1

MADRID AS PREFERREDLOCATION FOR FOREIGNINVESTORS

April 2012

2

4.- SERVICES OFFERED BY PROMOMADRID

2.- WHY INVEST IN MADRID?

3.- MAIN INDUSTRIES

1.- MADRID: KEY FACTS MRID KEY FACTS

3

1. MADRID: KEY FACTS

LOCATION OF MADRID

4

THE MADRID REGION AT A GLANCE

Comprised of the Capital City, Madrid, and the rest of the 179 municipalities:

Madrid region

Madrid City (region’s and country's capital)

Sources: (1) National Statistics Institute; (2) Madrid Statistics Institute and National Statistics Institute

1.6% of Spain

13.8% of Spain

19.7% of Spain

Population (2011) : 6.49 mill (1)

Size: 8,028 km2

GDP (2011) : €211,669 mill (2)

Large foreign population (2011) : 1.07 mill

18.6% of Spain

MADRID in SPAIN

1. MADRID: KEY FACTS

(1)

5

Construction 8.4%

Industry 9.4%

Services 82.1%

Agriculture 0.1%

Source: (1) Madrid Statistics Institute

Leading Economic Sectors

Services Business Services and Real Estate Commerce Transport and Communications Financial Services

Industry Paper products, Editing & Publishing Chemicals (Pharma) and Plastics Metal Industry Electronics

REGIONAL ECONOMY DEPENDENT UPON THE SERVICE SECTOR AND SUPPORTED BY A STRONG INDUSTRIAL BASE

(*) Gross Value Added : GDP less taxes on products plus subsidies on products

Gross Value Added (*) by sector, Madrid 2011 (%) (1)

1. MADRID: KEY FACTS

6

TOP FOREIGN DIRECT INVESTMENT LOCATION IN SPAIN

When it comes to investing in Spain, Madrid always comes in 1st

Sources: (1) Ministry of Economy; (2) World Investment Report 2011, UNCTAD

FDI to Madrid reached 72,071 mill.

€ between 2007-2011 (1)

Spain was the world’s 14th and

Europe’s 6h largest recipient of FDI

in 2010 (2)

Distribution of FDI by regions, Spain, 2007-2011 (%) (1)

1. MADRID: KEY FACTS

Catalonia 15%

Rest of Spain 21%

64%

7

1.- MADRID: KEY FACTS

2.- WHY INVEST IN MADRID?

3.- MAIN INDUSTRIES

4.- SERVICES OFFERED BY PROMOMADRID

8

DYNAMIC AND INTERNATIONAL BUSINESS CENTRE

2. WHY INVEST IN MADRID?

9

(*) For annual incomes lower than 600,000 Euros

Source: (1) Ministry of Industry, Tourism and Trade, CIRCE, 2011; (2) “Business Freedom Index 2011” Thomson Reuters

BUSINESS FRIENDLY GOVERNMENT

2. WHY INVEST IN MADRID?

Fiscal policy friendly to foreign corporations: Holding Companies, Tax Consolidation, Tax Credits for R&D activities

Expats pay only 24% income tax during the first 6 years (income generated in Spain) (*)

Lowest regional personal income tax in Spain

2,04 days: average time for setting up a company (Telematic procedure) (1)

Top “Business friendly” region in Spain (2)

Fiscal policy friendly to foreign corporations: Holding Companies, Tax Consolidation, Tax Credits for R&D activities

Expats pay only 24% income tax during the first 6 years (income generated in Spain) (*)

Lowest regional personal income tax in Spain

2,04 days: average time for setting up a company (Telematic procedure) (1)

Top “Business friendly” region in Spain (2)

10

Source: (1) Regional statistics Institutes (for GDP data) and National Statistics Institute 2011 (for population data); (2) Madrid Statistics Institute; (3) Madrid as Financial Center-Deloitte 2010; (4) National Statistics Institute; (5) Actualidad Económica 2011; (6) Datacomex-ICEX 2011

SPAIN’S ECONOMIC ENGINE …

Top Spanish region in terms of GDP and GDP per capita (2011) (1)

2.4% average annual growth in 2002-2011(2)

Financial Centre of Spain, third in Europe and fourth worldwide (3)

Main business hub in Spain (more than 500,000 operative companies) (4):

21% of all the companies created in Spain in 2011 are from Madrid (4)

53% of the 500 main Spanish companies are headquartered in Madrid (5)

First high technology exporter region in Spain (36% of the total of Spain) (6)

Top Spanish region in terms of GDP and GDP per capita (2011) (1)

2.4% average annual growth in 2002-2011(2)

Financial Centre of Spain, third in Europe and fourth worldwide (3)

Main business hub in Spain (more than 500,000 operative companies) (4):

21% of all the companies created in Spain in 2011 are from Madrid (4)

53% of the 500 main Spanish companies are headquartered in Madrid (5)

First high technology exporter region in Spain (36% of the total of Spain) (6)

2. WHY INVEST IN MADRID?

11

… AND TOP WORLDWIDE BUSINESS CENTRE7th worldwide most attractive city for business

7th worldwide most attractive city for business

5th European commercial centre (5)

5th European commercial centre (5)Sources: (1) ORBIS 2012; (2) IBM Global Location Trends 2010; (3) UNCTAD; (4) Regional

Statistics Institute (for Madrid data) and Eurostat (for EU countries data); (5) Worldwide Centers of Commerce Mastercard 2008

Preferred location in Spain for foreign multinationals: over 5,000 foreign

companies are located in Madrid (1)

3rd European city and 7th Worldwide by number of top multinational

companies with operative headquarters (3) :

BBVA, ENDESA, REPSOL, SANTANDER, TELEFONICA, etc. The Madrid region has a higher purchasing power than most of the other

European countries, such as Germany, the UK, France or Italy, with a

GDP per capita in 2011 of 32,616 €. (4)

Preferred location in Spain for foreign multinationals: over 5,000 foreign

companies are located in Madrid (1)

3rd European city and 7th Worldwide by number of top multinational

companies with operative headquarters (3) :

BBVA, ENDESA, REPSOL, SANTANDER, TELEFONICA, etc. The Madrid region has a higher purchasing power than most of the other

European countries, such as Germany, the UK, France or Italy, with a

GDP per capita in 2011 of 32,616 €. (4)

2. WHY INVEST IN MADRID?

12

EXCELLENT GEOSTRATEGIC LOCATION

2. WHY INVEST IN MADRID?

13

Transport by air Transport by air

LOGISTICS CENTRE FOR THE IBERIAN PENINSULA

Sources: (1) AENA; (2) ADIF; (3) National Statistics Institute

Transport by landTransport by land

National: heart of radial highway and railway system; hub for high-speed trains. Since 2010 Spain boasts the EU’s largest high-speed rail network (2nd in the world), with 1,800 miles in service. (2)

More than 600 miles of highways in the region. (3)

Within 8 hours by road of any market in Spain.

International: good road and rail links to France and Portugal. Impending connection to the French rail system.

Regional: the public transport network provides cheap, efficient and integrated transit throughout the region’s 8.000 km2.

National: heart of radial highway and railway system; hub for high-speed trains. Since 2010 Spain boasts the EU’s largest high-speed rail network (2nd in the world), with 1,800 miles in service. (2)

More than 600 miles of highways in the region. (3)

Within 8 hours by road of any market in Spain.

International: good road and rail links to France and Portugal. Impending connection to the French rail system.

Regional: the public transport network provides cheap, efficient and integrated transit throughout the region’s 8.000 km2.

Due to its inter-modal excellence, 60% of Spain’s largest logistic companies operate from Madrid

Barajas is the main airport in Iberia and the 4th in Europe in terms of passenger traffic

Strategic link between Europe and Latin America: 30% of flights to Latin America are routed via Madrid(1)

Barajas is the main airport in Iberia and the 4th in Europe in terms of passenger traffic

Strategic link between Europe and Latin America: 30% of flights to Latin America are routed via Madrid(1)

Barajas Airport is the main airport of Spain and the 4th in Europe in terms of passenger traffic (almost 50 million passengers in 2011). It is also the 2nd airport in Europe in terms of passenger capacity (70 million).(1)

Direct flights with more than 208 cities worldwide in 67 countries(1)

Strategic link between Europe and Latin America: 1/3 of flights to Latin America are routed via Madrid. (1)

Barajas Airport is the main airport of Spain and the 4th in Europe in terms of passenger traffic (almost 50 million passengers in 2011). It is also the 2nd airport in Europe in terms of passenger capacity (70 million).(1)

Direct flights with more than 208 cities worldwide in 67 countries(1)

Strategic link between Europe and Latin America: 1/3 of flights to Latin America are routed via Madrid. (1)

The Dry Port in the Logistics Center of Coslada is 10 minutes away from Barajas and connects Madrid with the main Iberian ports in a few hours and at very low cost

Transport by seaTransport by sea

2. WHY INVEST IN MADRID?

14

(*) European Union , Mediterranean countries & LAM;

Sources: (1) Cepal 2011; (2) Ministry of Economy; (3) Survey AHK, German Chamber of Commerce in Spain 2010.

Bridge to more than 1,300 Million(*) potential customers

Main Multinationals with HQs for Southern Europe in Madrid: Microsoft (Consumer Goods), Altran, Peribit Networks, THQ, etc.

Main Multinationals with HQs for Europe in Madrid: Alpargatas, BP Solar, Cigna, IBM, Reynolds Ventures, Cemex, Sany Heavy Industry Co., etc.

Main Multinationals with HQs for EMEA in Madrid: Ericsson Thyssenkrupp (Elevators), ICP Solar Technologies, Pemex, Grupo Modelo, etc.

Main Multinationals with HQs for Latin America in Madrid: Alcatel, Atlantic Cooper, BT, Qualcom, WincorNixdorf, etc.

Spain is the 2nd investor in Latin America (LAM) in 1990-2010 (1)

Madrid represented 60% of Spain’s investment in LAM in 2007-2011 (2)

“50% of all German subsidiaries in Spain are involved in third markets’ decision-making” (3)

STRATEGIC PLATFORM TO SOUTHERN EUROPE, NORTHERN AFRICA AND LATIN AMERICA

South America

Africa

Europe

2. WHY INVEST IN MADRID?

15

SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT CENTRE

2. WHY INVEST IN MADRID?

16

Source: (1) National Statistics Institute; (2) Eurostat

R&D goal in Madrid: to reach 3% of Madrid’s GDP by 2013

Madrid, number 1 Region in Spain in terms of R&D expenditure as percentage of GDP (2.02%). (1)

R&D expenditure of Spain and Madrid has increased in last years ( Madrid, from 1.92% of GDP in 2007 to 2.02% of GDP in 2010. (1)

2.02% (1)

1.39% (1)

2.00% (2)

1.63% (1)

R&D Weight in GDP in 2010

PRO-R&D GOVERNMENT

Regional, National and European incentives

2. WHY INVEST IN MADRID?

I PRIDI 2009-2012Regional Plan for

Research + Development + Innovation

17

Madrid 26%

Rest of Spain 74%

Madrid 28%

Rest of Spain 75%

Rest of Spain 72%

Madrid 25%

Source: (1) National Statistics Institute

R&D Professionals 2010 (1)

National R&D Expenditure 2010 (1)

Corporate R&D’s GVA 2010 (1)

SPAIN’S MAIN R&D HUB 4.5 million s.q.m. devoted to science and technology clusters

2. WHY INVEST IN MADRID?

Univ. Autónoma de Madrid

Univ. Çomplutense

Universidad Politécnica de Madrid

Universidad Carlos III

18

… SECOND EUROPEAN HIGH TECHNOLOGY REGION

Source: (1) Eurostat, Regional Employment in High Tech Sectors

High-tech employment in EU-27, 2010 (1)

“One of Madrid’s competitive advantages is the

high number of universities with R&D practices,

which are so useful for the group’s innovation

processes.”

“One of Madrid’s competitive advantages is the

high number of universities with R&D practices,

which are so useful for the group’s innovation

processes.”

Alvaro Alcina, Strategic Development and External Relations Director, ALCATEL

Madrid is in 6th position according to

Buck Consultants’ 2009 ranking

“EuropeanTech City Index”

2. WHY INVEST IN MADRID?

19

COMPETITIVE ECONOMY

2. WHY INVEST IN MADRID?

20

  336

Frankfurt 408

Milan 500

Mumbai 641

Sydney 651

Paris 750

Moscow 754

Hong Kong 901

Tokyo 1,051

London 1,067

..CCOMPETITIVE REAL ESTATE COSTS…

European office space availability ranking (2)

Source: (1) Knight Frank Global Real Estate Annual Review 2011; (2) European Cities Monitor 2011, Cushman & Wakefield

Office rental prices (€/Sq.m/annum) (1)

Berlín 1

Bucharest 2

3

Leeds 4

Birmingham 4

Barcelona 6

Dublin 7

Bratislava 8

Frankfurt 9

London 10

2. WHY INVEST IN MADRID?

21

… AND LABOUR COSTS IN SPAIN …

  20,6 €

Euro Zone 23,1 €

EU 27 27,6 €

ITALY 26,8 €

AUSTRIA 29,2 €

FINLAND 29,7 €

GERMANY 30,1 €

NETHERLANDS 31,1 €

FRANCE 34,2 €

BELGIUM 39,3 €

Euro Zone Labour costs (€/hour)1

Source: (1) Eurostat , April 2012

2. WHY INVEST IN MADRID?

22

… AND IN MADRID

Labour costs are distinctly low when compared with those of other Western European countries

In comparison to its neighbors from the European-15, labour costs in Madrid are 26% lower overall

JOB TITLE Madrid London Paris Milan Amsterdam Brussels Munich Geneva

Marketing Middle Management 64 578 65 367 67 507 71 779 75 579 79 039 91 304 119 386

Difference with Madrid   1,22% 4,50% 11,15% 17% 22,30% 41,30% 84,80%

Auditor 45 366 47 602 48 972 47 596 56 536 59 328 69 698 96 234

Difference with Madrid - 5% 8% 4,90% 24,60% 30,70% 53,60% 112%

Source: (1) Watson Wyatt Global 50, 2010

Annual Total Remuneration Benchmarking in Europe, 2010 (€) (1)

2. WHY INVEST IN MADRID?

23

HIGHLY QUALIFIED AND DIVERSE HUMAN CAPITAL

2. WHY INVEST IN MADRID?

24

Source: (1) Eurostat; (2) National Statistics Institute

Population with tertiary education, 2010 (1)

17 universities (plus 2 distance learning universities)

University graduates: more than 35,000 per year (2)

Doctorates: more than 1,800 per year (2)

Number of university students: 195,000 per year (2)

Engineering students: 45,000 per year (2)

QUALIFIED WORKFORCE

2. WHY INVEST IN MADRID?

25

More than 3.3 million professionals (4Q 2011) (1)

Unemployment rate: 18.5% (4Q 2011) (1)

Europe’s 3rd largest metropolitan area (2)

Available workforce

1,07 million foreigners (18.6% of the population) (3)

More than 11,000 foreign students per year (4.4% of total university students, higher than the national average of 3.2%) (4)

36% of the Spanish population speaks one or more foreign languages fluently

Madrid concentrates the highest percentage of students learning a foreign language in Spain: 91.4% English, 16.5% French and 1.5% German (5)

Spain 1st destination in Europe under ERASMUS program

International

Source: (1) National Statistics Institute; (2) UN-World Urbanization Prospects 2007; (3) National Statistics Institute; (4) Ministry of Education 2010-11; (5) Financial Times 2009

LARGE AND MULTINATIONAL LABOUR POOL

2. WHY INVEST IN MADRID?

26

UNIQUE QUALITY OF LIFE

2. WHY INVEST IN MADRID?

27

Source: (1) HSBC 2011; (2) Global Cities 2011, Euromoney.

ABILITY TO ATTRACT AND RETAIN TALENT

Ricardo Weiss, TAVEX-Brasil, Corporate General Manager“Madrid has the best combination of whatever a businessman needs”“Madrid has the best combination of whatever a businessman needs”

Ruth Härdle, Eurocopter Spain, R&D Configuration Management

“Madrid, my new home. Best for life and business”“Madrid, my new home. Best for life and business”

Spain # 1 in terms of quality of life for expatriates (1)

Top Quality Multilingual Education: 50 international schools, 242 bilingual public schools and 32 bilingual public high-schools.

Universal health system with 87 hospitals.

Madrid is the 2nd city in the world by quality of its health system. (2)

Wide range of cultural and leisure activities: Museums, Theatres, Concert Halls, Theme Parks, etc.

Sailing and skiing within 1 hour of Madrid’s downtown

Outstanding weather: 2.769 hours of sun per year (15ºc)

Spain # 1 in terms of quality of life for expatriates (1)

Top Quality Multilingual Education: 50 international schools, 242 bilingual public schools and 32 bilingual public high-schools.

Universal health system with 87 hospitals.

Madrid is the 2nd city in the world by quality of its health system. (2)

Wide range of cultural and leisure activities: Museums, Theatres, Concert Halls, Theme Parks, etc.

Sailing and skiing within 1 hour of Madrid’s downtown

Outstanding weather: 2.769 hours of sun per year (15ºc)

2. WHY INVEST IN MADRID?

28

1.- MADRID: KEY FACTS

3.- MAIN INDUSTRIES

2.- WHY INVEST IN MADRID?

4.- SERVICES OFFERED BY PROMOMADRID

29

3. MAIN INDUSTRIES

IT and Telecommunications Logistics, Retail & Hospitality Clean Energies

IBM, Alcatel-Lucent, BT, Toshiba, Nokia, HP, Oracle, Atos, BT, Motorola, Siemens, Microsoft, SAP, Vodafone, Google, Accenture

DHL, FEDEX, Kiala, Palletways, Accor , Autogrill, Decathlon, H&M, Leroy Merlin, McDonalds, Newrest, Primark, Travellodge

Iberdrola, Petratherm, MT-Enerterra, Suzlon, Vestas, Sunpower, Suntech, First Solar, Yingli Solar, ABB

INVESTMENT SECTORS

Life SciencesAerospace

EADS, Boeing, Airbus, Eurocopter, Thales Alenia Space, Alcatel, EuroProp Int., General Dynamics, CAE, Safran Gr., Hexcel,RR Plc, Goodrich

Pfizer, Bristol Myers Squibb, GSK, Sanofi Aventis, MSD, Lilly, Janssen Cilag, Novo Nordisk, Italfarmaco, Merck Serono, Bayer

Finance

Clifford Chance, DLA Pipper,Baker&McKenzie, Boston Consulting,PWC, Deloitte, KPMG, E&Y,Voith, Jacobs, FW, Mc Cann-Erikson, DDB

Business Services

ICBC,BMCE, Deutsche Bank, Barclays, BNP-Paribas, Western Union, Generali, AXA, Allianz , Saxo Bank, CIGNA, Zürich

30

3. MAIN INDUSTRIES

INVESTMENT OPPORTUNITIES

R&D and Excellence Centres

IBM, Boeing, Ericsson, Motorola, HP, GSK, Janssen-Cilag, Lilly, Alcatel- Lucent, Pfizer, Siemens, Vodafone, SanofiAventis

Accenture, Altran, BT, Cigna, Cemex, Grupo Modelo,BMCE, Daimler, Deloitte, Ericsson, IBM, Praxair, Pemex, Roche, Microsoft, Nixdorf, Thyssen Krupp

Regional HQs & SSC

Abbott, Carrefour, Danone, Dunlop, Inditex, Fnac, Holmen Paper, Legrand, Lilly, MSD, Míele, Renault, Roche,Toys-R-Us, Valeo, WEG

Distribution Centers

31

1.- MADRID: KEY FACTS

2.- WHY INVEST IN MADRID?

3.- MAIN INDUSTRIES

4.- SERVICES OFFERED BY PROMOMADRID

32

PRELIMINARY STUDYPRELIMINARY STUDY IMPLEMENTATIONIMPLEMENTATION

Advice and supply of tailor-made information

Organization of visit to Madrid

To attract new foreign companies to the Region of Madrid

To help foreign companies already settled in Madrid to increase their business

Advice and support to commence operations in Madrid

We provide companies with information and advice throughout their investment decision process and implementation

OBJECTIVESOBJECTIVES

4. SERVICES OFFERED BY PROMOMADRID

33

PRELIMINARY STUDY

Economic data: macroeconomic and demographic, regional and local figures

Market intelligence

Legislation: investment, company, labour and social security, tax and accounting

Business and Operational Costs: labour, property, utilities, pricing and setting-up costs

Property availability: rental/sales, industrial/office and warehouse/labs

Support programmes and Available incentives

The most suitable product and service providers

The search for potential partnerships, strategic alliances and joint ventures with local companies

PRELIMINARY STUDYPRELIMINARY STUDY IMPLEMENTATIONIMPLEMENTATION

4. SERVICES OFFERED BY PROMOMADRID

34

Organize visits to potential location sites

Arrange meetings with foreign businesses located in Madrid

Meetings with sectorial associations and incentive management entities

Programme of visits to companies who may be potential investment partners

PRELIMINARY STUDYPRELIMINARY STUDY IMPLEMENTATIONIMPLEMENTATION

Organize client’s visit to Madrid

PRELIMINARY STUDY

4. SERVICES OFFERED BY PROMOMADRID

35

Practical guidance with administrative procedures

Liaisons with local, regional, and national institutions

Help in finding project financing

Advice regarding obtaining business incentives

Help in choosing and securing final location

PRELIMINARY STUDYPRELIMINARY STUDY IMPLEMENTATIONIMPLEMENTATION

IMPLEMENTATION

4. SERVICES OFFERED BY PROMOMADRID

36

THIS CUSTOMIZED INFORMATION AND GUIDANCE WILL BE PROVIDED AT NO CHARGE AND ON A

STRICTLY CONFIDENTIAL BASIS

4. SERVICES OFFERED BY PROMOMADRID

37

SOLID CUSTOMER BASE

38

SOLID CUSTOMER BASE

39

Thank you

C/ Suero de Quiñones, 34Madrid 28002

Tel: +34 917 450 127Fax: +34 914 110 913

info@promomadrid.comwww.promomadrid.com