Annual Report 2005 - Leeden Limited

Notes to the Financial Statements- 31 December 2005332.2 Changes in accounting policies (cont’d)(i)FRS 39 – Financial Instruments: Recognition and MeasurementThe Group and the Company had adopted FRS 39 prospectively on 1 January 2005. At that date, fi nancial assets within the scopeof FRS 39 were classifi ed as either fi nancial assets at fair value through profi t or loss, loans and receivables, held-to-maturityinvestments or available-for-sale fi nancial assets, as appropriate. Financial assets that were classifi ed as fi nancial assets at fairvalue through profi t or loss and available-for-sale fi nancial assets were measured at fair value while loans and receivables andheld-to-maturity investments were measured at amortised cost using the effective interest rate method.Under the transitional provisoins of FRS 39, the change in accounting policy on 1 January 2005 did not result in any adjustmentsto the Group and the Company’s accumulated profi ts.ACE DYNAMICS LIMITED(ii) FRS 102 – Share-based PaymentThe main impact of FRS 102 on the Group and the Company is the recognition of an expense and a corresponding entry to equityfor share options granted to senior executives and general employees, and the recognition of an expense and a correspondingliability for cash-settled share appreciation rights.The Group and the Company have applied FRS 102 retrospectively and have applied the transitional provisions of FRS 102 inrespect of equity-settled awards. As a result, the Group and the Company have applied FRS 102 only to equity-settled awardsgranted after 22 November 2002 that had not vested on 1 January 2005.Under the transitional provisions of FRS 102, the change in accounting policy has resulted in the following:• At 1 January 2005, increases in the Group’s and the Company’s:- Employee share option reserve by $101,000 and $25,000 respectively- Accumulated losses by $101,000 and $25,000 respectively.• For the year ended 31 December 2005, decreases in the Group’s:- Profi t for the year by $202,000 (2004 : $101,000) due to an increase in the employee benefi ts expense;- Basic earnings per share by 0.14 cents (2004: 0.08 cents); and- Diluted earnings per share by 0.14 cents (2004: 0.08 cents).(iii) FRS 103 – Business Combinations,FRS 36 (revised) – Impairment of Assets andFRS 38 (revised) – Intangible AssetsFRS 103 has been applied for business combinations on or after 1 January 2005.The adoption of FRS 103 and revised FRS 36 has resulted in the Group ceasing annual goodwill amortisation and commencingtesting for impairment at the cash-generating unit level annually (unless an event occurs during the year which requires thegoodwill to be tested more frequently) from 1 January 2005.ANNUAL REPORT 2005