Annual Report and Accounts 2006 - Optos

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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
Notes to the Consolidated Financial Statements continued 23(b) RECONCILIATIONS OF PREVIOUSLY REPORTED UK GAAP TO IFRS Effect on Group balance sheet as at 1 October 2004 The effect of the changes to the Group’s accounting policies on the equity of the Group at 30 September 2004 was as follows: Impact of Transition to IFRS Under UK Accounting Development Computer Significant Government Share Holiday IFRS Standards Expenditure Software Parts Grant Option NI Pay Accrual GAAP $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Non-current assets Property, plant and equipment 44,417 – (764) 2,324 – – – 45,977 Intangible assets – 2,485 764 – – – – 3,249 Total non-current assets 44,417 2,485 – 2,324 – – – 49,226 Current assets Inventories 4,720 – – (2,324) – – – 2,396 Trade and other receivables 3,825 – – – – – – 3,825 Corporation tax recoverable – – – – – – – – Cash and cash equivalents 6,109 – – – – – – 6,109 Total current assets 14,654 – – (2,324) – – – 12,330 Current liabilities Trade and other payables (7,931) – – – – – (129) (8,060) Government grants – – – – – – – – Provisions – – – – – – – – Financial liabilities – – – – – – – – Total current liabilities (7,931) – – – – – (129) (8,060) Total assets less current liabilities 51,140 2,485 – – – – (129) 53,496 Non-current liabilities Financial liabilities (72,056) – – – – – – (72,056) Provisions – – – – – (558) – (558) Government grants – – – – (626) – – (626) Total non-current liabilities (72,056) – – (626) (558) – (73,240) Net liabilities (20,916) 2,485 – – (626) (558) (129) (19,744) Equity and liabilities Equity attributable to equity holders of the parent Issued capital 1,663 – – – – – – 1,663 Share premium 52,417 – – – – – – 52,417 Retained earnings (75,682) 2,485 – – (626) (558) (129) (74,510) Other reserves 686 – – – – – – 686 (20,916) 2,485 – – (626) (558) (129) (19,744) Optos plc Annual Report & Accounts 2006 61
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