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2021-03-31-accounts

MARINE SOCIETY & SEA CADETS

Report & Accounts For the year ended 31 March 2021

Patron: Her Majesty the Queen Admiral of the Sea Cadet Corps: Her Royal Highness The Princess Royal President: Admiral Sir Mark Stanhope GCB OBE DL

Charity number (England & Wales): 313013 Charity number (Scotland): SC037808

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

Overview

Marine Society and Sea Cadets (MSSC) is a charity that helps launch young people for life and supports aspiring and serving seafarers to realise their potential.

With a clear vision to be the leading maritime charity for youth development and lifelong learning, MSSC is committed to investing in and supporting all of our beneficiaries so they can achieve their potential whatever path they choose.

For Sea Cadets this means: Inspiring the next generation to realise their potential and seize a better future through nautical adventure based on the customs and traditions of the Royal Navy.

For the Marine Society this means: Empowering aspiring and serving seafarers to realise their ambitions, through learning and self-development.

We know that our work has a transformational impact on both individuals and the communities they live and work in, positively affecting their life chances and benefiting their communities and society as a whole. Our five-year 2016 strategy enabled us to further develop our impact, measured against clear outcomes frameworks. It also prepared us well to be able to respond with speed and agility to the effect of the pandemic on our delivery, offering significant support, programmes and services to cadets, volunteers and seafarers during the crisis, as well enabling us to deliver another five years of progress in just this last year.

Pivotal to this has been the incredible can-do attitude of our volunteers who have worked tirelessly together with the national charity as one team to continue to deliver for young people wherever possible, ensuring remarkable resilience in numbers engaged. For the Marine Society we have partnered with like-minded organisations to provide collective emergency grant support for seafarers as well as achieve rapid development of new essential programmes such as maritime apprenticeships, post-16 courses and careers support.

As we emerge from this year of crisis then, our charity has not only proven its agility and resilience, but that what it has to offer has never been more relevant and more needed, equipping young people and seafarers to play their part as the world recovers, transforms and finds its future. Our two-year Strategic Regeneration Plan from April 2021 therefore focusses on how we not only get back to delivering the full experience and services on offer to all young people and seafarers, but also grow and develop to fully meet the needs of the changing world around us, now and for the future.

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Our values and culture

We are driven by what we do and the impact we have. We are proud of our work, approaching it with positivity, energy and enthusiasm as we lay the foundations for more inspiring futures. Our shared values and ways of working are summarised below and will guide us as we work together to achieve our goals for those we support.

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Our outcomes framework

The charity has developed a framework that gives a clear picture of the journey a young person or a seafarer goes on with us. This helps to ensure that the charity offers a consistent and conscious outcome to all beneficiaries and that we always meet our long terms goals of making a positive, life enhancing difference. We developed a framework to help us map our impact for young people. It means we can explain more clearly why we do what we do and how we achieve positive outcomes for young people:

The table below shows how we map our impact for current and aspiring seafarers. It means we can explain more clearly how we empower aspiring and serving seafarers to realise their ambitions and deliver long-term benefits for them:

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MSSC REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021 Inputs Intermediate outcomes Long-term benefits What is offered Learning Long-term wellbeing - Prffji.16 C(Ax What makes it special Transferable skills - f - S93fw & Improved career opportunities and progression What is the seafarer experience 11 Qualifications Personal development Page 5

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

OUR STRATEGIC REGENERATION PLAN to 2023

Marine Society and Sea Cadets has proved immensely resilient to the challenges of the Coronavirus pandemic (Covid-19). As the world recovers, transforms and finds its new future, what we provide to young people as well as current and aspiring seafarers has never been so relevant or needed.

Developed during the previous year and commenced in April 2021 our strategic regeneration plan will drive our regeneration over the next two years, building on the outcomes of the 2016–2021 Impact Strategy and embracing three catalysts for change that have been learned and developed over this last year:

In delivering the regeneration plan we will also follow three underlying themes:

We will do this by delivering projects and initiatives under seven strategic Areas of Focus:

  1. Youth

  2. Volunteers

  3. Growth

  4. Digital

  5. Community 6. Marine Society

  6. Enablers

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2021/22

Youth:

As soon as possible, in line with guidance across the four nations, we will re-introduce district, area and national cadet training programmes and target 15 hours boating (average) per cadet. Until September, this will be day run courses, offshore taster days and additional cadet holiday activity programmes, with contingency planning for summer residential camps. Thereafter we plan to revert to some residential delivery, including offshore weekly voyages. During the year we will launch a new Royal Marines Cadets syllabus, re-introduce Duke of Edinburgh expeditions and, where needed, utilise virtual delivery to ensure continued training regardless of the situation.

We will give cadets more ways to have a voice in how Sea Cadets returns and evolves. Responding to what we have already heard we will develop a ‘wellbeing and resilience’ course to support our cadets, as well as increase career awareness to help them find opportunities.

Alongside all of this we will re-establish the vital role of Admiral of the Sea Cadet Corps through appointment of a high profile ambassador to support all that Sea Cadets has to offer young people.[1]

Volunteers:

Volunteers are critical to the regeneration of Sea Cadets. We will target increased training to ensure we fully reskill our volunteers to support this, and where possible make training more accessible through blended learning, together with streamlining our on-boarding processes for new volunteers and further developing flexible volunteering options.

We will develop further support for volunteer delivery of our cadet training programmes, and pilot mental health awareness training to better equip volunteers to support cadets.

Growth:

Whereas numbers have inevitably fallen through lockdown, we believe there will now be even greater and growing demand for the unique offer of Sea Cadets. In the first year of regeneration we will focus on helping existing units plan and begin to get back to offering full capacity to their communities, including using ‘twinning’ to help units benefit from shared learning across the country and support the opening of 20 new additional junior sections to enable more nine to eleven year olds to participate in what Sea Cadets has to offer.

Concerned to open Sea Cadets to all, we will also target hard-to-reach young people to offer 1,200 outreach places for summer boating sessions through our ‘On the Water’ programme inspiring them to get out on the water, achieve, and if they wish, join Sea Cadets.

Digital:

We will build on the digital developments we have begun to leverage over the past year, to further accelerate capability, including releasing simple digital tools for onboarding volunteers, creating a platform for volunteer online learning, as well as offering ability to pay course contributions and volunteer expenses online.

1 HRH The Princess Royal now Admiral of the Sea Cadet Corps

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Community:

In the return from lockdown cadets can and want to play a key role in their local communities. We will develop a framework and resources to help them and their local unit to do so, with at least 50 Sea Cadet units participating in Communities Engagement Week.

Marine Society:

Our support for seafarers has continued to be even more critical during lockdown so we have also refreshed the Marine Society offer to include both the current and aspiring seafarer. We will now introduce:

Enablers:

To underpin all these plans we will develop a clear diversity and inclusion strategy, further improve fundraising and public awareness, as well as deliver a programme of infrastructure improvements.

2022/21

Youth:

By Year Two we will be offering the full range of cadet activities again, including the new Royal Marines Cadets syllabus, ongoing cadet holiday activity programmes, re-introduction of international exchanges, further increasing Duke of Edinburgh courses and targeting 30 hours boating (average) per cadet.

Building on our Year One plans we will continue to give more cadets a voice, whilst delivering the ‘wellbeing and resilience’ course for cadets nationally as well as providing further practical careers support.

Volunteers:

For volunteers we will support return to full delivery of the Sea Cadet Experience, with many of the 2021/22 initiatives fully embedded. This will include delivering blended training, introducing more external accreditations, flexible volunteering as well as further improving communications with volunteers.

Growth:

On top of continuing to support the full regeneration of existing units and opening a further 20 Junior sections we will return to at least April 2020 cadet numbers, with sufficient volunteers in place to make this happen. By the end of Year Two we will also have delivered an additional 1,200 outreach opportunities.

Digital:

We will continue to invest in our digital offer with improvements to the Sea Cadets Portal, more volunteer self-service functionality, a new members’ website, and upgrades to the Marine Society digital systems.

Community:

In addition to active participation of at least 150 Sea Cadets units in Communities Engagement Week, we will also play our part in the Queen’s Platinum Jubilee.

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Marine Society:

By the end of Year Two we will have established two maritime apprentice recruitment assessment centres, put in place additional partnerships with learning providers, delivered additional courses and expanded our digital learning at sea resources through our ‘Learn@Sea’ upskilling app and ‘eFarer’ service offering our digital library and ‘Learn@Sea’ products.

Enablers:

Year Two will see the delivery of a major new boat station in the Midlands, improvements to regional training venue opportunities and completion of a wide-ranging transport review. We will also continue to roll out diversity and inclusion plans, grow fundraising and further develop communications.

Beyond Regeneration

The world has changed. We have and will learn from the experience and will not go back to exactly who and what we were before the Covid-19 pandemic. We have and will continue to prove to be responsive and innovative.

By 2023:

Sea Cadets will be even stronger and even better at meeting the needs of young people and their communities in a post-pandemic world. We will have harnessed what we have learnt to further develop the offer, our systems and support for our volunteers so that by March 2023 we have even stronger foundations and are impacting the lives of many more young people with all that Sea Cadets has to offer.

Our close partnership with the Royal Navy will continue to be central to Sea Cadets and we will have delivered reflective of the Cadet Forces 2025 strategy for MOD sponsored cadet forces (which includes Sea Cadets). We will also have taken opportunities to work with the government and sector policy across the four nations to both better support Sea Cadets and use our expertise to help build better policy responses for children, young people and local communities.

Marine Society will have built services that reflect the needs of current and aspiring maritime workers in a post Covid-19 and increasingly changing and complex sector. We will have expanded our digital maritime learning services, developed a post-16 maritime careers and qualifications programme, as well as ‘Coming Ashore’ careers support, whilst continuing to develop a scholarships and bursaries offer, crew libraries and specialist book sales.

Together we will have forged even stronger and collaborative working, engaging with our many sponsors, and fully leveraging our resources across the charity for the benefit of cadets, volunteers and seafarers.

Beyond 2023:

Alongside this work we will develop our next long term strategy from 2023, building on the following themes:

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What we achieved in 2020-2021

The pandemic had a considerable impact on our ability to deliver the year plan originally intended. We were still able to achieve much of this together with significant additional delivery responding to the pandemic, resulting in a year of real progress:

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MSSC’S LAMBETH ROAD, LONDON PREMISES

Some years ago, the charity became aware that a property company, the Downing group, had acquired the neighbouring plot of land for development of a new six storey building. Following negotiations with the developer, the charity completed an agreement in December 2018 to transfer part of its existing land and property to the developer in exchange for new more efficient fully fitted offices for the charity. These are on the ground and lower ground floors of the new building. Following practical completion of the new facility, on 09 July 2021 the charity completed a 249 year lease of the new premises at a peppercorn rent at a net premium of £3.764m plus VAT ahead of occupation from early September 2021. The existing MSSC building (already partially let) and its associated land will remain the property of the charity and is being marketed for disposal by the charity.

CHARITY OBJECTS

The objects of the Marine Society & Sea Cadets (MSSC), a charity registered in England and Wales 313013 and in Scotland SC037808, are set out in its governing instruments which are based on the Act of Incorporation of 1772, the Charities (Marine Society) Order 1976 No 147 and subsequent Charity Commission schemes, the latest being that dated 22 November 2004. The Objects of the charity are:

“Seafarers” used above is a term defined as:

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CHARITY OBJECTS (cont)

“Sea Cadet Corps” (SCC) means properly constituted maritime cadet units that conform to the policies of Sea Cadet Regulations established by the charity and that are formally affiliated to it.

HISTORY

The Marine Society was founded in 1756 by Jonas Hanway, a London-based philanthropist, with the aim of encouraging young men and boys of good character to join the Royal Navy at the start of the Seven Years’ War. Incorporated in 1772, the Society commissioned in 1786 the first sea training ship in the world, the 350-ton Sloop Beatty , and went on to provide sea training all the way up to the Second World War. It was estimated that over 110,000 men and boys were trained and equipped by the Society over this period.

The Sea Cadet movement dates back to 1856 when sailors returning from the Crimean War started up ‘Naval Lads’ Brigades’ in ports around the country. In 1910 the Navy League sponsored a small number of independent units, which received Admiralty recognition in 1919. In 1937 Lord Nuffield gave £50,000 to fund the re-launch and expansion of the Corps and five years later the Admiralty started to pay for uniforms, equipment, travel and training. In 1976 the Navy League was renamed the Sea Cadet Association. In 1963 the Girls' Naval Training Corps (GNTC), which had been formed in 1942 with objectives similar to those of the Sea Cadet Corps, became a partner organisation of the Sea Cadets, often sharing facilities. In 1980, the GNTC merged with the Sea Cadets, firstly as the Girls Nautical Training Contingent, until becoming fully absorbed in 1992. Girls and women currently make up over a third of all cadets and volunteers.

MSSC was formed in 2004 on the merger of The Marine Society and the Sea Cadet Association (SCA) with the merged organisation retaining the constitution of The Marine Society. The SCA (registered charity number 306141 & company number 404951) is now a subsidiary of MSSC.

PRINCIPAL ACTIVITIES

The activities broadly relate to those of promoting Sea Cadet activity and helping seafarers realise their ambitions.

The charity supports the maritime industry through the provision of Marine Society College activities, by promoting career opportunities into maritime, upskilling seafarers using new technologies, whilst supporting others to transition ashore into maritime-related roles. As an approved Government-funded training provider and Ofsted-rating ‘Good’, Marine Society will build on its global reputation for supporting seafarers offering advice and guidance, scholarships, bursaries, apprenticeships, a growing range of post-16 to graduate courses as well as delivery of crew libraries and specialist book sales.

The charity acts as the franchisor for Sea Cadet units – local groups are constituted as separately registered charities. The charity sets Sea Cadet regulations, issues guidance and performs inspections to ensure that the highest of standards are maintained. It provides support in many other ways including provision of uniforms, equipment, onshore and offshore training and related travel, business and unit support and Disclosure and Barring Service (DBS) checks. The charity does not have overall control over the day to day operation of the individual units.

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PRINCIPAL ACTIVITIES (cont)

Sea Cadet units operate across the United Kingdom, with a total as at 01 April 2021 of 13,216 cadets (10,965 in England, 1,046 in Scotland, 682 in Wales, 344 in Northern Ireland and 179 overseas). There are 304 established units in England, 37 in Scotland, 22 in Wales and 11 in Northern Ireland, with a further two in Bermuda and one each in Jersey, Guernsey and Malta. There are also a further six new units (one in Northern Ireland, five in England) and fifteen partnership units (one in Scotland and fourteen in England). The charity maintains six area offices, five based in England and one in Scotland, three national training centres, two in England and one in Scotland, eight boating stations, seven in England and one in Scotland, and an offshore fleet of five vessels, based in England.

VOLUNTEERS

The charity relies extensively on volunteers to support the delivery of its training and other activities to Sea Cadets, and to serve as unit management team members (trustees) of Sea Cadet units. As at 01 April 2021 there were 4,355 adult instructional volunteers, 1,587 unit management team members and 2,613 other volunteers. In total 8,555 volunteers 7,040 in England, 731 in Scotland, 442 in Wales and 249 in Northern Ireland). We are extremely grateful for the generosity of time, huge commitment and can do attitude of our volunteers in making the Sea Cadets the success that the organisation is. This has been particularly so over this last year in ensuring Sea Cadets kept going virtually when not able to meet face to face during lockdowns and in getting back up and running as things have eased.

KEY RISKS AND UNCERTAINTIES

The Council is responsible for management of the risks and uncertainties faced by the charity, assisted by senior staff. The Council undertook an annual review of the organisation’s risk management process through the Safety, Safeguarding and Risk Committee in May 2021, and together with the Policy Development and Nominations Committee and the Financial Investments Audit and Remuneration Committee continued to monitor the charity’s key risks throughout the year. This included frequent review throughout the year of the impact of the pandemic upon all aspects of the charity.

The charity’s risk register operates at three principal levels; the Strategic Risk Register, the High Operational Risk Register and Departmental Risk Registers. Each risk identified is described, together with its indicators and mitigating factors in place, and its target and current mitigated scores based upon an impact and likelihood matrix. A commentary is also maintained by risks of actions in progress to further reduce the risk score, which may also be increased should risk circumstances change. All risks and their completeness is reviewed and revised by management and reviewed by the relevant committee, overseen by the Safety, Safeguarding and Risk Committee which meets four times a year.

The Council considers the key risks facing the charity to fall within the following areas:

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KEY RISKS AND UNCERTAINTIES (cont)

The key mitigating controls used are:

The Council is satisfied that key risks identified are adequately managed and these are reviewed by the full Council. It is recognised that systems can only provide reasonable but not absolute assurance that major risks are adequately managed.

The charity continues to respond to the consequences of Covid-19 across a number of risk areas, following the regeneration strategic plan. This includes ensuring that where possible services remain available or are appropriately adjusted to ensure Covid-secure delivery in line with relevant government and sector guidance and that there is enhanced support and regular and clear guidance for cadets, their next of kin, volunteers, seafarers and staff.

The Trustees, assisted by the senior management team, continue to keep the charity’s response and the ongoing implications of the pandemic upon its operation and financial position under regular review. The Trustees will as required take necessary further steps to ensure the charity delivers effective support for its beneficiaries whilst remaining a going concern.

FINANCIAL REVIEW

Income

Total income amounted to £14,259K (2020: £ 17,774K), a decrease of 20% over the previous year. Some of this is due to Covid-19, particularly the decrease in donations, legacies and other income of £2,633K (55%), offshore bursaries of £236K and Areas & Branch income of £208K. Also two restricted projects the Cadet Expansion Programme (CEP) (2020:£1,252K) and Westminster Development & Cadet Portal £59K (2020:£1,062K) concluded.

The MOD grant in aid for Sea Cadets increased by 2% to £11,511K. Sea Cadets training income and offshore fleet income reduced significantly due to Covid-19.

MSSC (Trading) Limited income decreased from £89K to £17K and Investment income was lower than previously due to Covid-19.

We continue to remain sincerely grateful for the continued support provided by the MOD in helping finance the Sea Cadets and appreciate the agreement of our Grant in Aid for the next three years to March 2023, which is enabling us to plan more effectively.

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FINANCIAL REVIEW (cont)

Expenditure

Total expenditure was £14,092K (2020: £17,324K ), a decrease of 19.0% on the prior year. The cost of safeguarding and supporting Sea Cadet activity and infrastructure decreased by £1,089K (14%) due to the reduction in restricted funds. Sea Cadets training reduced by £1,858K (32%) due to reduced face to face training activity as a result of Covid-19.

Net income and other movements

Overall, net income before investment gains was down by £283K to £167K mainly due to the significant reduction in restricted grant income and the impact of Covid-19. The £167K is broken down to restricted funds (£618K), Designated funds £837K and Unrestricted funds (£52K).

It has been the policy of the charity since 2012/13 to set aside long-term gains from its expendable endowment for current expenditure. The allocation amounted to £nilK (2019: £65K ) based on a 4.0% agreed return set by the Trustees following advice from the investment managers. Due to the impact of Covid-19 it has been decided not to make this transfer this year.

Investment portfolio gains in the year were £2,363K, which represented the recovery of the stock market after the initial fall from February 2020 because of Covid-19.

Balance sheet

Intangibles have increased by £44K, with additions for the Cadet Portal, Finance system and Learn@sea, offset by depreciation. Tangibles have reduced by (£574K), due to depreciation, primary additions for Port Edgar and Midlands Boat Station.

Investments have increased by investment gain but decreased by (£4,000K) which is being held in an escrow account for the new building – this also shows in the prepayments.

Cash at bank has increased by £4,257K, mainly due to the prepayment of the GIA for April, shown in Deferred income £1,400K.

Total debtors have increased by £3,766K, Prepayments have increased by £4,427K – mainly due to the £4,000K prepayment for the new building. Other debtors have reduced by £500K – made up from Slater and LIBOR.

Total creditors have increased by £2,423K. Deferred income has increased by £1,180K (primarily GIA). Grants have increased by £645K, made up of unit grant commitments of £417K and bursary commitments of £228K. Accruals have increased by £506K, including £250K Foul Weather Jackets, £170K mandatory volunteer training, plus investments to enable socially distanced training.

SAFEGUARDING POLICY

It is the policy of MSSC to safeguard our young people and vulnerable adults from harm, physical, sexual and emotional abuse and neglect by:

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SAFEGUARDING POLICY (cont)

In 2016 a review of the charity’s current safeguarding arrangements was commissioned and undertaken by Barnado’s. Their report noted that the charity had clearly made considerable effort and investment in recent years to develop and embed a strong safeguarding culture, and made a number of recommendations for further refinement of the charity’s procedures. All the recommendations have been fully implemented.

A further internal review of non-recent safeguarding cases was completed during 2020. This review made a number of recommendations with implementation underway.

MSSC also accords the utmost priority to the safety of vulnerable/protected groups, who should be free to work, learn and develop their potential without fear of violence, abuse or exploitation. Within the charity’s environment, irrespective of their age, gender, disability, racial origin, religion, belief and sexual orientation, they will be valued and their rights to opportunity, protection and safety fully respected.

FUNDRAISING STANDARDS

Open and accountable

The MSSC works hard to ensure that everyone supporting the charity understands how their money will be used to help launch young people for life today, whatever they want to do after school, and help people who work on the sea to keep learning all their lives. This is reflected in the low levels of negative feedback we receive, and the absence to date in recent years of formal complaints to the charity.

Complaints and negative feedback

Should we receive a complaint, we would respond on a one-to-one basis as quickly as possible, maintaining full records. There has been nothing to report in recent years.

Contacting our supporters and supervising our fundraisers

The charity prides itself on a high standard of ethical fundraising and we continually review how we contact the public to ask for support. This ensures that we follow regulations, meet our own high standards and exceed the public’s expectations, including ensuring the charity’s compliance with General Data Protection Regulation (GDPR) (EU) 2016/679.

MSSC staff and volunteers carry out the vast majority of the charity’s fundraising activities

We did not work with any professional fundraisers and fundraising organisations in 2020/2021. The Trustees are aware of the need to comply with regulations from the Charities (Protection and Social Investment) Act 2016. The MSSC ensures that our approach to commercial participators, professional fundraisers and our contracts with them are in compliance with the regulations.

Protecting our reputation, money and other assets

As a charity, gaining supporters’ trust is incredibly important. The MSSC must demonstrate that it is a responsible and worthy recipient of supporters’ generous donations. We therefore work hard to ensure that we manage our money and other assets responsibly and do all we can to maintain our good reputation by being transparent and trustworthy.

The MSSC takes its responsibility for managing supporters’ donations very seriously and applies rigorous financial controls to ensure funds are securely held and properly accounted for at all times. The MSSC strives to make the supporters’ experience simple – making it easy to donate in a way that suits individuals, whether that is online, by post, over the phone or through other means.

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FUNDRAISING STANDARDS (cont)

Protecting the vulnerable

The MSSC takes its responsibility towards supporters who may be considered to be in vulnerable circumstances very seriously. Our fundraisers are carefully briefed to respond sensitively and appropriately to any individual whom they might consider to be in a vulnerable circumstance.

Compliance with fundraising laws and regulation

Fundraising regulation goes through continuous change. Through membership of industry bodies, subscription to charity sector publications and staff continuing professional development we ensure that our fundraising teams keep up to date with amendments to regulations and professional practice, and their changing responsibilities.

The Trustees are satisfied that MSSC adhered to the appropriate fundraising standards for the year ended 31 March 2021. The charity is a paid-up member of the Fundraising Regulator.

Compliance with recognised standards

Every member of our fundraising team is responsible for making sure that they are compliant with the standards laid out in the Fundraising Regulator’s Code of Fundraising Practice. This is carefully monitored by senior management. We are satisfied that we meet all current standards.

No complaints were received about fundraising in the year.

INVESTMENT POLICY

Investec manage the investment portfolio (excluding properties managed directly by the charity (see Note 12)). KW Investment Management manage the treasury portfolio.

The overall objective of the investment policy is to create sufficient income and capital growth to enable the charity to carry out its purposes consistently year by year with due and proper consideration for future needs and the maintenance of, and if possible, enhancement of the value of the invested funds while they are retained. The overall objective of the treasury policy is to achieve better returns on cash than through bank deposits, primarily using short dated corporate bonds and certificates of deposit issued by the major banks.

MSSC’s objective is to achieve, over the medium term, a real total return of at least 4.0% (net of fees and inflation). Both capital and income may be used at any time for the furtherance of the Charity’s aims.

The investment portfolio mix is set to fall within the following broad planning ranges:

Planning 31 March 31 March
range 2021 2020
UK Equities 30-55% 33.8% 18.7%
Non-UK Equities 30-55% 43.2% 31.8%
Fixed Interest 10-30% 10.0% 7.3%
Property 5-10% 4.8% 5.8%
Hedge funds 0% 0% 0%
Other 0% 4.1% 3.7%
Cash 0-30% 4.1% 32.7%

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INVESTMENT POLICY (cont)

The move from Cash Holdings to Equities reflects the cash being transferred to the escrow account to pay for the new building. This does not mean that they can’t still be tactically overweight in any asset class from time to time.

The bonds held will be of ‘BBB’ credit rating or better.

No single investment should exceed 10% of the total value of the funds under management and the total sum of all equity holdings in excess of 5% must not be equal to or exceed 40% of the fund’s value at any time. The portfolio should have a minimum of 35 separate stocks held at any one time, either within packaged products or held directly.

The objectives are to be achieved by investing prudently in a broad range of fixed interest securities and equities which are quoted on a recognised investment exchange and unit trusts and OEICs (open ended investment companies) which are appropriately authorised and compliant with current legislation. The performance of each asset class is measured against relevant market indices. The overall performance is compared with the long term return expected (4% plus inflation and fees) and a portfolio weighted Charity Universe benchmark. From 1 April 2018, the Trustees have adopted CPI rather than RPI as a more appropriate measure of the inflation facing the charity.

Investments in Alternative Investment Strategy funds, Derivatives and Hedge Funds are allowed on a limited exposure basis (up to 5% of funds) on a short-term basis (maximum of 5 years).

Treasury holdings should not exceed £1M by counterparty, nor two years’ maturity for bank debt.

Ethical considerations

The Trustees would like to invest in a responsible and sustainable way and therefore expect the investment manager to take into account ESG factors when making investment decisions, as well as a carbon aware approach.

Performance

The fund delivered a total return (net-of-fees) of 25.4% (2020: 5.8%) against our real return benchmark of 4.7% (CPI plus 4%) and ARC Sterling Steady Growth Index 1 of 24.0% (2020: 7.9%). Total return over the three year period to 31 March 2021 was 7.3% (net-of fees) per annum against a benchmark of 5.4% (CPI plus 4% per annum over the period) and ARC Sterling Steady Growth Index 6.6% (net-of-fees) per annum since 31st March 2019.

The Trustees continue to monitor investment performance and are grateful for the assistance of the investment managers, Investec.

Review of investment managers

A tender exercise for the provision of investment management services to the charity was conducted in 2017, with the assistance of Independent Investment Reviews Ltd. Following a full and fair competition, Investec were re-appointed.

1 The ARC Sterling Steady Growth Index is a composite of charity portfolios exhibiting 60-80% of the volatility of the UK equity market.

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RESERVES POLICY

Total funds at the year-end as detailed in note 17 were £35,080K, (2020: £32,550K ), which includes £15,126K (2020: £15,744K ) restricted funds and £17,399K (2020: £15,036K ) endowment funds. After accounting for intangible and tangible fixed assets of £570K (2020: £531K ) and the setting up designated funds for investments in boat stations and outreach work of £837K, this leaves unrestricted funds, comprising free reserves of £1,148K (2020: £1,239K).

The charity does not retain MOD grant monies as part of its reserves. The reserves policy of the charity has been to hold three months’ expenditure (approximately £3.5 million) in income funds rather than capital. It remains an aspiration of the charity to increase its free reserves. However, the Charity Commission is encouraging charities to move to a risk based reserve strategy rather than one based on a number of month’s expenditure with little explanation. A Risk based approach, means that the reserves reflect the risk of loss of specific income and the risk of the most significant costs increasing. On the basis of this approach our target will be £2.6 million.

A breakeven budget has again been set in the current year. It is unlikely the charity will be able to meet its reserves targets and instead will have to rely on expendable endowment to act as a reserves buffer. The policy has clear dangers for the charity in the long term so any drawdown that may be made will be kept to an absolute minimum. It is at the complete discretion of Trustees as to the level of support the charity will give to the Sea Cadet movement in the event of shortfalls in public funding.

GRANT MAKING POLICY

Grants awarded in 2021 amounted to £1,464K (2020: £1,494K ). Individual Sea Cadet units are separate registered charities and thus financial support is paid via grants. The policy of the charity is to grant monies for one-off items to support the Sea Cadet Corps and individuals (members of the Sea Cadet Corps or seafarers) to help them either facilitate or receive approved training or qualifications. In addition, grants are provided to volunteers to allow upkeep or purchase of uniforms on promotion or for wear and tear during the year. Payments are made in accordance with published scales.

MSSC STAFF REMUNERATION POLICY

As a charity, it is important we achieve balance in ensuring value for money, including how we pay our staff, with the need to attract, motivate and retain the right people to ensure we are able to deliver our ambitious plans and so maximise our impact on our beneficiaries. Therefore, our principles are to pay fair salaries that are consistent with our commitment to equality and diversity; that we remain competitive within the industry and geographic location of the role; are appropriate for the level of responsibility; and are in keeping with our charitable status. Headcount is reviewed annually as part of our budgeting process.

Governance of Pay

The Council approves the Pay and Benefits Policy, and the Finance, Investments, Remuneration and Audit Committee is appointed as a committee of the Council to approve pay related matters. The Council delegates to this committee the annual pay review and determining the CEO and senior management team salaries. This committee meets quarterly.

Page 19

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

MSSC STAFF REMUNERATION POLICY(cont)

Annual pay review

Salaries are normally reviewed annually in April / May with any pay increases being paid from 1 June. We benchmark salaries to ensure that we are paying appropriately and that we broadly fall within the mid-point for similar organisations. Where we find salaries that are not aligned, we adjust accordingly. There is no obligation to increase salaries, however if it is affordable and we have performed well, then a uniform inflationary increase may be applied. This is awarded to all staff, including senior staff, with the exception of those who are within their probation period or have resigned, or those who have already received an increase that year. In the light of the significant impact of the pandemic upon operations, it was decided to forego a pay review June 2020. As a result, salaries a 2% inflationary pay review was implemented in June 2021.

PUBLIC BENEFIT

The Council members continue to give due regard to the public benefit provided by the charity in relation to its charitable purposes as set out in the activities and achievements outlined in this report and have given due consideration to guidance issued by the Charity Commission on this matter.

The aim of Sea Cadet activities is to give young people the best possible head start in life through nautical adventure and fun, based on the customs and traditions of the Royal Navy. “Adventure that launches young people for life”

In order to achieve this, Sea Cadet units take young people from all backgrounds, including where possible those with disabilities and develop their skills and abilities by:

Charges are kept low in order to ensure all those who wish to take part in Sea Cadet activities may do so. Where further financial support is required for those on low incomes, a wide range of bursaries are available.

The aim of the Marine Society is to give aspiring and serving seafarers the best possible lifelong learning opportunities tailored to their individual needs. “ Realising Seafarer Potential ”.

Page 20

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

PUBLIC BENEFIT (cont)

We achieve this through a wide range of services that are geared towards their personal development, education and learning support needs, helping them realise their potential. This includes:

The Council members are thus satisfied that the charity provides substantial public benefit.

ORGANISATIONAL STRUCTURE AND GOVERNANCE

The charity is governed by a board of unpaid non-executive Council members who act as Trustees. Details of the Council Members who served during the year, and as at the date of this report, together with details of the executive management and professional advisors, are shown on pages 55-56.

The Council meets at least quarterly and is supported by members of the senior management team. Responsibility for reviewing key areas of activity is delegated to committees which report back to the Council meetings. The committees, with specific terms of reference, may also include specialist co-opted members as well as Council members to ensure that expert opinion is available. The day-to-day management of the charity and the exercising of executive responsibility are delegated to the CEO and senior management team. Meetings of the Council are also attended by one of our current First Sea Lord Cadets.

The current committees and their primary purposes are: Finance, Investment, Remuneration & Audit Committee

Policy, Development and Nominations Committee

Page 21

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

ORGANISATIONAL STRUCTURE AND GOVERNANCE(cont)

Safety, Safeguarding & Risk Committee

National Sea Cadet Forum

National Sea Cadet Advisory Council (NSCAC)

Appointment, induction and training of Council members

Council members (Trustees) are co-opted by the board and elected by the charity’s members at the AGM following their appointment according to the provisions of the Society’s Scheme. A Council member, who has previously been re-elected at an AGM, is eligible for re-election only with the prior approval of the Council. The Society’s Scheme formally provides that one-third (rounded down) of the elected Council members shall retire at each AGM. The board keeps the skill requirements for the Trustee body under review and, with these in mind, seeks to identify new members in a range of ways, including recommendation from all interested parties.

The induction process for a new Council member comprises initial meetings with the Chairman and other members of the board, followed by meetings with the CEO and senior management team, through which the individual will be briefed on the remit of the charity and the powers and responsibilities of its Trustees. The charity aims to provide all new Council members with the information necessary to ensure that they are fully equipped to contribute to the organisation within their powers. Council members are informed of current and evolving issues within the sector by the senior management team.

Membership and Branches

The MSSC is a membership organisation and currently enjoys the support of some 600 members who pay an annual subscription to the Charity. MSSC has five (2020: five) branches within the United Kingdom made up of members of the charity who reside within its locality. The annual subscriptions of those living within the catchment area of a branch are returned to the branch committee to be applied for the benefit of local Sea Cadet units and MSSC initiatives. These branches are an active and welcome force in spreading the charity's message at a local level.

Page 22

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

THE CHARITY GOVERNANCE CODE

The Trustees have considered the new third edition of the Charity Governance Code for larger charities, published in July 2017 by the charity sector’s The Code Steering Group (the Association of Chief Executives of Voluntary Organisations, the Association of Chairs, Small Charities Coalition, the Institute of Chartered Secretaries and Administrators: The Governance Institute, the National Council for Voluntary Organisations and the Wales Council for Voluntary Action). The code is supported and endorsed by the Charity Commission in England and Wales.

The code lays out principles for seven key areas of governance together with recommended practice for each principle; organisational purpose, leadership, integrity, decision making, risk and control, board effectiveness, diversity, openness and accountability.

The Trustees consider that the charity continues to comply with the principles of the code.

UNITED KINGDOM EXITING THE EUROPEAN UNION

The Sea Cadets activity is mostly based in the United Kingdom. The Marine Society operates on a global basis, though again much of its activity is delivered within or led from the United Kingdom. Nevertheless the charity is generally and indirectly subject to the broader economic uncertainties, including exchange rate impact of the United Kingdom’s departure from the European Union which occurred at the beginning of 2021.

INTERNAL AUDITOR’S REPORT TO THE COUNCIL

A dedicated member of staff was appointed as Internal Auditor to the Charity in April 2015. Previously the function had been fulfilled by a contracted internal audit service provider.

The Internal Auditor reported to the Council in July 2021 as follows:

Based on the work performed during the year, it is the opinion of Internal Audit that MSSC has an adequate and effective framework of governance, risk management and control in place to support the organisation’s objectives as laid out in its Vision and Strategy.

Following each audit engagement, actions to address any identified control weaknesses have been agreed with management and progress against these agreed actions is monitored by Internal Audit and reported to the Finance, Investments, Remuneration & Audit (FIRA) Committee on a regular basis. In the opinion of Internal Audit, no control weaknesses have been identified during the year which are of such significance to warrant specific disclosure in the Annual Governance Statement.

Page 23

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

STATEMENT OF THE ACCOUNTING OFFICER

The Chief Executive Officer (CEO) as designated Accounting Officer in accordance with the current ten year Memorandum of Understanding with the MOD dated 13 December 2018, should ensure that MSSC and any subsidiaries to it or organisations sponsored by it, operates in respect of the GIA effectively and to a high standard of probity. The MSSC should in respect of the GIA:

Governance

Decision-making

Make all its decisions in line with the strategy, aims and objectives of the charity

Financial management

In order for the Chief Executive Officer to provide assurance on the above matters the following measures are in place:

Page 24

REPORT OF THE COUNCIL YEAR ENDED 31 MARCH 2021

STATEMENT OF COUNCIL'S RESPONSIBILITIES

The Council as Trustees are responsible for preparing the Report of the Council and the financial statements in accordance with applicable law and regulations. Charity law requires the Council to prepare financial statements for each financial year in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.

Under charity law the Council 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 charity and of its net incoming resources for that period. In preparing these financial statements, the Council are required to:

The Council are responsible for keeping adequate accounting records that are sufficient to show and explain the charity’s transactions and disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008, the Charities and Trustee Investment (Scotland) Act 2005 and Charities Accounts (Scotland) Regulations 2006 (as amended) and the provisions of the charity’s constitution. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Council are responsible for the maintenance and integrity of the corporate and financial information included on the Charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

AUDITORS

A resolution to reappoint Mazars LLP will be tabled at the Annual Court.

Each of the persons who are Trustees at the time when this Trustees' report is approved has confirmed that: • so far as the Trustee is aware, there is no relevant audit information of which the charity's auditor is unaware, and

On behalf of the Board

Jeremy Penn Council Member and Chairman

Martin Coles Chief Executive Officer & Grant in Aid Accounting Officer

21 July 2021

21 July 2021

Page 25

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEES OF THE MARINE SOCIETY & SEA CADETS

Opinion

We have audited the financial statements of The Marine Society & Sea Cadets (‘the parent charity’) and its subsidiaries (‘the group’) for the year ended 31 March 2021 which comprise the Consolidated Statement of Financial Activities, the Consolidated and Charity Balance Sheets, the Consolidated Statement of Cash Flows 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 FRS 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:

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 charity 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 trustees’ 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 group’s or the parent charity's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Report of the Trustees, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information. 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 course of 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.

Page 26

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEES OF THE MARINE SOCIETY & SEA CADETS

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In light of the knowledge and understanding of the charity and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report included within the Report of the Trustees.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of Trustees

As explained more fully in the Trustees’ responsibilities statement set out on page 25, the Trustees (who are also the directors of the parent charity for the purposes of company law) 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 trustees determine 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 Trustees are responsible for assessing the group’s and the parent charity’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 trustees either intend to liquidate the charity 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 the 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. Based on our understanding of the charity and its activities, we identified that the principal risks of non-compliance with laws and regulations related to the Charities Act 2011, UK tax legislation, pensions legislation, employment regulation and health and safety regulation, anti-bribery, corruption and fraud, money laundering, non-compliance with implementation of government support schemes relating to COVID-19, 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 and the Charities Statement of Recommended Practice.

Page 27

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEES OF THE MARINE SOCIETY & SEA CADETS

We evaluated the trustees’ and 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 posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to use of restricted funds, and significant one-off or unusual transactions.

Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:

Our audit procedures in relation to fraud included but were not limited to:

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

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 auditor’s report.

Use of the audit report

This report is made solely to the charity’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 charity’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 charity and the charity’s members as a body for our audit work, for this report, or for the opinions we have formed.

Signed:

Nicola Wakefield (Senior Statutory Auditor)

for and on behalf of Mazars LLP

Chartered Accountants and Statutory Auditor

6 Sutton Plaza, Sutton Court Road, Sutton, Surrey SM1 4FS Date: 10 August 2021

Page 28

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES YEAR ENDED 31 MARCH 2021

Notes
INCOME AND
ENDOWMENTS FROM:
Donations, legacies and
other income
2
Charitable activities
3
MOD grant in aid
(for Sea Cadet activity)
Seafarer education and
support
Sea Cadet Corps training
Offshore fleet income
Other trading activities
MSSC (Trading) Limited
8
Investments
4
TOTAL INCOME
EXPENDITURE ON:
Raising funds
Investment management
Costs
MSSC (Trading) Limited
Donations and legacies1
NET INCOME AVAILABLE FOR
CHARITABLE ACTIVITIES		 Unrestricted
Funds
£’000
564
-
123
85
8
216
17
604
1,401
48
8
290
346

1,055		 Restricted
Funds
£’000
1,578
11,111
148
-
-
11,259
-
21
12,858
-
-
-
-
12,858		 Endowment
Funds
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 2021
Total
£’000
2,142
11,111
271
85
8
11,475
17
625
14,259
48
8
290
346
13,913		 2020
Total
£’000
4,775
10,893
345
666
214
12,118
89
792
17,774
52
50
223
325
17,449

The notes on pages 35 to 54 form an integral part of these accounts

1 Donations and legacies includes unrestricted costs of raising both unrestricted and restricted income.

Page 29

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES (CONTINUED) YEAR ENDED 31 MARCH 2021

Notes
Charitable activities
Safeguarding and supporting
Sea Cadet activity and
infrastructure
Sea Cadet Corps training
Offshore fleet
Professional seafarer
education and support
Promoting the Marine
Society & Sea Cadets
Total charitable
activity costs
TOTAL
EXPENDITURE
5
NET INCOME
(EXPENDITURE)
BEFORE INVESTMENT
GAINS (LOSSES)
Net gains (losses)
on investments
12
NET INCOME
(EXPENDITURE)
Transfers between
funds
17
NET MOVEMENT IN FUNDS
TOTAL FUNDS
1 APRIL 2020
TOTAL FUNDS
31 MARCH 2021
17		 Unrestricted
Designated
Restricted
Endowment
2021
2020
Funds
Funds
Funds
Funds
Total
Total
£’000
£’000
£’000
£’000
£’000
£’000
12
6,348
-
6,360
7,723
4
4,042
-
4,046
5,893
1
1,899
-
1,900
2,338

335
379
-
714
581

1
474
-
475
464
353
13,142
-
13,495
16,999
699
13,142
-
13,841
17,324
702
(284)
-
418
450
-
-
2,363
2,363
(1,340)
702
(284)
2,363
2,781
(890)
(754)
837
(83)
-
-
-
(52)
837
(367)
2,363
2,781
(890)
1,770
15,744
15,036
32,550
33,440
1,718
837
15,377
17,399
35,331
32,550

All amounts relate to continuing activities. The notes on pages 35 to 54 form an integral part of these accounts

Page 30

CONSOLIDATED BALANCE SHEET 31 MARCH 2021

Notes
£’000
FIXED ASSETS
Intangible assets
10
Tangible assets
11
Investments
12
CURRENT ASSETS
Stocks
628
Debtors
13
6,080
Cash at bank and in hand
4,991
11,699
CREDITORS
Amounts falling due within one year
14
(5,936)
NET CURRENT ASSETS (LIABILITIES)
NET ASSETS
THE FUNDS OF THE CHARITY
Unrestricted funds
Fixed assets
570
Other
1,148
1,718
Designated funds
837
Restricted funds
15
Fixed assets
9,503
Other
5,874
15,377
Endowment funds
16
17
Approved by the Trustees on 21 July 2021 and signed on their behalf:		 2021
£’000
829
9,244
19,495
29,568
5,763
35,331
17,399
35,331		 2020
£’000
785
9,818
22,094
32,697
569
2,314
734
3,617
(3,764)
(147)
32,550
531
1,239
1,770
10,072
5,672
15,744
15,036
32,550

Jeremy Penn Martin Coles Council Member & Chairman Chief Executive Officer & Grant in Aid Accounting Officer

The notes on pages 35 to 54 form an integral part of these accounts

Page 31

CHARITY BALANCE SHEET 31 MARCH 2021

Notes
FIXED ASSETS
Intangible assets
10
Tangible assets
11
Investments
12
CURRENT ASSETS
Stocks
Debtors
13
Cash at bank and in hand
CREDITORS
Amounts falling due within one year
14
NET CURRENT ASSETS (LIABILITIES)
NET ASSETS
THE FUNDS OF THE CHARITY
Unrestricted funds
Fixed assets
Other
Designated funds
Restricted funds
15
Fixed assets
Other
Endowment funds
16
17		 £’000
628
6,090
4,969
11,687
(5,934)
570
1,143
1,713
837
9,503
5,874
15,377		 2021
£’000
829
9,244
19,500
29,573
5,753
35,326
17,399
35,326		 2020
£’000
785
9,818
22,099
32,702
569
2,303
704
3,576
(3,763)
(187)
32,515
531
1,204
1,735
10,072
5,672
15,744
15,036
32,515

Approved by the Trustees on 21 July 2021 and signed on their behalf:

Jeremy Penn Martin Coles Council Member & Chairman Chief Executive Officer & Grant in Aid Accounting Officer

The notes on pages 35 to 54 form an integral part of these accounts

Page 32

CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED 31 MARCH 2021

Notes
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used by)/provided by operating activities
(a)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received
4
Investment income
4
Purchase of tangible fixed assets
11
Proceeds from sale of tangible fixed assets
Purchase of investments
12
Proceeds from sale of investments
12
Net cash generated by/(used in) investing activities
INCREASE/(DECREASE) IN CASH AT BANK AND IN HAND IN THE
YEAR
CASH AT BANK AND IN HAND 1 APRIL 2020
CASH AT BANK AND IN HAND 31 MARCH 2021
NOTES TO CASH FLOW STATEMENT
(a) Reconciliation of net income (expenditure) to
Net cash flows from operating activities
Net income/(expenditure)
Depreciation
10 &11
(Gains)/losses on investments
12
Loss on the sale of tangible fixed assets
(Increase) in stocks
(Increase)/Decrease in debtors
Increase/(Decrease) in creditors
Interest received and investment income
4
Net cash (used by)/provided by operating activities		 2021
£’000
(941)
1
624
(393)
5
(9,483)
14,444
5,198
4,257
734
4,991
2021
£’000
2,781
988
(2,363)
(5)
(59)
(3,766)
2,108
(625)
(941)		 2020
£’000
293
9
783
(2,248)
-
(12,509)
11,431
(2,534)
(2,241)
2,975
734
2020
£’000
(890)
862
1,340
-
(167)
480
(540)
(792)
293

The notes on pages 35 to 54 form an integral part of these accounts

Page 33

NOTES TO THE ACCOUNTS YEAR ENDED 31 MARCH 2021

1. ACCOUNTING POLICIES

a) Basis of Preparation

The financial statements have been prepared on a consolidated basis in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), the Charities Act 2011 and UK Generally Accepted Accounting Practice.

The financial statements have been prepared to give a ‘true and fair’ view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a ‘true and fair view’. This departure has involved following Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).

The charity meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy. The results of the charity and its subsidiaries are consolidated on a line by line basis after intercompany transactions and balances have been eliminated.

The charity is well placed to manage the business risks we face. The position is supported by a strong cash flow, a sufficient level of reserves and a good relationship with our key funders. We therefore have a reasonable expectation that we have sufficient resources to continue in operational existence for the foreseeable future and believe that there are no material uncertainties that call into doubt the ability of the charity to continue as a going concern.

Whilst one of the main charitable purposes of the Fund is to support the activities of Sea Cadets and seafarers, the level of this necessary expenditure is at the discretion of the Trustees and can be adjusted during the year. The Trustees have also considered the Group's working capital and capital expenditure requirements. As a result of the foregoing the Trustees are satisfied that it is appropriate to prepare the accounts on a going concern basis.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are described in the accounting policies below. The Trustees are not aware of any areas where significant changes to key accounting assumptions concerning the future or estimation uncertainty affecting assets and liabilities at the balance sheet date are likely to result in a material adjustment to their carrying amounts in the next financial year.

b) Donations, legacies and other income

Income is recognised when the charity has earned entitlement, receipt is probable and the amounts involved can be measured with reasonable certainty. This policy is applied as follows:

Donations are recognised when received, grants are recognised when receivable unless they are restricted for use in a future accounting period in which case they are deferred.

Legacies are recognised at the earlier of receipt, completion of estate accounts or notification by the executors of an estate of a distribution.

Income received from the sale of goods and service is recognised in the year the sale occurs or the good is provided. Income from training, events and offshore activities is recognised in the year the activity or event is delivered.

Page 34

NOTES TO THE ACCOUNTS YEAR ENDED 31 MARCH 2021

1. ACCOUNTING POLICIES (CONTINUED)

c) Expenditure

Expenditure is classified by direct allocation of costs and best estimates of usage of costs where relevant, as follows:

Raising funds:

d)

Recognition of liabilities and grants

Liabilities are recognised either on the date goods or services are received, or when recipients are given a reasonable expectation that grants will be made and the conditions of those grants have been met.

e) Definition of liquid resources

Liquid resources included on the cash flow statement are those held as cash at bank and in hand.

f) Pension costs

Pension contributions are made to a defined contribution pension scheme and are written off to the Statement of Financial Activities as they are incurred. The charity also makes contributions to a multiemployer defined benefit scheme in respect of former employees. These amounts are also written off as incurred together with any known commitments to fund the deficit of the scheme, where they relate to past service.

g) Intangible and tangible fixed assets

Capital items with a value over £5,000 are treated as fixed assets. Depreciation / amortisation is provided on all fixed assets to write off the cost of these assets over their expected useful life. The following straight line depreciation rates have been used:

Freehold buildings 1.66% Boats and dinghies 10%
Freehold improvements 10% Motor vehicles 25%
Leasehold improvements Lease term Furniture, Fixtures & Fittings 20%
Training ships and yachts 5% Computers & software 25%

h) Investments

Investments are included in the Balance Sheet at fair value. Realised investment gains and losses represent the difference between the fair value of the investments at the beginning of the period, or the cost if purchased during the period, and the sale proceeds. The Trustees review the valuation of property investments for impairment every year and revalue the investments on a market basis at least every five years.

i) Stocks

Stock is valued at the lower of cost, including irrecoverable VAT, and market value.

Page 35

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

1. ACCOUNTING POLICIES (CONTINUED)

j) Endowment and Restricted Funds

Restricted funds represent gifts or grants, which can only be applied for a purpose specified by the donor or grantor. All monies received from the MOD are treated as restricted funds. These amounts are carried forward as deferred income where there is a restriction on when monies can be spent.

Designated funds for investments in boat stations and outreach work have been set up.

Endowment funds are classified as either permanent - those where the donor has specified that the capital of the gift cannot be expended and that only the income arising from the capital may be used for the specified purpose. Alternatively, they may be expendable if they relate to those that were given where the intention was clearly for the donation to be held for the longer term but where the funds are ultimately expendable.

k) Heritage assets

The charity has received donations of various naval and maritime paintings and artefacts over its 265 year history. A number of these are housed at the National Maritime Museum in Greenwich. These assets are retained for their historical and cultural significance in relation to the work of the charity, which illustrate and show the unique service the charity has given to the nation. The assets are not held on the balance sheet as they were either donated or have long since been written off, and are not held for their financial value, however the assets were valued for insurance purposes during the financial year, with a total valuation of £617K.

It is not the policy of the charity to obtain further artefacts but to preserve those of heritage significance that it owns, which it does with the help of the National Maritime Museum. Alongside the planned relocation of the national offices of the charity, the Trustees reviewed the artefacts held and determined those that should be held for posterity, those that should be gifted to relevant museums and those to be sold. Effecting this is ongoing. No material artefacts have been acquired in the last five years.

l) Financial instruments

The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.

Financial assets held at amortised cost comprise cash at bank and in hand, together with trade and other debtors, and accrued income. Financial liabilities held at amortised cost comprise, trade and other creditors, grants payable and accruals. Income arising from financial assets, comprising bank interest is recognised within income and expenditure.

Non property investments, including bonds held as part of an investment portfolio, are held at fair value at the balance sheet date, with gains and losses and investment income being recognised within income and expenditure. Investments in subsidiaries are held at cost less impairment.

m) Post balance sheet event

On 9[th] July 2021 the charity acquired a long leasehold property in Southwark for a net consideration of £3.764m plus VAT, including consideration for transfer by the charity of a small parcel of freehold land as part of the transaction. This will be used as the headquarters building for the charity going forward. The full amount is held in Prepayments (Note 13).

Page 36

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

2. DONATIONS, LEGACIES AND OTHER INCOME

2020/21 analysis of income
Donations and subscriptions
Legacies
Grants – MOD Cadet Expansion
Programme
Other Major Grants1
Boat station appeals
Westminster Development Donations
Bursaries2
Other restricted funds4
Coronavirus job retention scheme
Areas, Branches and Other Income
2019/20 analysis of income
Donations and subscriptions
Legacies
Grants – MOD Cadet Expansion
Programme
Other Major Grants1
Boat Station Appeals
Westminster Development Donations
Bursaries2
Other restricted funds4
Areas, Branches and Other Income		 Unrestricted
£’000
48
2
-
-
-
-
-
-
355
159
564
57
8
-
-
-
-
-
-
551
616		 Restricted
£’000
-
-
-
1,100
25
-
67
261
-
125
1,578
-
-
1,252
1,063
200
820
303
225
296
4,159		 Endowment
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 Total
£’000
48
2
-
1,100
25
-
67
261
355
**284 **
2,142
57
8
1,252
1,063
200
820
303
225
847
4,775

Other Major Grants[1]

Includes grants from The Seafarers' Charity (including the Marine Engineering Pods Project (MEP)), Trinity House Maritime Charity (for premises), MOD (grant in aid and for foul weather jackets), International Foundation for Aids to Navigation (IFAN) (Learn@Sea) and Ufi Trust (Sea Cadets Portal). Swire Charitable Trust (Boat station appeals).

Bursaries[2]

Include major donations from the Association of Sail Training Organisations (for offshore support during the pandemic) and Greenwich Hospital.

Other Restricted Funds[4]

Include major donations from the Michael Uren Foundation, Maritime Educational Foundation, International Transport Workers Federation (ITF) Seafarers Trust and Dulverton Trust.

Page 37

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

3. INCOME FROM CHARITABLE ACTIVITIES

MOD grant in
aid (for Sea
Cadet activity)
Seafarer
education and
support
Sea Cadet
Corps training
Offshore fleet
income		 Unrestricted
2021
£’000
-
123
85
8
216		 Restricted
2021
£’000
11,111
148
-
-
11,259		 Total
2021
£’000
11,111
271
85
8
11,475		 Unrestricted
2020
£’000
-
201
666
214
1,081		 Restricted
2020
£’000
10,893
144
-
-
11,037		 Total
2020
£’000
10,893
345
666
214
12,118

In addition to the MOD grant in aid (for Sea Cadet activity), the charity receives significant support in kind from the MOD. Eleven Royal Navy personnel are provided on loan, at an estimated value to the charity of £600K. Six area offices, three Sea Cadet training centres, Sea Cadet stores, the offshore offices and berthing facilities are also provided at MOD premises, together with ad hoc use of MOD training estate. Fuel for the offshore vessels from Royal Navy sources, some uniforms and various specialist stores items are also provided by the Royal Navy.

The Trustees have considered the very significant difficulties in undertaking a valuation of this support in kind, including whether a reliable, objective valuation would be possible, and the very significant costs which would be involved. They have concluded that the costs involved in undertaking the valuation would not be justified by the benefits to the users of the accounts in terms of their better understanding of the resources available to the charity and to the charity itself from having this financial information.

4.
INVESTMENTS
Unrestricted
2021
£’000
Investment
income
(excluding
Rental
income)
343
Rental income
261
Bank interest
604		 Restricted
2021
£’000
20
-
1
21		 Total
2021
£’000
363
261
1
625		 Unrestricted
2020
£’000
509
245
-
754		 Restricted
2020
£’000
29
-
9
38		 Total
2020
£’000
538
245
9
792

Page 38

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

5. ANALYSIS OF EXPENDITURE

Unrestricted
Restricted
2021
2021
£’000
£’000
Investment
management
fees
48
-
Fundraising
290
-
MSSC
(Trading)
Limited
8
-
Safeguarding
and supporting
Sea Cadet
activity and
infrastructure
12
6,348
Sea Cadet
Corps training
4
4,042
Offshore fleet
1
1,899
Professional
seafarer
education and
support
335
379
Promoting Sea
Cadet activity
1
474
699
13,142
Grants
£’000
2020/21 analysis of costs
Investment management fees
-
Fundraising
-
MSSC (Trading) Limited
-
Safeguarding and supporting Sea
Cadet activity and infrastructure
660
Sea Cadet Corps training
203
Offshore fleet
291
Professional seafarer education and
support
59
Promoting Sea Cadet activity
-
1,213		 Unrestricted
Restricted
2021
2021
£’000
£’000
Investment
management
fees
48
-
Fundraising
290
-
MSSC
(Trading)
Limited
8
-
Safeguarding
and supporting
Sea Cadet
activity and
infrastructure
12
6,348
Sea Cadet
Corps training
4
4,042
Offshore fleet
1
1,899
Professional
seafarer
education and
support
335
379
Promoting Sea
Cadet activity
1
474
699
13,142
Grants
£’000
2020/21 analysis of costs
Investment management fees
-
Fundraising
-
MSSC (Trading) Limited
-
Safeguarding and supporting Sea
Cadet activity and infrastructure
660
Sea Cadet Corps training
203
Offshore fleet
291
Professional seafarer education and
support
59
Promoting Sea Cadet activity
-
1,213		 Total
Unrestricted
2021
2020
£’000
£’000
48
52
290
223
8
50
6,360
980
4,046
672
1,900
227
714
334
475
53
13,841
2,591
Direct
Salary
Costs
Other
£’000
£’000
-
48
179
57
-
8
3,186
1,309
1,524
1,525
659
603
265
296
169
236
5,982
4,082		 Restricted
2020
£’000
-
-
-
6,743
5,221
2,111
247
411
14,733
Support
costs
(note 7)
£’000
-
54
-
1,228
783
338
94
67
2,564		 Total
2020
£’000
52
223
50
7,723
5,893
2,338
581
_464 _
17,324


Total
£’000
48
290
8
6,383
4,035
1,891
714
472
1,213 13,841

Page 39

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2020

5. ANALYSIS OF EXPENDITURE (CONTINUED)

2019/20 analysis of costs
Investment management fees
Fundraising
MSSC (Trading) Limited
Safeguarding and supporting Sea
Cadet activity and infrastructure
Sea Cadet Corps training
Offshore fleet
Professional seafarer education and
support
Promoting Sea Cadet activity		 Grants
£’000
-
-
-
727
610
150
7
-
1,494		 Direct
Salary
Costs
£’000
-
122
-
3,166
1,647
815
246
169
6,165		 Other
£’000
52
50
50
2,671
2,825
1,090
225
231
7,194		 Support
costs
(note 7)
£’000
-
51
-
1,159
811
283
103
64
2,471		 Total
£’000
52
223
50
7,723
5,893
2,338
581
_464 _
17,324

Other costs include all direct expenditure in relation to areas, branches, onshore and offshore activities.

6. GRANTS PAYABLE

Grants payable were as follows:

Grants payable were as follows:
Grants to institutions
Grants to individuals		 2021
£’000
878
586
1,464		 2020
£’000
679
815
1,494

Individual grants given are small and not material within the overall total.

Grants to institutions comprise grants made to Sea Cadet units to reimburse expenditure. Grants to individuals comprise grants to Sea Cadet volunteers of allowances and reimbursement of expenses. As a part of the charity’s response to Covid-19, a number of emergency grants were made to cadets and volunteers challenged by affordability to enable digital connectivity to Virtual Sea Cadets.

Support costs in relation to grants payable are included within note 7 below.

Grants payable at the year-end are included with creditors (see note 14).

Page 40

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

7. SUPPORT COSTS

The support costs of the charity consist of four elements: Management, Finance & Digital, Premises, and Human Resources. These costs have been apportioned across the work of the charity on the basis of staff numbers in each functional area. The apportioned costs are set out below:

Fundraising
Safeguarding and
supporting
Sea Cadet activity
and
Infrastructure
Sea Cadet Corps
training
Offshore fleet
Professional
seafarer
education and
support
Promoting Sea
Cadet activity
2021
2020		 Manage-
ment
£’000
4
94
60
26
7
5
196
243		 Finance
and
Digital
£’000
29
653
416
180
50
36
1,364
1,304		 Premises
£’000
12
272
174
75
21
15
569
390		 Human
Resour
ces
£’000
9
209
133
57
16
11
435
534		 2021
Total
£’000
54
1,228
783
338
94
67
2,564
2,471		 2020
Total
£’000
51
1,159
811
283
103
64
2,471

Included within Support costs are salary costs of £1,1227K (2020: £1,019K ).

Irrecoverable VAT costs included within Support costs amounted to £451K (2020: £351K ).

Total Governance costs included in Support were £156K (2020: £151K). These included auditors’ fees for external audit £18K (2020: £19K ) and tax advice £nilK (2020: £2K ).

Page 41

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

8. SUBSIDIARY ORGANISATIONS

The Sea Cadet Association is a charitable company registered in England and Wales (company number Number 404951 and Charity Number 306141). The charity was dormant in the current year and both net income and net assets/funds for the year were £nil (2020: net income and net assets/funds : £nil). The organisation is retained as it is counterparty to a number of leases held by Sea Cadet units and also acts as a vehicle for the receipt of occasional legacies.

MSSC (Trading) Limited is registered in England with company number 9476222. The charity has a £5K (2020: £5K ) investment in MSSC (Trading) Limited (note 12), representing 100% of the issued share capital of that company. The results of the company for the year and its balance sheet at the year end were as below. The company made a charitable donation in the year of £35K (2020: £37k ) to the charity. The company anticipates making a charitable donation to the charity of £5K in 2020/21 based on profits earned in 2020/21. Year-end net assets stand at £10K (2020 :£40K ).

Turnover
Purchases for resale
Other operating charges
Profit on Ordinary Activities before taxation
Taxation
Profit on Ordinary Activities after taxation
Retained profit at 1 April 2020
Charitable donation to the Marine Society & Sea Cadets
Retained profit at 31 March 2021
Current Assets
Debtors
Cash at bank and in hand
Creditors
Amounts falling due within one year
Net Current Assets
Net Assets
Capital and Reserves
Called up share capital
Profit and loss account		 2021
£’000
17
-
(12)
5
-
5
35
(35)
5
2021
£’000
1
22
23
(13)
10
10
5
5
10		 2020
£’000
89
(48)
(6)
35
-
35
37
(37)
35
2020
£’000
40
30
70
(30)
40
40
5
35
40
Page 42

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

9. STAFF COSTS
Wages and salaries
Social security costs
Pension fund contributions
Health insurance		 2021
£’000
6,121
567
402
120
7,210		 2020
£’000
6,279
568
400
98
7,345

The average head count was 217 staff (2020: 227) and the average full time equivalent numbers of employees were as follows:

Fundraising
Supporting Sea Cadet activity and infrastructure
Sea Cadet training
Offshore fleet
Promoting Sea Cadet activity
Seafarer education and support		 2021
4
91
58
25
5
7
190		 2020
4
90
63
22
5
8
192

Included within staff costs are £1,227K (2020: £1,019K ) support costs and £nilK (2020: £161K ) costs capitalised within Fixed Assets.

The key management personnel of the charity comprise the Trustees, the Chief Executive Officer and the seven (2020: seven ) Directors in post (senior management team) listed under Executive Management on page 55. Their total remuneration, (including those not in post at the year-end), including social security costs and pension contributions was £721K (2020: £692K). This increase is due to investment in the Director of Marine Society who moved from a consultant to a Director in 2020/21. The Trustees did not receive any remuneration from the charity during the year but were reimbursed for some travel costs, where they chose to claim. No (2020: two ) Trustees claimed travelling expenses totalling £nilK (2020: £1K ).

Eight employees earned over £60K (2020: six ). Bandings, inclusive of allowances (where payable) were:

2021 2020
£60K - £70K 3 4
£70K - £80K 3 1
£80K - £90K 1 -
£90K - £100K - -
£110K - £120K *1 *1

Page 43

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

10. INTANGIBLE FIXED ASSETS (GROUP AND CHARITY)

COST
At 1 April 2020
Additions in period
Disposals in period
At 31 March 2021
AMORTISATION
At 1 April 2020
Provision in period
Disposals in period
At 31 March 2021
Net book value
At 31 March 2021
Net book value
At 31 March 2020		 Computers
& software
£’000
1,312
229
-
1,541
527
185
-
712
829
785		 Total
£’000
1,312
229
-
1,541
527
185
-
712
829
785

Above includes £100K (2020: £647K) in respect of assets under construction.

Page 44

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

11. TANGIBLE FIXED ASSETS (GROUP AND CHARITY)

COST
At 1 April 2020
Additions in
period
Disposals in
period
At 31 March
2021
DEPRECIATION
At 1 April 2020
Provision in
period
Disposals in
period
At 31 March
2021
Net book value
At 31 March
2021
Net book value
At 31 March
2020		 Freehold
building
£’000
718
-
-
718
592
12
-
604
114
126		 Building
improve-
ments
£’000
4,010
173
-
4,183
1,210
151
-
1,361
2,822
2,800		 Ships
& boats
£’000
10,700
-
-
10,700
3,872
598
-
4,470
6,230
6,828		 Furniture
& fittings
£’000
311
19
-
330
304
6
310
20
7		 Motor
vehicles
£’000
387
12
(8)
391
332
35
(8)
359
32
55		 Computers
£’000
57
25
-
82
55
1
56
26
2		 Total
£’000
16,183
229
(8)
**16,404 **
6,365
803
(8)
7,160
9,244
9,818

Building improvements include assets under construction £178K (2020: £1,665K) .

Page 45

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

12. INVESTMENTS GROUP INVESTMENTS

12.
INVESTMENTS
GROUP INVESTMENTS
Fair value at 1 April 2020
Additions at cost
Disposal proceeds
Movement in Cash
Gain for the year
Fair value at 31 March 2021
CHARITY INVESTMENTS
Fair value at 1 April 2020
Additions at cost
Disposal proceeds
Movement in Cash
Gain for the year
Fair value at 31 March 2021		 Investment
Portfolio
£’000
16,008
9,297
(9,922)
-
2,363
17,746		 Investment
Portfolio
£’000
16,008
9,297
(9,922)
-
2,363
17,746
Properties
£’000
1,200
-
-
-
-
1,200		 Properties
£’000
1,200
-
-
-
-
1,200
Cash
£’000
4,886
-
-
(4,337)
-
549		 Cash
£’000
4,886
-
-
(4,337)
-
549
Subsidiary
£’000
5
-
-
-
-
5		 Total
£’000
22,094
9,297
(9,922)
(4,337)
2,363
19,495
Total
£’000
22,099
9,297
(9,922)
(4,337)
2,363
19,500

CHARITY INVESTMENTS

All investments are held in the UK. There are three single investments in excess of 5% of the portfolio, Barclays 2.375% 2023 Gilts (5.5%), Findlay Park American USD Fund (5.5%) and Vanguard Funds Plc S&P 500 (5.1%). No amounts were invested directly in overseas’ equities. The subsidiary investment is in MSSC (Trading) Limited, note 8. The cost of the Investment Portfolio including cash was £14,681K ( 2020: £19,167K ).

Fund analysis of gains and (losses):
Endowment (note 17)
Total gains (losses)		 2021
£’000
2,363
2,363		 2020
£’000
(1,340)
(1,340)

Page 46

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

13. DEBTORS

Trade debtors
Amounts due from MSSC (Trading) Ltd
Loans
Other taxation and social security
Other debtors
Prepayments
Accrued income		 Group
2021
£’000
85
-
20
61
245
5,554
115
6,080		 Group
2020
£’000
104
-
51
69
745
1,127
218
2,314		 Charity
2021
£’000
85
10
20
61
245
5,554
115
6,090		 Charity
2020
£’000
93
-
51
69
745
1,127
218
2,303

£5,387K (2020: £970K ) of Prepayments are held by our solicitors for payment for the new building in Lambeth Road.

14. CREDITORS: Amounts falling due within one year

Trade creditors
Amount due to MSSC (Trading) Ltd
Other taxation and social security
Grants payable
Other creditors
Pension provision (note 20)
Accruals
Deferred income		 Group
2021
£’000
432
-
257
1,423
414
-
1,068
2,342
5,936		 Group
2020
£’000
555
-
220
778
126
110
813
1,162
3,764		 Charity
2021
£’000
432
-
257
1,423
412
-
1,068
2,342
5,934		 Charity
2020
£’000
555
1
220
778
124
110
813
_1,162 _
3,763

£333K (2020: £1,312K ) of Grants payable at 1 April 2020 were paid in the year, and £978K (2020: £662K ) of further grants were provided during the year to 31 March 2021. Payment of grants made is mostly conditional on the balance of funding for property projects being raised by the grant recipient. £208K (2020: £143k ) of accruals and £844K (2020: £855k ) of deferred income balances at 1 April 2020 are included in creditors at 31 March 2021. These should be released in 2021/22.

Page 47

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

15. RESTRICTED FUNDS (GROUP AND CHARITY)

Donor
Purpose
MOD
The Sea Cadet
Corps
Various
Offshore ships and
boats
Various
Sea Cadet training
Various
Cadet expansion
Programme
Various
Sea Cadet unit
grants
Various
Area Sea Cadet
Training
Various
Seafarer training
Various
Bursaries
Corbyn
Memorial
Fund
London Nautical
School
Thomas
Gray
Memorial
Trust
Maritime Science
and Technology
Various
Other		 Balance
1 April
2020
£’000
-
6,793
1,382
4,585
1,313
927
263
325
45
37
74
15,744		 Movement of funds
Income
Expend
-iture
Income/
interest
£’000
£’000
£’000
11,111
11,028
-
1
495
-
367
421
-
-
76
1
790
730
-
157
148
9
375
379
2
36
65
2
-
-
5
-
-
2
-
-
-
12,837
13,142
21		 Transfer
£’000
(83)
-
-
-
-
-
-
-
(83)		 Balance
31
March
2021
£’000
-
6,299
1,328
4,510
1,573
945
261
298
50
39
74
15,377

Page 48

(continued)

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

15. RESTRICTED FUNDS (GROUP AND CHARITY) (2019/20)

Donor
Purpose
MOD
The Sea Cadet Corps
Various
Offshore ships and
boats
Various
Sea Cadet training
Various
Cadet expansion
Programme
Various
Sea Cadet unit grants
Various
Area Sea Cadet
Training
Various
Seafarer training
Various
Bursaries
Corbyn
Memorial
Fund
London Nautical
School
Thomas
Gray
Memorial
Trust
Maritime Science and
Technology
Various
Other		 Balance
1 April
2019
£’000
-
7,252
1,602
3,767
1,294
818
251
113
38
34
74
15,243		 Movement of funds
Income
Expend-
iture
Income/
interest
£’000
£’000
£’000
10,893
(10,893)
-
143
(603)
1
1,476
(1,697)
1
1,253
(439)
4
523
(506)
2
343
(248)
14
259
(249)
2
306
(98)
4
-
-
7
-
-
3
-
-
-
15,196
(14,733)
38		 Balance
31 March
2020
£’000
-
6,793
1,382
4,585
1,313
927
263
325
45
37
74
15,744

Page 49

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

16. ENDOWMENT FUNDS (GROUP AND CHARITY)
Balance
1 April
Donor
Purpose
2020
£’000
Corbyn Memorial
Grants and payments
203
Fund
to members of London
Nautical School
Thomas Gray
Advancement of
97
Memorial Trust
Maritime Technology
and Science
Destitute Sailors
Assisting distressed
60
Fund
merchant seamen
Various
Providing subsidised
478
berths and awards to
Sea Cadets
Expendable
Held for general
14,198
Endowed Funds
purposes
15,036
Balance
1 April
Donor
Purpose
2019
£’000
Corbyn Memorial
Grants and payments
216
Fund
to members of London
Nautical School
Thomas Gray
Advancement of
104
Memorial Trust
Maritime Technology
and Science
Destitute Sailors
Assisting distressed
64
Fund
merchant seamen
Various
Providing subsidised
509
berths and awards to
Sea Cadets
Expendable
Held for general
15,548
Endowed Funds
purposes
16,441		 Movement
Investment
returns
£’000
26
13
8
61
2,255
2,363
Movement
Investment
returns
£’000
(13)
(7)
(4)
(31)
(1,285)
(1,340)		 of funds
Donations/
(transfers)
£’000
-
-
-
-
-
-
of funds
Donations/
(transfers)
£’000
-
-
-
-
(65)
(65)		 Balance
31 March
2021
£’000
229
110
68
539
16,453
17,399
Balance
31 March
2020
£’000
203
97
60
478
14,198
15,036

(continued)

Page 50

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

16. ENDOWMENT FUNDS (GROUP AND CHARITY) (CONTINUED)

The transfers from endowed funds to unrestricted funds in 2020 are the element of the group and charity’s investment returns that are used to fund the on-going operations of the group and charity over and above investment income actually received.

17. ANALYSIS OF NET ASSETS BETWEEN FUNDS

GROUP

2021
Restricted funds
Endowment funds
Designated funds
Unrestricted funds
Total		 Intangible
& tangible
fixed
assets
£’000
9,503
-
-
570
10,073		 Investments
£’000
-
17,399
-
2,106
19,505		 Net current
assets and
long term
liabilities
£’000
5,874
-
837
(958)
5,753		 Total
£’000
15,377
17,399
837
1,718
35,331
2020
Restricted funds
Endowment funds
Unrestricted funds
Total
CHARITY
2021
Restricted funds
Endowment funds
Designated funds
Unrestricted funds
Total
(continued)		 10,072
-
531
10,603
Intangible
& tangible
fixed
assets
£’000
9,503
-
-
570
10,073		 -
15,036
7,058
22,094
Investments
£’000
-
17,399
-
2,101
19,500		 5,672
-
(5,819)
(147)
Net current
assets and
long term
liabilities
£’000
5,874
-
837
(958)
5,753		 Page 51
15,744
15,036
1,770
32,550
Total
£’000
15,377
17,399
837
1,713
35,326

NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

17. ANALYSIS OF NET ASSETS BETWEEN FUNDS (CONTINUED)

2020
Restricted funds
Endowment funds
Unrestricted funds
Total		 Intangible
& tangible
fixed
assets
£’000
10,072
-
531
10,603		 Investments
£’000
-
15,036
7,063
22,099		 Net current
assets and
long term
liabilities
Total
£’000
£’000
5,672
15,744
-
15,036
(5,859)
1,735
(187)
32,515

The group’s liquid free reserves (see reserves policy) total £1,897K (2020 : £1,239K ) (unrestricted investments less unrestricted net current assets and long term liabilities).

18. TAXATION

No corporation tax is payable due to the charitable status of the activities of the charity.

19. PENSION SCHEMES (GROUP AND CHARITY)

A number of former employees of the former Marine Society and of the Sea Cadet Association are members of the Merchant Navy Officers Pension Fund - MNOPF (New Section). The fund is active, though closed to future accrual on 31 March 2016. However, the MSSC continues to have a share of the net deficit in the fund.

The triennial valuation as at 31 March 2018 valued assets in the scheme at £3,278M and the liabilities at £3,351M giving a rise to a scheme wide deficit of £73M. As at the date of the 2018 valuation, the value of future instalments of 2009 and 2012 deficit contributions stood at £64M, resulting in an adjusted deficit of £9M.

The Trustees have put a recovery plan in place in respect of the MSSC’s share of the 2009-12 deficits, involving additional contributions to 30 September 2023. MSSC’s share of the liability has now been paid.

All current employees are members of a contract based defined contribution scheme. £400K (2019: £370K) was paid by the charity during the year of which £34K (2019: £32K ) was outstanding at the year end and included in creditors.

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NOTES TO THE ACCOUNTS (CONTINUED) YEAR ENDED 31 MARCH 2021

20. RELATED PARTY TRANSACTIONS (CHARITY)

The Chief Executive Officer is an ex officio trustee/director of the Royal Albert Dock Trust and (up to 23 June 2021) also of Youth United Foundation (YUF). During the year, the charity received grant income totalling £nil (2019: £421k ) and rental income from YUF of £13K (2019: £29K ). £2K (2019: £10K ) outstanding at the year end has been received since the year end. During the year, the charity paid rent to the Royal Albert Dock Trust’s London Regatta Centre totalling £18K (2019: £19K ). No amounts were outstanding to the charity at 31 March 2021.

Four of the Trustees of the charity are trustees of Trinity House Maritime Charity. During the year the charity received a grant of £130K (2019: £110K ) from the Trinity House Maritime Charity. No amounts were outstanding to the charity at the year end.

One of the Trustees was appointed Chairman of IFAN maritime in November 2019. They support MSSC on various educational projects, during the year the charity received a grant of £70K (2019: £nil ).

One of the Trustees is an Associate Member of Stelios Philanthropic Foundation who has supported two Sea Cadets projects, £60k for RS21s and £30k for On the Water.

Four Trustees, the Chief Executive Officer and another Director are members of the Company of Shipwrights who have funded £14k for bursaries.

The charity was paid £4K (2019: £4K ) for management and accounting services from its subsidiary undertaking MSSC (Trading) Limited (note 8). A charitable donation amounting to £37K (2019: £nil ) was received from the subsidiary. The charity anticipates receiving a charitable donation from the subsidiary of £35K in 2020/21 based on profits earned by the company in 2019/20. At the year end, the charity owed £1K (2019: due £3K ) to the subsidiary and this amount is included in charity creditors, (2019: charity debtors )

One Trustee of the charity, Simon Figgis, and two employees, Jenny Howard and Paul Wilkinson, are directors of MSSC (Trading) Limited. Two Trustees, Robert Woods CBE and Louise Bennett, are directors of the Sea Cadet Association.

21. STATUTORY INFORMATION

The Marine Society and Sea Cadets (MSSC) is a charity registered with the Charity Commission in England and Wales (registration number 313013) and with the Office of the Scottish Charity Regulator (registration number SC037808). The registered office is 202 Lambeth Road, London SE1 7JW.

Page 53

COUNCIL MEMBERS AND EXECUTIVE MANAGEMENT YEAR ENDED 31 MARCH 2021

Council members and executive management during the year, and as at the date of this report, were :

PRESIDENT: Admiral Sir Mark Stanhope GCB OBE DL

COUNCIL MEMBERS

The Council members who served during the year were:

Robert Woods CBE (Chair)[ 2 ] (retired 25 November 2020) Jeremy Penn[1, 2, 3, ] (elected 25 November 2020) Liz Cassidy (Vice Chair)[1, 2 ]

Dr Louise Bennett[1, 2, 3] Simon Figgis[1, 3] Dr Sheila Fitzpatrick MBE[3, 5 ] (retired 13 October 2020) Lt Cdr (SCC) Jason Kinghorn RNR[2, 3] Alan Marsh MBE FICS[1] Nick Mason[1, 2] John May OBE DL[2, 3] Sir Alan Massey KCB CBE[1] Captain Ian McNaught CVO MNM Commodore W M Walworth CBE MNM[4, ] (retired 13 October 2020) Vice Admiral Sir Jonathan Woodcock KCB OBE[2, 3] David Derbyshire[ 3] Léonie Austin[2 ] David Dingle CBE[1,2 ] (elected 13 October 2020) Jonathan Robertshaw[1,2 ] (elected 13 October 2020) Michael Schofield[2, 3 ] (elected 13 October 2020) Gareth Hampton – Youth Committee member (appointed 22 December 2020)[1,2] Laurelle Brant - Youth Committee member (appointed 22 December 2020)[2,3]

Council Members are members of the following committees as annotated above.

EXECUTIVE MANAGEMENT

Chief Executive Officer Captain Sea Cadets & Director of Operations* Director of Finance & Digital and Company Secretary Director of Policy & Young People Support Director of Volunteer Support & Outreach Director of Sea Cadet Learning Director of Fundraising and Communications Director of Human Resources Director of Maritime Training and Development

Martin Coles FRICS ACIArb Captain Philip Russell RN Jenny Howard Veronika Neyer Paul Wilkinson Heather Williams Daniel McAllister Petrina Brooker Darrell Bate (joined 1[st] September 2020)

Page 54

PROFESSIONAL ADVISERS YEAR ENDED 31 MARCH 2021

The principal professional advisers during the year were:

Auditors: Mazars 2[nd] Floor, 6 Sutton Plaza, Sutton Court Road, Sutton SM1 4FS Bankers: Barclays Bank plc 1 Churchill Place London E14 5HP National Westminster Bank plc 250 Regent Street London W1B 3BN Royal Bank of Scotland plc 62-63 Threadneedle Street London EC2R 8HP Investment Advisers and Custodians: Investec Wealth & Investment Ltd 2 Gresham Street London EC2V 7QN KW Investment Management Ltd 13 Austin Friars London EC2N 2HE Legal advisers: Farrer & Co LLP 66 Lincoln’s Inn Fields London WC2A 3LH Moon Beever 21A John Street London WC1N 2BF Russell Cooke 2 Putney Hill London SW15 6BA Insurance Brokers: Arthur J. Gallagher Insurance Brokers The Walbrook Building 25 Walbrook London EC4N 8AW Pension Advisers: Mercer Limited 1 Tower Place West, Tower Place, London, EC3R 5BU Registered Office: 202 Lambeth Road London SE1 7JW ms-sc.org

Page 55