AquaHarvest Farms (Pty) Ltd Business Plan › Section 18 › Notes to the Financial Projections

18.1 Revenue Recognition Policy

Revenue from the sale of tilapia (whole fish, fillets, and live fish) is recognised at the point of delivery to the customer, when control of the goods has transferred and the Company has a present right to payment. Revenue is measured at the fair value of consideration received, net of trade discounts, volume rebates, and Value Added Tax (VAT) at 15%. Sales to major retailers are typically invoiced on 30-day payment terms, while informal market sales and live fish sales are conducted on a cash-on-delivery basis.

Fingerling revenue is recognised upon delivery and acceptance by the purchasing farmer. Aquaculture tourism revenue (Phase 3) is recognised at the point of service delivery. All revenue is denominated in South African Rand (ZAR).

18.2 Biological Asset Valuation

Biological assets (live fish stock) are measured at fair value less costs to sell in accordance with IAS 41 Agriculture and IFRS for SMEs Section 34. Fair value is determined using a market-based approach, referencing observable market prices for tilapia at equivalent stages of growth. Where market prices are not directly observable for intermediate growth stages, fair value is estimated using a cost-accumulation model adjusted for expected mortality and growth rates.

The fair value gain or loss on biological assets is recognised in the income statement in the period in which it arises. At each reporting date, biological assets are categorised by production stage:

• Fry and Fingerlings (0–80g): Valued at accumulated cost plus proportional fair value increment

• Juvenile Fish (80–300g): Valued at estimated market value less costs to complete grow-out and selling costs

• Market-Ready Fish (300–800g): Valued at current market price less estimated point-of-sale costs (harvesting, transport, packaging)

18.3 Property, Plant & Equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of each asset category:

18.4 Taxation

The Company will be subject to South African corporate income tax at the prevailing rate of 27% (effective from years of assessment commencing on or after 1 April 2023). The following tax-related assumptions have been applied in the financial projections:

• Assessed Loss: The Year 1 projected tax loss of R480,000 will be carried forward and offset against taxable income in Year 2, subject to the provisions of Section 20 of the Income Tax Act

• Section 12B Allowances: Capital expenditure on qualifying manufacturing assets (including RAS equipment) may qualify for accelerated depreciation allowances under Section 12B (40:20:20:20 or 50:30:20 write-off)

• Section 12I Tax Allowance: The Company may qualify for the Section 12I Tax Allowance Incentive Programme for greenfield industrial projects, providing additional investment and training allowances

• VAT: The Company will register as a VAT vendor and charge output VAT at 15% on all taxable supplies. Input VAT on qualifying expenditure will be claimed as input tax credits

• Dividends Tax: Dividends declared to shareholders will be subject to Dividends Tax at 20%, withheld at source

18.5 Working Capital Management

Working capital management is critical for agricultural enterprises with seasonal production cycles. The following assumptions underpin the working capital projections:

18.6 Detailed Revenue Build-Up

The revenue projection is constructed from a bottom-up production volume model, validated against market capacity analysis and benchmarked to comparable South African aquaculture operations:

18.7 Detailed Operating Cost Build-Up

Operating costs have been modelled on a per-unit basis where possible, with fixed overheads escalated at assumed inflation rates. The following table provides a granular breakdown:

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