Ireland: A platform for expansion into Europe - TMANYnyce.tmany.org/.../01/Ireland-a-platform-for-expansion-into-Europe... · Ireland: A Platform for Expansion into Europe 13

Ireland: A platform for expansion into Europe

Presentation at the31st Annual New York Cash Exchange 201329 May 2013

2

Introductions

David EvansVice President

First Names Group

Denise MagyerSenior Vice President

Allied Irish Bank

3Ireland: A Platform for Expansion into Europe 3

Ireland: The Economy

What happened?

2008 market disruption prompted Irish government to guarantee bank deposits Property bubble left Irish banks exposedRise in Irish public debt Agreed a funding plan with EU/IMF/ECB2010 marked Ireland’s re-entry to capital marketsSince then, Irish bond yields have fallen sharplyDeposit guarantee program eliminated March 2013 due to stability of Irish financial marketsIreland looks on course to exit the EU/IMF bailout programme on schedule at end 2013

Ireland (in 2010) was one of the few European countries to show an increase in FDI projects

American Chamber of Commerce September 2011

Irish Benchmark Yields

0

3

6

9

12

15

18

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-130

3

6

9

12

15

18

10 Year 5 Year

% %

Source: Thomson Reuters

4Ireland: A Platform for Expansion into Europe

Timeline


Positive Economic TrendsIrish economy continues modest expansion for second straight year, outperforming fiscal targets

Irish GDP rose by 1.4% in 2011 and 0.9% in 2012 2012 GNP was up by a strong 3.4%

Export growth remained resilient in 2012, despite weak trading partner demand; Ireland’s forecast GDP growth is among highest in euro area

Bank de-leveraging plan has continued apace and other contingent liabilities reduced sharply

Lower deficit and funding needs for Ireland in short and medium-term; reduction in Government debt in longer-term.

Irish Growth Rates (% yoy)

-10

-8

-6-4

-2

0

2

46

8

10

Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012Source: CSO

GNP

GDP

GDP Contributions (2008-2015)

-12

-9

-6

-3

0

3

6

2008 2009 2010 2011 2012 2013(f) 2014(f) 2015(f)

Personal Spending Govt Spending Fixed Investment Net Exports Other

%

Source: CSO and AIB ERU forecasts

GDP GROWTH FORECAST

2013 2014 2015

1.5% 2.5% 2.9%


Economic Advantages

13.7% cumulative fall in Irish unit labor costs from 2009 to 2013 (projected)

Major gains in Irish competitiveness helping the traded sector of the economy & to boost Foreign Direct Investment (FDI)

Exports, driven by huge FDI, equate to 108% of GDP. Exports provided Ireland with way out of the recession – exports rose by 6.2% in 2010, and 5% in 2011, although slowing in 2012 due to downturn in EU economy

Unit Labour Costs 2009-2013 (% Change)

-15 -12 -9 -6 -3 0 3 6 9 12 15

Germany

France

Italy

Eurozone

UK

Ireland

Spain

Portugal

Source: EU Commission November 2012

Exports as % of GDP 2011

0 10 20 30 40 50 60 70 80 90 100 110

Spain

Portugal

Ireland

Italy

Greece

France

Germany

UK

Source: Thomson Datastream

*


Housing & Employment TrendsHousing

New stock overhang is limited and being slowly eroded given low level of new supply

House prices declined sharply – fell by over 50% from their peak in late 2007

Housing affordability back to best levels since 1996, i.e. before the boom

Rents have troughed – up 7% from lows

House prices show signs of bottoming out, especially in Dublin, though still quite volatile

UnemploymentEasing in the pace of job losses since early 2010 as economy stabilized and then improvedUnemployment rate leveling off at 14.7%at YE12 on fall in redundancies and pick up in emigration

National House Price Inflation

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13-30

-25

-20

-15

-10

-5

0

5

10

15

20

Month-on-Month : LHS Year-on-Year : RHS Source: CSO

% %

Unemployment Rate (%)

8

9

10

11

12

13

14

15

16

Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13Source: Thomson Datastream


To Summarize…

Ireland has done an admirable job of differentiating itself. It is coping better than most of its European partners.

“This has not gone unnoticed by US multinationals.”

American Chamber of CommerceThe Irish-US Economic Relationship 2012


Evolution of FDI in Ireland

Source: IDA Ireland Strategy, Horizon 2020

A range of services and incentives, including funding and grants, are available to those considering foreign direct investment in Ireland. These are offered by IDA Ireland, Ireland’s inward investment promotion agency, to both new and existing clients. www.idaireland.us


Why FDI?

Access to the 500m people in EuropeUS affiliate sales of goods and services

in Ireland totaled $247 billion in 2009

Greater than affiliate sales in China ($148bn)

and in Japan ($220bn).

Within Europe, only US affiliate sales in Germany, Switzerland and the United Kingdom are larger than Ireland’s

The reason: export-propensity. About 25% of foreign affiliate sales are for the local market, while the rest is bound for the transatlantic economy of the European Union and the US

Source: Bureau of Economic Analysis


How are Companies using Ireland?

Global Business Service Centers

Headquarters & IP Management

High Value Manufacturing

Research, Development & Innovation

Supply Chain Management


How Ireland Ranks amongst its Peers…


How Ireland Ranks amongst its Peers…


A Platform for Expansion into Europe

Why is Ireland so popular with US companies?


A Platform for Expansion into Europe

5TsTrack recordTalentTime zoneTechnology & infrastructureTaxation policy Weather!


Track Record: Who’s in Ireland

Nine of the top 10 pharmaceutical companies

Eight of the top 10 technology companies

11 of the top 13 medical device companies

Three of the top five games companies

The top 10 “Born on the Internet” companies

Source: IDA Ireland website


Track Record: Who’s in Ireland

50% of the world’s fleet of leased aircraft

More than 50% of the top financial services companies

Largest exporter of software in the world

Source: Investing in Ireland: Always Open for Business, Deloitte


Irish-US Relationship: Built to Last

US firms have invested more capital in Ireland since 1990

than the four BRIC nations combined

(c. $189 bn on a cumulative basis vs. $159 bn)

IDA Ireland


What US Executives are Saying

“We are very excited about our expansion into the European market and Dublin will be at the very center of our new business generation and support. We are impressed by the quality and depth of the talent pool and the strength of the software industry in Ireland, which coupled with the partnership of IDA Ireland, made the decision to locate our European Operations Hub here, the right one for the future of the company.”

Chris HickeyPresident of Total Defense



Talent in Ireland

FirstIn availability of skilled labor1

In Europe for completion of third level education2

In Eurozone for best countries for business3

In flexibility and adaptability of workforce1

SecondIn future availability of workforce4

ThirdIn labor productivity1

Source: 1 IMD World Competitiveness Yearbook 2012 | 2Central Statistics Office | 3Forbes.com; October 42011, Population Division of the Department of Economics & Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision

Ireland is the only English speaking workforce in the Eurozone



“After considering a number of global locations for this strategically important R&D center, we decided that Limerick was the perfect fit for our company due to the research expertise in the University of Limerick, the availability of engineering skills, the cluster of many leading players in electronics in the region and the support of IDA Ireland.”

Bernhard HuberZMDI’s Business Line Manager

Source: IDA Ireland Website



“Ireland also has proven to be a valuable location for Mylan, providing the company with access to a skilled and highly educated workforce that shares our strong work ethic and commitment to excellence.”

Heather BreschMylan Chief Executive

Source: Irish Independent


Time Zone



“Ireland has established a solid track record as the ideal location for many of the world’s leading pharmaceutical businesses. We see our Dublin base as important to the evolution of our business, both in our European markets and globally. We look forward to building a substantial biopharmaceutical business, based in Ireland, with the goal of bringing innovative medicines to the patients we serve.”

Richard PopsCEO Alkermes plc




“The technical acumen and competency of the people in Galway, as well as their attention to detail and commitment to quality, their passion, this is what makes it special. They get it right the first time.”

William H. KuchemanCEO Boston Scientific



Technology & InfrastructureDublin Airport Terminal 2 opened in 2011

Motorway network completed in 2010

Data centers and connectivity


Taxation Policy

Attractive for US outbound investment

Expansion into EMEA markets

Intellectual property exploitation

Captive treasury function

Securitization – special rules


Expansion into EMEA Markets

Tax efficient supply chain management

Arm’s length pricing and transfer pricing

Operational substance in Ireland

Corporate restructuring and inversions into

Ireland


Intellectual Property Exploitation

Why choose Ireland for IP?

Legal framework for IP protection

Taxation at 12.5% on trading profits of an

active brand management trade

Effective tax rate can be as low as 2.5%

Amortization for tax purposes

R&D credits: close to 40% on the dollar for qualifying R&D

spend


Example: IP Exploitation

Before After

Profit 100 100

Tax (40) (12.5)

Retained Earnings 60 87.5

Net Cash Tax Saving per annum 27.5


Captive Treasury Function

Global treasury functions housed in Ireland

Margin business

Taxed at 12.5% as an active trade

Attractive withholding tax (WHT) legislation

and exemptions


Securitization: Special Rules

Popular for acquisition of specific assetsMargin taxable at 25%

Hedge funds often use special purpose

vehicles (SPVs) for European acquisitions


Questions

34

ContactsDavid EvansVice PresidentFirst Names Group

100 Park AvenueSuite 1600New YorkNY 10017

T: 203-428-7883E: [email protected]

Denise MagyerSenior Vice PresidentAllied Irish Bank

1166 Avenue of the Americas18th FloorNew YorkNY 10036

T: 212-339-8170E: [email protected]

Documents

Ireland: A platform for expansion into Europe - TMANYnyce.tmany.org/.../01/Ireland-a-platform-for-expansion-into-Europe... · Ireland: A Platform for Expansion into Europe 13