DAWNFRESH_FARMING_LIMITED - Accounts

The directors present the strategic report for the period ended 28 March 2021.

During 2020/21 Dawnfresh Farming continued its focus on large Scottish Loch Trout with harvest volume of 5.1mt representing a 10.2% increase from the previous year. While this double digit growth represents progression, the impact of COVID on labour availability during the summer of 2020 meant that feeding activities were curtailed from planned levels, with an estimated impact on growth and harvesting of ~0.3mt. Working within consents, the group has targeted a sustainable level of harvesting at 5.5mt per annum.

Key successes for Dawnfresh Farming have been continued high levels of fish health, in particular sea lice control in our seawater site, while the increases in harvest output have continued to validate the businesses strategy of growing all fish to a single target weight.

Turnover increased to £20.6m (2020 - £16.5m) reflecting the increased harvest volumes, but more significantly, a change to the methodology for transfer price alignment with market value. This is further explained under KPIs below.

Operating profit was £2.9m (2020 - operating loss, £2.4m). Improvement in result driven by increased volumes and prudent cost management, but mainly as a result of the changes in significant accounting estimates described below.

In the year to March 2022, the business encountered some significant sealice challenges at its Loch Etive farm requiring 800t of fish to be harvested across a two week period in August 2021. This had a negative consequence on overall harvest tonnage for the full year, and some one off costs related to additional boat hire and clearance costs. However, with improving sales prices, the business remained profitable.

On 28th February 2022, Dawnfresh Farming’s parent company (Dawnfresh Seafoods Limited) and ultimate parent company (Dawnfresh Holdings Limited) were placed into administration. Dawnfresh Seafoods had been buying and processing all the harvest tonnage produced by Dawnfresh Farming. As a profitable and solvent company, Dawnfresh Farming continues to trade and contracts were arranged with 3rd party processors to gut the fish. In addition, sales were arranged direct to customers in UK Retail and export companies in US, Canada, Europe and Asia through key sales personnel transferred from Dawnfresh Seafoods to Dawnfresh Farming.

The company'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 directors have prepared the financial statements on a going concern basis following a detailed assessment of the company’s liquidity and having effectively managed their cashflow by securing £2million loan funding from a director at March 2022. The directors have prepared detailed trading projections to the end of September 2023 based on current trading conditions and applied sensitivities to key assumptions. The sensitivities include sale and feed prices, along with harvest volumes.  These projections provide the directors with a reasonable expectation that the company has funding in place to continue as a going concern for a minimum period of 12 months from the date of authorising the financial statements.  In making this assessment, the directors acknowledge that forecasts are by nature forward looking and therefore may vary from actual results.

An Information Memorandum has been prepared to market the business for sale. This has now been provided to various interested parties under NDA and a deadline set for first indicative offers in late September 2022. The business operates as a going concern and has been marketed on this basis with a share sale expected.

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:

2020/21         2019/20

£'000             £'000

Turnover                20,628             16,457

Gross profit             4,966         48

GP %                 24.1%     0.3%

Net profit / (Loss)             2,867             (2,367)

Net assets             6,277         3,409

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.

- Retrospective discount (2021: £1.5m (2020: £5.1m))

Dawnfresh Farming sold all of its harvest volume to its parent company for processing on an internal transfer price basis. For statutory reporting this has been replaced in prior years using a methodology to approximate for an adjustment in the transfer price to an arms length market rate. The methodology used was based around an initial estimate of market price which in each future years reporting was adjusted in line with the annual movement in the Fishpool salmonoid index. Management have now concluded that the market price being calculated under this methodology is no longer representative of the market price being achieved by the business. A methodology has been implemented where the market price adjustment is based on the actual invoice price to the customer, less all conversion and secondary distribution costs. Given this is a change in accounting estimate, adjustment has been applied prospectively and not retrospectively per FRS 102 requirements.

- Management charge (£618k (2020: £1,038k))

In prior years, the results of Dawnfresh Farming have included management charges allocated to it from its parent company. The methodology was to assess the % of cost of each central function and other centrally held costs that were attributable to supporting the Farming operation. This has now been replaced by a methodology which more closely aligns with the costs expected to be borne by the Farming business on a stand-alone basis. Given this is a change in accounting estimate, adjustment has been applied prospectively and not retrospectively per FRS 102 requirements.

Future Developments

In April 2022 Dawnfresh Farming was granted SEPA approval in relation to the development of four fish farms in the Clyde basin. If developed, these could provide for 7.5mt of additional output. The business will now move onto the Planning Application stage with a view to establish this opportunity as efficiently as possible.

On behalf of the board

The directors present their annual report and financial statements for the period ended 28 March 2021. The current period covers the period from 30 March 2020 to 28 March 2021. The comparative period covers the period from 1 April 2019 to 29 March 2020.

The principal activity of the company continued to be that of fish farming and the sale of fish.

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.

The directors who held office during the period and up to the date of signature of the financial statements were as follows:

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company'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 future developments.

The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

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

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Dawnfresh Farming Limited (the 'company') for the period ended 28 March 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 28 March 2021 and of its profit 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 responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The 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 contained within the annual report. 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. 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 this gives rise to a material misstatement in the financial statements themselves. 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 our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters 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, or returns adequate for our audit have not been received from branches not visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of 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 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We obtained an understanding of the legal and regulatory frameworks that are applicable to the company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

• UK GAAP

• Companies Act 2006

• VAT and Corporation Tax legislation

• Heath and Safety legislation

• Global G.A.P certification

• RSPCA

We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, board meeting minutes, internal health and safety records and the outcome of food and safety audits, as well as relevant correspondence with regulatory bodies.

We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.

The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

• Reviewing minutes of meetings of those charged with governance;

• Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;

• Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias.

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. 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.

Dawnfresh Farming Limited is a private company limited by shares incorporated in Scotland. The registered office is Suite 2, Ground Floor Orchard Brae House, 30 Queensferry Road, Edinburgh, United Kingdom, EH4 2HS.

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 directors have prepared the financial statements on a going concern basis following a detailed assessment of the company’s liquidity. The directors have effectively managed their cashflow by securing £2million loan funding from truea director at March 2022. The directors have prepared detailed trading projections to the end of September 2023 based on current trading conditions and applied sensitivities to key assumptions. The sensitivities include sale and feed prices, along with harvest volumes.  These projections provide the directors with a reasonable expectation that the company has funding in place to continue as a going concern for a minimum period of 12 months from the date of authorising the financial statements.  In making this assessment, the directors acknowledge that forecasts are by nature forward looking and therefore may vary from actual results.

An Information Memorandum has been prepared to market the business for sale. This has now been provided to various interested parties under NDA and a deadline set for first indicative offers in late September 2022. The business operates as a going concern and has been marketed on this basis with a share sale expected.

Turnover represents amounts received or receivable for the sale of fish and is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch delivery), 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.

Fish farm leases

Fish farm leases and associated rights over areas of loch were initially recognised at cost, which was nil. FRS 102 prevents these from being carried at fair value because the volume of sale transactions is insufficient to qualify as an active market for valuation purposes. With the difficulty and cost of acquiring new sites being high, the directors are satisfied that there is significant value attached to these assets.

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

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 credited or charged to the statement of comprehensive income.

At each reporting period end date, the company 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.

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.

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.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. The cost of feed stocks comprise direct costs and the appropriate direct and indirect overheads that have been incurred in bringing the stocks to their present location and condition.

The cost of fish stocks comprise the cost of purchase, feed, labour, depreciation and production overheads.

Costs of fish stock relating to mortalities are expensed to the statement of comprehensive income as they occur. The cost is based on a normal production level.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in the statement of comprehensive income. Reversals of impairment losses are also recognised in the statement of comprehensive income.

Cash at bank and in hand are basic financial assets and include cash in hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with 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. 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 company 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 company after deducting all of its liabilities.

Basic financial liabilities, including certain creditors, bank and other loans and loans from fellow group companies are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.

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 company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company 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 company.

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 company’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 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.

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 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 leases 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 company’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.

In making their going concern assessment, the Directors recognise that forecasts are by nature future looking and therefore may vary from actual results.

Historically, the methodology for quantifying this was to assess the % of cost of each central function and other centrally held costs that were attributable to supporting the Farming operation. This has now been replaced by a methodology which more closely aligns with the costs expected to be borne by the Farming business on a stand-alone basis.

The directors carry out an annual review of the transfer price of large trout between Dawnfresh Farming Limited and Dawnfresh Seafoods Limited. The proposed adjustment to the transfer price reflects the actual price per kilo in the year for fish, less all conversion and secondary distribution costs. This is a change in methodology from the prior year where this was quantified by taking the prior year transfer price after retrospective discount adjustment and applying the % movement year on year in the Salmon market price per the NASDAQ exchange.

Since the current year methodology is based on the actual sales prices achieved by the business and not an estimate based on market price, this revised methodology is deemed to give a more accurate estimate. This revised methodology has increased the transfer price from £3.65 per kilo to £4.64, in turn causing a significant reduction in the retrospective discount.

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 expected volumes are found to be relatively accurate.

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 in 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.

An analysis of the company's turnover is as follows:

Grants received represent amortisation of capital grants. Further details on the capital grants has been disclosed at Note 16.

Auditors' remuneration in the current year has been borne by Dawnfresh Seafoods Limited, the company's immediate parent undertaking.

The average monthly number of persons (including directors) employed by the company during the period was:

Their aggregate remuneration comprised:

None of the directors are remunerated through the company.

The actual charge for the period can be reconciled to the expected charge/(credit) for the period based on the profit or loss and the standard rate of tax as follows:

At the beginning of the period, unutilised losses brought forward were £15.2m. At 28 March 2021, unutilised losses carried forward were £11.5m.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

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 company.

Other loans represent supplier finance balances and marine mortgages. The marine mortgages are secured against the underlying vessels.

Finance lease payments represent rentals payable by the company for certain motor vehicles. 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:

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

Capital contribution reserve represents contributions received in respect of intragroup loan waivers.

Profit and loss reserves represent accumulated comprehensive income/(expenditure) for the year and prior periods less dividends paid.

At the reporting end date the company 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:

At 28 February 2022, Dawnfresh Farming’s parent company (Dawnfresh Seafoods Limited) and ultimate parent company (Dawnfresh Holdings Limited) were placed into administration. Dawnfresh Seafoods purchased and processed all harvest tonnage from Dawnfresh Farming. Dawnfresh Farming continues to operate as a going concern, having established contractual relationships with 3rd party processors for gutting, and the creation of a sales operation for direct sales to customers in UK retail, US, Canada, Europe and Asia. Following the administration, control of Dawnfresh Farming moved from Alastair Salvesen to the administrator of Dawnfresh Holdings Limited.

At 10 March 2022, £2million of loan funding was provided to the company by a director, with £1.95million being received net of costs. This loan is due for repayment at March 2023. Interest is payable on the loan at a fixed rate of 15% per annum payable quarterly in arrears.

During the period the company entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The company is party to a cross corporate guarantee in respect of certain bank borrowings held within the group. At 28 March 2021, these borrowings amounted to £1,581,708 (2020: £146,025).

At the period end, the company's ultimate controlling party was Alastair Salvesen. Following the administration of Dawnfresh Seafoods Limited and Dawnfresh Holdings Limited, the company's ultimate controlling party is now FRP Advisory Trading Ltd.