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	20091	2008	2007
Turnover	-	138	210
Operating Profit	-	4	6
Profit/(Loss) for the year	-	(1)	(1)
Net Cash flow	-	(4)	30
Net Operating Assets	-	48	48
RONA	-	7.4%	12.8%
Shareholders' Funds	-	44	52
Dividends	-	-	-

Dividend policy

FSS does not currently pay a dividend to the Home Office. Historically, it has paid a dividend, but the company is undertaking a transformation programme and does not have sufficient cash reserves to declare a dividend.This will be reviewed following completion of the programme.

Performance targets

The FSS’ performance targets are focused on achieving the specific financial objectives of the new Business Plan – particularly in terms of revenue growth, cost reductions and new business development.This looks to ensure the business has a sustainable long term future and remains able to deliver stable and secure forensic support to the UK Criminal Justice System.

Notes

¹ Figures for 2009 had not been published at the date of publication of this report.

Commentary

This was FSS’ third year of operations as a Government company, wholly owned by the Home Office.

FSS experienced continued commercial challenges in 2008-09, as the expected development of competition for commoditised forensic services within the market for UK criminal justice services led to a decline in the proportion of the market served. Having been led by a large scale cross-force North West/South West (NW/SW) tendering exercise, 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 UK criminal justice services revenues continued to decline, although at a controllable rate.The International and R&D division, set up to exploit new business areas and technologies, sustained levels of revenue through exploiting international opportunities.Against this challenging backdrop, management delivered reductions to the cost base of the business through efficiency gains and managed reductions in staff numbers.

The FSS and the Home Office remain focused on the ongoing development of the FSS within a stable and healthy UK forensics market.A new Strategic Business Plan was prepared by management – and was then approved by the shareholder during the year – aimed at transforming the size and shape of the business to allow it to compete more effectively in this more competitive market. A decision on a change of company status will not be taken for the foreseeable future, as has been highlighted by the Home Office Minister’s written statement on 8 June 2009.

The FSS Board was strengthened by the appointment of Mark Boyle as Shareholder Director during the course of the year. A new Chief Executive, Dr Simon Bennett, has been appointed, and will join the company in October 2009.