Annual Report and Accounts 2006 - Optos

Notes to the Consolidated Financial Statements
continued
Convertible secured and unsecured loan stock
In November 2001, the Company obtained £1,000,000 of loan stock funding from the Bank of Scotland, convertible at the Bank’s option at a price of 40p per share into
ordinary shares of 1p each. The loan was repayable in 2006 and carried an interest rate 3% above the Bank of Scotland base rate.
In September 2003, the Company obtained £5,000,000 of loan stock funding, convertible at the subscriber’s option at a price of 50p per share into ordinary shares of 1p
each. No interest was payable on this loan stock.
Upon adoption of IAS32/39, on 1 October 2005, the carrying value of the secured loan stock 2006 and unsecured loan stock 2007 was reduced by $1,439,000,
of which $2,744,000 reflects the removal of the original value of the conversion options (which was taken to equity), and the balance of $1,305,000 represents the
imputed interest calculated on an amortised costs basis from date of issue to 1 October 2005 (which is taken to retained earnings). Both the secured loan stock 2006
and unsecured loan stock 2007 were converted into ordinary shares upon flotation, the carrying value at date of conversion was $9,229,000.
Finance lease commitments
Upon placement of P200 equipment at a customer site, the healthcare professional enters into a three-year lease agreement with a third-party provider of vendor
finance. Optos enters into a matching financing agreement with the third-party provider of vendor finance involving the transfer of P200 equipment to the finance
provider with legal title being transferred back to Optos at the end of the period. As the significant risks and rewards of ownership are retained by Optos, the proceeds
received from the third-party providers of vendor finance are recorded as finance lease obligations, which are repayable by instalments and are secured over the
related P200 assets. Optos had finance lease obligations at 30 September 2006 as set out below:
2006 2005
$’000 $’000
Amounts payable:
Within one year 45,649 36,365
Between one and two years 26,843 31,790
Between two and five years 16,144 15,096
88,636 83,251
Less: finance charges allocated to future periods (7,476) (7,168)
81,160 76,083
Finance leases and hire-purchase contracts are shown as:
Current 40,940 31,587
Non-current 40,220 44,496
81,160 76,083
The weighted average outstanding lease term is 20.8 months (2005: 21.9 months). The weighted average effective borrowing rate for 2006 was 8.4% (2005: 6.9%).
All leases are on a fixed repayment term and no arrangements have been entered into for contingent rental payments.
16 OPERATING LEASE COMMITMENTS – MINIMUM LEASE PAYMENTS
At 30 September 2006, the Group had commitments under non-cancellable operating leases as follows:
2006 2005
Land and Buildings $’000 $’000
When the lease expires:
Within one year 27 22
In the second to the fifth year 900 626
After the fifth year 3,420 2,622
4,347 3,270
The Group has entered into four commercial leases on property, in June 1999, August 1999, December 2005 and May 2006. The lease entered into on 12 August 1999
is for a period of 20 years, the June 1999 lease for 10 years , the December 2005 lease for 10 years and the May 2006 lease for a period of 5 years. There are no renewal
options or escalation costs included within the contracts. There are no restrictions placed upon the lessee by entering into these leases.
Management considered the operating leases on transition and concluded that none should be considered finance leases under IFRS.
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Optos plc Annual Report & Accounts 2006