Annual Report and Accounts 2006 - Optos

Notes to the Consolidated Financial Statements
continued
23 RECONCILIATIONS OF PREVIOUSLY REPORTED UK GAAP TO IFRS
For all periods up to and including the year ended 30 September 2005, the Group prepared its financial statements in accordance with United Kingdom generally
accepted accounting practice (“UK GAAP”). These financial statements for the year ended 30 September 2006 are the first the Group is required to prepare in
accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. The first results prepared on an IFRS basis were contained in
the Group’s unaudited results announcement for the six months ended 31 March 2006.
As a general rule, the Group is required to apply IFRS applicable as at 30 September 2006 retrospectively to determine its restated financial position as at 30 September
2004 (“the transition date”). The significant accounting policies meeting those requirements are outlined in Note 2. In preparing these financial statements, the Group
has started from an opening balance sheet as at 1 October 2004, the Group’s date of transition to IFRS, and made those changes in accounting policies and other
restatements as required by IFRS1 for the first-time adoption of IFRS. This Note summarises the principal adjustments made by the Group in that restatement.
However, under IFRS1 “First-time adoption of IFRS”, there are certain exemptions to this general principle that the Group has adopted, as follows:
Share-based payments
Optos has applied IFRS2 “Share-based Payment” retrospectively only to equity-settled awards that had not vested as at 1 October 2004 and were granted on or after
7 November 2002.
Financial instruments
Optos has elected to apply IAS32 “Financial Instruments: Disclosure and Presentation” and IAS39 “Financial Instruments: Recognition and Measurement” prospectively
from 1 October 2005. Consequently, the relevant information for 2005 does not reflect the impact of these standards and is accounted for on a UK GAAP basis.
Cumulative foreign currency translation differences
Optos has elected to deem the cumulative differences on the retranslation into sterling of the Group’s net investment in foreign operations to be $nil as at
30 September 2004. As a result, in the event of the subsequent disposal of a foreign operation, any gain or loss on disposal will only include cumulative translation
differences arising on or after 30 September 2004.
The transition from UK GAAP to IFRS has no effect on the cash flows generated by the Group. The IFRS cash flow statement is presented in a different format from that
reported under UK GAAP, with cash flows split into three categories – operating, investing and financing. The reconciling items between the UK GAAP presentation
and the IFRS presentation have no net impact on the cash flows generated. In preparing the cash flow statement under IFRS, cash and cash equivalents include cash
in hand, deposits available on demand and bank overdrafts.
23(a) Effect on consolidated profit and loss account for the year ended 30 September 2005
The effect of the changes to the Group’s accounting policies on the consolidated profit and loss account was as follows:
Impact of Transition to IFRS
Under UK
Accounting Research and Government NI on Share Share Holiday Under
Standards Development Grant Depreciation Options Options Pay Accrual IFRS GAAP
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Revenue 48,399 – – – – – – 48,399
Cost of sales (16,924) – – (32) – – – (16,956)
Gross profit 31,475 – – (32) – – – 31,443
Other income 321 – – – – – – 321
Selling and distribution costs (9,689) – – – – – – (9,689)
Administrative expenses (20,146) 2,635 (88) – – – (23) (17,622)
Operating profit before
share-based payments 1,961 2,635 (88) (32) – – (23) 4,453
Share-based payments – – – – (285) (885) – (1,170)
Operating profit after
share-based payments 1,961 2,635 (88) (32) (285) (885) (23) 3,283
Finance revenue 78 – – – – – – 78
Finance costs (5,954) – – – – – – (5,954)
Loss before tax (3,915) 2,635 (88) (32) (285) (885) (23) (2,593)
Income tax credit 396 – – – – – – 396
Loss for year (3,519) 2,635 (88) (32) (285) (885) (23) (2,197)
60
Optos plc Annual Report & Accounts 2006