Shareholder Executive

The Forensic Science Service (FSS)

Purpose

The Forensic Science Service (FSS) is the largest provider of forensic science services within the UK Criminal Justice System (UK CJS). Its services include both testing (where discrete pieces of scientific analysis are performed) and casework (generally involving a combination of testing and judgement).

Legal Status and Ownership

The Forensic Science Service Limited is a company limited by shares, incorporated under the Companies Act in December 2005. It is wholly-owned by the Secretary of State for Home Affairs who appoints the Chair.

Government's Objectives

The Home Office has both policy and shareholder interests in FSS. As the largest provider of forensic science services in the UK, the Government views the FSS as a key element of its policy to promote a competitive, commercial and robust marketplace while preserving the quality and impartiality of forensic analysis. The Home Office also wishes to promote collaboration between providers and ensure a flexible forensic science service in cases of national emergencies.

As FSS' owner, the Home Office also expects the company to deliver shareholder value by:

• becoming more commercial
• driving down its cost base
• improving internal capabilities
• broadening the base of its business
• exploiting new delivery channels.

Financial Performance

£m	20081	20072	20063
Turnover	-	210	109
Operating Profit	-	6	6
Profit/(Loss) for the year	-	(1)	4
Net Cash flow	-	30	(3)
Net Operating Assets	-	48	56
RONA	-	12.8%	11.2%
Shareholders' Funds	-	52	52
Dividends	-	-	4

1 Figures for 2008 had not been published at the date of publication of this report.
2 2007 results are for the period 31 October 2005 to 31 March 2007 following vesting to GovCo.
3 2006 results are based on accounts for the period 1 April 2005 to 4 December 2005.

Commentary

This was FSS' second full year of operations as a Government company, wholly owned by the Home Office.

FSS experienced a commercially challenging year in 2007-08, as the expected development of competition within the market for UK criminal justice services led to a decline in the proportion of the market served. Police forces continued to put all aspects of forensic work out to competitive tender to a market which now has a variety of different providers in addition to FSS, as well as insourced provision. Consequently, FSS revenues experienced a modest decline. The New Business Division, set up to exploit new business areas and technologies, continued to yield a proportion of revenues through exploiting overseas opportunities. Given this backdrop, management performed well to reduce the cost base of the business through efficiency gains and some reduction to staff numbers.

The FSS and the Home Office remain focussed on the ongoing development of its place within a stable and healthy UK forensics market. To ensure that the FSS is equipped with the right structure going forward, management has begun work on a new Strategic Business Plan, which aims to transform the business into being the right structure and size to supply high quality forensic services in a competitive market. A decision on a change of company status has not yet been made.

The FSS Board was supplemented by three new executives during the year: Ian Revill as Finance Director; Mark Turner as New Business Director; and Chris Hadkiss as UK CJS Director. Bill Griffi ths continues to act as Executive Chairman in the absence of a Chief Executive.