Budget 1999: Case Study: The Hi-Tech Company - We'll invest more, says risk-taker at cutting edge
The Budget and Business
Wednesday 10 March 1999
Based in north London, the family-run company is one of the small high- technology firms that yesterday's Budget is seeking to support.
Unimatic supplies manufacturers with engineering products. Its products are used by a wide-range of companies in the automotive, nuclear, aerospace, semi- conductor and electronics industries - for example in the robots that help to assemble cars.
Unimatic is also involved in a 50:50 joint venture with University College London to develop and market a machine that polishes high-tech optical lenses. They plan to seek venture capital backing to help them to develop and market the product.
Mr Stevens' firm employs 30 people and most of its sales are in the UK and Ireland. The company turns over about pounds 4m a year, with profits of around pounds 50,000. As such it will benefit from yesterday's decision to introduce a starting corporation tax rate of 10 per cent for firms with profits of less than pounds 50,000. Mr Stevens welcomed the decision.
"Last year we paid 21p [in the pound] and the new rate is a substantial reduction that will enable us to keep more money in the business to fund future growth," he said. He was also pleased with Gordon Brown's decision to earmark pounds 325m to renew an allowance on the first 40 per cent write- off of capital expenditure.
"Given the nature of our business, we are very reliant on manufacturers' capital expenditure. The renewal of the 40 per cent allowance is a relief although I would have liked 100 per cent. It will also have a beneficial impact on our capital expenditure. Last year we spent pounds 150,000 and the decision makes it more likely that we will invest more this year," he said.
The pounds 150m tax credit for research and development expenditure will help Mr Stevens' venture with UCL. "The R&D expenditure to launch the lens- polishing machine has been phenomenal. We have spent pounds 300,000 in the first year. It is a big-risk, high-cost investment and anything that encourages R&D is welcome," he said.
Mr Stevens' optical start-up could also be boosted by the pounds 20m grant to high-tech venture capital funds.
Mr Stevens commented that the enterprise management scheme, which allows tax-free equity of up to pounds 100,000, will help him to keep key staff.
"It will be of great value to us," he said. "Our companies are entrepreneurial and we need to make sure that we keep our valuable people to maintain our growth pattern."
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