PAYING FOR CENTRAL RESEARCH
1. In the past the research carried out by B.A.T. H. Q. ,
has been paid for by B.A.T. in the U.K. The cost
has been partly offset by contributions from ASSOCiated
Companies as part of advisory fees, or in the case of
B&W under a "Cost and Risk Sharing Agreement". In the
current year this latter Agreement has meant that B&W
are contributing less than Malaya, Switzerland or
Hong Kong for example.
2. It is now proposed that all R&D done by operating
companies should properly be regarded as done for the
Company and paid for by the Company concerned. The
product from such R&D therefore would become the property
of the operating company for exploitation anywhere.
3. Member companies however would agree certain ground
rules for the exploitation of such research product
and for the exchange of information and avoidance.
of unwanted duplication (See Appendix I).
4. The R&D directed from the Centre calls for special
consideration. Of the total budget of about
JE4 million some L2. 5 million can be identified as
research in support of general Group strategy (see
Appendix II) while the remainder can be related
to operating company objectives or is supportive
of other Millbank services (See Appendix III).
5. It is sugges,-ted that the identified Central Group
research should be financed by a levy on sales by all
Companies. This levy would amount to 0.15% Net
Turnover.
6. It is believed this method could have advantages
because it would have acceptance by Authorities to
treating this charge as a deduction for tax in the
paying country, there would be more chance of
obtaining Exchange Control approval to remit and
adjustment for inflation would be automatic.
7. It is essential to get proper financing of our
longer range research. It may be that some
structural change (e.g. the creation of a Group
research company) might be useful in order to
facilitate further the involvement of the major
companies if this were desired. However it is
hoped to get agreement in principle now with the
major companies and commitment both to the aims of
central research and the contributions involved
(See Appendix IV).
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BATCo document for Province of British Columbia 19 April 1999