Bachem (U.K.) Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02006400 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

BACHEM (U.K.) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Statement of Profit or Loss and Other Comprehensive Income

6

Statement of Financial Position

7

Statement of Changes in Equity

8

Statement of Cash Flows

9

Notes to the Statement of Cash Flows

10

Notes to the Financial Statements

11

DIRECTORS:

Dr J Marley

Mr S Schindler

Dr T Meier

REGISTERED OFFICE:

1 Delph Court

Sullivans Way

St Helens

Merseyside

WA9 5GL

REGISTERED NUMBER:

02006400 (England and Wales)

AUDITORS:

Livesey Spottiswood Ltd

Chartered Accountants and

Statutory Auditors

17 George Street

St Helens

Merseyside

WA10 1DB

BANKERS:

Barclays Bank Plc

19 Church Street

St.Helens

Merseyside

WA10 1BG

The directors present their strategic report for the year ended 31 December 2019.

Bachem is a listed technology-based company focused on peptide chemistry. The company provides a full range of services to the

Pharma and biotech industries. It specialises in the development of innovative, efficient manufacturing processes and reliable

production of peptide-based active pharmaceutical ingredients. A comprehensive catalogue of biochemicals and exclusive custom

syntheses for research laboratories complete the service portfolio. Within the Bachem group, Bachem (UK) Ltd is the Centre of

Excellence for research products and as such the principle activity is focused on the core competency; manufacture of custom and

catalogue peptides.

REVIEW OF BUSINESS

The results for the year and the financial position of the company are included in the annexed financial statement.

Sales revenue in the year decreased marginally from the previous year (-7%), when significant unplanned growth (30%) was

observed due to one-off effects from key customer inventory replenishment. In-vitro diagnostics again represented a significant

percentage of the overall sales and was the main contributor to profitability. Diagnostics sales were further supported by transition

of the site to the newest version of ISO 13485 certification in February 2019 as our continued commitment to Quality. The standard

defines the requirements for comprehensive quality management systems for medical devices and supports our customers in the

diagnostics business. Our commitment to customers as a Pioneering Partner is enabled by continued investment into state-of the-art

equipment throughout the year and the introduction of an automated powder dispensing system.

Despite sales below expectations the operating result (EBIT), the company's main key performance indicator, at 23% is above the

budget expectations of 19%. The higher than expected EBIT is attributable to both a favourable project portfolio, which includes

material and services for diagnostic applications, and the implementation of numerous planned efficiencies. These include the

introduction of 5S lean manufacturing principles and operational process efficiencies, both of which contributed to reductions in

manufacturing expenses leading to higher EBIT.

The directors are satisfied that the results are within expectations and reflect the current market for research peptides and that

continued investments will ensure that the company remains in a strong competitive position within the market place in the future

years.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors consider the principal risks and uncertainties for the business relate to competition in the research peptides sector in

both Europe and US, which is somewhat mitigated by the ISO 13485 certification which differentiates Bachem (UK) Ltd from many

competitors.

Advanced contingency planning of critical raw material inventories in 2019 enabled mitigation of the risk proposed by numerous

BREXIT deadlines throughout the year. In 2020 and beyond the UK site will be supported through the UK exit from the European

Union with the expertise of Supply Chain Management within Bachem Europe. As primary critical raw materials for manufacturing

in UK are supplied directly from Bachem headquarters in Switzerland, the existing trade agreement between UK and Switzerland

will mitigate future risk.

ON BEHALF OF THE BOARD:

Dr T Meier - Director

13 March 2020

The directors present their report with the financial statements of the company for the year ended 31 December 2019.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2019.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

Dr J Marley

Mr S Schindler

Dr T Meier

Other changes in directors holding office are as follows:

Dr T Frueh - resigned 31 December 2019

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Report of the Directors 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 Swiss GAAP FER, IFRIC interpretations and with those parts of the

Companies Act 2006 applicable to companies reporting under IFRS. 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 then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state that the financial statements comply with Swiss GAAP FER;

- 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of

which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in

order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of

that information.

ON BEHALF OF THE BOARD:

Dr T Meier - Director

13 March 2020

Opinion

We have audited the financial statements of Bachem (U.K.) Limited (the 'company') for the year ended 31 December 2019 which

comprise the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of

Changes in Equity, the Statement of Cash Flows and Notes to the Statement of Cash Flows, 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its profit for the year then ended;

-	have been properly prepared in accordance with IFRSs as adopted by the European Union; 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 Auditors' 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and

the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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.

Opinions on other matters 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 the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the 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 or the Report of the Directors.

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 directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are 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

directors determine 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 directors are 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 directors either

intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's

website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Mr Andrew McMinnis ACA FCCA (Senior Statutory Auditor)

for and on behalf of Livesey Spottiswood Ltd

Chartered Accountants and

Statutory Auditors

17 George Street

St Helens

Merseyside

WA10 1DB

13 March 2020

CONTINUING OPERATIONS

Revenue

4,160,479

4,460,794

Cost of sales

(1,721,979

)

(1,930,427

)

GROSS PROFIT

2,438,500

2,530,367

Distribution costs

(14,143

)

(42,719

)

Administrative expenses

(1,452,946

)

(1,300,416

)

OPERATING PROFIT

971,411

1,187,232

Finance costs

4

-

(10,938

)

Finance income

4

1

526

PROFIT BEFORE INCOME TAX

5

971,412

1,176,820

Income tax

6

(187,772

)

(235,759

)

PROFIT FOR THE YEAR

783,640

941,061

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

783,640

941,061

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment

8

3,985,578

3,752,475

CURRENT ASSETS

Inventories

9

1,192,376

974,933

Trade and other receivables

10

858,583

360,913

Cash and cash equivalents

11

592,009

896,111

2,642,968

2,231,957

TOTAL ASSETS

6,628,546

5,984,432

EQUITY

SHAREHOLDERS' EQUITY

Called up share capital

12

2,500

2,500

Share premium

13

380,409

380,409

Retained earnings

13

5,524,332

4,740,692

TOTAL EQUITY

5,907,241

5,123,601

LIABILITIES

NON-CURRENT LIABILITIES

Deferred tax

15

327,579

246,012

CURRENT LIABILITIES

Trade and other payables

14

334,515

411,990

Tax payable

59,211

202,829

393,726

614,819

TOTAL LIABILITIES

721,305

860,831

TOTAL EQUITY AND LIABILITIES

6,628,546

5,984,432

The financial statements were approved by the Board of Directors on 13 March 2020 and were signed on its behalf by:

Dr J Marley - Director

Dr T Meier - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£

£

£

£

Balance at 1 January 2018

2,500

3,799,631

380,409

4,182,540

Changes in equity

Total comprehensive income

-

941,061

-

941,061

Balance at 31 December 2018

2,500

4,740,692

380,409

5,123,601

Changes in equity

Total comprehensive income

-

783,640

-

783,640

Balance at 31 December 2019

2,500

5,524,332

380,409

5,907,241

Cash flows from operating activities

Cash generated from operations

1

491,831

1,388,142

Interest paid

-

(10,938

)

Tax paid

(249,823

)

11,841

Net cash from operating activities

242,008

1,389,045

Cash flows from investing activities

Purchase of tangible fixed assets

(546,111

)

(531,737

)

Interest received

1

526

Net cash from investing activities

(546,110

)

(531,211

)

Cash flows from financing activities

Loan repayments in year

-

(300,000

)

Net cash from financing activities

-

(300,000

)

(Decrease)/increase in cash and cash equivalents

(304,102

)

557,834

Cash and cash equivalents at beginning of year

2

896,111

338,277

Cash and cash equivalents at end of year

2

592,009

896,111

1.	RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit before income tax

971,412

1,176,820

Depreciation charges

313,008

312,942

Finance costs

-

10,938

Finance income

(1

)

(526

)

1,284,419

1,500,174

Increase in inventories

(217,443

)

(72,765

)

Increase in trade and other receivables

(497,670

)

(103,899

)

(Decrease)/increase in trade and other payables

(77,475

)

64,632

Cash generated from operations

491,831

1,388,142

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these

Statement of Financial Position amounts:

Year ended 31 December 2019

31/12/19

1/1/19

£

£

Cash and cash equivalents

592,009

896,111

Year ended 31 December 2018

31/12/18

1/1/18

£

£

Cash and cash equivalents

896,111

338,277

1.	STATUTORY INFORMATION

Bachem (U.K.) Limited is a private company, limited by shares , registered in England and Wales. The company's registered

number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with Swiss GAAP FER and IFRIC interpretations and with

those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company's accounting policies as set out below, management is required to make judgements,

estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are based on historical experience and other factors that are considered to be

relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the

revision and future periods if the revision affects both current and future periods.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue

can be reliably measured. Revenue is not recognised until the significant risks and rewards of ownership of the goods have

passed to the buyer and the amount of revenue can be measured reliably.

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold property

-

4% on cost and 2.5% on cost

Fixtures, fittings and equipment

-

10% on cost and 4% on cost

Computer equipment

-

33% on cost

Inventories

Inventories and work in progress are valued at the lower of cost and net realisable value, after making due allowance for

obsolete and slow moving items.

Cost includes all direct expenditure and an appropriate proportion of fixed and variable overheads.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent

that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively

enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in

which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted

or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be

recovered against future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of

financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the

date of transaction. Exchange differences are taken into account in arriving at the operating result.

Employee benefit costs

When employees have rendered services to the company, short-term employee benefits to which the employees are entitled

are recognised at the undiscounted amount expected to be paid in exchange for that service.

The company operates a defined contribution plan for the benefit of its employees. Contributions are expensed as they

become payable.

Debtors and creditors receivable / payable within one year

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price.

Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.

Provisions

Provisions are recognised when the company has an obligation at the balance sheet date as a result of a past event, it is

probable that an outflow of economic benefits will be required in settlement and the amount can be reliably estimated.

3.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

1,143,382

1,119,858

Social security costs

97,187

90,936

Other pension costs

140,358

119,780

1,380,927

1,330,574

The average number of employees during the year was as follows:

2019

2018

Production

38

38

Administration

4

4

42

42

2019

2018

£

£

Directors' remuneration

52,729

51,207

Directors' pension contributions to money purchase schemes

34,756

32,083

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

4.	NET FINANCE INCOME

2019

2018

£

£

Finance income:

Deposit account interest

1

526

2019

2018

£

£

Finance costs:

Interest on group loan

-

10,938

Net finance income

1

(10,412

)

5.	PROFIT BEFORE INCOME TAX

The profit before income tax is stated after charging/(crediting):

2019

2018

£

£

Cost of inventories recognised as expense

1,721,979

1,930,427

Depreciation - owned assets

313,008

312,942

Foreign exchange differences

9,590

(23,597

)

Auditors' remuneration - audit fee

9,500

9,000

Operating lease payments in respect of low-value assets

6,955

3,073

6.	INCOME TAX

Analysis of tax expense

2019

2018

£

£

Current tax:

Tax

106,205

202,888

Deferred tax

81,567

32,871

Total tax expense in statement of profit or loss and other comprehensive income

187,772

235,759

Factors affecting the tax expense

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained

below:

2019

2018

£

£

Profit before income tax

971,412

1,176,820

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

184,568

223,596

Effects of:

Capital allowances in surplus/(excess) of depreciation

(78,363

)

(20,708

)

Movement in deferred tax

81,567

32,871

Tax expense

187,772

235,759

7.	LEASING AGREEMENTS

Minimum lease payments in respect of low-value assets under non-cancellable operating leases fall due as follows;

2019

2018

£

£

Within one year

-

894

Between one and five years

22,534

25,607

22,534

26,501

8.	PROPERTY, PLANT AND EQUIPMENT

Fixtures,

fittings

Freehold

and

Computer

property

equipment

equipment

Totals

£

£

£

£

COST

At 1 January 2019

2,499,667

4,140,108

379,302

7,019,077

Additions

38,526

502,620

4,965

546,111

At 31 December 2019

2,538,193

4,642,728

384,267

7,565,188

DEPRECIATION

At 1 January 2019

566,245

2,352,928

347,429

3,266,602

Charge for year

63,737

239,043

10,228

313,008

At 31 December 2019

629,982

2,591,971

357,657

3,579,610

NET BOOK VALUE

At 31 December 2019

1,908,211

2,050,757

26,610

3,985,578

At 31 December 2018

1,933,422

1,787,180

31,873

3,752,475

9.	INVENTORIES

2019

2018

£

£

Raw materials

245,116

210,467

Work-in-progress

183,051

218,013

Finished goods

764,209

546,453

1,192,376

974,933

10.	TRADE AND OTHER RECEIVABLES

2019

2018

£

£

Current:

Amounts owed by group undertakings

810,319

339,704

Other debtors

27,707

4,727

Prepayments and accrued income

20,557

16,482

858,583

360,913

11.	CASH AND CASH EQUIVALENTS

2019

2018

£

£

Cash in hand

80

477

Bank accounts

591,929

895,634

592,009

896,111