DAWNFRESH_HOLDINGS_LIMITE - Accounts
DAWNFRESH_HOLDINGS_LIMITE - Accounts
The Directors present their strategic report for the period ended 29th March 2020 where a substantial step change improvement has been made in business performance compared with the previous year. While group turnover is broadly in line with the previous year gross margin has improved by 2.1% to 8.2% (LY 6.1%) and overhead costs reduced by £2.3m. Reported losses for the year were £(5.8)m from £(8.9)m in the prior year.
Reported group turnover for 2019/20 reduced by 0.9% to £72.4m, reflecting customer mix changes in UK retail and growth of the Export business. Sales to Export customers have grown by 26% against the prior year. In UK retail and B2B, the company saw a 5% reduction in sales. Gross profit was £5.9m from £4.5m in the previous year.
Over the course of 2019/20 the principal focus of the business was to drive benefit from the major investments made in the previous year across our processing facilities at Uddingston and Arbroath, expanding our customer base in export markets in preparation for a 20% increase in harvest output from our Farming operations, and to reduce overheads costs through the consolidation of our pickling operations at Grantown into the existing footprint at Arbroath whilst also reducing central management costs.
Post year end, the business faced the challenge of Covid-19. A Covid Response Team was mobilised with the main aim of protecting the health and safety of employees. A wide range of measures were implemented to ensure social distancing throughout the workplace and the majority of office staff transitioned to working from home. The impact on sales has varied in quantum across UK retail, B2B and export markets. Export markets have been most challenging with reduced air freight availability and increased costs.
New Product Development
Dawnfresh invest heavily in NPD with an extensive team of chefs, technologists and trend analysts to support existing customers as well as accessing new key customers. Key successes during the year include the onboarding of two new UK retail customers providing a further platform for our NPD team.
Investment
During the year we continued to invest in our fixed assets and working capital of both our farming and processing businesses, with prioritisation based on regulatory compliance, health and safety and projects achieving minimum payback criteria. Asset investment totalled £2.2m in the year, evenly distributed between our farming and processing operations.
Within farming we continued to invest in our people and fish husbandry and welfare standards to remain the largest global supplier of Scottish Loch Trout. Turnover associated with our trout farms grew by 2.5% in the year. Notable investment included the purchase of a boat and equipment to measurably improve harvesting operations at Loch Etive and investment to safeguard water quality at one of our juvenile sites.
Investment of £1.2m was made within our processing facilities. Payback investment was made into packaging automation, increasing throughput speed and quality and driving labour efficiencies.
Our people
We continue to invest in our people and build our employer brand within the locations we operate through reward, recognition and training. This has resulted in a diverse and motivated workforce where this investment has supported the significant business growth. The Group is committed to remuneration in line with the National Living Wage, and it also continues to be recognised for its investment in people. Dawnfresh Seafoods Limited currently holds Investors in People Silver award.
Finance
The Group has ambitious plans to grow, and with the continued support of its shareholders remains financially secure.
The Group has continued to diversify its sources of funding. Consequently, the Group enjoys a broader base of external finance providers and, with net external loans and borrowings of £6.2m, these are comfortably covered by the balance sheet net asset position of £19.9m.
Ongoing impact of Covid 19. The company continues to take action to safeguard employees and to minimise disruption to the business. Sales trends and market data continue to be analysed to gain insight into changes in consumer behaviour.
The Group’s farms operate in a natural environment, where business performance can be potentially impacted by nature, in the form of weather patterns, as well as fish health risks. Our continued investment into equipment and high standards helps the company manage these natural risks. In addition, we continue to invest significantly in training and development for our staff, including graduate and NVQ programmes, to help us increase the wealth of skills and experience we already have with which to manage our business risk and opportunities.
The Group operates in the highly competitive UK food sector as well as internationally. The company looks to mitigate market share and margin challenges by expanding its customer base, and by continued focus on providing its customers with consistently high quality products, combined with innovative new product development of added value products.
The company uses a number of key performance indicators to measure and manage performance and progress. Of these the Directors consider turnover, gross profit, gross profit % and net profit/(loss) to be the most representative of the company’s progress as defined below.
2019/20 2018/19
£’000 £’000
Turnover 72,369 73,034
Gross profit 5,943 4,474
GP% 8.2% 6.1%
Net (loss) (5,758) (8,914)
In addition to the KPI’s above, the Directors internally monitor a suite of operational kpi’s including, but not limited to, productivity, yields, revenue delivery, staff attendance, health and safety and environmental matters. The Directors are satisfied with the progress being made in these key areas.
Section 172(1) of the Companies Act 2006 provides that a director of a company must act in a way that (s)he considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to various other stakeholder interests – below are the six key factors:
the likely consequences of any decision in the long term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the Company.
Stakeholder engagement
1. Shareholders
Shareholders provide funds that help us run and grow our business and they expect a sustainable return.
Executive meetings are held weekly with our shareholder, focused on financial and trading updates. Formal chaired, minuted meetings are held monthly where strategic, operational and financial matters are reviewed and discussed, providing a platform for well-informed decision making.
2. Customers
Our customers are our lifeblood whom we value highly. They provide the opportunities which provides gainful employment for our people and a return for our shareholders.
Service to our customers is of prime importance, and our Account Managers systematically seek feedback on how we are performing. A large number of our customers have supplier performance reporting which covers order fulfilment, accuracy, timeliness, quality and consumer complaints.
We also interact with our customers through joint business plans, new product development, promotional planning and tendering.
3. Our people
Our people provide the external services to our customers and support each other in that common goal. We are passionate about nurturing a highly motivated, well-trained, team-orientated workforce.
Health & Safety is of paramount importance in our business, with a significant emphasis on in house training and quality PPE. With the particular challenge of Covid 19 a significant number of changes have been made to safeguard our people and our most recent Employee Survey indicated that this had been recognised by our workforce .
4. Suppliers
We fully support the collaboration with our suppliers as it reduces the risk in our supply chain and strengthens the platform from which we provide a service to our customers.
Regular meetings are held between our Procurement function and a number of key suppliers. Across the entire supply base, contact is maintained to optimise order quantities, delivery patterns and lead times. Discussions are also maintained to understand market price movements, particularly with raw ingredients, and similarly to understand latest developments in packaging innovation.
Future Developments
The Directors consider that by continued focus on growing both its chilled seafood processing and fish farming businesses it will further enhance the reputation of the Dawnfresh Group with its customers and suppliers, and provide accelerated future growth and prosperity for the Group and its employees.
Thanks
The Chairman and Directors would like to thank everyone at Dawnfresh for their continuing hard work, support and commitment during a further year of transition and transformation. We are confident that the continued success of the business developments and growth will deliver further improvement in the coming financial years.
On behalf of the board
The directors present their annual report and financial statements for the period ended 29 March 2020. The current period covers the period from 1 April 2019 to 29 March 2020. The comparative period covers the period from 26 March 2018 to 31 March 2019.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The results for the period are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The Directors recognise that we have a responsibility to the environment and endeavour to be as environmentally friendly as possible. We recognise our responsibility to mitigate the impact of our operations on climate change and are taking steps to reduce this wherever possible.
Methodology
The footprint was calculated in accordance GHG Reporting Protocol – Corporate Standard. Energy consumption data has been converted into carbon emissions using published emissions factors. Ancillary guidance was taken from HM Government Environmental Reporting Guidelines. For any conversions to kWh from a specified quantity of fuel, the gross calorific value was used.
SECR Mandatory Measurable | Results |
Purchased Electricity Consumption (kWh) | 10,227,171 |
Gas Consumption (kWh) | 3,098,366 |
Transport Fuel Consumption (kWh) | 3,386,514 |
Transport Fuel Consumption from business travel (rental cars or employee owned vehicles) (kWh) | 232,818 |
Total Energy Consumption used to calculate emissions (kWh) | 16,944,869 |
Emissions from combustion of gas (Scope 1) (tCO2e) | 570 |
Emissions from combustion of fuel for transport purposes (Scope 1) (tCO2e) | 924 |
Emissions from business travel in rental cars or employee-owned vehicles where company is responsible for purchasing the fuel (Scope 3) (tCO2e) | 58 |
Emissions from purchased electricity (Scope 2) (tCO2e) | 2384 |
Fugitive Emissions (Scope 1) (tCO2e) | 266 |
Total Gross CO2e based on above (tCO2e) | 4202 |
Intensity ratio: tCO2e gross / tonnes of fish produced | 0.59 |
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
We have audited the financial statements of Dawnfresh Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 29 March 2020 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).
give a true and fair view of the state of the group's and the parent company's affairs as at 29 March 2020 and of the group's loss for the period then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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' report for the financial period 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 identified material misstatements in the strategic report and the directors' report.
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:
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' responsibilities statement, 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 group's and 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 group or the parent 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.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 company has not presented its own profit and loss account and related notes. The company’s loss for the period was £40,000,000 (2019 - £0 ).
Dawnfresh Holdings Limited (“the company”) is a limited company domiciled and incorporated in Scotland. The registered office is Bothwell Park Industrial Estate, Uddingston, Glasgow, G71 6LS.
The group consists of Dawnfresh Holdings 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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of Dawnfresh Holdings Limited and all of its subsidiaries (ie entities that the group 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 29 March 2020. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
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 will continue to have access to adequate resources to continue in operational existence for the foreseeable future, including support from its shareholder to fund the business. In making this assessment, the directors have taken into account the impact of Covid-19 on the business to date and their view on its likely future impact. The directors recognise that forecasts are by nature future looking and therefore may vary from actual results. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover principally represents amounts received or receivable for the sale of fish and seafood.
Turnover is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Turnover is stated net of trade discounts, settlement discounts and volume rebates.
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 statement of comprehensive income.
Included within land and buildings is land of £3,108,412 which is not depreciated.
Equity investments 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.
In the parent company financial statements, investments in subsidiaries 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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 certain 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 method 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 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 the statement of comprehensive income.
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 the statement of comprehensive income.
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 certain creditors and other loans 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 receipts 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.
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.
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 statement of comprehensive income 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 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 statement of comprehensive income, 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 if, and only if, there is 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 assets 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 statement of comprehensive income 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 income 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 asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
R&D tax credits are also recognised at the fair value of the asset received or receivable when there is reasonable assurance that claims will be successful. R&D tax credits are recognised in other operating income.
Grants towards capital expenditure are credited to deferred income and are released to the statement of comprehensive income over the expected useful life of the assets. Grants towards revenue expenditure are released to the statement of comprehensive income as the related expenditure is incurred.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the statement of comprehensive income for the period.
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.
In making their going concern assessment, the Directors recognise that forecasts are by nature future looking and therefore may vary from actual results.
Valuation of stock (2020: £11.7m (2019: £12m))
The nature of the fish stocks means that the volume of biological assets at any point in time is an estimate. Sampling techniques are used to monitor average fish size which is then extrapolated over the total biomass in the water to determine growth and therefore an estimate of volume. Technical monitoring equipment is used to review average fish size at high biomass sites on a daily basis. Mortalities are removed and the resultant cost charged to the statement of comprehensive income on an ongoing basis. Whilst uncertainty is inherent deviations from expected volume at the point of harvest are monitored and found to be relatively accurate.
Other stocks of work in progress and finished goods are valued on a standard cost basis incorporating a proportion of fixed and variable overheads. There is an element of estimation involved in the costing of inventory due to potential for variability in the actual cost of production compared to the standard cost of production. Testing is carried out periodically to ensure that the cost of inventory is not in excess of its net realisable value.
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Related to this is the period over which government grant income is recognised where it relates to capital expenditure.
Where there are indicators of impairment of individual assets, impairment tests are performed. These are based on a calculation of either fair value less costs to sell or value in use. Fair value is based on available data from a similar arms length sales transaction or similar observable market data for comparable assets. Value is use is based on a discounted cash flow model based on the budgeted cash flows for significant cash generating units. Due care is taken in determining the discount rate which can have a significant impact on the recoverable amount attributable to an asset.
The requirement for any provision for bad debts is based on an assessment of the objective evidence available suggesting that a debtor may not be recoverable. Although due care is applied to this process there is an element of subjectivity involved.
There are estimates, assumptions and judgements relating to the determination of carrying value of unlisted investments. In determining this amount, the Group considers whether fair value can be assigned and if so this is based on the amount for which an asset can be exchanged between knowledgeable willing parties in an arm’s length transaction. Where fair value cannot be reliably measured the asset is carried at cost less any provision for impairment. Judgements are required in determining any impairment provision to be applied. In the current year, the directors prepared a valuation model of the Farming business. The nature, facts and circumstance of the inputs of this calculation are subjective and drives the valuation methodology.
An analysis of the group's turnover is as follows:
Exceptional items are costs incurred during a re-structure of the group, largely in relation to redundancy costs.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2019 - 2).
The actual charge for the period can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
The company’s investment in its subsidiaries is stated at historic cost less impairment, which is the lower of cost and the directors’ estimate of its net recoverable value. Whilst the aggregate net assets of the company’s subsidiaries are lower than the carrying value of the investment, the directors believe that the investment is fairly stated at cost less impairment.
Details of the company's subsidiaries at 29 March 2020 are as follows:
The registered office of all subsidiaries, with the exception of Dawnfresh Projects Limited, is Bothwell Park Industrial Estate, Uddingston, Lanarkshire, G71 6LS.
The registered office of Dawnfresh Projects Limited is C/O Grasphskill Limited, Pheonix Works Birks Road, Cleator Moor, Cumbria, CA25 5HU.
Trade debtors are stated after provision for impairment of £7,860 (2019: £30,192).
Obligations under finance leases are secured over the assets to which they relate.
Obligations under finance leases are secured over the assets to which they relate.
The bank overdraft is secured by a bond and floating charge over the assets of the group.
Other loans represent supplier finance balances, marine mortgages, shareholder loans and loans received from other related parties. Marine mortgages of £1,379,421 (2019 - £914,525) are secured against the underlying vessels to which the loans relate and bear interest of 9% per annum. One mortgage agreement has a term period of 8 years and the other has a term period 5 years.
Finance lease payments represent rentals payable by the company or group for certain assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Deferred income is included in the financial statements as follows:
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.
B Ordinary shares have no voting rights attached. Preference shares have no voting rights attached except on the proposal of certain resolutions to either wind up the company or to vary the rights of the Preference shares.
Share premium represents amounts received for equity instruments in excess of their par value.
Profit and loss reserves represent accumulated comprehensive income/(expenditure) for the year and prior periods less dividends paid.
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:
Amounts contracted for but not provided in the financial statements:
The remuneration of key management personnel is as follows.
During the period the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
The ultimate controlling party is A E H Salvesen CBE CA MBA.