Annual Report and Accounts 2006 - Optos

Notes to the Consolidated Financial Statements
continued
A reconciliation between tax expense and the product of accounting loss multiplied by Optos’ UK domestic tax rate for the year ended 30 September 2006 is as follows:
2006 2005
$’000 $’000
Corporation tax reconciliation
Loss on ordinary activities before tax (1,100) (2,593)
Loss on ordinary activities multiplied by the rate of corporation tax in the UK of 30% (2005: 30%) (330) (778)
Effects of:
Disallowed expenses 263 199
Unrecognised deferred tax assets 1,102 488
Prior year tax losses utilised against current year profits (834) –
Prior year tax losses now recognised (9,131) –
Effect of higher overseas tax rates (2,977) 91
Adjustment In respect of prior years – (396)
Total tax credit for the year (11,907) (396)
Deferred income tax at 30 September 2006 and 30 September 2005, recognised in the balance sheet, related to the following:
2006 2005
$’000 $’000
Deferred income tax
Tax losses 13,660 1,210
Capital allowances in advance of depreciation (797) (136)
Other timing differences (956) (1,074)
Net deferred income tax asset 11,907 –
Deferred income tax recognised in the income statement, related to the following:
2006 2005
$’000 $’000
Deferred income tax
Tax losses 12,450 229
Capital allowances in advance of depreciation (661) 4
Other timing differences 118 (233)
Deferred income tax credit 11,907 –
Tax losses:
Deferred tax asset balances for gross unused tax losses of approximately $37,000,000 (2005: $33,000,000), arising primarily in the UK, have not been recognised on the
grounds that there is insufficient evidence that these assets will be recoverable. These assets will be recovered when future tax charges are sufficient to absorb these tax
benefits. The continued availability of the tax losses is subject to certain conditions being met and the level of losses not being challenged by the relevant tax authority.
Following a review of future prospects for the US operation, a deferred tax asset has been recognised in respect of historic US tax losses as there is now sufficient
evidence to conclude that these losses will be recoverable in the future.
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Optos plc Annual Report & Accounts 2006