The directors present the strategic report for the year ended 30 September 2020.
The performance of the group in the year was satisfactory albeit sales have continued to be held back by the continuing uncertainty surrounding the terms under which the UK's decision to leave the EU was to be implemented. Sales were somewhat lower than those in the previous year and profits were similar. The group aims to lead in innovation in its markets, to build upon its continuing relationships with customers and develop its through-life maintenance work for the installed fleet of boats around the world.
The Group returned a profit before taxation of £498,854 on turnover of £12,083,614 for the year. The directors believe that significant opportunities exist to develop the business further and continue to actively pursue sales in its existing and new geographical markets and presently has a forward order book of over £70 million.
The emergence of the Covid-19 pandemic during the year and its continued effect following the year end has impacted on operations and the group's supply chain. Action has been taken to protect our workers by organising homeworking wherever possible and observing social distancing and strict hygiene arrangements in the workplace. There has been an unavoidable impact on the business with some orders being deferred and some customers being forced to delay delivery dates due to lockdowns closing their premises. Supply chains have been disrupted and we have experienced some difficulties in obtaining components from suppliers both in the UK and overseas. At the time of writing this report we are looking forward to the removal of all remaining restrictions in the UK and the continued successful global roll out of the vaccine programmes.
The directors and senior management continually monitor the key risks facing the business as well as assessing the controls used for managing these risks.
We are aware that any plans for the future development of the business may be subject to unforeseen future events outside our control. In particular, the group's activities will be affected by the levels of defence spending in the UK and overseas and the continuing effects of the Coronavirus pandemic.
A significant proportion of the group's activities relate to export markets. The decision of the UK to leave the European Union led to considerable uncertainty in the group's European markets but, following the conclusion of discussions with the EU regarding new trading arrangements, this situation has eased.
Firm contracts priced in foreign currencies are managed through the use of appropriate exchange rate hedges.
Financial risk management objectives and policies
The management of the business and execution of the group's strategy are subject to a number of risks including price risk, exchange rate risk, credit risk and liquidity risk. The use of financial derivatives is governed by the group's policies, approved by the board of directors, which provide written principles on the use of such instruments to manage currency exchange and interest rate risks. The group does not use derivative financial instruments for speculative purposes.
Price risk
The group is exposed to price risk on the parts and components which it buys in. Wherever possible, contracts with suppliers are entered into to match the terms and timing of sales orders.
Exchange rate risk
The group can be significantly exposed to financial risks of foreign currency exchange rates as contracts are frequently taken in currencies other than sterling. These exposures are first matched with purchase contracts taken in the same currencies and any remaining exposure is hedged using forward contracts with UK banks.
Credit risk
The group's principal financial assets are bank balances and cash, trade and other receivables. The group's credit risk is primarily attributed to trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. In practice, the group seeks advance payments from commercial customers for its products and obtains letters of credit or similar to cover risks once products are despatched.
Liquidity risk
The group has funded and intends to continue funding its on-going operations and future developments through cash generated from operating activities and secured bank borrowings.
Research and development
During the year the group has undertaken research and development activities as it continues to invest in new designs and to update existing products. The results for the group show research and development expenditure of £95,207 (2019 - £471,547) which has enabled the business to develop innovative products that continue to provide a competitive advantage within the industry
Group management monitors the performance of the operations of each business unit against budgets and forecasts.
KPl's monitored on a daily basis are:
-Order intake and levels of enquiries
-Production progress
-Utilisation of direct labour
-Allocation of designers’ time to projects
-Cash headroom and Borrowings
KPl's measured on a weekly or monthly basis are the above plus:
-Profit and Cash Generation
-Debtor, Creditor and Stock days
-On time Delivery Performance
-Turnover/Profit per employee
-Overtime and absentee rates
-Health and Safety record
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 September 2020.
The results for the year are set out on page 9.
The group profit for the year amounted to £423,970 (2019 - £370,764 excluding minority interest). An interim dividend on the ordinary shares of the company was paid amounting to £nil (2019 - £49,500).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditors, BWM, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group 's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of post-balance sheet events affecting the group, future developments in the business of the group, research and development activities of the group and the financial risk management objectives and policies of the group including the exposure of the group included in the consolidation to price risk, credit risk, liquidity risk and cash flow risk.
We have audited the financial statements of Marine Specialised Technology Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2018 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue .
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit :
the information given in the strategic report and the directors' r eport for the financial year for which the financial statements are prepared is consistent with the financial statements ; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report and the directors' r eport .
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' r esponsibilities s tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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 directors are responsible for assessing the parent company ' s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the year was £261,997 (2019 - £1,246,520 profit).
Marine Specialised Technology Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 2, Atlantic Way, Dempster Buildings, Brunswick Business Park, Liverpool, L4 4BE.
The group consists of Marine Specialised Technology Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling , which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of Marine Specialised Technology Limited and all of its subsidiaries (ie entities that the g roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 30 September 2020 .
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and parent has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Despite the matters set out in the eve nt s after the reporting date note, at the date of approving the financial statements the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group has been able to continue operating throughout the Covid-19 crisis and has a strong future order book in place for the long term together with positive cash flow forecasts for the next 18 months.
Turnover represents amounts receivable for goods and services provided during the year net of VAT and trade discounts.
Revenue is recognised in the period when the material risks and rewards of ownership of the goods have passed to the buyer which would usually be on dispatch of the goods or services or when a pre-determined milestone is reached.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated .
Patent costs are expensed when there is considered to be no future benefit to the group.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Properties whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being their fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value of the land and buildings is usually considered to be their market value.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in profit or loss or a revaluation loss exceeds the accumulated revaluation gains recognised in equity ; such gains and loss are recognised in profit or loss.
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest m ethod unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss , are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future paymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the asset ' s fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease d asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset receive d or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met . Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable . A grant received before the recognition criteria are satisfied is recognised as a liability.
The Job Retention Scheme grant income will be recognised in the period to which the underlying furloughed staff costs relate to.
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the group blended rate applicable to such transactions in accordance with the forward currency contracts in place at the year end.
Group relief
The financial statements have been prepared on the assumption that group relief will be used to facilitate the transfer of corporation tax losses between companies in the group. No compensation is made in respect of any loss relief between companies.
Share capital
Share capital is recorded at the proceeds received, net of direct issue costs and classified as equity.
Distributions to equity holders
Dividends to the company's shareholders are recognised as a liability in the financial statements in the period in which they are approved and paid. These amounts are recognised in the statement of changes in equity.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are assessed on initial acquisition and reassessed periodically to ensure they remain appropriate. They are amended when necessary to reflect current estimates based on technological advancement, future investments, economic utilisation and the physical condition of the assets. Accounting policy note 1.8 sets out the useful economic lives for each class of asset and carrying values of property plant and equipment is shown in note 13.
The group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors management considers factors such as current credit rating, the ageing profile of debtors and historical experience. The carrying amount of trade and other debtors are set out in note 18.
In accordance with specific sales agreements the group is obliged to provide warranty services on both its boat builds and repair work. Those provisions are recognised on completion and despatch of the boat or completion of the relevant repair service and are calculated based on an appropriate percentage of the sales price. The period in which the warranty is provided is pre-determined in the sales agreement however the amount of the provision is estimated by directors using their knowledge and expertise of their products and the industry as a whole. Expenditure relating to boats post sale are captured and reviewed to ensure the provision is at an appropriate level. The carrying amount of warranty provisions is set out in note 24.
The group uses estimates and assumptions in calculating labour rates and overhead absorption rates when valuing work in progress. The labour rates are based on the total labour cost for employees in each division divided by the number of productive hours for each division. The overhead absorption rate is based on the total overheads divided by the total number of productive hours for all divisions.
In the directors’ opinion, disclosing the different classes of business and different markets would be seriously prejudicial to the group’s interest, therefore the group has taken the decision to exclude this analysis from the financial statements.
Turnover represents the manufacture and maintenance of boats and other equipment.
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £33,759 loss (2019 - £48,424 loss).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The directors' remuneration shown above relates to the directors of the parent company only.
Investment income includes the following:
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
The group has unrelieved tax losses carried forward of £193,946 (2019: £83,157), a deferred tax asset of £36,850 (2019: £15,800) relating to these losses has been fully included in the accounts.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Freehold Land and buildings were revalued at £990,000 on 14 May 2019 by Eckersley, independent valuers ( not connected with the company ) on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
The following asse t s are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
Details of the company's subsidiaries at 30 September 2020 are as follows:
Subskimmer Limited is a 100% owned subsidiary of MST Special Products Limited.
On 30 April 2019, Marine Specialised Technology Limited acquired a further 25% of the shares of Specialised Inflatable Technology Limited with a call and put option in respect of purchasing the remaining 25% in 3 years time. This has been treated as an 100% owned subsidiary for consolidation purposes with deferred consideration due of £1.
All of the above companies have been included in the consolidated accounts.
The Specialised Inflatable Technology Limited bank loans of £575,568 (2019: £116,115) with Handelsbanken were secured by a first legal charge over the company's property and its associated assets, together with a debenture over the company's whole assets and undertakings. This loan has paid off the previous loan with Natwest Bank PLC. At the year end £431,491 is repayable at the end of the loan term, with the remaining loan repayable by instalments.
The bank borrowings with Handelsbanken of £nil (2019: £3,710) are secured by a floating charge over the property and undertaking of the company in which the overdraft has arisen.
Finance lease obligations are secured against the assets to which they relate.
The group utilises hedging financial instruments to manage foreign exchange risk and has entered into forward contracts during the year with a commitment to sell predetermined amounts in Euros each month. At the balance sheet date the group has committed to selling a total of €nil (2019: €1,500,000).
The fair value of these derivative contracts at the year end was £nil (2019: £36,180).
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Ordinary class 'A' shares rank equally in all respects with ordinary class 'B' and ordinary class 'C' shares.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Since the year end the continuance of the Covid-19 infection has impacted on operations and the group’s supply chain. The group has continued to trade throughout the lockdown and action has been taken to protect workers by organising homeworking wherever possible and observing social distancing and strict hygiene arrangements in the workplace. It is too early to assess what overall impact the pandemic will have on the business but the group has already seen some customers being forced to defer delivery dates due to lockdowns closing their premises and some difficulties in obtaining components from suppliers both in the UK and overseas. The directors are cautiously optimistic that the effect will be limited if the lockdown of business is eased and we are able to cover any shortfalls in cashflows by using the Government emergency funding schemes. The group has a strong future order book for the long term and positive cash flow forecasts for the next 18 months.
The remuneration of key management personnel is as follows.
The group has taken advantage of the disclosure exemptions to which it is entitled regarding transactions between parent and 100% owned subsidiary companies.