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Northwest Regional Development Agency

Annual report and financial statements

Year ended 31 March 2005

Northwest Regional Development AgencyAnnual report and financial statements


Contents

Page

Annual report

Chairman's statement .......... ..... ... .... ............. ... ........ ........................................ .... ................ ......... .......... 2

Chief Executive's review..........................................................................................................................3

Summary of performance ........................................................................................................................ 5

Operating review.. ....... ............. ... .... ..................... ...... ...... ... ................. ........ ... ............ ...... ... ... ... ...... ........8

Governance....................................................................................................................... .................... 20

Environmental policy..............................................................................................................................27

Financial statements

Foreword................................................................................................................................................30

Statement of Internal Control.................................................................................................................35

Certificate of the Comptroller and Auditor General............................................................................... 38

Income and Expenditure account..........................................................................................................40

Statement of Total Recognised Gains and Losses ............................................................................... 41

Balance Sheet........ ......... ........... ................ ..................... ....... ......... ................ .......... ............... .............42

Cashflow Statement....... ........ .................... .... ......... ...... ..... ......... ... ....... ......... ...... ..... ........ .............. ... ....43

Notes to the financial statements. ........ .................................................. ............. ....... ...........................44

Accounts direction .................................................................................................................................72

Annual Report

1



Chairman's statement

England's Northwest has witnessed a period of sustained economic growth over the pastthree years. Evidence from a new economic baseline report points to a very positive overallperformance for the region. Employment growth, business start-ups and labour marketperformance are all much stronger in the Northwest than nationally.

I am proud of the Northwest Regional Development Agency's contribution to this positivechange to our regional economy and you wil see many examples of that in this AnnualReport and Financial Statements. In my second term as Chairman I will ensure that wecontinue this momentum as we review the Regional Economic Strategy (RES), and focus onactivities which wil transform our economy.

The RDA's remit is becoming increasingly focussed on providing strategic leadership. Weare continuing to work with the government on the development and implementation of newstrategies which will provide future growth opportunities for our region.

An example of this is our collaborative working on The Northern Way Growth Strategy, whichhas tremendous potential to strengthen the knowledge base, encourage greater levels ofinnovation, and make a real difference to the economy of the North of England. However, agood strategy is meaningless without effective implementation and over the coming year wewill be working hard with our Northern RDA counterparts to ensure we deliver on this.

Likewise, our focus on Sub-Regional Partnerships (SRPs) is helping to ensure that wedevelop robust local leadership and strong, evidence-based strategies and priorities, all ofwhich are closely aligned with the development and delivery of strategic objectives within theRES.

With innovation a key route to competitiveness, the Agency is helping to develop and exploitthe region's knowledge base. Two significant projects in this area are our investment intoDaresbury International Science and Technology Park and the National BiomanufacturingCentre at Speke, both of which are helping to build on the region's scientific capability.

Relationships with the Higher and Further Education sector have also grown stronger, withthe Agency using its influence to encourage universities to play a more significant role in theregional economy. In particular our support for the growth plans of the new University ofManchester is helping to ensure that our businesses have a plentiful supply of skilledgraduates, as well as developing an institution of national significance.

Lastly, we cannot forget the importance of promoting the best of the region's assets and theexcellent quality of life enjoyed by people and businesses in the Northwest. To strengthenour aim of developing the region's image, the Agency has now taken responsibility for thedelivery of tourism in the region, to ensure that support is in place to drive forward a vibrantand sustainable future for the sector.

There have been a significant number of achievements for the Agency over the past year.Through sustained investment in our people and businesses, we wil continue to bringtogether businesses, government, the public sector and local communities to identify furtheropportunities to drive forward the sustainable economic development and regeneration ofEngland's Northwest.

~~"'~~Bryan GrayChairman

8 July 2005

2



Chief Executive's review

2004-5 has seen the agency continue to change to ensure that it is able to meet therequirements of new responsibilities for delivery and to provide strategic leadership. It hasbeen a challenging but rewarding year, in which I have continued to prioritise the need tobuild capacity both internally and externally and to ensure that the Agency is able to focus itsefforts on a smaller number of priorities for transformational change.

This annual report includes a comprehensive update on the Agency's achievements in theyear, but I would like to highlight the following:

. Business Skills Northwest, launched in July 2004, wil deliver a cohesive and integrated

service linking business support with skils provision based on the demand from theregions businesses and ensuring that individuals have access to skils training that willdirectly help employabilty and development

. Construction of the Daresbury international Science park was complete during the year

and the Cockcroft Institute, a world class accelerator science facilty is being establishedon the site.

. The Agency continued engagement with the sub regions to develop robust SRPs toreflect sub-regional priorities, faciltating the creation of a single SRP for Lancashire andsupporting the development of sub regional strategies

. Through Project ACCESS, a UK and Regional Development Agency first, we areinvesting £20m in Broadband infrastructure across Cumbria. Areas of the Northwesthave now outstripped the national average for Broadband take up.

. The Agency launched the first ever Air Services Development Fund to encourage airlinesto invest in new routes, and support Northwest Airports to maximise capacity.

. the Deputy Prime Minister announced new Urban Regeneration Companies for Blackpool

and Central Salford

. five new tourist boards began creative programmes to boost visitor numbers and an

online booking system is now available for each sub region and linked with the nationallyco-ordinated tourism network.

. At Lancaster University the Agency faciltated the establishment of Infolab21, a world

class Centre of Excellence for the research, development and commercialisation of

Information and Communication Technology.

. The Agency also began the review of the Regional Economic Strategy, which wil bepublished in 2006. A detailed economic analysis of the region was prepared anddiscussed with a wide range of stakeholders through consultation.

In addition to the operational achievements, the Agency has also continued to improve on itsown internal management systems and performance. The second Strategic InvestmentPlan (covering the three years from April 2005 to March 2008) was published in January.

3



Chief Executive's review (continued)

The Agency's risk management framework has been refreshed and linked to the internalBusiness Plan, which has been developed to ensure a clear link between risks and activitiesis properly controlled. The Agency has also commenced a substantial project to enhanceexisting project management methodology through the Systems and Process ImprovementProgramme ('SAPIP') initiative. This initiative involves staff from all areas of the Agencyand aims to ensure the continuous improvement of the Agency's processes.

Following the hard work undertaken in the year, I am confident that the Agency is well-placed to lead the economic regeneration of the North West. I would like to thank all of ourpartners, stakeholders, and staff for their continued dedication over the past year in helpingus to achieve our targets.

~~~Steven SroomheadChief Executive

8 July 2005

4



Summary of Performance

Key achievements against Tier 3 milestones

The following section provides an overview of the Agency's performance during 2004-5

against the Tier 3 milestones as determined by the DTI for assessing and comparing

Regional Development Agency performance. The Agency also publishes (as a separatedocument) an Annual Review of its achievements during the year. This provides a furtheranalysis of progress made against the five priorities of the Regional Economic Strategy -Business Development, Regeneration, Skills and Employment, Infrastructure, and Image.

The Agency is extremely pleased to have once again achieved all of its Tier 3 targets. Theachievement of the targets depends almost as much on the quality of advance forecasting,and the ability to take corrective action where necessary, as on delivery on the ground. Theperformance is a testament to the improvements in the Agency's and its partner'sperformance management and monitoring arrangements, with the consequent improvedquality of data included in the Agency's programme management system.

Core Milestones

1. Employment Opportunities

The total number of employment opportunities directly attibutable to RDA activity - takingnew and safeguarded jobs together (excluding jobs created as a result of Foreign DirectInvestment and RSA Grants).

Target

8,978

Achieved

11,208

This demonstrates an excellent performance for the year with all targets against all five RESpriorities being exceeded. Actual performance was lower than the previous year but thiswas expected (and reflected in the target) due to the sharp decline in the SingleRegeneration Budget ('SRB') programme.

2. Business Penormance 725 1,094

The total number of new businesses added to the regional economy as a direct result ofRDA activites.

The result represents a 48% improvement on 2003-4, with especially strong performancefrom regional and sub-regional Business Development programmes, including BusinessSkils Northwest.

3. Brownfield Land 344 357

The total number of hectares of land remediated to an acceptable condition and/or recycledinto effective use as a direct result of RDA inputs and activites.

This is an excellent performance with the Agency once again delivering over 30% of

ODPM's national brownfield land target. In addition, the Agency also exceeded the 2003-4performance figure.

5



Summary of Penormance (continued)

Key achievements against tier 3 milestones (continued)

Target Achieved

4. Education and Skils 15,462 26,198

The total number of learning opportunites created as a direct result of RDA support.

The Agency has achieved a 36% improvement on the 2003-4 performance with a number ofmajor skills programmes delivering substantial learning outputs.

5. Investment benefiing deprived areas 208 238The amount (£m) of private sector investment benefitng residents of the most deprivedwards as a result of RDA funding and activity. Deprived wards are those wards within thebottom 20% of the Index of Multple Deprivation.

Significant amounts of levered investment were reported by partners during the year. An89% improvement on the 2003-4 performance has been achieved, reflecting the Agency'sincreased emphasis on levering private investment.

Supplementary Milestones

(a) Floorspace 112,308 179,447the amount (sq m) of commercial or industrial floorspace buil or refurbished as a directresult of RDA investment.

The target was significantly exceeded due primarily to accelerated development activity atkey Strategic Regional Sites. However performance was below that in 2003-4, in line withexpectations at the start of the year when the target was set.

(b) Businesses receiving specialist advicethe number of businesses receiving face to face support or advice under a RDA fundedbusiness development programme, as specified in the Corporate Plan.

6,455 9,220

This represents an excellent performance with a number of regional and sub-regionalBusiness Development programmes delivering high value, intensive advice and support to arange of businesses across priority sectors. The performance is more than double thatachieved in 2003-4.

(c) Businesses assisted in skils needsthe number of businesses receiving specific face to face support or advice in response totheir skils / workforce development needs as a direct result of a RDA inteivention.

1,820 8,913

The target was significantly exceeded, as was expected throughout the year, due primarilyto the substantial expansion in this area of activity compared to prior years. The target wasaligned to the 2003-4 out-turn (1,682).

6



Summary of Performance (continued)

Key achievements against tier 3 milestones (continued)

Target Achieved

(d) Woodland 141 186

Hectares of woodland or forestry created or expanded on what was previously derelict,under-used or neglected land through a RDA funded project.

The Agency has delivered an excellent performance in line with expectations throughout theyear. The actual result represents a 20% improvement on the prior year's performance.

Regional Selective Assistance I Selective FinancialInvestment ('SFI')

(i) number of projects (grants offered)(ii) number of employment opportunities (expected jobs created

or safeguarded)(iii) total value of grants less than £2m disbursed

N/A5,000

N/A

1205,244

£10.8m

The jobs target was achieved although out-turn was slightly down on the previous yearwhilst the number of grant offers increased by 50%. This indicates a larger number ofsmaller (in jobs terms) projects, which reflects the new SFI scheme, which came into forceon 1 April 2004.

Foreign Direct Investment(i) number of projects

(ii) number of employment opportunities (expected jobs createdor safeguarded)

As in previous years, the target was substantially exceeded with a significant level of activityin the final quarter of the year, due in part to some major successes in the final quarter.

N/A2,000

377,970

7



Operating review

In addition to the specific Tier 3 milestones for which the Agency is responsible, the Agency'sactivities also contribute to the wider Public Sector Achievement ('PSA') targets on which theDTI and other government departments are monitored. The following section explains someof the key features of the Agency's contribution to these measures.

1 . Sustainable economic performance

The region's published target is to achieve Gross Value Added ('GVA') per head of 91% ofthe UK average by 2006.

In December 2004, National Statistics published revised regional GVA data for the period1998-2003. The position in 20031 is that GVA per head in the Northwest was 89.8% of theUK average.

The overall size of the economy increased from £92.2bn to £97.6bn, an increase of 5.8%compared with a UK increase of 4.9%. This represents 10.3% of the UK total and ranks theNorthwest third after London and the South East. The growth rate was 0.9% higher than therate of the South East and more than double the growth rate of London.

The Northwest is characterised by wide disparities in GVA per head, ranging from Cheshire,which was 13% above the UK average in 2002 (latest year available for sub-regional data) toCumbria, which was 26% below, and Merseyside at 27% below. Between 1998 and 2002,growth in Greater Manchester, Cheshire and Merseyside was close to the UK average.

Lancashire grew slower whilst Cumbria grew the slowest of all Northwest sub-regions.

GVA per head increased from £13,599 to £14,346, an increase of 5.5%, compared with aUKincrease of 4.6%.

GVA per head relative to the UK average increased from 89% to 89.8%. The Northwest'sranking remains 8th out of twelve UK regions.

Between 1990 and 2003, Northwest GVA grew at an average annual rate of 1.9%, below theUK average of 2.3%. However, performance in the five years to 2003 improved with the gapin growth rates halving over this period. The Regional Economic Forecasting Panel's LongTerm Report (March 2005) provides a forecast for growth in the Northwest economy of 2.2%a year between 2003 and 2022, compared to 2.5% a year in the UK. The Panel forecasts theNorthwest will rise to 90.6% of the UK but fall back to 90.1 % by 2006.

2 Regeneration

As well managing the remaining SRB schemes and the implementation of successorregeneration schemes, the Agency has focussed on a number of strategic sub-regional andlocal initiatives such as:

Sub-Regional Partnerships

During the year the Agency took a number of important steps to develop the Sub-RegionalPartnership structures further, including facilitating the creation of a single SRP forLancashire, providing funding to each SRP to build its strategy/policy, performancemanagement and project development capacity, and developing specific proposals for SRParrangements to be piloted in Cumbria, which are currently subject to consultation.

i 2003 is the most recent year for which data is available.

8



Operating review (continued)

2 Regeneration (continued)

Lancaster Vision

The Lancaster Vision Board began work in earnest during 2004-5 by considering the keyeconomic assets of the Lancaster and Morecambe district and future opportunities foreconomic growth. It has agreed a 12 month action plan up until December 2005, which

includes establishing an evidence base for each of the key economic drivers identified for thedistrict.

Burnley Vision

The Burnley Vision Board was established in January 2005 to provide a greater privatesector perspective on economic regeneration plans for Burnley, building on earlier visioningwork commissioned with Agency support. The first priority wil be to oversee Burnley TownCentre m'asterplanning to maximise development opportunities in support of the town centreeconomy.

Preston Vision

Preston Vision began developing the evidence base to support the economic regeneration

action plan for the city to build upon the £500m private sector led retail/mixed usedevelopment planned for the city centre. Major progress was made on the strategy and itsobjectives and priorities for presentation in 2005/06.

Cumbria Vision

Following the appointment of a Chairman and Chief Executive, the full Board, comprising aprivate and public sector mix, was confirmed at the end of May 2005. The first year BusinessPlan is now being prepared. This new organisation wil provide strong leadership to the sub-region and help secure the economic future of Cumbria by maximising public and privatesector investment and influencing national and regional policy.

Northwich Vision

There was significant progress in implementing the Northwich Vision. The process of fillingthe abandoned salt mines under the town centre began in January 2005 (scheduled forcompletion in 2007), work started on the refurbishment of a redundant building at the railwaystation to provide a community learning centre, a feasibility study for a new cultural centre isunderway and the search for a private sector development partner for the prime Baron'sQuay site has reached the short listing stage.

Liverpool City Growth Strategy

The Board and Project Team have been created and a comprehensive survey of 1,000businesses has been commissioned.

Over 5,000 jobs were created or safeguarded in regeneration priority areas as a result of theAgency's regeneration programmes with over 400 new businesses started up and over£200m private sector investment levered.

9




3 Urban renaissance

Significant progress was made in 2004-5 across a range of urban renaissance initiatives,including the following:

New East Manchester

A broad range" of projects "and programmes started and progressed on site includingsubstantial progress on Central Park where remediation works have now been completedcreating a development area of approximately 38 hectares. The first development comprising14,000 sq. m of high quality offces for Fujitsu was completed. The One Central Parkdevelopment, a project to provide learning opportunities for the local community and to servethe employers at the business park, is now being delivered. This is due to complete inAutumn 2005. A £2.7m Economic Programme in East Manchester was approved which wilfund business support projects across the regeneration area.

The Agency approved £5.3m of investment to match a £7.2m heritage grant award to carryout the full repair of the listed Murray's Mills complex in Ancoats. Murray's Mills is an integralpart of the Agency's Ancoats Urban Vilage initiative, which forms part of the EastManchester Regeneration Framework, and will provide new residential accommodation.Construction began on the £1.3m restoration of the former St Peter's Church in AncoatsUrban Village. Plans to construct a modern contemporary Thai restaurant were unveiled inDecember 2004. The 550-seat venue is part of a £10m development in East Manchesterreceiving £2m of funding support from the NWDA. New East Manchester commissioned B ofthe Bang, a landmark piece of public art, which forms a centrepiece for Sportcity and marksthe success of the 2002 Commonwealth Games. The 184 feet tall landmark was inspired byLinford Christie, who famously started his gold medal winning Olympic 100 metres race 'onthe B of the Bang'.

Liverpool Vision

The European Capital of Culture designation for 2008 is providing a new impetus for thedelivery of many key projects. These include the £390m Kings Waterfront regeneration

scheniein Liverpool,. which received planning consent and NWDNEP funding approval.Construction on the Paradise Street retail development, which will deliver the Tier 2 retailtarget in Liverpool City Centre, started. The Fourth Grace project did not, however, goforward when the public sector partners concluded that the project was no longer viablebecause of increasing costs and fundamental changes from the original scheme. Followingthis decision a project to produce a worid class museum and mixed use scheme on MannIsland was developed. The Liverpool Waterfront was confirmed as a World Heritage Site byUNESCO following a bid for such status actively supported by NWDA, Liverpool Vision,Liverpool City Council and other partners. The NWDA approved a grant of £5m towards theUnity Development Project in Liverpool City Centre, a key development in the regeneration ofLiverpool's business district. Other key areas of progress include the City Centre MovementStrategy and public realm improvements.

10




3 Urban renaissance (continued)

West Lakes Renaissance

2004-5 represented the first full year of this URC's operation. Achievements include the co-ordination of an integrated regeneration programme to create a new economy for Barrow inpartnership with Barrow Task Force and the creation of a Nuclear Opportunities Team tomarket opportunities and develop the local supply chain. The Agency approved £2.7m ofinvestment in public realm works associated with the £35m Workington Town Centreredevelopment. The project forms a critical element of a Regeneration Master Plan forWorkington produced by local partners.

Blackpool

A new URC for Blackpool was announced by the Deputy Prime Minister in January 2005.The URC Board, chaired by Sir Peter Hall, was established. The Blackpool Masterplan iscomplete and the URC Business Plan is close to completion. The NWDA contributed to twoearly win projects which are completed or nearing completion - £2m for South Promenadepublic realm work and £7m for the Central Corridor Gateway public realml community parkimproved transport commercial development scheme due for completion in June 2005. TheAgency also set aside £5m for a programme of key acquisitions.

Central Salford

The Deputy Prime Minister also announced a new URC for Central Salford which wil leadand co-ordinate the redevelopment of Salford's central wards of Ordsall, Broughton, IrwellRiverside, Langworthy, Kersal, Claremont, Weaste and Seedley.

Housing Market Renewal

The Agency presented a draft Framework for NWDA Engagement in Housing MarketRenewal to all four North West Housing Pathfinder Boards. The Framework outlines how theNWDA wil contribute to the Housing Market Renewal Programme in a range of areasincluding linkages to regional policy, targeting investment and supporting cross-regionalinitiatives such as urban design. Examples of specific performance in each of the HMR areasare as follows:

. Elevate - The Agency agreed in principle to support two key projects, Hyndburn Phoenix

and Darwen Academy, which will complement Housing Market Renewal activity in EastLancashire.

. Manchester Salford - The NWDA provided financial support for complementary economicactivity in East Manchester, via New East Manchester URC, gap-funding and otherprogrammes totalling c£36m.

. Oldham Rochdale - The Partnership achieved investment of £17.2m of ODPM funding inaccordance with its Annual Investment Plan, and NWDA provided financial support forcomplementary economic activity totalling £1 m in 2004-5.

. New Heartlands - The Partnership delivered the full allocation of OD PM funding in 2004-5. The Agency is working closely with the partnership to align currenUfuture investment inMerseyside with emerging HMR priorities.

11




3 Urban renaissance (continued)

Resort Action Plan for Morecambe

This Action Plan was developed with Lancaster City Council in the context of the NW CoastalStrategy. An "early win" was the NWDA's agreement to provide £4m of funding towards theUrban Splash refurbishme.nt of the iconic. Midland Hotel to kick start wider mixed usedevelopment at the west end of Morecambe.

4 Rural renaissance

The region's Rural Strategy, Rural Renaissance, is the policy context for delivering economicdevelopment and regeneration in rural communities. Progress during the year was as followsin the various communities is summarized below.

The Cumbria Rural Regeneration Company

16 new projects were approved, including the flagship £10m Farming Connect project toprovide intensive business support to the agricultural sector. Other initiatives were alsoapproved, such as Forest Futures, the Northern Reaches Feasibility Study, Cumbria RuralInfrastructure Support Programme and Junction 38 Meat Processing. The Agency endorsedthe Lake District Economic Futures study, which identifies how the Lake District cancontribute to the economic regeneration of rural Cumbria in an environmentally sustainableway. This will form the basis of an action plan for the future.

The Lancashire Rural Partnership (LRPJ

The LRP supported a second wave of Market Towns, Colne, Kirkham, Darwen, Longridgeand Poulton-le-Fylde, which completed Health Checks in October 2004. It also established alocal food promotion, sourcing and business advice project being managed by MyerscoughRural Business Centre as well as a rural business facilitation service. A mid term evaluationof the Lancashire Rural Recovery Action Plan wil take place in the summer of 2005.

The Cheshire Rural Partnership

The Rurai Enterprise Gateway Business Centre, a one-stop shop for business advice in thecounty, was approved in December 2004 and the Centre is open for business. Othersuccesses included: Workplace by Design, based in Sand bach, which secured funding toreconstruct and expand their offce premises leading to an additional 12 full time staff; andBrighouse Group Holdings Ltd which received support to convert redundant farm buildingsinto new company headquarters. .The Sustainable Food and Farming Plan (SFFJ

The Northwest Food Allance, in conjunction with DEFRA, held two regional PublicProcurement Seminars in March 2005, raising awareness of DEFRA's Public SectorProcurement Initiative and demonstrating what is available to support public sector

procurement of food. Other projects included a schools project with the production of aninteractive learning package based on the principle of "from dairy cow to fridge". There hasalso been a successful Forward Farming Project and a regional' rural skils and trainingprogramme, managed by Myerscough College but implemented regionally. The NorthwestFantastic Foods programme has also been highly successfuL. The SFF project in theNorthwest has received national praise for its activity.

12




4 Rural renaissance (continued)

The Agency's rural programmes delivered the following outputs: 1,000 jobs created orsafeguarded, 2,000 learning opportunities delivered and 250 business start ups completed.

5 Physical development

The NWDA's role in the delivery of the Government's target for 60% of all new housing to beon previously developed land (which the North West region consistently exceeds) is marginalalthough at a policy level the Agency has actively supported the development of the RegionalSpatial Strategy, which wil play an important role in future physical development activity.However, two specific projects progressed dunng the year are directly relevant to thisobjective:

. Murray's Mils (Ancoats) - Details provided within the commentary for New East

Manchester under section 3 above.

. Luneside, East Lancaster - NWDA agreed to contribute £3.9m to the £50m private sectorled Luneside East mixed use development which wil provide housing on a severelycontaminated brownfield site adjacent to the River Lune and close to Lancaster CityCentre. EP are also providing funding.

Across the region, the Agency's programmes recycled over 350ha of brownfield land for softend use or for development, including housing.

6 EmploymentAll of the Agency's activities described elsewhere in this report have a positive impact onemployment, either in the short term (through investing in areas of need under urban andrural regeneration programmes) or the longer term where strategic economic developmentwil result in increased competitiveness and productivity sustaining employment into the

future. An additional specific NWDA initiative to support employment growth is thedevelopment of 25 strategic regional sites. In April 2004 the NWDA Board endorsed thedeletion of Waterside Park, Tameside from the list of designated sites on the basis that thetype of development now proposed was different in scale and location from the earlierWaterside Park proposal and was essentially of local and sub regional significance. Keyachievements on the strategic regional sites include:

. Central Park, Manchester - As reported in section 3 above, a new business vilage to be

occupied by Fujitsu has been completed and construction at One Central Park isunderway.

. Chester Business Park - Construction of the extension to MBNA's existing operations is

nearing completion. The four new linked offce buildings wil create up to 2,700 jobs.

. Daresbury Park, Halton - Construction of the Daresbury International Science Park was

completed during the year. The Innovation Centre was opened for business and theCockcroft Institute, a world class accelerator science facility, is being established withinthe Science Park.

. Ditton, Widnes - Ditton Strategic Rail Freight Park proposals have been carried forward

into the adopted Halton Urban Development Programme ('UDP'). An application for full

13



Operating review (continued)planning permission has been submitted proposing new distribution warehousing withassociated road and rail access improvements.

6 Employment (continued)

· Kingmoor, Carlisle - Over 90,000 sq.m of industrial/offce space is so far occupied on thesite by approximately 150 companies employing over 1,400 people.

. Kings Business Park, Knowsley - Computer Sciences Corporation (CSC) opened a new

office development creating over 100 new jobs with support from the NWDA. CSC is aleading global information technology services company.

. Kingsway, Rochdale - The Agency received CPO confirmation for this 170ha site andland preparation started to facilitate development.

. Liverpool Science Park (Edge Lane) - Outline planning consent received for B1 and B2

uses as part of Liverpool Science Park bringing together the Liverpool Digital site, theformer MTL site and part of the existing Wavertree Technology Park. At Liverpool Digitalthe Agency completed the refurbishment of 10,000 sq.m of floorspace to enable earlyoccupation by four companies. Site remediation works commenced at the NWDA ownedMTL site with funding secured from EP.

. Liverpool University Edge - The construction of two NWDA-supported developments

adjacent to the Metropolitan Cathedral is approaching completion, creating new

works pace to accommodate high technology and knowledge-based businesses.

. Royal Ordnance Factory, Chorley - Planning permission granted for a mix of B2 and B8uses, including full permission for the proposed 1.5km main service road for the site.Remediation of part of the site, to kick start development and support the relocation of amajor local employer, was undertaken with support of £1.3m from the NWDA.

· The Estuary, Liverpool (Speke/Garston) - The National Biomanufacturing Centre isapproaching completion on Plot 1. Arvato AG wil take a site on Plot 2 with its newgravure printing facilty, investing up to £120m and initially creating up to 500 highlyskilled jobs.

. Westlakes, Whitehaven - Completion of the infrastructure on the 20 ha second phase ofthe Park's expansion was achieved in July 2004. So far, the Park has attracted 39businesses employing over 850 people.

As a direct consequence of NWDA investment, the Strategic Regional Sites programmedelivered' 20ha of remediated brownfield land, 40,000 sq.m of industrial development and400 jobs.

14




7 SkilsSpecific initiatives and projects undertaken include:

. The Lancaster Leadership Centre - The extension and refurbishment of the Lancaster

University Management Centre is now completed. This £4.5m investment clearlydemonstrates the NWDA's commitment to addressing leadership and managementdevelopment in the region. .

. The Northwest Enterprise Project - This is a joint project with Manchester MetropolitanUniversity and Salford University to increase the capacity for schools to develop, promoteand engage in the regional enterprise agenda. It has now completed two years of thethree year funded programme and continues to meet objectives and exceed targets setfor this stage of its development. The only exception here relates to the Cumbriaelement, which has taken longer to get established due to the constraints placed uponschools travellng to suitable venues. So far 50 Enterprise Master classes have beendelivered and the Action Enterprise Website has been accessed more than 45,000 times.

. 'Grow Your Future Workforce' - This project continues to exceed all expectations. Theproject now involves 132 teachers in 73 schools working with 4,527 students, comparedto the original target by this stage of 5 teachers and 500 students.

. Skil City Northwest - This international exhibition for skills and employment opportunities

was held in Manchester and attracted 35,000 visitors.

8 Productivity

Productivity is driven by skils, enterprise, innovation, investment and competitiveness andachievements in these areas are described elsewhere in this report. However, there are anumber of NWDA initiatives which are not covered elsewhere, as follows:

. Cluster Development Programme - The development of strong clusters around growthsectors is key to improving the region's economic performance and a number of otherprogrammes, such as inward investment, innovation, business finance, and BusinessSkils Northwest, are aligned to this initiative. Of the 16 priority sectors in the region, 11cluster programmes are now fully operationaL. The five remaining clusters have had theircluster strategy and action plans completed with specific activities taking place. Thecluster networks continue to grow in scale and participation with active involvement ofaround 14,000 companies (500 more than last year) and more than 4 million hits oncluster websites. One of the Agency's flagship cluster supporting projects is the NationalBiomanufacturing Centre and this £35m project is expected to be completed at the end of2005. The building provides both a regional and national facility for the research anddevelopment of the bio-pharmaceutical industry, complementing the Agency's Bio

Pharma Clustering Strategy on Merseyside. During the year the Agency terminated itscontract with Digital Industries NW, who were heading the Digital Industries cluster, forcontractual reasons. Across the Cluster Development Programme as a whole, 2,500businesses received specialist advice and 1,200 jobs were created or safeguarded.

15




8 Productivity (continued)

· Regional Business Advisers - This ERDF Objective 2 funded project provides a team ofsenior sector specialist advisers providing advice and support to SMEs. The project is apartnership between NWDA, UKTI, and Regional Cluster Organisations and is operatingin the same growth sectors, managed through the Business Links. .During 2004-5, 528SMEs received specialist advice.

· Air Services Development Fund - The Agency launched England's first ever such fund toattract new air services to the region.

· Manufacturing Advisory Service - The Manufacturing Institute (TMI) has completed itsfirst 3-year contract to deliver the Manufacturing Advisory Service (MAS) and hasexceeded its primary GVA target - £32m achieved against £12m target. On average eachclient company has seen a 14% increase in GVA and a 9% increase in turnover. Anindependent evaluation of TMI and MAS found that TMl's delivery of MAS in the regionhas been highly effective.

· Relationship Management - This is a key part of the NWDA Business Support Team's

activities, through which strategic partnerships have been proactively developed withc250 major companies from amongst the top 400 companies in the region. 2004-5 sawthe initiation of over 54 new projects including new capital equipment, surroundinginfrastructure, relocation, training, expansions, rationalisation, supply chain, productdevelopment, recruitment and site refurbishment.

· Supply Chain projects - Key project developments in 2004-5 included NuclearDecommissioning supply chain mapping, the NHS Supplier Bureau, and Heinz AD facilityFood Waste Management. Additionally, as part of a national programme covering theAutomotive Sector, in partnership with the DTI and all the RDAs, a two year programmewas implemented at Leyland Trucks plc, with a similar project being scoped with BentleyMotors plc.

· UNIDO - 150 Northwest companies were assisted. The value of investment, jointventures and subcontracting was over £30m.

· Selective Finance for Investment - The last year saw the further integration of RSA/SFIsupport into wider NWDA business support activities, demonstrating a closer workingrelationship between the Inward Investment, Regeneration and Skills Teams withinNWDA and relevant sector partners. In total 120 grants were offered, total value £25m,which wil lever £163m of investment and create or safeguard over 5,000 jobs.

· Lancashire Technology Management Centre - This major project was completed on akey gateway plot of the NWDA-owned Michelin site at Burnley. The Agency contributed£2m to the project, which will help kick start development of the wider site.

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9 Enterprise

Enterprise objectives are embedded in regeneration programmes targeted on the economiesof deprived urban and rural areas. An important tool to help stimulate enterprise is theportolio of business finance schemes put in place by the Agency. These also contribute toinnovation and broader productivity objectives. Major activities and funding during the yearincluded:

. North West Equity Fund - A significant increase in investment activity in 2004-5 undernew team leadership. 42 investments totalling £6.8m were made in 24 companies,doubling the investment rate in the first two years. NWEF also co-invested with each ofthe NWDA backed funds, providing follow on funds with companies in early stages andfunds for larger scale start ups.

. NW Business Investment Scheme - This £19.3m fund was the first ERDF Objective 2Venture Fund in the UK. It is facilitated by NWDA. In 2004-5 the portolio grew from 9 to20 companies ranging from early stage technology and renewable energy to major jobcreating businesses such as contract cleaning. Approximately £1.7m invested levered

£30.1 m of other funds with almost 500 jobs created or safeguarded.

. TEChlNVEST - Companies and investors registered with NWDA's TEChlNVEST servicehad a particularly busy year with 15 companies raising £1.4m and unlocking £5.9 m.North West funds have sourced their co-investments from a variety of sources includingfrom TEChINVEST.

. Rising Stars Growth Fund - This NWDA financed fund grew its portolio from 17 to 28companies in its third year, investing £2.5m of the £6.4m total invested. An additional£4.2m was also levered. This Fund focuses on very high potential technology start ups,including those at proof of concept stage. The biotechnology, softare, communications,and healthcare sectors are strongly represented.

. Barrow and Furness Peninsula Task Force Enterprise Fund - The Agency made £3m

available to establish this fund to encourage start-ups in Furness following majorredundancies in and around Barrow.

Over 1,000 new business start upsweré created and sustained during the year. 40% ofthese were a direct consequence of regeneration programmes focussed on the region's mostdeprived areas.

10 Investment

The Agency achieved 37 foreign inward investments whilst reporting a further 50 from othersources in 2004-5. Investment by overseas-owned companies created 5,380 new jobs (an

increase of 70% on last year) and safeguarded 2,590 jobs. Total disclosed capitalexpenditure by these companies reached almost £850m. Out of the 87 total inwardinvestments, European owned companies have provided 45 investments with USA- andCanadian-owned companies accounting for 37. China has also made an impact on inwardinvestment, providing 4% of all projects into the Northwest.

17




10 Investment (continued)Major initiatives and programmes included:

· Regional Partnerships - A European regional marketing plan was produced following

consultation with sub regional partners. Partnership working has increased with the.establishment of an inward investment forum for NWDA and sub regional partners. Theforum discusses both inward investment and aftercare issues on a regular basis. This isleading to a more collaborative approach to both marketing activities and support on

.

projects.

· North of England - The collaboration with Yorkshire Forward and One North East

continued in the USA and Australia. The US operation has exceeded targets and hasproduced 15 successes in 2004-5. Of these, six have located in the Northwest. The Northof England operation in Japan is a collaboration between Yorkshire Forward and NWDA.The offce achieved three successful investments into the North of England, with onelocating in the Northwest. The Australian collaboration produced eight successes in 2004-5, and is on schedule for its three year target of 15-20 successful investments. Of the

eight, the Northwest won three projects.

11 InnovationThe Agency's direct contribution to the pursuit of innovation objectives and actions set out inthe RES can be summarised as follows:

Northwest Science Strategy

A review and updating of the Strategy was undertaken by the Northwest Science CounciL.

The North West Science Fund of £15m was launched with 41 bids totallng over £100mreceived. The Fund wil support commercial technologies in the North West and be phasedover three years. The Science Council also reviewed a number of Cluster strategiesincluding Chemicals, Biotechnology and Textiles. The Daresbury International Science Parkis a flagship project within the Science Strategy and progress is described under section 6above. This project wil accommodate the Cockcroft Institute, a collaboration between threeUniversities and Daresbury Laboratory, which secured a £7m grant from PPARC for R&Dinto accelerator science against strong opposition from elsewhere in the UK. This was amajor coup for the region's science base.

Regional Innovation Strategy

The Strategy was reviewed through a public consultation that provided recommendations toimprove regional implementation. Continuing innovation support and knowledge transferprojects have performed well, including those transferring technology from the defencesector to the civil sector and those improving SME innovation performance. The MotivatingBusiness to Innovate project completed during the year, having helped over 300 SMEs toimprove their innovation performance. The move of Campus Ventures into administrationcaused practical difficulties in implementing the Regional Incubation Strategy, which is beingreviewed by NWDA during 2005.

18




11 Innovation (continued)Higher Education Innovation Fund (HEIF) Round 2

NWDA match funded HEIF 2 allocations to North West Higher Education Institutions and ledthe regional process for evaluation of the national HEIF 2 bids. All HElF2 projects are nowwell underway and making good progress. These projects aim to meet the needs of the keygrowth sectors, putting systems in place to ensure knowledge transfer, address workforcedevelopment issues, new business creation and graduate retention.

E-Merlin

Work started on the e-merlin project at Jodrell Bank, which is the provision of a 217kmoptical fibre network connecting five radio telescopes in other parts of the country to the giantLovell telescope at Jodrell Bank. The project, which is funded by NWDA, University ofManchester, UMIST, PPARC and the University of Cambridge, wil secure Jodrell Bank'sleading position in world astronomical research.

NW Genetics Knowledge Park

The Nowgen Centre, jointly funded by the NWDA and ERDF, is now complete. A partnershipproject between Manchester, Liverpool and Lancaster Universities and the CentralManchester and Manchester Children's University Hospital, it wil ensure that the outcomesof genetics research are successfully applied.

InfaLab21

A Lancaster University initiative to establish a world class Centre of Excellence for research,development and commercialisation of ICT, was opened. NWDA made £10m available forconstruction of the building. A key aim of the Centre is to promote and accelerate technologytransfer between the ICT research in the University and local and regional industry,especially SMEs.

19



Governance

The Board

Board Members, including their main occupation and interests are listed below. The fullregister of Board Members interests is available from the Agency's Headquarters inWarrington. Details of transactions with such entities in the financial year are disclosed innote 31.

In December 2004 Nevile Chamberlain, John Dunning, Richard Leese, Dennis Mendoroswere replaced by David Brockbank, Peter Hensman, John Merry and John Moverley.

Bryan Gray MBE DL (appointed April 2002)

Bryan Gray is Chairman of the Northwest Regional Development Agency. He is Chairman ofBaxi Technologies, now part of Baxi Group Limited, one of Europe's leading heatingcompanies. He is Vice President of Micropower, promoting new energy technologies.

He is Pro Chancellor of the University of Lancaster and a member of the National Learning &Skills CounciL. He was Chairman of Preston North End Football Club until October 2001 andwas a Trustee of the National Football Museum until July 2003. He is a member of theNational Learning and Skils Council, a member of Liverpool Capital of Culture Board, aTrustee of National Museums Liverpool and a Director of Culture Northwest.

Professor Sir Martin Harris, CBE, DL (appointed December 2001)Deputy Chairman of NWDA. Formerly Vice Chancellor of the University of Manchester, he isnow Chancellor of the University of Salford and Deputy Chairman of USS Limited. He is alsoChair of Manchester Knowledge Capital and Director for the Offce of Fair Access.

David Brockbank (appointed December 2004)

A property developer whose current projects are the conversion of a redundant wood mill intothe largest employment site in the Lake District and the development of the world's first"green bridge," across Morecambe Bay, linking Barrow and Lancaster. He is Director ofRural Regeneration Cumbria (NWDA funding conduit) and a member of Lancaster UniversityCouncil and Cumbria Tourist Board. He was appointed by the Secretary of State to the LakeDistrict National Park Authority from 1988 to 1997.

20



Governance (continued)

The Board (continued)

Joseph Dwek CBE (appointed December 2003)

Executive Chairman and Chief Executive of Bodycote International Plc from 1972 until 1998,when he retired. Currently a Director of City Invoice Finance Ltd, Jerome Group PI,

Penmarric Plc, Opal Property Group Ltd and Mercury Recycling Ltd; Chairman and ChiefExecutive of Worthington Group PLC.

Formerly Chairman of the Mersey Basin Campaign, Healthy Waterways Trust, and CouncilMember of ENCAMS. Currently Chairman of Envirolink and a member of the Board of theDTI Environmental Innovation Advisory Group, amongst other offces.

Peter Hensman (appointed December 2004)

A chartered accountant and engineer who has spent most of his career in the general andfinancial management of manufacturing companies, Peter is now Executive Director of asmall group of companies involved in tourism, leisure and property in Cumbria. He is a non-executive Director of Cumbria Rural Enterprise Agency and Furness Building Society. Hechairs Cumbria Community Foundation and chaired Kendal Brewery Arts Centre from 2001-2005 where he remains a Trustee.

Robert Johnston (appointed December 2002)

From 1996-2005 Rob was Managing Director of the Visual Link, a Cumbrian based world-class creative technology SME specialising in ICT, media and communications, serving arange of blue-chip customers. The company won numerous international awards - theInternational Visual Communications Association's Millennium and 2003 Gold Awards forMultimedia, and the 2002 and 2003 Silver Awards for Interactive Multimedia Publishing.

In 2001 Rob created Enabling Educational Excellence (e), a company producing award-winning e-Iearning teacher training materials and creating bespoke change-managementdistance learning packages.

Rob is a member of Cumbria Learning and Skills Council and is currently involved in settngup and chairing the Cumbria Digital Development Network.

21





Cllr Dr Pauleen Lane (appointed December 2001)She is Mayor and Elected Member of Trafford MBC. A civil engineer who has worked inengineering practice, Dr Lane currently lectures in Geotechnics and Computing at theUniversity of Manchester.

Dr Lane is also non-executive Director of English Partnerships, North West regional Trusteefor Lloyds TSB Foundation charity and an Audit Commissioner.

Dave McCall (appointed December 2003)Dave has been Regional Secretary of the Transport and General Workers Union since 1996and Chair of the North West TUC since 2002. He has been a full time trade union offcialsince 1980 with experience of public appointments on the North West Industrial DevelopmentBoard. He served on the governing body of Manchester Metropolitan University.

He is currently a member of the Economic and Social Partners Group in the' North WestRegional Assembly and also serves on the Northwest Constitution Convention.

Cllr John Merry (appointed December 2004)

Leader (Labour) Salford City CounciL. John is a Board member of the National Learning &Skills Council and the Greater Manchester Learning & Skills CounciL. He has previousmembership of various organisations and committees with an education and training remit.He has been a full time Councilor since 1990 with previous career experience in retail andsales.

In addition to being a councillor, he has held office at the local branch of the Labour partyand canvassed on its behalf.

Professor John Moverley OBE (appointed December 2004)

Chief Executive and Principal of Myerscough College and has 27 years experience of furtherand higher education. He Chairs the Lancashire Rural Partnership and is Vice Chair of theNorth West Rural Affairs Forum, which he helped to establish. He was an invited member ofan All Party Rural Economy Group founded in the House of Lords and is a member of theDEFRA Regional Steering Group and a Theme Champion for Sustainable Food andFarming.

He held office as an independent parish councillor in his local village from 1998 to 2003. Heholds no other Ministerial appointments.

22





CUr Marie Rimmer CBE (appointed December 2002)

Leader (Labour) of St Helens CounciL. She is Chair of the Local Strategic Partnership and aDirector of St Helens Chamber and The World of Glass. . She is a Board Member of theMersey Partnership.

She was the Chair of the former Association of Metropolitan Authorities Housing Committeeand served on the European Committee of the Regions Social Affairs Committee. She wasalso the Chair of the North West Coalfields Communities Campaign.

She has been politically active on behalf of the Labour party since 1969, and has held offceat branch, constituency and district party leveL. She does not hold any otherMinisterial appointments.

Anil Ruia OBE JP (appointed December 2001)

Director of Wrengate Limited. The company imports, distributes and converts textiles andalso has a controlling stake in Warren Tea Limited, India, engaged in the business ofgrowing, manufacture and sale of tea.

A magistrate, Mr Ruia also holds a number of positions which contribute to the economicregeneration of the Northwest including Chairman of the North West International TradeForum, Deputy Chair Manchester: Knowledge Capital and non-executive Director GranadaTelevision Ltd.

Cllr Mike Storey CBE (appointed December 2001)

Leader (Liberal Democrats) of Liverpool City Council, Cllr Mike Storey is its longest servingmember. He is the Headteacher of Plantation CP School in Halewood Merseyside.

Mike has been a member of the LGA Economic Regeneration Committee from 1996,previous to that he was a Member of AMA Economic Regeneration Committee. He is also aBoard Member for The Mersey Partnership, Liverpool Vision, Speke Garston DevelopmentCompany until 31 March 2003, Liverpool Land Development Company from 1 April 2003.

Brenda Smith (appointed December 2001)

Group Managing Director Europe, Ascent Media Group. Brenda was Managing Director,Granada Television and Managing Director, Studios Granada Plc until May 2004, when shebecame Deputy Chair, Granada Television Ltd.

Brenda is also a Board Member of Liverpool Vision and has chaired the Regional MarketingForum since December 2002. Member of Tourism Forum, Non-executive Director ofManchester Airport Aviation Services, Non-executive Director of AFM Lighting Ltd and Chairof Skillset London Forum.

23





Professor Maureen Wiliams (appointed December 2002)

Professor Williams is the Chief Executive and founder of the Merseyside Development

Foundation. She'is an Honorary Fellow and Visiting Professor of Sociology (Governance) atLiverpool John Moores University and Chairs the Big Lottery Fund's North West Communityand Voluntary Sector Funding Programme (previously The Community Fund).

She is also Co-founder of Community North West, and Advisor and previous Chair ofTelescope Technologies Ltd. She is a member of the Greater Merseyside Learning andSkils Council and a Senior Expert ¡Consultant with the Council of Europe.

Board Meetings and Committees

The Agency's Board meets 11 times a year. In addition the Remuneration Committeeconvened on 5 occasions and the Audit Committee had 5 meetings during the year to 31March 2005.

In addition, there are seven formal sub-committees, which meet regularly throughout theyear, these are:

Enterprise and InnovationInfrastructureRuralUrban

EnvironmentMarketing & CommunicationsSocial Inclusion

Annual General Meeting

The Agency's ArinualGeneral Meeting was held on 24 September 2004 at the ManchesterInternational Conference Centre, with a keynote address from Sir Bobby Charlton. Theconference outlined the key activities made by the Agency and its partners in the precedingyear. The Chief Executive and Chairman presented on their future plans for the region.

The 2005 Annual General Meeting wil be held on 16 September 2005.

24




Code of Best PracticeBoard Members are governed by a Code of Best Practice, which amongst other thingsoutlnes:

· The Board's requirement to demonstrate Public Service Values and their accountabilityfor public funds

. The Board's relationship with Central Government.

. The role of the Chairman and Chief Executive.

. Corporate and individual responsibilities of Board Members.

. Handling conflicts of interest.

The Agency has ensured that the Code has been adhered to throughout the year and hasrobust and thorough monitoring and recording systems in place. Board Members havedeclared interests at particular Board discussions as appropriate. Staff have followed asimilar requirement in compliance with the Agency's Code of Conduct.

Further information concerning any of the above can be obtained from the Agency'sWarrington Headquarters.

Equal opportunities and diversity

The Agency has continued to implement its Equal Opportunities and Diversity Strategy whichsets out three broad headings under which the Agency wil fu lfi I its obligations: as anemployer, as programme deliver and as a leader I catalyst within the region.

Open government

During the year the Agency fully complied with the Government's Code of Practice onAccess to Information. In relation to specific requirements of the Code:

· No requests for information were received which specifically referred to the Code;

. No charges were levied for the information supplied;

. No replies to requests for information exceeded 20 days;

· No complaints against the Agency were referred to the Parliamentary Commissioner forAdministration (the Ombudsman).

25




Freedom of Information Act and the publication of information

In November 2000 the Freedom of Information Act received Royal Assent and became fullyoperational on 1 January 2005. The Act applies to some 100,000 public authorities,including England's nine Regional Development Agencies. The Act provides greater accessto all types of recorded inform.ation held by public authorities and imposes obligations onthem to disclose information, subject to a range of exemptions.

Section 19 of the Act requires public authorities to adopt and maintain a publication schemewhich relates to the publication of information by the authority and publish information in

accordance with its publication scheme. Eight of the nine English RDAs agreed to acollective publication scheme which outlines the information that wil be published by each ofthose RDAs. The Northwest Regional Development Agency took responsibilty for thedevelopment of the RDAs model publication scheme and the Information Commissionerapproved this in October 2002. The publication scheme is available at ww.nwda.co.uk.

The Agency received 21 requests for information under the Act between 1 January and 31March 2005. All were responded to within the 20 day deadline, with the exception of 2instances where the deadline was extended under the Acts rules as exemptions were beingconsidered.

26



Environmental Policy Statement

Our aim is to contribute towards the delivery of sustainable economic development in theregion and ensure that environmental objectives are integrated into relevant businessobjectives. We are committed to the continual improvement of our environmental

performance and we will conduct our own activities and operations to reflect bestenvironmental practice.

Specifically, in the short term we wil:

· Review our activities, operations and procedures to identify environmental aspects andprioritise actions to address them;

· Implement an environmental management system appropriate to the location, scale andnature of our activities to demonstrate our commitment to the Greening GovernmentInitiative and the Government's Sustainable Development strategy;

· Establish an environmental management Steering Group to drive forward commitments

made in our environmental policy and provide regular (minimum of biannual) progressreports to the Board;

· Take measures to increase staff awareness of environmental issues and individualenvironmental responsibilities and ensure that environmental management is includedwithin our staff induction and training programmes;

· Develop and implement a Green :Travel Plan for business and commuter travel for all ofour offces and actively encourage staff to think about and where possible change theirtravel behaviour;

· Establish recycling schemes for all appropriate waste streams in each of our offces.

In the longer term we will:

· Reduce energy and resource consumption within the Agency by promoting effective andeffcient reduction methods consistent with best practice;

· Set and achieve measurable targets against agreed baselines across the Agency for keyperformance criteria such as energy, transport, emissions, waste, water andenvironmental incidents. This includes setting appropriate environmental indicators andtargets to measure our impact on the environment of the region e.g. CO2;

· Meet and, where possible, adopt best practice regarding all relevant UK, European andInternational environmental legislative and regulatory requirements and identify staffresponsible for developing a register of environmental legislation of relevance to theAgency and monitoring environmental legislative compliance;

· Where appropriate, use the most resource-efficient technologies and media forcommunicating and maintaining records of documentation;

· Purchase, wherever possible, environmentally-preferable goods and services andinfluence our suppliers and contractors to ensure that goods and services procuredsupport our environmental procurement policy;

· Ensure that all projects and programmes we fund are appraised for their environmentaland sustainable development impact, e.g. through procuring sustainable buildingmaterials;

27



Environmental Policy Statement (continued)

. Develop a communications policy to share information and best practice with others tohelp contribute to a better understanding of environmental and sustainable developmentissues;

· Publish in a limited paper form, and make available on our web-site, an environmental

report with information on our environmental performance and progress against corporatetargets;

. Ensure good management practice by repeating an Environmental Audit of theorganisation every two years, by a third party and review and revise this policy statementaccordingly.

l

28

Financial Statements



Foreword

Statutory backgroundThe Northwest Regional Development Agency ('the Agency') was established under theprovisions of the Regional Development Agencies Act 1998. It came into existence on 14December 1998, following Parliamentary approval of the Regional Development Agencies.Act 1998 and the appointment of Board Members. . The Agency is an Executive Non-Departmental Public Body (NDPB) sponsored by the Department of Trade and Industry(DTI).

The Agency became fully operational on 1 April 1999 when it took over the regional activitiesof English Partnerships and the Rural Development Commission and the SRB ChallengeFund formerly administered by Government Offce for the North West.

A number of other activities have subsequently been transferred into the Agency, notably thebusiness of Inward Limited, the Northwest Tourist Board, the Selective Finance forInvestment Programme, the development of skils and employment, policy and businesssupport and delivery mechanisms, and the North West Business Link Organisations.

Statement of the Agency's and Chief Executive's responsibilties

Under section 14 of the Regional Development Agencies Act 1998 the Agency is required toprepare a statement of account for each financial year in the form and on the basisdetermined by the Secretary of State, with the consent of Treasury. The Financial

Statements are prepared on an accruals basis and must give a true and fair view of theAgency's state of affairs at the year end and of its income and expenditure, total recognisedgains and losses and cash flows for the financial year.

In preparing the Financial Statements the Agency is required to:

. Observe the Accounts Direction, reproduced on page 72, issued by the Secretary of

State, including the relevant accounting and disclosure requirements, and apply suitableaccounting policies on a consistent basis;

. Make judgements and estimates on a reasonable basis;

. State whether applicable accounting standards have been followed, and disclose and

explain any material departures in the Financial Statements;

. Prepare the accounts on the going concern basis, unless it is inappropriate to presumethat the Agency wil continue in operation.

The Accounting Officer for the Department of Trade and Industry has designated the ChiefExecutive as the Accounting Offcer of the Northwest Regional Development Agency. Hisresponsibilities as Accounting Offcer include responsibility for the propriety and regularityand value for money of the public finances; the keeping of proper records; and advising andinforming the Board of financial considerations. These requirements are set out in the "Non-Departmental Public Bodies' Accounting Officer's Memorandum" issued by the Treasury andpublished in Government Accounting. The Agency and the Chief Executive are alsoresponsible for ensuring that there are appropriate controls over any publication of theFinancial Statements, including the publication of the National Audit Offce audit report on theAgency's website and in other electronic forms.

30



Foreword (continued)

Financial Memorandum

The Secretary of State has issued the Agency with a Financial Memorandum setting out thefinancial framework under which the Agency should operate. The Agency has complied in allmaterial respects with the terms of this memorandum during the course of financial year.

Results for the year and review of activities

There was no surplus or deficit for the year after taxation (2004: £nil).

The Agency's total expenditure for the year amounted to £416.0m (2004: £358.1m), of which£380.2m (2004: £328.2m) was spent on delivering programme activities. The full results forthe year are contained in the Agency's financial statements set out below.

Between 1 April 2004 and 30 September 2004 the Agency undertook th6 Chair of Chairs roleon behalf of all nine RDAs. This involved representing the RDAs in strategic policydiscussions with Government Departments and Ministers, and leading RDA collaboration.

The Agency continued to work with Yorkshire Forward and ONE North East to develop andestablish the Northern Way growth corridor, stretching from Liverpool to Hull and northwardsto Newcastle. The aim is to boost the productivity of the whole of the North of England,reduce regional disparities, and tackle social and economic exclusion by linking areas ofopportunity and need.

From 1 April 2004 the Agency became responsible for the administration of the SelectiveFinance for Investment in England (which replaces both the Enterprise Grant Scheme andRegional Selective Assistance, previously administered by the Small Business Service).

During the year the Agency has been developing the concept of Sub-Regional Partnerships(SRPs), and this wil continue into the forthcoming year. The SRPs will be delivered throughfunded Action Plans that wil include initiatives to strengthen delivery capacity.

Significant changes in fixed assetsOn 1 April 2004 Investment Properties with a value of £81.6m were held by the Agency.During the year there were additions at a cost of £1. 7m and disposals from this portolio withan aggregate book value of £3.5m. At 31 March 2005 the Investment Property portolio wasre-valued, resulting in a revaluation surplus of £22.8m, with £0.8m of this surplus beingwritten back to the Income and Expenditure Account to be offset against un realised deficitspreviously charged, and the remaining surplus was applied to the Government Grant

Reserve.

Post balance sheet eventsWith effect from 1 April 2005 the assumed responsibilty for payments of rural grantspreviously administered by the Countryside Agency. Accruals transferred to the Agency asat 1 April 2005 amounted to an estimated £150,000.

31




Future developments

The Agency wil lead the review of the Northwest's Regional Economic Strategy for 2006,ensuring that the Regional Spatial Strategy, Housing Strategy, Northern Way GrowthStrategy, City Region Action Plans and the Regional Transport priorities are aligned with theNorthwest's economic priorities.

The 2004 Spending Review allocated £1.5bn for NWDA investment in the region over threeyears from 2005-8. For 2005-6 the Agency's Board has agreed an investment plan of £420mfor projects spanning the range of the Agency's responsibilities. This has involved athorough prioritisation of planned and committed expenditure as the available resources arenot suffcient to fund every project seeking support.

The Agency wil implement its effciency plan and enhanced performance managementsystems to support the delivery and project management of key priorities and programmes.Learning and development of all employees wil continue to be valued.

Board membersBoard Members are appointed by the Secretary of State. They include Local Authority,Trade Union, Community and Private Sector representatives. Their corporate responsibilitiesare detailed in the Code of Best Practice for the Board of the Northwest Regional

Development Agency, which is a public document available from the Agency's offices.

Bryan Gray MBE OL, Chairman (appointed 1 Apri/2002)Professor Sir Martin Harris CBE OL, Deputy Chairman (appointed December 2001)Oavid Brockbank (appointed December 2004)Joseph Owek CBE (appointed December 2003)Peter Hensman (appointed December 2004)Robert Johnston (appointed December 2002)

Or Pauleen Lane (appointed December 2001)DaveMcCall (appointed December 2003)CUr John Merry (appointed December 2004)Professor John Moverley OBE (appointed December 2004)

CUr Marie Rimmer CBE(appointed December 2002)Anil Ruia OBE (appointed December 2001)Brenda Smith (appointed December 2001)CUr Mike Storey CBE (appointed December 2001)Or Maureen Wiliams (appointed December 2002)

32




Board members (continued)

Brief biographies for the Board Members are shown in the Annual Report section of thisdocument.

Board Members are contracted to carry out two days work per month on behalf of theAgency. The Chairman is contracted for three days per week and the Deputy Chairman oneday per week.

The Agency maintains a Register of Board Members' Interests, which is available on requestby contacting the Executive Director of Operations at the Agency's offces at RenaissanceHouse, Warrington. Members declare their interests to the Board in any transactionsinvolving relevant organisations.

Employment of disabled persons

The Agency is committed to p'roviding equal opportunities for all and wil make reasonableadjustments to working arrangements to meet special needs. We will work towards anenvironment and culture where everyone is encouraged and supported to develop their fullpotential regardless of individual characteristics, which may limit a person's opportunities inlife.

Provision of information to and consultation with employeesThe Agency is fully committed to effective and open communication and consultation with itsemployees. This is achieved through a variety of means including a Staff ConsultativeCommittee involving the Public and Commercial Services (PCS) and Prospect Trade Unionstogether with staff representatives; a Health and Safety Committee; and staff events tocommunicate key issues and receive feedback.

Better payment practice codeThe Agency is committed to the Better Payment Practice Code and aims. to pay 95% of allundisputèd invoices either within 30 days or the terms agreed with the supplier.

In 2004-5 the Agency did not achieve this target paying 83% (2004: 67%) of invoices within30 days. The Agency's ability to pay suppliers within the target timescale has improvedconsiderably on the previous year, and the Agency will seek to continue this improvement in2005-6 with the aim of achieving the prompt payment target in the forthcoming year.

33




Audit services

The Comptroller and Auditor General is appointed by statute to audit the Northwest RegionalDevelopment Agency, and reports to Parliament on the truth and fairness of the annualFinancial Statements and the regularity of income and expenditure. The following costs havebeen incurred in relation to services provided by the Comptroller and Auditor General:

Audit Services £68,000

The Comptroller and Auditor General also has statutory powers to report on economy,

efficiency and effectiveness with which the Agency has used its resources. In November2003 the Comptroller and Auditor General published the 'Success in the Regions' report onhow the Agencies and the departments work together. This and other reports issued by theComptroller and Auditor General can be found on the National Audit Offce Website atww.nao.org.uk.

Statement on the Agency's policy for conserving energy, reducing waste andminimizing the release of greenhouse gases

In 2004/5, the NWDA Board formed an Environmental Sub-committee to advise the Board onthe implementation of the Regional Economic Strategy as it pertains to the environment. AnEnvironment Action Plan has been developed to assist the Sub-committee in monitoringprogress including energy conservation, waste reduction and minimising greenhouse gasemissions. The Action Plan addresses Internal Environmental Management, Mainstreaminginto NWDA Policies and Processes, Influencing the Region and Single Programmeexpenditure on Projects and Programmes and incorporates action from the Memorandum ofUnderstanding with the Environment Agency.

In the last year, the NWDA has defined its significant environmental aspects. As a result ithas: developed a Green Travel Plan to reduce the emissions from its business vehicles;developed a sustainable development communications strategy; implemented staff trainingon Environmental Management and has commenced work on adoption of sustainableprocurement practices. Through its single programme expenditure, the Agency hassupported Constructing Excellence and RENEW (the region's centre of excellence forregeneration) to influence improved construction practices. The Agency has also developeda Business Resource Effciency and Waste (BREW) programme with key partners andappointed a co-ordinator for the programme.

In addition, the Agency continues to support programmes aimed at developing theenvironmental technologies sector including transforming waste into products. The Agencycontinues to fund business support programmes to assist regional businesses in reducingtheir greenhouse gas emissions, adapting to climate change, reducing their energyconsumption and support them in achieving excellence in corporate responsibility.

The Northwest Regional Development Agency's Environmental Policy is laid out on page 27.The Policy will be reviewed and updated as part of the Agency's Environmental Audit

ç\-Sleven BroWdChief Executive Officer

~./'\

34



Statement on Internal Control

Scope of ResponsibiltyAs Accounting Offcer, I have responsibility for maintaining a sound system of internal controlwithin the Agency. This system supports the achievement of the Agency's policies, aims andobjectives, set by the Board, whilst safeguarding it's assets and the public funds that itutilses, for which I am personally responsible, in accordance with the responsibilitiesassigned to me in Government Accounting.

The Purpose of the System of Internal Control

The system of internal control is designed to manage rather than eliminate the risk of failureto achieve policies, aims and objectives. It can therefore only provide reasonable and notabsolute assurance of effectiveness.

The system of internal control is based on a continuous process designed to identify theprincipal risks to the achievement of the Agency's policies, aims and objectives, to evaluatethe nature and extent of those risks and to manage them efficiently, effectively andeconomically. This process has been in place for the year ended 31 March 2005 and up tothe date of approval of the annual report and accounts and accords with HM Treasuryguidance.

Capacity To Handle Risk

The Board sets the Agency's policy and attitude towards risk. The Audit Committee

approved a revised and updated risk management policy during the year, on behalf of theBoard.

The Executive Management Board, led by the Chief Executive, is responsible for theoperation of the Agency's corporate risk management process. A new Head of Risk joinedthe Agency during the year and the corporate risk management process has been refreshedand reviewed by the Head of Risk, Executive Management Board and Audit Committee.

The Risk and Control Framework

The main processes which the Agency has in place for identifying, evaluating and managingrisk are:

(a) Risk Management Strategy

Our risk management strategy is updated annually and approved by the Audit Committee.The risk management strategy sets out the Agency's approach to the different stages of therisk management process including risk identification, analysis, evaluation and control.

(b) Directorate Risk Registers

Risk registers are maintained by each of the Agency's Directorates. The most significantrisks identified by the Directorates are incorporated into the Agency's overall risk register.

35



Statement on Internal Control (continued)

The risk and control framework (continued)

(c) Review of Risk Registers

The Directorates update the risk registers on a quarterly basis as part of the businessplanning process. Where controls are not considered to be working effectively, further actionis put in place. The Executive Team' review the Agency risk register on a regular basis andmake changes as appropriate.

Information and CommunicationThe Board meets eleven times per annum and receives progress reports on significantprojects, a monthly finance director's report on the Agency's financial position, and theAgency's quarterly performance report that summarises progress against key outcometargets.

The Executive Management Board meets fortnightly to make key decisions, agree actionsand specific initiatives and to review financial and operational performance.

Key decisions made and actions agreed are communicated to managers via a monthly corebriefing session and cascaded to all staff through regular team meetings.

Specific policies and procedures are approved by the Executive Management Board anddelivered to the relevant teams through induction training, team meetings, and via em ail andthe Intranet. These address issues such as project appraisal and monitoring, financialmanagement and control, procurement and legislation, for example the Freedom ofInformation Act.

Project Management SystemThe Agency embarked on a comprehensive review of its system for the management ofprojects during the year.

The Systems and Process Improvement Programme is designed to ensure the guidanceoffered by the DTI under the Single Programme is comprehensively adopted throughout thewhole Agency. Following discussion of the new project management system, and testing onkey pilot projects, the new system will go live during 2005/2006 with support from acomprehensive staff training programme.

Significant Internal Control Issues

Any significant internal control issues wil be dealt with by Executive Management, withadvice where appropriate, from the Head of Risk, internal and external audit.

There were no significant control issues during the year.

36



Statement on Internal Control (continued)

Review of Effectiveness

As Accounting Offcer, I have responsibilty for reviewing the effectiveness of the system ofinternal control. My review of the effectiveness of the system of internal control is informedby the work of the Internal Auditors, the Head of Risk and the Executive Management Teamwithin NWDA who have responsibility for the development and maintenance of the internalcontrol framework, and comments made by the External Auditors in their management letterand other reports. The Board and the Audit Committee have advised me on the implicationsof the result of my review of the effectiveness of the system of internal control, and a plan toaddress weaknesses and ensure continuous improvement of the system is in place.

-\8 July 2005

37

Northwest Regional Development AgencyThe Certificate of the Comptroller and Auditor General to the Houses of

Parliament and the Northwest Development Agency

31 March 2005

I have audited the financial statements on pages 40 to 71 under the Regional DevelopmentAgencies Act 1998. These financial statements have been prepared under the historical costconvention as modified by the revaluation of certain fixed assets and the accounting policiesset out on pages 44 to 47.

Respective responsibilties of the Northwest Regional Development Agency,the Chief Executive and Auditor

As described on page 30, the Northwest Regional Development Agency and Chief Executiveare responsible for the preparation of the financial statements in accordance with theRegional Development Agencies Act 1998 and directions made thereunder by the Secretaryof State and for ensuring the regularity of financial transactions. The Northwest RegionalDevelopment Agency and Chief Executive are also responsible for the preparation of theother contents of the Annual Report. My responsibilities, as independent auditor, areestablished by statute and have regard to the standards and guidance issued by the AuditingPractices Board and the ethical guidance applicable to the auditing profession.

I report my opinion as to whether the financial statements give a true and fair view and areproperly prepared in accordance with the Regional Development Agencies Act 1998 anddirections made thereunder by the Secretary of State, and whether in all material respectsthe expenditure and income have been applied to the purposes intended by Parliament andthe financial transactions conform to the authorities which govern them. i also report if, in myopinion, the Foreword is not consistent with the financial statements, if the Agency has notkept proper accounting records, or if i have not received all the information and explanationsI require for my audit.

I read the other information contained in the Annual Report and consider whether it isconsistent with the audited financial statements. i consider the implications for my certificateif I become aware of any apparent misstatements or material inconsistencies with thefinancial statements.

I review whether the statement on pages 35 to 37 reflects the Agency's compliance withTreasury's guidance on the Statement on Internal Control. I report if it does not meet therequirements specified by Treasury, or if the statement is misleading or inconsistent withother information I am aware of from my audit of the financial statements. I am not requiredto consider, nor have I considered whether the Accounting Offcer's Statement on InternalControl covers all risks and controls. I am also not required to form an opinion on theeffectiveness of the Agency's corporate governance procedures or its risk and controlprocedures.

Basis of audit opinion

I conducted my audit in accordance with United Kingdom Auditing Standards issued by theAuditing Practices Board. An audit includes examination, on a test basis, of evidence

relevant to the amounts, disclosures and regularity of financial transactions included in thefinancial statements. It also includes an assessment of the significant estimates andjudgments made by the Northwest Regional Development Agency and Chief Executive in thepreparation of the financial statements, and of whether the accounting policies areappropriate to the Agency's circumstances, consistently applied and adequately disclosed.

38

Northwest Regional Development AgencyThe Certificate of the Comptroller and Auditor General to the Houses of

Parliament and the Northwest Development Agency

31 March 2005

Basis of audit opinion (continued)I planned and performed my audit so as to obtain all the information and explanations which Iconsidered necessary in order to provide me with suffcient evidence to give reasonableassurance that the financial statements are free from material misstatement, whether causedby error, or by fraud or other irregularity and that, in all material respects, the expenditureand income have been applied to the purposes intended by Parliament and the financialtransactions conform to the authorities which govern them. In forming my opinion I have alsoevaluated the overall adequacy of the presentation of information in the financial statements.

OpinionIn my opinion:

. the financial statements give a true and fair view of the state of affairs of the Northwest

Regional Development Agency at 31 March 2005 and of the surplus, total recognisedgains and losses and cash flows for the year then ended and have been properlyprepared in accordance with the Regional Development Agencies Act 1998 anddirections made thereunder by the Secretary of State; and

. in all material respects the expenditure and income have been applied to the purposes

intended by Parliament and the financial transactions conform to the authorities whichgovern them.

I have no observations to make on these financial statements.

John BournComptroller and Auditor General

National Audit Offce157 -197 Buckingham Palace RoadVictoriaLondon SW1W 9SP

Date July 2005

39

Income & Expenditure accountFor the year ended 31 March 2005

IncomeGrant-in-AidSmall Business Service fundingEuropean fundingCoalfield and other government grantsTransfer from government grant reserveRents and maintenance chargesClaw-back of grant and contributions

'~ Proceeds from disposal of AssetsOther income

ExpenditureGrants paid for programme expenditureSalaries and wagesOther administrative costsNon-grant programme expenditureNon-grant coalfield expenditure

. Book value of Assets sold

Asset valuation write-downAsset valuation write-backRelease of Environmental ProvisionsBad debts and movements in provision for bad and

doubtful debts

Operating Deficit

Interest receivableNotional cost of capital

(Deficit) for the year on ordinary activities

Taxation

(Deficit) for the year after Tax

Reversal of notional cost of capital

(Deficit) I Surplus for the year carried forward



All activities are from continuing operations.

The notes on pages 44 to 71 form part of these accounts.

Note

2

23

64

21

511

12

Restated2005 2004£000 £000

323,457 263,62519,490 18,859.18,120 16,1584,999 2,419

14,721 19,49812,269 13,1359,669 4,0637,474 16,9453,770 2,561

413,969 357,263

11

325,364 263,96116,348 14,12814,846 15,39132,001 35,557

1,659 1,7875,856 10,757

22,002 18,545(2,971) (2,524)

(310) 100

1,255 406

416,050 358,108

(2,081) (845)

2,080 833(6,092) (5,809)

(6,093) (5,821 )

1 12

(6,092) (5,809)

6,092 5,809

40



Statement of total recognised gains and lossesFor the year ended 31 March 2005

2005 2004£000 £000

Surplus for year carried forward

Revaluation on Investment and Development Assets 26,366

Grant receivable not released to the Income andExpenditure Account 41,821 42,406

Total recognised gains 68,187 42,406

41



Balance sheetAs at 31 March 2005

Note 2005 2004£000 £000

Fixed AssetsIntangible Operating Assets 13 145.1 81Tangible Operating Assets 14 3,691/ 4,491Investment Properties 15 100;5151 81,587Investments 16 14,949/ 4,979

119,300 91,138

Current AssetsDevelopment Assets 17 90,670/ 77,612Debtors 18 72,434 ( 36,466Cash at bank and in hand 26 26,749/ 34,344

189,853 148,422

Creditors: Amounts fallng due within one year 19 (80,813) (' (53,746)

Net Current Assets 109,040 94,676

Creditors: Amounts fallng due after more than one year 20 (15,692) / (2,104)

Provisions For Liabilties And Charges 21 (3,306) (3,239)

Total Assets Less Total Liabilties 209,342/ 180,471

Reserves

Government Grant Reserve 23 204,287 172,089European Funding Reserve 24 14,144 17,471Income and Expenditure Reserve 25 (9,089) (9,089)

209,342 180,471

These financial statements were approved by the board on 8 July 2005, and were signed onits behalf by:

~~Vc" l\ IWBryan M Gray \Chairman

s\-42



Cash flow statementFor the year ended 31 March 2005

Note 2005 2004£000 £000

Net Cash Outflow From Operating Activities (47,450) (19,503)

Returns On Investments And Servicing Of FinanceInterest Received 2,080 833TaxationUK Corporation Tax paid 385 1,040Capital Expenditure And Financial InvestmentPurchase of Fixed Assets (9,141) (10,633)Proceeds on disposal of Fixed Assets 4,710 9,871

Net Cash Outflow Before Financing (49,416) (18,392)

Financing

Financing for Assets 41,821 42,012

Increase in Cash (7,595) 23,620

Net liquid funds at 1 April 2004 34,344 10,724

Net liquid funds as at 31 March 2005 26 26,749 34,344

Reconcilation of operating deficit to net cash outfow from operating activities

2005 2004£000 £000

Operating Deficit (2,081)

(32,030)(42,062)37,409

1,430(310)

(14,721)(11,935)

(3,328)1,147

22,002

(2,971)

Increase in development assets Mci;l'"io",,,,,Increase in debtorsIncrease in creditorsDepreciation and amortizationEnvironmental liability provision increaseTransfer from government grant reserveTransfer from European funding reserveEuropean advance funding for BISLoss I (Profit) on disposal of assetsAsset valuation write-downAsset valuation write-back

Net cash outflow from operating activities (47,450)

(845)

(31,379)(4,659)10,298

1,102100

(19,498)(8,877)17,471

88618,545

(2,524)

(19,503)

43



Notes to the financial statements

1. Accounting policies

(a) Basis of Accounting

The Financial Statements of the Northwest Regional Development Agency have beenprepared in a form directed by the Secretary of State for Trade and Industry, with theapproval of H M Treasury, in accordance with the Regional Development Agencies Act 1998.The Financial Statements. have been prepared as set out in Treasury guidanc$ under themodified historical cost basis as explained in the sub-paragraphs below and in accordancewith applicable Accounting Standards.

Compliance with SSAP 19 "Accounting for Investment Properties" requires departure fromthe requirements of the Companies Act 1985 relating to depreciation and an explanation ofthe departure is given in note 1(c) below.

Non-grant programme expenditure, salaries and wages, and other administration costs havebeen re-classified following a review of the analysis of expenditure during the year. Thecomparative information has been restated accordingly. The revised classification isconsidered to be more representative of the activity undertaken by the Agency. Furtherdetails are given in note 4.

(b) Basis of ConsolidationThe Agency holds a number of investments in other subsidiary and associate undertakings.No consolidated financial statements are presented on the grounds that there is no materialdifference between the Agency's own financial statements and those prepared on aconsolidated basis.

(c) Intangible Operating AssetsIntangible Operating Assets consisting of softare licences are valued at amortised historiccost, which is not materially different from amortised replacement cost.

( d) Tangible Operating Assets

Tangible fixed assets are valued at depreciated historic cost, which is not materially differentfrom depreciated replacement cost.

(e) Investment Properties

The portolio of industrial and commercial investment properties held at anyone time istreated in such a way that surpluses and deficits on revaluation of industrial and commercialproperties are netted off. Any overall write-down of these properties to open market value,and subsequent adjustments thereto, are accounted for annually and separately identified inthe Income & Expenditure Account. Any overall surplus on revaluation of these properties toopen market value, and subsequent adjustments thereto, are credited to the governmentgrant reserve after eliminating the overall accumulated unrealised deficit, as originallycharged, by revaluation adjustment, to the Income and Expenditure Account.

Valuations are carried out in accordance with best practice as contained in the Statement ofAsset Valuation Practice and Guidance Notes (4th Edition) published by the Royal Institute ofChartered Surveyors.

A valuation for the whole portolio was carried out as at 31 March 2005, which wasundertaken by King Sturge, International Property Consultants.

44



Notes (continued)

1. Accounting policies (continued)

(e) Investment Properties (continued)

In accordance with SSAP 19, no depreciation is provided in respect of investment properties.This departure from the requirement of the Companies Act 1985 for all properties to bedepreciated is, in the opinion of the Board, necessary for the Financial Statements to give atrue and fair view in accordance with applicable accounting standards as properties areincluded in the Financial Statements at their open market value. .

Depreciation is only one of the many factors reflected in the annual valuation of theproperties and the amount attributed to this factor by the valuers cannot reasonably beseparately quantified.

Acquisitions and disposals of land and buildings are accounted for on the date of legalcompletion.

(t) Investments

Investments are valued at market value unless this cannot readily be obtained, where analternative method of valuation is used.

Movements arising on the revaluation of investments are reflected in the governmentrevaluation reserve, except for impairments and reductions in value below historical cost,which are reported in the income and expenditure account.

(g) Development AssetsDevelopment assets, consisting of land and buildings, are shown at the lower of currentreplacement cost and net realisable value, any reductions in carrying value being written offto the Income & Expenditure Account. Movements arising on the revaluation of developmentassets in excess of historical cost are reflected in the government grant reserve.

Acquisitions and disposals of Development Assets are accounted for on the date of legalcompletion.

(h) Depreciation and amortisation

Depreciation and amortisation is provided to write off the replacement cost of tangible fixedassets over their anticipated useful lives on a straight line basis at the following annual rates:

Owned property 50 yearsLeasehold buildings with less than 25 years to run Period of lease

Office furniture, fittings and equipment 5 yearsComputer equipment 3 yearsSoftare licences 3 years

45



Notes (continued)


(i) Investments and Long Term LoansInvestments and loans are shown net of provision for amounts considered doubtful and ofwrite-offs for amounts considered irrecoverable. Provision has been made for all loanswhere recovery appears doubtfuL. No loan is written off until the impossibility of recovery isbeyond doubt. Approval from the DTI is obtained for any write-off in excess of £250,000.

Partnership workspace schemes, the Agency's investment with partners, mainly localauthorities, to provide rural works pace has been disclosed in the Balance Sheet at avaluation based on the present value of estimated future rental income. Expenditure onthese projects is written off in the year of spend.

lj Pension Costs

Certain of the employees of the Agency participate in the Principal Civil Service PensionScheme (PCSPS) and the English Partnerships Pension Scheme (EPPS). The PCSPS andEPPS are defined benefi schemes. The Agency recognises the expected cost of providingpensions on a systematic and rational basis over the period during which it benefits fromemployee's services by payment to the scheme of amounts calculated on an accruing basis.Liability for payment of future benefits is a charge on the scheme

(k) Government Grants

The Agency's activities are funded primarily by Grant-in-Aid provided by the Department ofTrade and Industry for specified types of expenditure. Government Grants receivable of arevenue nature are credited to the Income & Expenditure Account in the year to which theyrelate. Government Grants in respect of capital expenditure are credited to the GovernmentGrant Reserve (GGR) and released to the Income & Expenditure Account either, over theexpected useful life of the asset, for assets that are depreciated or, upon disposal or loss invalue, for assets that are not depreciated.

(I) European Grants

The Agency's activities are funded in part by European Funding for specified types ofexpenditure. European Funding Grants receivable of a revenue nature are credited to theIncome & Expenditure Account in the year to which they relate. European Funding Grants inrespect of capital expenditure are credited to the Deferred European Funding Reserve(DEFR) and released to the Income & Expenditure Account either, over the expected usefullife of the asset, for assets that are depreciated or, upon disposal or loss in value, for assetsthat are not depreciated.

(m) Deferred Taxation

Full provision has been made for deferred tax assets and liabilities arising from timingdifferences between the recognition of gains and losses in the Financial Statements and theirrecognition in the tax computation.

(n) Foreign Currency Transactions

Transactions in foreign currencies are recorded in sterling at the rates prevailing at the dateof transaction. Resulting exchange gains and losses are taken to the Income & ExpenditureAccount.

46



Notes (continued)


(0) LeasesOperating lease rentals are charged to the Income & Expenditure Account over the period ofthe lease.

The Agency does not hold any finance leases.

47



Notes (continued)

2. Analysis of total grant utilisedIn 2004-5, the Agency was funded by Grant-in-Aid from theIndustry.

Grant-in-Aid received from DTIGrant-in-Aid allocation for Regional Aggregation BoardGrants received

Tránsfer from Government Grant ReserveOpening net grant creditor I (debtor)Closing net grant debtor I (creditor)

Total grant receivable

Total relevant expenditureLess non-grant income

Total grant utilised

Regional Aggregation Board loanTotal grant applied to:

- Operational Asset additions- Investment Asset additions- Development Asset additions- Investment additions

Grant in Aid credited to Income & Expenditure AccountOther Income & Expenditure Account

Total grant utilised

Analysis of net closing debtor/(creditor):

Department of Trade and

Restated2005 2004£000 £000

315,000 295,000650 394

46,526 56,9256,0934,022 (13,708)

23,661 (4,022)

395,952 334,589

431,215 372,126(35,263) (37,537)

395,952 334,589

650 394

703 1,9451,662 4,369

32,030 31,3796,776 4,319

323,457 263,62530,674 28,558

395,952 334,589

2005 2004£000 £000

Grant in Aid 41,500 13,852Coalfields 1,076 307European Union (5,104) 2,707BIS (14,144) (17,443)SBS 333 (2,679)Tax and interest (766)

23,661 (4,022)

48



Notes (continued)

3. Analysis of income and expenditure by key driverGrant Grant

applied to applied tocapital capital

Total income Total additions Total Total additionsrecorded expenditure recorded in income expenditure recorded in

in recorded in GGR& recorded in recorded in GGR&I&E I&E European I &E I&E European

Account Account Reserve Account Account Reserve2005 2005 2005 2004 2004 2004£000 £000 £000 £000 £000 £000

BusinessDevelopment 116,066 116,066 26,888 93,552 93,552 15,223

Regeneration 213,949 213,949 4,943 202,995 202,995 18,653Skils 18,654 18,654 10,856 10,856Infrastructure 26,136 26,136 8,873 12,645 12,645 6,149Investing in Image& Environment 7,312 7,312 5,319 5,319

Administration 30,368 32,449 707 29,080 29,925 1,945Coalfields 1,484 1,484 410 2,816 2,816 436

413,969 416,050 41,821 357,263 358,108 42,406

4. Other administration costs

Restated2005 2004£000 £000

Professional costsMarketing and PREstate ManagementNon-recoverable VATOffce costsOperating lease rentalsOther staff costsIT and communicationTravel & SubsistenceDepreciation and Amortisation

Contributions to Joint VenturesExternal Auditors' remuneration

1,3882,3602,676

3402,1691,251

923907

1,0951,430

23968

14,846

2,1941,9772,657

3411,7561,4791,2291,1021,0961,102

39266

15,391

Non-grant programme expenditure, salaries and wages, and other administration costs havebeen re-classified following a review of the nature of expenditure incurred. The comparativeamount has been restated accordingly. The effect of the re-classification is to increase non-grant programme expenditure incurred in 2004 by £;30,384,000 and reduce otheradministrative costs by a corresponding amount. There is no overall effect on totalexpenditure.

49



Notes (continued)

5. Interest receivable

2005 2004£000 £000

Corporation Tax Interest 20 19Bank deposit 2,056 807Rural loan interest 4 7

2,080 833

6. Salaries and wages2005 2004£000 £000

Board MembersBoard members salaries 194 191Pension costs 14 13Social security costs 15 15

223 219

StaffSalaries and wages inc. overtime 12,052 10,207Pension costs 1,596 1,332Social security costs 1,037 932

14,685 12,471

Temporary staffRecruitment agency staff 610 911Seconded staff salary costs 830 527

1,440 1,438

Total Salaries and wages 16,348 14,128

50



Notes (continued)

7. Staff numbers

The average number of staff employed by the Agency during the year (including all secondedstaff) was 377 (2004: 357). The figures do not include recruitment agency staff.

20052005 SecondedStaff Staff

2005 Senior

Management2005Total

2004TotalDepartment

Chief Executive's Office 1 17 18 27Operations 1 76 4 81 79Enterprise and Innovation 1 103 8 112 87Development and Partnerships 1 87 88 102Corporate Resources 1 74 2 77 62

5 357 14 376 357

8. Emoluments of Board MembersThe emoluments of Board Members can be analysed as follows:

Total TotalName Period of Appointment Salary Pension 2005 2004

From To £ £ £ £

Bryan Gray (Chairman) April 2002 - Mar 2005 74,781 13,834 88,615 86,877Professor Sir Martin Harris Dec 2004 - Dec 2007 15,861 15,861 15,550David Brockbank Dec 2004 - Dec 2007 2,410 2,410Neville Chamberlain 1 Dec 2001 - Dec 2004 5,531 5,531 7,775John Dunning 1 Dec 2001 - Dec 2004 5,531 5,531 7,775Joe Dwek Dec 2003 - Dec 2006 7,931 7,931 2,592Peter Hensman Dec 2004 - Dec 2007 2,410 2,410

ýRobert Johnston Dec 2002- Dec 2005 7,931 7,931 7,775Or Pauleen Lane Dec 2004 - Dec 2007 7,931 7,931 7,775Richard Leese 1 Dec 2001 - Dec 2004 5,531 5,531 7,775Dave McCall Dec 2003 - Dec 2006 7,931 7,931 2,592Dennis Mendoros 1 Dec 2001 - Dec 2004 5,531 5,531 7,775John Merry Dec 2004 - Dec 2007 2,410 2,410John Moverley Dec 2004 - Dec 2007 2,410 2,410Marie Rimmer Dec 2002 - Dec 2005 7,931 7,931 7,775Anil Kumar Ruia Dec 2004 - Dec 2007 7,931 7,931 7,775Brenda Smith Dec 2004 - Dec 2007 7,931 7,931 7,775Mike Storey Dec 2004 - Dec 2005 7,931 7,931 7,775Maureen Wiliams Dec 2002- Dec 2005 7,931 7,931 7,7751 Retired December 2004

51



Notes (continued)

8. Emoluments of Board Members (continued)

Board Members are contracted to carry out two days work per month on behalf of theAgency. The Chairman is contracted for three days per week and the Deputy Chairman iscontracted for one day per week.

Real Total accrued Total accruedincrease in pension at 60 pension at 60pension at at at

Name 60 31 March 2005 31 March 2004£ £ £

Bryan Gray (Chairman) 914 2,804 1,833

No Board Members are eligible for pension contributions, performance related payor anyother Taxable benefit as a result of employment with the Agency, with the exception of theChairman, who has a by-analogy pension aligned to PCSPS. With the approval of DTI, apension and death in service benefit scheme has been put in place for the Chairman withcontribution rates and pension benefits which are identical to the Principal Civil ServicePension Scheme but which is funded directly by the Agency. On his retirement, payment ofthe Chair's pension will be the responsible of the Agency, underwritten by DTI.

The Agency is not permitted to invest its contributions of £13,834 and those deducted fromthe Chairman's salary of £2,617 and an equivalent pension benefit has therefore beenprovided for in the Balance Sheet.

Similar arrangements were made for the previous Chairman whose pension is met year onyear from current resources.

52



Notes (continued)

9. Emoluments of Chief Executive and the Most Senior Managers

The emoluments of Board Members can be analysed as follows:

SalaryName furrelevant Redun- 2005 2004

period Bonus Benefits Pension dancy Total Total£ .£ £ £ £ £ £Steven ßroomheadChief Executive 122,400 18,360 8,199 22,644 - 171,603 132,266

ßernice LawExecutive Director ofOperations 97,872 2,862 1,022 18,106 - 119,862 34,608

lan HaythornthwaiteExecutive Director ofFinance and Corporate

Resources 48,208 700 7,439 - 56,347 1,000

Helen FranceExecutive Director ofDevelopment andPartnerships 92,295 4,765 3,852 17,075 - 117,987 57,250

Mark HughesExecutive Director ofEnterprise and Innovation 2,969 145 550 3,664

Alan Turley

Executive Director ofEnterprise and Innovation 54,160 2,961 10,020 65,917 133,058 34,524

The Board determines the performance pay for the Chief Executive on the recommendationof the Remuneration Committee. Performance is measured against seven separatelyweighted targets determined by the Board and agreed by the Secretary of State for Tradeand Industry and the amount of the performance award can be up to a maximum of 20% ofsalary. In 2004-5 targets related to Programme Delivery, the Review of the RegionalEconomic Strategy and the introduction of the Single Financial Framework, review andimplementation of a new organisational structure and production of a corporate financialstrategy.

The Chief Executive determines the performance pay of the Senior Management Team onadvice from the Remuneration Committee. Performance is measured against detailedannual targets set individually for each employee by the Chief Executive and the amount ofthe performance award can be up to 10% of salary.

Benefits include cars, within an agreed car lease scheme.

53



Notes (continued)

9. Emoluments of Chief Executive and the Most Senior Managers (continued)

The Chief Executive and Senior Management have given their consent to show their pensionbenefit details, as follows:

Lump Employee Realsum CETV contn- increase

Real Real Pension at at CETV butions in CETVincrease increase at 31 31 at and as funded

in in lump 31 March March March 31 March transfers bypension sum 2005 2005 2004 2005 in employer

£000 £000 £000 £000 £000 £000 £000 £000

Steven ßroomhead 40 -42.5 N/a 40 -45 N/a 21 520 415 - 417.5 89ßemice Law 0-2.5 N/a 1-2.5 N/a 6 23 2.5 - 5 17lan 0-2.5 N/a 0-5 N/a 7 2.5-5 6HaythomthwaiteHelen France 5-7.5 20 - 22.5 30 -35 90 - 95 299 408 0-2.5 88Alan Turley 0-2.5 N/a 0-2.5 N/a 7 19 2.5-5 11

Columns 5 and 6 of the above table show the member's cash equivalent transfer value(CETV) accrued at the beginning and the end of the reporting period. Column 8 reflects theincrease in CETV effectively funded by the employer. It takes account of the increase inaccrued pension due to inflation, contributions paid by the employee (including the value ofany benefits transferred from another pension scheme or arrangement) and uses commonmarket valuation factors for the start and end of the period.

A CETV is the actuarially assessed capitalised value of the pension schemes benefisaccrued by a member at a particular point in time. The benefits valued are the member'saccrued benefits and any contingent spouse's pension payable from the scheme. A CETV isa payment made by a pension scheme or arrangement to secure pension benefis in anotherpension scheme or arrangement when the member leaves a scheme and chooses to transferthe benefits accrued in the former scheme.

The pension figures shown relate to the benefits that the individual has accrued as aconsequence of their total membership of the pension scheme, not just their service in asenior capacity to which disclosure applies. The CETV figures, and from 2004-5 the otherpensions details, include the value of any pension benefit in another scheme or arrangement,which the individual has transfer payment commensurate to the additional pension liabiltiesbeing assumed. They also include any additional pension benefit accrued to the member asa result of their purchasing additional years of pension service in the scheme at their owncost. CETV's are calculated within the guidelines and framework prescribed by the Instituteand Faculty of Actuaries. .Pension benefits are provided through the Principal Civil Service Classic Pension Scheme.This is a statutory scheme that provides benefits on a final salary basis at a normal

retirement age of 60. Benefits accrue at the rate of 1/8oth of pensionable salary for each

year of service. In addition a lump sum equivalent to 3 years' pension is payable on

retirement. Members pay contributions of 1.5% of pensionable earnings. Pensions increasein line with the Retail Price Index. On death, pensions are payable to the surviving spouse ata rate of half the member's pension. On death in service, the scheme pays a lump sumbenefit of twice pensionable pay and also provides a service enhancement on computing thespouse's pension. The enhancement depends on length of service and cannot exceed 10years.

54



Notes (continued)

10. Pension arrangements

The Agency has a number pension schemes in operation. The principal schemes are of thecontributory defined benefit type.

(i) Principal Civil Service Pension Scheme (PCSPS)

The PCSPS is an unfunded multi-employer defined benefit scheme and the Agency is unableto identify its share of the underlying assets and liabilities. A full actuarial valuation wascarried out at 31 March 2003. Details can be found in the resource accounts of the CabinetOffce; Civil Superannuation (ww.civilservice-pensions.gov.uk).

For 2004-5, employer's contributions of £1,447,718 were payable to the PCSPS (2004:£1,236,091) at one of four rates in the range 16.2 to 24.6 percent of pensionable pay, basedon salary bands. Rates wil remain the same next year, subject to revalorisation of the salarybands. Employer contributions are to be reviewed every four years following a full schemevaluation by the Government Actuary, The contribution rates reflect benefis as they areaccrued, not when the costs are actually incurred, and reflect past experience of the scheme.

From 1 October 2002, civil servants may be in one of three statutory based "final salarydefined benefi schemes (classic, premium and classic plus). The schemes are unfundedwith the cost of benefis met by monies voted by Parliament each year. Pensions payableunder classic, premium and classic plus are increased annually in line with changes in theRetail Prices Index. New entrants from 1 October 2002 may choose between membership ofpremium or joining a good quality "money purchase" stakeholder arrangement with asignificant employer contribution (partnership pension account).

Employee contributions are set at the rate of 1.5% of pensionable earnings for classic and3.5% for premium and classic plus. Benefits in classic accrue at the rate of 1/8Oth ofpensionable salary for each year of service. In addition, a lump sum equivalent to three

years pension is payable on retirement. For premium, benefis accrue at the rate of 1/6Oth offinal pensionable earnings for each year of service. Unlike classic, there is no automaticlump sum (but members may give up (commute) some of their pension to provide a lumpsum). Classic plus is essentially a variation of premium, but with benefis in respect ofservice before 1 October 2002 calculated broadly as per classic.

Classic Scheme

Benefis accrue at the rate of 1/80th of pensionable salary for each year of service. Inaddition, a lump sum equivalent to three years pension is payable on retirement. Memberspay contributions of 1.5 per cent of pensionable earnings. On death, pensions are payableto the surviving spouse at a rate of half the member's pension. On death in service, thescheme pays a lump sum benefit of twice pensionable pay and also provides a serviceenhancement on computing the spouse's pension. The enhancement depends on length ofservice and cannot exceed 10 years. Medical retirement is possible in the event of serious ilhealth. In this case, pensions are brought into payment immediately without actuarial

reduction and with service enhanced as for widow( er) pensions.

55



Notes (continued)

10. Pension arrangements (continued)

Premium Scheme

Benefits accrue at the rate of 1/6Oth of final pensionable earnings for each year of service.Unlike classic, there is no automatic lump sum, but members may commute some of theirpension to provide a lump sum up to a maximum of 3/8Oths of final pensionable earnings foreach year of service or 2.25 times pension if greater (the commutation rate is £12 of iumpsum for each £1 of pension given up). For the purposes of pension disclosure the tablesassume maximum commutation. Members pay contributions of 3.5% of pensionableearnings. On death, pensions are payable to the surviving spouse or eligible partner at arate of 3/8ths the member's pension (before any commutation). On death in service, thescheme pays a lump-sum benefit of three times pensionable earnings and also provides aservice enhancement on computing the spouse's pension. The enhancement depends onlength of service and cannot exceed 10 years. Medical retirement is possible in the event ofserious il health. In this case, pensions are brought into payment immediately without

actuarial reduction. Where the member's ill health is such that it permanently prevents themundertaking any gainful employment, service is enhanced to what they would have accruedat age 60.

Classic Plus Scheme

This is essentially a variation of premium, but with benefits in respect of service before1 October 2002 calculated broadly as per classic.

Pensions payable under classic, premium, and classic plus are increased in line with theRetail Prices Index.

The partnership pension account is a stakeholder pension arrangement. The employermakes a basic contribution of between 3% and 12.5% (depending on age of the member)into a stakeholder pension product chosen by the employee. The employee does not haveto contribute but where they do make contributions, the employer wil match these up to alimit of 3% of pensionable salary (in addition to the employer's basic contribution).

Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrallyprovided risk benefit cover (death in service and ill health retirement).

Further details about the CSP arrangements can be found at the website ww.civilservice-pensions.gov.uk

(ii) English Partnerships Pension Scheme ('EPPS?

The EPPS is a multi-employer defined benefit scheme but the Northwest RegionalDevelopment Agency is unable to identify its share of underlying net assets and liabilities. Afull actuarial valuation was carried out at 31 March 2002 and a new valuation is beingundertaken in the current year. For 2004-5, normal employer contributions of £105,450 werepayable to the EPPS (2004: £115,770) at the rate of 14.5% (2004: 14.5%) of pensionablesalary. It has been agreed that contributions will be reviewed on an annual basis following ascheme valuation by the scheme actuary. The contribution rates reflect benefits as they areaccrued, not when the costs are actually incurred, and they reflect past experience of thescheme. At the balance sheet date there were no outstanding or prepaid contributions to thescheme. The accounts of the English Partnerships Pension Scheme are available from theSecretary, at St George's House, Kingsway, Team Valley, Gateshead, NE11 aNA. Allemployees in the scheme are issued with a summary of the accounts.

56



Notes (continued)

11. Notional cost of capital

When calculating the surplus or deficit for the year, the Agency is required to include anotional cost of capital as expenditure, to the extent that there is no real charge for this. Thishas been calculated as 3.5% (2004: 3.5%) of the average of total assets less total liabilities.After the surplus or deficit for the year there is an entry reversing this amount.

12. Taxation2005 2004£000 £000

Current taxationAdjustments relating to previous year (385) (5)

Deferred taxationDeferred Tax provision 384 (7)

(1) (12)

13. Intangible operating assets

SoftwareLicences

£000CostAt the beginning of the yearAdditions in year

122111

At the end of the year 233

AmortisationAt the beginning of the yearAmortisation in year

4147


Net Book ValueAt the end of the year 145

At the beginning of the year 81

57



Notes (continued)

14. Tangible operating assets

Land & Fixtures & Computerbuildings fittings equipment Total

£000 £000 £000 £000Cost or Valuation

At the beginning of the year 1,108 3,524 2,458 7,090Additions in year 210 382 592Disposals in year (31 ) (31 )

At the end of the year 1,108 3,734 2,809 7,651

DepreciationAt the beginning of the year 111 1,436 1,052 2,599Depreciation in year 22 675 685 1,382Disposals in year (21 ) (21 )

At the end of the year 133 2,111 1,716 3,960

Net Book ValueAt the end of the year 975 1,623 1,093 3,691

At the beginning of the year 997 2,088 1,406 4,491

The Net Book Value of tangible operating assets does not differ materially from thedepreciated replacement cost of the assets.

15. Investment properties2005 2004£000 £000

Cost or valuationAt the beginning of the year 81,587 82,498Additions 1,662 4,369Disposals (3,489) (6,682)Transferred to Fixed Asset Investments (2,000)Revaluations 22,755 1,402

At the end of the year 100,515 81,587

58



Notes (continued)

16. Investments£000

Cost or valuationAt the beginning of the year 5,376Additions in year 6,775Transfers in from Investment 2,000PropertiesRevaluation 1,545

At the end of the year 15,696

ProvisionsAt the beginning of the year 397Provided in year 517Amounts written back (167)


Net Book ValueAt the end of the year 14,949

At the beginning of the year 4,979

The entities in which the Agency had an interest at the year end are as follows:

Type ofOrganisationName of Undertaking Nature of Business Interest

Subsidiary undertakingsEstuary ManagementCompany Limited

Company limited byguarantee

Provision of services atthe Estuary CommercePark

100%

Rural RegenerationCumbria Limited

Company limited byguarantee

Regeneration for Furnessand Cumbria

81%

59



Notes (continued)

16. Fixed asset investments (continued)

Type ofName of Undertaking Organisation Nature of Business Interest

AssociatesNew East Manchester Company limited by Regeneration of East 33%Limited guarantee Manchester

Liverpool Land Company limited by Regeneration of Strategic 33%Development Company guarantee Investment areas inLimited Liverpool

Liverpool Vision Limited Company limited by Urban regeneration of 33%guarantee Liverpool

Brunswick Business Park Company limited by Management of 23.86%Limited guarantee Brunswick business Park

Furness West Cumbria Company limited by Regeneration of West 20%New Vision Limited - guarantee Cumbriatrading as West LakesRenaissance

Ancoats Urban Village Company limited by Regeneration of Ancoats 33%Company Limited guarantee area of Manchester

Maryport Developments Private limited Management of the 20.4% ordinaryLimited company development of Maryport share capital

Harbour 100% Preferenceshare capital

Joint VenturesNorth West Business Limited partnership Provision of loans and 80%Investment Scheme equity finance in North

West Region

North West Seed Fund Limited partnership Provision of loans and 80%equity finance in NorthWest Region

Rising Stars Limited partnership Provision of loans and 80%equity finance in NorthWest Region

Regional Aggregation Limited liability Procurement and 50%Body Limited partnership distribution of broad band

services

Renewables Northwest Company limited by Development of Initiatives 50%Limited guarantee for renewable energy

60



Notes (continued)

16. Fixed asset investments (continued)

The Agency's principle investments relate to the North West Business Investment Scheme('BIS'), the North West Seed Fund and Rising Stars. Other investments are primarily held inlimited guarantee companies, which do not contribute to the investment carrying value. Inaddition, other long term interests in developments, not classified as development assets areincluded in this caption. As at 31 March 2005, these investments represented £2m of theoverall carrying value.

The investment in North West Regional Aggregation Board was written down in full during2004-5. On 31 December 2004 the company ceased to trade and is in the process of beingliquidated. Audited accounts were not available for the year ended 31 March 2005, but nosignificant distributions are expected to be received from the winding up.

The Memoranda of Association of the above associate investments, excluding New EastManchester Limited, provide that the assets shall not be available for distribution by way ofdividend or in any other way that amounts to a distribution of available funds. In the event ofany company being wound-up or dissolved, any remaining assets after all its debts andliabilties have been satisfied wil be transferred to a company or institution having similarobjects to the members. As a result of these restrictions, the Agency has not accounted forany share of the financial results, total assets or total liabilities of the company at the yearend.

The Northwest Business Investment Scheme has been primarily funded by the EuropeanUnion with the objective of making equity-based investments in SMEs in the North West ofEngland.

17. Development assets2005 2004£000 £000

At the beginning of the yearAdditions in yearDisposalsAmounts written down: European aid-FundedAmounts written down: Grant In Aid-FundedRevaluations

77,61232,030(2,358)

(11,589)(9,896)4,871

67,33031,379(4,071 )(8,754)(9,394)1,122


61



Notes (continued)

18. Debtors2005 2004£000 £000

Trade debtors 16,018 12,832Grant in Aid debtor 41,499 12,997Other debtors 3,521 560Prepayments and accrued income 2,711 6,143Value Added Tax 1,789 1,063European Regional Development Fund 6,354 2,707Rural Loans 26 53Corporation Tax 516 111

72,434 36,466

Intra-government balance analysis:2005 2004£000 £000

Balances with other central government bodies 42,429 19,967Balances with local authorities 1,114 571Balances with bodies external to government 28,891 15,928

72,434 36,466

19. Creditors: Amounts fallng due within one year

2005 2004£000 £000

Trade creditors 24,119 42,490Accruals 49,731 3,378Other creditors 3,951 1,448Deferred Income 2,621 6,128Other Taxes and social security 391 302

80,813 53,746

Intra-government balance analysis:2005 2004£000 £000

Balances with other central government bodies 682 3,500Balances with local authorities 6,487 2,692Balances with NHS trusts 576 156Balances with bodies external to government 73,068 47,398

80,813 53,746

62



Notes (continued)

20. Creditors: Amounts fallng due after more than one year2005 2004£000 £000

Deferred Income - European Capital Grants 15,692 2,104

21. Provisions for liabilties and chargesDeferred tax Dilapidations Environmental Total

£000 £000 £000 £000

At the beginning of the year 2,364 225 650 3,239Charge I credit to the Income &Expenditure account 384 (7) (310) 67

At the end of the year 2,748 218 340 3,306

22. Deferred tax

The major elements of deferred taxation are as follows:

2005 2004£000 £000

Accelerated capital allowances 3,766 3,039Short term timing differences (26) (14)Tax losses (992) (660)

2,748 2,365

63



Notes (continued)

23. Government grant reserve2005 2005 2004 2004£000 £000 £000 £000

Agency - at the beginning of the year 172,089 150,821

Tangible Operating AssetsAdditions 592 1,823Depreciation (1,383) (1,061 )Disposals (9) (5)

Intangible Operating AssetsAdditions 111 122Amortisation (47) (41 )

Investment AssetsAdditions 1,662 4,369Disposals (3,489) (6,682)Revaluations 735 22,019 1,402

Development AssetsAdditions 20,584 21,635Disposals (2,357) (4,071 )Amounts written off (9,896) (8,272)Amounts written back 2,069 2,802

Fixed Asset InvestmentsAdditions 2,637 2,646Amounts written off (171) 1,545 (274)Amounts written back 167Environmental Provision 310 (100)

RAB LoanAdditions 650 394Amounts written off (650) (394)

Amount released to I&E Account (14,721) (19,498)

Transferred from Speke Garston DevelopmentsLtd 9,341

Release of Grant in Aid funding (6,093)

Coalfield asset additions 410 436


64



Notes (continued)

24. European funding reserve

2005 2004£000 £000

At the beginning of the yearFunding received during the yearInterest receivedTransferred to Deferred Income

17,471

812(4,139)

At the end of the year 14,144

25. Income and expenditure reserve

19,11628

(1,673)

17,471

2005 2004£000 £000

Agency - at the beginning of the year (9,089)

Transferred from Speke Garston Developments Ltd on 1 April 2003

At the end of the year (9,089)

26. Reconcilation of net cashflow to movement in net funds

(2,503)

(6,586)

(9,089)

2005 2004£000 £000

Net funds at the beginning of the yearIncrease in cash for the period

34,344(7,595)

Net funds at the end of the year 26,749

27. Contingent liabiltiesAt 31 March 2005 there were no significant contingent liabilities (2004: nil).

10,72423,620

34,344

65



Notes (continued)

28. Commitments

(a) Operating leases

As at 31 March 2005 the Agency had annual commitments under operating leases asfollows:

2005 2004Buildings Others Buildings Others

£000 £000 £000 £000Leases expiring- within one year 121 33- between one and five years 131 241- over five years 1,110 1,035

1,110 252 1,035 274

Rental costs of operating leases are charged to the Income & Expenditure Account on astraight line basis over the term of the lease. Operating lease commitments over 5 yearsrelate primarily to the Agency's Headquarters at Warrington.

(b) Capital commitments

Capital commitments at the end of the financial year for which no provision has been made,are as follows:

2005 2004£000 £000

Authorised by the board and contracted 45,022 36,328

29. Financial instruments

The Agency has no borrowings and relies primarily on departmental grants for its cashrequirements and is therefore not exposed to liquidity risks. It has no material deposits andall material assets and liabilities are denominated in sterling, so it is not exposed to interestrate risk or currency risk. Transactions entered into which result in debtors due after morethan one year have a low credit risk.

30. Post balance sheet events

On 1 April 2005 the Agency took over responsibilty for the activities of the NorthwestCountryside Agency. The net liabilities amounting to £150,000 have been transferred to theagency as part of the transfer.

66



Notes (continued)

31. Related party transactions

The Northwest Regional Development Agency is a Non-Departmental Public Bodysponsored by The Department of Trade and Industry ('DTI'). DTI is regarded as a relatedparty with which, during the year, Northwest Regional Development Agency has had asignificant number of material transactions.

In addition, the Agency .has had various material transactions with other GovernmentDepartments and other central bodies. Most of these transactions have been with EnglishPartnerships (EP), and Small Business Service (SBS).

Other Regional Development Agencies are also sponsored by the DTI and so are regardedas related parties. The Agency has had transactions with East of England Development

Agency, East Midlands Development Agency, Advantage West Midlands, One North East,South East of England Development Agency, South West of England Development Agencyand Yorkshire Forward in the year.

Board Members took no part in the discussions which concerned organisations that BoardMembers have connections with as reported in the Register of Members' Interests.

During the year none of the Board Members, key management staff or other related partieshas undertaken any material transactions with the Northwest Regional Development Agencyapart from those detailed below.

(a) Subsidiary and associated undertakings

Connected Party

Sales J(Purchases)

£

Debtor J(Creditor)

£

Subsidiary undertakingsThe Estuary Management Company LimitedRural Regeneration Cumbria

24,675(801,357)

Associated undertakingsNew East Manchester LimitedLiverpool Land Development Company LimitedLiverpool Vision LimitedBrunswick Business Park LimitedFurness West Cumbria New Vision Limited - trading as WestLakes RenaissanceMaryport Developments LimitedAncoats Urban Village Company Limited

(9,917,889)(2,813,443)

(495,873)

(33,513)

(408,312)

Joint venturesNorthwest Business Investment SchemeNorthwest Seed FundRising StarsNorthwest Regional Aggregation Body LimitedRenewables Northwest Limited

(4,388,702)(610,688)

(1,776,316)(650,000)

(90,746)

67

Not

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cont

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71

Northwest Regional Development Agency

Accounts direction given by the Secretary of State, with the approval of theTreasury, in accordance with section 14(2) of the Regional DevelopmentAgencies Act 1998

The annual accounts of Northwest Regional Development Agency (hereinafter referred to as"the Agency") shall give a true and fair view of the income and expenditure and cash flowsfor the financial year, and the state of affairs as at the year end. Subject to this requirement,the Agency shall prepare accounts for the financial year ended 31 March 2004 andsubsequent financial years in accordance with:

a) Executive Non-Departmental Public Bodies Annual Report and AccountsGuidance2 published by HM Treasury and as amended from time to time;

b) Other gùidance which the Treasury may issue from time to time in respect ofaccounts where the requirement is to give a true and fair view of the FinancialStatements; and

c) Any specific disclosures required by the Secretary of State.

except where agreed with the Treasury, in which case the exception shall be described in thenotes to the accounts.

This direction shall be produced as an appendix to the annual accounts.

This direction replaces that dated 26 March 2002.

Signed by authority of the Secretary of State for Trade and Industry

10 March 2004

A Grade 3 officer in theDepartment of Trade andIndustry

2 http://ww.h m-treasu iy ,gov, uklmedia/C693F / ACF DAD, pdf

72

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