1. Establishing an Electronics R&D Centre A cost/quality comparison (Based on information from the Financial Times fDi Benchmark tool – May 2012)

2. Competitiveness of Scotland Value for Money Overall Attractiveness Quality of the Location Annual Operating Costs Quality Competitiveness General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment Contents

3.  The following analysis is based on fDi Benchmark, an online location benchmarking tool provided by the Financial Times (FT)  fDi Benchmark compared the Scottish Central Belt with the leading locations globally for establishing an Electronics R&D Centre based on an analysis of over 55 quality factors and 10 cost factors  A key emphasis was placed on: - Presence of industrial cluster - Labour availability and quality Other factors including the general business environment, infrastructure and accessibility and the living environment were also assessed Benchmarking Study

4. Project Profile Overview Cost FactorUsage Amount Property Total Occupancy cost (in town office rent)2,000 m² Weighting Model OverviewWeight Presence of an Industrial Cluster55 Labour Availability and Quality25 General Business Environment10 Infrastructure and Accessibility5 Living Environment5 Employee TypeProfile Head count General Management Project Manager1 Information Technology Engineering Technician8 Software Development Engineer30 Software Development Manager2 R&D / Engineering Engineer9

5. fDi Benchmark Matrix The fDi Benchmark Matrix shows the trade off between cost and quality across the 4 selected locations for the Electronics R&D centre profile. The average cost and quality score is 100 for the selected locations. Source: fDi Intelligence, from the Financial Times Ltd The ‘ideal’ quadrant is the top left (high quality/lower operating costs)

6. fDi Benchmark Matrix  The matrix is based on the weighting and cost model for the Electronics R&D centre profile. The weighting model identifies the key location criteria for the project and the cost model shows the primary cost inputs for the operation. The cost and quality scores are calculated using real data on all the location requirements and cost inputs.  The results indicate the different location solutions for the investor as follows: - the Scottish Central Belt offers higher quality at lower cost than the average of all the selected locations - Los Angeles offers higher quality but at higher cost - Manchester offers lower cost, but at lower quality The Operating Cost value is in GBP - United Kingdom Pound LocationQualitative Score Operating Cost Index Operating Cost Value Los Angeles (CA)127.9112.93,401,305 Manchester55.681.62,458,607 Scottish Central Belt120.186.62,610,381 Stockholm96.4118.93,582,048 Source: fDi Intelligence, from the Financial Times Ltd

7. Location Attractiveness Index The location attractiveness index shows the overall attractiveness of the 4 selected locations for the Electronics R&D centre profile. The ratio of quality to cost is 50:50 Source: fDi Intelligence, from the Financial Times Ltd

8. Cost Quality Competitiveness The cost quality competitiveness uses the results of the fDi Benchmark Matrix to show the value for money of each location option. The graph shows that:  The top location offering the highest quality for a given level of cost is the Scottish Central Belt  the Scottish Central Belt also offers an above average level of quality and good value for money as its relative quality is higher than its relative cost Source: fDi Intelligence, from the Financial Times Ltd

9. Cost Competitiveness The annual operating cost calculation for Electronics R&D centre is based on the following primary input costs: Labour Cost  The average cost across the selected locations for Electronics R&D centre is GBP 3,013,084  The greatest cost saving between the selected locations is GBP 1,123,442 per annum  The values in the chart below are in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd

10. Cost Competitiveness LocationLabour CostProperty Los Angeles (CA)2,925,435475,869 Manchester1,572,125886,480 Scottish Central Belt1,785,035825,345 Stockholm2,638,421943,626 The location with the lowest operating costs is Manchester In terms of the individual cost factors, the location with the lowest costs is:  Labour Cost: Manchester  Property: Los Angeles The values in the table below are in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd

11. Quality Competitiveness The quality competitiveness assessment is based on the weight model for the Electronics R&D centre profile which assesses each location across the following location factors: General Business Environment, Labour Availability and Quality, Presence of an Industrial Cluster, Infrastructure and Accessibility and Living Environment. The average score for the selected locations is 100. The location with the highest quality score is Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

12. Quality Competitiveness Location General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment Los Angeles (CA)11446545 Manchester10152055 Scottish Central Belt10237845 Stockholm9185775 In terms of the individual quality factors, the location with the highest score is:  General Business Environment: Los Angeles  Labour Availability and Quality: Los Angeles  Presence of an Industrial Cluster: the Scottish Central Belt  Infrastructure and Accessibility: Stockholm  Living Environment: Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

13. General Business Environment The quality competitiveness breakdown for General Business Environment for the Electronics R&D centre profile is shown below The location with the highest overall score for General Business Environment is Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

14. General Business Environment Location Economic growth and stability Operating risk Taxation and incentives Regulatory environment Los Angeles (CA) 1.040.925.443.35 Manchester 0.320.845.573.37 Scottish Central Belt 0.270.845.573.37 Stockholm 0.371.403.423.90 In terms of the individual quality criteria within General Business Environment, the location with the highest score is:  Economic growth and stability: Los Angeles  Operating risk: Stockholm  Taxation and incentives: the Scottish Central Belt  Regulatory environment: Stockholm Source: fDi Intelligence, from the Financial Times Ltd

15. Labour Availability and Quality The quality competitiveness breakdown for Labour Availability and Quality for the Electronics R&D centre profile is shown below The location with the highest overall score for Labour Availability and Quality is Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

16. Labour Availability and Quality Location Overall size of labour market Tightness and competition for labour Experienced industry-specific staff Flexibility of labour regulations Los Angeles (CA) 10.812.9617.7012.41 Manchester 1.562.891.289.03 Scottish Central Belt 1.552.3810.459.03 Stockholm 1.071.7710.584.54 In terms of the individual quality criteria within Labour Availability and Quality, the location with the highest score is: Overall size of labour market: Los Angeles Tightness and competition for labour: Los Angeles Experienced industry specific staff: Los Angeles Flexibility of labour regulations: Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

17. Presence of an Industrial Cluster The quality competitiveness breakdown for Presence of an Industrial Cluster for the Electronics R&D centre profile is shown below The location with the highest overall score for Presence of an Industrial Cluster is the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

18. Presence of an Industrial Cluster Location Size of industryTrack record Research and Development Capabilities Los Angeles (CA) 21.9215.3827.20 Manchester 6.019.474.93 Scottish Central Belt 15.2357.644.98 Stockholm 11.8438.516.88 In terms of the individual quality criteria within Presence of an Industrial Cluster, the location with the highest score is: Size of industry: Los Angeles Track record: the Scottish Central Belt Research and Development Capabilities: Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

19. Infrastructure and Accessibility The quality competitiveness breakdown for Infrastructure and Accessibility for the Electronics R&D centre profile is shown below The location with the highest overall score for Infrastructure and Accessibility is Stockholm Source: fDi Intelligence, from the Financial Times Ltd

20. Infrastructure and Accessibility Location Access to major overseas markets Quality of utilities Quality of ICT infrastructure Los Angeles (CA) 2.410.251.01 Manchester 3.640.251.58 Scottish Central Belt 2.340.251.17 Stockholm 3.610.253.24 In terms of the individual quality criteria within Infrastructure and Accessibility, the location with the highest score is: Access to major overseas markets: Manchester Quality of utilities: the Scottish Central Belt Quality of ICT infrastructure: Stockholm Source: fDi Intelligence, from the Financial Times Ltd

21. Living Environment The quality competitiveness breakdown for Living Environment for the Electronics R&D centre profile is shown below The location with the highest overall score for Living Environment is Los Angeles Source: fDi Intelligence, from the Financial Times Ltd

22. Living Environment Location Cost of living Attractiveness for international staff Los Angeles (CA) 2.932.16 Manchester 3.171.69 Scottish Central Belt 3.281.73 Stockholm 2.622.42 In terms of the individual quality criteria within Living Environment, the location with the highest score is: Cost of living: the Scottish Central Belt Attractiveness for international staff: Stockholm Source: fDi Intelligence, from the Financial Times Ltd

23. To realise the potential, please contact: Scottish Development International 150 Broomielaw, Atlantic Quay Glasgow G2 8LU Scotland, UK T +44 141 228 2828 F +44 141 228 2089 www.sdi.co.uk Worldwide offices in: Americas, Europe, Middle East, Africa and Asia Pacific