renewable energy products such as solar panels, roof-mounted wind turbines, etc.

Installation and repair.

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Renewable Energy Equipment and Services

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Public Power Supply Projects

For major public power supply projects, the government or a power generation company will typically appoint a lead contractor. This main contractor then subcontracts each separate element of a project. In this case, it is the prime contractor, rather than the end-user, that represents the best sales channel and prospect for the renewable energy equipment and service suppliers. Currently, there are a number of major UK renewable energy supply projects under discussion or in planning that represent significant opportunities for suppliers to the renewable energy industry. One such opportunity recently given the green light by the government is the Thames Estuary offshore wind farm project. When completed this will be the world’s largest offshore wind farm. It is expected to cost $2.9 billion and will use 341 wind turbines, with five offshore substations and four meteorological masts. A second, smaller offshore wind farm at nearby Thanet, expected to cost $877 million, will consist of 100 wind turbines. A prime example of a major new opportunity presently under UK government evaluation is the Severn River Tidal Power Group project. It involves creating a ten-mile wide barrage across the River Severn which has the world’s second largest tidal range. When built, it would be capable of supplying up to 6% of the UK’s total electricity demand. It is estimated that this project will take six years to complete at a projected cost of over $29 billion.

2.3.2

Individual Business Projects

Internal “off-grid” renewable energy projects at an individual business level are often contracted out, but some are procured and delivered directly by the infrastructure and asset management departments of companies. With the increasing cost and regulatory burden associated with the use of fossil fuels by UK industry, a fast-growing emerging trend is for individual businesses to source their own power generation solutions, partly or wholly independent off the national grid. This has created significant opportunity for the suppliers of equipment such as biogas generators and similar products. Apart from the traditional heavy industrial users of energy such as manufacturing companies, public sector organizations (hospitals, universities and local government offices) are increasingly turning to renewable, off-grid energy sources like biogas.

2.3.3

Household Consumer Opportunities

For household renewable products, the traditional route to market is via wholesalers, retailers, and individual installation companies. As an indicator of the UK public appetite for renewable energy solutions at the household level, a recent national consumer survey suggested that 73% of UK citizens believe that all new homes should incorporate microgeneration capabilities. National hardware chains such as B&Q have recently started to stock solar panels and roof-mountable wind turbines in anticipation of growing demand for these products by individual consumers.

2.4

KEY SUPPLIERS

Many of the existing key suppliers currently active in the UK market can be identified from the member lists of trade associations such as The Renewable Energy Association (www.r-p-a.org.uk), The British Wind Energy Association (www.bwea.com), the Solar Trade Association (www.greenenergy.org.uk) and the British Hydropower Association (www.british-hydro.org).

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Some key suppliers to each of the renewable energy market segments include: •

Biofuels: Biofuels Corporation plc, Greenergy International Ltd., Compact Power Ltd.

•

Hydro: Black and Veatch Ltd., The Weir Group plc.

•

Wind: Novera Energy Ltd., Clarke Energy Ltd.

•

Wave: Ocean Energy Ltd., Wavegen, EMEC.

•

Solar: BP Alternative Energy, Solar Logic, Ecovision Systems.

2.5

PROSPECTIVE BUYERS

Prospective buyers fall into two main categories: •

Buyers for major public supply and large individual business projects.

•

Buyers for microgeneration and consumer renewables.

In the “major buyers” category, existing operators in the UK renewable energy market with large-scale renewable projects already in planning or on their books include: •

AMEC Wind Energy: Part of AMEC plc, a major engineering services company recently nominated to construct a large offshore wind farm in Scotland.

•

BP Alternative Energy International Ltd.: Part of the multinational oil and gas company that plans to invest $8 billion in renewables over the next ten years.

•

E.ON UK Renewables: A UK subsidiary of the German power company nominated to construct a $3 billion wind farm in the Thames Estuary in a consortium with Shell, WindEnergy Ltd. and Core Ltd.

•

Npower Renewables: A UK subsidiary of the German power company RWE AG, which has been nominated to build a new hydropower scheme in Scotland and is also involved in several new wind farm projects.

•

Renewable Energy Systems Ltd.: Part of the construction company Sir Robert McAlpine Group, which is involved in the construction of several wind farms in the UK and Ireland.

•

Scottish and Southern Energy plc: The UK power company currently involved in several wind farm projects and a new hydroelectric project in Scotland.

•

Scottish Power plc: The UK power company that currently has fourteen wind farm facilities and plans for several more projects, plus hydroelectric facilities in Scotland.

•

Shell Renewables: Part of the international oil and gas giant and a member of the London Thames Estuary wind farm consortium.

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2007 Icon Group International, Inc.

Renewable Energy Equipment and Services

12

UK Regional Power Distribution Companies

Source: Energy Networks Association As conventional power supply companies diversify into renewables, these companies will represent a source of new business for renewable energy industry suppliers. Due to historic licensing arrangements, these traditional power supply companies operate on a regional basis in the UK. At the individual business level, U.S. exporters can identify prospective buyers by monitoring invitations to tender published by such companies as Tenders Direct (www.tendersdirect.co.uk) and The Achilles Group (www.achilles.com) in the UK, and by identifying appropriate distributors and agents. At the lower end of the scale, local renewable energy product suppliers and installation companies can be identified in business directories such as Kelly, Kompass, and Yellow Pages.

2.6

ACCESSIBILITY: MARKET ENTRY

Individual product suppliers typically enter the market through specialist distributors and manufacturers’ agents. A further route to UK market entry is through partnership arrangements with existing UK suppliers. This is particularly relevant for large scale infrastructure projects and opportunities requiring a high level of investment or research and development input.

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Renewable Energy Equipment and Services

13

Also, many of the UK’s universities run departments to commercialize new technologies. Some of these specialize in specific markets, including renewable energy. University spin-outs are increasingly seeking to partner with existing industry suppliers to help market their innovations. Another possible method of entering the market is to bid directly for renewable energy tender opportunities. Under EU legislation, all of the public sector contracts for renewable energy projects in the UK, above a minimum value, have to be procured via a highly regulated official tendering process designed to ensure open competition. A good way to identify such opportunities is to monitor the contract notices published in the Supplement to the Official European Journal, via the EU Web site ted.europa.eu/. The EU Journal not only contains all formal invitations to tender, but also the notifications of forthcoming projects for which suppliers can register their official interest as part of a pre-qualification process. In addition to the EU Journal, most of the UK energy companies subscribe to a procurement administration service run by the Achilles Group (see www.achilles.com). Achilles offers “business opportunity” and “supplier screening” services to both buyers and sellers in the utilities marketplace. Along with other organizations such as Tenders Direct (see www.tendersdirect.co.uk) such companies will advise interested suppliers of new contract opportunities as they arise. They will also provide information to companies new to the UK market on tendering and contract regulations in the UK.

2.7

MARKET ISSUES AND OBSTACLES

The present rapid growth in investment in renewable energy projects makes the UK an attractive market for U.S. companies. Also, the EU procurement regulations on open competition help provide a level playing field for suppliers, irrespective of their country of origin. However, there are a number of issues and potential market obstacles that companies wishing to enter the UK market should consider. First, the contract bidding process for energy industry projects, though open, can be complex, financially onerous, and time-consuming. For smaller companies without access to specialist legal counsel and extensive bid management resources, the time and expense involved in bidding for such projects can be daunting. For this reason, overseas companies seeking easier entry into the UK market often consider collaborating with UK-based partners or distributors familiar with the commercial and regulatory. Second, the UK energy industry is highly regulated by the Energy Division of the UK Government’s Department of Trade and Industry (see Web site www.dti.gov.uk/energy/index.html) and its associated industry watchdog body, OFGEM, the Office of Gas and Electricity Markets (see Web site www.ofgem.gov.uk). Companies wishing to enter the market may face a number of regulatory issues, which apply to various aspects of the energy market including licensing, competition practices, tariffs and pricing, health and safety, marketing practices, and environmental management issues.

2.8

KEY CONTACTS

2.8.1

Trade Events

Renewable Energy Association Bioenergy 2007 September 20th –21st, 2007 www.r-p-a.org.uk

www.icongrouponline.com

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Renewable Energy Equipment and Services

14

World Renewable Energy Congress X July 19th-25th, 2008 www.wrenuk.co.uk

2.8.2

Public Sector

•

The Carbon Trust: www.carbontrust.co.uk

•

Department for Trade and Industry: www.dti.gov.uk

•

The National Energy Foundation: www.nef.org.uk

2.8.3

Trade Organizations

•

Renewable Energy Association: www.r-p-a.org.uk

•

British Wind Energy Association: www.bwea.com

•

Energy Industries Council: www.the-eic.com

•

Energy Systems Trade Association: www.esta.org.uk

•

Business Council for Sustainable Energy UK: www.bcse.org.uk

2.8.4

Publications and Information

•

Renewable Energy News: www.renewableenergy.com

•

European Power News: www.epnmagazine.com

•

Energy Engineering Magazine: www.energyengineering.co.uk

•

Key Note Ltd. Market Report 2006 “Renewable Energy”: www.keynote.co.uk

www.icongrouponline.com

2007 Icon Group International, Inc.

15

3

3.1

FINANCIAL INDICATORS: STEAM, GAS AND HYDRAULIC TURBINES AND TURBINE GENERATOR SET UNITS OVERVIEW

Is The United Kingdom competitive? With the globalization of markets, the increased mobility of corporate assets, and the need for productive human resources, this question has become all the more complex to answer. The financial indicators section was prepared to tackle this question by focusing on certain fundamentals: financial performance and labor productivity. Rather than focus on the economy as a whole, the analysis presented here considers only one sector: steam, gas and hydraulic turbines and turbine generator set units. We are essentially interested in the degree to which firms operating in The United Kingdom have fundamentally different financial structures and performance compared to firms located elsewhere. With respect to this view of competitiveness, if one were to invest or operate in The United Kingdom, how would the firm’s asset structure likely vary compared to a firm operating in some other country in Europe or average location in the world? In The United Kingdom, do firms typically hold more cash and other short term assets, or do they concentrate their assets in physical plant and equipment? On the liability side, do firms operating in The United Kingdom have a higher percent of payables compared to other firms operating in Europe, or do they hold a higher concentration of long term debt? The structure of the income statement is also telling. Do firms operating in The United Kingdom have relatively higher costs of goods sold, operating costs, or income taxes compared to firms located elsewhere in the region or the world in general? Are returns on equity higher in The United Kingdom? Are profit margins greater? Are inventories held longer? The financial indicators section was designed to answer these and similar questions that naturally affect one’s decision to invest or operate in The United Kingdom. Again, we are particularly interested in steam, gas and hydraulic turbines and turbine generator set units, and not the economy as a whole. In many instances, people make all the difference. In addition to financial competitiveness, we consider the extent to which labor deployment and productivity in The United Kingdom differs from regional and global benchmarks. In this case, we are interested in the amount of labor required to operate a typical business in The United Kingdom and the likely returns on this human investment. What is the typical ratio of short-term and long-term assets to employee (employed in steam, gas and hydraulic turbines and turbine generator set units operations)? What are typical capitallabor ratios? How different are these ratios to those in Europe in general and the world as a whole? What are the average sales and net profits per employee in The United Kingdom compared to regional benchmarks? The goal of this section is to assist managers in gauging the competitive performance of The United Kingdom at the global level for steam, gas and hydraulic turbines and turbine generator set units. With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark The United Kingdom against other countries on a worldwide basis. Doing so, however, is not an obvious task. This report generates international benchmarks and measures gaps that might be revealed from such an exercise. First, data is collected from companies across all regions of the world. For each of these firms, data are standardized into comparable categories (assets, liabilities, income and ratios), by country, region and on a worldwide basis. From there, we eliminate all currency effects by standardizing within each category. Global benchmarks are then compared to those estimated for steam, gas and hydraulic turbines and turbine generator set units in The United Kingdom. Though we heavily rely on historical performance, the figures reported are not historical but are forecasts and projections for the coming fiscal year.

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Financial Indicators

3.1.1

16

Financial Returns and Gaps in United Kingdom

The approach used in this report to evaluate operating performance for steam, gas and hydraulic turbines and turbine generator set units in The United Kingdom is called "vertical analysis." For those unfamiliar with this type of analysis, frequently taught in graduate schools of business, the reader is recommended Jae K. Shim and Joel G. Siegel’s recent book titled Financial Management.1 In their discussion of financial statement analysis and ratios, Skim and Siegel (p. 42-43), describe common-size statement (vertical analysis) as follows: A common-size statement is one that shows each item in percentage terms. Preparation of common-size statements is known as vertical analysis, in which a material financial statement item is used as a base value and all other accounts on the financial statement are compared to it. In the balance sheet, for example, total assets equal 100 percent, and each individual asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders’ equity are assigned a value of 100 percent and each liability or equity account is then stated as a percentage of total liabilities and stockholders’ equity, respectively. … For the income statement, a value of 100 percent is assigned to net sales, and all other revenues and expense accounts are related to it. It is possible to see at a glance how each dollar of sales is distributed among various costs, expenses, and profits. The authors suggest that vertical analyses involve industry-based comparisons. Such a comparison “allows you to answer the question, ‘How does a business fare in the industry?’ You must compare the company’s ratios to… industry norms.” (p. 43-44) This approach is extended to country competitiveness (in this case The United Kingdom) for a particular sector (in this case steam, gas and hydraulic turbines and turbine generator set units). This involves calculating country, regional and global norms. This introduction will describe the seven-stage methodology used to perform this analysis. Each stage should be seen as a working assumption behind the numbers presented in later chapters. Stage 1. Industry Classification. This stage begins by classifying the company into an industry. For this, we have relied on a combination of the North American Industry Classification System (NAICS pronounced “Nakes”), a relatively new system for classifying business establishments, and the older Standard Industrial Classification (SIC) system. Adopted in 1997, NAICS codes are the new industry classification codes used by statistical agencies of the United States. NAICS was developed jointly by the U.S., Canada, and Mexico to provide comparability in statistics about business activity across North America. After 60 years of service, the outdated SIC system was retired on October 1, 2000, leaving only the NAICS codes for official use. The NAICS classification system adds some 350 new industries and represents a revision to over 60% of the previous SIC industries. Despite its official retirement, the SIC system is still commonly used (and often reported in firm’s financial statements). For most companies in the world, classification within either the new NAICS or older SIC systems is a rather straight forward exercise. For some, however, it can be problematic. This is true for several reasons. The first being that the SIC or NAICS classification systems are rather broad for many product and industry categories (a firm’s products or services may be only a minor aspect of the classification’s definition). The second is that some firms’ activities span multiple codes. Finally, it is possible that a firm is classified by one source using its SIC code, and by another using its NAICS code, and by a third using both. Furthermore, some sources do not report either code, but instead use qualitative statements of the firm’s activities. Nevertheless, if one wishes to pursue a vertical analysis, some classification needs to take place which selects a peer group. In making this classification, one can rely on a number of sources. In some countries, firms must “self” classify in official periodic reports (e.g. annular reports, 10Ks, etc.) to public authorities (such as the Securities and Exchange Commission). These reports are then open for public scrutiny (e.g. EDGAR filings). In other cases, commercial data vendors or private research firms provide SIC/NAICS codes for specific companies. These include: •

Bloomberg - www.bloomberg.com

1

Skim and Siegel (2000), Financial Management published by Barron’s Educational Series, Inc. (BARON’S BUSINESS LIBRARY Series), ISBN: 0-7641-1402-6. www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators •

Datastream (Thomson Financial) - www.datastream.com

•

Dun & Bradstreet - www.dnb.com

•

Hoovers - www.hoovers.com

•

HarrisInfoSource - www.HarrisInfo.com

•

InfoUSA - www.infousa.com

•

Investext (Thomson Financial) - www.investext.com

•

Kompass International Neuenschwander SA. – www.kompass.com

•

Moody's Investors Service - www.moodys.com

•

Primark (Thomson Financial) - www.primark.com

•

Profound (The Dialog Corporation – A Thomson Company) - www.profound.com

•

Reuters - www.reuters.com

•

Standard & Poor's - www.standardandpoors.com

17

It is interesting to note that commercial vendors often report different qualitative descriptions and industrial classifications from one to another. These descriptions and classifications may also be different from those reported by the firm itself. Anyone hoping to perform a benchmarking study, therefore, has to make a judgment call across these various sources in order to determine a reasonable classification. In this report, we have decided a metaanalytic process, by combining various sources (including linking a classification’s keywords to qualitative descriptions of the firm’s product line). In cases of inconsistency, the most recent or globally comparable available is chosen. Again, the overall goal is to classify firms, which either produce similar products, offer similar services, or are in the same stage of the value chain for a particular industrial classification. In the case of this report, the SIC code selected is: 3511 which is defined as “steam, gas and hydraulic turbines and turbine generator set units”. This classification should be seen as a working assumption. In order to obtain a more detailed discussion of this classification, the reader is referred to the Web sites developed by the U.S. Census Bureau: http://www.census.gov/epcd/www/naics.html. Basic definitions and descriptions are provided at: http://www.census.gov/epcd/www/drnaics.htm#q1. A full correspondence table between SIC and NAICS codes, and detailed definitions are given at http://www.census.gov/epcd/www/naicstab.htm. Stage 2. Firm-Level Data Collection. A global search was conducted across over 20,000 companies in over 40 major economies, including The United Kingdom, for those that report financials (balance sheet and income statements) and that are involved in steam, gas and hydraulic turbines and turbine generator set units. It should be noted that the public-domain financials can be either historic or projections. It should also be noted that even historic figures can be modified in the future and often represent “estimates” of performance. Stage 3. Standardization. Once collected, public domain financial figures of firms identified in Stage 2 are standardize into comparable categories (assets, liabilities, and income). Again, these are limited to firms involved in some aspect of steam, gas and hydraulic turbines and turbine generator set units (i.e. are members of the value chain). From there, we eliminate all currency effects by standardizing within each category (creating ratios). In order to maintain comparability over time and across countries, vertical analysis is used. In the case of a firm’s assets, we treat the total assets as equaling 100, irrespective of the value of the local currency. All other assets are then calculated as a percent of total assets. In this way, the structure of the firm’s assets can be easily interpreted and compared with international benchmarks. For liabilities, total liabilities and equity are indexed to equal to 100. For the income statement, total revenue is indexed to equal 100, and all other figures are calculated as a percent of these figures. Stage 4. Filtering. Not all the firms selected in Stage 2 or the ratios calculated in Stage 3 are used for the country, regional or global benchmarks, as a number of companies are purposely dropped from the analysis. This is justified by the “outlier” phenomenon that plagues such analysis. The problem lies in that any given company in the benchmarking pool may be facing some exceptional event or may be organized in an exceptional way so as to make

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Financial Indicators

18

its ratios vastly different from the norm. By including such firms, the global benchmarks can be overly skewed. In many countries, firms are organized into holding groups. These groups nominally have very few employees (e.g. 4 to 25 employees), but have extremely large assets, liabilities, or revenues. As such, the inclusion or exclusion of firms having this form of management can affect the ratios and benchmarks reported. Likewise, some firms have no net sales, no assets, no liabilities, or ratios. Others have ratios that appear implausible for a normal or viable company. In order to not allow these firms to affect the global benchmarks, only those firms with reasonable financials have been chosen. Finally, in some countries, detailed financials are not available or are not comparable to either the company in question or the global norm (e.g. various forms of depreciation). In this case, only those which exist and are comparable are reported. The details, therefore, that comprise a given ratio or set of ratios may not be reported. This may lead to the addition of several ratios, not summing to the whole. Stage 5. Calculation of Global Norms. Once the filtering process has eliminated outliers, a final list of companies included is compiled. Based on this list, the ratios discussed in Stage 3 are calculated for every firm, and then averaged to create country, regional and global benchmarks. The world average is calculated using each country’s population as a weight. Stage 6. Projection of Deviations. The goal of this report is not only to estimate raw ratios or averages, but also to present the difference between The United Kingdom and projected global averages for that same ratio. Furthermore, it can be insightful to know the location of each ratio within the distribution of the countries represented in Stage 5. These deviations, in fact, can be seen as projections or likely scenarios for the future. This is often true for two reasons. First, while a company’s financials change from year to year, its ratios are often stable. This is especially true for the country, regional and global benchmarks which represent averages across companies. From a purely Bayesian sense, the difference between the company’s recent ratios and the benchmarks are a reasonable prior for future deviations. This is true, even if the entire industry is hit by an external or exogenous shock, such as an oil crisis or economic slowdown. In other words, we assume that the structure of the variance in the industry’s financials remains stable. Second, many of the data are based on preliminary reports that might be changed in future filings. As forecasts, therefore, the numbers derived from these are also forecasts of past and future performance (with associated uncertainties). The calculation of the difference between a country’s ratios and the global benchmarks is meant to yield roughly approximate forecasts, or "useful measures". Within Europe, the reliability of estimates varies from one country to another for those ratios given in tables that report national averages. This is true because reliable source statistics are not available for all countries in Europe. Countries with the highest reliability, or sample sizes after filtering in Stage 4, include Denmark, France, Germany, and Netherlands. Others are generally econometrically extrapolated using models that use country characteristics (e.g. income per capita) as independent variables (i.e. countries having similar economic structures are assumed to have similar operating ratios). Again, the forecasts are based on the assumption of relative stability. This assumption has proven extremely robust in previous applications of this methodology (i.e. today’s weather is a good predictor of tomorrow’s weather, but not the weather three years from now). The results reported should be viewed as those for a “proto-typical” firm operating in The United Kingdom whose primary activity is steam, gas and hydraulic turbines and turbine generator set units. Stage 7. Projection of Ranks and Percentiles. Based on the calculation of deviations, relative ranks and percentiles are calculated across the firms used in the benchmarks. The percentile estimates the percent of a representative sample of countries in the world having values of the ratio lower than The United Kingdom. It is important to note that a percentile being high (or low) does not mean good (or bad) past, present or future financial performance. The reader must draw this conclusion on their own. The estimates provided were created to provide managerial insight, and not a recommendation with respect to particular investments within any country. We graphically report, for each part of the financial statement, the larger structural differences between The United Kingdom and the regional and global benchmarks, and provide a summary table of ranks and percentiles. These are estimates for firm which would be involved in steam, gas and hydraulic turbines and turbine generator set units. A deviation from the global norm need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or perhaps signal a country's relative strength or weakness for the coming fiscal year.

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Financial Indicators

3.1.2

19

Labor Productivity Gaps in United Kingdom

In the case of labor productivity measures, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. The seven stage approach given above is used in a similar manner. We then report, for each part of the financial statement, the larger labor productivity gaps that The United Kingdom has vis-à-vis the worldwide average (for steam, gas and hydraulic turbines and turbine generator set units). Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

3.1.3

Limitations and Extensions

Shim and Siegal (p. 60) stress that “while ratio analysis is an effective tool for assessing a company’s financial condition,” operating The United Kingdom or any other country, “its limitations must be recognized.” They find that (p. 59) “no single ratio or group of ratios is adequate for assessing all aspects of a company’s financial condition” operating in a particular country. The authors note the following limitations associated with ratio analyses which apply to the global benchmarking and vertical analysis presented here (p.60): •

Accounting standards or policies may limit useful comparisons across companies

•

Management accounting practices across companies and countries may not be performed in the same style

•

Ratios are static and do not reveal future trends

•

Ratios do not indicate the quality of the components used to calculate the ratios (i.e. ratios have ambiguous interpretations)

•

Reported ratios may not reflect real values

•

Companies may be highly diversified, limiting the comparability of their ratios to others

•

Industry averages or norms are approximate; finer industry definitions may be required for certain interpretations or comparisons

•

Financial statements and resulting ratios often mean different things to different people depending on their points of view or motivations.

Again, all figures reported here are estimates, so due caution is required. The above caveats, and the fact that statements made in this report are forward-looking, requires that this point be emphasized. A number of intervening factors can have material effect on the ratios and variances forecasted. These include changes in a company's management style, exchange rate volatility, changes in accounting standards, the lack of oversight or comparability in accounting standards, changes in economic conditions, changes in competition, changes in the global economy, changes in source data quality, and similar factors.

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Financial Indicators

3.2 3.2.1

FINANCIAL RETURNS STRUCTURE RATIOS

IN

UNITED

KINGDOM:

20

ASSET

Overview

In this chapter we consider the asset structure of companies involved in steam, gas and hydraulic turbines and turbine generator set units operating in The United Kingdom benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of assets is then presented for companies operating in The United Kingdom and the average global benchmarks (total assets = 100 percent). For ratios where there are large deviations between The United Kingdom and the benchmarks, graphics are provided (sometimes referred to as a financial “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis asset ratios are highlighted across countries in the comparison group.

3.2.2

Assets – Definitions of Terms

The following definitions are provided for those less familiar with the asset-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of assets, only definitions covering certain terms used in this chapter’s tables and graphs are provided here . The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accumulated Depreciation - Buildings. Accumulated depreciation is commonly understood as a contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of a fixed asset. Buildings are fixed assets which represent the acquisition and improvement costs of permanent structures owned or held by the company. Such structures typically include office buildings, storage quarters, or other facilities and also associated items such as loading docks, heating and airconditioning equipment, refrigeration equipment, and all other property permanently attached to or forming an integral part of the structure. However, it generally does not include furniture, fixtures, or other equipment which are not an integral part of the building.

•

Accumulated Depreciation – Property, Plant & Equipment Under Capitalized Leases. Accumulated depreciation of property, plant and equipment under capitalized leases is commonly understood as a contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of property, plant and equipment under capitalized lease obligations.

•

Accumulated Depreciation - Transportation Equipment. Accumulated depreciation of transportation equipment is commonly understood to be contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of transportation equipment.

•

Accumulated Depreciation -Machinery & Equipment. Accumulated depreciation of machinery and equipment is commonly understood to be contra asset account used to report the accumulation of periodic credits to reflect the use of the estimated service life of machinery and equipment.

•

Buildings. Buildings are defined as fixed assets which represent the acquisition and improvement costs of permanent structures owned or held by the company. Such structures include office buildings, storage quarters, or other facilities and also associated items such as loading docks, heating and air-conditioning equipment, refrigeration equipment, and all other property permanently attached to or forming an integral

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Financial Indicators

•

21

part of the structure. However, it does not include furniture, fixtures, or other equipment which are not an integral part of the building. Cash. Cash is typically defined as money on hand, on deposit with chartered bank, or held in the form of eligible securities.

•

Current Assets. Current assets are generally defined to be resources which are available, or can readily be made available, to meet the cost of operations or to pay current liabilities.

•

Deferred Charges. Deferred charges are generally understood to represent the amount which has been paid for services already received by the company but has not been charged to operations.

•

Finished Goods. Finished goods generally comprise the ready-for-sale inventory.

•

Intangible Other Assets. Intangible assets are generally understood to be nonphysical assets such as legal rights (patents and trademarks) recorded at their historical cost then reduced by systematic amortization.

•

Investments in Unconsolidated Subsidiaries. Investments in unconsolidated subsidiaries are typically defined as investments for the purpose of generating revenue in subsidiaries whose financial statements are not combined with the company's.

•

land. Land is generally considered to be a fixed asset. If land is purchased, its capitalized value typically includes the purchase price plus costs such as legal fees, filling and excavation costs which are incurred to put the land in condition for its intended use. If land is acquired by gift, its capitalized value typically reflects its appraised value at the time of acquisition. Land typically does not include depletable resources.

•

long Term Receivables. Long-term receivables are commonly defined as amounts due within a period exceeding one year from private persons, businesses, agencies, funds, or governmental units which are expected to be collected in the form of moneys, goods, and/or services.

•

Machinery & Equipment. Machinery and equipment is commonly defined as a fixed asset classification which typically includes tangible property (other than land, buildings, and improvements other than buildings) with a life of more than one year. Such assets typically include office equipment, furniture, machine tools, and motor vehicles. Equipment may be attached to a structure for purposes of securing the item, but unless it is permanently attached to an integral part of the building or structure, it will generally be classified as equipment and not buildings. Equipment is generally defined as tangible property other than land, buildings, or improvements other than buildings, which is used in operations. Examples include machinery, tools, trucks, cars, furniture, and furnishings.

•

Prepaid Expenses. Prepaid expenses are typically defined as those supplies and/or services (not inventory) acquired or purchased but not consumed or used at the end of the accounting period.

•

Progress Payments. Progress payments are commonly defined as periodic payments to a supplier, contractor, or subcontractor for work as it is completed as desired, in order to reduce working capital requirements.

•

Property Plant & Equipment Under Capitalized Leases. Property plant & equipment under capitalized leases generally consists of the gross book value (rather than the more commonly-used measures of fixed capital stocks in current or real value), of all commercial buildings, associated land and equipment used therein that are owned by the company and that are either used or operated by the company or leased or rented to others (under capitalized leases).

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Financial Indicators

22

•

Property Plant and Equipment - Gross. Gross property, plant and equipment generally consists of the gross book value (rather than the more commonly-used measures of fixed capital stocks in current or real value), of all commercial buildings, associated land and equipment used therein that are owned by the company and that are either used or operated by the company or leased or rented to others.

•

Property Plant and Equipment - Net. Net PP&E equals the original cost of property, plant, and equipment (PP&E), less accumulated depreciation, depletion and amortization (DD&A).

•

Raw Materials. Raw materials are materials which will be converted by a manufacturer into a finished product.

•

Receivables (Net). Net receivables are defined as the net amount due to the company from private persons, businesses, agencies, funds, or governmental units which is expected to be collected in the form of moneys, goods, and/or services.

•

Rental/Lease Property. Rental or leased property is property necessary to the operation of the company and paid for the use of structures, land, roads, rolling stock and equipment.

•

Short Term Investments. Short-term investments are investments which can be typically liquidated in less than one year.

•

Tangible Other Assets. Other tangible assets are commonly understood to be something substantial or real that is capable of being given an actual or approximate value (market or estimated), not classified elsewhere.

•

Total Assets. Total assets are defined as the financial representation of economic resources, the beneficial interest in which is legally or equitably secured to a particular organization as a result of a past transaction or event.

•

Total Inventories. Total inventories are defined as the total amount of goods on hand.

•

Transportation Equipment. Transportation equipment is equipment used for the transportation of goods for sale.

•

Work in Process. Work in progress includes goods which have been started but are not yet ready for sale.

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Financial Indicators

3.2.3

23

Asset Structure: Outlook

Using the methodology described in the introduction, the following table summarizes asset structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in United Kingdom. To allow comparable benchmarking, a common index of Total Assets = 100 is used. All figures are current-year projections for companies operating in United Kingdom based on latest financial results available. Asset Structure United Kingdom Europe World Avg.

_________________________________________________________________________________________________________

Cash & Short Term Investments Cash Short Term Investments Receivables (Net) Total Inventories Raw Materials Work in Process Finished Goods Progress Payments & Other Prepaid Expenses Other Current Assets Current Assets - Total Long Term Receivables Investments in Unconsolidated Subsidiaries Other Investments Property Plant and Equipment - Net Property Plant and Equipment - Gross Land Buildings Machinery & Equipment Rental/Lease Property Transportation Equipment Other Property Plant & Equipment Property Plant & Equipment Under Capitalized Leases Accumulated Depreciation - Total Accumulated Depreciation - Buildings Accumulated Depreciation -Machinery & Equipment Accumulated Depreciation - Rental/Lease Property Accumulated Depreciation - Transportation Equipment Accumulated Depreciation - Other Prop & Equip Accumulated Depreciation - PP&E Under Capitalized Leases Other Assets Deferred Charges Tangible Other Assets Intangible Other Assets Total Assets

11.41 8.00 2.31 30.43 21.50 6.78 4.82 9.78 -0.03 1.57 2.41 65.90 0.55 0.92 0.12 25.17 50.47 1.73 15.63 36.80 1.29 4.10 10.90 3.72 25.31 2.68 23.72 0.51 1.81 7.23 1.18 7.56 1.02 0.17 6.10 100.00

9.00 6.65 4.67 28.55 17.79 4.76 5.79 7.09 0.79 0.74 0.99 56.47 1.17 1.64 6.53 24.97 42.67 3.49 11.49 22.16 6.63 0.93 6.61 3.49 21.48 4.02 14.56 4.20 0.54 4.16 0.89 5.54 0.96 0.36 4.31 100.00

11.41 5.50 5.35 27.15 16.97 5.25 3.51 5.61 0.54 1.33 1.23 57.46 0.66 1.56 4.78 25.30 51.05 1.79 8.80 31.90 1.48 0.91 5.20 2.11 27.21 3.05 19.93 0.44 0.56 2.34 0.42 4.21 0.65 0.61 2.24 100.00

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.2.4

24

Large Variances: Assets

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large asset structure gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Total Inventories 25

21.5 17.79

20

16.97

15 10 4.53

5 0 United Kingdom

Europe

World Average

Gap

Gap: Finished Goods 10

9.78 7.09

8

5.61

6

4.17

4 2 0 United Kingdom

Europe

World Average

Gap

Gap: Current Assets - Total 80

65.9 56.47

60

57.46

40 20

8.44

0 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

25

Gap: Other Investments 8 6 4 2 0 -2 -4 -6

6.53 4.78 0.12

-4.66 United Kingdom

Europe

World Average

Gap

Gap: Buildings 20 15.63 15

11.49 8.8

10

6.83

5 0 United Kingdom

Europe

World Average

Gap

Gap: Machinery & Equipment 40

36.8 31.9

30

22.16

20 10

4.9

0 United Kingdom

Europe

World Average

Gap

Gap: Other Property Plant & Equipment 12

10.9

10 8

6.61 5.2

6

5.7

4 2 0 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

26

Gap: Accumulated Depreciation -Machinery & Equipment 25

23.72 19.93

20 14.56

15 10

3.79

5 0 United Kingdom

Europe

World Average

Gap

Gap: Accumulated Depreciation - Other Prop & Equip 8

7.23

6

4.89

4.16 4

2.34

2 0 United Kingdom

Europe

World Average

Gap

Gap: Other Assets 8

7.56 5.54

6

4.21 3.35

4 2 0 United Kingdom

Europe

World Average

Gap

Gap: Intangible Other Assets 8 6.1 6 4.31

3.86

4 2.24 2 0 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.2.5

27

Key Percentiles and Rankings

We now consider the distribution of asset ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than United Kingdom (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of asset structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical asset ratios are highlighted in additional tables. Asset Structure

United Kingdom

Rank of Total

Percentile

25 of 53 15 of 46 31 of 42 19 of 53 18 of 53 16 of 46 13 of 46 10 of 46 36 of 44 9 of 32 9 of 47 14 of 53 21 of 40 30 of 43 36 of 39 28 of 53 26 of 49 27 of 37 7 of 44 13 of 46 12 of 17 2 of 38 7 of 45 8 of 21 24 of 49 25 of 39 12 of 43 11 of 15 3 of 35 6 of 42 5 of 17 16 of 53 9 of 36 25 of 35 17 of 43

52.83 67.39 26.19 64.15 66.04 65.22 71.74 78.26 18.18 71.88 80.85 73.58 47.50 30.23 7.69 47.17 46.94 27.03 84.09 71.74 29.41 94.74 84.44 61.90 51.02 35.90 72.09 26.67 91.43 85.71 70.59 69.81 75.00 28.57 60.47

_________________________________________________________________________________________________________

Cash & Short Term Investments Cash Short Term Investments Receivables (Net) Total Inventories Raw Materials Work in Process Finished Goods Progress Payments & Other Prepaid Expenses Other Current Assets Current Assets - Total Long Term Receivables Investments in Unconsolidated Subsidiaries Other Investments Property Plant and Equipment - Net Property Plant and Equipment - Gross Land Buildings Machinery & Equipment Rental/Lease Property Transportation Equipment Other Property Plant & Equipment Property Plant & Equipment Under Capitalized Leases Accumulated Depreciation - Total Accumulated Depreciation - Buildings Accumulated Depreciation -Machinery & Equipment Accumulated Depreciation - Rental/Lease Property Accumulated Depreciation - Transportation Equipment Accumulated Depreciation - Other Prop & Equip Accumulated Depreciation - P P & E Under Capitalized Leases Other Assets Deferred Charges Tangible Other Assets Intangible Other Assets Total Assets

11.41 8.00 2.31 30.43 21.50 6.78 4.82 9.78 -0.03 1.57 2.41 65.90 0.55 0.92 0.12 25.17 50.47 1.73 15.63 36.80 1.29 4.10 10.90 3.72 25.31 2.68 23.72 0.51 1.81 7.23 1.18 7.56 1.02 0.17 6.10 100.00

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

28

Cash & Short Term Investments Countries

Value (total assets = 100)

Rank

Percentile

22.46 22.29 22.10 20.17 19.72 19.10 18.47 17.20 16.72 16.48 16.28 15.53 15.50 14.82 14.36 14.17 12.80 12.66 12.64 12.39 11.85 11.41 11.40 11.25 10.76 10.72 10.48 9.83 9.66 9.45 9.31 8.53 6.36 6.27 5.03 4.50 4.42 3.68 3.02 2.94 0.74 0.70 0.50 0.50 0.40

1 2 3 4 5 6 8 9 10 11 12 14 15 16 17 19 20 21 22 23 24 25 26 27 28 29 31 32 33 34 35 37 38 39 41 43 44 45 46 47 48 49 50 51 53

98.11 96.23 94.34 92.45 90.57 88.68 84.91 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 35.85 33.96 30.19 28.30 26.42 22.64 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 0.00

Region

_________________________________________________________________________________________________________

Hong Kong Israel Ireland South Africa Indonesia Australia China South Korea Norway Singapore Japan USA Russia Canada Spain France Malaysia Taiwan Greece Switzerland Finland the United Kingdom Pakistan Czech Republic Philippines Luxembourg Argentina Belgium Italy Germany India Sweden Austria Thailand Denmark Hungary Netherlands Poland Peru New Zealand Brazil Chile Turkey Mexico Portugal

Asia the Middle East Europe Africa Asia Oceana Asia Asia Europe Asia Asia North America Europe North America Europe Europe Asia Asia Europe Europe Europe Europe the Middle East Europe Asia Europe Latin America Europe Europe Europe Asia Europe Europe Asia Europe Europe Europe Europe Latin America Oceana Latin America Latin America the Middle East Latin America Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

29

Cash & Short Term Investments (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

22.10 21.53 16.72 16.58 15.98 15.83 15.79 15.69 15.50 15.46 14.36 14.17 13.48 12.64 12.39 11.85 11.71 11.57 11.56 11.41 11.25 10.72 10.68 10.67 9.83 9.74 9.66 9.45 8.53 6.36 6.30 6.14 6.14 5.03 4.50 4.42 4.05 3.85 3.79 3.68 3.31 3.19 3.18 3.05 2.64 0.47 0.43 0.42 0.41 0.40 0.38

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Faroe Islands Norway Estonia Monaco Belarus Slovakia Iceland Russia Lithuania Spain France Slovenia Greece Switzerland Finland Malta Liechtenstein Isle of Man the United Kingdom Czech Republic Luxembourg Latvia Croatia Belgium Vatican City Italy Germany Sweden Austria San Marino Jersey Guernsey Denmark Hungary Netherlands Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Andorra Albania Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Portugal Cyprus

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

30

Receivables (Net) Countries

Value (total assets = 100)

Rank

Percentile

48.48 47.07 40.55 39.45 37.74 37.64 37.09 36.10 35.58 34.41 33.62 33.54 32.87 32.60 31.81 30.71 30.57 30.43 30.27 28.75 28.25 28.08 27.97 27.45 27.38 27.24 26.16 26.11 25.65 25.20 25.08 25.07 24.40 24.35 22.74 22.62 22.21 21.94 21.69 21.23 21.15 19.07 18.76 18.35 15.60

1 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 40 41 42 43 44 45 46 47 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 3.77

Region

_________________________________________________________________________________________________________

Spain Portugal Greece India Turkey Mexico France Czech Republic Italy Philippines Argentina Netherlands Israel Ireland Malaysia Pakistan Austria the United Kingdom South Africa Denmark Sweden Norway Germany Japan Belgium Peru Finland New Zealand Brazil Singapore Switzerland Taiwan Chile South Korea Canada Hong Kong USA Russia Luxembourg China Thailand Hungary Indonesia Australia Poland

Europe Europe Europe Asia the Middle East Latin America Europe Europe Europe Asia Latin America Europe the Middle East Europe Asia the Middle East Europe Europe Africa Europe Europe Europe Europe Asia Europe Latin America Europe Oceana Latin America Asia Europe Asia Latin America Asia North America Asia North America Europe Europe Asia Asia Europe Asia Oceana Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

31

Receivables (Net) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

48.48 47.07 45.51 45.06 40.55 37.58 37.09 37.08 36.10 35.87 35.86 35.58 34.26 34.25 33.54 32.91 32.60 31.98 30.85 30.57 30.43 30.28 29.52 29.52 28.75 28.25 28.08 27.97 27.38 27.04 26.16 25.08 24.44 23.78 23.48 23.40 22.44 22.41 22.36 21.94 21.89 21.69 21.69 19.07 17.15 16.31 16.05 15.60 14.02 13.49 13.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Portugal Slovenia Cyprus Greece Malta France Isle of Man Czech Republic Vatican City Romania Italy Latvia Croatia Netherlands Bosnia & Herzegovina Ireland Macedonia Serbia & Montenegro Austria the United Kingdom San Marino Jersey Guernsey Denmark Sweden Norway Germany Belgium Andorra Finland Switzerland Monaco Albania Estonia Liechtenstein Iceland Belarus Slovakia Russia Lithuania Faroe Islands Luxembourg Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

32

Total Inventories Countries

Value (total assets = 100)

Rank

Percentile

39.81 39.65 36.42 31.72 29.43 29.36 28.95 27.32 26.04 25.68 25.57 25.46 25.35 24.70 24.51 24.33 21.52 21.50 21.05 20.66 18.50 18.26 18.25 17.67 17.52 17.47 16.81 16.23 15.53 15.46 15.31 15.28 15.27 14.91 14.52 14.45 14.00 13.99 13.88 13.46 12.49 9.94 8.25 7.20 7.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 28 29 31 32 33 34 35 36 37 38 40 41 42 43 45 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 22.64 20.75 18.87 15.09 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Pakistan Peru South Africa Denmark Australia Portugal Italy New Zealand Germany Israel Brazil Ireland Netherlands France Finland Chile Sweden the United Kingdom Norway Thailand China USA Austria Switzerland Hong Kong Spain Belgium Greece South Korea Singapore Japan Luxembourg Hungary India Canada Czech Republic Philippines Russia Indonesia Argentina Poland Malaysia Taiwan Turkey Mexico

the Middle East Latin America Africa Europe Oceana Europe Europe Oceana Europe the Middle East Latin America Europe Europe Europe Europe Latin America Europe Europe Europe Asia Asia North America Europe Europe Asia Europe Europe Europe Asia Asia Asia Europe Europe Asia North America Europe Asia Europe Asia Latin America Europe Asia Asia the Middle East Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

33

Total Inventories (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

34.61 31.72 29.36 29.18 28.95 28.29 28.11 26.04 25.46 25.35 24.70 24.51 21.52 21.50 21.05 18.44 18.25 18.08 17.67 17.63 17.63 17.47 16.81 16.80 16.49 16.40 16.23 15.28 15.27 15.05 14.99 14.97 14.85 14.45 14.28 14.25 13.99 13.96 13.74 13.72 13.71 13.06 12.86 12.49 11.23 10.81 10.79 6.84 6.28 6.10 5.88

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Albania Denmark Portugal Vatican City Italy Andorra Cyprus Germany Ireland Netherlands France Finland Sweden the United Kingdom Norway Iceland Austria San Marino Switzerland Jersey Guernsey Spain Belgium Faroe Islands Liechtenstein Slovenia Greece Luxembourg Hungary Malta Monaco Estonia Isle of Man Czech Republic Belarus Slovakia Russia Lithuania Ukraine Latvia Croatia Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

34

Current Assets - Total Countries

Value (total assets = 100)

Rank

Percentile

86.90 83.62 82.93 82.17 80.55 76.94 76.42 75.70 71.16 70.76 69.08 67.43 66.94 65.90 65.79 64.46 64.18 63.35 62.69 62.23 62.21 60.13 60.12 60.06 59.39 59.01 58.46 58.29 57.88 57.61 56.81 56.68 56.05 55.66 54.70 54.01 53.99 53.70 52.68 51.37 49.83 45.44 45.32 38.85 31.77

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 41 42 44 45 46 51 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 22.64 20.75 16.98 15.09 13.21 3.77 0.00

Region

_________________________________________________________________________________________________________

South Africa Israel Ireland Pakistan Spain Portugal France Italy Greece Peru Denmark Norway Germany the United Kingdom India Finland Netherlands Czech Republic Hong Kong Japan Australia USA China Sweden Philippines Argentina South Korea Singapore Taiwan Switzerland New Zealand Austria Indonesia Canada Malaysia Belgium Brazil Thailand Russia Chile Luxembourg Turkey Mexico Hungary Poland

Africa the Middle East Europe the Middle East Europe Europe Europe Europe Europe Latin America Europe Europe Europe Europe Asia Europe Europe Europe Asia Asia Oceana North America Asia Europe Asia Latin America Asia Asia Asia Europe Oceana Europe Asia North America Asia Europe Latin America Asia Europe Latin America Europe the Middle East Latin America Europe Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

35

Current Assets - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

82.93 80.55 76.94 76.42 76.31 75.70 75.62 73.65 71.16 69.08 67.43 66.94 65.95 65.90 65.08 64.46 64.18 63.35 61.77 60.75 60.13 60.12 60.10 60.06 58.83 57.61 56.68 56.53 56.36 56.14 54.74 54.74 54.01 53.79 53.76 53.66 52.68 52.55 49.83 43.17 39.62 38.85 38.51 37.14 34.93 33.22 32.70 31.77 28.57 27.49 27.44

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Spain Portugal France Vatican City Italy Slovenia Cyprus Greece Denmark Norway Germany Malta the United Kingdom Isle of Man Finland Netherlands Czech Republic Albania Iceland Latvia Faroe Islands Croatia Sweden Andorra Switzerland Austria Monaco Estonia San Marino Guernsey Jersey Belgium Belarus Liechtenstein Slovakia Russia Lithuania Luxembourg Romania Bosnia & Herzegovina Hungary Macedonia Serbia & Montenegro Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

36

Property Plant and Equipment - Net Countries

Value (total assets = 100)

Rank

Percentile

60.82 49.74 42.66 40.91 40.59 40.39 35.78 35.48 33.50 32.37 30.55 29.91 29.40 29.17 28.69 28.27 28.01 27.84 27.32 27.30 26.60 25.17 24.64 24.45 24.30 23.31 23.18 22.56 22.36 21.41 20.81 17.57 16.34 15.64 15.45 14.57 14.37 11.74 11.73 9.11 9.04 7.99 6.76 5.72 5.71

1 2 3 4 5 6 7 8 11 13 15 16 18 19 20 21 22 23 24 25 26 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 79.25 75.47 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Hungary Poland Brazil Thailand Chile Philippines Singapore Indonesia Malaysia South Korea China Canada New Zealand Russia Netherlands Switzerland Taiwan Peru Australia Japan Austria the United Kingdom Sweden Luxembourg Hong Kong Denmark Finland Germany India USA Portugal Greece Norway Czech Republic Spain Argentina Italy Pakistan France Israel Ireland Belgium South Africa Turkey Mexico

Europe Europe Latin America Asia Latin America Asia Asia Asia Asia Asia Asia North America Oceana Europe Europe Europe Asia Latin America Oceana Asia Europe Europe Europe Europe Asia Europe Europe Europe Asia North America Europe Europe Europe Europe Europe Latin America Europe the Middle East Europe the Middle East Europe Europe Africa the Middle East Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

37

Property Plant and Equipment - Net (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

60.82 54.69 52.00 51.20 49.74 44.72 43.04 42.96 34.70 31.21 30.44 29.78 29.72 29.17 29.10 28.69 28.27 26.60 26.38 26.35 25.69 25.69 25.17 24.64 24.45 24.30 23.31 23.30 23.18 22.56 21.63 20.81 19.92 17.57 16.34 16.28 16.07 15.64 15.45 14.85 14.84 14.51 14.49 14.37 11.73 9.04 7.99 5.44 4.99 4.85 4.68

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Monaco Estonia Andorra Belarus Slovakia Russia Lithuania Netherlands Switzerland Austria Liechtenstein San Marino Jersey Guernsey the United Kingdom Sweden Luxembourg Albania Denmark Faroe Islands Finland Germany Iceland Portugal Cyprus Greece Norway Malta Isle of Man Czech Republic Spain Latvia Croatia Slovenia Vatican City Italy France Ireland Belgium Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

38

Accumulated Depreciation - Total Countries

Value (total assets = 100)

Rank

Percentile

81.92 76.67 72.95 58.66 47.42 43.93 38.09 38.01 34.66 32.91 30.96 29.08 27.56 27.56 27.13 26.77 26.47 25.42 25.31 23.44 21.19 21.05 20.55 20.05 20.00 18.90 18.66 18.44 16.87 16.81 16.22 15.85 15.72 15.15 9.65 9.63 9.02 7.19 6.40 5.96 5.29

1 2 3 4 5 6 8 9 11 13 14 16 17 18 19 20 21 23 24 25 26 27 28 29 30 32 33 34 36 37 38 39 40 41 42 43 44 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 83.67 81.63 77.55 73.47 71.43 67.35 65.31 63.27 61.22 59.18 57.14 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 34.69 32.65 30.61 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 6.12 4.08 2.04 0.00

Region

_________________________________________________________________________________________________________

Peru Brazil Chile Belgium Philippines Thailand Japan Germany India Austria Switzerland Netherlands New Zealand Indonesia Australia Luxembourg Sweden USA the United Kingdom France China Denmark Finland Canada Singapore Norway South Korea Spain Italy Russia Malaysia Israel Ireland Hong Kong Turkey Mexico South Africa Greece Czech Republic Argentina Taiwan

Latin America Latin America Latin America Europe Asia Asia Asia Europe Asia Europe Europe Europe Oceana Asia Oceana Europe Europe North America Europe Europe Asia Europe Europe North America Asia Europe Asia Europe Europe Europe Asia the Middle East Europe Asia the Middle East Latin America Africa Europe Europe Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

39

Accumulated Depreciation - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

71.51 58.66 38.01 32.91 32.59 31.78 31.78 30.96 29.08 28.89 28.54 26.77 26.47 25.68 25.31 23.44 21.05 20.55 19.39 18.90 18.44 17.99 17.32 17.17 17.13 17.00 16.87 16.81 16.77 15.72 14.53 9.17 8.42 8.18 7.89 7.19 6.66 6.58 6.40 6.07 6.07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

97.56 95.12 92.68 90.24 87.80 85.37 82.93 80.49 78.05 75.61 73.17 70.73 68.29 65.85 63.41 60.98 58.54 56.10 53.66 51.22 48.78 46.34 43.90 41.46 39.02 36.59 34.15 31.71 29.27 26.83 24.39 21.95 19.51 17.07 14.63 12.20 9.76 7.32 4.88 2.44 0.00

_________________________________________________________________________________________________________

Albania Belgium Germany Austria San Marino Guernsey Jersey Switzerland Netherlands Liechtenstein Andorra Luxembourg Sweden Iceland the United Kingdom France Denmark Finland Monaco Norway Spain Estonia Slovenia Belarus Slovakia Vatican City Italy Russia Lithuania Ireland Faroe Islands Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Greece Malta Isle of Man Czech Republic Latvia Croatia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

40

Intangible Other Assets Countries

Value (total assets = 100)

Rank

Percentile

29.27 14.53 12.58 12.03 10.07 9.91 9.72 8.97 8.70 8.28 7.83 7.20 6.94 6.74 6.71 6.10 4.97 3.59 2.56 2.34 2.19 2.17 2.08 2.01 2.01 1.98 1.94 1.50 1.35 1.15 1.04 0.89 0.54 0.33 0.31 0.31 0.27 0.27

1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 31 32 33 34 35 36 37 38 40 41

97.67 93.02 90.70 88.37 86.05 83.72 81.40 79.07 76.74 74.42 72.09 69.77 67.44 65.12 62.79 60.47 58.14 55.81 53.49 51.16 48.84 46.51 44.19 41.86 39.53 37.21 34.88 32.56 27.91 25.58 23.26 20.93 18.60 16.28 13.95 11.63 6.98 4.65

Region

_________________________________________________________________________________________________________

Belgium USA Canada Norway Switzerland Australia Sweden France Luxembourg Austria Finland Malaysia New Zealand Germany Italy the United Kingdom Denmark Singapore Spain Greece Israel Ireland Czech Republic Hong Kong Netherlands China Argentina South Korea Russia India Japan Peru South Africa Hungary Turkey Mexico Poland Thailand

Europe North America North America Europe Europe Oceana Europe Europe Europe Europe Europe Asia Oceana Europe Europe Europe Europe Asia Europe Europe the Middle East Europe Europe Asia Europe Asia Latin America Asia Europe Asia Asia Latin America Africa Europe the Middle East Latin America Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

41

Intangible Other Assets (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

29.27 14.68 12.03 10.07 9.72 9.39 8.97 8.70 8.28 8.20 8.00 8.00 7.83 7.19 6.77 6.74 6.71 6.10 4.97 3.48 2.56 2.40 2.34 2.17 2.17 2.14 2.08 2.01 1.98 1.98 1.93 1.44 1.38 1.37 1.35 1.35 0.77 0.33 0.30 0.30 0.29 0.28 0.27 0.27 0.26 0.25 0.25 0.24 0.24

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Belgium Iceland Norway Switzerland Sweden Liechtenstein France Luxembourg Austria San Marino Jersey Guernsey Finland Andorra Vatican City Germany Italy the United Kingdom Denmark Monaco Spain Slovenia Greece Ireland Malta Isle of Man Czech Republic Netherlands Latvia Croatia Faroe Islands Estonia Belarus Slovakia Russia Lithuania Albania Hungary Ukraine Romania Gibraltar Georgia Poland Bosnia & Herzegovina Macedonia Serbia & Montenegro Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.3 3.3.1

FINANCIAL RETURNS STRUCTURE RATIOS

IN

42

UNITED KINGDOM: LIABILITY

Overview

In this chapter we consider the liability structure of firms operating in The United Kingdom benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of liabilities and shareholder equity is then presented for the proto-typical firm operating in The United Kingdom and the average global benchmarks (sometimes referred to as a financial “gap” analysis). The figure reflect firms involved in steam, gas and hydraulic turbines and turbine generator set units in The United Kingdom. For ratios where there are large deviations between The United Kingdom and the benchmarks, graphics are provided (total liabilities and equity = 100 percent). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis liability ratios are highlighted.

3.3.2

Liabilities and Equity – Definitions of Terms

The following definitions are provided for those less familiar with the liability-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of liabilities and equity, only definitions covering certain terms used in this chapter’s tables and graphs are provided here . The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accounts Payable. Accounts payable are defined as amounts owed on open account to private persons or organizations for goods or services received.

•

Capital Surplus. Capital surplus is commonly defined as an amount of equity which is directly contributed capital in excess of the par value.

•

Capitalized Lease Obligations. A capitalized lease obligation is commonly defined as an ownership arrangement in which the item under lease is typically a long-term asset. Capital leases are generally recorded as assets with liability at the current value of the lease payment.

•

Common Equity. Common equity is defined to equal the company's net worth. It typically comprises capital stock, capital surplus, retained earnings, and, in some cases, net worth reserves. Common equity is the portion of total net worth belonging to the common stockholders. Synonyms which are often used for common equity are “common stock” and “net worth”.

•

Common Stock. Common stock is defined as the securities which represent the company's ownership interest. Common stockholders typically assume greater risk than preferred stockholders; although common stockholders maintain greater control and generally greater dividends and capital appreciation. Common stock can be used interchangeably with the term capital stock when the company has no preferred stock.

•

Current Liabilities - Total. Total current liabilities are defined as the total amount of obligations which would require the use of current assets or other current liabilities to pay.

•

Current Portion of Long Term Debt. The current proportion of long term debt is typically defined as debt which is payable in more than one year.

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43

•

Deferred Income. Deferred income is commonly defined as the amount for services rendered that has not yet been received.

•

Deferred Taxes. Deferred taxes are compulsory charges from a previous accounting period which are yet unpaid.

•

Deferred Taxes - Credit. Deferred tax credits are defined as credits against compulsory charges from a previous accounting period which are yet unpaid.

•

Dividends Payable. Dividends payable typically include the declared dividend dollar amount that a company is obligated to pay. The dividend payment eliminates dividends payable and reduces cash.

•

Income Taxes Payable. Income taxes payable are understood to mean taxes which are levied by state, federal, and local governments on the company's reported accounting profit. Income taxes payable are those which are due in the current accounting period.

•

Long Term Debt. Long-term debt is defined to be due in a period exceeding one year or one operating cycle, whichever is longer. Long-term debt can have an extended repayment period such as a many-year mortgage on land and buildings, or debt that's intended to be permanent such as bonds issued to investors.

•

Long Term Debt Excluding Capitalized Leases. Long term debt excluding capitalized leases is defined as debt which is typically due in a period exceeding one year or one operating cycle, whichever is longer, less capitalized leases (see Long Term Debt for exceptions). Capital leases are generally recorded as assets with liability at the current value of the lease payment.

•

Minority Interest. Minority interest is the proportional share of the minority ownership's interest (less than 50 percent) in the earnings or losses.

•

Non-Equity Reserves. Non-equity reserves are the amount set aside for losses or liabilities which are certain to arise but cannot be quantified with certainty, and are not part of the firm’s equity.

•

Preferred Stock. Preferred stock receives payment of dividends from the company's earnings before common stock. Preferred stock generally maintains priority in the case of the company's liquidation. Usually the dividends from preferred stock are priced at a specific rate which has been determined by the board of directors.

•

Retained Earnings. proprietary funds.

•

Shareholders Equity. Shareholders equity is commonly defined to be the amount of total equity reserved for common and preferred shareholders.

•

Short Term Debt. Short term debt is generally defined as debt payable within one year.

•

Total Liabilities. Total liabilities are generally defined to include all the claims against a corporation. Liabilities include accounts and wages and salaries payable, dividends declared payable, accrued taxes payable, fixed or long-term liabilities such as mortgage bonds, debentures, and bank loans.

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Retained earnings is an equity account reflecting the accumulated earnings of

2007 Icon Group International, Inc.

Financial Indicators

3.3.3

44

Liability Structure: Outlook

Using the methodology described in the introduction, the following table summarizes liability and equity structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in United Kingdom. To allow comparable benchmarking, a common index of Total Liabilities & Shareholders Equity = 100 is used. All figures are current-year projections for companies operating in United Kingdom based on latest financial results available. Liability Structure United Kingdom Europe World Avg.

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Income Taxes Payable Dividends Payable Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Capitalized Lease Obligations Provision For Risks and Charges Deferred Income Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Other Liabilities Total Liabilities Non-Equity Reserves Minority Interest Preferred Stock Common Equity Common Stock Capital Surplus Revaluation Reserves Other Appropriated Reserves Unappropriated Reserves Retained Earnings Unrealized Foreign Exchange Gain/Loss Total Liabilities & Shareholders Equity

14.52 8.91 2.24 2.16 16.32 42.62 9.49 8.76 0.74 4.05 0.01 1.10 0.41 0.36 0.99 56.35 0.14 0.22 1.19 42.12 7.04 12.92 1.74 2.14 7.75 19.49 -0.57 100.00

12.07 12.07 1.81 1.20 12.86 36.78 9.95 9.81 0.14 4.50 0.20 0.24 1.08 1.00 0.94 50.49 0.63 0.91 0.04 41.30 12.32 13.95 1.42 7.07 7.03 9.93 -0.38 100.00

12.85 10.39 1.08 1.38 11.64 36.82 6.27 6.20 0.07 1.50 0.08 0.48 1.11 0.71 0.63 45.11 0.08 1.39 0.05 46.61 12.23 12.32 0.77 4.64 11.54 7.24 -0.05 100.00

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.3.4

45

Large Variances: Liabilities

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large liability structure gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Other Current Liabilities 20

16.32 12.86

15

11.64

10 4.68

5 0 United Kingdom

Europe

World Average

Gap

Gap: Current Liabilities - Total 50

42.62 36.78

40

36.82

30 20 5.8

10 0 United Kingdom

Europe

World Average

Gap

Gap: Long Term Debt 10

9.49

9.95

8

6.27

6 3.22

4 2 0 United Kingdom

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Europe

World Average

Gap

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Financial Indicators

46

Gap: Long Term Debt Excluding Capitalized Leases 10

9.81 8.76

8

6.2

6 4

2.56

2 0 United Kingdom

Europe

World Average

Gap

Gap: Provision For Risks and Charges 5

4.05

4.5

4 2.55

3 1.5

2 1 0 United Kingdom

Europe

World Average

Gap

Gap: Total Liabilities 60

56.35 50.49

50

45.11

40 30 20

11.24

10 0 United Kingdom

Europe

World Average

Gap

Gap: Common Equity 50

42.12

41.3

46.61

40 30 20 10 0

-4.49

-10 United Kingdom

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Europe

World Average

Gap

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47

Gap: Common Stock 12.32

15 10

12.23

7.04

5 0 -5

-5.19

-10 United Kingdom

Europe

World Average

Gap

Gap: Other Appropriated Reserves 7.07

8 6 4

4.64 2.14

2 0 -2

-2.5

-4 United Kingdom

Europe

World Average

Gap

Gap: Unappropriated Reserves 15 10

11.54 7.75

7.03

5 0 -3.79

-5 United Kingdom

Europe

World Average

Gap

Gap: Retained Earnings 20

19.49

15

12.25 9.93

10

7.24

5 0 United Kingdom

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Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.3.5

48

Key Percentiles and Rankings

We now consider the distribution of liability ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than United Kingdom (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of liability structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical liability ratios are highlighted in additional tables. Liability Structure

United Kingdom

Rank of Total

Percentile

14.52 8.91 2.24 2.16 16.32 42.62 9.49 8.76 0.74 4.05 0.01 1.10 0.41 0.36 0.99 56.35 0.14 0.22 1.19 42.12 7.04 12.92 1.74 2.14 7.75 19.49 -0.57 100.00

17 of 50 28 of 53 10 of 43 8 of 27 13 of 53 12 of 53 25 of 48 25 of 48 3 of 30 13 of 39 18 of 21 12 of 39 16 of 26 23 of 27 15 of 43 19 of 53 15 of 26 34 of 41 1 of 8 30 of 53 37 of 46 22 of 41 12 of 33 30 of 49 17 of 37 14 of 48 28 of 34

66.00 47.17 76.74 70.37 75.47 77.36 47.92 47.92 90.00 66.67 14.29 69.23 38.46 14.81 65.12 64.15 42.31 17.07 87.50 43.40 19.57 46.34 63.64 38.78 54.05 70.83 17.65

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Income Taxes Payable Dividends Payable Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Capitalized Lease Obligations Provision For Risks and Charges Deferred Income Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Other Liabilities Total Liabilities Non-Equity Reserves Minority Interest Preferred Stock Common Equity Common Stock Capital Surplus Revaluation Reserves Other Appropriated Reserves Unappropriated Reserves Retained Earnings Unrealized Foreign Exchange Gain/Loss Total Liabilities & Shareholders Equity

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

49

Accounts Payable Countries

Value (total liabilities & equity = 100)

Rank

Percentile

31.84 24.17 22.32 20.60 20.15 19.56 18.99 18.07 15.66 15.51 15.18 14.89 14.85 14.78 14.52 13.84 13.66 13.56 13.26 13.18 13.15 12.44 12.35 11.85 11.72 11.53 11.19 10.99 10.84 10.30 9.38 9.10 9.02 8.97 8.95 8.78 8.71 8.18 7.33 7.01 7.00 2.06

1 2 3 4 5 6 7 9 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 34 36 37 38 39 40 42 43 44 46 47 48 50

98.00 96.00 94.00 92.00 90.00 88.00 86.00 82.00 78.00 76.00 74.00 72.00 70.00 68.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 50.00 46.00 44.00 42.00 40.00 38.00 36.00 32.00 28.00 26.00 24.00 22.00 20.00 16.00 14.00 12.00 8.00 6.00 4.00 0.00

Region

_________________________________________________________________________________________________________

Belgium Italy Spain Philippines India France Brazil Chile Japan Hong Kong Singapore Greece Taiwan Netherlands the United Kingdom New Zealand Canada Norway Czech Republic Denmark South Korea Sweden Argentina Russia Australia Thailand Austria Indonesia Switzerland China Luxembourg Germany USA Hungary Malaysia Israel Ireland Finland Poland Turkey Mexico Peru

Europe Europe Europe Asia Asia Europe Latin America Latin America Asia Asia Asia Europe Asia Europe Europe Oceana North America Europe Europe Europe Asia Europe Latin America Europe Oceana Asia Europe Asia Europe Asia Europe Europe North America Europe Asia the Middle East Europe Europe Europe the Middle East Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

50

Accounts Payable (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

31.84 24.37 24.17 22.32 20.95 19.56 14.89 14.87 14.78 14.72 14.52 14.33 13.80 13.62 13.56 13.26 13.18 12.68 12.58 12.58 12.44 12.10 12.07 11.85 11.82 11.19 11.08 10.84 10.80 10.80 10.12 9.38 9.11 9.10 8.97 8.71 8.18 8.06 7.67 7.55 7.33 6.66 6.59 6.34 6.33 6.12 5.94 5.73 1.80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Belgium Vatican City Italy Spain Slovenia France Greece Faroe Islands Netherlands Monaco the United Kingdom Andorra Malta Isle of Man Norway Czech Republic Denmark Estonia Latvia Croatia Sweden Belarus Slovakia Russia Lithuania Austria San Marino Switzerland Guernsey Jersey Liechtenstein Luxembourg Iceland Germany Hungary Ireland Finland Ukraine Gibraltar Georgia Poland Romania Moldova Kazakhstan Bulgaria Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

51

Current Liabilities - Total Countries

Value (total liabilities & equity = 100)

Rank

Percentile

60.54 58.44 57.60 52.51 52.20 49.47 48.47 47.78 45.62 44.98 42.99 42.62 41.74 41.66 41.58 41.02 40.85 40.74 40.61 40.11 39.05 37.83 37.20 36.79 36.11 35.29 34.60 33.26 33.15 33.01 32.94 31.08 31.01 30.90 30.83 29.13 28.86 28.55 27.30 26.03 25.68 25.51 25.28 23.73 23.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 24 25 26 27 28 30 31 32 33 34 35 36 37 38 39 40 41 42 45 46 47 50 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 15.09 13.21 11.32 5.66 3.77

Region

_________________________________________________________________________________________________________

Brazil Spain Chile South Africa Pakistan Italy Portugal Taiwan Greece France Norway the United Kingdom Austria China India Denmark Turkey Mexico Czech Republic Belgium Netherlands Argentina Japan South Korea Finland Hungary Hong Kong Sweden Russia Switzerland Germany Israel Thailand Singapore Ireland Philippines Poland Luxembourg Peru USA Malaysia Australia Canada New Zealand Indonesia

Latin America Europe Latin America Africa the Middle East Europe Europe Asia Europe Europe Europe Europe Europe Asia Asia Europe the Middle East Latin America Europe Europe Europe Latin America Asia Asia Europe Europe Asia Europe Europe Europe Europe the Middle East Asia Asia Europe Asia Europe Europe Latin America North America Asia Oceana North America Oceana Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

52

Current Liabilities - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

58.44 54.86 49.87 49.47 48.47 46.40 45.62 44.98 42.99 42.62 42.28 41.74 41.73 41.34 41.02 40.61 40.31 40.31 40.11 39.05 38.81 38.55 38.53 36.11 35.62 35.47 35.29 34.61 33.85 33.77 33.39 33.26 33.18 33.15 33.07 33.01 32.94 31.73 30.83 30.80 30.17 29.96 29.71 28.86 28.55 26.30 25.95 24.97 24.93 24.58 23.83

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Slovenia Vatican City Italy Portugal Cyprus Greece France Norway the United Kingdom Malta Austria Isle of Man San Marino Denmark Czech Republic Guernsey Jersey Belgium Netherlands Romania Latvia Croatia Finland Bosnia & Herzegovina Estonia Hungary Macedonia Belarus Slovakia Serbia & Montenegro Sweden Faroe Islands Russia Lithuania Switzerland Germany Ukraine Ireland Liechtenstein Gibraltar Monaco Georgia Poland Luxembourg Iceland Moldova Kazakhstan Bulgaria Andorra Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

53

Long Term Debt Countries

Value (total liabilities & equity = 100)

Rank

Percentile

32.68 21.19 19.31 19.13 19.04 18.79 18.33 16.39 16.33 14.29 14.18 13.29 13.18 11.75 10.94 10.59 10.56 10.49 10.03 9.83 9.49 8.50 8.45 8.32 8.20 7.99 7.66 7.48 7.35 6.23 5.50 4.53 3.69 3.63 3.09 2.75 2.56 2.32 1.69 1.55 1.53

1 2 3 4 5 6 7 8 9 12 14 15 16 17 18 19 20 21 22 23 25 26 27 28 29 30 32 33 34 35 37 38 40 41 42 43 44 45 46 47 48

97.92 95.83 93.75 91.67 89.58 87.50 85.42 83.33 81.25 75.00 70.83 68.75 66.67 64.58 62.50 60.42 58.33 56.25 54.17 52.08 47.92 45.83 43.75 41.67 39.58 37.50 33.33 31.25 29.17 27.08 22.92 20.83 16.67 14.58 12.50 10.42 8.33 6.25 4.17 2.08 0.00

Region

_________________________________________________________________________________________________________

New Zealand Belgium Portugal Finland Thailand Netherlands Sweden Switzerland Norway USA Luxembourg Denmark Australia Canada Taiwan Turkey Mexico Austria Hungary Germany the United Kingdom South Korea Japan France Poland India Russia Italy Spain Indonesia Singapore South Africa Hong Kong China Greece Czech Republic Argentina Malaysia Peru Israel Ireland

Oceana Europe Europe Europe Asia Europe Europe Europe Europe North America Europe Europe Oceana North America Asia the Middle East Latin America Europe Europe Europe Europe Asia Asia Europe Europe Asia Europe Europe Europe Asia Asia Africa Asia Asia Europe Europe Latin America Asia Latin America the Middle East Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

54

Long Term Debt (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

33.84 21.19 19.31 19.13 18.79 18.48 18.33 16.39 16.33 15.30 14.44 14.18 13.29 10.49 10.39 10.13 10.13 10.06 10.03 9.83 9.49 9.23 9.02 8.97 8.66 8.58 8.44 8.32 8.20 8.19 7.82 7.80 7.66 7.64 7.54 7.48 7.38 7.35 7.10 7.09 6.90 5.33 3.54 3.09 2.86 2.82 2.75 2.61 2.61 1.53 1.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Andorra Belgium Portugal Finland Netherlands Cyprus Sweden Switzerland Norway Liechtenstein Iceland Luxembourg Denmark Austria San Marino Jersey Guernsey Romania Hungary Germany the United Kingdom Bosnia & Herzegovina Ukraine Macedonia Serbia & Montenegro Gibraltar Georgia France Poland Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Moldova Spain Kazakhstan Bulgaria Slovenia Monaco Faroe Islands Greece Malta Isle of Man Czech Republic Latvia Croatia Ireland Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

55

Total Liabilities Countries

Value (total liabilities & equity = 100)

Rank

Percentile

67.94 67.25 67.09 66.15 64.53 64.47 63.76 63.36 61.47 60.67 60.17 60.05 58.24 57.68 57.21 57.04 56.88 56.64 56.35 53.05 52.06 51.92 51.65 50.71 50.38 49.75 49.19 48.53 45.83 45.42 45.32 44.29 43.73 41.26 40.01 39.43 38.81 37.78 37.07 35.30 35.01 31.52 30.75 29.75 29.13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 34 35 38 39 40 42 43 44 45 46 47 48 49 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 35.85 33.96 28.30 26.42 24.53 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 3.77

Region

_________________________________________________________________________________________________________

Portugal Belgium Austria Spain Italy Germany Brazil Netherlands Sweden Chile Denmark Norway France Finland Taiwan New Zealand Switzerland South Africa the United Kingdom Pakistan Turkey Mexico India Thailand Japan Greece Luxembourg South Korea China USA Hungary Czech Republic Russia Argentina Australia Canada Hong Kong Singapore Poland Israel Ireland Indonesia Peru Malaysia Philippines

Europe Europe Europe Europe Europe Europe Latin America Europe Europe Latin America Europe Europe Europe Europe Asia Oceana Europe Africa Europe the Middle East the Middle East Latin America Asia Asia Asia Europe Europe Asia Asia North America Europe Europe Europe Latin America Oceana North America Asia Asia Europe the Middle East Europe Asia Latin America Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

56

Total Liabilities (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

67.94 67.25 67.09 66.45 66.15 65.05 65.03 64.79 64.79 64.53 64.47 63.36 62.10 61.47 60.17 60.05 59.07 58.24 57.68 56.88 56.35 53.08 49.75 49.47 49.19 46.78 46.11 45.88 45.51 45.39 45.32 44.65 44.55 44.29 44.12 43.73 43.63 42.56 42.04 42.02 40.76 38.75 38.15 37.22 37.07 36.63 35.01 33.33 32.07 32.01 26.84

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Portugal Belgium Austria San Marino Spain Vatican City Cyprus Jersey Guernsey Italy Germany Netherlands Slovenia Sweden Denmark Norway Andorra France Finland Switzerland the United Kingdom Liechtenstein Greece Romania Luxembourg Estonia Malta Iceland Isle of Man Bosnia & Herzegovina Hungary Belarus Slovakia Czech Republic Macedonia Russia Lithuania Serbia & Montenegro Latvia Croatia Ukraine Gibraltar Georgia Faroe Islands Poland Monaco Ireland Moldova Kazakhstan Bulgaria Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

57

Common Equity Countries

Value (total liabilities & equity = 100)

Rank

Percentile

70.87 69.29 69.25 64.70 64.69 64.17 60.19 59.97 59.11 56.07 54.68 53.58 50.89 50.04 49.10 48.70 48.32 47.94 47.81 46.95 45.09 44.72 44.36 42.27 42.12 42.01 41.92 41.54 40.96 39.82 39.57 39.49 38.36 36.79 36.37 36.33 34.89 34.43 34.23 34.03 32.76 32.56 32.09 32.06 31.17

1 2 3 4 5 6 8 10 11 12 13 14 15 16 17 18 19 20 21 22 25 26 28 29 30 31 32 33 35 36 37 38 39 41 42 43 44 45 46 47 48 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 84.91 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 52.83 50.94 47.17 45.28 43.40 41.51 39.62 37.74 33.96 32.08 30.19 28.30 26.42 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Philippines Malaysia Peru Israel Indonesia Ireland Singapore Australia Hong Kong Canada Hungary USA China South Korea Thailand Japan India Turkey Mexico Pakistan Russia Poland Greece South Africa the United Kingdom Switzerland Taiwan New Zealand France Denmark Finland Czech Republic Norway Argentina Sweden Luxembourg Italy Brazil Germany Netherlands Chile Belgium Spain Portugal Austria

Asia Asia Latin America the Middle East Asia Europe Asia Oceana Asia North America Europe North America Asia Asia Asia Asia Asia the Middle East Latin America the Middle East Europe Europe Europe Africa Europe Europe Asia Oceana Europe Europe Europe Europe Europe Latin America Europe Europe Europe Latin America Europe Europe Latin America Europe Europe Europe Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

58

Common Equity (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

64.17 60.45 58.37 56.68 54.68 54.13 49.17 48.24 46.75 46.04 46.03 45.94 45.55 45.09 44.99 44.72 44.36 43.01 42.12 42.01 41.80 41.12 40.96 40.62 40.58 40.21 39.82 39.57 39.49 39.20 39.19 38.69 38.62 38.36 37.49 37.47 36.37 36.33 35.17 34.89 34.23 34.03 32.56 32.09 32.06 31.17 30.88 30.69 30.13 30.10 30.10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Albania Monaco Faroe Islands Hungary Iceland Ukraine Estonia Gibraltar Belarus Georgia Slovakia Romania Russia Lithuania Poland Greece Andorra the United Kingdom Switzerland Bosnia & Herzegovina Malta France Macedonia Isle of Man Moldova Denmark Finland Czech Republic Liechtenstein Serbia & Montenegro Kazakhstan Bulgaria Norway Latvia Croatia Sweden Luxembourg Vatican City Italy Germany Netherlands Belgium Spain Portugal Austria San Marino Cyprus Slovenia Guernsey Jersey

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

59

Retained Earnings Countries

Value (total liabilities & equity = 100)

Rank

Percentile

37.15 36.85 31.67 29.75 28.68 26.69 26.15 24.75 22.61 21.44 20.02 19.99 19.49 18.96 18.27 18.13 17.25 15.74 14.98 14.58 14.41 13.06 12.51 11.18 10.38 9.45 8.36 7.53 6.84 6.54 5.97 3.83 3.71 2.72 0.92 -1.89 -2.03 -2.28 -2.46 -2.47

1 2 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 23 25 26 28 30 31 32 34 35 36 37 38 39 40 41 43 44 45 47 48

97.92 95.83 93.75 91.67 89.58 87.50 85.42 83.33 79.17 77.08 75.00 72.92 70.83 68.75 64.58 62.50 60.42 58.33 56.25 54.17 52.08 47.92 45.83 41.67 37.50 35.42 33.33 29.17 27.08 25.00 22.92 20.83 18.75 16.67 14.58 10.42 8.33 6.25 2.08 0.00

Region

_________________________________________________________________________________________________________

Israel Ireland South Africa USA Philippines Hong Kong Switzerland Japan Luxembourg Malaysia Canada Indonesia the United Kingdom Finland Singapore Brazil Chile Austria Norway Australia Thailand New Zealand Denmark Spain Germany Netherlands South Korea Russia France Sweden Italy Portugal Taiwan China Peru Argentina Czech Republic Greece Mexico Turkey

the Middle East Europe Africa North America Asia Asia Europe Asia Europe Asia North America Asia Europe Europe Asia Latin America Latin America Europe Europe Oceana Asia Oceana Europe Europe Europe Europe Asia Europe Europe Europe Europe Europe Asia Asia Latin America Latin America Europe Europe Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

60

Retained Earnings (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

36.85 30.06 26.15 25.59 24.40 22.61 19.49 18.96 17.72 15.74 15.59 15.20 15.20 14.98 13.52 12.51 11.18 10.50 10.38 9.45 8.06 7.69 7.67 7.53 7.52 6.84 6.54 6.02 5.97 3.83 3.66 0.80 -1.93 -1.93 -2.02 -2.03 -2.09 -2.09 -2.12 -2.15 -2.28 -2.34

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

97.62 95.24 92.86 90.48 88.10 85.71 83.33 80.95 78.57 76.19 73.81 71.43 69.05 66.67 64.29 61.90 59.52 57.14 54.76 52.38 50.00 47.62 45.24 42.86 40.48 38.10 35.71 33.33 30.95 28.57 26.19 23.81 21.43 19.05 16.67 14.29 11.90 9.52 7.14 4.76 2.38 0.00

_________________________________________________________________________________________________________

Ireland Iceland Switzerland Faroe Islands Liechtenstein Luxembourg the United Kingdom Finland Monaco Austria San Marino Guernsey Jersey Norway Andorra Denmark Spain Slovenia Germany Netherlands Estonia Belarus Slovakia Russia Lithuania France Sweden Vatican City Italy Portugal Cyprus Albania Croatia Latvia Serbia & Montenegro Czech Republic Isle of Man Macedonia Malta Bosnia & Herzegovina Greece Romania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

3.4 3.4.1

FINANCIAL RETURNS STRUCTURE RATIOS

IN

61

UNITED KINGDOM: INCOME

Overview

In this chapter we consider the income structure of companies operating in The United Kingdom benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of income is then presented for the proto-typical firm involved in steam, gas and hydraulic turbines and turbine generator set units operating in The United Kingdom and the average global benchmarks (total revenue = 100 percent). For ratios where there are large deviations between The United Kingdom and the benchmarks, graphics are provided. Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis income ratios are highlighted across countries in the comparison group.

3.4.2

Income Statements – Definitions of Terms

The following definitions are provided for those less familiar with the income-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of income, only definitions covering certain terms used in this chapter’s tables and graphs are provided here . The glossary below reflects commonly accepted definitions across various countries and official sources. •

Amortization. Amortization generally refers to the depreciation, depletion, or charge-off to expense of intangible and tangible assets over a period of time. Amortization is commonly understood to be the taking as an expense (writing off) of the loss of value of an intangible asset such as a copyright, a patent, or a mailing list, in an accounting period.

•

Cost of Goods Sold (excluding depreciation). For retail companies, cost of goods sold is generally defined as the equivalent of starting inventory plus purchases minus ending inventory. In manufacturing, cost of goods sold is defined to equal the starting inventory plus the cost of goods manufactured minus ending inventory. Most pure service firms do not generally have cost of goods sold.

•

Current Domestic Income Tax. Current domestic income taxes are commonly defined as compulsory charges levied by the government where the company is located on current income.

•

Current Foreign Income Tax. Current foreign income taxes are commonly defined as compulsory charges levied by foreign governments on current income.

•

Deferred Domestic Income Tax. Deferred domestic income tax is defined as a compulsory charge from a previous accounting period which is yet unpaid to the government where the company is located on current income.

•

Deferred Foreign Income Tax. Deferred foreign income tax is generally defined as a compulsory charge from a previous accounting period which is yet unpaid to foreign governments on current income.

•

Depletion. Depletion is commonly defined to be included as one of the elements of amortization, and is understood to be the portion of the carrying value (other than the portion associated with tangible assets) prorated in each accounting period for financial reporting purposes.

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Financial Indicators

62

•

Depreciation. Depreciation generally is defined as the expiration in the service life of fixed assets, other than depletable assets, attributable to wear and tear, deterioration, action of the physical elements, inadequacy and obsolescence. Depreciation is commonly defined as the portion of the cost of a fixed asset charged as an expense during a particular period. In accounting for depreciation, the cost of a fixed asset, less any salvage value, is prorated over the estimated service life of such an asset, and each period is charged with a portion of such cost. Through this process, the cost of the asset is ultimately charged off as an expense.

•

Earnings Before Interest and Taxes (EBIT). EBIT is a financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and non-operating profit before the deduction of interest and income taxes.

•

Equity in Earnings. Equity in earnings is defined as a company's proportional share (based on ownership) of the net earnings or losses of an unconsolidated company.

•

Extraordinary Items. Extraordinary items are defined to include income and expense items associated with events and transactions that possess a high degree of abnormality and are of a type that would not reasonably be expected to recur in the foreseeable future.

•

Gain/Loss Sale of Assets. Gains or losses associated with the sale of assets are defined as increases or decreases in equity (net assets) resulting from the sale of assets.

•

Gross Income. Gross income is commonly defined as all the money, goods, and property received by the company that must be included as taxable income.

•

Income Taxes. Income taxes are defined to include those taxes levied by state, federal, and local governments on the company's reported accounting profit. Income taxes generally include both deferred and paid taxes. They are generally determined after the interest expense has been deducted.

•

Interest Capitalized. Interest capitalized is generally added to a fixed asset instead of expensed. Capitalized interest can usually be found in footnotes or the face of the income statement.

•

Interest Expense on Debt. Interest expenses on debt are those which are spent on current debt and added to the net income so avoid underestimating interest coverage.

•

Minority Interest. Minority interest is the proportional share of the minority ownership's interest (less than 50 percent) in the earnings or losses.

•

Net Income Available to Common. Net income available to common is defined as the net income available to common stockholders.

•

Net Income Before Preferred Dividends. Net income before preferred dividends is generally calculated as the difference between total revenues and total expense prior to the granting of preferred dividends.

•

Net Sales or Revenues. Revenues or net sales are defined as payments made to and received by an entity. May take the form of taxes, user fees, fines, fees for service, and so on.

•

Non-Operating Interest Income. Non-operating interest income is generally understood to be any interest received (e.g., royalty, production payment, net profits interest) that does not involve the operation of the company.

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Financial Indicators

63

•

Operating Expenses. Operating expenses are generally defined as those incurred in paying for the company’s day-to-day activities.

•

Operating Income. Operating income is generally defined to equal operating revenues less operating expenses. It typically excludes items of other revenue and expense such as equity in earnings of unconsolidated companies, dividends, interest income and expense, income taxes, extraordinary items, and cumulative effect of accounting changes.

•

Preferred Dividend Requirements. Preferred dividend requirements are those dividend requirements set forth by the board to determine the amount of preferred dividends payable.

•

Pretax Equity In Earnings. Pretax equity in earnings is generally defined to equal a company's proportional share (based on ownership) of the gross earnings or losses of an unconsolidated company.

•

Pretax Income. Pretax income is generally defined as income before tax deductions.

•

Selling, General & Administrative Expenses. Selling, general and administrative expenses are expenses independent from cost of sales for the purpose of illustrating the amount of the company's selling and administrative costs. Generally included in this figure are the costs of employees' salaries, commissions, and travel expenses; company payroll and office costs; and advertising and promotion.

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Financial Indicators

3.4.3

64

Income Structure: Outlook

Using the methodology described in the introduction, the following table summarizes income structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in United Kingdom. To allow comparable benchmarking, a common index of Net Sales or Revenues = 100 is used. All figures are current-year projections for companies operating in United Kingdom based on latest financial results available. Income Structure United Kingdom Europe World Avg.

_________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Pretax Equity In Earnings Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Current Domestic Income Tax Current Foreign Income Tax Deferred Domestic Income Tax Deferred Foreign Income Tax Minority Interest Equity in Earnings Net Income Before Extra Items/Prefer Dividends Extraordinary Items & Gain/Loss Sale Of Assets Net Income Before Preferred Dividends Preferred Dividend Requirements Net Income Available to Common

100.00 69.10 3.30 27.60 25.12 93.36 1.25 6.45 0.18 0.78 0.68 -0.09 0.60 6.82 1.38 0.00 5.72 1.90 1.21 0.61 0.01 0.03 0.03 0.03 3.91 0.00 3.91 0.09 3.82

100.00 70.09 4.68 18.16 13.76 88.65 2.71 5.46 0.86 0.63 2.85 0.03 0.83 8.40 4.33 0.00 4.14 1.59 1.39 0.29 -0.03 -0.02 0.20 0.01 2.61 0.00 2.62 0.00 2.61

100.00 69.36 4.50 16.64 9.33 78.12 1.47 6.55 0.17 0.51 1.97 -0.02 1.48 9.61 3.64 0.02 6.00 1.70 1.56 0.07 -0.09 0.00 0.32 0.14 4.29 0.14 4.43 0.00 4.29

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

3.4.4

65

Large Variances: Income

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large income structure gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Depreciation, Depletion & Amortization 5 4 3 2 1 0 -1 -2

4.68

4.5

3.3

-1.2 United Kingdom

Europe

World Average

Gap

Gap: Gross Income 30

27.6

25 18.16

20

16.64

15

10.96

10 5 0 United Kingdom

Europe

World Average

Gap

Gap: Selling, General & Administrative Expenses 30

25.12

25 20

15.79

13.76

15

9.33

10 5 0 United Kingdom

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Europe

World Average

Gap

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Financial Indicators

66

Gap: Other Operating Expenses 100

93.36

88.65 78.12

80 60 40

15.24

20 0 United Kingdom

Europe

World Average

Gap

Gap: Non-Operating Interest Income 2.85

3

1.97

2 1

0.68

0 -1

-1.29

-2 United Kingdom

Europe

World Average

Gap

Gap: Other Income/Expense Net 1.48

1.5 1

0.6

0.83

0.5 0 -0.5 -0.88

-1 United Kingdom

Europe

World Average

Gap

Gap: Earnings Before Interest and Taxes (EBIT) 10

8.4

9.61

6.82 5 0 -2.79 -5 United Kingdom

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Europe

World Average

Gap

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Financial Indicators

67

Gap: Interest Expense on Debt 6

4.33

4 2

3.64

1.38

0 -2

-2.26

-4 United Kingdom

Europe

World Average

Gap

Gap: Current Foreign Income Tax 0.8 0.61

0.54

0.6 0.4

0.29

0.2

0.07

0 United Kingdom

Europe

World Average

Gap

Gap: Net Income Before Preferred Dividends 5 4

4.43

3.91 2.62

3 2 1 0

-0.52

-1 United Kingdom

Europe

World Average

Gap

Gap: Net Income Available to Common 5 4

4.29

3.82 2.61

3 2 1 0

-0.47

-1 United Kingdom

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Europe

World Average

Gap

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Financial Indicators

3.4.5

68

Key Percentiles and Rankings

We now consider the distribution of income ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than United Kingdom (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of income structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical income ratios are highlighted in additional tables. Income Structure

United Kingdom

Rank of Total

Percentile

100.00 69.10 3.30 27.60 25.12 93.36 1.25 6.45 0.18 0.78 0.68 -0.09 0.60 6.82 1.38 0.00 5.72 1.90 1.21 0.61 0.01 0.03 0.03 0.03 3.91 0.00 3.91 0.09 3.82

36 of 52 45 of 53 7 of 52 6 of 46 18 of 46 20 of 40 24 of 53 10 of 31 14 of 29 25 of 41 26 of 27 30 of 53 29 of 53 32 of 53 5 of 5 24 of 53 19 of 47 18 of 35 6 of 21 13 of 30 6 of 18 30 of 40 10 of 22 22 of 53 7 of 14 23 of 53 1 of 7 23 of 53

30.77 15.09 86.54 86.96 60.87 50.00 54.72 67.74 51.72 39.02 3.70 43.40 45.28 39.62 0.00 54.72 59.57 48.57 71.43 56.67 66.67 25.00 54.55 58.49 50.00 56.60 85.71 56.60

_________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Pretax Equity In Earnings Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Current Domestic Income Tax Current Foreign Income Tax Deferred Domestic Income Tax Deferred Foreign Income Tax Minority Interest Equity in Earnings Net Income Before Extra Items/Prefer Dividends Extraordinary Items & Gain/Loss Sale Of Assets Net Income Before Preferred Dividends Preferred Dividend Requirements Net Income Available to Common

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

69

Cost of Goods Sold (Excluding Depreciation) Countries

Value (total revenue = 100)

Rank

Percentile

90.62 89.40 88.70 88.31 87.88 85.34 83.94 82.83 80.14 79.88 78.96 77.69 77.62 76.49 76.48 76.47 75.55 74.93 74.02 73.34 73.18 73.11 72.79 72.53 72.22 71.69 70.30 70.28 70.19 69.67 69.56 69.10 68.44 68.41 67.89 67.33 67.16 64.58 63.43 63.25 62.95 62.88 62.58 58.30

1 2 3 4 5 6 7 8 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 50

98.08 96.15 94.23 92.31 90.38 88.46 86.54 84.62 80.77 78.85 76.92 75.00 73.08 69.23 67.31 65.38 63.46 61.54 59.62 55.77 53.85 51.92 50.00 48.08 46.15 44.23 40.38 38.46 36.54 34.62 32.69 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 15.38 13.46 11.54 9.62 3.85

Region

_________________________________________________________________________________________________________

Philippines Belgium New Zealand Portugal Taiwan Denmark India France South Korea Spain Hungary South Africa Norway Austria Finland Australia Singapore Indonesia Canada Germany China Brazil Switzerland Peru Russia Japan Greece Netherlands Thailand Sweden Chile the United Kingdom Hong Kong Malaysia Israel Ireland Italy Poland Turkey Mexico Luxembourg USA Czech Republic Argentina

Asia Europe Oceana Europe Asia Europe Asia Europe Asia Europe Europe Africa Europe Europe Europe Oceana Asia Asia North America Europe Asia Latin America Europe Latin America Europe Asia Europe Europe Asia Europe Latin America Europe Asia Asia the Middle East Europe Europe Europe the Middle East Latin America Europe North America Europe Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

70

Cost of Goods Sold (Excluding Depreciation) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

91.86 89.40 88.31 85.34 84.53 82.83 79.88 78.96 77.62 77.26 76.49 76.48 75.76 74.99 73.87 73.87 73.74 73.57 73.34 73.26 72.79 72.22 72.05 71.01 70.30 70.28 69.67 69.10 67.92 67.70 67.51 67.33 67.16 66.47 65.63 65.15 64.58 64.30 63.53 63.31 62.95 62.58 60.26 59.40 59.38 58.06 55.87 55.77 55.30 53.75 51.85

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Andorra Belgium Portugal Denmark Cyprus France Spain Hungary Norway Estonia Austria Finland San Marino Slovenia Jersey Guernsey Belarus Slovakia Germany Monaco Switzerland Russia Lithuania Ukraine Greece Netherlands Sweden the United Kingdom Liechtenstein Vatican City Gibraltar Ireland Italy Georgia Faroe Islands Malta Poland Isle of Man Iceland Albania Luxembourg Czech Republic Romania Latvia Croatia Moldova Kazakhstan Bulgaria Bosnia & Herzegovina Macedonia Serbia & Montenegro

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

71

Selling, General & Administrative Expenses Countries

Value (total revenue = 100)

Rank

Percentile

28.49 28.26 26.51 26.27 25.90 25.12 22.54 21.79 20.82 19.42 18.12 18.08 17.87 17.85 17.15 16.96 16.58 16.50 15.50 14.65 14.27 13.83 12.73 12.54 11.16 10.41 10.40 10.21 9.92 9.39 9.27 8.72 8.51 8.37 8.35 8.29 7.97 6.46 0.93

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 22 23 24 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 45

97.83 95.65 93.48 91.30 89.13 86.96 84.78 82.61 80.43 78.26 76.09 73.91 71.74 69.57 67.39 65.22 60.87 58.70 56.52 52.17 50.00 47.83 43.48 41.30 39.13 36.96 34.78 32.61 30.43 28.26 26.09 23.91 21.74 17.39 15.22 13.04 10.87 8.70 2.17

Region

_________________________________________________________________________________________________________

Israel Ireland Netherlands Peru USA the United Kingdom Sweden Italy Japan South Africa Turkey Mexico Thailand Finland Germany Canada Hong Kong Switzerland China France Luxembourg Malaysia Norway Greece Czech Republic Hungary Argentina Denmark Austria Australia South Korea Taiwan Poland Brazil Russia Singapore Chile Indonesia Philippines

the Middle East Europe Europe Latin America North America Europe Europe Europe Asia Africa the Middle East Latin America Asia Europe Europe North America Asia Europe Asia Europe Europe Asia Europe Europe Europe Europe Latin America Europe Europe Oceana Asia Asia Europe Latin America Europe Asia Latin America Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

72

Selling, General & Administrative Expenses (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

28.26 26.51 26.17 25.12 22.93 22.54 21.97 21.79 17.85 17.22 17.15 16.50 15.90 15.80 15.39 15.36 14.82 14.65 14.27 12.73 12.54 11.62 11.47 11.16 10.60 10.59 10.41 10.21 9.92 9.82 9.58 9.58 9.36 8.94 8.90 8.76 8.53 8.51 8.51 8.35 8.33 8.04 7.65 7.36 7.35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

97.78 95.56 93.33 91.11 88.89 86.67 84.44 82.22 80.00 77.78 75.56 73.33 71.11 68.89 66.67 64.44 62.22 60.00 57.78 55.56 53.33 51.11 48.89 46.67 44.44 42.22 40.00 37.78 35.56 33.33 31.11 28.89 26.67 24.44 22.22 20.00 17.78 15.56 13.33 11.11 8.89 6.67 4.44 2.22 0.00

_________________________________________________________________________________________________________

Ireland Netherlands Iceland the United Kingdom Albania Sweden Vatican City Italy Finland Romania Germany Switzerland Faroe Islands Bosnia & Herzegovina Liechtenstein Macedonia Serbia & Montenegro France Luxembourg Norway Greece Malta Isle of Man Czech Republic Latvia Croatia Hungary Denmark Austria San Marino Jersey Guernsey Ukraine Estonia Gibraltar Georgia Belarus Poland Slovakia Russia Lithuania Monaco Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

73

Operating Expenses - Total Countries

Value (total revenue = 100)

Rank

Percentile

14.48 9.69 8.83 8.44 6.61 5.45 4.97 4.71 4.24 4.15 4.14 3.73 2.66 2.62 2.48 2.46 1.80 1.34 1.25 1.23 0.92 0.55 0.29 0.23 0.21 0.19 0.19 0.18 0.17 0.15 0.12 0.12 0.11 0.07 -0.04

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20 21 23 24 25 26 28 29 30 31 32 33 34 35 36 37 40

97.50 95.00 92.50 90.00 87.50 85.00 82.50 80.00 77.50 75.00 72.50 70.00 67.50 65.00 62.50 60.00 57.50 55.00 50.00 47.50 42.50 40.00 37.50 35.00 30.00 27.50 25.00 22.50 20.00 17.50 15.00 12.50 10.00 7.50 0.00

Region

_________________________________________________________________________________________________________

Australia Austria Finland Germany Netherlands Switzerland Italy Luxembourg France Malaysia Norway India Belgium Taiwan Israel Ireland Singapore Indonesia the United Kingdom Sweden Hong Kong China Spain South Korea Russia Brazil Greece Chile Czech Republic Argentina Denmark Japan USA Canada Thailand

Oceana Europe Europe Europe Europe Europe Europe Europe Europe Asia Europe Asia Europe Asia the Middle East Europe Asia Asia Europe Europe Asia Asia Europe Asia Europe Latin America Europe Latin America Europe Latin America Europe Asia North America North America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

74

Operating Expenses - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

9.69 9.60 9.36 9.36 8.83 8.44 6.61 5.45 5.09 5.01 4.97 4.71 4.24 4.14 2.66 2.46 1.75 1.25 1.23 0.88 0.29 0.27 0.22 0.21 0.21 0.21 0.21 0.19 0.17 0.17 0.17 0.16 0.16 0.12 0.11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

97.14 94.29 91.43 88.57 85.71 82.86 80.00 77.14 74.29 71.43 68.57 65.71 62.86 60.00 57.14 54.29 51.43 48.57 45.71 42.86 40.00 37.14 34.29 31.43 28.57 25.71 22.86 20.00 17.14 14.29 11.43 8.57 5.71 2.86 0.00

_________________________________________________________________________________________________________

Austria San Marino Jersey Guernsey Finland Germany Netherlands Switzerland Liechtenstein Vatican City Italy Luxembourg France Norway Belgium Ireland Monaco the United Kingdom Sweden Faroe Islands Spain Slovenia Estonia Belarus Slovakia Russia Lithuania Greece Malta Isle of Man Czech Republic Latvia Croatia Denmark Iceland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

75

Operating Income Countries

Value (total revenue = 100)

Rank

Percentile

13.67 11.79 11.49 11.22 11.15 11.12 11.05 9.82 8.69 8.64 8.46 7.86 7.83 7.64 7.42 7.41 7.00 6.96 6.87 6.52 6.45 6.40 6.27 6.10 5.94 5.61 5.30 5.16 4.51 3.95 3.86 3.72 3.67 3.52 3.17 2.78 2.54 2.12 1.73 1.50 1.39 0.95 0.69 -2.29 -2.31

1 2 3 4 5 6 7 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 34 35 36 38 39 40 42 43 44 45 46 47 48 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 81.13 79.25 77.36 75.47 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 39.62 35.85 33.96 32.08 28.30 26.42 24.53 20.75 18.87 16.98 15.09 13.21 11.32 9.43 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Spain Brazil Indonesia Chile Turkey Mexico Hong Kong Singapore South Africa India Malaysia Greece Netherlands New Zealand USA Canada Czech Republic South Korea Pakistan Argentina the United Kingdom Italy Russia France Belgium Sweden China Norway Thailand Japan Finland Portugal Switzerland Austria Luxembourg Denmark Germany Hungary Poland Philippines Taiwan Australia Peru Ireland Israel

Europe Latin America Asia Latin America the Middle East Latin America Asia Asia Africa Asia Asia Europe Europe Oceana North America North America Europe Asia the Middle East Latin America Europe Europe Europe Europe Europe Europe Asia Europe Asia Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Asia Asia Oceana Latin America Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

76

Operating Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

13.67 12.83 10.60 10.60 9.73 9.52 9.45 9.12 7.92 7.86 7.83 7.50 7.28 7.19 7.00 6.71 6.64 6.64 6.45 6.45 6.40 6.40 6.39 6.27 6.25 6.10 5.94 5.61 5.16 3.86 3.72 3.67 3.56 3.52 3.48 3.42 3.39 3.39 3.17 2.78 2.54 2.12 1.91 1.81 1.79 1.73 1.56 1.50 1.50 0.60 -2.29

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Slovenia Faroe Islands Romania Bosnia & Herzegovina Monaco Macedonia Serbia & Montenegro Andorra Greece Netherlands Iceland Malta Isle of Man Czech Republic Estonia Latvia Croatia Vatican City the United Kingdom Belarus Italy Slovakia Russia Lithuania France Belgium Sweden Norway Finland Portugal Switzerland Cyprus Austria San Marino Liechtenstein Guernsey Jersey Luxembourg Denmark Germany Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Albania Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

77

Earnings Before Interest and Taxes (EBIT) Countries

Value (total revenue = 100)

Rank

Percentile

35.95 35.85 27.11 25.79 13.70 13.08 11.65 11.48 10.85 10.78 10.66 9.91 9.81 9.08 8.82 7.99 7.82 7.73 7.59 7.56 7.53 7.39 7.34 7.32 6.82 6.68 6.66 6.61 6.36 6.06 5.61 5.49 4.89 4.71 4.07 3.73 3.16 3.04 3.00 2.78 2.71 2.45 2.04 -1.63 -1.65

1 2 4 5 6 7 8 9 10 11 12 14 15 16 18 19 20 22 23 24 25 26 27 28 29 31 32 33 35 36 38 39 40 41 42 43 44 45 46 47 48 49 50 52 53

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 73.58 71.70 69.81 66.04 64.15 62.26 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Brazil Chile Spain Greece Czech Republic India Argentina Indonesia Malaysia Singapore Hong Kong New Zealand South Africa Italy Netherlands Thailand USA Canada France China South Korea Norway the United Kingdom Pakistan Sweden Russia Finland Taiwan Germany Austria Portugal Switzerland Luxembourg Belgium Denmark Australia Hungary Japan Peru Poland Philippines Ireland Israel

the Middle East Latin America Latin America Latin America Europe Europe Europe Asia Latin America Asia Asia Asia Asia Oceana Africa Europe Europe Asia North America North America Europe Asia Asia Europe Europe the Middle East Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Europe Oceana Europe Asia Latin America Europe Asia Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

78

Earnings Before Interest and Taxes (EBIT) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

34.16 31.35 30.47 29.39 13.70 13.08 12.86 12.13 11.97 11.65 11.05 11.05 9.61 9.41 9.40 8.05 7.99 7.82 7.67 7.53 7.32 7.07 6.82 6.75 6.73 6.66 6.61 6.59 6.36 5.61 5.49 5.44 5.30 5.30 4.89 4.71 4.68 4.39 4.07 3.73 3.16 3.00 2.70 2.57 2.53 2.45 2.36 2.21 2.12 2.12 -1.63

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Spain Greece Slovenia Malta Isle of Man Czech Republic Latvia Croatia Monaco Faroe Islands Andorra Vatican City Italy Netherlands Iceland France Norway Estonia the United Kingdom Belarus Slovakia Sweden Russia Lithuania Finland Germany Austria San Marino Guernsey Jersey Portugal Switzerland Cyprus Liechtenstein Luxembourg Belgium Denmark Hungary Ukraine Gibraltar Georgia Poland Albania Moldova Kazakhstan Bulgaria Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

79

Pretax Income Countries

Value (total revenue = 100)

Rank

Percentile

15.44 14.69 13.06 11.91 10.76 9.67 9.58 9.47 9.21 9.11 8.92 7.87 7.25 6.56 6.43 6.27 6.02 5.99 5.76 5.73 5.72 5.45 5.07 5.04 4.74 4.57 4.34 4.29 4.15 3.43 3.39 3.35 2.97 2.46 2.14 1.83 1.39 1.30 1.29 1.25 1.05 -1.98 -1.99 -6.48 -6.50

1 2 3 4 5 6 7 8 9 10 11 14 15 16 18 19 20 21 22 23 24 25 27 28 30 32 33 34 35 36 37 38 39 40 41 42 44 45 46 47 48 49 50 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 73.58 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 43.40 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Brazil Chile Spain Hong Kong Greece India Czech Republic Malaysia Singapore Indonesia Argentina South Africa New Zealand Canada USA Thailand France Italy Netherlands Norway the United Kingdom Pakistan South Korea China Sweden Russia Finland Germany Austria Switzerland Portugal Taiwan Luxembourg Belgium Japan Philippines Denmark Australia Hungary Peru Poland Ireland Israel Mexico Turkey

Latin America Latin America Europe Asia Europe Asia Europe Asia Asia Asia Latin America Africa Oceana North America North America Asia Europe Europe Europe Europe Europe the Middle East Asia Asia Europe Europe Europe Europe Europe Europe Europe Asia Europe Europe Asia Asia Europe Oceana Europe Latin America Europe Europe the Middle East Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

80

Pretax Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

13.06 12.26 11.42 10.76 9.97 9.84 9.58 9.09 9.09 8.93 7.51 6.50 6.04 6.02 5.99 5.76 5.73 5.72 4.89 4.74 4.67 4.66 4.57 4.56 4.34 4.29 4.15 4.11 4.00 4.00 3.43 3.39 3.25 3.20 2.97 2.46 1.39 1.29 1.16 1.10 1.09 1.08 1.05 0.95 0.91 0.91 -1.98 -5.31 -5.51 -5.67 -6.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Slovenia Faroe Islands Greece Malta Isle of Man Czech Republic Latvia Croatia Monaco Andorra Iceland Vatican City France Italy Netherlands Norway the United Kingdom Estonia Sweden Belarus Slovakia Russia Lithuania Finland Germany Austria San Marino Guernsey Jersey Switzerland Portugal Cyprus Liechtenstein Luxembourg Belgium Denmark Hungary Ukraine Gibraltar Albania Georgia Poland Moldova Kazakhstan Bulgaria Ireland Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

81

Income Taxes Countries

Value (total revenue = 100)

Rank

Percentile

5.16 4.60 4.28 4.19 4.09 3.89 3.09 3.05 2.82 2.81 2.51 2.23 2.12 2.09 2.01 1.90 1.85 1.76 1.72 1.50 1.39 1.38 1.35 1.29 1.24 1.24 1.23 1.08 1.08 1.06 0.91 0.87 0.83 0.79 0.74 0.42 0.42 0.26 0.17 0.01

1 2 3 4 5 6 8 9 10 11 13 14 15 16 18 19 20 21 22 23 24 25 26 27 29 30 31 32 33 34 35 36 37 38 39 42 43 44 45 46

97.87 95.74 93.62 91.49 89.36 87.23 82.98 80.85 78.72 76.60 72.34 70.21 68.09 65.96 61.70 59.57 57.45 55.32 53.19 51.06 48.94 46.81 44.68 42.55 38.30 36.17 34.04 31.91 29.79 27.66 25.53 23.40 21.28 19.15 17.02 10.64 8.51 6.38 4.26 2.13

Region

_________________________________________________________________________________________________________

Greece Czech Republic Argentina Spain Brazil Chile Italy India Malaysia Indonesia South Africa Belgium France USA Norway the United Kingdom Sweden Canada Netherlands Austria Singapore South Korea Germany Finland New Zealand Russia Japan Hong Kong Portugal Switzerland Luxembourg Australia Thailand Denmark China Israel Ireland Taiwan Peru Philippines

Europe Europe Latin America Europe Latin America Latin America Europe Asia Asia Asia Africa Europe Europe North America Europe Europe Europe North America Europe Europe Asia Asia Europe Europe Oceana Europe Asia Asia Europe Europe Europe Oceana Asia Europe Asia the Middle East Europe Asia Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

82

Income Taxes (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

5.16 4.79 4.72 4.60 4.36 4.36 4.19 3.94 3.11 3.09 2.23 2.12 2.11 2.01 1.90 1.85 1.72 1.50 1.49 1.45 1.45 1.35 1.35 1.33 1.29 1.29 1.27 1.27 1.24 1.24 1.08 1.06 1.04 1.03 0.99 0.91 0.79 0.42 0.15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

97.44 94.87 92.31 89.74 87.18 84.62 82.05 79.49 76.92 74.36 71.79 69.23 66.67 64.10 61.54 58.97 56.41 53.85 51.28 48.72 46.15 43.59 41.03 38.46 35.90 33.33 30.77 28.21 25.64 23.08 20.51 17.95 15.38 12.82 10.26 7.69 5.13 2.56 0.00

_________________________________________________________________________________________________________

Greece Malta Isle of Man Czech Republic Latvia Croatia Spain Slovenia Vatican City Italy Belgium France Iceland Norway the United Kingdom Sweden Netherlands Austria San Marino Guernsey Jersey Germany Monaco Estonia Finland Andorra Belarus Slovakia Russia Lithuania Portugal Switzerland Faroe Islands Cyprus Liechtenstein Luxembourg Denmark Ireland Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.5 3.5.1

FINANCIAL RETURNS RATIOS

IN

83

UNITED KINGDOM: PROFITABILITY

Overview

In this chapter we consider additional financial ratios estimated for firms involved in steam, gas and hydraulic turbines and turbine generator set units operating in The United Kingdom benchmarked against global averages. The chapter begins by defining relevant terms. Estimates are then presented for the proto-typical firm operating in The United Kingdom compared to average global benchmarks. For ratios where there are large deviations between the average firm in The United Kingdom and the benchmarks, graphics are provided. Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key ratios are highlighted across countries in the comparison group.

3.5.2

Ratios – Definitions of Terms

The following definitions are provided for those less familiar with financial ratio analysis. As this chapter deals with the global benchmarking of ratios, only definitions covering certain terms used in this chapter’s tables and graphs are provided here . The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accounts Receivables Days. The number of days' receivable sales generally correlates to the amount of the accounts receivables to the average daily sales on account. Accounts receivables days is often determined by dividing the gross receivables by (net sales/365).

•

Cash Earnings Return On Equity (%). Cash earnings return on equity generally measures the return of revenues to the shareholders. This ratio is generally calculated by dividing (net income before nonrecurring items minus preferred dividends) by the average common equity.

•

Cash Flow. Cash flow is generally defined as being equal to the company's net income plus the charge-off amounts for depreciation, depletion, amortization, extraordinary charges to reserves. These are bookkeeping deductions which are not paid out as cash.

•

Current Ratio. The current ratio is generally defined as a ratio of liquidity measuring the ability of a business to pay its current obligations when due. The current ratio is generally calculated by dividing total current assets by total current liabilities. Managers and lenders often want the current ratio to be 2.00 or greater. This ratio is often seen as an indication of short-term debt-paying ability. The higher the ratio, the more liquid the company.

•

Dividend Payout (% Earnings) - Total Dividends (%). The dividend payout ratio is generally used to measure the amount of current earnings per common share which are paid out in dividends. This ratio is generally determined by dividing dividends per common share by diluted earnings per share.

•

Fixed Charge Coverage Ratio. The fixed charge coverage ratio is generally seen as an indication of the company's ability to cover its fixed charges. This ratio is typically determined by dividing recurring earnings excluding interest expense, tax expense, equity earnings, and minority earnings plus interest from rentals by interest expense including capitalized interest and interest from rentals.

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Financial Indicators

84

•

Gross Profit Margin (%). The gross profit margin is typically defined to equals the difference, in percent, between net sales revenue and the cost of goods sold.

•

Inventories (# of Days) Held. Inventory days held is generally determined by dividing the ending inventory by (the cost of goods held/365). The number of days held results in the average daily cost of goods held.

•

Inventory Turnover (%). Inventory turnover is used as a measure of the balance of inventory. It generally compares the amount of inventory with the total sales for the year. The ratio can reflect both on the quality of the inventory and the efficiency of management. Typically, the higher the turnover rate, the greater the likelihood that profits would be larger and less working capital bound up in inventory.

•

Net Margin (%). The net margin is the ratio of net income dollars generated by each dollar of sales.

•

Operating Profit Margin (%). Operating profit margin percent is the ratio of operating profit to net sales. Operating profit (loss) is income or loss before taxes calculated by the difference between total revenues and total expense disregarding the effects of any extraordinary transactions.

•

Quick Ratio. The quick ratio, also commonly known as the “acid test ratio”, is a refined current ratio and is often seen as a more conservative measure of liquidity. The quick ratio is generally determined by dividing cash and equivalents plus trade receivables by total current liabilities. The ratio shows the degree to which a company's current liabilities can be covered by the most liquid current assets. Financial management texts generally conclude that any value of less than 1 to 1 implies a reciprocal dependency on inventory or other current assets to liquidate short-term debt.

•

Reinvestment Rate - Total (%). The reinvestment rate is typically defined as the rate at which an investor assumes interest payments made on a debt security can be reinvested over the life of that security.

•

Return on Assets (%). Return on assets is generally used to measure a company's ability to use assets to create profit.

•

Return on Equity - Total (%). The return on total equity ratio is often seen to reflect the profitability of the company's operations after income taxes. Return on equity is often considered to be a good measure of the company's profitability. Tax laws and tax loss carryovers can affect the net income and therefore can also affect the return on equity.

•

Return on Invested Capital (%). The ratio of return on invested capital is typically defined as an evaluation of earnings performance without regard to the method of financing. This ratio measures the earnings on investment and is an indication of how well the company utilizes its asset base. Return on investment is a type of return on capital, therefore this ratio can be an indication of the company’s ability to reward investors who provide long-term funds and to attract future investors.

•

Tax Rate (%). The tax rate is typically defined as the average rate of domestic tax owed to government by the company.

•

Working Capital. Net working capital equals the difference between total current assets and total current liabilities. Working capital often reflects a company's ability to expand volume and meet obligations. Since growth is usually one goal, the amount of working capital on this year's balance sheet should be greater than that of the previous year's. This is an efficiency, or turnover, ratio which benchmarks the rate at which current assets less current liabilities are used by the company in making sales. A low ratio can indicate a less profitable use of working capital in making sales. On the other hand, a very high ratio can indicate the company is wasting current assets which could be more efficiently deployed in production and in increasing

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Financial Indicators

85

sales and profits; or that the company my be undercapitalized, and thus vulnerable to liquidity problems in a period of weak business conditions.

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2007 Icon Group International, Inc.

Financial Indicators

3.5.3

86

Ratio Structure: Outlook

Using the methodology described in the introduction, the following table summarizes ratio structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in United Kingdom. All figures are current-year projections for companies operating in United Kingdom based on latest financial results available. Ratios United Kingdom Europe World Avg.

_________________________________________________________________________________________________________

Profitability Return on Equity - Total (%) Reinvestment Rate - Total (%) Return on Assets (%) Return on Invested Capital (%) Cash Earnings Return On Equity (%) Cash Flow % Sales Cost Goods Sold / Sales (%) Gross Profit Margin (%) Selling, General & Administrative Expense/Net Sales (%) Research & Development / Net Sales (%) Operating Profit Margin (%) Operating Inc / Total Capital (%) Pretax Margin (%) Tax Rate (%) Net Margin (%) Total Asset Turnover (X) th USD Asset Utilization Inventory Turnover (%) Net Sales % Working Capital Capital Expenditure % Gross Fixed Assets Capital Expenditure % Total Assets Capital Expenditure % Total Sales Accumulated Depreciation % Gross Fixed Assets Leverage Total Debt % Total Capital Long Term Debt % Total Capital Equity % Total Capital Preferred Stock % Total Capital Fixed Charge Coverage Ratio Dividend Payout (% Earnings) - Total Dividends Fixed Assets % Common Equity Working Capital % Total Capital Liquidity Quick Ratio Current Ratio Accounts Receivables Days Inventories (# of Days) Held

21.86 3.36 6.66 11.49 26.58 7.18 69.10 27.60 22.34 3.25 6.45 18.98 5.72 33.83 3.91 1.37

8.41 0.54 5.54 8.99 19.12 7.04 70.09 18.16 12.56 2.44 5.46 11.46 4.14 31.19 2.62 1.00

11.23 4.31 7.52 11.23 13.86 8.76 69.36 16.64 8.76 0.97 6.55 13.01 6.00 22.52 4.43 0.97

6.81 9.43 8.51 3.95 3.12 50.46

5.77 7.78 23.69 6.00 8.77 46.43

5.42 0.95 13.04 4.74 7.07 43.04

28.49 19.04 77.63 2.56 18.98 34.53 25.81 41.04

31.57 17.99 72.70 0.08 16.50 22.31 67.92 36.06

23.33 11.25 79.34 0.08 61.22 27.60 67.16 33.69

1.06 1.70 79.96 90.97

1.13 1.67 108.30 80.22

1.20 1.75 110.57 99.11

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.5.4

87

Large Variances: Ratios

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large ratio structure gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Return on Equity - Total (%) 25

21.86

20 15

11.23 8.41

10

10.63

5 0 United Kingdom

Europe

World Average

Gap

Gap: Cash Earnings Return On Equity (%) 30

26.58

25

19.12

20

13.86

15

12.72

10 5 0 United Kingdom

Europe

World Average

Gap

Gap: Gross Profit Margin (%) 30

27.6

25 18.16

20

16.64

15

10.96

10 5 0 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

88

Gap: Selling, General & Administrative Expense/Net Sales (%) 25

22.34

20 13.58

12.56

15

8.76

10 5 0 United Kingdom

Europe

World Average

Gap

Gap: Tax Rate (%) 40

33.83

31.19

30

22.52

20 11.31 10 0 United Kingdom

Europe

World Average

Gap

Gap: Net Sales % Working Capital 10

9.43

8.48

7.78

8 6 4 2

0.95

0 United Kingdom

Europe

World Average

Gap

Gap: Long Term Debt % Total Capital 20

19.04

17.99

15

11.25 7.79

10 5 0 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

89

Gap: Fixed Charge Coverage Ratio 80 60 40 20 0 -20 -40 -60

61.22 18.98

16.5

-42.24 United Kingdom

Europe

World Average

Gap

Gap: Fixed Assets % Common Equity 80 60 40 20 0 -20 -40 -60

67.92

67.16

25.81

-41.35 United Kingdom

Europe

World Average

Gap

Gap: Accounts Receivables Days 150 108.3 100

110.57

79.96

50 0 -30.61

-50 United Kingdom

Europe

World Average

Gap

Gap: Inventories (# of Days) Held 100

90.97

99.11 80.22

80 60 40 20 0

-8.14

-20 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.5.5

90

Key Percentiles and Rankings

We now consider the distribution of financial ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than United Kingdom (what is the ratio's rank or percentile)? The table below answers this question with respect to financial ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key financial ratios are highlighted in additional tables. Ratios

United Kingdom

Rank of Total

Percentile

21.86 3.36 6.66 11.49 26.58 7.18 69.10 27.60 22.34 3.25 6.45 18.98 5.72 33.83 3.91 1.37

8 of 53 33 of 53 21 of 53 18 of 53 13 of 53 34 of 53 36 of 52 7 of 52 2 of 46 8 of 30 24 of 53 10 of 53 24 of 53 19 of 47 23 of 53 8 of 53

84.91 37.74 60.38 66.04 75.47 35.85 30.77 86.54 95.65 73.33 54.72 81.13 54.72 59.57 56.60 84.91

6.81 9.43 8.51 3.95 3.12 50.46

17 of 53 4 of 53 33 of 49 34 of 53 39 of 53 23 of 49

67.92 92.45 32.65 35.85 26.42 53.06

28.49 19.04 77.63 2.56 18.98 34.53 25.81 41.04

27 of 53 21 of 48 27 of 53 1 of 7 17 of 53 14 of 46 46 of 53 24 of 53

49.06 56.25 49.06 85.71 67.92 69.57 13.21 54.72

1.06 1.70 79.96 90.97

33 of 53 31 of 53 32 of 53 20 of 53

37.74 41.51 39.62 62.26

_________________________________________________________________________________________________________

Profitability Return on Equity - Total (%) Reinvestment Rate - Total (%) Return on Assets (%) Return on Invested Capital (%) Cash Earnings Return On Equity (%) Cash Flow % Sales Cost Goods Sold / Sales (%) Gross Profit Margin (%) Selling, General & Administrative Expense/Net Sales (%) Research & Development / Net Sales (%) Operating Profit Margin (%) Operating Inc / Total Capital (%) Pretax Margin (%) Tax Rate (%) Net Margin (%) Total Asset Turnover (X) th USD Asset Utilization Inventory Turnover (%) Net Sales % Working Capital Capital Expenditure % Gross Fixed Assets Capital Expenditure % Total Assets Capital Expenditure % Total Sales Accumulated Depreciation % Gross Fixed Assets Leverage Total Debt % Total Capital Long Term Debt % Total Capital Equity % Total Capital Preferred Stock % Total Capital Fixed Charge Coverage Ratio Dividend Payout (% Earnings) - Total Dividends Fixed Assets % Common Equity Working Capital % Total Capital Liquidity Quick Ratio Current Ratio Accounts Receivables Days Inventories (# of Days) Held

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

91

Gross Profit Margin (%) Countries

Value

Rank

Percentile

USA Turkey Italy Mexico Israel Ireland the United Kingdom Hong Kong Sweden Netherlands Malaysia Japan Peru Germany Thailand Switzerland South Africa China Canada Brazil Greece Singapore Luxembourg Chile Finland Australia Austria Norway Indonesia Czech Republic Spain South Korea Argentina Russia France India Hungary Denmark Poland Portugal Taiwan Belgium New Zealand Philippines

32.95 29.28 29.27 29.20 28.66 28.43 27.60 27.47 26.24 25.80 25.29 24.37 24.36 22.73 22.57 22.47 21.38 21.33 21.30 20.35 19.74 19.63 19.43 19.37 19.31 19.19 19.14 18.87 17.67 17.57 17.29 16.48 16.37 14.85 13.40 12.57 12.50 10.84 10.22 10.08 9.82 8.31 7.64 2.42

1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 34 36 37 39 40 42 43 44 45 46 47 48 50 51

98.08 96.15 94.23 92.31 90.38 88.46 86.54 84.62 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 42.31 40.38 38.46 34.62 30.77 28.85 25.00 23.08 19.23 17.31 15.38 13.46 11.54 9.62 7.69 3.85 1.92

Region

_________________________________________________________________________________________________________

North America the Middle East Europe Latin America the Middle East Europe Europe Asia Europe Europe Asia Asia Latin America Europe Asia Europe Africa Asia North America Latin America Europe Asia Europe Latin America Europe Oceana Europe Europe Asia Europe Europe Asia Latin America Europe Europe Asia Europe Europe Europe Europe Asia Europe Oceana Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

92

Gross Profit Margin (%) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Iceland Vatican City Italy Ireland Romania the United Kingdom Faroe Islands Sweden Netherlands Bosnia & Herzegovina Macedonia Serbia & Montenegro Germany Switzerland Albania Liechtenstein Greece Luxembourg Finland Austria Monaco San Marino Norway Guernsey Jersey Malta Isle of Man Czech Republic Spain Latvia Croatia Slovenia Estonia Belarus Slovakia Russia Lithuania France Hungary Ukraine Denmark Gibraltar Georgia Poland Portugal Cyprus Moldova Kazakhstan Bulgaria Belgium Andorra

33.29 29.51 29.27 28.43 27.82 27.60 26.34 26.24 25.80 25.53 24.81 23.93 22.73 22.47 21.27 20.97 19.74 19.43 19.31 19.14 19.03 18.96 18.87 18.49 18.49 18.29 18.05 17.57 17.29 16.68 16.67 16.23 15.89 15.16 15.13 14.85 14.82 13.40 12.50 11.24 10.84 10.68 10.52 10.22 10.08 9.65 9.19 8.84 8.83 8.31 7.92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

93

Pretax Margin (%) Countries

Value

Rank

Percentile

Brazil Chile Spain Hong Kong Greece India Czech Republic Malaysia Singapore Indonesia Argentina South Africa New Zealand Canada USA Thailand France Italy Netherlands Norway the United Kingdom Pakistan South Korea China Sweden Russia Finland Germany Austria Switzerland Portugal Taiwan Luxembourg Belgium Japan Philippines Denmark Australia Hungary Peru Poland Ireland Israel Mexico Turkey

15.44 14.69 13.06 11.91 10.76 9.67 9.58 9.47 9.21 9.11 8.92 7.87 7.25 6.56 6.43 6.27 6.02 5.99 5.76 5.73 5.72 5.45 5.07 5.04 4.74 4.57 4.34 4.29 4.15 3.43 3.39 3.35 2.97 2.46 2.14 1.83 1.39 1.30 1.29 1.25 1.05 -1.98 -1.99 -6.48 -6.50

1 2 3 4 5 6 7 8 9 10 11 14 15 16 18 19 20 21 22 23 24 25 27 28 30 32 33 34 35 36 37 38 39 40 41 42 44 45 46 47 48 49 50 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 73.58 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 43.40 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Latin America Latin America Europe Asia Europe Asia Europe Asia Asia Asia Latin America Africa Oceana North America North America Asia Europe Europe Europe Europe Europe the Middle East Asia Asia Europe Europe Europe Europe Europe Europe Europe Asia Europe Europe Asia Asia Europe Oceana Europe Latin America Europe Europe the Middle East Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

94

Pretax Margin (%) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Spain Slovenia Faroe Islands Greece Malta Isle of Man Czech Republic Latvia Croatia Monaco Andorra Iceland Vatican City France Italy Netherlands Norway the United Kingdom Estonia Sweden Belarus Slovakia Russia Lithuania Finland Germany Austria San Marino Guernsey Jersey Switzerland Portugal Cyprus Liechtenstein Luxembourg Belgium Denmark Hungary Ukraine Gibraltar Albania Georgia Poland Moldova Kazakhstan Bulgaria Ireland Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

13.06 12.26 11.42 10.76 9.97 9.84 9.58 9.09 9.09 8.93 7.51 6.50 6.04 6.02 5.99 5.76 5.73 5.72 4.89 4.74 4.67 4.66 4.57 4.56 4.34 4.29 4.15 4.11 4.00 4.00 3.43 3.39 3.25 3.20 2.97 2.46 1.39 1.29 1.16 1.10 1.09 1.08 1.05 0.95 0.91 0.91 -1.98 -5.31 -5.51 -5.67 -6.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

95

Quick Ratio Countries

Value

Rank

Percentile

Australia Hong Kong Malaysia Israel Ireland Indonesia Canada USA Singapore Japan Philippines South Korea Greece Germany Switzerland Norway France Russia Czech Republic India New Zealand Thailand Sweden Peru Finland Argentina Luxembourg Spain the United Kingdom Italy China Netherlands Denmark Portugal South Africa Belgium Turkey Mexico Austria Taiwan Pakistan Hungary Poland Brazil Chile

12.75 3.86 3.62 2.46 2.44 2.25 2.22 2.17 1.59 1.59 1.55 1.41 1.39 1.36 1.33 1.32 1.29 1.27 1.23 1.22 1.22 1.22 1.19 1.18 1.15 1.15 1.15 1.09 1.06 1.05 1.05 1.04 1.01 0.98 0.97 0.95 0.94 0.93 0.92 0.87 0.81 0.67 0.55 0.44 0.41

1 2 3 4 5 6 7 8 11 12 13 14 15 16 17 18 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 43 44 45 46 48 49 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 18.87 16.98 15.09 13.21 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Oceana Asia Asia the Middle East Europe Asia North America North America Asia Asia Asia Asia Europe Europe Europe Europe Europe Europe Europe Asia Oceana Asia Europe Latin America Europe Latin America Europe Europe Europe Europe Asia Europe Europe Europe Africa Europe the Middle East Latin America Europe Asia the Middle East Europe Europe Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

96

Quick Ratio (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

3.70 2.44 2.19 1.54 1.39 1.36 1.36 1.33 1.32 1.30 1.30 1.29 1.29 1.27 1.27 1.27 1.27 1.24 1.23 1.19 1.17 1.17 1.15 1.15 1.09 1.06 1.06 1.05 1.04 1.03 1.02 1.01 0.98 0.95 0.94 0.92 0.91 0.89 0.89 0.89 0.82 0.79 0.77 0.67 0.60 0.57 0.56 0.55 0.49 0.47 0.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Faroe Islands Ireland Iceland Monaco Greece Estonia Germany Switzerland Norway Belarus Slovakia France Malta Russia Lithuania Isle of Man Andorra Liechtenstein Czech Republic Sweden Latvia Croatia Finland Luxembourg Spain Vatican City the United Kingdom Italy Netherlands Albania Slovenia Denmark Portugal Belgium Cyprus Austria San Marino Jersey Guernsey Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

97

Current Ratio Countries

Value

Rank

Percentile

Australia Hong Kong Malaysia Israel Ireland Indonesia USA Canada Peru New Zealand Germany Japan Singapore Denmark Switzerland Philippines Thailand Sweden France Finland Norway South Korea Greece Luxembourg Netherlands Russia the United Kingdom Italy South Africa India Czech Republic Portugal China Pakistan Argentina Spain Austria Belgium Taiwan Turkey Mexico Hungary Poland Brazil Chile

13.84 4.39 4.29 3.49 3.46 3.24 3.18 3.02 2.88 2.39 2.34 2.22 2.15 2.07 2.04 2.04 1.98 1.97 1.93 1.92 1.91 1.91 1.84 1.77 1.74 1.72 1.70 1.69 1.67 1.67 1.64 1.59 1.58 1.57 1.53 1.43 1.40 1.36 1.28 1.11 1.11 1.10 0.90 0.89 0.85

1 2 3 4 5 6 7 9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 26 28 30 31 32 33 34 36 37 38 39 41 43 44 45 46 47 48 49 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 47.17 43.40 41.51 39.62 37.74 35.85 32.08 30.19 28.30 26.42 22.64 18.87 16.98 15.09 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Oceana Asia Asia the Middle East Europe Asia North America North America Latin America Oceana Europe Asia Asia Europe Europe Asia Asia Europe Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Africa Asia Europe Europe Asia the Middle East Latin America Europe Europe Europe Asia the Middle East Latin America Europe Europe Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

98

Current Ratio (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

4.21 3.46 3.22 2.52 2.48 2.34 2.08 2.07 2.04 1.97 1.93 1.92 1.91 1.91 1.84 1.84 1.77 1.76 1.75 1.74 1.72 1.72 1.71 1.71 1.70 1.69 1.69 1.64 1.59 1.56 1.56 1.52 1.43 1.40 1.38 1.36 1.35 1.35 1.34 1.10 1.06 0.99 0.97 0.94 0.94 0.93 0.91 0.90 0.81 0.78 0.78

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Faroe Islands Ireland Iceland Albania Andorra Germany Monaco Denmark Switzerland Sweden France Finland Norway Liechtenstein Greece Estonia Luxembourg Belarus Slovakia Netherlands Russia Lithuania Vatican City Malta the United Kingdom Italy Isle of Man Czech Republic Portugal Latvia Croatia Cyprus Spain Austria San Marino Belgium Jersey Guernsey Slovenia Hungary Romania Ukraine Bosnia & Herzegovina Macedonia Gibraltar Georgia Serbia & Montenegro Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

99

Accounts Receivables Days Countries

Value

Rank

Percentile

Turkey Mexico Malaysia China Italy Greece Japan India Spain Israel Ireland Czech Republic France Argentina Portugal Peru Austria South Korea Singapore Netherlands Switzerland Norway Russia Germany Taiwan Denmark Sweden Hungary Hong Kong the United Kingdom Brazil Thailand Canada Finland Luxembourg Chile Philippines USA Belgium Poland Australia Indonesia New Zealand South Africa Pakistan

357.98 357.00 174.24 140.37 139.34 133.01 132.06 129.31 123.36 121.19 120.18 118.41 111.00 110.30 97.52 95.11 93.62 93.59 92.69 92.30 87.80 87.10 84.34 84.28 83.15 82.99 82.85 81.65 80.25 79.96 79.39 79.18 79.10 78.40 75.93 75.53 71.26 70.09 70.01 66.78 65.78 53.09 52.84 50.69 48.79

1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 44 47 48 49 51

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 11.32 9.43 7.55 3.77

Region

_________________________________________________________________________________________________________

the Middle East Latin America Asia Asia Europe Europe Asia Asia Europe the Middle East Europe Europe Europe Latin America Europe Latin America Europe Asia Asia Europe Europe Europe Europe Europe Asia Europe Europe Europe Asia Europe Latin America Asia North America Europe Europe Latin America Asia North America Europe Europe Oceana Asia Oceana Africa the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

100

Accounts Receivables Days (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Vatican City Italy Greece Spain Malta Isle of Man Ireland Czech Republic Slovenia Latvia Croatia France Portugal Austria Cyprus San Marino Netherlands Guernsey Jersey Estonia Monaco Switzerland Norway Belarus Slovakia Russia Germany Lithuania Albania Denmark Sweden Liechtenstein Hungary the United Kingdom Finland Faroe Islands Luxembourg Ukraine Iceland Belgium Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Andorra

340.13 312.13 303.36 292.63 140.47 139.34 133.01 123.36 123.28 121.66 120.18 118.41 115.80 112.40 112.35 111.00 97.52 93.62 93.35 92.73 92.30 90.41 90.41 90.22 89.88 87.80 87.10 86.11 85.91 84.34 84.28 84.14 83.02 82.99 82.85 81.93 81.65 79.96 78.40 76.95 75.93 73.43 70.80 70.01 69.81 68.74 66.78 60.04 57.78 57.67 54.72

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

101

Inventories (# of Days) Held Countries

Value

Rank

Percentile

Italy China Peru Israel Ireland Thailand Denmark Netherlands Australia Germany Japan Hong Kong Sweden France Brazil USA Malaysia the United Kingdom Chile Turkey Mexico Finland Switzerland Norway Austria South Korea South Africa Luxembourg Singapore Russia Hungary Spain New Zealand Indonesia Portugal India Pakistan Canada Poland Greece Czech Republic Argentina Taiwan Belgium Philippines

200.12 198.98 166.34 146.42 145.21 133.49 114.02 110.88 110.72 109.81 107.97 96.49 95.10 94.96 93.99 93.46 91.97 90.97 89.43 89.04 88.80 85.48 83.67 80.42 79.31 78.82 76.82 72.36 71.18 71.03 70.60 69.83 68.57 68.04 67.74 66.69 66.27 60.38 57.74 55.27 49.21 45.84 45.15 40.74 32.19

1 2 3 4 5 6 7 9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 33 34 35 37 38 39 40 41 42 44 45 46 47 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 37.74 35.85 33.96 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 11.32 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Europe Asia Latin America the Middle East Europe Asia Europe Europe Oceana Europe Asia Asia Europe Europe Latin America North America Asia Europe Latin America the Middle East Latin America Europe Europe Europe Europe Asia Africa Europe Asia Europe Europe Europe Oceana Asia Europe Asia the Middle East North America Europe Europe Europe Latin America Asia Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

102

Inventories (# of Days) Held (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Vatican City Italy Ireland Albania Denmark Netherlands Germany Sweden France Iceland Faroe Islands the United Kingdom Finland Romania Switzerland Norway Austria San Marino Liechtenstein Bosnia & Herzegovina Guernsey Jersey Estonia Macedonia Serbia & Montenegro Belarus Luxembourg Slovakia Russia Andorra Lithuania Hungary Spain Monaco Portugal Slovenia Cyprus Ukraine Gibraltar Georgia Poland Greece Moldova Malta Isle of Man Kazakhstan Bulgaria Czech Republic Latvia Croatia Belgium

201.74 200.12 145.21 145.20 114.02 110.88 109.81 95.10 94.96 94.42 92.53 90.97 85.48 84.60 83.67 80.42 79.31 78.56 78.08 77.64 76.60 76.60 75.99 75.45 72.79 72.52 72.36 72.36 71.03 71.01 70.86 70.60 69.83 69.02 67.74 65.56 64.84 63.49 60.37 59.44 57.74 55.27 51.92 51.23 50.55 49.96 49.87 49.21 46.71 46.69 40.74

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.6 3.6.1

103

PRODUCTIVITY IN UNITED KINGDOM: ASSET-LABOR RATIOS Overview

In this chapter, we consider numerous asset-labor ratios for steam, gas and hydraulic turbines and turbine generator set units in The United Kingdom benchmarked against global averages. Productivity and utilization ratios are presented for companies oprating in The United Kingdom and the average global benchmarks for steam, gas and hydraulic turbines and turbine generator set units. For ratios where there are large deviations between The United Kingdom and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain asset-labor ratios are highlighted across countries in the comparison group. In the case of asset-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. We then report the larger asset-labor ratio gaps for steam, gas and hydraulic turbines and turbine generator set units that The United Kingdom has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

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2007 Icon Group International, Inc.

Financial Indicators

3.6.2

104

Asset to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for steam, gas and hydraulic turbines and turbine generator set units in United Kingdom based on latest financial results available. Labor-asset Ratios ($k/employee) United Kingdom Europe World Avg. _________________________________________________________________________________________________________

Cash & Short Term Investments Cash Short Term Investments Receivables (Net) Total Inventories Raw Materials Work in Process Finished Goods Progress Payments & Other Prepaid Expenses Other Current Assets Current Assets - Total Long Term Receivables Investments in Unconsolidated Subsidiaries Other Investments Property Plant and Equipment - Net Property Plant and Equipment - Gross Land Buildings Machinery & Equipment Rental/Lease Property Transportation Equipment Other Property Plant & Equipment Property Plant & Equipment Under Capitalized Leases Accumulated Depreciation - Total Accumulated Depreciation - Buildings Accumulated Depreciation -Machinery & Equipment Accumulated Depreciation - Rental/Lease Property Accumulated Depreciation - Transportation Equipment Accumulated Depreciation - Other Prop & Equip Accumulated Depreciation - PP&E Under Capitalized Leases Other Assets Deferred Charges Tangible Other Assets Intangible Other Assets Total Assets

20.61 10.75 9.05 31.27 20.54 6.40 4.88 9.37 -0.09 1.28 2.75 75.30 0.59 1.49 0.21 26.10 49.93 1.84 16.78 34.35 1.23 8.06 12.56 3.88 24.26 2.63 21.64 0.48 2.68 8.69 1.13 10.86 1.34 0.20 8.76 114.26

19.81 15.66 10.70 80.12 37.20 9.64 13.45 17.85 2.00 1.60 2.58 140.04 2.40 4.27 55.91 45.86 99.44 9.87 26.90 60.84 16.11 1.71 13.15 3.96 45.30 7.93 27.12 10.65 1.01 6.96 0.88 11.38 2.24 0.91 8.54 244.38

21.26 10.74 10.51 46.74 23.18 6.13 5.45 9.24 0.71 2.15 1.74 93.95 1.10 3.90 26.34 31.94 58.92 4.15 13.01 34.23 2.79 0.98 7.05 1.36 27.74 3.77 15.72 0.75 0.58 2.50 0.26 6.15 0.85 0.96 3.80 162.19

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.6.3

105

Asset to Labor: International Gaps

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large labor-asset gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Receivables (Net) ($k/employee) 100

80.12

80 60 40

46.74 31.27

20 0 -15.47

-20 United Kingdom

Europe

World Average

Gap

Gap: Current Assets - Total ($k/employee) 140.04

150 100

93.95

75.3

50 0

-18.65

-50 United Kingdom

Europe

World Average

Gap

Gap: Other Investments ($k/employee) 55.91

60 40 20

26.34 0.21

0 -20

-26.13

-40 United Kingdom

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Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

106

Gap: Property Plant and Equipment - Net ($k/employee) 45.86

50 40

31.94

26.1

30 20 10 0

-5.84

-10 United Kingdom

Europe

World Average

Gap

Gap: Property Plant and Equipment - Gross ($k/employee) 99.44 100 80 60

58.92

49.93

40 20 0

-8.99

-20 United Kingdom

Europe

World Average

Gap

Gap: Transportation Equipment ($k/employee) 10

8.06 7.08

8 6 4 1.71

2

0.98

0 United Kingdom

Europe

World Average

Gap

Gap: Other Property Plant & Equipment ($k/employee) 15

12.56

13.15

10

7.05 5.51

5 0 United Kingdom

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Europe

World Average

Gap

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Financial Indicators

107

Gap: Accumulated Depreciation -Machinery & Equipment ($k/employee) 27.12

30 25

21.64

20

15.72

15 10

5.92

5 0 United Kingdom

Europe

World Average

Gap

Gap: Accumulated Depreciation - Other Prop & Equip ($k/employee) 10

8.69

8

6.96

6.19

6 4

2.5

2 0 United Kingdom

Europe

World Average

Gap

Gap: Intangible Other Assets ($k/employee) 10

8.76

8.54

8 4.96

6 3.8

4 2 0 United Kingdom

Europe

World Average

Gap

Gap: Total Assets ($k/employee) 244.38

250 200 150

162.19 114.26

100 50 0 -50 United Kingdom

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Europe

World Average

-47.93 Gap

2007 Icon Group International, Inc.

Financial Indicators

3.6.4

108

Key Percentiles and Rankings

We now consider the distribution of asset-labor ratios using ranks and percentiles across . What percent of countries have a productivity indicator lower or higher than United Kingdom (what is the indicator's rank or percentile)? The table below answers this question with respect to asset-labor structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key asset-labor ratios are highlighted in additional tables. Asset Structure ($k/employee)

United Kingdom

Rank of Total

Percentile

23 of 53 23 of 46 19 of 42 31 of 53 34 of 53 27 of 46 27 of 46 29 of 46 37 of 44 16 of 32 18 of 47 34 of 53 20 of 40 27 of 43 33 of 39 33 of 53 33 of 49 23 of 37 22 of 44 25 of 46 12 of 17 1 of 38 15 of 45 7 of 21 31 of 49 26 of 39 20 of 43 11 of 15 4 of 35 12 of 42 4 of 17 23 of 53 9 of 36 24 of 35 17 of 43 34 of 53

56.60 50.00 54.76 41.51 35.85 41.30 41.30 36.96 15.91 50.00 61.70 35.85 50.00 37.21 15.38 37.74 32.65 37.84 50.00 45.65 29.41 97.37 66.67 66.67 36.73 33.33 53.49 26.67 88.57 71.43 76.47 56.60 75.00 31.43 60.47 35.85

_________________________________________________________________________________________________________

Cash & Short Term Investments Cash Short Term Investments Receivables (Net) Total Inventories Raw Materials Work in Process Finished Goods Progress Payments & Other Prepaid Expenses Other Current Assets Current Assets - Total Long Term Receivables Investments in Unconsolidated Subsidiaries Other Investments Property Plant and Equipment - Net Property Plant and Equipment - Gross Land Buildings Machinery & Equipment Rental/Lease Property Transportation Equipment Other Property Plant & Equipment Property Plant & Equipment Under Capitalized Leases Accumulated Depreciation - Total Accumulated Depreciation - Buildings Accumulated Depreciation -Machinery & Equipment Accumulated Depreciation - Rental/Lease Property Accumulated Depreciation - Transportation Equipment Accumulated Depreciation - Other Prop & Equip Accumulated Depreciation - P P & E Under Capitalized Leases Other Assets Deferred Charges Tangible Other Assets Intangible Other Assets Total Assets

20.61 10.75 9.05 31.27 20.54 6.40 4.88 9.37 -0.09 1.28 2.75 75.30 0.59 1.49 0.21 26.10 49.93 1.84 16.78 34.35 1.23 8.06 12.56 3.88 24.26 2.63 21.64 0.48 2.68 8.69 1.13 10.86 1.34 0.20 8.76 114.26

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

109

Cash & Short Term Investments Countries

Value ($K/employee)

Rank

Percentile

75.14 70.27 66.82 65.96 59.44 53.76 51.33 50.91 45.09 41.62 31.76 30.89 25.36 25.22 23.91 23.54 23.26 22.10 21.82 21.32 21.29 20.61 19.83 18.87 15.55 14.68 13.42 12.33 10.82 10.73 8.87 8.08 7.34 6.19 6.17 5.53 3.39 3.31 2.47 2.46 2.01 1.75 1.06 0.46 0.44

1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 29 30 31 32 34 35 37 38 39 41 42 43 46 47 48 49 51 52 53

98.11 96.23 94.34 92.45 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 45.28 43.40 41.51 39.62 35.85 33.96 30.19 28.30 26.42 22.64 20.75 18.87 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Taiwan Australia USA South Korea Russia Japan Israel Ireland Norway China Canada Hong Kong Singapore France Greece Italy Germany Finland Switzerland South Africa Czech Republic the United Kingdom Argentina Luxembourg Spain Belgium Malaysia Sweden Indonesia Austria Pakistan Denmark Netherlands Turkey Mexico India Peru Thailand New Zealand Hungary Poland Philippines Portugal Brazil Chile

Asia Oceana North America Asia Europe Asia the Middle East Europe Europe Asia North America Asia Asia Europe Europe Europe Europe Europe Europe Africa Europe Europe Latin America Europe Europe Europe Asia Europe Asia Europe the Middle East Europe Europe the Middle East Latin America Asia Latin America Asia Oceana Europe Europe Asia Europe Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

110

Cash & Short Term Investments (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

67.50 63.59 60.69 60.55 59.44 59.30 50.91 45.09 29.62 25.22 24.59 23.91 23.73 23.54 23.26 22.16 22.10 21.87 21.82 21.29 20.61 20.37 20.21 20.20 18.87 15.55 14.68 14.60 12.33 10.73 10.63 10.36 10.36 8.08 7.34 5.88 5.39 5.24 5.06 2.96 2.56 2.46 2.21 2.10 2.07 2.01 1.81 1.74 1.73 1.06 1.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Iceland Estonia Belarus Slovakia Russia Lithuania Ireland Norway Faroe Islands France Monaco Greece Vatican City Italy Germany Malta Finland Isle of Man Switzerland Czech Republic the United Kingdom Liechtenstein Latvia Croatia Luxembourg Spain Belgium Slovenia Sweden Austria San Marino Guernsey Jersey Denmark Netherlands Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Portugal Cyprus

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

111

Receivables (Net) Countries

Value ($K/employee)

Rank

Percentile

468.24 466.96 178.16 125.28 102.56 99.19 92.42 90.46 77.51 69.00 64.27 63.99 61.36 59.42 57.06 53.96 53.58 53.51 49.54 45.46 44.90 41.38 41.25 40.51 39.32 39.14 38.94 31.36 31.27 30.96 28.85 27.96 26.99 26.67 23.89 23.42 21.95 17.22 15.96 15.18 10.40 8.53 8.50 7.31 5.60

1 2 4 5 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 50

98.11 96.23 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 5.66

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan Portugal South Korea Italy Russia Japan Greece Czech Republic Argentina France Norway Germany Netherlands Israel Spain Ireland Denmark Switzerland Austria USA Sweden Malaysia Luxembourg Finland Belgium South Africa the United Kingdom Singapore Hong Kong Canada Peru China Pakistan India New Zealand Australia Brazil Chile Hungary Thailand Poland Indonesia Philippines

the Middle East Latin America Asia Europe Asia Europe Europe Asia Europe Europe Latin America Europe Europe Europe Europe the Middle East Europe Europe Europe Europe Europe North America Europe Asia Europe Europe Europe Africa Europe Asia Asia North America Latin America Asia the Middle East Asia Oceana Oceana Latin America Latin America Europe Asia Europe Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

112

Receivables (Net) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

444.89 408.27 396.79 382.76 125.28 119.92 99.99 99.19 98.87 94.37 94.15 92.42 92.21 77.51 71.83 70.89 69.00 65.49 65.46 63.99 61.36 59.42 57.06 53.58 53.51 50.30 49.54 45.46 44.90 44.47 43.36 43.36 42.42 41.80 41.25 39.32 39.14 38.94 31.27 30.02 27.66 23.56 22.73 10.40 9.35 8.89 8.75 8.50 7.65 7.36 7.35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Portugal Cyprus Vatican City Italy Estonia Belarus Slovakia Russia Lithuania Greece Malta Isle of Man Czech Republic Latvia Croatia France Norway Germany Netherlands Spain Ireland Slovenia Denmark Switzerland Austria San Marino Guernsey Jersey Liechtenstein Iceland Sweden Luxembourg Finland Belgium the United Kingdom Monaco Faroe Islands Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

113

Total Inventories Countries

Value ($K/employee)

Rank

Percentile

89.29 89.04 80.46 78.14 77.12 69.50 63.82 53.05 49.54 45.66 41.73 41.73 39.46 39.14 38.80 38.38 36.62 34.00 31.28 30.97 30.78 30.56 27.27 27.05 26.11 25.85 23.91 23.43 23.25 22.96 21.66 20.54 20.40 19.71 18.28 15.90 15.35 15.13 10.77 8.33 8.03 7.95 6.81 6.20 2.28

1 2 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 39 40 41 42 43 44 45 46 49 52

98.11 96.23 92.45 90.57 88.68 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Italy Portugal South Korea Russia Taiwan Denmark Japan France Netherlands Germany Israel Ireland Norway South Africa Peru Finland Switzerland Pakistan Sweden USA Austria Luxembourg Greece Australia Belgium China Czech Republic New Zealand Argentina the United Kingdom Singapore Canada Spain Brazil Hong Kong Chile Malaysia Hungary Thailand India Poland Indonesia Philippines

the Middle East Latin America Europe Europe Asia Europe Asia Europe Asia Europe Europe Europe the Middle East Europe Europe Africa Latin America Europe Europe the Middle East Europe North America Europe Europe Europe Oceana Europe Asia Europe Oceana Latin America Europe Asia North America Europe Latin America Asia Latin America Asia Europe Asia Asia Europe Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

114

Total Inventories (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

84.84 81.11 80.46 78.14 77.85 75.66 74.80 74.35 72.99 70.96 70.80 69.50 69.33 53.05 45.66 41.73 41.73 39.14 38.80 34.00 31.96 31.28 30.88 30.78 29.19 27.27 27.05 27.01 26.33 26.33 26.11 24.20 23.91 23.88 23.78 23.25 22.07 22.06 20.54 19.78 18.28 17.16 14.72 8.33 7.49 7.12 7.01 6.81 6.12 5.89 5.88

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Vatican City Italy Portugal Bosnia & Herzegovina Macedonia Cyprus Estonia Serbia & Montenegro Belarus Slovakia Russia Lithuania Denmark France Netherlands Germany Ireland Norway Finland Albania Switzerland Iceland Sweden Liechtenstein Austria Luxembourg San Marino Jersey Guernsey Greece Malta Belgium Isle of Man Andorra Czech Republic Latvia Croatia the United Kingdom Monaco Spain Slovenia Faroe Islands Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

115

Current Assets - Total Countries

Value ($K/employee)

Rank

Percentile

563.71 562.18 355.71 251.30 226.46 207.87 204.76 203.78 149.02 147.79 147.63 147.02 137.06 136.69 131.62 121.69 116.22 113.35 109.84 107.82 103.26 98.25 95.65 91.09 89.30 87.67 86.83 84.74 84.64 77.72 77.53 75.30 75.23 67.61 64.85 63.92 47.75 37.98 33.59 31.96 25.65 21.87 21.18 17.33 9.67

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 40 41 42 43 44 46 47 50 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 22.64 20.75 18.87 16.98 13.21 11.32 5.66 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Italy Portugal Japan Israel Ireland USA Norway France Greece Germany Czech Republic Denmark Argentina Australia Netherlands Switzerland Finland China South Africa Luxembourg Spain Sweden Austria Canada Singapore Belgium the United Kingdom Hong Kong Peru Malaysia Pakistan New Zealand India Brazil Chile Indonesia Thailand Hungary Poland Philippines

the Middle East Latin America Asia Asia Europe Europe Europe Asia the Middle East Europe North America Europe Europe Europe Europe Europe Europe Latin America Oceana Europe Europe Europe Asia Africa Europe Europe Europe Europe North America Asia Europe Europe Asia Latin America Asia the Middle East Oceana Asia Latin America Latin America Asia Asia Europe Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

116

Current Assets - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

535.60 491.52 477.70 460.80 242.26 231.22 230.69 226.46 225.93 209.55 207.87 204.76 196.00 149.14 147.79 147.02 137.06 136.69 131.62 126.69 125.02 121.69 116.22 115.50 115.45 107.82 103.26 98.25 96.36 89.30 87.67 86.83 84.74 83.94 82.31 81.84 81.84 77.53 75.37 75.30 72.14 59.02 49.45 21.18 19.05 18.11 17.83 17.33 15.58 14.99 14.96

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Portugal Cyprus Iceland Ireland Norway France Greece Germany Malta Isle of Man Czech Republic Denmark Latvia Croatia Netherlands Switzerland Finland Liechtenstein Luxembourg Spain Sweden Austria San Marino Slovenia Guernsey Jersey Belgium Monaco the United Kingdom Faroe Islands Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

117

Property Plant and Equipment - Net Countries

Value ($K/employee)

Rank

Percentile

149.59 128.39 115.70 81.21 70.98 70.79 66.34 59.06 55.39 55.01 54.74 47.34 44.97 43.98 41.51 40.65 40.57 38.07 37.53 35.70 35.49 34.02 33.99 33.16 33.00 31.76 29.73 27.12 26.54 26.10 25.25 24.71 22.51 20.39 18.60 16.22 14.54 14.19 13.41 13.30 11.91 10.38 9.13 6.58 6.27

1 2 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 33 34 35 36 37 38 40 42 43 44 46 47 48 50 51 52

98.11 96.23 92.45 90.57 88.68 86.79 84.91 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 20.75 18.87 16.98 13.21 11.32 9.43 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Taiwan South Korea Russia Japan Turkey Mexico Greece Czech Republic Portugal Argentina Switzerland Luxembourg China Germany Australia Malaysia Netherlands Austria USA Canada Finland Denmark Sweden Hungary Norway Italy Singapore Poland Brazil the United Kingdom Chile New Zealand Peru Thailand France Spain Hong Kong Indonesia Israel Ireland Belgium India Pakistan Philippines South Africa

Asia Asia Europe Asia the Middle East Latin America Europe Europe Europe Latin America Europe Europe Asia Europe Oceana Asia Europe Europe North America North America Europe Europe Europe Europe Europe Europe Asia Europe Latin America Europe Latin America Oceana Latin America Asia Europe Europe Asia Asia the Middle East Europe Europe Asia the Middle East Asia Africa

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

118

Property Plant and Equipment - Net (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

123.77 118.13 117.86 115.70 115.43 67.44 66.34 61.89 61.48 60.68 60.15 59.06 58.02 56.06 56.03 55.39 54.74 53.02 51.08 47.34 43.98 40.57 38.07 37.92 37.71 36.76 36.76 35.49 34.02 33.99 33.16 33.00 32.02 31.76 29.82 28.83 28.36 27.92 27.12 26.10 25.59 24.39 23.47 23.42 19.65 18.60 16.22 15.23 13.94 13.30 11.91

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Estonia Belarus Slovakia Russia Lithuania Romania Greece Bosnia & Herzegovina Malta Isle of Man Macedonia Czech Republic Serbia & Montenegro Latvia Croatia Portugal Switzerland Cyprus Liechtenstein Luxembourg Germany Netherlands Austria Iceland San Marino Jersey Guernsey Finland Denmark Sweden Hungary Norway Vatican City Italy Ukraine Monaco Gibraltar Georgia Poland the United Kingdom Andorra Moldova Kazakhstan Bulgaria Albania France Spain Slovenia Faroe Islands Ireland Belgium

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

119

Accumulated Depreciation - Total Countries

Value ($K/employee)

Rank

Percentile

119.75 119.42 105.74 76.76 76.62 64.68 58.28 55.99 48.42 47.70 45.96 45.38 40.98 39.83 38.47 36.98 36.85 35.70 33.64 33.43 32.33 31.23 30.95 27.55 26.53 26.31 25.66 24.26 23.17 23.14 21.37 19.10 18.02 16.43 14.99 14.39 14.29 13.90 9.30 7.72 6.63

1 2 4 5 6 7 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 46 47 48

97.96 95.92 91.84 89.80 87.76 85.71 81.63 79.59 77.55 75.51 73.47 71.43 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 6.12 4.08 2.04

Region

_________________________________________________________________________________________________________

Turkey Mexico Japan Germany Belgium South Korea Russia Switzerland Luxembourg Brazil Austria Chile USA Peru Australia Norway Finland Sweden France Netherlands Italy Denmark Greece Czech Republic Israel Ireland Argentina the United Kingdom New Zealand China Canada Spain Malaysia Taiwan Singapore India Indonesia Thailand Hong Kong Philippines South Africa

the Middle East Latin America Asia Europe Europe Asia Europe Europe Europe Latin America Europe Latin America North America Latin America Oceana Europe Europe Europe Europe Europe Europe Europe Europe Europe the Middle East Europe Latin America Europe Oceana Asia North America Europe Asia Asia Asia Asia Asia Asia Asia Asia Africa

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

120

Accumulated Depreciation - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

113.78 104.41 101.47 97.89 76.76 76.62 62.35 59.51 59.37 58.28 58.15 55.99 52.25 48.42 45.96 45.52 44.38 44.38 41.40 36.98 36.85 35.70 34.77 33.64 33.43 32.59 32.33 31.23 30.95 28.68 28.30 27.55 26.31 26.15 26.14 24.26 23.99 19.10 17.93 14.54 8.91

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

97.56 95.12 92.68 90.24 87.80 85.37 82.93 80.49 78.05 75.61 73.17 70.73 68.29 65.85 63.41 60.98 58.54 56.10 53.66 51.22 48.78 46.34 43.90 41.46 39.02 36.59 34.15 31.71 29.27 26.83 24.39 21.95 19.51 17.07 14.63 12.20 9.76 7.32 4.88 2.44 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Germany Belgium Estonia Belarus Slovakia Russia Lithuania Switzerland Liechtenstein Luxembourg Austria San Marino Jersey Guernsey Iceland Norway Finland Sweden Albania France Netherlands Vatican City Italy Denmark Greece Malta Isle of Man Czech Republic Ireland Latvia Croatia the United Kingdom Andorra Spain Slovenia Monaco Faroe Islands

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

121

Intangible Other Assets Countries

Value ($K/employee)

Rank

Percentile

48.49 29.65 29.55 19.59 18.57 18.47 16.88 15.30 15.07 14.60 14.10 13.21 12.49 10.50 8.82 8.76 7.26 6.46 6.02 5.84 5.81 5.80 5.76 5.22 4.27 3.87 3.86 3.77 3.23 2.97 2.83 2.35 0.68 0.57 0.46 0.18 0.15 0.12

1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 28 29 30 32 33 34 35 36 37 38 39 40 41

97.67 95.35 93.02 88.37 86.05 83.72 81.40 79.07 76.74 74.42 72.09 69.77 67.44 65.12 62.79 60.47 58.14 55.81 53.49 51.16 48.84 46.51 44.19 39.53 37.21 34.88 32.56 30.23 25.58 23.26 20.93 18.60 16.28 13.95 11.63 9.30 6.98 4.65

Region

_________________________________________________________________________________________________________

Belgium USA Norway France Italy Canada Switzerland Malaysia Sweden Luxembourg Austria Germany Finland Australia Denmark the United Kingdom Greece Czech Republic Argentina New Zealand Israel South Korea Ireland Russia Singapore Turkey Mexico Hong Kong Netherlands Japan Spain China Peru South Africa India Hungary Poland Thailand

Europe North America Europe Europe Europe North America Europe Asia Europe Europe Europe Europe Europe Oceana Europe Europe Europe Europe Latin America Oceana the Middle East Asia Europe Europe Asia the Middle East Latin America Asia Europe Asia Europe Asia Latin America Africa Asia Europe Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

122

Intangible Other Assets (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

48.49 29.96 29.55 19.59 18.72 18.57 16.88 15.75 15.07 14.60 14.10 13.97 13.62 13.62 13.21 12.49 8.82 8.76 7.26 6.73 6.64 6.46 6.13 6.13 6.05 5.76 5.59 5.33 5.32 5.22 5.21 4.14 3.67 3.61 3.37 3.28 3.23 3.16 2.83 2.65 0.59 0.18 0.16 0.16 0.15 0.15 0.13 0.13 0.13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Belgium Iceland Norway France Vatican City Italy Switzerland Liechtenstein Sweden Luxembourg Austria San Marino Jersey Guernsey Germany Finland Denmark the United Kingdom Greece Malta Isle of Man Czech Republic Latvia Croatia Andorra Ireland Estonia Belarus Slovakia Russia Lithuania Monaco Romania Faroe Islands Bosnia & Herzegovina Macedonia Netherlands Serbia & Montenegro Spain Slovenia Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.7 3.7.1

PRODUCTIVITY RATIOS

IN

123

UNITED KINGDOM: LIABILITY-LABOR

Overview

In this chapter we consider the liability-labor ratios of companies operating in The United Kingdom benchmarked against global averages for steam, gas and hydraulic turbines and turbine generator set units. For ratios where there are large deviations between The United Kingdom and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of productivity ratios is presented in the form of ranks and percentiles. Certain key liability-labor ratios are highlighted for steam, gas and hydraulic turbines and turbine generator set units across countries in the comparison group. Definitions of liability statement terms are given in Chapter 3. In the case of liability-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. I then report the larger liability-labor ratio gaps for steam, gas and hydraulic turbines and turbine generator set units that The United Kingdom has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

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2007 Icon Group International, Inc.

Financial Indicators

3.7.2

124

Liability to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for steam, gas and hydraulic turbines and turbine generator set units in United Kingdom based on latest financial results available. Labor-liability Ratios ($k/employee) United Kingdom Europe World Avg.

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Income Taxes Payable Dividends Payable Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Capitalized Lease Obligations Provision For Risks and Charges Deferred Income Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Other Liabilities Total Liabilities Non-Equity Reserves Minority Interest Preferred Stock Common Equity Common Stock Capital Surplus Revaluation Reserves Other Appropriated Reserves Unappropriated Reserves Retained Earnings Unrealized Foreign Exchange Gain/Loss Total Liabilities & Shareholders Equity

15.07 14.82 2.70 2.57 15.86 48.51 9.59 8.92 0.68 5.05 0.01 1.60 0.44 0.39 1.10 64.07 0.19 0.28 1.15 49.32 7.81 17.58 1.65 2.22 7.27 23.04 -0.65 114.26

27.47 35.70 5.26 7.61 30.01 97.10 27.04 26.83 0.21 9.18 0.62 0.42 2.19 2.16 1.59 131.49 3.11 1.80 0.12 108.59 61.21 35.60 8.11 10.89 13.79 16.85 -0.57 244.38

17.12 22.43 1.96 3.72 19.46 63.27 12.60 12.51 0.09 2.91 0.17 0.15 1.22 1.10 0.97 78.99 0.38 3.67 0.20 79.02 32.29 21.27 3.32 5.85 11.20 9.29 -0.06 162.19

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.7.3

125

Liability and Equity to Labor: International Gaps

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large labor-liability gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Short Term Debt & Current Portion of Long Term Debt ($k/employee) 35.7

40 30 20

22.43 14.82

10 0 -7.61

-10 United Kingdom

Europe

World Average

Gap

Gap: Other Current Liabilities ($k/employee) 40

30.01

30 20

19.46

15.86

10 0

-3.6

-10 United Kingdom

Europe

World Average

Gap

Gap: Current Liabilities - Total ($k/employee) 97.1

100 80 60

63.27 48.51

40 20 0 -14.76

-20 United Kingdom

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Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

126

Gap: Total Liabilities ($k/employee) 131.49

150 100

78.99

64.07

50 0

-14.92

-50 United Kingdom

Europe

World Average

Gap

Gap: Common Equity ($k/employee) 150 108.59 79.02

100 49.32 50 0

-29.7 -50 United Kingdom

Europe

World Average

Gap

Gap: Common Stock ($k/employee) 80

61.21

60 32.29

40 20

7.81

0 -20

-24.48

-40 United Kingdom

Europe

World Average

Gap

Gap: Capital Surplus ($k/employee) 35.6

40 30 20

21.27

17.58

10 0

-3.69

-10 United Kingdom

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Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

127

Gap: Other Appropriated Reserves ($k/employee) 15 10.89 10 5.85 5

2.22

0 -3.63

-5 United Kingdom

Europe

World Average

Gap

Gap: Unappropriated Reserves ($k/employee) 13.79

15 10

11.2 7.27

5 0 -3.93

-5 United Kingdom

Europe

World Average

Gap

Gap: Retained Earnings ($k/employee) 25

23.04

20

16.85 13.75

15 9.29

10 5 0 United Kingdom

Europe

World Average

Gap

Gap: Total Liabilities & Shareholders Equity ($k/employee) 244.38

250 200 150

162.19 114.26

100 50 0 -50 United Kingdom

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Europe

World Average

-47.93 Gap

2007 Icon Group International, Inc.

Financial Indicators

3.7.4

128

Key Percentiles and Rankings

We now consider the distribution of liability-labor ratios using ranks and percentiles across . What percent of countries have a value lower or higher than United Kingdom (what is the indicator's rank or percentile)? The table below answers this question with respect to liability-labor ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key liabilitylabor ratios are highlighted in additional tables. Liability Structure ($k/employee)

United Kingdom

Rank of Total

Percentile

15.07 14.82 2.70 2.57 15.86 48.51 9.59 8.92 0.68 5.05 0.01 1.60 0.44 0.39 1.10 64.07 0.19 0.28 1.15 49.32 7.81 17.58 1.65 2.22 7.27 23.04 -0.65 114.26

29 of 50 20 of 53 15 of 43 11 of 27 33 of 53 29 of 53 30 of 48 30 of 48 7 of 30 20 of 39 18 of 21 9 of 39 18 of 26 25 of 27 19 of 43 28 of 53 15 of 26 34 of 41 2 of 8 34 of 53 36 of 46 23 of 41 12 of 33 31 of 49 17 of 37 21 of 48 27 of 34 34 of 53

42.00 62.26 65.12 59.26 37.74 45.28 37.50 37.50 76.67 48.72 14.29 76.92 30.77 7.41 55.81 47.17 42.31 17.07 75.00 35.85 21.74 43.90 63.64 36.73 54.05 56.25 20.59 35.85

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Income Taxes Payable Dividends Payable Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Capitalized Lease Obligations Provision For Risks and Charges Deferred Income Deferred Taxes Deferred Taxes - Credit Deferred Taxes - Debit Other Liabilities Total Liabilities Non-Equity Reserves Minority Interest Preferred Stock Common Equity Common Stock Capital Surplus Revaluation Reserves Other Appropriated Reserves Unappropriated Reserves Retained Earnings Unrealized Foreign Exchange Gain/Loss Total Liabilities & Shareholders Equity

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

129

Accounts Payable Countries

Value ($K/employee)

Rank

Percentile

87.40 87.02 86.79 71.13 57.18 52.99 51.53 41.59 32.27 30.19 25.93 25.15 25.00 23.85 22.39 21.64 21.11 20.86 19.28 18.81 18.61 18.34 16.74 16.67 15.82 15.07 13.03 12.19 11.82 11.64 11.56 11.47 11.24 11.22 10.99 8.68 4.89 4.58 4.36 4.00 3.36 1.00

1 2 3 5 6 7 9 10 11 12 13 14 15 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 44 47 50

98.00 96.00 94.00 90.00 88.00 86.00 82.00 80.00 78.00 76.00 74.00 72.00 70.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 50.00 48.00 46.00 44.00 42.00 40.00 38.00 36.00 34.00 32.00 30.00 28.00 26.00 24.00 22.00 20.00 18.00 16.00 12.00 6.00 0.00

Region

_________________________________________________________________________________________________________

Taiwan Turkey Mexico Italy South Korea Japan Russia Belgium France Norway Denmark Greece Spain Netherlands Czech Republic Sweden Singapore Argentina Switzerland Germany Hong Kong USA Canada Luxembourg Austria the United Kingdom Finland China Brazil New Zealand Israel Ireland Chile India Australia Malaysia Hungary Indonesia Thailand Poland Philippines Peru

Asia the Middle East Latin America Europe Asia Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Asia Latin America Europe Europe Asia North America North America Europe Europe Europe Europe Asia Latin America Oceana the Middle East Europe Latin America Asia Oceana Asia Europe Asia Asia Europe Asia Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

130

Accounts Payable (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

82.68 75.88 73.74 71.71 71.14 71.13 55.12 52.61 52.49 51.53 51.41 41.59 32.27 30.19 25.93 25.15 25.00 23.85 23.47 23.31 23.00 22.39 21.64 21.25 21.24 20.47 19.28 18.81 18.53 17.99 17.84 16.67 15.82 15.67 15.28 15.28 15.07 13.03 12.05 11.47 4.89 4.40 4.18 4.12 4.00 3.59 3.46 3.45 0.87

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Vatican City Serbia & Montenegro Italy Estonia Belarus Slovakia Russia Lithuania Belgium France Norway Denmark Greece Spain Netherlands Slovenia Malta Isle of Man Czech Republic Sweden Latvia Croatia Monaco Switzerland Germany Iceland Liechtenstein Faroe Islands Luxembourg Austria San Marino Guernsey Jersey the United Kingdom Finland Andorra Ireland Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

131

Current Liabilities - Total Countries

Value ($K/employee)

Rank

Percentile

506.75 505.36 226.98 166.02 149.61 141.55 129.00 118.68 87.93 82.29 77.84 73.25 72.19 68.24 65.14 63.90 63.87 61.93 61.10 57.37 57.14 55.81 53.70 51.60 50.72 49.41 48.51 42.51 42.16 40.61 38.86 37.71 37.66 35.84 31.31 30.41 29.23 25.11 21.73 19.95 19.24 15.74 12.06 9.20 4.74

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 43 44 45 46 49 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Italy Portugal Japan Norway Greece France Czech Republic Denmark Argentina China Spain Germany Netherlands Austria Belgium Switzerland South Africa Finland Sweden USA Luxembourg the United Kingdom Israel Ireland Pakistan Singapore Hong Kong Brazil Chile Canada Malaysia Peru Australia India New Zealand Hungary Poland Thailand Indonesia Philippines

the Middle East Latin America Asia Asia Europe Europe Europe Asia Europe Europe Europe Europe Europe Latin America Asia Europe Europe Europe Europe Europe Europe Africa Europe Europe North America Europe Europe the Middle East Europe the Middle East Asia Asia Latin America Latin America North America Asia Latin America Oceana Asia Oceana Europe Europe Asia Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

132

Current Liabilities - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

481.48 441.85 429.42 414.23 160.05 152.76 152.41 149.61 149.26 142.70 141.55 129.00 123.49 87.93 82.29 77.84 76.27 75.26 73.25 72.19 69.53 69.50 63.90 63.87 61.93 61.10 60.52 59.98 59.00 59.00 57.37 57.14 53.70 53.32 51.60 51.24 49.41 48.51 42.16 37.69 36.16 25.52 20.66 19.24 17.31 16.45 16.20 15.74 14.15 13.62 13.59

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Portugal Cyprus Norway Greece France Malta Isle of Man Czech Republic Denmark Latvia Croatia Spain Germany Netherlands Austria San Marino Slovenia Jersey Guernsey Belgium Switzerland Finland Liechtenstein Sweden Iceland Luxembourg the United Kingdom Ireland Monaco Faroe Islands Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

133

Long Term Debt Countries

Value ($K/employee)

Rank

Percentile

131.37 131.02 93.29 51.38 42.58 38.37 32.88 31.75 29.79 27.66 27.47 26.88 26.22 25.89 25.76 25.46 21.50 21.03 18.72 17.44 16.90 16.06 15.56 14.71 14.38 11.39 9.59 8.36 7.00 5.47 5.36 4.50 4.47 4.22 4.19 3.52 3.29 3.26 3.01 2.10 1.07

1 2 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 31 32 34 36 37 38 39 40 41 42 43 44 45 48

97.92 95.83 91.67 89.58 87.50 83.33 81.25 79.17 77.08 75.00 72.92 70.83 68.75 66.67 64.58 62.50 60.42 58.33 54.17 52.08 50.00 47.92 45.83 43.75 41.67 39.58 37.50 35.42 33.33 29.17 25.00 22.92 20.83 18.75 16.67 14.58 12.50 10.42 8.33 6.25 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan Portugal South Korea Russia Belgium Norway Switzerland Netherlands New Zealand USA Japan Sweden Luxembourg Finland Italy Greece Czech Republic Argentina Denmark Austria France Germany Canada Australia the United Kingdom Spain Thailand Hungary South Africa Singapore Poland Israel Ireland Malaysia Hong Kong China India Indonesia Peru

the Middle East Latin America Asia Europe Asia Europe Europe Europe Europe Europe Oceana North America Asia Europe Europe Europe Europe Europe Europe Latin America Europe Europe Europe Europe North America Oceana Europe Europe Asia Europe Africa Asia Europe the Middle East Europe Asia Asia Asia Asia Asia Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

134

Long Term Debt (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

124.82 114.55 111.33 107.39 51.38 49.18 41.05 39.18 39.09 38.37 38.28 32.88 31.75 29.79 28.45 27.80 27.66 27.15 25.89 25.76 25.46 21.67 21.50 21.03 19.49 19.23 18.72 17.77 17.76 16.90 16.06 15.90 15.56 15.51 15.51 14.71 9.59 8.36 7.85 5.47 4.92 4.68 4.60 4.47 4.36 4.19 4.02 3.87 3.86 3.15 0.94

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Portugal Cyprus Estonia Belarus Slovakia Russia Lithuania Belgium Norway Switzerland Andorra Liechtenstein Netherlands Iceland Sweden Luxembourg Finland Vatican City Italy Greece Malta Isle of Man Czech Republic Latvia Croatia Denmark Austria San Marino France Guernsey Jersey Germany the United Kingdom Spain Slovenia Hungary Ukraine Gibraltar Georgia Poland Monaco Ireland Moldova Kazakhstan Bulgaria Faroe Islands Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

135

Total Liabilities Countries

Value ($K/employee)

Rank

Percentile

645.86 644.10 320.58 219.98 198.23 181.11 180.80 159.41 123.30 120.24 104.91 102.02 100.53 100.09 99.65 98.31 97.45 93.39 90.99 87.00 86.46 86.18 83.27 72.79 68.71 64.07 60.67 53.22 52.78 49.13 47.95 44.43 41.53 41.27 39.67 37.74 37.64 36.21 31.56 25.72 24.71 20.21 19.36 11.90 4.74

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 49 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Italy Portugal Japan Germany Norway Greece France Denmark Austria Switzerland Belgium Netherlands Czech Republic Sweden Argentina USA Luxembourg Finland Spain China the United Kingdom South Africa Israel Ireland Canada New Zealand Singapore Hong Kong Pakistan Brazil Chile Australia Malaysia Peru India Hungary Poland Thailand Indonesia Philippines

the Middle East Latin America Asia Asia Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Latin America North America Europe Europe Europe Asia Europe Africa the Middle East Europe North America Oceana Asia Asia the Middle East Latin America Latin America Oceana Asia Latin America Asia Europe Europe Asia Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

136

Total Liabilities (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

613.66 563.15 547.31 527.95 212.07 202.40 201.94 198.23 197.77 182.57 181.11 180.80 173.07 123.30 120.24 104.91 102.02 100.53 100.09 99.65 99.14 98.31 97.45 97.23 96.66 96.66 95.95 93.39 92.98 90.99 88.65 88.61 87.35 86.18 83.27 72.79 68.33 64.07 52.78 49.66 43.08 39.82 27.55 24.71 22.22 21.13 20.80 20.21 18.17 17.49 17.46

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Portugal Cyprus Germany Norway Greece France Denmark Austria Switzerland San Marino Belgium Netherlands Malta Jersey Guernsey Isle of Man Czech Republic Liechtenstein Sweden Latvia Croatia Iceland Luxembourg Finland Spain Slovenia the United Kingdom Ireland Andorra Monaco Faroe Islands Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

137

Common Equity Countries

Value ($K/employee)

Rank

Percentile

594.71 593.09 283.20 188.26 169.65 158.60 138.81 128.58 127.52 124.76 95.17 94.48 88.58 86.69 86.29 85.33 84.11 82.29 79.71 78.35 77.17 71.16 69.51 68.57 67.27 66.78 63.47 60.03 59.93 52.54 51.16 49.32 46.42 42.59 36.53 34.91 33.55 31.09 29.82 27.55 25.21 24.39 21.42 20.38 11.54

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 44 45 46 48 50 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 9.43 5.66 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Japan USA Israel Ireland Australia Norway Greece Malaysia Canada Italy Portugal Czech Republic Switzerland China Argentina France Luxembourg Germany Singapore Finland Hong Kong Denmark Netherlands Peru Sweden Belgium the United Kingdom Austria South Africa Pakistan New Zealand Spain Indonesia Hungary India Thailand Poland Brazil Chile Philippines

the Middle East Latin America Asia Asia Europe Asia North America the Middle East Europe Oceana Europe Europe Asia North America Europe Europe Europe Europe Asia Latin America Europe Europe Europe Asia Europe Asia Europe Europe Latin America Europe Europe Europe Europe Africa the Middle East Oceana Europe Asia Europe Asia Asia Europe Latin America Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

138

Common Equity (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

565.06 518.55 503.97 486.14 181.49 173.22 172.82 169.65 169.25 140.23 127.52 95.17 94.48 87.57 86.99 86.41 86.29 85.33 84.11 82.29 81.68 79.83 79.80 77.17 76.78 71.16 69.51 67.27 66.50 64.03 63.47 60.03 52.54 52.31 51.16 49.32 46.42 45.98 44.83 44.83 36.16 33.55 31.50 29.82 26.81 25.49 25.10 24.39 21.92 21.10 21.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Iceland Ireland Norway Greece Malta Vatican City Isle of Man Italy Portugal Czech Republic Switzerland Cyprus Latvia Croatia France Liechtenstein Luxembourg Germany Finland Monaco Faroe Islands Denmark Netherlands Sweden Albania Belgium the United Kingdom Austria San Marino Jersey Guernsey Andorra Spain Slovenia Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

139

Retained Earnings Countries

Value ($K/employee)

Rank

Percentile

86.03 85.32 81.05 61.59 50.09 43.32 37.45 36.18 32.75 31.66 30.41 28.36 27.94 27.55 25.26 25.18 24.59 23.99 23.78 23.04 19.79 18.17 16.10 13.72 11.38 11.28 10.98 10.73 10.18 9.12 8.59 6.57 6.18 4.67 0.61 -1.93 -2.07 -2.33 -30.51 -30.60

1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 34 36 39 41 43 44 45 47 48

97.92 95.83 93.75 91.67 89.58 87.50 85.42 83.33 81.25 79.17 77.08 75.00 72.92 70.83 66.67 64.58 62.50 60.42 58.33 56.25 54.17 52.08 50.00 47.92 45.83 43.75 41.67 39.58 37.50 35.42 33.33 29.17 25.00 18.75 14.58 10.42 8.33 6.25 2.08 0.00

Region

_________________________________________________________________________________________________________

Israel Ireland Japan USA Switzerland Luxembourg Australia Finland Taiwan South Africa Norway Netherlands South Korea Hong Kong Malaysia Russia Austria Canada Singapore the United Kingdom Denmark Germany Italy France Spain Brazil New Zealand Chile Portugal Sweden Indonesia China Thailand Philippines Peru Argentina Czech Republic Greece Mexico Turkey

the Middle East Europe Asia North America Europe Europe Oceana Europe Asia Africa Europe Europe Asia Asia Asia Europe Europe North America Asia Europe Europe Europe Europe Europe Europe Latin America Oceana Latin America Europe Europe Asia Asia Asia Asia Latin America Latin America Europe Europe Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

140

Retained Earnings (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

85.32 62.22 50.09 46.74 43.32 36.18 30.41 28.36 26.93 26.42 25.71 25.65 25.18 25.12 24.59 24.36 23.75 23.75 23.06 23.04 19.79 18.17 16.23 16.10 13.72 11.38 11.37 10.68 10.18 9.75 9.12 0.54 -1.97 -1.97 -2.07 -2.13 -2.16 -2.33 -25.01 -25.93 -26.68 -29.07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

97.62 95.24 92.86 90.48 88.10 85.71 83.33 80.95 78.57 76.19 73.81 71.43 69.05 66.67 64.29 61.90 59.52 57.14 54.76 52.38 50.00 47.62 45.24 42.86 40.48 38.10 35.71 33.33 30.95 28.57 26.19 23.81 21.43 19.05 16.67 14.29 11.90 9.52 7.14 4.76 2.38 0.00

_________________________________________________________________________________________________________

Ireland Iceland Switzerland Liechtenstein Luxembourg Finland Norway Netherlands Estonia Faroe Islands Belarus Slovakia Russia Lithuania Austria San Marino Guernsey Jersey Monaco the United Kingdom Denmark Germany Vatican City Italy France Spain Andorra Slovenia Portugal Cyprus Sweden Albania Croatia Latvia Czech Republic Isle of Man Malta Greece Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.8 3.8.1

PRODUCTIVITY RATIOS

IN

141

UNITED KINGDOM: INCOME-LABOR

Overview

In this chapter we consider the income-labor ratios for steam, gas and hydraulic turbines and turbine generator set units in The United Kingdom benchmarked against global averages. For ratios where there are large deviations between the average firm operating in The United Kingdom and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key income-labor ratios are highlighted across countries in the comparison group. In the case of income-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. We then report the larger income-labor ratio gaps for steam, gas and hydraulic turbines and turbine generator set units that The United Kingdom has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

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2007 Icon Group International, Inc.

Financial Indicators

3.8.2

142

Income to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for steam, gas and hydraulic turbines and turbine generator set units in United Kingdom based on latest financial results available. Labor-income Ratios ($k/employee) United Kingdom Europe World Avg. _________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Pretax Equity In Earnings Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Current Domestic Income Tax Current Foreign Income Tax Deferred Domestic Income Tax Deferred Foreign Income Tax Minority Interest Equity in Earnings Net Income Before Extra Items/Prefer Dividends Extraordinary Items & Gain/Loss Sale Of Assets Net Income Before Preferred Dividends Preferred Dividend Requirements Net Income Available to Common

139.62 97.70 4.20 37.73 33.19 128.49 1.91 9.52 0.31 0.88 1.21 -0.09 0.79 9.79 1.85 0.00 8.98 2.90 1.77 0.85 0.08 0.03 0.04 0.05 6.12 0.13 6.25 0.12 5.99

198.08 151.12 8.63 39.60 27.93 203.23 4.60 13.28 1.58 1.23 11.66 0.07 1.20 23.43 16.42 0.00 7.04 3.00 2.98 0.50 -0.10 0.00 0.38 0.01 4.00 0.02 4.02 0.01 3.99

128.08 93.24 5.06 25.62 15.38 106.07 1.37 9.69 0.26 0.64 5.54 -0.20 1.13 15.79 9.49 0.02 6.36 1.98 1.74 0.12 -0.10 -0.01 0.74 0.23 3.98 0.16 4.14 0.01 3.98

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.8.3

143

Income to Labor: Gaps

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large labor-income gaps between firms operating in United Kingdom and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Net Sales or Revenues ($k/employee) 198.08

200 150

139.62

128.08

100 50

11.54

0 United Kingdom

Europe

World Average

Gap

Gap: Cost of Goods Sold (Excluding Depreciation) ($k/employee) 200 151.12 150 97.7

100

93.24

50 4.46 0 United Kingdom

Europe

World Average

Gap

Gap: Gross Income ($k/employee) 40

37.73

39.6

30

25.62

20

12.11

10 0 United Kingdom

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Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

144

Gap: Selling, General & Administrative Expenses ($k/employee) 40

33.19 27.93

30

15.38

20

17.81

10 0 United Kingdom

Europe

World Average

Gap

Gap: Other Operating Expenses ($k/employee) 250

203.23

200 150

128.49

106.07

100 22.42

50 0 United Kingdom

Europe

World Average

Gap

Gap: Non-Operating Interest Income ($k/employee) 15

11.66

10 5.54 5

1.21

0 -4.33

-5 United Kingdom

Europe

World Average

Gap

Gap: Earnings Before Interest and Taxes (EBIT) ($k/employee) 25 20 15 10 5 0 -5 -10

23.43 15.79 9.79

-6 United Kingdom

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

145

Gap: Interest Expense on Debt ($k/employee) 20

16.42

15

9.49

10 5

1.85

0 -5

-7.64

-10 United Kingdom

Europe

World Average

Gap

Gap: Pretax Income ($k/employee) 10

8.98 7.04

8

6.36

6 4

2.62

2 0 United Kingdom

Europe

World Average

Gap

Gap: Net Income Before Extra Items/Prefer Dividends ($k/employee) 8 6.12 6 4

3.98

4 2.14 2 0 United Kingdom

Europe

World Average

Gap

Gap: Net Income Before Preferred Dividends ($k/employee) 8 6.25 6 4.02

4.14

4 2.11 2 0 United Kingdom

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Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.8.4

146

Key Percentiles and Rankings

We now consider the distribution of income-labor ratios using ranks and percentiles across . What percent of countries have a value lower or higher than United Kingdom (what is the ratio's rank or percentile)? The table below answers this question with respect to income-labor ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key incomelabor ratios are highlighted in additional tables. Income Structure ($k/employee)

United Kingdom

Rank of Total

Percentile

139.62 97.70 4.20 37.73 33.19 128.49 1.91 9.52 0.31 0.88 1.21 -0.09 0.79 9.79 1.85 0.00 8.98 2.90 1.77 0.85 0.08 0.03 0.04 0.05 6.12 0.13 6.25 0.12 5.99

33 of 53 34 of 52 36 of 53 22 of 52 15 of 46 29 of 46 17 of 40 25 of 53 17 of 31 20 of 29 21 of 41 26 of 27 26 of 53 28 of 53 32 of 53 4 of 5 24 of 53 22 of 47 19 of 35 8 of 21 10 of 30 6 of 18 29 of 40 10 of 22 25 of 53 5 of 14 24 of 53 1 of 7 25 of 53

37.74 34.62 32.08 57.69 67.39 36.96 57.50 52.83 45.16 31.03 48.78 3.70 50.94 47.17 39.62 20.00 54.72 53.19 45.71 61.90 66.67 66.67 27.50 54.55 52.83 64.29 54.72 85.71 52.83

_________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Other Operating Expenses Operating Expenses - Total Operating Income Extraordinary Credit - Pretax Extraordinary Charge - Pretax Non-Operating Interest Income Pretax Equity In Earnings Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Interest Capitalized Pretax Income Income Taxes Current Domestic Income Tax Current Foreign Income Tax Deferred Domestic Income Tax Deferred Foreign Income Tax Minority Interest Equity in Earnings Net Income Before Extra Items/Prefer Dividends Extraordinary Items & Gain/Loss Sale Of Assets Net Income Before Preferred Dividends Preferred Dividend Requirements Net Income Available to Common

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

147

Cost of Goods Sold (Excluding Depreciation) Countries

Value ($K/employee)

Rank

Percentile

853.22 388.78 306.09 298.54 297.72 275.82 226.16 205.13 195.15 192.75 183.90 181.64 173.87 166.87 154.77 148.01 147.81 144.11 142.21 138.02 130.19 125.85 122.99 121.96 117.95 113.63 108.57 106.86 101.13 100.45 99.62 97.70 90.30 90.09 85.39 58.03 47.81 45.74 45.49 44.83 39.22 37.34 33.69 32.08

1 2 3 4 5 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 39 40 41 42 43 45 46 47 49

98.08 96.15 94.23 92.31 90.38 84.62 82.69 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 44.23 42.31 40.38 38.46 36.54 34.62 32.69 30.77 28.85 25.00 23.08 21.15 19.23 17.31 13.46 11.54 9.62 5.77

Region

_________________________________________________________________________________________________________

Taiwan Portugal South Korea Turkey Mexico Russia South Africa Belgium Japan Norway Australia Italy France Denmark Singapore Germany Sweden Finland Switzerland USA Austria Peru Luxembourg Greece Netherlands New Zealand Czech Republic Spain Argentina Israel Ireland the United Kingdom Canada Hong Kong China Malaysia Brazil India Chile Indonesia Hungary Thailand Philippines Poland

Asia Europe Asia the Middle East Latin America Europe Africa Europe Asia Europe Oceana Europe Europe Europe Asia Europe Europe Europe Europe North America Europe Latin America Europe Europe Europe Oceana Europe Europe Latin America the Middle East Europe Europe North America Asia Asia Asia Latin America Asia Latin America Asia Europe Asia Asia Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

148

Cost of Goods Sold (Excluding Depreciation) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

388.78 372.15 295.08 283.65 281.63 280.98 275.82 275.18 260.30 252.98 244.04 205.13 192.75 183.11 181.64 173.87 166.87 150.08 148.01 147.81 144.11 142.21 139.43 132.71 130.19 128.96 125.73 125.73 122.99 121.96 117.95 117.67 113.03 111.55 109.86 108.57 106.86 103.05 103.01 100.32 99.62 97.70 86.39 39.22 35.27 33.53 33.02 32.08 28.84 27.75 27.70

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Portugal Cyprus Estonia Romania Belarus Slovakia Russia Lithuania Bosnia & Herzegovina Macedonia Serbia & Montenegro Belgium Norway Vatican City Italy France Denmark Monaco Germany Sweden Finland Switzerland Iceland Liechtenstein Austria San Marino Guernsey Jersey Luxembourg Greece Netherlands Andorra Malta Isle of Man Albania Czech Republic Spain Latvia Croatia Slovenia Ireland the United Kingdom Faroe Islands Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

149

Selling, General & Administrative Expenses Countries

Value ($K/employee)

Rank

Percentile

85.31 85.08 80.20 60.93 55.92 50.19 46.12 43.04 42.68 37.87 35.50 34.27 33.88 33.19 32.31 30.88 30.70 26.55 26.43 26.40 26.26 20.61 20.42 19.08 17.66 17.22 16.99 15.82 15.22 12.28 10.88 9.72 5.47 5.21 5.17 4.25 4.23 3.31 0.34

1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 41 45

97.83 95.65 93.48 89.13 86.96 84.78 82.61 80.43 78.26 76.09 73.91 71.74 69.57 67.39 65.22 60.87 58.70 56.52 54.35 52.17 50.00 47.83 45.65 43.48 41.30 39.13 36.96 34.78 32.61 30.43 28.26 26.09 23.91 21.74 19.57 17.39 15.22 10.87 2.17

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan Netherlands USA Japan Italy Israel Ireland Norway Sweden South Korea Finland the United Kingdom Germany Russia Switzerland Luxembourg South Africa France Australia Denmark Canada Greece Austria Hong Kong Czech Republic Argentina China Peru Malaysia Singapore Brazil Chile Hungary Thailand Poland Indonesia Philippines

the Middle East Latin America Asia Europe North America Asia Europe the Middle East Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Africa Europe Oceana Europe North America Europe Europe Asia Europe Latin America Asia Latin America Asia Asia Latin America Latin America Europe Asia Europe Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

150

Selling, General & Administrative Expenses (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

81.05 74.38 72.29 69.73 60.93 56.49 46.50 46.12 42.68 37.87 35.50 33.88 33.19 33.03 32.31 31.53 31.46 30.88 30.81 30.70 28.65 26.55 26.40 20.61 19.08 17.68 17.66 17.49 17.45 17.05 17.05 16.99 16.51 16.12 16.12 10.72 9.42 5.17 4.65 4.42 4.35 4.23 3.80 3.66 3.65

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

97.78 95.56 93.33 91.11 88.89 86.67 84.44 82.22 80.00 77.78 75.56 73.33 71.11 68.89 66.67 64.44 62.22 60.00 57.78 55.56 53.33 51.11 48.89 46.67 44.44 42.22 40.00 37.78 35.56 33.33 31.11 28.89 26.67 24.44 22.22 20.00 17.78 15.56 13.33 11.11 8.89 6.67 4.44 2.22 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Netherlands Iceland Vatican City Italy Ireland Norway Sweden Finland the United Kingdom Estonia Germany Belarus Slovakia Russia Lithuania Switzerland Liechtenstein Luxembourg France Denmark Greece Malta Austria San Marino Isle of Man Guernsey Jersey Czech Republic Faroe Islands Latvia Croatia Albania Monaco Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

151

Operating Expenses - Total Countries

Value ($K/employee)

Rank

Percentile

35.83 17.39 17.04 14.94 10.25 8.95 8.86 8.31 7.98 7.94 6.86 6.11 3.80 3.77 2.50 2.21 1.91 1.77 1.64 0.82 0.73 0.66 0.42 0.37 0.36 0.35 0.29 0.16 0.12 0.12 0.11 0.11 0.10 0.09 -0.02

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 24 25 26 27 29 31 32 33 34 35 36 37 40

97.50 95.00 92.50 90.00 87.50 85.00 82.50 80.00 77.50 75.00 72.50 70.00 67.50 65.00 62.50 60.00 57.50 55.00 52.50 50.00 47.50 42.50 40.00 37.50 35.00 32.50 27.50 22.50 20.00 17.50 15.00 12.50 10.00 7.50 0.00

Region

_________________________________________________________________________________________________________

Australia Germany Finland Austria Switzerland Norway Luxembourg Netherlands France Italy Taiwan Belgium Israel Ireland Malaysia India the United Kingdom Sweden Singapore Hong Kong South Korea Russia China USA Spain Indonesia Japan Denmark Brazil Chile Greece Canada Czech Republic Argentina Thailand

Oceana Europe Europe Europe Europe Europe Europe Europe Europe Europe Asia Europe the Middle East Europe Asia Asia Europe Europe Asia Asia Asia Europe Asia North America Europe Asia Asia Europe Latin America Latin America Europe North America Europe Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

152

Operating Expenses - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

17.39 17.04 14.94 14.80 14.43 14.43 10.25 9.56 8.95 8.86 8.31 8.01 7.98 7.94 6.11 3.77 1.91 1.77 1.59 0.78 0.71 0.68 0.67 0.66 0.66 0.38 0.36 0.34 0.16 0.11 0.11 0.10 0.10 0.10 0.10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

97.14 94.29 91.43 88.57 85.71 82.86 80.00 77.14 74.29 71.43 68.57 65.71 62.86 60.00 57.14 54.29 51.43 48.57 45.71 42.86 40.00 37.14 34.29 31.43 28.57 25.71 22.86 20.00 17.14 14.29 11.43 8.57 5.71 2.86 0.00

_________________________________________________________________________________________________________

Germany Finland Austria San Marino Jersey Guernsey Switzerland Liechtenstein Norway Luxembourg Netherlands Vatican City France Italy Belgium Ireland the United Kingdom Sweden Monaco Faroe Islands Estonia Belarus Slovakia Russia Lithuania Iceland Spain Slovenia Denmark Greece Malta Isle of Man Czech Republic Latvia Croatia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

153

Operating Income Countries

Value ($K/employee)

Rank

Percentile

52.50 52.36 28.13 25.37 25.35 22.09 18.71 17.95 17.23 16.36 15.88 14.98 13.40 12.72 11.93 11.74 11.12 11.08 10.83 10.17 10.16 9.79 9.52 8.80 8.67 8.61 8.13 7.79 7.71 7.41 7.34 6.99 6.76 6.41 6.24 5.37 3.63 2.69 1.05 0.86 0.56 0.54 -2.21 -3.72 -3.75

1 2 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 40 42 46 47 48 49 51 52 53

98.11 96.23 92.45 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 20.75 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico South Korea Taiwan Russia Netherlands South Africa USA Spain Portugal Norway Italy Greece France Czech Republic Pakistan Argentina Belgium Canada Japan Singapore New Zealand the United Kingdom Hong Kong China Finland Sweden Malaysia Brazil Switzerland Chile Germany Austria Luxembourg Denmark India Indonesia Thailand Hungary Poland Philippines Australia Peru Ireland Israel

the Middle East Latin America Asia Asia Europe Europe Africa North America Europe Europe Europe Europe Europe Europe Europe the Middle East Latin America Europe North America Asia Asia Oceana Europe Asia Asia Europe Europe Asia Latin America Europe Latin America Europe Europe Europe Europe Asia Asia Asia Europe Europe Asia Oceana Latin America Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

154

Operating Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

49.88 45.78 44.49 42.92 27.12 25.88 25.82 25.35 25.29 22.09 18.13 17.23 16.36 16.18 15.88 15.66 15.10 14.98 13.40 12.72 12.42 12.26 11.93 11.33 11.32 11.08 10.14 9.86 9.52 8.61 8.44 8.13 7.41 6.99 6.91 6.76 6.69 6.53 6.53 6.41 6.24 1.05 0.95 0.90 0.89 0.86 0.77 0.75 0.74 -1.93 -3.72

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Netherlands Iceland Spain Portugal Slovenia Norway Cyprus Vatican City Italy Greece France Malta Isle of Man Czech Republic Latvia Croatia Belgium Andorra Monaco the United Kingdom Finland Faroe Islands Sweden Switzerland Germany Liechtenstein Austria San Marino Jersey Guernsey Luxembourg Denmark Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Albania Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

155

Earnings Before Interest and Taxes (EBIT) Countries

Value ($K/employee)

Rank

Percentile

169.22 168.76 44.85 29.31 26.41 22.51 21.53 20.45 20.42 20.00 19.28 18.96 18.18 17.73 17.18 16.94 16.87 15.00 13.89 12.62 11.63 11.41 11.29 10.92 10.22 9.79 9.78 9.76 9.74 9.68 9.46 9.18 8.30 8.18 7.52 6.98 6.55 3.48 3.28 2.97 1.49 1.22 0.76 -2.68 -2.70

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 36 37 38 39 40 41 42 43 48 49 50 52 53

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Netherlands Portugal Norway Greece USA Italy South Africa Czech Republic Brazil Spain Argentina Chile France Germany Finland New Zealand Pakistan Canada Australia Singapore the United Kingdom Austria Sweden Hong Kong China Switzerland Malaysia Belgium Luxembourg Japan India Denmark Thailand Peru Indonesia Hungary Poland Philippines Ireland Israel

the Middle East Latin America Asia Asia Europe Europe Europe Europe Europe North America Europe Africa Europe Latin America Europe Latin America Latin America Europe Europe Europe Oceana the Middle East North America Oceana Asia Europe Europe Europe Asia Asia Europe Asia Europe Europe Asia Asia Europe Asia Latin America Asia Europe Europe Asia Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

156

Earnings Before Interest and Taxes (EBIT) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

160.78 147.55 143.40 138.33 28.26 26.97 26.91 26.41 26.35 22.51 21.53 20.61 20.45 20.42 20.20 19.44 19.28 18.93 18.68 18.18 17.26 17.25 17.18 16.13 15.00 13.89 12.62 12.04 9.91 9.79 9.78 9.76 9.68 9.46 9.44 9.44 9.34 8.82 8.30 8.18 6.55 2.86 1.49 1.34 1.27 1.25 1.22 1.10 1.05 1.05 -2.68

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Netherlands Portugal Cyprus Norway Greece Iceland Vatican City Italy Malta Isle of Man Czech Republic Latvia Croatia Spain Slovenia France Germany Finland Andorra Monaco the United Kingdom Austria Sweden San Marino Switzerland Jersey Guernsey Faroe Islands Liechtenstein Belgium Luxembourg Denmark Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

157

Pretax Income Countries

Value ($K/employee)

Rank

Percentile

34.08 20.39 18.65 18.38 18.09 17.50 16.49 16.47 16.31 14.94 14.68 14.61 13.67 12.10 11.65 10.11 10.09 9.70 9.60 9.54 9.32 9.29 8.98 8.57 8.40 8.23 8.23 7.64 7.12 6.72 6.35 6.26 6.16 6.04 3.35 3.00 2.39 1.24 0.68 0.64 0.52 -3.20 -3.23 -30.51 -30.60

1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 33 34 35 36 37 38 40 44 45 46 48 49 50 52 53

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 16.98 15.09 13.21 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Taiwan South Korea Netherlands Russia USA Norway Greece South Africa Spain Portugal Czech Republic Italy Argentina France Germany Canada Brazil Finland Chile Singapore Pakistan New Zealand the United Kingdom Australia Hong Kong Malaysia China Austria Switzerland Sweden Belgium India Luxembourg Japan Denmark Thailand Indonesia Peru Philippines Hungary Poland Ireland Israel Mexico Turkey

Asia Asia Europe Europe North America Europe Europe Africa Europe Europe Europe Europe Latin America Europe Europe North America Latin America Europe Latin America Asia the Middle East Oceana Europe Oceana Asia Asia Asia Europe Europe Europe Europe Asia Europe Asia Europe Asia Asia Latin America Asia Europe Europe Europe the Middle East Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

158

Pretax Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

19.66 18.76 18.72 18.65 18.38 18.33 18.28 17.50 16.49 16.31 15.31 15.28 15.08 14.94 14.73 14.68 14.61 14.30 13.93 13.93 12.10 11.65 9.70 9.62 9.25 8.98 8.06 7.64 7.57 7.38 7.38 7.12 6.72 6.64 6.35 6.16 3.35 1.08 0.64 0.58 0.55 0.54 0.52 0.47 0.45 0.45 -3.20 -25.01 -25.93 -26.68 -29.07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Estonia Belarus Slovakia Netherlands Russia Lithuania Iceland Norway Greece Spain Slovenia Malta Isle of Man Portugal Vatican City Czech Republic Italy Cyprus Latvia Croatia France Germany Finland Andorra Monaco the United Kingdom Faroe Islands Austria San Marino Guernsey Jersey Switzerland Sweden Liechtenstein Belgium Luxembourg Denmark Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Ireland Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

159

Income Taxes Countries

Value ($K/employee)

Rank

Percentile

6.83 6.74 6.08 6.07 5.66 5.66 5.64 5.58 5.27 5.19 5.12 5.09 4.75 4.48 4.17 3.36 3.31 3.28 3.21 2.90 2.69 2.67 2.54 2.52 2.41 2.23 2.12 1.90 1.83 1.70 1.61 1.59 1.29 0.95 0.71 0.59 0.58 0.22 0.01 0.00

1 2 3 4 5 6 7 8 9 10 12 13 14 15 16 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 39 40 42 45 46

97.87 95.74 93.62 91.49 89.36 87.23 85.11 82.98 80.85 78.72 74.47 72.34 70.21 68.09 65.96 61.70 59.57 57.45 55.32 53.19 51.06 48.94 46.81 44.68 42.55 40.43 38.30 36.17 34.04 31.91 29.79 27.66 25.53 23.40 21.28 17.02 14.89 10.64 4.26 2.13

Region

_________________________________________________________________________________________________________

Greece Australia Czech Republic Norway Argentina Italy South Korea South Africa Netherlands Spain Belgium Russia Portugal USA France Taiwan Finland Japan Germany the United Kingdom Sweden Brazil Chile Austria Canada Malaysia Switzerland India Luxembourg Denmark China New Zealand Singapore Hong Kong Indonesia Israel Ireland Thailand Peru Philippines

Europe Oceana Europe Europe Latin America Europe Asia Africa Europe Europe Europe Europe Europe North America Europe Asia Europe Asia Europe Europe Europe Latin America Latin America Europe North America Asia Europe Asia Europe Europe Asia Oceana Asia Asia Asia the Middle East Europe Asia Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

160

Income Taxes (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

6.83 6.33 6.24 6.08 6.07 5.77 5.76 5.70 5.66 5.44 5.27 5.19 5.19 5.18 5.12 5.09 5.07 4.87 4.75 4.55 4.53 4.17 3.31 3.21 2.90 2.69 2.52 2.49 2.43 2.43 2.12 1.98 1.83 1.70 1.65 1.25 0.92 0.58 0.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

97.44 94.87 92.31 89.74 87.18 84.62 82.05 79.49 76.92 74.36 71.79 69.23 66.67 64.10 61.54 58.97 56.41 53.85 51.28 48.72 46.15 43.59 41.03 38.46 35.90 33.33 30.77 28.21 25.64 23.08 20.51 17.95 15.38 12.82 10.26 7.69 5.13 2.56 0.00

_________________________________________________________________________________________________________

Greece Malta Isle of Man Czech Republic Norway Latvia Croatia Vatican City Italy Estonia Netherlands Belarus Spain Slovakia Belgium Russia Lithuania Slovenia Portugal Cyprus Iceland France Finland Germany the United Kingdom Sweden Austria San Marino Guernsey Jersey Switzerland Liechtenstein Luxembourg Denmark Andorra Monaco Faroe Islands Ireland Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

161

4 4.1

MACRO-ACCESSIBILITY IN UNITED KINGDOM EXECUTIVE SUMMARY

The United Kingdom (UK), the world’s fourth largest economy, is a trading nation with a generally open market and a “level playing field”. The UK attracts U.S. exporters and investors as a place in which to do business because of the common language, a similar legal framework and business practices, and relatively low rates of taxation and inflation. Once here, it is easy for American firms to use the UK as a gateway to the rest of the EU. There are very few sectors in which foreign ownership is limited, and there is no restriction on the repatriation of capital and profit, although there are strict rules on transfer pricing. Within the EU, the British Government supports the rights of any company registered in the UK, irrespective of the nationality of its ultimate parent. The UK is very receptive to U.S. goods and services. With its $1.6 trillion GDP, the UK remains the United States’ largest European market and fourth largest market worldwide, after Canada, Mexico and Japan. Major exports from the U.S. to the UK include aircraft and aircraft parts, aircraft engines, IT equipment and parts, telecommunications equipment, electronic components, medical equipment, pharmaceuticals, gold and other precious metals, paintings and art, and laboratory equipment. The U.S. and the UK are also the largest foreign investors in each other’s countries. The UK government’s economic policies generally seek to sustain job creation. Specific measures have included tax reform; privatization of state-owned industries and utilities; deregulation of financial services, telecommunications and transportation; and labor law reforms. The government is, however, concerned about overall UK productivity which lags behind the U.S.; that said, the two most productive automotive plants in Europe are located there. The UK has now signed up to the EU Social Chapter. As a result, the UK has adopted a number of new labor laws, including the working time directive, although derogating from certain parts of this. The UK government is committed to making the UK a hub for e-business, and recent surveys have confirmed London as the e-capital of Europe. The UK’s telecommunications services industry has been deregulated, and as a result competition in internet service provision and voice telephony is intense. Internet penetration, both in the home and in businesses, is higher than in most other EU countries, and mobile phone penetration is well above 50%. There has been no rush to embrace third-generation (3G) mobile technology, offered by just one company, Hutchison Telecom. Broadband, however, both wired and wireless, has had immediate acceptance, although the roll-out has been slowed by BT’s continued domination of the local loop.

4.2

ECONOMIC FUNDAMENTALS AND DYNAMICS

The UK is the fourth largest world economy. The emphasis on privatization and taxation that characterized the economy of the 1970s and early 1980s has become more moderate in scope over the past 10 years.

4.2.1

Principal Growth Sectors

With regard to factors that provide opportunities for foreign businesses, public-sector procurement policies seek best value and best practice regardless of the bidders’ national origin, and outsourcing of public services is encouraged at central and local government levels. National legislation on the UK’s infrastructure and the environment, health care reform, and private-public partnerships are continuing to create business opportunities for foreign investors. U.S. exporters, investors, and management companies participate in public and private sector ventures and partnerships

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with virtual equality to British firms. These U.S. entities also have established a route via the UK to the European single market. Although the UK’s telecommunications sector is among the most liberal in Europe, the rollout of high-speed Internet services has not been as fast as it could have been. British Telecom is still the dominant phone company in the country, and its control of the phone exchanges has allowed it to hinder competitors’ access to the last copper mile. Fully installed cable and cellular networks show limited additional opportunities for U.S. equipment manufacturers. Overall, there has been a 19.9% drop in U.S. agricultural exports - agricultural, forestry and seafood - to the UK since 1998 (www.fas.usda.gov). The UK, however, continues to be a major market for U.S. agricultural products. The UK Ministry of Defense (MoD) admits U.S. companies as potential suppliers in most procurement competitions, whether as prime contractors, as joint venture partners, or as major sub-contractors and suppliers to the UK prime contractors.

4.2.2

Government Intervention Risks

The UK has an essentially free and market-driven economy, with independent regulatory bodies providing additional direction in those sectors where private individuals are the principal users of the product or service. Regulated industries include the privatized utilities: telecommunications, electricity, water, and gas supply. Control of the railway infrastructure has been assigned to the Strategic Rail Authority. The Financial Services Authority regulates financial services, while the Office of Fair Trading regulates consumer credit. Further liberalization of the financial services, energy, and telecommunications sectors is an economic goal of the Labour government.

4.2.3

Infrastructure

Private sector production, transportation, warehousing, communications, and distribution facilities in the UK are adequate, although some of the physical assets employed show the need for repair and replacement. Much of the responsibility for public sector infrastructure in the UK has been transferred to the private sector, and to independent executive agencies that are accountable to government departments. To supplement government investment, the Public-Private Partnership (PPP) initiative enables Private Finance Initiative (PFI) schemes that create viable business entities from public assets at minimal cost to the government. PFI schemes transfer ownership of public assets to the private sector, as well as transferring financial risk and reward i.e. the private company has no recourse to the government if the business fails.

4.3 4.3.1

POLITICAL RISKS Political Relationship with the United States

The exceptionally close and productive Anglo-American “special relationship” is anchored by long-standing and vibrant political and security contacts, common values, close trade and investment links, and a shared cultural heritage. At the government level, the strength of the relationship ensures continued cooperation on a very broad range of foreign policy and security issues. The UK is one of the strongest international supporters of the war against terrorism, and UK troops participated side-by-side with U.S. troops in Operation Iraqi Freedom.

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4.3.2

163

Politics and the Business Environment

There are no major British political issues that affect the business climate as a whole in the UK. The status of the peace process in Northern Ireland does impact business sentiment there, however. The Labour Government has said that it favors joining the European Single Currency and will hold a national referendum on accepting the Euro as a common currency, if certain economic conditions are met. Recently the Chancellor of the Exchequer, Gordon Brown, announced that the UK was not ready for a referendum at this time, although he has since published HMG’s third National Changeover Plan, which details the timetable from any referendum through to withdrawing sterling currency. The Conservatives, by contrast, generally oppose joining the Single Currency. Wide differences of opinion on joining the Euro prevail within the parties and the public at large. An important EU issue is the prospect of harmonizing direct taxation policies among member states, as in the recent case of savings withholding tax. Labour and Conservatives alike oppose this, as both political parties are committed to defending individual EU member states’ tax powers.

4.3.3

The Political System

The UK has a centralized parliamentary governmental system, though the Labour Government supported referenda that led to the creation of a devolved Scottish Parliament and Welsh Assembly. The government has devolved significant powers to the Scottish Parliament, including responsibility for agriculture, economic development, education, health, law and order, local government, social work, and transport. Fewer powers have been devolved to the Welsh Assembly. The UK national government, consisting of 15 cabinet-level departments, and numerous smaller entities, is staffed by career civil servants. The three to eight senior policy positions in each department (Secretary of State, Minister of State, and junior ministers) are drawn from the ranks of the ruling party, generally from the House of Commons and the House of Lords. Parliaments are elected for a five-year maximum term, although the government of the day can call an election at any time, or be forced to call one by losing a vote of confidence in the House of Commons. The Labour Government has distanced itself from its socialist origins, and widened its popular appeal by moving steadily toward the political center. It accepts the irreversible nature of industrial privatization and, while some Members of Parliament are sponsored by labor unions, the Labour Party is less reliant than in the past on union funding.

4.4 4.4.1

MARKETING STRATEGIES Creating a Sales Office

Establishing a place of business or a branch office in the UK is a straightforward and inexpensive procedure, involving the notification of the parent company’s registration details and the physical location of the UK place of business to the Department of Trade and Industry’s Registrar of Companies. The local branch of a foreign company can trade for up to one month before it is registered, using the permitted grace period. A company may be registered by its UK-resident directors or secretary, although using a local accountant or law firm for filing purposes may make the task even easier. Pre-registered companies can be purchased from company formation agents, allowing new-to-market companies to start trading with limited liability immediately. A company www.icongrouponline.com

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incorporated with limited liability must file annual returns, and incurs a local profit-related tax liability. The branch office has no separate corporate identity from its parent and no separate accountability for taxation purposes. In all cases, expert assistance should be obtained to mitigate risk and to avoid potentially expensive mistakes.

4.4.2

Creating a Joint Venture

Joint ventures may be formed as limited liability companies or as equal or unequal partnerships. Consortia of companies formed to bid or manage specific projects usually use a British-registered limited liability company as the vehicle, to more easily rent or purchase local premises and assets, and to hire and manage a local workforce and support staff. No ownership or control restrictions apply to joint ventures in the United Kingdom.

4.4.3

Agents and Distributors

National laws governing the relationships between agent and principal, and distributor and supplier are broadly harmonized throughout the EU. EU Directives establish the rights and obligations of the parties to an agreement, the agent’s entitlement to commission payments, and the conclusion and termination clauses of agency contracts. In the case of EU agents and their non-EU principals, the law favors the agent to such an extent that most of those agency arrangements have been terminated in favor of reseller and distributorship arrangements.

4.4.4

Hiring Local Counsel

The U.S. Commercial Service is ideally placed to advise on marketing strategies, and on methods of identifying effective sales and marketing partners for products and services of any description that are exported from the United States. Although there are few instances that specifically require the use of a local lawyer, local contracts and agreements should be vetted by a competent law firm conversant with UK and EU Law, as such contracts are generally different from U.S. ones. U.S. contracts should not be used as they are mostly unenforceable in UK law. Many U.S. law firms have either established their own UK offices or have links with local practices, and are often the most convenient and practical sources of legal advice for American companies. The Commercial Service in London can provide lists of local law firms, including those with U.S. links.

4.4.5

Checking Bona Fides

Banks, accounting firms, credit agencies and risk management companies provide a full range of reporting services that U.S. companies can use as part of their due diligence before signing a local partner. Service providers include the UK subsidiaries of the American-owned Dun & Bradstreet, Equifax, and Infocheck. The U.S. Commercial Service has discontinued the preparation of International Company Profile (ICP) background checks in the UK, as private-sector alternatives are available.

4.4.6

Distribution and Sales Channels

Dedicated sales and distribution channels have evolved for most imported products and services, ranging from wholly-owned subsidiaries of foreign manufacturers to independent trading companies that buy and sell on their own

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account. Between these two extremes are independent resellers, sales agents, and stocking distributors that have contractual relationships with their suppliers. The selection of an appropriate marketing organization depends largely on the nature of the goods and services involved. One recent channel marketing development, responding to the expanding requirements of international e-commerce, is the growth of local fulfillment and delivery/returns services.

4.4.7

Franchising and Direct Marketing

Franchising accounts for approximately one third of UK retail sales in fast food and beverage services, hotels, car rental agencies, printing and copying, and auto services. North American-origin franchise systems operate in the UK, with more than 4,200 franchised units employing 35,000 staff, generating a turnover of $1.5 billion. Although franchising is a thriving sector, the biggest barrier to growth is a lack of suitable single unit franchisees. The Office of Fair Trading (OFT) is the regulatory body that provides consumer protection in franchise operations. The OFT seeks to ensure that the franchise promotes a genuine product or service, and is not a pyramid-type sales scheme. Since the major UK banks recognize the value of successful franchise operations, they can evaluate the business prospects and local credit needs of franchise schemes, and can often provide advice and investor leads to U.S. franchise operators considering UK market entry. The market can be slow to adopt new ideas, and finding a suitable master franchisee can be a long process. Affordable transatlantic telecommunications and the use of electronic payment methods for international transactions have made direct marketing from the United States more popular. Public confidence in the accuracy of remote billing, data security, and delivery is increasing at a time when the Internet is an increasingly accepted marketing tool. These factors combine to make direct marketing of many types of goods and services worth considering. U.S. Web-based marketers should be aware of the EU Value Added Tax Directive that requires service providers to collect Value Added Tax (VAT) on sales of services to consumers over the Internet. The EU Distance Selling Directive (97/7/EC) applies to most direct marketing activities. The legislation requires that consumers be given clear and comprehensive information about the vendor and the goods or services offered. The directive also gives the consumer the right of withdrawal within seven days without penalty, and requires the vendor to refund any monies due within thirty days of the cancellation of an order. The Advertising Standards Authority (ASA) has established a code of practice for direct mail advertising and for list and database management, and the Direct Marketing Association has done the same in respect of direct selling. The industry code of practice for direct marketing can be obtained from the Direct Marketing Association, and the code of practice for advertising can be obtained from the ASA.

4.4.8

Selling Strategies

EU law implemented by national legislation governs exclusivity in agency and supply agreements, purchasing contracts, and contract terms. U.S. manufacturers and exporters are generally able to appoint exclusive representatives and to determine the methods used to promote the sale of their products. Such exclusive territories are usually national in size. Sales practices that give regulatory concern are those that could give an unfair advantage to the supplier at the expense of competitors or end users. Recent legislation exempts some vertical agreements between manufacturers and their resellers, but requires the disclosure of certain types of inter-company commercial arrangements, and also gives powers of investigation and enforcement to the regulatory authorities.

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4.4.9

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Pricing and Licensing Issues

Import prices should be based on the landed cost, including value added tax (VAT), which is payable on entry into the EU. The basic formula is cost, insurance, freight and duty, plus VAT at 17.5% levied on the aggregate value. End-user pricing should include local storage, delivery, sales and support costs, with the local profit element. The formerly practiced “Resale Price Maintenance”, where manufacturers set a mandatory retail price and prevented retail discounting is now illegal. Traditional pricing methods have led to the acceptance of higher prices and profit margins than is customary in the U.S., because the UK market for any product is generally smaller than that of the U.S. The cost of sales in the UK is recovered from the smaller sales volume, and the local vendor generally bears the expense of promotion and support.

4.4.10

Advertising and Trade Promotion

While trade promotion practices in the UK are similar to those of the U.S., printed materials prepared for use in the U.S. market may need to be modified for use in the UK to account for local legal, cultural, and other differences. In addition to advice that the Commercial Service offers, local advertising agencies and marketing consultants can provide appropriate professional guidance. Also, the Advertising Standards Authority oversees the practices of the advertising industry and enforces the provisions of the British Code of Advertising Practice (CAP). Advertisers should become familiar with CAP recommendations. The leading British daily newspapers are: •

The Times (www.the-times.co.uk)

•

The Daily Telegraph (www.telegraph.co.uk)

•

The Guardian (www.guardian.co.uk)

•

The Independent (www.independent.co.uk)

•

The Financial Times (www.ft.com)

•

Daily Mail (www.dailymail.co.uk)

•

Daily Express (www.expressnewspapers.co.uk)

•

Sun (www.the-sun.co.uk)

•

Mirror (www.mirror.co.uk)

Sunday newspapers: •

Sunday Times (www.sunday-times.co.uk)

•

Sunday Telegraph (www.telegraph.co.uk)

•

Observer (www.observer.co.uk)

The London Gazette, Edinburgh Gazette and Belfast Gazette (www.gazettes-online.co.uk) are the official journals of the UK, but these are less widely used for formal notices than the Official Journal of the European Community (OJEC). Popular business journals: •

The Economist (www.economist.com)

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Investors Chronicle (www.investorschronicle.co.uk)

In addition, global publications such as Business Week and Industry Week are widely read. Supplying There are independent after-sales, warranty and product servicing organizations in the UK. Most specialize in a single business sector, but a few major firms operate nationwide, providing a comprehensive maintenance and facilities management service. The leaders in this sector are Serco, Jarvis, AMEC and Planned Maintenance Ltd. The smaller service companies that provide local coverage can be identified from business directories, the Internet, and from listings held by local trade associations.

4.4.11

Government Procurement

Most UK government departments are subject to the EU Procurement Directive and the Remedies Directive, and to the WTO Government Procurement Code which gives qualified foreign bidders from signatory countries equal access to each other country’s public sector contracts. Urgency or national security considerations can be used to justify procurements outside WTO rules. Intended procurements above the EU public procurement thresholds are published in the Official Journal of the European Community Supplement (OJECS), and in specialized industryspecific publications. Smaller procurements do not need to be published. Information on specific tenders may be found at www.ted.eur-op.eu.int. The Ministry of Defence (MoD) publishes information on its future projects and procurements in a biweekly Contracts Bulletin, which is available to U.S. subscribers. Nonetheless, most U.S. defense companies require more lead-time than the bulletin provides, and need detailed guidance on the procedures and bid evaluation criteria used in this sector. To remedy this, the Embassy’s Office of Defense Cooperation (ODC) has prepared a handbook of unique insights and case studies in UK defense marketing for U.S. companies. The handbook is routinely updated to incorporate changes in UK defense procurement policy, procedures and organization. The handbook is a briefing tool that supplements the practical advice that can be obtained directly from the ODC in London. This advice includes insight, guidance, status and advocacy in support of U.S. defense contractors competing for sales and cooperative development programs for military equipment and services, including missiles and defense systems, munitions, sensors, ships, planes and helicopters. Larger defense contracts awarded to non-EU contractors require the negotiation of industrial participation (IP) i.e., offset arrangements. The IP arrangements are separate from the procurement contracts, but administered by the MoD’s Defence Export Services Organization (DESO).

4.5

IMPORT AND EXPORT REGULATION RISKS

4.5.1

Membership in Free Trade Arrangements

The UK participates in the free trade arrangements of the European Union (EU) and European Free Trade Association (EFTA).

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Tariff and Non-Tariff Barriers

The UK has no significant trade or investment barriers, and no restrictions on the transfer of capital or repatriation of profits. The very few barriers that exist are almost all attributable to UK implementation of EU Directives and regulations, and do not reflect UK Government intentions. Customs duty is assessed on the fair market value of imported goods at the time they are landed in the UK. The commercial invoice value is usually accepted as the normal price, but if a preferential arrangement has been established between the overseas supplier and the importer, or an unrealistic value has been declared, HM Customs reserves the right to assess a fair market value for duty purposes. The duty is payable at the time the goods are imported, but established importers can defer payment for up to 30 days. In addition to customs duties on imported goods, an excise tax is levied on in-country sales of alcohol, tobacco, and road vehicles, and on sales of oil and petroleum products. The applicable import duty and excise tax rates can be obtained from U.S. Department of Commerce Export Assistance Centers, and copies of the tariff can be purchased from HM Stationery Office

4.5.3

Prohibited Imports and USG-Imposed Export Controls

Prohibited imports include AM citizens band radios, switchblade knives, devices that project toxic, noxious or harmful substances (e.g., tear gas), counterfeit coins and currency, certain types of pornography and hormone-treated beef. The UK participates in the Wassenaar Arrangement for the control of dual-use exports, the Australia Group (AG) for the control of chemical and biological weapons, and the Nuclear Suppliers’ Group (NSG) for nuclear-related goods, preventing the export of restricted goods and technology to countries of proliferation concern. The UK also supports United Nations’ sanctions restricting exports to certain other destinations. Although sensitive to the extraterritorial application of U.S. law in export controls, the UK authorities cooperate with the U.S. in preventing the re-export of sensitive goods and technology of U.S.-origin to unauthorized destinations, when the enforcement action is based on multilateral controls.

4.5.4

Import Taxes and License Requirements

A limited range of goods requires import licenses, which are issued by the UK Department of Trade and Industry’s Import Licensing Branch. These include firearms and explosives, nuclear materials, controlled drugs and certain items of military equipment.

4.5.5

Customs Regulations and Contact Information

The documents required for shipments include the commercial invoice, bill of lading or airway bill, packing list, insurance documents, and, when required, special certificates of origin, sanitation, ownership, etc. A copy of the commercial invoice should accompany the shipment to avoid delays in customs clearance. No special form of invoice is required, but all of the details needed to establish the true value of the goods should be given. At least two additional copies of the invoice should be sent to the consignees to facilitate customs clearance. Consular documents are not required for shipments to the UK.

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Temporary Goods Entry Requirements

Raw materials, temporarily imported for incorporation into products for export, may be admitted without payment of duties and taxes. The importer must provide a bank or insurance company guarantee or indemnity for the applicable duties and taxes. Goods intended for unaltered re-export may also be imported free of duty for a period of up to six months by prior arrangement with HM Customs & Excise. Duty-free entry is also permitted by prior arrangement for leased or loaned machinery, plant, and equipment, and goods imported solely for processing, repair, technical examination and testing. Professional and demonstration equipment may be temporarily imported into the UK free of duty and tax under the Customs Convention on the Temporary Importation of Professional Equipment. For this, a carnet should be obtained from the U.S. Council of the International Chamber of Commerce.

4.5.7

Labeling Issues

Origin, weight and dimension, chemical composition and appropriate hazard warnings are required for consumer protection purposes on any product offered for retail sale. If the product cannot be labeled or marked, the data may be included on any packaging or accompanying printed material or product literature. Although metric units of weight and dimension are required, the continued use of labels with both metric and standard units is permitted through a derogation from EU directives. This continued freedom is supported by importers, and also by British exporters of products destined for the U.S. market. European and British clothing and shoe sizes are differently marked, and special provision may have to be made for retail labeling of apparel. The entity responsible for placing products conforming to EU standards on the market must also affix a CE-mark. To support the CE-marking, a technical file must be maintained, with test data and methodology showing how the standards conformity was checked. For standard products, a single file is generally sufficient, but for purpose-built units, a technical file may need to be prepared for each unit imported. The file must be held available for inspection for a ten-year period. Self-certification is permitted for most product categories, and only a limited range of goods require third-party test and certification by a “notified body”.

4.5.8

Warranty and Non-Warranty Repairs

Duty-free entry is permitted for goods imported solely for processing, repair, technical examination and testing and for the repair parts needed to restore them to their original condition. Upgrade kits and parts of a higher specification do not qualify for duty-free entry.

4.5.9

Free Trade Zones and Warehouses

The Free Trade Zones of the UK are the cargo ports and freight transshipment points of Birmingham, Humberside, Liverpool, Prestwick, Sheerness, Southampton and Tilbury. These seven zones are used only for cargo storage and consolidation, and not for value-added processing of the goods concerned.

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INVESTMENT CLIMATE Openness to Foreign Investment

The UK is home to more big-name corporations than any other European country. As Europe’s top location for inward investment, the UK receives 19% of all investment in the EU. Currently, the UK gets about 32% of U.S. investment in Europe. London remains the “Best City for Investment”. With a few exceptions, the UK does not discriminate between nationals and foreign individuals in the formation and operation of private companies. U.S. companies establishing British subsidiaries generally encounter no special nationality requirements on directors or shareholders, although at least one director of any company registered in the UK must be ordinarily resident in the UK. Once established in the UK, foreign-owned companies are treated no differently from UK companies. Within the European Union (EU), HMG (the British Government) is a strong defender of the rights of any British registered company, irrespective of its nationality of ownership. Market entry for U.S. firms is greatly facilitated by a common language, legal heritage and similar business institutions and practices. Long-term political, economic and regulatory stability, coupled with relatively low rates of taxation and inflation make the UK particularly attractive to foreign investors. The Blair government inherited a legacy of economic reforms, including privatization, deregulation, and support for competition. These initiatives have been continued, with very few instances of government intervention. Local and foreign-owned companies are taxed alike. Inward investors may have access to certain regional grants and incentives that are designed to attract industry to areas of high unemployment, but no tax concessions are granted. The UK taxes corporations at rates between 10% and 30%. The rate applicable to a particular company in a particular year will depend primarily on the level of profit made, but revenue can also be a contributing factor. In April 2002, a social tax increase was levied on corporations (and employees) in the form of a 1 percentage point increase in the 11.8% employers’ national insurance contribution, taking it to 12.8% in the 2003/2004 tax year. This tax costs companies more than $6 billion annually. This tax increase is designed to fund higher spending on National Health Service improvements and reforms. Tax deductions are allowed for expenditure and depreciation of assets used for trade purposes. These include: machinery, plant, industrial buildings and assets used for research and development. The UK has a simple system of personal income tax, and one of the lowest top marginal rates of any EU country (40%). The UK imposes few impediments to foreign ownership. The UK subscribes to the OECD Committee on Investment and Multinational Enterprises’ (CIME) National Treatment Instrument and the OECD Code on Capital Movements and Invisible Transactions (CMIT). The UK is highly receptive to U.S. investment. The U.S. and the UK are the largest foreign investors in each other’s countries. Direct stock investment by U.S. companies in the UK has grown modestly. U.S. companies have found that establishing a base in the UK is an effective means of accessing the European Single Market, and the abolition of most intra-European trade barriers enables UK-based firms to operate with relative freedom throughout the EU. According to InvestUK (part of the British Government’s investment promotion agency, British Trade International), all of the one hundred largest U.S. companies have established operations in the UK. The UK hosts more than half of the corporate headquarters of American-owned companies in Europe.

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Conversion and Transfer Policies

The British pound is a free-floating currency with no restrictions on its transfer or conversion. There are no exchange controls restricting the transfer of funds associated with an investment into or out of the UK. All exchange controls were repealed in 1987. Government policies are intended to facilitate the free flow of capital and to support the flow of resources in the product and services markets. The City of London houses one of the largest and most comprehensive financial centers in the world. Foreign investors are able to obtain credit in the local market at normal market terms, and a wide range of credit instruments is available. The principles involved in legal, regulatory and accounting systems are transparent, and they are consistent with international standards. In all cases, regulations have been published and are applied on a non-discriminatory basis.

4.6.3

Expropriation and Compensation

Expropriation of corporate assets or nationalization of an industry requires a special Act of Parliament. Should nationalization of any private-sector entity occur, HMG would follow customary international law, providing prompt, adequate, and effective compensation.

4.6.4

Dispute Settlement

Disputes over property, contracts, and share holdings are resolved through litigation in the High Court. The Stock Exchange Panel on Takeovers and Mergers mediates takeover bid disputes, and there is a further right of appeal to the Stock Exchange Appeals Committee. As a member of the International Center for Settlement of Investment Disputes, the UK accepts binding international arbitration between foreign investors and the state. As a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the UK permits local enforcement on arbitration judgments decided in other signatory countries.

4.6.5

Political Violence

Domestic politic al violence associated with the Northern Ireland “Troubles” has decreased dramatically in the past several years as the main paramilitary groups have maintained a cease-fire and the 1998 Good Friday Agreement created the potential for parties to resolve political disputes through peaceful means. Sectarian violence continues to occur sporadically in parts of Northern Ireland. Some small dissident paramilitary groups remain opposed to the Agreement and within the last three years have committed acts of terrorism in Northern Ireland and in London. During the summer of 2001 there were riots in the north of England, in the towns of Oldham and Bradford, connected to racial tensions. Racially motivated crimes have also been on the rise since September 11th. There has been no indication, however, that foreign investments have been harmed or threatened. Animal rights, trade, and environmental activists have caused some disruption but little actual damage at UK laboratory facilities and construction sites. Pharmaceuticals and cosmetics test labs using animals have been their principal targets. Opponents of agricultural biotechnology have occasionally carried out the destruction of property, including

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agricultural field tests. Airport expansion, bypass roads, offshore structures and petrochemical facilities also attract the attention of environmental pressure groups that undertake protests.

4.6.6

Performance Requirements and Incentives

Business contracts are legally enforceable in the UK. There is generally no need for performance bonds or guarantees in British commerce, nor is any technology transfer, joint venture or local management participation or control requirement imposed on suppliers. Government and industry encourage prompt payment, but there is no tradition of providing an additional discount to encourage early settlement of accounts. The UK offers a wide range of incentives for companies of any nationality locating in depressed regions of the country, as long as the investment generates employment. Regional Selective Assistance (RSA) is available from the central government for qualifying projects in parts of the UK needing investment to revitalize their economies. Grants are the main type of assistance, and the level of grant is based on capital expenditure costs and expectations of job creation. In addition to RSA, assistance can be obtained through the EU Regional Development Fund. Assistance from this fund is offered to companies that locate in an area designated under Objective 1 (regions whose development is lagging behind), Objective 2 (regions undergoing economic and social conversion), or Objective 3 (education, training, and employment.) The highest level of assistance is available for companies that locate in Objective 1 areas. In the UK these areas include parts of Cornwall, Merseyside, South Yorkshire, and West Wales and the Valleys. Local authorities in England and Wales also have power under the Local Government and Housing Act of 1989 to promote the economic development of their areas through a variety of assistance schemes, including the provision of grants, loan capital, property or other financial benefit. Separate legislation, granting similar powers to local authorities, applies to Scotland and Northern Ireland. Where available, both domestic and overseas investors may also be eligible for loans from the European Investment Bank.

4.6.7

Right to Private Ownership and Establishment

The Companies Act of 1985, administered by the Department of Trade and Industry (DTI), governs ownership and operation of private companies. The government has powers under the Mergers and Industry Act of 1986 to prohibit the takeover of important manufacturing undertakings by non-residents, and to prevent undue concentration of market share. Protected sectors include air and maritime transport, fishing, and defense. The DTI uses a transparent code of practice in evaluating bids and mergers for possible referral to the Competition Commission. On March 1, 2000, the Competition Act of 1998 entered into force, strengthening competition law and enhancing the enforcement powers of the Office of Fair Trading. Prohibitions under the act relate to competition restricting agreements and abusive behavior by entities in dominant market positions. There are only a few exceptions to national treatment. For example, foreign (non-EU or non-EFTA) ownership of UK airlines is limited by law to 49%. Registration of shipping vessels is limited to UK citizens or nationals of EU/EFTA member states resident in the UK. HMG holds one special controlling interest share in BAE Systems, Rolls Royce, VSEL, Stena Sealink, Cable and Wireless, Devonport Royal Dockyard Ltd., and Rosyth Royal Dockyard Ltd. For some of these companies, restrictions of foreign ownership of ordinary shares apply. Citizenship requirements for certain senior executive and non-executive posts also apply for these enterprises. Foreign investment in financial services that are not covered by EU Directives on banking, investment, services, and insurance may be subject to a bilateral agreement. Under the Private Finance Initiative (PFI), British and foreign-owned companies may bid for long-term franchises to build, run and improve existing public-sector services in areas including: education, health care, road traffic management, passenger rail, production of coins and currency, port operations, air and water monitoring and

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cleanup, land use planning, and building control. The government’s goal is to provide cost-effective and higher quality services in partnership with private sector investment capital providers.

4.6.8

Protection of Property Rights

The UK legal system provides a high-level of intellectual property rights (IPR) protection. Enforcement mechanisms are comparable to those available in the United States. The UK is a member of the World Intellectual Property Organization (WIPO). The UK is also a member of the major international intellectual property protection agreements: the Bern Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, the Universal Copyright Convention, the Geneva Phonograms Convention, and the Patent Cooperation Treaty.

Patents Under the Patents Act of 1997, a patent application requires that an invention must be new, involve an innovative step, and be capable of industrial application. A patent cannot be granted for any invention used for any offensive, immoral or antisocial purpose, for any variety of animal or plant, or for a biological process used in its production.

Copyright The Copyright, Designs and Patents Act of 1988 grants the originator the exclusive right to assign those rights or to exploit them through copying, dissemination, publication or sale. Computer programs and semiconductor internal circuit designs are included as works that are protected by this Act. Under the terms of an EU Directive, which took effect in January 1998, databases are also protected in each EU-member country by the national legislation that implements the Directive.

Trademarks The Trademarks Act of 1938 prohibits the use of a mark identical to, or nearly resembling a trademark registered by another person or legal entity. A trademark may be removed from the register if a period of five years has elapsed, during which time there has been no bona fide use of the trademark in relation to the goods by any proprietor. A trademark may be registered within more than one class, the registrations being associated or linked. The same trademark may not be registered by more than one company, irrespective of the number of classes in which it is registered.

Trade Secrets/Confidential Test Data Commercially sensitive information is not itself specifically subject to legal protection, but the misappropriation of such information from business premises may be subject to criminal law. Action under employment law may also be taken against an employee who, by disclosing information, breaches a contract with his or her employer. In addition, confidential test data, submitted in conjunction with a registered application for pharmaceuticals or veterinary products, enjoys ten years of exclusive protection from the date of authorization, provided the product is marketed in the UK. Common law prevails in the UK as the basis for commercial transactions, and the International Commercial Terms (INCOTERMS) of the International Chambers of Commerce are accepted definitions of trading terms. Accounting standards and audit provisions used in the UK are the SSAP Standards of the Accounting Standards Board (www.asb.org.uk). U.S. exporters and investors will find little or no difference between the United States and the UK in the conduct of business.

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Regulatory System

The government’s declared intent is to introduce more business competition and to reduce the administrative burden on companies by reducing unnecessary red tape. Statutory authority over prices and competition in various industries is given to independent regulators. These include the Office of Telecommunications (OFTEL), the Office of Water Regulation (OFWAT), the Office of Gas and Electricity Markets (OFGEM), the Office of Fair Trading (OFT), the Strategic Rail Authority (SRA), and the Financial Services Authority (FSA). The Prevention of Corruption Act makes bribery of domestic or foreign public officials a criminal offense. The maximum penalty under this act is imprisonment for up to seven years, and/or a fine not exceeding BPS 5,000. Corrupt payments are not deductible for UK tax purposes. Although there have been isolated instances of bribery and corruption in the UK, U.S. investors have not identified corruption of public officials as a factor in doing business in the UK. The UK included new legislation in the Anti-Terrorism Act to bolster the strength of the anti-corruption legislation. This new legislation cites corruption as one of the conditions that causes terrorism, and takes a hard line on it. Part 12 of the Act makes clear that bribery applies to acts involving foreign officials. It expressly extends government jurisdiction to cover bribes by UK nationals and by UK incorporated bodies overseas.

4.6.10

Bilateral Investment Agreements

The U.S. and the UK have no formal bilateral investment treaty relationship, though a Bilateral Tax Treaty specifically protects U.S. and UK investors from double taxation. The UK has its own bilateral tax treaties with almost 90 (mostly developing) countries, and a network of double taxation agreements.

4.6.11

OPIC and Other Investment Insurance Programs

Because OPIC supports investments in emerging market economies and developing countries, its programs do not apply to the UK. Export/Import Bank financing is available to support major investment projects in the UK, particularly oil and gas exploration machinery and wide-bodied civil aircraft. An MOU signed by ExIm Bank and its UK equivalent, the ECGD, enables bilateral U.S./UK consortia, intending to invest in third countries, to seek investment funding support from the country of the larger partner. This removes the need for each of the two parties to seek financing from their respective credit guarantee organizations.

4.6.12

Labor

Nearly a third of the British workforce is unionized, a low proportion by historic UK standards, but still quite high to an employer used to a much lower American percentage. Unionization of the workforce in the UK is prohibited only in the armed forces, public-sector security services and police forces. Manufacturing, transport, and distributive trades are highly unionized, but once-common militant unionism is now rare, although on the increase. In the face of a globalized economy, most British unions have come to appreciate that their members will only have jobs (and unions have members) to the extent that their employers are competitive. Privatization (and subsequent fragmentation) of heretofore -nationalized industries has accelerated such thinking. The Trades Union Congress (TUC), the British AFL-CIO equivalent, launched a major partnership initiative in January 2000 to encourage union-management cooperation. Most of the TUC’s private-sector affiliates are on board, and these are the unions most likely to be encountered by an American investor. www.icongrouponline.com

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The Labour Government’s Employment Relations Act of July 1999 rolled back most of the anti-union legislation enacted by previous Conservative Governments (1979-97), but it retained many key labor-market reforms enacted by former Prime Minister Thatcher; the union closed shop and secondary picketing remain outlawed. The most significant change wrought by the 1999 legislation is that it is now very much easier for a TUC affiliate to organize a non-union workplace. Furthermore, union recognition (where achieved) now carries a binding statutory obligation as distinct from its previous voluntary status. Some of the most far-reaching employment legislation affecting the UK labor market now originates in Brussels (i.e., from the European Union). Typically, resultant regulations affect working patterns, wage structures, and employee protection rights. For example, the European Working Time Directive, applicable since October 1998, creates an entitlement to minimum daily and weekly rest periods, an average work-week limit of 48 hours, and restrictions on night work. It also entitles workers who meet the qualifying criteria to a minimum of four weeks annual paid holiday. Holiday pay is also due for part-time and seasonal workers. The universal application of labor regulations across respective EU borders undermines British competitiveness to the extent that the UK has made its historically more flexible labor market a major selling point to inward investors. Women now form 49.7% of the workforce, increasingly in managerial positions. Children under the age of 16 may work in an industrial enterprise only as part of an educational course. Local education authorities can limit employment of children under 16 years old if working will interfere with a child’s education, which is mandatory until age 16. A persistent characteristic of the UK workforce is its relative lack of mobility, geographically and between trades. Successive governments have introduced retraining schemes and grants with some success in creating a workforce more adapted to the changing pattern of demand. The most serious issue facing British employers, as polled two years ago, is a growing skills gap as the requirements of a high-skill, high-tech economy outstrip the educational systems’ ability to deliver work-ready graduates.

4.6.13

Foreign Trade Zones and Free Ports

The cargo ports and freight transshipment points at Birmingham, Humberside, Liverpool, Prestwick, Sheerness, Southampton, and Tilbury that are used for cargo storage and consolidation are designated as Free Trade Zones. No activities that add value to the commodities are permitted within the Free Trade Areas, which are reserved for bonded storage, cargo consolidation and reconfiguration. The Free Trade Zones offer little benefit to U.S. exporters or investors.

4.6.14

Major Foreign Investors

There are approximately 22,000 foreign-owned companies in the UK, including at least 5,900 U.S. firms, 2,100 from Germany and 1,800 from France. Also, more than 1,000 Japanese-owned companies (including more than 160 R&D and nearly 300 manufacturing firms) are located in the UK.

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TRADE AND PROJECT FINANCING The Banking System

There are many British and foreign-owned banks and financial institutions offering competitive trade and project financing, and capital equipment lease finance. There are more U.S.-owned banks operating branches and subsidiaries in London than there are on Wall Street. In addition, many of the smaller U.S. banks have correspondent relationships with one or more of the major British banks, and those UK correspondents can provide a complete range of financial services for exporters and investors.

4.7.2

Foreign Exchange Control Risks

There are no exchange controls restricting the transfer of funds into or out of the UK.

4.7.3

General Availability of Financing

With such a well-developed banking sector, general finance is readily available. Payment for exports to the UK can be on open account, payment in advance, letter of credit, documentary drafts, or consignment sale. Letter of credit payment is normal until a trading pattern has been established. British buyers will typically ask for 60, 90 or 180 days credit, depending on the industry sector in which they trade. London is a major source of international project finance, and U.S. investors should be able to locate suitable banking and financial advisors that will assist in putting together suitable financing packages. The venture capital industry in the UK is particularly well developed. OPIC financing is not appropriate to the developed UK economy, but Export/Import Bank financing is available to support major capital equipment sales to the UK, particularly for oil and gas exploration machinery and wide-bodied civil aircraft. An MOU signed by ExIm Bank and its UK equivalent, ECGD, enables bilateral U.S./UK consortia, seeking to export to third countries, to seek trade finance guarantees from the country of the larger partner. This removes the need for each of the two parties to seek credit guarantees from their respective credit guarantee organizations.

4.8 4.8.1

TRAVEL ISSUES Local Business Practices

The British class structure based on property and land ownership has been eroded by taxation, education, and social developments over the last few decades. Liberalization of business and industry has rewarded enterprise, and a new generation of professionals schooled in management, marketing and finance techniques has increasingly taken charge. Ethnic minorities constitute about 8% of the population, and are active throughout the British economy. Some fundamental cultural differences between the U.S. and the UK remain. Variations in pace and style may be most noticeable, and sustained personal contact with potential business partners is expected. Prompt www.icongrouponline.com

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acknowledgment of correspondence, adherence to appointment schedules, and a greater formality in the conduct of business is the norm. British executives communicate more by letter and fax than by telephone, although the Internet is widely used, and email is becoming more common. The British are less likely to seek legal advice and guidance than their U.S. counterparts, although a litigation culture is developing along the lines of the U.S. model - i.e. no win, no fee cases are permitted.

4.8.2

Travel Advisory and Visas

Every U.S. citizen entering the UK must have a valid American passport. For non-tourist stays of more than three months, U.S. citizens require visas or entry permits. Visitors intending to remain in the UK should check in advance with the British Embassy or the nearest British Consulate. The Web site of the British Embassy in the United States is http://www.britainusa.com. Americans intending to seek employment in the UK should consult the British Embassy or a British Consulate in the U.S. to inquire about work permits. The Employment Service, an executive agency of the Department of Education and Employment, controls the employment of aliens in the UK. U.S. citizens wishing to obtain or extend a work permit should contact the Employment Service by phone on 011 44 1937 840224. Directors and employees of existing British subsidiaries of U.S. firms have encountered little difficulty in obtaining permission to enter and remain in the UK. Sending the technical personnel required to install and operate a plant or business generally poses no problem, though it is necessary to establish that British employees with the necessary qualifications are not available. The Government has issued new regulations easing the entry of experts in emerging technologies from overseas. HMG has adopted the EU regulations governing the admission of non-EU business visitors and economic migrants to the UK, which limit the ability of some foreign nationals, including American citizens, to reside in the UK. The categories of persons adversely affected, to a lesser or greater extent, by the new immigration rules are self-employed persons, retired persons of independent means, business investors, and short-term business visitors. Entry may be denied to those who intend to perform productive services unless a work permit has been issued in advance to their employer. The determination of who may be admitted as a consultant is decided on a case-by-case basis at ports of entry. The American Citizen Services (ACS) section at the American Embassy in London provides many services for U.S. citizens and business travelers, including passport issuance, absentee voter registration and notarial services. The Special Citizen Services (SCS) Unit supplies travel advisory information on visa requirements, health, safety, and security concerns in countries around the world. For information on these and other issues, Americans should consult the Embassy Web site at: www.usembassy.org.uk. American Citizens seeking services should enter via the Upper Grosvenor Street security gate of the Embassy building located on Grosvenor Square, London W1A 1AE and proceed to the Upper Brook Street entrance. The Passport Unit is open 8.30 to 11.00am Monday through Friday mornings, and 2.00 to 4.00pm Monday and Friday afternoons. The Embassy is closed for all American and British holidays. More information on consular programs and travel advice may be obtained from the U.S. Department of State Web site at http://travel.state.gov.

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Infrastructure for Conducting Business

Safety and Security The United Kingdom is stable and modern but shares with the rest of the world an increased threat of terrorist incidents of international origin, as well as violence related to the political situation in Northern Ireland (a part of the United Kingdom.) Americans are reminded to remain vigilant with regard to their personal security and to exercise caution. In recent months, seve ral arrests have been made in Great Britain in connection with various possible terrorist plots. The British Home Secretary has urged its citizens to be alert and vigilant by, for example, keeping an eye out for suspect packages or people acting suspiciously at subway and train stations and airports and reporting anything suspicious to the appropriate authorities by contacting the free confidential anti-terrorist telephone hotline on 0800 789 321. Americans traveling abroad should regularly monitor the Department of State’s Web site at http://travel.state.gov where any current Worldwide Cautions or Public Announcements can be found. From time to time during periods of heightened threat of terrorism, the U.K. government deems it necessary to raise levels of security activity. Heightened activity may include the use of military personnel in support of the police and law enforcement officers. The use of troops, who remain at all times under the control of the police, is part of longstanding contingency plans. Military personnel and equipment may be deployed at airports and other transportation links, or other public locations. For more information about U.K. public safety initiatives, consult the U.K. Civil Contingencies Secretariat Web site at http://www.ukresilience.gov.uk. Political demonstrations are well policed and, except at times in Northern Ireland, generally orderly. Although the political situation in Northern Ireland has dramatically improved since the signing of the Good Friday Agreement in 1998, incidents of terrorist violence have, nevertheless, occurred in the past few years. Early in 2001, two explosive devices were detonated in London suburbs, injuring eight people and damaging buildings. Within Northern Ireland, flash-points for sectarian confrontations still exist, but they are generally removed from areas where tourists congregate. Sporadic incidents of street violence often erupt during the summer marching season (April to August), with tensions heightened during the month of July, especially around the July 12th public holiday. As a result, American citizens traveling in Northern Ireland have experienced delays and disruption.

Crime While the UK benefits from generally low crime rates, the UK has recently experienced an increase in crime, including crimes involving violence. Incidents of pickpocketing, muggings, street thefts of watches, jewelry and mobile phones, and theft of unattended bags are increasingly common. In London, travelers should use only licensed “black taxi cabs” or car services recommended by their hotel or tour operator. Unlicensed taxis or private cars posing as taxis may offer low fares, but are often uninsured and may have unlicensed drivers. In some instances, travelers have been robbed while using these cars. Due to the circumstances described above, visitors should take steps to ensure the safety of their U.S. passports. Visitors in England, Scotland and Wales are not expected to produce identity documents for police authorities and thus may secure their passports in hotel safes or residences. In Northern Ireland, however, passports or other photographic I.D. should be carried at all times. The loss or theft of a U.S. passport should be reported immediately to the local police and the nearest U.S. embassy or consulate. Contact details for the Embassy in London and the Consulates General in Belfast and Edinburgh are available on the Embassy Web site at: http://usembassy.org.uk.

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Medical Facilities and Insurance While good medical services are widely available, free care under the National Health System is allowed only to UK residents. Tourists and short-term visitors can expect charges roughly comparable to those assessed in the U.S. U.S. medical insurance is not always valid outside the United States. U.S. Medicare and Medicaid programs do not provide payment for medical services outside the United States. Doctors and hospitals often ask non-residents to pay immediately for medical services, and uninsured travelers who require medical care may face extreme difficulties, unless they have the means to pay. Check with your own insurance company to confirm whether your policy applies overseas, including provisions for medical evacuation, and for adequacy of coverage. Generally, travel insurance cannot be purchased once you have departed the United States. Serious medical problems requiring hospitalization and/or medical evacuation to the United States can cost tens of thousands of dollars. Ascertain whether payment will be made to the overseas hospital or doctor or whether you will be reimbursed later for expenses you incur. Some insurance policies also include coverage for psychiatric treatment and for disposition of remains in the event of death.

Traffic Safety and Road Conditions While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning the UK is provided for general reference only, and may not be totally accurate in a particular location or circumstance. The safety of public transportation, urban and rural road conditions and the availability of roadside assistance are all excellent compared with most foreign countries, although they are not generally up to the standard of some other European countries. UK penalties for drunk driving are stiff and often result in prison sentences. Visitors uncomfortable with or intimidated by the prospect of driving on the left-hand side of the road may wish to avail themselves of extensive bus, rail and air transport networks, though these can be expensive modes of travel. If you plan to drive while in the UK, you may wish to obtain a copy of The Highway Code, available in the UK. Rail transport in the UK is extensive, but poor track conditions have contributed to train derailments resulting in some fatalities in recent years. Repairs are underway and the overall safety record is otherwise good. Many U.S. citizens are injured every year in pedestrian accidents in the UK, forgetting that traffic moves in the opposite direction than in the United States. Care should be taken when crossing streets. The phone number for police/fire/ambulance emergency services - the equivalent of “911” in the U.S - is 999 in the UK.

Aviation Safety and Oversight The U.S. Federal Aviation Administration (FAA) has assessed the Government of the UK’s Civil Aviation Authority as Category One - in compliance with international aviation standards for oversight of the UK’s air carrier operations. Air travelers to and from the UK should be aware that penalties against alcohol-related and other in-flight crimes (“air rage”) are stiff and are being enforced with prison sentences.

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Accommodation The UK is well served with hotels ranging from the very best to more modest establishments. In London, demand for rooms can be high during peak vacation times.

Food Food is generally safe to eat in restaurants anywhere in the UK.

4.8.4

Country Data

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Population: The UK population is approximately 59 million people.

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Population Growth Rate: 0.3%. The population is forecast to reach 63.6 million people in 2021.

•

Religion: The established religion in the UK is the Church of England (Anglican). Other major religions in the UK include: Catholicism, Hinduism, Islam, Judaism, Methodism, Presbyterianism, and Sikhism.

•

Government: The UK is a constitutional monarchy. The Head of State is Queen Elizabeth II. The head of government is Prime Minister Anthony (Tony) Blair. The monarch is hereditary. The Prime Minister is the leader of the majority party in the House of Commons (if there is no majority party, a prime minister would have a majority coalition or at least a coalition that was not rejected by the majority). The legislative branch consists of two chambers: the elected House of Commons (659 members) and the unelected House of Lords (676 members as of May 2003. The number varies as peers are created). In addition to the UK government in London, there are an elected Scottish Parliament in Edinburgh, an elected Welsh Assembly in Cardiff, and an elected Northern Ireland Assembly in Belfast.

•

Language: The official language is English. A substantial minority in Wales speaks Welsh, and a minority in Scotland speaks Gaelic. In addition, there are many large communities in the UK whose first language is not English. Numerous languages are spoken in London, including thirty-three for which there are resident populations of 10,000 or more.

•

Work Week: Banking hours are generally 9:30 a.m. to 4.30 p.m., Monday through Friday, except on Thursdays when banks tend to stay open later. Offices are open from 9 a.m. until 5 p.m., Monday through Friday. Stores are generally open from 9 a.m. to 5:30 p.m., Monday through Saturday, and Sunday 10 a.m. to 4 p.m. At traditional vacation times, many British executives are unavailable except by advance appointment. England, Scotland, Wales, and Northern Ireland are all in the same time zone, five hours ahead of U.S. Eastern Standard Time.

4.9 4.9.1

KEY CONTACTS U.S. Embassy Trade-Related Contacts

American Embassy 24/31 Grosvenor Square London, WIA 1AE England Tel: 011 44 20 7499 9000 Fax: 011 44 20 7491 4022 http://www.usembassy.org.uk

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Address for U.S. mail: American Embassy (London) PSC 801 Box 33 (Commercial Service) Box 27 (Economic Section) Box 48 (Agriculture) Box 54 (Defense) FPO AE 09498 U.S. Commercial Service Tel: 011 44 20 7408 8019 Fax: 011 44 20 7408 8020 E-mail: [email protected] http://www.usexports.co.uk Commercial Representative in Northern Ireland U.S. Consulate General Queen’s House 14 Queen Street Belfast BT1 6EQ Tel: 011 44 28 9032 8239 Fax: 011 44 28 9024 8482 Economic Section Tel: 011 44 20 7408 8011 Fax: 011 44 20 7409 1637 Foreign Agricultural Service Tel: 011 44 20 7894 0464 and 0040 Fax: 011 44 20 7894 0031 E-mail: [email protected] http://www.usembassy.org.uk/fas Office of Defense Cooperation (ODC) Tel: 011 44 20 7894 0737 Fax: 011 44 20 7514 4634 http://www.usembassy.org.uk/odc/index.html The European Bank for Reconstruction & Development U.S. Commercial Service Tel: 011 44 20 7588 4027 and 4028 Fax: 011 44 20 7588 4026

4.9.2

Bilateral Business Councils

BritishAmerican Business Inc. 75 Brook Street London W1Y 2EB, UK Tel: 011 44 20 7493 0381 Fax: 011 44 20 7493 2394 www.babinc.org

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For information about the other British American Business Council chapters in the U.K. and the U.S., please visit www.babc.org.

4.9.3

UK Trade and Industry Associations

British Chambers of Commerce 1St Floor 65 Petty France St James Park London SW1H 9EU Tel: 011 44 20 7654 5800 Fax: 011 44 20 7654 5819 www.britishchambers.org.uk International Chamber of Commerce 12 Grosvenor Place London SW1X 7HH Tel: 011 44 20 7823 2811 Fax: 011 44 20 7235 5447 www.iccuk.net Confederation of British Industry (CBI) Centre Point 103 New Oxford Street London WC1A 1DU Tel: 011 44 20 7379 7400 Fax: 011 44 20 7240 1578 www.cbi.org.uk British Standards Institution 389 Chiswick High Road London W4 4AL Tel: 011 44 20 8996 9000 Fax: 011 44 20 8996 7001 www.bsi-global.com Information on UK standards is available from the American National Standards Institute, Tel: (212) 642 4900, Fax: (212) 302 1286 and from the National Institute for Standards and Technology (Gaithersburg, MD 20234), Tel: (301) 975 3058. British Bankers’ Association Pinners Hall 105-108 Old Broad Street London EC2N 1EZ Tel: 011 44 20 7216 8800 Fax: 011 44 20 7216 8811 www.bba.org.uk Direct Marketing Association DMA House 70 Margaret Street

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London W1W 8SS Tel: 011 44 20 7291 3300 Fax: 011 44 20 7323 4165 www.dma.org.uk Advertising Standards Association 2 Torrington Place London WC1E 7HW Tel: 011 44 20 7580 5555 Fax: 011 44 20 7631 3051 www.asa.org.uk

4.9.4

UK Government Offices

UK government Web sites are readily identified and accessed via the official portal: www.ukonline.gov.uk Trade Partners UK Department of Trade & Industry Kingsgate House 66-74 Victoria Street London SW1E 6SN Tel: 011 44 20 7215 5000 Fax: 011 44 20 7215 8000 www.tradepartners.gov.uk Invest.UK Department of Trade and Industry 10-18 Victoria Street London SW1H 0NN Tel: 011 44 20 7215 2501 Fax: 011 44 20 7215 8451 www.invest.uk.com Invest.UK USA Atlanta Tel: (404) 524 8823 Boston Tel: (617) 248 9555 Chicago Tel: (312) 346 1810 Cleveland Tel: (216) 621 7674 Houston Tel: (713) 659 6275 Los Angeles Tel: (310) 477 3322 New York Tel: (212) 745 0495 Seattle Tel: (206) 622 9255 Washington D.C. Tel: (202) 462 1340 British Embassy 3100 Massachusetts Avenue Washington, D.C. 20008 Tel: (202) 462 1340 Fax: (202) 898 4255 Department of Trade and Industry

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1 Victoria Street London SW1H 0ET Tel: 011 44 20 7215 5000 Fax: 011 44 20 7222 0613 www.dti.gov.uk (General Inquiries) Consumer Affairs Division 1A Department of Trade and Industry 10-18 Victoria Street London SW1H 0NN Tel: 011 44 20 7215 0332 Fax: 011 44 20 7215 0315 (Packaging and Labeling Requirements) HM Board of Customs and Excise Tel: 011 44 20 7620 1313 Fax: 011 44 20 7865 4944 (Customs and Rules/Regulations for the UK) HM Stationery Office Bookshop 49 Holborn London WC1V 6HB Tel: 011 44 20 7873 0011 (UK equivalent of the U.S. Government Printing Office) U.S. Representative: Kraus-Thompson Publishers Tel: (914) 762 2200 Central Statistical Office Great George Street London SW1P 3AQ Tel: 011 44 20 7270 3000 www.ons.gov.uk (Statistical Information) Home Office 50 Queen Anne’s Gate London SW1H 9AT Tel: 011 44 20 7273 4000 Fax: 011 44 20 7273 3965 (Work Permits, Consular Matters) Department of the Environment, Food & Rural Affairs Nobel House 17 Smith Square London SW1P 3JR Tel: 011 44 20 7238 3000 (Environmental Regulations) Department of Health Richmond House 79 Whitehall London SW1A 2NL www.icongrouponline.com

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Tel: 011 44 20 7210 3000 (Medicines Licensing and Regulation) Patent and Trademark Office Concept House Cardiff Road Newport NP9 1RH Tel: 011 44 1645 500505 (UK Patents) Bank of England Threadneedle Street London EC2V 8DQ Tel: 011 44 20 7601 4444 (Central Bank) The House of Commons Houses of Parliament London SW1A 0AA Tel: 011 44 20 7219 3000

4.9.5

UK Commercial Banks

Barclays Bank PLC 54 Lombard Street London EC3P 3AH Tel: 011 44 20 7626 1567 Fax: 011 44 20 7488 0020 HSBC Bank PLC 10 Lower Thames Street London EC3R 6AE Tel: 011 44 20 7260 8789 Fax: 011 44 20 7620 4829 Lloyds TSB Bank PLC 71 Lombard Street London EC3P 3BS Tel: 011 44 20 7626 1500 Fax: 011 44 20 7523 3444 National Westminster Bank PLC 41 Lothbury London EC2P 2BP Tel: 011 44 20 7726 1000 Fax: 011 44 20 7726 1035

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Multilateral Development Banks

European Bank for Reconstruction and Development One Exchange Square London EC2A 2JN Tel: 011 44 20 7338 6000 Fax: 011 44 20 7338 6100

4.9.7

Washington D.C.-Based U.S. Contacts

U.S. Department of Commerce UK Desk Officer Office of European Affairs International Trade Administration Room 3515 Washington, DC 20230 Tel: 202 482 3748 Fax: 202 482 2897 Trade Information Center International Trade Administration U.S. Department of Commerce Washington, DC 20230 Tel: 1-800-USA-TRADE Fax: 202 482 4473 Email: [email protected] www.trade.gov/td/tic U.S. Department of Agriculture Foreign Agricultural Service Information and Assistance Tel. (202) 720-2791 Export-Import Bank of the U.S. Washington DC Office 811 Vermont Ave., NW Washington, DC 20571 Tel: 202 565 3946 Fax: 202 565 3380 www.exim.gov

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5 5.1

DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS DISCLAIMERS & SAFE HARBOR

Summary Disclaimer. This publication ("Report") does not constitute legal, valuation, tax, or financial consulting advice. Nor is it a statement on the performance, management capability or future potential (good or bad) of the company(ies), industry(ies), product(s), region(s), city(ies) or country(ies) discussed. It is offered as an information service to clients, associates, and academicians. Those interested in specific guidance for legal, strategic, and/or financial or accounting matters should seek competent professional assistance from their own advisors. Information was furnished to Icon Group International, Inc. ("Icon Group"), and its subsidiaries, by its internal researchers and/or extracted from public filings, or sources available within the public domain, including other information providers (e.g. EDGAR filings, national organizations and international organizations). Icon Group does not promise or warrant that we will obtain information from any particular independent source. Published regularly by Icon Group, this and similar reports provide analysis on cities, countries, industries, and/or foreign and domestic companies which may or may not be publicly traded. Icon Group reports are used by various companies and persons including consulting firms, investment officers, pension fund managers, registered representatives, and other financial service professionals. Any commentary, observations or discussion by Icon Group about a country, city, region, industry or company does not constitute a recommendation to buy or sell company shares or make investment decisions. Further, the financial condition or outlook for each industry, city, country, or company may change after the date of the publication, and Icon Group does not warrant, promise or represent that it will provide report users with notice of that change, nor will Icon Group promise updates on the information presented. Safe Harbor for Forward-Looking Statements. Icon Group reports, including the present report, make numerous forward-looking statements which should be treated as such. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995, and similar local laws. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's, city's, country's or industry's actual results or outlook in future periods to differ materially from those forecasted. These risks and uncertainties include, among other things, product price volatility, exchange rate volatility, regulation volatility, product demand volatility, data inaccuracies, computer- or software-generated calculation inaccuracies, market competition, changes in management style, changes in corporate strategy, and risks inherent in international and corporate operations. Forward-looking statements can be identified in statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate,'' "estimate," "expect,'' "project,'' "intend,'' "plan,'' "feel", "think", "hear," "guess," "forecast," "believe," and other words and terms of similar meaning in connection with any discussion of future operating, economic or financial performance. This equally applies to all statements relating to an industry, city, country, region, economic variable, or company financial situation. Icon Group recommends that the reader follow the advice of Nancy M. Smith, Director of SEC's Office of Investor Education and Assistance, who has been quoted to say, "Never, ever, make an investment based solely on what you read in an online newsletter or Internet bulletin board, especially if the investment involves a small, thinly-traded company that isn't well known … Assume that the information about these companies is not trustworthy unless you can prove otherwise through your own independent research." Similar recommendations apply to decisions relating to industry studies, product category studies, corporate strategies discussions and country evaluations. In the case of Icon Group reports, many factors can affect the actual outcome of the period discussed, including exchange rate volatility, changes in accounting standards, the lack of oversight or comparability in accounting standards, changes in economic conditions, changes in competition, changes in the global economy, changes in source data quality, changes in reported data quality, changes in methodology and similar factors. Information Accuracy. Although the statements in this report are derived from or based upon various information sources and/or econometric models that Icon Group believes to be reliable, we do not guarantee their accuracy, reliability, quality, and any such information, or resulting analyses, may be incomplete, rounded, inaccurate or condensed. All estimates included in this report are subject to change without notice. This report is for informational purposes only and is not intended as a recommendation to invest in a city, country, industry or product area, or an offer or solicitation with respect to the purchase or sale of a security, stock, or financial instrument. This report does not take into account the investment

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objectives, financial situation or particular needs of any particular person or legal entity. With respect to any specific company, city, country, region, or industry that might be discussed in this report, investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the information in this report. Investing in either U.S. or non-U.S. securities or markets entails inherent risks. In addition, exchange rate movements may have an effect on the reliability of the estimates provided in this report. Icon Group is not a registered Investment Adviser or a Broker/Dealer.

5.2

ICON GROUP INTERNATIONAL, INC. USER AGREEMENT PROVISIONS

Ownership. User agrees that Icon Group International, Inc. ("Icon Group") and its subsidiaries retain all rights, title and interests, including copyright and other proprietary rights, in this report and all material, including but not limited to text, images, and other multimedia data, provided or made available as part of this report ("Report"). Restrictions on Use. User agrees that it will not copy nor license, sell, transfer, make available or otherwise distribute the Report to any entity or person, except that User may (a) make available to its employees electronic copies of Report, (b) allow its employees to store, manipulate, and reformat Report, and (c) allow its employees to make paper copies of Report, provided that such electronic and paper copies are used solely internally and are not distributed to any third parties. In all cases the User agrees to fully inform and distribute to other internal users all discussions covering the methodology of this Report and the disclaimers and caveats associated with this Report. User shall use its best efforts to stop any unauthorized copying or distribution immediately after such unauthorized use becomes known. The provisions of this paragraph are for the benefit of Icon Group and its information resellers, each of which shall have the right to enforce its rights hereunder directly and on its own behalf. No Warranty. The Report is provided on an "AS IS" basis. ICON GROUP DISCLAIMS ANY AND ALL WARRANTIES, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, RELATING TO THIS AGREEMENT, PERFORMANCE UNDER THIS AGREEMENT, THE REPORT. Icon Group makes no warranties regarding the completeness, accuracy or availability of the Report. Limitation of Liability. In no event shall Icon Group, its employees or its agent, resellers and distributors be liable to User or any other person or entity for any direct, indirect, special, exemplary, punitive, or consequential damages, including lost profits, based on breach of warranty, contract, negligence, strict liability or otherwise, arising from the use of the report or under this Agreement or any performance under this Agreement, whether or not they or it had any knowledge, actual or constructive, that such damages might be incurred. Indemnification. User shall indemnify and hold harmless Icon Group and its resellers, distributors and information providers against any claim, damages, loss, liability or expense arising out of User's use of the Report in any way contrary to this Agreement. © Icon Group International, Inc., 2007. All rights reserved. Any unauthorized use, duplication or disclosure is prohibited by law and will result in prosecution. Text, graphics, and HTML or other computer code are protected by U.S. and International Copyright Laws, and may not be copied, reprinted, published, translated, hosted, or otherwise distributed by any means without explicit permission. Permission is granted to quote small portions of this report with proper attribution. Media quotations with source attributions are encouraged. Reporters requesting additional information or editorial comments should contact Icon Group via email at [email protected]. Sources: This report was prepared from a variety of sources including excerpts from documents and official reports or databases published by the World Bank, the U.S. Department of Commerce, the U.S. State Department, various national agencies, the International Monetary Fund, the Central Intelligence Agency, and Icon Group International, Inc.

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END

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