Norwich Research Park Annual Report

NORWICH RESEARCH PARK ANNUAL REPORT

FY 2016/17

Operational highlights and financial performance TABLE OF CONTENTS Contents

To Our Stakeholders ______1 Financial Summary ______4 Financial Statements ______6 Company Information ______8

TO OUR STAKEHOLDERS

To Our Stakeholders

STRATEGIC HIGHLIGHTS

It has been another year on the Park during which significant progress has been made with several exciting projects moving forward. The number of companies at the park has increased, significant grant support has been secured and the profile and awareness of the many strengths and attributes of Norwich Research Park continue to grow. Furthermore, full year accounts delivered a positive variance of £324k and potential new developments in the pipeline may provide a route to Norwich Research Park (NRP) LLP financial self- sustainability in the future.

There are now over 75 non-Partner organisations based at the Park employing over 350 people. This represents a growth rate of over 1 organisation per month since the establishment of NRP LLP in 2012. Overall occupancy stands at 85% and options are under review to accommodate future growth at the Park.

In March, NRP LLP successfully won a national grant to fund a further nursery with additional financial contribution from the John Innes Foundation. The gross funding of £683k will be used to refurbish an existing building within West Site A and the current occupiers will transfer to the Innovation Centre. The nursery will provide a much-needed facility on site when completed in January 2017.

The translational facility to produce high value proteins in plants for Leaf Expression Systems Ltd was completed in December 2016 on time and on budget. Construction of the new Quadram Institute is progressing well and is due to open in Summer 2018. The Quadram Institute will be an international hub for food and health research working across four themes: the gut and the microbiome, healthy aging, food innovation and food safety.

A review is being undertaken by the BBSRC to assess the future viability of the IFR Building to provide additional accommodation when Quadram Biosciences vacates in 2018. A new development is planned for a health referral clinic and other potential additions to the Park are under discussion.

Enterprise Zone status was achieved in April 2016 for the 52 acres of development land. This brings business rate discounts and other benefits to new companies wishing to locate on the Park. Discussions are in progress with the local authorities, including South Norfolk Council, Norfolk County Council and the New Anglia Local Economic Partnership, to deliver additional infrastructure to support further growth at the Park. We continue to work closely with Bullen Developments.

The Centrum hub that provides cross park accommodation, a cafe and meeting space is now 80% occupied. It has been highly successful in supporting innovation and knowledge share, with the cafe proving particularly popular as a meeting place for academics, entrepreneurs and business. There are now 10 occupiers in the building and 9 virtual occupiers with further discussions for additional occupiers in progress.

We continue to strengthen the innovation pipeline by providing business support and access to scientific facilities. In April 2016 the European Regional Development Fund awarded NRP LLP in collaboration with Hethel Innovation, €1.6m to provide innovation support to researchers and entrepreneurs. Since then a total of 11 workshops, 8 drop-in sessions and 20 bite size seminars with Norwich Business School have been held at the Centrum. These training events have received excellent feedback and will be rolled out further in the coming year.

A new website was launched in the summer to simplify the user journey and highlight the strengths of the Park to attract inward investment both nationally and internationally. A key part of the website is Our Sceience which showcases the activities of the Member organisations.

TO OUR STAKEHOLDERS

The target companies identified by the Buck Consulting International report are being pursued by New Anglia Local Economic Partnership in collaboration with Knowledge Exchange Managers from Member organisations. In parallel to this work, a number of regional advertising campaigns and specialist events have been run throughout the year attracting new occupiers to the Park. The joint Science and Innovation Audit for Greater Cambridge Greater Peterborough LEP and New Anglia LEP provided a great opportunity to raise the profile of Norwich Research Park and strengthen links in the region. NRP LLP submitted a proposal for funding for a Microbiome Hub based at NRP that was included as one of the recommended priority interventions. It is an exciting time for Norwich Research Park with lots of new opportunities now and in the future. We look forwards to the next phase of the Park’s development.

CONSOLIDATED FINANCIAL SUMMARY

The overall consolidated financial performance of Norwich Research Partners LLP (NRP LLP) and its wholly owned subsidiary Colney Innovations Limited (CIL) was a combined loss of £358k in 2016/17 versus a loss of £402k in 2015/16. The loss position is improved over last year and is as expected for this early stage of development of the Park. Taking into consideration the revaluation of the investment properties, the consolidated result for 2016/17 is a profit of £159k compared with a loss of £302k last year. Part of this was due to the value of the investment portion of the Centrum building which increased by £517k due to higher occupancy. The overall loss, before revaluation adjustments, for 2016/17 of £358k also compared very favourably with the budgeted loss of £646k, an improvement of £288k (45%). Rental income for 2016/17 was £758k, up from £612k in 2015/16, reflecting increased income for the Centrum building, the commencement of the new Leaf Systems lease and a rent review on the Cotman Centre which was back dated by two years. Service charge turnover for 2016/17 was £528k compared with £681k in 2015/16 as two year’s estate service charge recharges were included in 2015/16. Ignoring one off adjustments associated with the costs and subsequent refunds in respect of the Hethersett Lane junction improvements, direct costs of £1,053k in 2016/17 are virtually unchanged from the £1,059k incurred in 2015/16. Administrative expenses of £1,526 in 2016/17 are unchanged from the previous year’s £1,511 assuming impartment charges are excluded. Total grant income, excluding works on the Hethersett Lane junction and the Leaf Systems building revaluation adjustments, of £590k in 2016/17 is slightly reduced from £614k in 2015/16 as some grants have now been fully amortised.

OPERATING HIGHLIGHTS

The business plan 2016/7 and associated 5-year financial plan were completed in January. This work outlined the progress so far and the plan for new development bringing the Park to financial self-sustainability.

All of the buildings, other than the Centrum building, have shown an occupancy average of 85%. The Centrum building which provides accommodation, cafe and meeting space was opened in July 2014. There are now 10 occupiers in the building and 9 virtual occupiers. Discussions are taking place with another 3 which have the potential to take the building close to 88% occupancy.

There has been a 3% increase this year in cafe prices but with no effect on sales. Performance has continued to improve throughout the year with peak sales of £20k for the month of March. Catering has shown an uplift of 20% in cafe sales at the Centrum in 2016/17 compared to the same period in 2015/16.

TO OUR STAKEHOLDERS

Meeting room occupancy and income was £47k for 2016/17 compared to £30k for 2015/16. The first 3 months of 2017/18 have shown a steady increase in income with additional meeting space being provided to meet increased demand.

Facilities management service contracts are challenged to drive down costs and improve service delivery. Energy management costs have now levelled following the implementation of initiatives to reduce electricity and gas consumption during 2015/16.

There is an ongoing project to refurbish a vacant building to accommodate a Nursery which will be available to all staff working on the Park. The work will be completed by end January 2018.

LOOKING AHEAD

The profile of the Park has been raised significantly as an attractive location for research companies resulting in increasing interest from commercial occupiers. The main areas of focus for the year are summarised below:

• Maintain the focus on achieving the Enterprise Vision adopted by the Members in 2012. • Continue to build on the ongoing strong relationships with Member organisations to assist them in realising the science vision. • Complete refurbishment of the nursery facility and appointment of operator. • Review the future potential of the IFR building when the current occupants vacate in 2018. • Promote the Leaf Expression Systems and Quadram Institute developments, capitalising on the opportunity for these important projects to enhance the profile, expertise and overall attraction of Norwich Research Park to inward investors. • Grow the occupancy levels within the Centrum building and continue to deliver an excellent environment for knowledge share. • Pursue proposals for a Microbiome Hub that complement the activities of the new Quadram Institute. • Apply for a follow-on ERDF grant to enable continuation of innovation support and training to encourage an enterprise culture. • Work with the local authorities to deliver additional infrastructure to support further growth at the Park. • Continue to work with Member organisations to promote key areas of strength and leverage these to attract inward investment by raising awareness both nationally and internationally. • Continue to support strategic scientific alliances, the funding of studentships and follow on funds.

The main strength of Norwich Research Park is the concentration of world-leading researchers and outstanding facilities coupled with the capability to provide a supportive environment for innovation and business. We are now building on this by attracting new partners, innovative businesses and further investment and development to the Park.

Working together we can look forward to another exciting and successful year for Norwich Research Park delivering our vision as a world class location for academics, researchers, entrepreneurs and business.

Dr Sally Ann Forsyth, Chief Executive Officer Norwich Research Partners LLP 18th October 2017

FINANCIAL SUMMARY

Financial Summary

Background During 2012 Norwich Research Partners LLP (NRP LLP) was formed principally as a vehicle to receive the bulk of the £26m BBSRC investment on the Park and deliver the associated vision. Colney Innovations Limited (CIL) was an existing company managing the Innovation Centre on Zone 1 of the Park and has become a wholly owned subsidiary of NRP LLP. NRP LLP Before Revaluation adjustments, NRP LLP reported a loss of £229k for 2016/17, an improvement of £143k on the previous year’s 2015/16 loss of £372k, and better than expected in the five-year plan. Budget vs Actual The loss of £229k for 2016/7 was a significant improvement on the budgeted loss of £484k. Rental income of £577k was ahead of budget by in excess of £113k, mainly due to the Cotman Centre rent review, back dated to 1st April 2015. In addition, rent is included in respect of the new Leaf Systems building. There was a strong performance in the Centrum building offset by some leases not being renewed on expiry in West Site A. Service charge income of £289k in 2016/17 was slightly ahead of the budgeted £264k and included £195k estate service charge re charges. Total overheads of £2,893k include a one-off impairment charge of £1,859 in respect of the new Leaf Systems building. The building was completed in December 2016 and the costs of construction (£2,769k) have been written down to the professional valuation (£910k). A corresponding amount has been released from grants received from BBSRC so there is no effect on the profit and loss account. Excluding one-off impairment charges overheads were £50k under budget. Savings were made in staff costs and marketing/PR, reduced slightly by a small overspend in professional fees. Direct costs of £594k were under budget by £34k mainly due to refunds received from Norfolk County Council in respect of the Hethersett Lane junction improvements. There were also savings in facility management costs, business rates and ground rents, offset by increases in utility costs. Grants Grants received from BBSRC in previous years are released to the profit and loss account in respect of the Centrum and Leaf Systems buildings and other related projects to improve the infrastructure of the Park. The grant income shown in the accounts for 2016/17 of £2,167k includes a one-off grant release of £1,859k to match the diminution in value of the Leaf Systems building. Investment properties are required to be written down to an independent valuation upon completion. A corresponding charge has been included in depreciation so the P&L effect is nil. The prior year grant income of £2,079k included one off grant releases of £1,771 in respect of improvements to the Hethersett Lane junction with Watton Road as the work was completed during 2015/16. Excluding these one-off adjustments grants released were £308k in both 2016/17 and 2015/16.

FINANCIAL SUMMARY

CIL CIL made a loss of £129k in 2016/17, a slightly worse position than 2015/16 when a loss of £30k was reported. This was due to reductions in rental income and energy recharges and some deferred grants becoming fully amortised during the year. Budget vs Actual The loss of £129k in 2016/17 was an improvement over the budgeted loss of £162k. Turnover of £748k was £18k under budget due to some aspirational let’s not being achieved and occupiers vacating during the year. However, good cost management saw direct costs £29k under budget and overheads £21k under budget. Savings were made on facilities management, landscaping and IT support due to contract re-negotiations.

Paul Reed Financial Controller 18th October 2017

FINANCIAL STATEMENTS

Financial Statements

Profit & Loss to 31st March 2017

In £000s Norwich Research Partners Colney Innovations Income - Rent and Service Charges 866 420 - Revenue Grant Income - 19 - Capital Grant Income 2,167 262 - Other Income 225 47 3,258 748 Less: Direct Costs - Facilities Management 170 80 - Business Rates 166 79 - Utility Costs 106 144 - Ground Rents 50 - - Other Direct Costs 102 82 594 385 Less: Other Costs - Management & Admin. Costs 60 176 - Staff Costs 514 - - Marketing & PR 92 - - Professional fees 64 8 - Depreciation & Impairment 2,162 308 2,893 492

Loss for the year before Revaluations (229) (129)

Revaluation Reserve 517 -

NET PROFIT/( LOSS) 287 (129)

FINANCIAL STATEMENTS

Balance Sheet to 31st March 2017

In £000s Norwich Research Partners Colney Innovations FIXED ASSETS Land & Buildings 6,368 - Improvements to property 351 3,439 Other Tangible Assets 517 48 Investment Property 3,860 - 11,096 3,487 CURRENT ASSETS Trade Debtors 47 8 Other Debtors 327 6 Bank Account 1,374 107 1,749 121

TOTAL ASSETS 12,845 3,609

CAPITAL AND RESERVES Called Up Capital / Capital Account 2,499 - Profit and Loss Account (1274) (1072) Revaluation Reserve 617 - 1,841 (1072)

CURRENT LIABILITIES Trade Creditors 61 23 Other Creditors 230 245 Deferred Grants 357 304 648 572 LONG TERM LIABILITIES Amounts Due > 1 Year 76 1,454 Deferred Grants > 1 Year 10,279 2,654 10,355 4,109

TOTAL RESERVES AND LIABILITIES 12,845 3,609