IRDG Seminar on R&D T ax Credits The Audit Process Brian Walsh - PowerPoint PPT Presentation

IRDG Seminar on R&D T ax Credits The Audit Process Brian Walsh Quality & Technical Manager – FMC Ireland

Contents FMC Corporation & FMC Ireland Overview R&D Projects – types and details Technical Assessment & Financial Audit Timeline Audit Process Key Learning's 2

Safety 9/4/2014 3

FMC Corporation – Number 1 or 2 in most markets FMC Agricultural Solutions FMC Health and Nutrition FMC Minerals $2.2B $0.8B $1.0B Product Lines Product Lines Product Lines Microcrystalline Herbicides Fungicides Alginates Soda ash Lithium cellulose Insecticides Carrageenan Pectin Omega 3 Natural Colours 4

Our Locations – FMC Health and Nutrition Burton-On-Trent, Haugesund, Rockland, ME Cork, Ireland Iceland Girvan, Scotland Sandvika, Norway Moscow, Russia UK Norway Manufacturing Manufacturing Seaweed Drying Blending Laboratories Sales & Laboratory Sales, Laboratories & Manufacturing Marketing Philadelphia, PA Brussels, Belgium Div. HQ. Sales, Laboratories & Sales & Marketing Marketing Ewing, NJ Pace del Mela, Italy Laboratories Manufacturing Newark, DE Istanbul, Turkey Manufacturing Sales & Laboratories Mexico City, Shanghai, China Mexico Sales & Laboratories Sales, Laboratories Campinas, Brazil Cebu, Philippines Sales, Laboratories Manufacturing, Blending Puerto Montt, Guangzhou, Kings Island, Jakarta, Santiago, Chile Bangalore, India Singapore Manila, Philippines Chile China Tasmania Indonesia Manufacturing, Sales & Laboratory Sales, Laboratories Customer Service Blending & Laboratory Manufacturing Blending & Laboratory Manufacturing Sales 5

Ireland 6

FMC Cork One of the longest established industries in Little Island Built in 1978 with 5,500T 2010 expansion increased Highly automated process Manufacturing capacity to serve capacity to 30,000T – with 82 full time Regional Customer Service European market provides product to employees Regional finance worldwide market 7

FMC Cork’s Product Portfolio Product Uses Avicel PH Grades Colloidal Avicel Grades AcDiSol Suspension aid in Binder and compression Disintegration aid in aid for pharmaceutical pharmaceutical liquids, Pharmaceutical Tablets tablets creams & food products 8

The Avicel process…… Rotary Vacuum Filter Hydrolysis Reaction Dicing Acid Water Pulp Re-slurry Quench Tank & pH adjust Spray Warehouse Palletization Packaging Powder Dryer Storage

R&D Projects 10

R&D But we don’t do any R&D activity….. Activity must be 1. Systematic, investigative or experimental …… yes, we carry out a lot of activities like this 2. In a field of science or technology……. yes, our activities cover the areas of chemical, mechanical & material engineering 3. Basic research - no ; applied research - probably not ; or experimental development- yes 4. Seek to achieve scientific or technological advancement……. yes, some projects seek advances in this area…..may not necessarily work but at outset seek to 5. Involve the resolution of scientific or technological uncertainty……. yes, projects have varying degrees of uncertainty at outset So in fact we do carry out R&D activity……mainly in the area of experimental development 11

R&D Projects – 2009 to 2011 Title Description Status Low Cost Fluid Bed Investigate the capability of using a modified fluid bed drying Dryer Novacel Grade and grinder process to produce a binder grade microcrystalline Complete cellulose which met appropriate regulatory requirements Product Integration of a new spray dryer and feed system utilizing Addition of 3 rd Spray upgraded technology to allow production of higher volumes of pharmaceutical and food grade Colloidal Avicel and higher Ongoing Dryer volumes of Avicel PH product in Ireland at previously undemonstrated rates Design, install and commission a filter to allow higher volumes of pharmaceutical grade Avicel. Project strove to integrate the Filter B enlarged filtration area with existing filtration components. The Ongoing filter is the first of it’s kind in the world by virtue of the nature of the design, size and materials used. 12

An example - Addition of 3 rd Spray Dryer Integration of a new spray dryer and feed system utilizing upgraded technology to allow production of higher volumes of pharmaceutical and food grade Colloidal Avicel and higher volumes of Avicel PH product in Ireland at previously undemonstrated Colloidal Avicel rates Field of Science & • Chemical Engineering Technology • Science & technology of Food Production Methods Used For details contact brian.walsh@fmc.com Scientific & Technological For details contact brian.walsh@fmc.com Objectives Scientific & Technological For details contact brian.walsh@fmc.com Advancement 13

An example - Addition of 3 rd Spray Dryer Integration of a new spray dryer and feed system utilizing upgraded technology to allow production of higher volumes of pharmaceutical and food grade Colloidal Avicel and higher volumes of Avicel PH product in Ireland at previously undemonstrated Colloidal Avicel rates Scientific & Technological For details contact brian.walsh@fmc.com Advancement (continued) Scientific & Technological For details contact brian.walsh@fmc.com Uncertainty 14

Timeline 15

Technical Assessment & Financial Audit Timeline Q4 2008 3 rd Spray dryer May 2010 Commissioning Dryer project kicked off & initial trials of 2014 3 rd spray dryer and dryer Filter B project ongoing Q1 2009 Filter B Q1 2011 Filter Filter project kicked off B installed Jan 2009 FBD product 2009 – 2010 Q2 2010 Project R&D Tax Credit claim submitted end of FBD project kicked off Various trials stopped 2010/2011/2012 Financial & Technical Audit Process Q4 11 FMC requested Q3 13 Technical Q4 13 Financial audit & Q1 14 Verbal indication Q2 14 Follow up visit Now Revenue formal revenue for audit expert confirmed Technical Assessment that Technical Report is by Revenue – happy response pending OK with financials 16

Audit Process 17

Technical & Financial Audit Process • Detailed technical report prepared before claim submission on each project – prepared by FMC in conjunction with KPMG • Reports submitted to Revenue • Claim submitted at each year by KPMG in advance of audit end – by KPMG on FMC’s behalf • File prepared on each project in • Detailed back up information & advance of audit containing all report prepared and retained relevant technical information for audit Financial Technical • Presentation given at outset of (2 days) (2 days) • Detailed information reviewed Technical Assessment & by two Revenue employees Financial Audit during Q4 2013 audit • Intro to FMC • Overview of process • Follow up Revenue visit to • Plant tour check some records relevant to above information – 1 day • Overview of each project • Break • Detailed discussions on each project • Expert studied files • Q&A 18

Key Learning’s 19

Learning’s Eligible work think critically about what you do – it might be R&D – Process was managed retrospectively initially – now have a simple process in place to better manage R&D in a structure way – – R&D engineer, R&D project procedure structure your process so as to meet the requirements – e.g. plans, reports, cost – records, time records, etc. Need to be able to demonstrate R&D activity on an ongoing basis over the life of – the project Success vs. Failure your project need not necessarily be successful – organizational support & involvement – finance, leader – 20

Learning’s Value it’s worth the effort – demonstrating the value received positively at HQ • additional headcount • influenced HQ support for additional investment & spending in Cork • Going Forward New possible R&D projects underway – 21

Thank you The Right Chemistry