Annual Report2012/13

To lead in livestock

health solutions for

global food security

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 anti-

parasitic vaccines which would be a significant breakthrough in combating

livestock disease across the world.

Chief Executive’s Review

Professor Julie Fitzpatrick

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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.

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

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Moredun Research Institute aims to provide livestock health solutionsfor global food security by undertaking world-class research ininfectious diseases in livestock species, especially sheep, cattle, goats,pigs, poultry and aquaculture species. Our objectives are to ensurethe optimal health and wellbeing of livestock kept for food, fibre orpower while minimising the impact on the environment throughreducing waste and the use of drugs and pesticides.

Vaccines

Understanding how pathogens cause disease and how animals developimmunity and resist infection are key to designing effective disease preventionstrategies using vaccination. Moredun scientists have achieved someinteresting breakthroughs in developing novel vaccines to protect sheepagainst parasitic worms. This has been a real challenge due to the complicatedlife cycle of the worm in the host and the ability of the parasites to evade theimmune response. Worm infections are currently controlled by drugs,however, resistance is rife and multi-drug resistant isolates are being reportedwith such frequency that the development of a vaccine is now a researchpriority worldwide. Scientists have identified a number of proteins that theworm uses to survive and escape from the immune response of the sheep,and are using these as the basis for a vaccination approach. Results haveshown that the novel vaccine can significantly reduce both the number ofadult worms in sheep, and eggs shed into the environment. This is a significantbreakthrough in the battle to control parasitic worms through vaccination andhas important implications for both veterinary and human medicine. Anotherpathogen of increasing significance is Toxoplasma gondii, an important cause ofdisease in both humans and animals. It is currently estimated that around 20%of the human population are infected with T. gondii and that eatingundercooked meat from infected food animals is a major route oftransmission to people. Moredun scientists are collaborating with researchgroups in Europe and South America to look at whether vaccination of foodanimals against T. gondii would provide safer meat for human consumption.

Safeguarding Health & Welfare

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.

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

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The Moredun Group consists of the Moredun Research Instituteand several companies and charitable bodies which include; The Moredun Foundation, Moredun Scientific, Pentlands Science Parkand the Equine Grass Sickness Fund. The research outputs from theInstitute have made a major impact both in the UK and globally duein a large part to the unique relationship Moredun has with thefarming community and the emphasis the organisation puts oneffective knowledge exchange with livestock producers. Today manyof the veterinary medicines and vaccines that are routinely used onthe farm have been researched, developed or tested at Moredun.Any profits made from the commercial activities of the MoredunGroup companies are gift aided back to the Foundation and thenused 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.

Innovation & Growth

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.

Effective connections and collaborations with other organisations arekey to communicating our research to all stakeholders. Moredun hasan excellent track record in proactively seeking out new partnershipsto 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.

Connecting

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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

A central philosophy of Moredun is to contribute towards botheconomic and societal benefits through education and training, along with charitable work, to improve the health and welfare oflivestock 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 post-

graduate 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.

Contributing

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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.

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

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Expenditure

Direct Research Costs 55%

Cost of Sales 25%

Administration Costs 11%

Depreciation & Amortisation 6%

Irrecoverable VAT 2%

Interest Paid 1%

Overall the Group achieved a 9.5% increase in its incomingresources to £17.2 million largely due to increased competitiveresearch contracts income within the Research Institute and acontinued recovery in the turnover of Moredun Scientific. The netsurplus amounted to £938k (before capital grants and realised andunrealised investment gains) as against a net deficit of £99k theprevious 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

Financial Summary

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

2013 2012

£ £

Income

Sales (After Eliminating Inter-company & Joint Ventures) 3,160,041 2,934,447

Research Income 12,368,008 10,987,605

Fundraising Income 924,587 992,585

16,452,636 14,914,637

Expenditure

Cost of Sales 3,848,643 3,134,766

Direct Research Costs 8,663,526 9,130,677

Administration Costs 1,786,047 1,536,841

Depreciation and Amortisation 1,003,255 1,054,757

Irrecoverable VAT 269,453 347,041

15,570,924 15,204,082

Operating Surplus/(Deficit) 881,712 (289,445)

Other Income 25,570 235,846

Share of Operating Loss in Joint Ventures (9,359) (557)

897,923 (54,156)

Interest and Similar Items

Bank and Other Interest Received 197,544 110,298

Bank, Loan and Other Interest Paid (124,275) (159,902)

73,269 (49,604)

Surplus/(Deficit) on Ordinary Activities Before Taxation 971,192 (103,760)

Corporation Tax (Commercial Subsidiaries & Joint Ventures) (33,357) 5,085

Net Surplus/(Deficit) 937,835 (98,675)

Realised and Unrealised Gains 7,608 5,363

Capital Grants Received 40,500 75,376

Total Recognised Gains and Losses relating to the Year 985,943 (17,936)

The Moredun Foundation

Summary of Consolidated Balance Sheet

As at 31 March 2013

2013 2012

£ £

Fixed Assets

Intangible Assets 320,165 282,440

Tangible Assets 22,764,870 23,229,416

Investments 184,701 213,871

23,269,736 23,725,727

Share of gross assets of joint ventures 373,817 567,778

Share of gross liabilities of joint ventures (351,391) (542,104)

23,292,162 23,751,401

Current Assets

Stocks 314,035 306,039

Debtors: due within one year 2,483,585 2,004,610

Debtors: due after more than one year 98,075 165,549

Cash at bank and in hand 10,380,714 11,938,142

13,276,409 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

Total Assets Less Current Liabilities 32,610,639 32,467,670

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 21,568,806 19,902,149

Restricted Funds 10,226,106 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.

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.

Who We Are

Published by The Moredun Foundation

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

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Pentlands Science Park, Bush Loan,

Penicuik EH26 0PZ, Scotland, UK

Tel: +44 (0)131 445 5111

www.moredun.org.uk