REPORT OF
THE CHIEF EXECUTIVE
TO: Budget Scrutiny Committee on Tuesday 22nd May 2007
TITLE: Manchester Science Park (MSP) & Salford Innovation Park (SIP)
RECOMMENDATIONS:
That the Budget Scrutiny Committee supports the proposal that Salford City Council and Salford
University consider joining forces with Manchester Science Park Ltd to create a major science park
facility across the conurbation.
______________________________________________________________________________
EXECUTIVE SUMMARY :
The purpose of this report is to inform Members of the Committee of discussions with partners with
a view to Salford Innovation Park (SIP) being transferred to the Manchester Science Park Ltd
Company.
BACKGROUND DOCUMENTS
Cabinet Briefing on 20th March 2007
Press Release on 08th May 2007
ASSESSMENT OF RISK
Any risk to the Council will be addressed in the continuing discussions with Manchester Science
Park and conform with the principles of due diligence. In the medium to longer-term, risk with
regard to the operation of Salford Innovation Forum and Salford Business Park will pass from the
City Council to Manchester Science Park, although the City Council will share risk with other
shareholders in the running of the company.
SOURCE OF FUNDING:
No additional funding is required to support the opportunity.
COMMENTS OF THE STRATEGIC DIRECTOR OF CUSTOMER AND SUPPORT SERVICES (or
his representative)
1.
LEGAL IMPLICATIONS
2.
FINANCIAL IMPLICATIONS -
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are addressed through the due diligence
procedures
The risk of a net liability falling upon the City Council
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will be removed in the medium term.
3.
ICT STEERING GROUP IMPLICATIONS
- N/A
PROPERTY: N/A
HUMAN RESOURCES: N/A
______________________________________________________________________________
CONTACT MEMBER / OFFICER:
Kevin Brady – Assistant Chief Executive x-3406
John Spink – Head of Finance x-3230
WARD (S) TO WHICH REPORT RELATE (S) All
KEY COUNCIL POLICIES (that have an impact on service delivery)
Making the vision real; Salford Community Plan for 2006 – 2016
Economic Development Strategy 2004 – 2007
Regenerating a Great City, Salford’s Neighbourhood Renewal Strategy
DETAILS
1.
Background
1.1
Members will recall from previous reports to this Committee that the City Council has :

Commissioned the construction of the Salford Innovation Forum, which is due
for completion imminently
Acquired Salford Business Park from NWDA
Together these now form what is known as Salford Innovation Park.
1.2
Both properties are located on Frederick Rd, Salford and lie adjacent to each other.
Nearby is Technology House, which is owned by the University of Salford.
1.3
In recent months, discussion has been held with the University and with Manchester
Science Park Ltd (MSP Ltd) to seek to bring these assets together under proven
specialist management expertise for the long-term benefit of Salford residents.
1.4
A proposal is therefore currently being worked up to transfer the assets of Salford
City Council and Salford University located at the Salford Innovation Park (SIP) into
MSP Ltd in return for shares and Board representation in that company.
1.5
The working title for the planned new venture is ‘Salford Innovation Park’ and this –
together with branding- has now been agreed by the three parties.
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1.6
All the three partners are defining what information they require to carry out a ‘due
diligence’ exercise and to define how the new shareholding arrangements in MSP
Ltd will be structured, although the existing broad 3-way split between the public,
university and private sectors will be maintained.
1.7
Key to the proposal will be to ensure that the key funding bodies (NWDA/ERDF) for
the Salford Innovation Forum are prepared to give their consent and that EU state
aid and procurement rules are not compromised. Specialist legal advice is being
sought by all parties on a shared basis to ensure these requirements are satisfied.
1.8
Other issues that also will need to be satisfied are :




1.9
2.
Asset values
Outstanding debt on the acquisition of Salford Business Park by the City Council
Continuing to fulfil grant conditions re outcomes/outputs
Taxation issues on the transfer of assets
General due diligence by all 3 parties
In the interim whilst the transfer of assets is negotiated, a sub-contract for the
management of the facilities at SIP has been let by Urban Vision to MSP Ltd.
Specific benefits of the link Up with MSP (Manchester Science Park)
2.1
In considering how best to secure the necessary expertise to manage the Salford
Innovation Park (SIP), consideration has been given to the relationship between the
Salford Innovation Park (SIP) and MSP Ltd. MSP Ltd is a property investment and
management company that has economic development and knowledge transfer as
its strategic objectives. It already operates on three sites in Greater Manchester
(Science Park, Technopark, One Central Park), and is recognised internationally as
one of the leading UK science parks. It is a profitable private company, limited by
shares and its shareholders include the City of Manchester, two universities and five
commercial investors.
2.2
An analysis of the figures (below) indicates that turnover of Manchester Science
Park Limited has increased by 25% between 2003 and 2006 and Earnings Before
Interest and Taxation (EBIT) has increased by 28% during the same period.
The following table is an excerpt from the Manchester Science Park Limited
published accounts (up until year end 2006):
Year Ended 31st Dec
2003
Turnover (£’000)
2,454 2,509 2,706 3,087
EBIT (£’000)
(Earnings Before Interest
and Taxation)
945
2004
870
2005
984
2006 (forecast)
1,211
In 2006 as a direct result of high occupancy rates, MSP’s financial performance has
been encouraging with turnover increasing 7% to £2.7m over the last financial year
and profit (after dividend and tax) to £0.5m compared to £0.39m in the last financial
year. This indicates that net profit has increased by £0.11m in one financial year
which is excellent.
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The Council understands that any remaining surplus generated by MSP after the
payment of interest and taxation is reinvested into the science park both in terms of
the parks infrastructure and in relation to the services provided to tenants.
2.3
Specific benefits to Salford arising from a partnership with MSP Ltd include:

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MSP’s specialist proven management expertise
The attraction of MSP’s brand
Stimulation of jobs for Salford’s residents
Economies of scale
Transfer of risk
A stake in the success of the company
Manchester Science Park Limited has an absolutely outstanding record of delivering
the benefits of regeneration into communities. Its reputation for delivering
knowledge based managed workspace is internationally renowned. Its incubator
facilities in North Manchester and around the University of Manchester campus are
testimony to the principle of the benefits of regeneration impacting positively on the
surrounding community.
The following facts about the Company are particularly worthy of note:
 Manchester Science Park Limited is a private limited company with
Shareholdings divided (approximately) as follows:
- Manchester City Council 28%
- Manchester Universities 38% (University of Manchester 28% & MMU 10%)
-Commercial 34% (various, ie Granada, Natwest Bank etc)

The Company hosts business space for Chinese companies wanting to
invest in Manchester through a MIDAS initiative called ‘Sinoventures’. The
space at SIP will seek to expand on this link with new Chinese companies
using Sinoventures and our twinning with Chengdu city in Sichuan province.
Discussions are already well underway to get this idea moving.

MSP Limited worked in close partnership with the Moss Side and Hulme
Regeneration Partnership to ensure that the commercial success of the
Science Park contributed to the overall regeneration plan for the area. Using
this experience, MSP Ltd is very keen to forge links with Central Salford
Urban Regeneration Company to ensure that their plans for the SIP are
similarly integrated into Central Salford’s strategic vision.

In North Manchester, MSP Ltd and the University of Manchester are two of
the partners in One Central Park on North Manchester Business Park
(Central Park) adjacent to the regional Fujitsu plant. This facility was
established with assistance from Northwest Development Agency and New
East Manchester Urban Regeneration Company and it provides further and
higher education courses, enterprise education and business creation,
incubation and acceleration. Early discussions will take place on replicating
a similar model of community involvement with regards to SIP in the
Broughton ward of Salford, to maximise the existing input of Charlestown
and Lower Kersal New Deal with Communities programme.
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
2.4
Specific benefits to MSP Ltd arising from a partnership with Salford include:

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2.5
Scale – as a small company, MSP Ltd only has the resources (people and
cash) to manage one development at a time. Doubling the size of the
portfolio would enable MSP Ltd to exploit other opportunities across Greater
Manchester;
Range of Accommodation – business start-ups require low cost
accommodation in their early stages, land values around the University of
Manchester make this difficult to provide on existing sites. The Salford
portfolio would extend the range of rents and type of accommodation MSP
Ltd could offer to tenants, allowing more start-ups to benefit from MSP Ltd’s
business development services;
Knowledge Transfer – partnership would enable further development of the
already positive relationship between Academic Enterprise at the University
of Salford and MSP Ltd, adding another dimension to its work on building
university/industry links;
Economic development – MSP Ltd will be able to apply its proven expertise
in another area of the city region, working in partnership with an urban
regeneration company as it did in Hulme and is doing in East Manchester.
This is consistent with the company’s strategic objectives and also with the
Knowledge Capital aim of spreading the benefits of the knowledge economy
to all areas of the city region.
Specific benefits to Greater Manchester arising from a partnership with MSP Ltd
include:



3.
The Company is keen to work with Salford City Council in delivering the
‘Connecting People Programme’ which aims to increase the employability of
the proportion of unemployed people living in the most deprived wards in
Salford.
Transfer of an internationally recognised brand to another location in the
city-region, resulting in the retention and attraction of more knowledge based
businesses. The partnership between MIDAS and MSP Ltd that supports
SinoVentures and the International Innovation Centre attracts a steady
stream of overseas companies to the city region;
Integration of existing management processes and systems of proven quality
and efficiency, across the joint portfolio with economies of scale at an
operational level;
Creation of a Greater Manchester science park company that links both
ends of the `Arc of Opportunity’ is an obvious step for a Knowledge Capital
with aspirations to be a world wide business capital and would send a strong
signal to national government of our commitment to the Science City
concept;
On the contrary, competing science parks within the city region would
undermine partnerships that already existing and be counter-productive in
terms of growing the knowledge economy of the city region.
Conclusion
Recent developments now offer Salford City Council and University a unique opportunity to
maximise the potential of the Salford Innovation Park (SIP).
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