Mri%20ar%202013

Annual Report 2012/13

To lead in livestock health solutions for global food security

Photo by Kevin McCollum

Chief Executive’s Review

Professor Julie Fitzpatrick

Moredun occupies a unique position in the scientific research landscape due to the very strong relationship the Institute and the Foundation have with the farming community. The Moredun Foundation now has over 12,000 members across the UK and overseas and farmers are on our governing boards. This close connection with the farming community has been a real driver for innovation to develop outputs and products to improve the health and welfare of farm animals and bring real benefits to the global livestock industry.

The scientists at Moredun have been very successful in winning external funding to expand our research into novel areas of work and open up new collaborations with other academic institutions across the world. Moredun has a strong focus on using cutting edge science to deliver practical outputs and therefore many of our research projects also involve strong links with industry partners.

A current topic of worldwide significance is how best to treat diseases of livestock while minimising the risk of developing antimicrobial and anthelmintic resistance. Working together with the National Farmers Union Scotland and with policy colleagues, Moredun hosted an international conference to address this topic and look at how new technologies may be applied to provide solutions to this increasing problem. A potential solution to this issue is to use vaccination to prevent disease as a replacement for the use of drugs to treat diseased animals. Some of our recent research has shown some very promising results towards the development of antiparasitic vaccines which would be a significant breakthrough in combating livestock disease across the world.

I would like to thank all the staff at Moredun for their commitment and dedication in working together to deliver research outputs to help prevent and control diseases of livestock in UK and worldwide. I am also very grateful for the advice and counsel we receive from our Chairmen and board members and all of our regional advisors across the UK. I look forward very much to working with you all in the coming year to help Moredun to lead in livestock health solutions for global food security.

Main picture: Professor Alan Miller, Heriot-Watt University at Moredun’s debate on Innovation Cultures at Edinburgh International Science Festival Top right: Attending shows and farming events across the UK Bottom left: Bug Busters at Edinburgh International Science Festival, Photo: RGBE

Photo by Kevin McCollum

Moredun staff have been very active in our knowledge transfer and exchange programme where we have travelled across the UK participating in animal health roadshows for farmers and veterinarians; taken part in public debates on topics including food security and innovation cultures; participated in schools programmes and collaborated with the broadcast media to make television programmes about two very important livestock pathogens, Neospora caninum and liver fluke.

Safeguarding Health & Welfare Moredun Research Institute aims to provide livestock health solutions for global food security by undertaking world-class research in infectious diseases in livestock species, especially sheep, cattle, goats, pigs, poultry and aquaculture species. Our objectives are to ensure the optimal health and wellbeing of livestock kept for food, fibre or power while minimising the impact on the environment through reducing waste and the use of drugs and pesticides.

Vaccines Understanding how pathogens cause disease and how animals develop immunity and resist infection are key to designing effective disease prevention strategies using vaccination. Moredun scientists have achieved some interesting breakthroughs in developing novel vaccines to protect sheep against parasitic worms. This has been a real challenge due to the complicated life cycle of the worm in the host and the ability of the parasites to evade the immune response. Worm infections are currently controlled by drugs, however, resistance is rife and multi-drug resistant isolates are being reported with such frequency that the development of a vaccine is now a research priority worldwide. Scientists have identified a number of proteins that the worm uses to survive and escape from the immune response of the sheep, and are using these as the basis for a vaccination approach. Results have shown that the novel vaccine can significantly reduce both the number of adult worms in sheep, and eggs shed into the environment. This is a significant breakthrough in the battle to control parasitic worms through vaccination and has important implications for both veterinary and human medicine. Another pathogen of increasing significance is Toxoplasma gondii, an important cause of disease in both humans and animals. It is currently estimated that around 20% of the human population are infected with T. gondii and that eating undercooked meat from infected food animals is a major route of transmission to people. Moredun scientists are collaborating with research groups in Europe and South America to look at whether vaccination of food animals against T. gondii would provide safer meat for human consumption.

Diagnostic Tests Moredun provides an expert disease surveillance service to enable the accurate and rapid diagnosis of a large number of diseases of livestock.

Activity is focussed within the Virus Surveillance Unit and in Pathology where specialist molecular and histopathological techniques are applied to enable the scientists to determine the causes of disease and to horizon scan for new emerging conditions. Scientists were able to help confirm the first case of Schmallenberg virus in Scotland using molecular and pathology diagnostic techniques. Recent developments include a blood test to enable the early diagnosis of sheep infested with the scab mite and a new test for liver fluke which can detect tiny quantities of fluke secretions in sheep and cattle faeces. This fluke diagnostic has shown considerable promise in experimental studies, being capable of detecting active infection several weeks ahead of the routine egg count test and will also be of benefit to determine the efficacy of treatments. The test is currently being trialled in the field with the support and collaboration of QMS. Disease Control The research on disease control is multi-disciplinary, involving genomic and molecular analyses of pathogens, interactions between pathogens and their host species, through to whole animal or population studies. The outputs look at employing new strategies to prevent and control disease together with applying more traditional skills and techniques. Moredun is collaborating with 14 organisations across Europe in the GLOWORM project, funded by the European Union (EU), which aims to develop innovative and sustainable strategies to mitigate the impact of global change on helminth infections in ruminants. Researchers from the Moredun Research Institute and Scotland’s Rural College have received a major funding award to develop a project that could ultimately lead to an early warning system for poor health and welfare states in dairy cattle. Initial work by the team has found that easily recordable immune traits could be used to predict an individual farm animal’s susceptibility and resistance to a range of health conditions.

Image reproduced by kind permission of Thomas Tzelos

Main picture: Teladorsagia circumcincta larvae Top: Right, Moredun provides an excellent disease surveillance service Middle: Further developments in the early diagnosis of sheep scab Bottom: Left, Safeguarding livestock health Middle, Pathogen culture

Right, Highland cattle, Glengorm Estate, Isle of Mull

Photo by Tootie and Shane Cadzow, Isle of Luing

Innovation & Growth The Moredun Group consists of the Moredun Research Institute and several companies and charitable bodies which include; The Moredun Foundation, Moredun Scientific, Pentlands Science Park and the Equine Grass Sickness Fund. The research outputs from the Institute have made a major impact both in the UK and globally due in a large part to the unique relationship Moredun has with the farming community and the emphasis the organisation puts on effective knowledge exchange with livestock producers. Today many of the veterinary medicines and vaccines that are routinely used on the farm have been researched, developed or tested at Moredun.

Any profits made from the commercial activities of the Moredun Group companies are gift aided back to the Foundation and then used to help support scientific research.

Moredun Scientific Moredun Scientific is celebrating 25 years of providing contract research and testing services to the animal health and biopharmaceutical industries.

The company was created in 1988 as the commercial arm of the Moredun Research Institute in recognition that Moredun`s expert knowledge of animal diseases and its state of the art animal facilities could provide world class services to the animal health industry.The animal health business continues to deliver efficacy and safety testing studies for vaccines and therapeutics to the leading animal health companies around the world. The company has recently completed the validation of a Streptococcus suis serotype 2 meningitis disease model in weaner piglets. S. suis is a bacterium found in the pig industry all over the world and infections caused by the organism have a major economic impact.

Pentlands Science Park Pentlands Science Park is part of a global science park network and aims to provide an environment where knowledge based businesses can operate and grow successfully. The company provides flexible specialist accommodation and a range of support services for tenants. PSP has active links with other science parks both nationally and internationally and these links are of great benefit to share best practice and deliver added value services and benefits.

Innovative Research and Links with Industry A team of scientists from Moredun Research Institute won the top prize in the Converge Business Challenge for research to exploit a new platform technology that will enable the development of novel and effective vaccines against important bacterial diseases of livestock. The animal health market is a global multi-billion dollar industry and this new technology is well placed to make a strong impact to generate novel products to prevent and control animal diseases. Other new areas of research at Moredun have attracted research funding along with industrial partners. These include understanding the role of Chlamydia-like organisms in reproductive failure in cattle; developing a vaccine to control red poultry mite, and a large scale European project (Aquavalens) linking academic organisations and SMEs to develop rapid molecular diagnostics to detect water borne pathogens.

Photo by Kevin McCollum

Connecting Effective connections and collaborations with other organisations are key to communicating our research to all stakeholders. Moredun has an excellent track record in proactively seeking out new partnerships to ensure the maximum impact of our research.

Collaboration Moredun staff are very active in engaging in different activities to encourage effective collaboration with other organisations. These include hosting scientific conferences and workshops such as the international meeting to discuss the issues involved in microbial and anthelmintic resistance and a workshop discussing respiratory pathogens. Moredun has also played host to several international visitors from Russia, Poland and Japan to help encourage scientific innovation and commercial development. Scientists have active research collaborations both in UK and worldwide to share knowledge and expertise and expand the reach of research programmes through multi-disciplinary working: The PARAVAC initiative is led by Moredun and involves scientists from across Europe and other countries worldwide to develop vaccines against parasitic pathogens; AQUAVALENS is a European project involving 40 partners across industry and academia; the IMMUNOLOGICAL TOOLBOX initiative is helping to provide species specific immunology reagents to help researchers understand how animals respond to infections, and C0ZEE is the new cooperative network set up by Moredun scientists to bring together different groups interested in the prevention and control of zoonoses.

The Dark Arts of Innovation: Panel debate at Edinburgh International Science Festival.

L to R: Alan Miller, Heriot-Watt University; Mark Stephen, BBC; Gerry Mulligan, W.L. Gore & Associates; Lee Innes, Moredun

Outreach to Livestock Producers Moredun staff met with large numbers of livestock producers and veterinary professionals at agricultural shows, workshops and focus groups across the UK. Moredun has an active group of over 40 volunteer regional advisors throughout the UK who serve as a direct link between Moredun and those involved in the livestock industry. Many farmers have been active in helping our scientists with surveys and providing valuable samples for study. Moredun organises a UK wide livestock health roadshow each year giving advice on the prevention and control of a wide range of endemic diseases affecting sheep and cattle. Scientists also meet and discuss with livestock producers at agricultural shows, specialist events, farmers meetings and run CPD events for large animal vets.

Public and Policy Engagement Moredun’s public engagement programme received a high profile boost with a collaboration with BBC Scotland’s Landward, the popular farming and countryside programme. Nigel Miller, President of the NFUS, and Moredun’s Lee Innes joined Dougie Vipond to discuss bovine neosporosis and the risk of dog fouling in the countryside spreading pathogens to cattle, and Phil Skuce discussed the rising problems of liver fluke in sheep and cattle with Sarah Mack (www.moredun.org.uk/liver-fluke). Moredun also hosted a panel debate at the Edinburgh International Science Festival discussing how best to stimulate a culture of innovation in different science organisations and industries. The debate entitled, The Dark Arts of Innovation was chaired by the BBC’s Mark Stephen and involved panellists from Heriot Watt University, W.L. Gore & Associates and Moredun. Improving the connectivity between science and policy is important to maximise the benefits scientific research may bring to society. Scientists are involved in writing policy research briefs and providing information to government colleagues on aspects of livestock health and welfare. Moredun also coordinates a work shadowing scheme which places scientists from all the Scottish Research Institutes with government colleagues to enable them to improve their understanding of how science is used within policy.

Top: Left, Moredun contributes new research into water borne pathogens Middle, Moredun welcomes visitors from Akita Co Ltd, Japan Top: Right, Landward visit Moredun to discuss bovine neosporosis Middle: Moredun scientists start work on Aquavalens project Bottom: Liver fluke on the increase Main picture: Dr Rebekkah Widdowfield, RESAS, at the knowledgescotland work shadowing scheme

Photo by Kevin McCollum

Contributing A central philosophy of Moredun is to contribute towards both economic and societal benefits through education and training, along with charitable work, to improve the health and welfare of livestock animals.

Education and Training Education and training are a key aspect of our commitment to advancing knowledge exchange, both within formal education and more widely with the general public. Moredun’s contribution in this area was showcased during a visit by Her Royal Highness, The Princess Royal. Her Royal Highness particularly enjoyed the contribution by Edward Marr, a young postgraduate student, who had been inspired to take up a career in livestock science following a short project placement he had undertaken at Moredun whilst completing his undergraduate degree. Moredun staff continue to develop educational exhibits and activities for school children and Disease Explorers is a new activity looking at how scientists identify the different bugs and micro-organisms that can cause disease. This activity was taken to the Edinburgh International Science Festival, Midlothian Science Festival and the Royal Highland Education Trust’s food and farming day. Moredun also hosted secondary school biology teachers from across Scotland for an educational workshop in collaboration with SSERC. Staff at Moredun provide training opportunities for undergraduate and post-graduate students wishing to undertake scientific research projects on different aspects of animal health and welfare.

HRH The Princess Royal at Moredun’s Educational Training in Livestock Health and Welfare event

Moredun Foundation The critical link with the farming community has been a mainstay of Moredun’s success. The Moredun Foundation, a registered charity, currently has over 12,000 members from the farming, veterinary and animal health community and farmers sit on Moredun’s governing boards. This ensures that the research outputs, knowledge, skills and expertise generated at Moredun are focussed and targeted to improve animal health and welfare and increase the sustainable efficiency of livestock production, vital to help safeguard global food security.The Moredun Foundation Scholarships are awarded annually and give individuals the opportunity to undertake short term research projects in different aspects of livestock health and welfare. www.moredun.org.uk/scholarship The Equine Grass Sickness Fund This important charity supports research into this devastating disease of horses. The charity is currently supporting some exciting work with a pilot vaccine trial targeting horses and ponies in premises with a high incidence and frequency of the disease. The vaccine is a Clostridium botulinum type C toxoid and there is great interest in the equine community in receiving the initial results. www.grasssickness.org.uk Environment The Moredun Group gained ISO 14001 certification for its environmental management systems. This was the culmination of two years work in setting up and implementing the system with the advice and assistance of the business environmental partnership.

Photo by Kevin McCollum

Main picture: HRH The Princess Royal views the educational activities of Moredun scientists Top: Right, Musicians from Beeslack High School at the Christmas fair Bottom: Left, ‘Healthy Sheep are Happy Sheep’ at the RHET Food and Farming Day Bottom: Middle, Microbe modelling at Midlothian Science Festival, Photo: Bethany Archibald

Right, Rock Up In Red Day

Financial Summary Overall the Group achieved a 9.5% increase in its incoming resources to £17.2 million largely due to increased competitive research contracts income within the Research Institute and a continued recovery in the turnover of Moredun Scientific. The net surplus amounted to £938k (before capital grants and realised and unrealised investment gains) as against a net deficit of £99k the previous year. Group net assets increased 3.2% to £30.8 million.

During the year under review, Moredun Foundation saw its income decrease by 3% largely due to vacant space within the science park.

Demand for accommodation remains strong and we have been fortunate in that the tenants, with a few exceptions, have largely survived the economic downturn and continue to prosper. Despite the slight downturn in income, the Foundation continued to support the farming and veterinary communities through funding research work, carrying out knowledge exchange activities and providing excellent research facilities for the scientific community. Overall the financial year ended with a net surplus of £443k and net assets increased by over 2% to £19.6 million. Debt repayments continued as planned resulting in a reduction in our development loan positions of £647k over the course of the year.

The Research Institute continues to benefit from Scottish Government funding and has been successful in winning competitively funded research projects. Overall there was a 9.5% increase in income to £13.5 million, including a 23% increase in research contracts income. Following a structural review and the implementation of cost saving measures, the Institute ended the year with a surplus of £280k as against a previous year deficit of £766k.

Irrecoverable VAT remains a large cost to the Institute, as it does for many charities, and this year this amounted to £260k. As a result of the surplus, the net assets increased 3% to £11.1 million.

It is extremely satisfying to be able to confirm that the increased interest in the services of Moredun Scientific from new and existing customers resulted

Expenditure Direct Research Costs

55%

Cost of Sales

25%

Administration Costs

11%

Depreciation & Amortisation

6%

Irrecoverable VAT

2%

Interest Paid

1%

Income Research Income

74%

Sales

19%

Fundraising Income

6%

Interest Received

1%

in turnover and profitability of the business significantly increasing over the previous year. During the year we have seen significant changes in both of the divisions. Biosafety has been transformed from the start-up arm of Moredun Scientific to become a major contributor to the sales and profit of the overall business. This has been achieved through strong partnerships with key clients and a new contract with a major customer contributing to the growth of the division. For the Animal Health division, after an encouraging start to the year there was a period in the third quarter when despite a high level of enquiries, these did not secure substantial contracts.

However, this trend reversed significantly in the final quarter and the outlook for 2013-2014 is positive. Overall the financial performance was robust and recorded an increase in turnover of 11% to £2 million with pre tax profits increasing by 81% to £151k. Net assets increased to £279k from £147k the previous year.

Pentlands Science Park remains a key partner in the Edinburgh Science Triangle (EST). The company also has representation on the board of the United Kingdom Science Park Association (UKSPA) and works closely with other organisations such as Scottish Enterprise, Midlothian Council and Midlothian & East Lothian Chamber of Commerce which provides a wide array of services to local businesses. Overall services for park tenants were maintained at a high level and occupancy ended the year at 95%, slightly down on the previous year but still extremely positive given the occupancy levels experienced on other similar research parks. Overall, the company achieved an 8.7% increase in turnover to £3.5 million and net assets increased 13% to £823k. Gift aid to the Group charities increased 188% to £230k benefitting the scientific research that underpins the Group.

Finally we would like to acknowledge the contributions from our major funders (including the Scottish Government), collaborators and members who enable the Moredun staff to continue their world leading research work to provide livestock health solutions for global food security. We once again give our sincere thanks to all our supporters.

The Moredun Foundation Summary of Consolidated Income and Expenditure Account For the year ending 31 March 2013 Income Sales (After Eliminating Inter-company & Joint Ventures) Research Income Fundraising Income Expenditure Cost of Sales Direct Research Costs Administration Costs Depreciation and Amortisation Irrecoverable VAT Operating Surplus/(Deficit) Other Income Share of Operating Loss in Joint Ventures

2013 ÂŁ

2012 ÂŁ

3,160,041 12,368,008 924,587 16,452,636

2,934,447 10,987,605 992,585 14,914,637

3,848,643 8,663,526 1,786,047 1,003,255 269,453 15,570,924

3,134,766 9,130,677 1,536,841 1,054,757 347,041 15,204,082

881,712 25,570 (9,359) 897,923

(289,445) 235,846 (557) (54,156)

197,544 (124,275) 73,269

110,298 (159,902) (49,604)

Surplus/(Deficit) on Ordinary Activities Before Taxation Corporation Tax (Commercial Subsidiaries & Joint Ventures)

971,192 (33,357)

(103,760) 5,085

Net Surplus/(Deficit) Realised and Unrealised Gains Capital Grants Received

937,835 7,608 40,500

(98,675) 5,363 75,376

Total Recognised Gains and Losses relating to the Year

985,943

(17,936)

Interest and Similar Items Bank and Other Interest Received Bank, Loan and Other Interest Paid

The Moredun Foundation Summary of Consolidated Balance Sheet As at 31 March 2013 2013 ÂŁ

2012 ÂŁ

320,165 22,764,870 184,701

282,440 23,229,416 213,871

23,269,736 373,817 (351,391) 23,292,162

23,725,727 567,778 (542,104) 23,751,401

314,035 2,483,585 98,075 10,380,714 13,276,409

306,039 2,004,610 165,549 11,938,142 14,414,340

Creditors: amounts falling due within one year

(3,957.932)

(5,698,071)

Net Current Assets

9,318,477

8,716,269

32,610,639

32,467,670

Fixed Assets Intangible Assets Tangible Assets Investments Share of gross assets of joint ventures Share of gross liabilities of joint ventures Current Assets Stocks Debtors: due within one year Debtors: due after more than one year Cash at bank and in hand

Total Assets Less Current Liabilities Creditors: amounts falling due after more than one year

(815,727)

(1,658,701)

Net Assets

31,794,912

30,808,969

Funds Unrestricted Funds Restricted Funds

21,568,806 10,226,106

19,902,149 10,906,820

Total Funds

31,794,912

30,808,969

This summary financial information is intended to provide an overview of Moredun's financial position.

It has been extracted from the full annual accounts which have been audited by Scott-Moncrieff, Statutory Auditor, and which were approved by the Trustees on 5 September 2013.The full accounts and Trustees' Report are available by writing to:The Moredun Foundation, Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PZ.

Who We Are Moredun was originally established as the Animal Diseases Research Association in 1920 by farmers dedicated to improving the health of their livestock. The Moredun Group has maintained and strengthened the link with farmers and other end users of our research. Situated at Pentlands Science Park near Edinburgh, Scotland, Moredun is the only example worldwide of a thriving Bioscience Park centred around an animal health and welfare research facility.

Key organisations within the Moredun Group are: The Moredun Foundation – a registered charity supporting animal health and welfare through research and education. The Foundation governs the work of the Moredun Group.

Moredun Research Institute – conducts world class scientific research to improve animal health and welfare through the prevention and control of infectious diseases of livestock.

Moredun Scientific – a commercial arm of the Moredun Group, provides contract research and biosafety testing services supporting the animal health, pharmaceutical and biotechnology industries.

Pentlands Science Park Limited – a commercial arm of the Moredun Group, offers incubation units for biotechnology and related companies. It also provides property and management services including conferencing facilities.

The Equine Grass Sickness Fund – administered within the Moredun Foundation and dedicated to supporting and advancing research into equine grass sickness and further improving the treatment of chronic cases.

The Moredun Foundation is a company limited by guarantee, registered in Scotland No SC151865 (Scottish Charity No SC022515).

The Moredun Foundation is the sole member of Moredun Research Institute (a company limited by guarantee, registered in Scotland No SC149440, Scottish Charity No SC022353).

The Moredun Foundation also has the following wholly owned subsidiaries • Moredun Scientific Limited, registered in Scotland No SC107439 • Pentlands Science Park Limited, registered in Scotland No SC148767

• Moredun Animal Health Limited, registered in Scotland No SC161952 • Pentland Holdings Limited, registered in Scotland No SC174058 Group companies are also involved in the following joint ventures: • Genomia Management Limited, registered in Scotland No SC266593 • Genecom Limited, registered in Scotland No SC270942 Moredun Research Institute is one of the Main Research Providers and is sponsored by the Scottish Government and RESAS (Rural and Environment Science and Analytical Services).

© The Moredun Foundation 2013 The Moredun Annual Report 2012/13 is available on application to: The Communications Team The Moredun Foundation Pentlands Science Park Bush Loan Penicuik EH26 0PZ Tel: 0131 445 5111 Fax: 0131 445 6235 Web: www.moredun.org.uk Email: info@moredun.org.uk

Designed and produced by Moredun Communications Centre © 2013

Published by The Moredun Foundation

Pentlands Science Park, Bush Loan, Penicuik EH26 0PZ, Scotland, UK Tel: +44 (0)131 445 5111 www.moredun.org.uk