Building a community of innovators

Annual Report 2005

SMARTPARKD E V E L O P M E N T C O R P O R A T I O N

2 • Annual Report 2005 • SMARTPARK DEVELOPMENT CORPORATION

What is SMARTPARK Development Corporation?SMARTPARK Development Corporation is a subsidiary corporation of the University of Manitoba. As a separate legal entity from the University, with its own Board of Directors, the Corporation has the mandate to develop a designated 100 acres of university land as a research and technology park referred to as “SMARTPARK.”

The Corporation’s vision is to “Build a Community of Innovators” on the doorstep of the University. It does this by developing land and space for lease to companies and organizations involved in the following broad research areas that coincide with research expertise at the University:

• Information and Communications Technology• Engineering and Advanced Materials• Health and Biotechnology• Agricultural and Nutritional Sciences

Research-intensive universities and their respective communities worldwide are developing research and technology parks. The parks facilitate university-industry research collaborations and innovation, create high-tech clusters that potentially attract similar companies to the region, and nurture an environment and culture that assist in retaining highly skilled students and researchers in the region instead of moving elsewhere for opportunities — in our case, away from Winnipeg and Manitoba.

On the Front Cover: Sami Kibria (BSc/99) initially was a Project Leader at TRLabs in SMARTPARK. Sami then moved to IDERS Inc. where he has worked for the past year-and-a-half as the Software Engineering Manager.

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Message from the Chairman of the Board

SMARTPARK Development Corporation is building a community of innovators in conjunction with the research expertise and strategies of the University of Manitoba.

The thinking is that the SMARTPARK community will interact amongst themselves and with the University community, and more broadly within Winnipeg and the province, to stir a powerful mix of talent and innovation — for all our benefit and to make our community’s mark on the global stage.

On behalf of the Board of Directors, and to the University of Manitoba as the Corporation’s sole shareholder, I am pleased to report that SMARTPARK Development Corporation has been able to take some well-placed steps towards this grand ambition in the past fiscal year.

Our progress is a result of a great number of people. Significant among these are the companies and individuals who have taken the early step of becoming members of the SMARTPARK community — our tenants; as well as University researchers and students; Federal and Provincial government visionaries, such as Reg Alcock, currently President of the Treasury Board and Minister responsible for the Canadian Wheat Board and the Manitoba Premier Gary Doer; and the nearby residents of Fort Richmond who have seen the view from their backyards change from grazing sheep to building construction.

All this in the name of innovation — in Winnipeg, in Manitoba and on the doorstep of the University of Manitoba.

Sincerely,Mr. Robert SilverChairman of the Board

Message from the President

SMARTPARK Development Corporation is a real estate development company in a niche market.

Our success will depend upon basic real estate factors — interest rates, construction costs and the economy — but also upon our ability to develop a vibrant community. That is why we also promote opportunities for community members to interact with each other, with the University community a short walk away, and with the business and government communities in other parts of Winnipeg and the world.

Our community now includes world leaders such as Cangene Corporation and soon, Monsanto; start-up enterprises such as IMRIS and the Composites Innovation Centre; companies hitting their stride such as RTDS Technologies, TransGrid Solutions, IDERS Inc. and ProfitMaster Canada; and in the fall, organizations such as the Industrial Technology Centre. Each company is a dynamic innovator.

Do not hesitate to contact me at alan_simms@umanitoba.ca if you have questions or want to learn more about SMARTPARK.

Sincerely,Mr. Alan SimmsPresident

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SMARTPARKD E V E L O P M E N T C O R P O R A T I O N N

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4 • Annual Report 2005 • SMARTPARK DEVELOPMENT CORPORATION

SMARTPARK Interactive Breakfast Series

SMARTPARK Interactive Breakfast Series and the “Cash at SMARTPARK” series (moderated by Martin Cash of the Winnipeg Free Press) is an opportunity for networking. Frank Clegg, President of Microsoft Canada; Mark Ross, President of Boeing Canada Technology; and John Langstaff, President and CEO of Cangene Corporation, have been guests of SMARTPARK Interactive.

The SMARTPARK TenantsSMARTPARK is home to technologically advanced companies focused in four broad strategic research themes.

SMARTPARK Jazz Innovators Series

In collaboration with the University’s Faculty of Music and Continuing Education Division, SMARTPARK presents a number of world renowned jazz musicians, including Nicholas Payton and Luciana Souza, through its Jazz Innovator Series. SMARTPARK also presented “SMARTPARK’s Summer Night Jazz Fest” in August 2004.

Eureka! Musica!

SMARTPARK delivers Eureka! Musica! to a packed audience in the lobby of 135 Innovation Drive. Eureka! Musica! showcases the talents of the Faculty of Music students in the jazz and classical music programs.

INFORMATION AND COMMUNICATIONS TECHNOLOGY

DMT Development Systems Group Inc.* Produces automotive Web and software solutions for automobile manufacturers, sales managers and salespeople

RTDS Technologies Inc. Provides Real Time Digital Simulators and simulation services for the electrical power industry

TRLabs Operates laboratories where university professors, graduate students, industrial partners and staff researchers work together to conduct applied research

IDERS Inc. Designs and manufactures leading-edge electronic products and systems

TransGrid Solutions Inc. Provides expert technical consulting services in the field of power transmission technologies

ProfitMaster Canada Provides quality knowledge and financial management solutions to the Canadian hardware and building supply industry

Incubat ICT A strategic alliance with the University and local entrepreneurs to foster development of high-tech start-up companies in ICT

ENGINEERING AND ADVANCED MATERIALS

Composites Innovation Centre Spearheads the development of advanced composites for the manufacturing industry

Industrial Technology Centre* Provides advanced technical services that enable its clients to improve their products and processes

HEALTH AND BIOTECHNOLOGY

Cangene Corporation Develops, manufactures and commercializes specialty hyperimmune plasma and biotechnology products

IMRIS Inc. Brings MRI technology to the patient for intra-operative deployment and for neurosurgical applications

Incubat Biotech A strategic alliance with the University and local entrepreneurs to foster development of high-tech start-up companies in biotechnology

AGRICULTURAL AND NUTRITIONAL SCIENCES

BASF Canada* Provides intelligent system solutions and high-quality products, including agricultural and nutrition products, chemicals, plastics, performance products and fine chemicals

Richardson Centre for Functional Foods and Nutraceuticals* Brings together multi-disciplinary researchers to identify and extract useful compounds in plants and to assess health and safety issues for our consumption of these compounds

Monsanto Canada Inc.* Provides agricultural products and solutions

Wolf Trax* Manufactures leading-edge plant nutrition products

Manitoba Rural Adaptation Council Inc.* Funds innovative agricultural projects and acts as a catalyst to stimulate industry and government activity where voids are recognized

*As of fall 2005

BUILDING A COMMUNITY

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Kid-netic Energy Saturdays

Kid-netic Energy Saturdays, a SMARTPARK collaboration with the Women in Science and Engineering (WISE) access program, was offered to delighted Grade 5 students over four days in February this year.

Community Meetings with Fort Richmond Residents

SMARTPARK holds an Annual Community Information Meeting each winter to discuss recent and upcoming developments at SMARTPARK with residents of nearby Fort Richmond.

Shuttle Services

Tenants stay connected with colleagues and facilities at the University with the campus shuttle service, which runs daily through SMARTPARK on a route through the University’s Fort Garry campus from September to April.

SMARTPARK’s Tenants Collaborate with the University:

• RTDS Technologies contributed to the Power System Simulation Research Chair in the Faculty of Engineering

• Manitoba Rural Adaptation Council funded a number of joint university-industry initiatives including $420,000 for a Research Development Manager and business development and promotion activities for the Richardson Centre for Functional Food and Nutraceuticals

• TRLabs awarded $1.1 million in graduate student scholarships, supporting expanded university research and development activity

• IDERS Inc. supported university initiatives and research activities with its contribution of over $135,000

• Cangene Corporation and the University of Manitoba received a Synergy Award for Innovation from the Natural Sciences and Engineering Research Council of Canada (NSERC). The Synergy Awards celebrate successful collaborations between university researchers and industry. Cangene has also co-funded an NSERC Industrial Research Chair in Fermentation Microbiology.

6 • Annual Report 2005 • SMARTPARK DEVELOPMENT CORPORATION

Frequently Asked Questions1. How do companies/organizations become tenants of SMARTPARK?

Prospective tenants must have a research and/or product development component to their business and be involved in one of the following four broad research areas that coincide with research expertise at the University:

• Information and Communications Technology• Engineering and Advanced Materials• Health and Biotechnology• Agricultural and Nutritional Sciences

Tenants may decide to lease space within one of SMARTPARK’s multi-tenant facilities or to land lease a parcel and develop their own facility. Multi-tenant buildings offer office/lab space where the building entrance and common areas are shared by tenants. SMARTPARK’s current multi-tenant facilities are located at 135 and 137 Innovation Drive, with the newest building being constructed this year at One Research Road. Contact us at (204) 474-8758 to discuss the best lease package for your organization.

2. Why are companies coming to SMARTPARK?

Recently we conducted a survey with the CEOs from our tenant organizations. This is what some of them had to say about the reasons they chose SMARTPARK:

• “ For its image, location, closeness to the University and interaction with other tenants”• “ Nice offices for our visitors to see and our employees are happy to work here”• “ The relationship with the University and our key sponsors that are here”• “ It’s a good place to have a technology-based enterprise”• “ It’s a high profile location — everyone knows where SMARTPARK is”

OCTOBER 1999: Start of Phase I development was announced

JANUARY 2002: Completion of 135 Innovation Drive, a 30,000 square foot office/computer lab multi-tenant facility

OCTOBER 2003: Completion of Cangene Corporation’s 76,000 square foot expansion of packaging, office and warehouse space

NOVEMBER 2003: Completion of 137 Innovation Drive, a 28,500 square foot office/computer lab/manufacturing multi-tenant facility

JULY 2004: Start of construction at Richardson Centre for Functional Foods and Nutraceuticals, a 55,000 square foot research lab facility

THE EVOLUTION OF A COMMUNITY

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NOVEMBER 2004: Completion of 100–78 Innovation Drive, a 9,000 square foot facility, the new home to IMRIS, a spin off of National Research Council – Institute for Biodiagnostics (NRC-IBD)

JANUARY 2005: Start of construction at Cangene Corporation for a 40,000 square foot expansion of the plasma fractionation facilities

MARCH 2005: Start of construction at 200 and 300–78 Innovation Drive, a 23,500 square foot facility for Composites Innovation Centre and Industrial Technology Centre

APRIL 2005: Start of construction at One Research Road, a 42,000 square foot multi-tenant facility for BASF Canada, DMT Development Systems Group Inc., Manitoba Rural Adaptation Council Inc., Monsanto Canada Inc. and Wolf Trax

3. How has SMARTPARK benefited the community?

Over the last three years, SMARTPARK has stimulated over $100 million in capital developments. The park is home to 18 growing companies in high-tech sectors.

SMARTPARK’s high-tech focus will ultimately contribute to an environment and culture that encourages entrepreneurs and University graduates across many disciplines to stay in Winnipeg and in Manitoba, each in turn contributing to further investment and development.

4. How does SMARTPARK compare to other university-affiliated research parks?

Research parks in Canada and the U.S. represent over 41,000 acres of land, with over 2,900 tenants employing 235,000 people. (Source: Association of University Research Parks www.aurp.net)

Innovation Place in Saskatoon, Saskatchewan promotes itself as “the most successful research park in North America.” After 25 years, Innovation Place has 78 acres with 122 companies, 18 buildings and 2,200 employees. In comparison, SMARTPARK spans 100 acres with 18 companies, seven buildings and 850 employees; we have made significant progress after only three years of development.

5. What are the risks for SMARTPARK Development Corporation?

As a real estate development company, the Corporation is exposed to risks common to all companies in this field. These risks include the risk of tenant default on lease payments, the risk of debt refinancing on maturity at higher rates and the risk of carrying vacant space if tenants do not renew leases on expiry. The Corporation attempts to meet these risks by undertaking financial due diligence checks of tenants as a condition of leasing, by matching lease duration with debt maturity and by maintaining an active network of prospective tenants.

One of the ways in which real estate development companies meet or ameliorate business risk is by diversifying their portfolio across tenant sectors and geographic regions. The Corporation is restricted to leasing only in specific research and technology sectors that may from time to time experience economic volatility and the Corporation has a natural geographic limitation and scope that does not permit diversification into other economic regions.

The economic environment has been favourable for the Corporation over the past fiscal year with generally low interest rates and economic vitality within the targeted tenant sectors.

Board of DirectorsMr. Bob Silver Chairman of the Board President, Western Glove Works

Dr. Douglas Ruth Dean, Faculty of Engineering, University of Manitoba

Mr. Gerry Price President, Price Industries (Term expired July 1, 2005)

Mr. Alfred Black Vice President, Employer Services & Program Development, Workers Compensation Board

Dr. Jasper McKee Professor Emeritus, Department of Physics and Astronomy, University of Manitoba (Term expired July 1, 2005)

Dr. Harold Bjarnason Former Dean, Faculty of Agricultural and Food Sciences, University of Manitoba (Term expired July 1, 2005)

Mr. Paul Soubry, Jr. President, Standard Aero Canada

Mr. Curt Vossen President, James Richardson International

Mrs. Deborah McCallum Vice President (Administration), University of Manitoba

Dr. Joanne Keselman Vice President (Research), University of Manitoba

Mr. Arni Thorsteinson President, Shelter Canada Properties Limited (Resigned April 2005)

Dr. Lloyd McGinnis Chief Executive Officer, ISIS Canada (Appointed as of July 1, 2005)

Dr. Michael Trevan Dean, Faculty of Agricultural and Food Sciences, University of Manitoba (Appointed as of July 1, 2005)

Dr. Mark Whitmore Dean, Faculty of Science, University of Manitoba (Appointed as of July 1, 2005)

301-135 Innovation DriveWinnipeg, Manitoba R3T 6A8

www.umanitoba.ca/smartpark

SMARTPARKD E V E L O P M E N T C O R P O R A T I O N