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1
CHAIRMANS FOREWORD
CHAIRMANS FOREWORD
In times like these, its natural for businesses to focus on weathering
the storm. Our mission over the next three years is to shift that focus.
Now, more than ever, its time to think about growth.
innovation, international trade and investment and
low carbon.
Well be working with companies to seek out and
respond to opportunities including opportunities
they might not have considered before. We will help
them make the robust decisions that will give them
the determination and confidence to make maximum
impact on their markets.
Our work will also focus on responding quickly to
key events like ownership change or innovative
new products, services or business models, to
capitalise on a period of renewed activity. So well
keep recognising the importance of leadership and
organisational development and of innovations that
carve out a clearer route to global markets.
Our response
To help us respond to these conditions, we need to
retain an unstinting focus on growth over the next
three years. That means a focus on areas where
Scotland already has competitive advantage and
where we know we can have the biggest impact, both
in the short and longer term.
Economic context
By 2015, we will
By 2016, we will
Partnership
Equal opportunities
There is a strong business case for embedding
equality into the work of Scottish Enterprise. We
are committed to realising Scotlands full economic
potential by embedding equal opportunities across
our wider policies and practices as an employer
and service provider. We are also encouraging the
companies we work with to embrace the equality
agenda, recognising that it makes good business
sense.
Evidence of impact
The activities and priorities set out in our business
plan continue to be based on the evidence we have
gathered about the effectiveness of our interventions.
This allows us to measure the potential and actual
1. Scottish government, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland,
VisitScotland and Scottish Funding Council.
SEs Focus
Growth Companies
825
2,700
growth Firms
5,219
14,000 SMEs
Exports
4,682 companies
selling 50%+ outside
Scotland and overseas
239,080 self-employed
(businesses with no employees)
Business start-up
15,000 start-ups
55 high-growth start-ups
Improving entrepreneurship
Within a global marketplace where competitive
advantage is realised through innovative products,
processes and business models, fostering an
entrepreneurial and ambitious culture is essential
for Scotland to thrive. We require more people with
an entrepreneurial mindset and ambition, with an
appetite for risk, who can create and grow companies
of international scale.
As part of our more focused approach to supporting
growth companies, we need to address the challenges
of building Scotlands enterprise culture. Working
with the Scottish government and alongside our
partners in local authorities, Business gateway
and in our universities and colleges, we will seek to
create an environment which nurtures and supports
the development of entrepreneurs. This applies both
to supporting individuals and business start-ups to
grow, as well as to improving entrepreneurial thinking
and ambition within existing companies.
Brodie Engineering
Kilmarnock based Brodie Engineering Ltd
provides innovative design, installation
and general repair solutions to both main
and light railway sectors. Since 2009,
the company has grown rapidly, but this
growth has presented the management
team with a number of challenges and
has put pressure on their site and its
ability to support the business expansion.
Along with site sourcing introductions
and an RSA grant, we have supported
a strategic review of leadership and
management to support the ongoing
business expansion. With a focus on
company growth and development, this
review entailed a series of group and
individual reviews alongside profiling of
the company and roles within it.
We saw immediate
positive impacts
resulting from
the Leadership
Development activity.
We know that the
company needs to
continue to develop and
change in order to keep
growing as part of its
business strategy.
The support from
SE has helped me to
adopt an increasingly
strategic role; building
my senior team and
their skills and roles;
as well as helping me
to create the time and
space to do this.
Innovation
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Access to finance
By 2015, we will
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International trade
13
Calgary
San Jose
Stavanger
Copenhagen
Glasgow (HQ)
Moscow
London Dsseldorf
Paris Brussels
Toronto
Boston
Chicago
New York
Houston
West Africa w
Seoul
Beijing
Tokyo
New Delhi
Shanghai
Dubai
Shenzhen Taipei
Middle East w
Mumbai
Hong Kong
Hyderabad
Singapore
Rio de Janeiro
Sydney
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Cocoa Black
Cocoa Black, based in the Scottish
Borders, manufactures and retails a
range of luxury handmade chocolate,
cakes and patisserie. The company
also operates a school which
provides instruction in chocolate
making and baking, from beginners
to professional chefs.
The company was considering the
complexities of exporting and asked
us for support. We quickly saw that
the business had huge international
potential and identified opportunities
for their niche chocolate products.
There was also a recognition that the
company needed to be very selective
about which international markets
to target.
With our support, Cocoa Black
undertook an International Strategy
Workshop to identify business
expectations around exporting
and what the potential risks might
be. Our research also helped to
determine what the key criteria
should be for evaluating potential
overseas markets and where the
business would stand the best
possible chance of export success.
Having agreed an international
strategy, Cocoa Black is now actively
working to deliver it. Much work is
also going on behind the scenes to
ensure that the business can grow
to meet overseas demand,
for instance, ensuring that all
manufacturing processes are as
efficient as possible.
15
By 2015, we will
16
By 2016, we will
By 2015, we aim to
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Mainetti
Mainetti is a multinational garment
hanger company which manufactures
and recycles hangers for dispatch to
a number of well known high street
customers. The companys Jedburgh
site focuses on manufacturing and
currently employs around 185 staff.
As part of Mainettis plan M policy,
the company constantly looks at new
ways to increase productivity and
reduce resource use. One of the main
ways it does this is by recycling and
remanufacturing old hangers back into
productive use. The SMAS team has
been working with Mainetti, helping
to develop optimum site layouts and
training employees in lean tools and
techniques.
In order to reduce production costs
and CO2 emissions, Mainetti has
also recently been working with our
sustainability specialists to review
current energy consumption and
identify opportunities to make use of
renewable resources.
The companys commitment to
sustainability was acknowledged
at the 2012 VIBES Awards where
they were announced as winners
of the management category. This
award recognises businesses
whose management systems
deliver continuous improvement in
environmental performance.
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19
Renewable Energy
Scotland has significant offshore wind, wave and
tidal resources. If these can be more fully harnessed,
building on expertise from other sectors such as oil
and gas, there is considerable long term potential for
Scotland to become a major player in global offshore
renewables markets and to create significant and
sustainable long term economic growth.
21
By 2016, we aim to
22
Albatern
Based in Midlothian, Albaterns focus
is on finding a highly efficient, low cost
method of producing electrical power
from waves. These cost savings are
based on the companys ground-breaking
WaveNET device, a modular wave energy
array system using building blocks
called Squids. The initial smaller Squid
modules can provide energy for users who
are off the grid, such as salmon farms,
or have only poor grid service in remote
or island communities. The WaveNET
can also be scaled up into larger arrays
- based on 100kW Squid modules - and
could provide up to 10MW of electricity
from one array for mainstream grid
connection.
We have supported the company through
SMART: Scotland awards which have
funded the proof of concept and related
feasibility work on the initial Squid
device which has generated electricity.
This was combined with a founder seed
round matched by the Seed Fund of
the Scottish Investment Bank. Albatern
has also been successful in attracting
WATERS2 grant from us; supporting
significant equity investment from a high
net worth investor. In 2013, this funding
will enable the deployment of the first
WaveNET array at 45kW to demonstrate
performance in stronger waves and
progress low cost marine energy devices
towards commercial application in the
offshore aquaculture market. Here,
Albatern has also been successful in
winning a feasibility study funded jointly
by DECC, DEFRA and BIS UK government
departments.
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Life Sciences
Tourism
24
The Hydro
Our work with the tourism sector
seeks to maximise the economic
return on major infrastructure
investments such as the new Hydro
Arena in glasgow. As part of the
Scottish Exhibition and Conference
Centre (SECC), the Hydro will provide
Scotland with a state of the art 12,000
spectator arena, as well as a purpose
built exhibition centre, conference
centre and auditorium, all on one site.
Very few destinations in Europe can
offer the same quality and mix of
facilities that the expanded SECC
complex will provide. As such, glasgow
will have the ability to compete in
new growing markets, including
international conferences and events,
particularly the mega-conference
market of more than 5,000 delegates.
The Hydro will greatly enhance
Scotlands competitiveness in the
business tourism market and will
boost glasgows competitiveness as
a leading destination. part funded by
25 million from us, it will potentially
inject an additional 131 million into
the economy and create over 2,000
jobs. The development will also
contribute to the ongoing regeneration
of the Clyde Waterfront and will
support the Creative Clyde initiative at
pacific Quay, which aims to grow the
digital media and creative industries
sector.
25
Creative Industries
Universities
26
Rockstar North
Rockstar North, the internationally
recognised video game development
studio based in Edinburgh, has been
awarded a Research and Development
grant from us. The grant of just over
1 million is a 15% contribution
towards an 8 million R&D project,
and has, to date, created 25 new
high value jobs in the Edinburgh and
Scottish video game sector.
As the largest game development
studio in Scotland, Rockstar North
invests considerably in development
talent and currently employs
approximately 300 people. The R&D
award has supported Rockstar Norths
work on a game engine that is used
by all Rockstar games development
studios worldwide. This project further
cements Rockstar Norths position as
a leader in innovation within the game
development community.
The first title developed by Rockstar
North in 2001, grand Theft Auto III,
was a worldwide breakout success,
and was hailed as a turning point in
the evolution of video games. At the
time of its release in 2008, grand
Theft Auto IV became the biggest
entertainment launch of all time in any
format, selling approximately
6 million units in its first week of sales.
games developed by Rockstar North
currently hold the highest critics
ratings of all games in the last two
generations of gaming console
hardware. The studio is currently
working on the highly anticipated
grand Theft Auto V.
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Chemical Sciences
Construction
Construction is another industry that is changing
considerably in the current economic climate. The
refreshed Scottish construction strategy looks to
build an industry which recognises and exploits
its areas of competitive advantage, becoming a
recognised leader and providing solutions in areas
such as the low carbon built environment. It aims,
by 2016, to increase gVA by 10% to 9.62 billion and
increase exports by 10%. The Strategy highlights
the industry as an enabler for other sectors, with
potential to make a significant economic and
environmental contribution to the low carbon
economy.
Textiles
The textiles sector plays a particularly vital role in
the rural economy. The Scottish sector has notable
strengths in technical and traditional textiles
such as cashmere, tweed and tartan and also has
applications in medical and construction markets.
It has proven its resilience despite the economic
downturn, with a sustained focus on export growth,
reflected in a target to increase export sales by 50%
by 2016.
Our focus will be around opportunities to generate
additional industry growth through increased exports,
building on the sectors reputation and product
strengths.
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29
Energetica
Energetica is a flagship programme
of activities being taken forward by
the Aberdeen City and Shire Economic
Future (ACSEF), a partnership of local
public agencies, including us, and
private sector companies.
The programme has a long term vision
to help anchor the energy sector in the
area, attracting investment and talent
and creating a global hub. It builds on
the areas rich oil and gas heritage and
infrastructure, alongside emerging
opportunities for carbon capture and
storage, hydrogen and onshore and
offshore renewable energy.
Through Energetica, partners expect
to see the development of a 30 mile
energy corridor, thriving in a high
quality natural environment and with
critical infrastructure in place which
attracts and connects world class
companies and communities. The area
will also become a leading destination
for innovation, knowledge, learning
and skills in energy generation and
will host the companies, organisations
and research institutions that will
collaborate to meet the worlds energy
challenges.
As a key partner in Energetica, our
role is to help develop a high quality
business environment which can
attract and retain companies operating
across a number of key supply chain
activities. We are also supporting
delivery of projects which encourage
and support cutting edge research,
ensuring that the region becomes
world renowned for advancements in
new technologies.
We estimate that Energetica has the
potential to create hundreds of jobs
and add considerable economic value
to the area. The programme has
already been successful in attracting
260 million investment in its first
5 years.
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32
FINANCIAL SUMMARY
Over the next three years, we will invest over
1 billion in the Scottish economy. This is a significant
amount and we are determined to achieve excellent
value for money and impact through this expenditure.
In recent years, we have been able to make significant
efficiency savings. We have done this by streamlining
our operations and management structures,
reducing our accommodation costs by sharing office
space with other organisations, rationalising our
office accommodation requirements and reducing
expenditure in areas such as IT and marketing.
2013/14
Indicative Resource
Allocation
2014/15
Indicative Resource
Allocation
2015/16
Indicative Resource
Allocation
Business Efficiency
14.5
14.7
13.5
29.1
43.0
25.5
35.0
36.4
36.4
4.5
4.0
3.0
17.5
17.9
16.8
8.0
7.0
7.0
31.2
32.0
32.7
139.8
155.0
134.9
13.6
15.1
15.1
8.4
8.6
8.8
22.0
23.7
23.9
Planned Investment
33
2013/14
Indicative Resource
Allocation
2014/15
Indicative Resource
Allocation
2015/16
Indicative Resource
Allocation
41.3
35.2
46.1
36.1
39.2
31.5
31.5
69.8
8.1
7.6
7.1
6.2
6.3
6.4
123.2
158.1
91.1
Domestic
2.3
2.0
2.0
4.6
4.6
4.6
TOTAL
6.9
6.6
6.6
12.7
13.0
13.4
Domestic
13.3
13.0
12.7
Overseas
6.3
6.3
6.3
12.2
10.9
9.0
TOTAL
44.5
43.2
41.4
336.4
386.6
297.9
Planned Investment
TOTAL
Marketing, Research & Stakeholder Engagement
34
2013/14
Indicative Resource
Allocation
2014/15
Indicative Resource
Allocation
2015/16
Indicative Resource
Allocation
210.7
225.2
225.2
-10.8
3.2
3.1
4.7
203.1
228.3
229.9
20.4
3.9
3.9
41.0
92.9
7.0
61.4
96.8
10.9
264.5
325.1
240.8
7.3
8.2
8.3
16.5
4.0
4.0
6.5
6.0
6.0
Co-Investment Fund
10.0
10.0
10.0
15.0
16.0
10.0
16.6
17.3
18.8
336.4
386.6
297.9
130.0 to 155.0
175.0 to 200.0
95.0 to 120.0
61.4
96.8
10.9
Capital Receipts
41.3
38.4
33.3
27.3 to 52.3
39.8 to 64.8
50.8 to 75.8
Income Analysis
EU Funds
Property Disposals
Property Income
TOTAL INCOME
The budget allocations are indicative only. SE manages its budgets in a flexible manner to allow us to react to opportunities and threats
that may arise from developments in the global economy.
Delivery costs include services we provide on behalf of partners and across the whole of Scotland, including: Scottish Development
International; Business Gateway website and enquiry service; Scottish Manufacturing Advisory Service; Co-operative Development
Scotland and the Scottish Investment Bank.
Notes
1. Excludes Ring-Fenced DEL and Annually Managed Expenditure non-cash allocations.
2. Planned capital expenditure over the business period.
3. The actual figure transferred from Grant in Aid Revenue to Capital budget will be dependent on a number of factors including
progress with planned capital expenditure projects and programmes and the amount of capital receipts actually received.
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Increase exports
36
2.
3.
4.
5.
6.
7.
8.
9.
10.
We live in well-designed,
sustainable places where we
are able to access the amenities
and services we need
11.
12.
14.
16.
7 pURpOSE TARgETS
1.
Increase
Scotlands
Economic
growth (gDp)
2.
productivity
3.
Establishing a globally
competitive business
environment
participation
To maintain our
position on labour
market participation
as the top performing
country in the UK
To close the gap with
the top five OECD
economies by 2017
population
To match average
European (EU15)
population growth over
the period from 2007
to 2017. Supported by
increased healthy life
expectancy in Scotland
over the period 20072017
Solidarity
Cohesion
Sustainability
To reduce emissions by
80 per cent by 2050
13.
15.
Key:
Major contribution
Support contribution
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38
Economic growth
Employment growth
Increased turnover/revenues
International revenues
Inward investment
Revenues from innovation
Research & development growth
Resource efficiency/reduced CO2 emissions
Indicators of competitiveness:
Improved company
performance:
Investment leverage in
terms of:
Improved sector
performance:
Increased turnover/
revenues
International revenue
growth
Employment growth
Capital raised
Capital investment
(incl risk capital)
R&D (including via
collaboration)
Inward investment/FDI
Infrastructure
investment
SE contribution to
sector growth
Contribution to sector
performance from SE
projects
International revenue
growth
Employment growth
Low-carbon impact of
SE actions
Contribution from
projects that address
major low-carbon
opportunities
Value of SE-backed
resource efficiency
actions
Helping businesses to
increase growth, by
improving:
Helping to increase
investment to increase
economic growth, through:
Strategic Priorities
Energy Renewables
Creative Industries
Developing Scotlands
international
trade & investment
OBJECTIVES
OBJECTIVES
PRIORITIES
(FOR 2012-15)
ACTIVITIES
ACTIVITIES
OUTPUTS
OUTPUTS
i) productivity
ii) Wage rates
iii) Levels of innovation
iv) New firm formation
Transition to a low-carbon
economy
Tourism
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IMPACTS
OUTCOMES
OUTCOMES
IMPACTS
By 2016, achieve leverage of 300 million 350 million of additional private investment into
offshore renewables, including 130 million 150 million of additional private investment
through NRIF
COMPANY GROWTH
Milestones for 2013-2014
Secure an significant increase in activity by account-managed companies to achieve significant turnover growth in
international markets
Deliver a deeper engagement with companies in the oil and gas sector, including an increase in the number of
companies from this sector in our account management portfolio
Help deliver significant investment into Scottish life sciences companies through the new Scottish life sciences
fund managed by RSV
Launch a new drive to encourage tourism companies to grow by developing new customer experiences through
increased use of market intelligence and leveraging Scotlands tourism assets and major infrastructure
developments such as the Hydro at the SECC and the EICC.
Measures
Account
Management
Investment
In 2013-14, 1 billion 1.3 billion turnover growth achieved by account managed firms
In 2013-14, help 250 350 account managed companies develop their leadership and strategy
In 2013-14, achieve 70 million 85 million of leveraged investment from the provision
of growth finance through the Scottish Investment Bank
In 2013-14, help 350 400 companies secure growth finance by improving their financial readiness
In 2013-14, deliver 250 million 350 million of additional capital investment in planned projects
supported by us
By 2016, help companies generate significant productivity and efficiency improvements,
worth at least 70 million 85 million
Develop growth in exports through e-Commerce, to capitalise on global opportunities in digital connectivity
Inward Investment
Maintain Scotlands relatively strong globally competitive position on attractive high-value inward investment
through a range of benchmarking and comparative analysis mechanisms
Attract significant inward investment to support the growth strategies of Scotlands sectors
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Measures
**Over 2011-15, achieve a 1.2 billion to 1.7 billion increase in international sales
from supported businesses
Exports
In 2013-14, 220 330 companies projecting significant turnover growth from exporting,
including 150 210 projecting turnover growth of 1 million +
**Over 2011-15, 8,000 10,000 companies assisted to develop their capacity for exporting
through initiatives like Smart Exporter
Inward Investment
**Over 2011-15, 25,000 35,000 planned jobs through the attraction of foreign investment
of which between 8,000 and 12,000 planned high value jobs
In 2013-14, 5,000 9,000 planned jobs through the attraction of foreign investment
of which between 1,800 2,500 are planned high value-added jobs
INNOVATION
Milestones for 2013-2014
Initiate a significant step change in our approach to innovation and entrepreneurship in collaboration with the
Scottish Government, Scottish Funding Council, and Highlands & Islands Enterprise
Initiate agreed action with industry partners and with HIE, the Scottish Funding Council and Scottish Government to
maximise the contribution to innovation and R&D from the EU Horizon 2020 programmes
Deliver new activity as our contribution to Scotlands Digital Strategy including demonstration projects in sectors
and a new Digital Excellence programme involving our account managed companies
As part of our commitment to improve entrepreneurship in Scotland, deliver two further rounds of the Scottish EDGE
competition to support up to 30 companies to accelerate and achieve their growth potential
Measures
Innovation
Support
R&D Support
Commercialisation
In 2013-14, help companies achieve significant additional revenues from innovation, worth between
70 million 100 million over the next three years
In 2013-14, secure 110 million to 150 million of additional commitments in R&D investment
through our assisted projects
***By 2015, generate 15 21 entrepreneurial companies capable of achieving 5 million turnover
growth within five years of trading, or attracting 10 million investment
Initiate actions to address significant market opportunities for Scotland in clean technology, the low-carbon built
environment and low-carbon transport
Develop significant actions to help Scottish companies use low carbon as a major driver of innovation, in terms of
new products, processes and business models
Measures
Transition to a Low
carbon economy
In 2013-14, identify between 80,000 100,000 tonnes of CO2 savings arising from our projects and
company support that improves efficiency
** Measures under this theme set against the Targets set for the 2011-15 International Trade & Investment Strategy
*** Three-year target, established last year.
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