Ireland Update Q4 2014

Why Ireland, companies are attracted to Ireland for a variety of reasonsTalent Our predominantly young work force is capable, adaptable, mobile and committed to achievement. 50% of the population is under 35 years of age.

Track Record Over 1,150 multinational companies have already chosen Ireland as their strategic European base.

Taxation Ireland’s corporate tax rate is 12.5%Budget 2015 increased measures to attract FDI which include;- a new “best in class” Knowledge Box to be legislated for- the R&D tax credit system has been broadened and made more attractive to companies,- an improved Special Assignee Relief Programme (SARP) will continue to attract key decision makers into Ireland and- reduction in the top level of income tax.

Technology Significant State Investment in R&D helps ensure Ireland stays at the forefront of technological innovation.

Education Ireland leads in the skills race with a higher percentage of 3rd Level Graduates than UK, US and OECD averages. An EIU Benchmarking Competitiveness Report ranks Dublin as the best city in the world for human capital.

European Market Companies located in Ireland benefit from barrier-free access to over 500 million consumers in Europe, one of the largest markets in the world (c22% of global GDP).

English Speaking English is the universal spoken language. The country is a highly developed multi-cultural community with access to a highly skilled workforce with multilingual skills.

Ireland, named best country in the world for business by Forbes

- Irish economy now growing at its fastest rate in 7 years

- Irish consumer sentiment returned to levels not seen

since January 2007

- Export sector continues to expand

- The labour market continues to improve

- Record year for FDI

- Public finances are ahead of target

- Hugely positive reaction to Irelands on-going

recovery, with bond yields at record low

- Ireland’s competitiveness has improved

dramatically since 2008

‘Our choice of Ireland reflects the calibre of the

workforce and the country’s culture of innovation,

and we look forward to an ongoing partnership with

the Irish Government, IDA Ireland and local

communities in the years to come.’

Leonard Bell M.D., CEO of Alexion Pharmaceuticals

‘Predictive Analytics is one of the most exciting

next-generation technologies in our industry.

SAP has placed Ireland at the heart of driving

global innovation and development in this area,

and I know our record of engineering excellence

and innovation will make the new mission a success.’

Dr Tony O’Donnell, Head of Business Intelligence

R&D SAP operations in Ireland

Ireland is one of the best places in the world to do business.

The scale & strength of industry in Ireland

is illustrated by the fact that:

- 9 of the top 10 global software companies

- 9 of the top 10 global pharmaceutical corporations

- 10 of the top 10 “born on the internet” companies

- More than 50% of the world’s leading financial

services firms

- 15 of the top 20 global medical technology

companies are all based here

- Ireland, best country to invest in Western Europe,

Siteselection 2014

- The IBM 2013 Global Location Trends Report which

ranks Ireland 1st in the world for inward

investment by quality and value and 1st in Europe

for the number of investment jobs per capita

- The IMD World Competitiveness Yearbook 2014

ranks Ireland 1st in the world for availability of

skilled labour, flexibility and adaptability of

workforce. The same report also ranks Ireland

1st in the world for productivity and efficiency

of companies and large corporations

Bond markets positive on Ireland’s on-going recovery

Tax revenue +7.4% in the first 3 quarters On track to beat fiscal targets for a 4th year in 2014, deficit forecast at -3.7% Gross debt peaked at 123.3% of GDP in 2013 and is set to fall to 110.5% of GDP this year Investors responding positively:Irish bond yields are now under 2% compared to a peak of 14% in July 2011

Source: Department of Finance Budget 2015

Irish Deficit (% of GDP)

2013 2014 2015 2016 2017 2018

Source: CSO National Accounts, 2014-2016 forecast from Department of Finance (Budget 2015)

Irish Real GDP Growth

5%

4%

3%

2%

1%

0%

-1%

0%

-1%

-2%

-3%

-4%

-5%

-6%2012 2013 2014* 2015* 2016*

Strong GDP growth in prospect for 2014/2015

Irish economy to grow 4.7% this year Growth broad based with both domestic and external demand up

Retail sales up 7% for Jan-Aug 2014

FDI led exports sector plays an important role

High value exporting sector supported the economy through restructuring

Exports were up an impressive 6.4% in Q2, providing strong support to the economy

Employment increased for the 7th consecutive quarter in Q2 2014 Over 70,000 additional people at work since Q3 2012 trough, 85% in full time employment Unemployment falling for 2 years, down to 11.1% from peak of 15% Job growth is feeding through to tax, with income tax up 8.8% for Jan–Sept 2014 compared to same period in 2013

Source: CSO, 2012

Composition of Exports 2012

30%20%14%

9%6%6%5%

0% 10% 20% 30% 40%

PHARMA & CHEMICALSCOMPUTER SERVICESBUSINESS SERVICESFINANCIAL SERVICESMEDICAL DEVICESMACHINERY & TRANSPORTFOOD & BEVERAGE

* Miscellaneous sector account for the final 10% of exports

Labour market showing on-going improvement

Source: CSO, Q2 2014

Number Employed (000’s)

Full time Part time (right hand axis)

460

455

450

445

440

435

430

425

420

415

1,460

1,450

1,440

1,430

1,420

1,410

1,400

1,390

1,380

1,370

1,360

1,350Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 Q1-14 Q3-14

Significant improvement in cost competitiveness

Irelands competitiveness has improved dramatically since 2008

The improvement has been driven by strong productivity growth and weak prices

Relative business costs have come down across the board, with labour costs, services and property costs all falling

Reflected in international rankings: +9 places in the IMD World Competitiveness yearbook since 2011

Labour costs competitive

Since 2009 Irish labour costs have remained stable compared to an increase of 8% in the EU (see chart)

Irish hourly labour costs fell below the Euro Area in 2011 and have remained so to 2013

Irish labour costs are 11th lowest in the EU, below countries like Luxembourg, Germany, Belgium, and the Netherlands.

Source: Eurostat 2014

Labour Costs FallingIrish hourly labour costs fell below the Euro area in 2011 and has remained below in 2013.

0%0%2%4%7%8%8%9%9%9%

10%11%11%12%12%13%16%32%36%

50 60 70 80 90 1000 10 20 30 40

CYPRUSIRELANDCROATIASPAINHUNGARYEU 28DENMARKFRANCEITALYNETHERLANDSGERMANYLUXEMBOURGBELGIUMUKCZECH REPAUSTRIAPOLANDBULGARIASWEDEN

CHANGE IN LABOUR COSTS 2009-2013 (%)

Cost of living

Source: Eurostat 2014

Irish and EU 27 inflation (annual rate of change %).Cost of Living Improving Versus the EU27

4.0

3.0

2.0

1.0

0.0

-1.0

-2.02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015*

* Forecast EU Commission Spring Forecast

EU27

Ireland Eurozone

Relative cost of living continues to improve

Ireland’s cost of living continues to improve vs. the EU

Inflation below the EU average since 2008, differential to persist out to 2015

On-going relative competitiveness improvements

One of the most productive economies in EU

Labour costs do not tell the whole story, productivity is also key

Irish productivity is c. 40 points above the EU27 baseline

Source: AMECO Database 2013

One of the Most Productive Economies in the WorldIrish productivity is almost c40 points above the EU27 baseline.

163.9156.7135.5127.3

116114.9114.5113.4111.2

111108.8108.8108.6107.1

10799.492.791.891.780.176.774.674.371.970.6

70

100 120 140 160 180 2000 20 40 60 80

LUXEMBOURGNORWAYIRELANDBELGIUMFRANCESWITZERLANDSWEDENAUSTRIASPAINDENMARKNETHERLANDSITALYEURO AREAFINLANDGERMANYUKGREECECYPRUSMALTACROATIAPORTUGALLITHUANIAPOLANDCZECH REPHUNGARYESTONIA

LABOUR PRODUCTIVITY PER PERSON EMPLOYED (COMPARED TO EU 27). INDEX EU 27 = 100

Commercial property

Value remains in the Irish office market, with prices below peak levels, and competitive internationally Dublin occupancy costs are competitive internationally at €561m2 pa Moving outside of Dublin offers improved value:Cork €315m2 paLimerick €261m2 paGalway €261m2 pa

Tender prices are back to prices last seenin the late 90’s

Source: CBRE, **Society of Chartered Surveyors Ireland, H1 2014

Source: CBRE, Q2 2014

DUBLIN (€/M2)

Office occupancy costs

700

600

500

400

300

2002008 2009 2010 2011 2012 2013

160

150

140

130

120

110

100

90

INDEX**(1998=100)

Construction Tender Price Index

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

+353 1 603 4000

idaireland@ida.ie

@IDAIRELAND

www.linkedin.com/company/ida-ireland

www.youtube.com/InvestIreland

These client companies have a significant impact on the Irish economy:

- 28,000 jobs created in the last 2 years

- Strong and integrated FDI sector :

- €120.8bn exports

- €1.3bn expenditure on R&D

- Growing supply base - €11bn of

purchases from Irish suppliers

- €2.8bn of corporation tax

Impact of FDI2013 was a record year for FDI, with IDA client employment rising to its highest level ever at 166,184*

Source: *Employment Survey 2013, ABSEI 2012