Registration number:
for the Year Ended
Orchid Cellmark Ltd
Contents
Company Information |
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Strategic Report |
|
Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Profit and Loss Account |
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Balance Sheet |
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Statement of Changes in Equity |
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Notes to the Financial Statements |
Orchid Cellmark Ltd
Company Information
Director |
D J Hartshorne |
Registered office |
|
Auditors |
|
Orchid Cellmark Ltd
Strategic Report for the Year Ended 31 December 2020
Business review
The audited financial statements for the year ended 31 December 2020 are set out on pages 10-26.
The Company recorded a profit before tax of £40k (2019 £308k) from a turnover of £28.900m (2019: £30.123m). Profit after tax was £137k (2019 926k).
Drafted in the early days of the Coronavirus pandemic, the Directors forecasted a breakeven position for 2020 in the 2019 Strategic Report. The Company had returned to profitability in 2019 but trading uncertainties lay ahead due to the unknown impact of COVID-19. The Company did end 2020 in a break-even position, indeed with a small profit, despite a challenging year which saw unprecedented turbulence in the company’s markets.
The restrictions imposed by the Government to combat COVID-19, including two national lock-downs in 2020, affected all areas of the business to a greater or lesser extent, with impacts on submission volumes as well as productivity. Cellmark’s forensic business was classified by the Government as a critical service, essential to the Justice System, and therefore remained fully operational throughout the two national lockdowns. However, in general, forensic submissions were depressed and, in line with the Government’s Procurement Policy Note 02/20 (supplier relief due to coronavirus) some financial assistance was provided by the Company’s police customers for a period during the first lockdown.
Other areas of Cellmark’s operations, such as DNA relationship testing and the Company’s forensic defence business, were negatively impacted due to temporary closure or reduced activity in government departments, solicitors’ offices, the court system and GP surgeries. Consequently, at various stages in the year the Company utilised the Government’s Job Retention Scheme (Furlough) for up to 30 staff at any one time due to significant reductions in these business areas.
In June 2020, Cellmark launched a COVID-19 PCR testing service capitalising on a long history of PCR (Polymerase Chain Reaction) testing expertise and Cellmark’s specialist laboratory containment facilities. The Company initially provided subsidised testing for front line healthcare workers at GP surgeries and care homes local to Cellmark’s laboratories in Abingdon, Oxfordshire and Chorley, Lancashire. Subsequently, having been audited and approved by the Department of Health and Social Care, the Company provided funded testing to support the Government’s Pillar 2 and outbreak testing programmes and also provided testing to a number of commercial customers.
In the second half of the year Cellmark delivered a strong performance when sales in its traditional business areas returned, supplemented by COVID-19 testing. This compensated for losses sustained earlier in the year leaving the Company profitable overall for 2020.
Looking forward, the Directors are again budgeting a breakeven position for 2021 based on the experience of a third national lockdown during the initial months of the year, but assuming a sustained easing of restrictions and an increased workload in the second half of 2021. The Company will continue to pursue cost and revenue opportunities on an ongoing basis to generate profit.
The Company’s cash position remains stable with no borrowings other than that in specific asset finance.
Principal risks and uncertainties
The Directors regularly review risks and uncertainties that impact the Company. The principal risks for the Company concern pricing and the impact of pressure on public sector expenditure; matching capacity with the uncertainty of demand; the achievement of performance targets in ongoing contracts; continuing to win new work; and the impact of events which we cannot control such as changes in government policy and public health incidents. A key risk is that a significant proportion of the Company's work is concentrated in one core market.
Orchid Cellmark Ltd
Strategic Report for the Year Ended 31 December 2020
The Company's key financial and other performance indicators during the year were as follows:
Unit |
2020 |
2019 |
|
Turnover |
£m |
28.90 |
30.12 |
Gross profit / (loss) margin |
% |
23.21 |
23.19 |
Operating profit / (loss) margin |
% |
.04 |
.31 |
Financial risk management objectives and policies
The Company seeks to manage financial risk by ensuring sufficient cash resources are available to meet foreseeable needs but there are some risks inherent with the Company’s liquid resources and mitigation of these is summarised:
Interest rate risk
The Company finances its operations through retained profits and working capital. The Company is cash positive and therefore exposure to interest rate risk is limited to the effect of interest rates on income received on credit balances.
Credit risk
The Company's principal financial assets are cash and trade debtors. The credit risk associated with cash is limited, the principal credit risk therefore arises from its trade debtors. A significant proportion of the debt is from UK Government Agencies but the remainder is managed through a diversified customer base such that no one customer represents a significant proportion of the Company's trade.
Currency risk
A small proportion of the Company's purchases are from continental Europe. The Company is exposed to foreign exchange risk in this respect. The Company manages this risk by monitoring exchange rates at the time of purchase and by maintaining Euro and Dollar accounts.
Approved by the
.........................................
Director
Orchid Cellmark Ltd
Directors' Report for the Year Ended 31 December 2020
The Directors presents his report and the financial statements for the year ended 31 December 2020.
Principal activity
The Company is an accredited laboratory services company specialising in DNA testing, toxicology (drugs of abuse testing), COVID-19 testing, and forensic analysis and interpretation. The organisation was established in 1987 as the UK's first commercial DNA fingerprinting company and now trades as Cellmark, Cellmark Forensic Services and Keith Borer Consultants, and employs approximately 500 staff in the UK, working at 5 locations.
Forensic services for the police account for over three quarters of the Company's revenue; it is one of the UK's largest Forensic Science Providers and is contracted by the majority of the UK's police forces. Trading as Cellmark Forensic Services the Company provides a broad range of quality accredited forensic analytical services to assist the Criminal Justice System from crime scene to court and is an accredited supplier of DNA profiles to the UK National DNA Database®. Trading as Keith Borer Consultants, the Company is the UK's largest provider of forensic defence review services.
The Company is also a leading provider of DNA paternity and relationship analysis as well as toxicology services in civil matters to the Courts, the legal profession and the general public, and provides DNA services under contract to UK and International government agencies. The Company also provides government approved COVID-19 testing services.
Director of the Company
The director who held office during the year was as follows:
Dividends
The profit for the year, after taxation, amounted to £137,000 (2019: £926,000).
The Directors paid a dividend of £Nil in 2020 (2019: £0).
Going concern
Following a profitable year in 2019 the Company maintained cash positive trading in 2020 despite the challenges associated with the Coronavirus pandemic. The Company continually met all its liabilities throughout 2020 and plans to do the same in 2021.
As the Company has over £7m net assets, its liabilities are up to date and forward projections show continued cash positive trading for at least the 12 month period from the date of approval of the financial statements, the Directors consider it appropriate for these accounts to be prepared on a going concern basis.
Research and development
The Company continues to focus on developing its scientific approaches and services, in order to maintain its competitive position, through a targeted research and development programme. The Company employs a team of R&D scientists and software developers and maintains collaborations with other leading scientists, institutions and laboratories. The total R&D spend in the period was £1.020m (2019: £1.136m).
Orchid Cellmark Ltd
Directors' Report for the Year Ended 31 December 2020
Employee involvement
Employees are provided with information about the Company's performance at both the departmental and Company level through a structure of regular team and cross-departmental meetings, by the circulation of Company management information and through updates by the Managing Director.
Employees are actively encouraged to contribute and participate in the review of operational and business metrics.
We are an Equal Opportunity Employer and do not discriminate on the basis of race, national origin, religion, colour, gender, sexual orientation, age, non-disqualifying physical or mental disability or any other basis covered by law. Employment decisions are based solely on qualifications, merit and business need.
Employment of disabled persons
We seek to ensure that employees with disabilities are considered for promotion according to their abilities and qualifications, and that any employee who becomes disabled will receive continued employment and training by making any reasonable adjustments necessary to do so.
Qualifying third party indemnity provisions
During the year and up to the date of this report, the Company maintained liability insurance and third-party indemnification provisions for its Directors, under which the Company has agreed to indemnify the Directors to the extent permitted by law in respect of all liabilities to third parties arising out of, or in connection with, the execution of their powers, duties and responsibilities as the Directors of the Company.
Brexit
As anticipated, Brexit had a minimal impact on the business since the majority of the Company’s revenue, supplies’ procurement and staff are UK based. However, as a safeguard against supply shortage due to Brexit issues, the Company increased stock levels in Q3 and Q4 2019 to buffer potential shortfalls or supply difficulties and these stock levels were maintained during Q1 2020.
This proved helpful in Q2 when supplies of laboratory consumables and Personal Protective Equipment (PPE) were impacted nationally by the pandemic. The procurement of laboratory supplies was managed throughout 2020 to prevent any impact on laboratory activities, but it was not possible to avoid pandemic related price increases for certain laboratory consumables and PPE.
Information included in the Strategic Report
The Directors have set out the Company's financial management risk objectives and policies in the strategic report rather than the Director's report.
Disclosure of information to the auditors
The Directors have taken the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. The Directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Approved by the
.........................................
Director
Orchid Cellmark Ltd
Statement of Directors' Responsibilities
The Directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
• |
select suitable accounting policies and apply them consistently; |
• |
make judgements and accounting estimates that are reasonable and prudent; |
• |
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. |
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statement may differ from legislation in other jurisdictions.
Orchid Cellmark Ltd
Independent Auditor's Report to the Members of Orchid Cellmark Ltd
Opinion
We have audited the financial statements of Orchid Cellmark Ltd (the 'Company') for the year ended 31 December 2020, which comprise the Profit and Loss Account, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
• |
give a true and fair view of the state of the Company's affairs as at 31 December 2020 and of its profit for the year then ended; |
• |
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
• |
have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Orchid Cellmark Ltd
Independent Auditor's Report to the Members of Orchid Cellmark Ltd
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• |
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• |
the financial statements are not in agreement with the accounting records and returns; or |
• |
certain disclosures of directors’ remuneration specified by law are not made; or |
• |
we have not received all the information and explanations we require for our audit. |
Responsibilities of the director
As explained more fully in the Statement of Directors' Responsibilities [set out on page 6], the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the director is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Orchid Cellmark Ltd
Independent Auditor's Report to the Members of Orchid Cellmark Ltd
Based on our understanding of the company and the industry in which it operates, we identified the principal risks of non-compliance with laws and regulations including fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to inflated revenue and profit. Audit procedures performed included: comparison of the financial statement disclosures to underlying supporting documentation, enquiries of management, and testing of journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
......................................
For and on behalf of
Suite I Windrush Court
Abingdon Business Park
Oxfordshire
OX14 1SY
Orchid Cellmark Ltd
Profit and Loss Account for the Year Ended 31 December 2020
Note |
2020 |
2019 |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
|
- |
|
Operating profit |
38 |
305 |
|
Other interest receivable and similar income |
|
|
|
Profit before tax |
|
|
|
Tax on profit |
|
|
|
Profit for the financial year |
|
|
The above results were derived from continuing operations.
The company has no recognised gains or losses for the year other than the results above.
Orchid Cellmark Ltd
(Registration number: 04045527)
Balance Sheet as at 31 December 2020
Note |
2020 |
2019 |
|
Fixed assets |
|||
Intangible assets |
- |
|
|
Tangible assets |
|
|
|
|
|
||
Current assets |
|||
Stocks |
|
|
|
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
- |
|
Provisions for liabilities |
( |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
- |
- |
|
Other reserves |
3,154 |
3,154 |
|
Profit and loss account |
4,093 |
3,956 |
|
Total equity |
7,247 |
7,110 |
Approved and authorised by the
.........................................
Director
Orchid Cellmark Ltd
Statement of Changes in Equity for the Year Ended 31 December 2020
Other reserves |
Profit and loss account |
Total |
|
At 1 January 2019 |
|
|
|
Profit for the year |
- |
|
|
At 31 December 2019 |
|
|
|
Other reserves |
Profit and loss account |
Total |
|
At 1 January 2020 |
|
|
|
Profit for the year |
- |
|
|
At 31 December 2020 |
|
|
|
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
General information |
The Company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
Unit 16 Blacklands Way
Abingdon Business Park
Abingdon
Oxon
OX14 1DY
These financial statements were authorised for issue by the
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
Basis of preparation
These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.
The financial statements are presented in Sterling (£) which is the functional currency of the company and rounded to the nearest £000 for presentation purposes.
Summary of disclosure exemptions
A statement of cash flows has not been prepared as the Directors have taken advantage of the exemption under FRS 102 on the grounds that the Company is wholly owned and its ultimate parent, DNACO Limited, publishes publicly available group financial statements that include cash flows.
Going concern
The financial statements have been prepared on a going concern basis.
In response to the COVID-19 pandemic and the lockdown called in Q1 2021, revenues from forensic and realtionship testing fell but not to the same intensity as in 2020 and so no government support was offered but Cellmark developed covid testing during 2020 which carried forward into 2021 and this together with margin and cost improvements will enable the business to achieve break even again in 2021 . The balance sheet remains strong, there is no working capital borrowing in spite of the repayment of VAT due in Q2 2020 which was allowed to be carried forward into 2021 by HMRC.
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported in the profit and loss account for the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements: |
Operating lease commitments: The Company has entered into operating leases as a lessee. The classification of such leases as operating or finance leases requires the company to determine, based on an evaluation of the terms and conditions of the arrangements, whether it acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liabilities to be recognised in the balance sheet. |
The following are the Company's key sources of estimation uncertainty: |
Goodwill and intangible assets: The Company establishes a reliable estimate of the useful life of goodwill and intangible assets arising on business combinations. The estimate is based on a variety of factors such as the expected use of the acquired business, any legal, regulatory or contractual provision that can limit useful life and assumptions that market participants would consider in respect of similar business. |
Dilapidation provisions: The Company has made provisions for dilapidation in respect of its leasehold properties. The provision requires the cost of returning the properties to their original state at the end of the lease to be estimated and the actual costs incurred may differ from the original estimate. |
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.
Revenue is recognised on the submission of a report of results of an analysis to the customer.
Government grants
Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants relating to revenue are recognised in income over the period in which the related costs are recognised.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss Account except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Profit and Loss Account with ‘finance income or costs’. All other foreign exchange gains and losses are presented in the Profit and Loss Account within ‘other operating income’.
Tax
The tax expense for the period comprises current tax payable.
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Leasehold improvements |
life of lease |
Plant and machinery |
2 to 5 years |
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
Asset class |
Amortisation method and rate |
Goodwill |
5 years straight line |
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Provisions
Provisions are recognised when the Company has an obligation at the reporting date as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.
Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Financial instruments
Debt instruments (other than those wholly repayable or receivable within on year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and are subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration, expected to be paid or received. However if the arrangements of short-term instruments constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence or impairment is found, an impairment loss is recognised in the Profit and Loss Account.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset’s carrying amount and best estimate, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Revenue |
The analysis of the company's turnover for the year by market is as follows:
2020 |
2019 |
|
UK |
|
|
Europe |
|
|
Rest of world |
|
|
|
|
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2020 |
2019 |
|
Government grants in respect of job retention scheme |
|
- |
Operating profit |
Arrived at after charging/(crediting)
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
2020 |
2019 |
|
Depreciation expense |
|
|
Amortisation expense |
|
|
Research and development cost |
|
|
Operating lease expenses |
|
|
Profit on disposal of property, plant and equipment |
- |
( |
Other interest receivable and similar income |
2020 |
2019 |
|
Interest income on bank deposits |
|
|
Staff costs |
The aggregate payroll costs (including Directors' remuneration) were as follows:
2020 |
2019 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the company (including the Directors) during the year, analysed by category was as follows:
2020 |
2019 |
|
Operational |
|
|
Support services |
|
|
|
|
Director's remuneration |
The Director's remuneration for the year was as follows:
2020 |
2019 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
|
168 |
167 |
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Auditors' remuneration |
2020 |
2019 |
|
Audit of the financial statements |
|
|
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Taxation |
Tax charged/(credited) in the income statement
2020 |
2019 |
|
Current taxation |
||
UK corporation tax |
( |
( |
Deferred taxation |
||
Arising from tax losses of prior periods |
- |
(411) |
Tax credit in the income statement |
( |
( |
The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2019 - lower than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2020 |
2019 |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
Expenses not deductible in determining taxable profit (tax loss) |
|
|
Effect of tax losses |
( |
( |
Deferred tax credit from tax losses |
- |
( |
Capital allowances |
( |
( |
Adjustment to tax charge in respect of prior periods |
- |
|
Payment for group relief |
- |
( |
Total tax credit |
( |
( |
Deferred tax
The Company has a deferred tax asset arising from unutilised losses carried forward of £484,000 which is included in the income tax debtor in note 13 (2019: £411,000). The remainder of the debtor amounting to £313,000 relates to R&D tax claims.
There is an unprovided asset in respect of depreciation in excess of capital allowances of £107,000 (2019: £157,000).
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Intangible assets |
Goodwill |
Total |
|
Cost or valuation |
||
At 1 January 2020 |
|
|
At 31 December 2020 |
|
|
Amortisation |
||
At 1 January 2020 |
|
|
Amortisation charge |
|
|
At 31 December 2020 |
|
|
Carrying amount |
||
At 31 December 2020 |
- |
- |
At 31 December 2019 |
|
|
The carrying value of goodwill represents goodwill on the acquisition of Keith Borer Consultants in 2015 and is being amortised over its estimated useful economic life of five years.
The aggregate amount of research and development expenditure recognised as an expense during the period is £
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Tangible assets |
Short leasehold land and buildings |
Plant and machinery |
Total |
|
Cost or valuation |
|||
At 1 January 2020 |
|
|
|
Additions |
|
|
|
Disposals |
- |
( |
( |
At 31 December 2020 |
|
|
|
Depreciation |
|||
At 1 January 2020 |
|
|
|
Charge for the year |
|
|
|
Eliminated on disposal |
- |
( |
( |
At 31 December 2020 |
|
|
|
Carrying amount |
|||
At 31 December 2020 |
|
|
|
At 31 December 2019 |
|
|
|
Stocks |
2020 |
2019 |
|
Raw materials and consumables |
|
|
Work in progress |
|
|
|
|
Stock recognised in cost of sales during the year as an expense was £4,373,000 (2019: £4,297,000)
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Debtors |
Note |
2020 |
2019 |
|
Trade debtors |
|
|
|
Other debtors |
|
|
|
Prepayments |
|
|
|
Income tax asset |
|
|
|
|
|
Cash and cash equivalents |
2020 |
2019 |
|
Cash at bank |
|
|
Creditors |
Note |
2020 |
2019 |
|
Due within one year |
|||
Loans and borrowings |
|
- |
|
Trade creditors |
|
|
|
Social security and other taxes |
|
|
|
Outstanding defined contribution pension costs |
|
|
|
Other payables |
( |
- |
|
Accruals |
|
|
|
|
|
||
Due after one year |
|||
Loans and borrowings |
|
- |
Provisions for liabilities |
Dilapidations |
Total |
|
At 1 January 2020 |
|
|
Increase (decrease) in existing provisions |
( |
( |
At 31 December 2020 |
|
|
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £
Contributions totalling
£
Share capital |
Allotted, called up and fully paid shares
2020 |
2019 |
|||
No. |
£ |
No. |
£ |
|
|
|
100 |
|
100 |
Reserves |
Other reserves
On 31 December 2002 the Company's former parent, Orchid Cellmark Inc, made a capital contribution of £3,395,000 that was offset against the inter-company balance payable by the Company to Orchid Cellmark Inc. Subsequent movements on this reserve relate to waivers of inter-company balances.
Profit and loss account
This includes all current and prior period retained profits and losses.
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Loans and borrowings |
2020 |
2019 |
|
Non-current loans and borrowings |
||
Hire purchase contracts |
|
- |
2020 |
2019 |
|
Current loans and borrowings |
||
Hire purchase contracts |
|
- |
Obligations under leases and hire purchase contracts |
Operating leases
The total of future minimum lease payments is as follows:
2020 |
2019 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Commitments |
Capital commitments
The total amount contracted for but not provided in the financial statements was £
Orchid Cellmark Ltd
Notes to the Financial Statements for the Year Ended 31 December 2020
Related party transactions |
The Company is a wholly owned subsidiary of DNACO Limited. It has taken advantage of the exemption in FRS 102 Section 33 not to disclose transactions or balances with entities which form part of the group.
Summary of transactions with key management
Key management personnel are considered to be senior management. During the year key management personnel compensation was £723,000 (2019: £666,000).
Parent and ultimate parent undertaking |
The company's immediate parent is
The most senior parent entity producing publicly available financial statements is
The ultimate controlling party is
Non adjusting events after the financial period |
|